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01-16-2002
The transformation of the Central Asian Economic Commonwealth into the Central Asian Cooperation (CAC) comes as regional cooperation is desperately needed in the broad array of issues, from national security to environmental protection. However, past performance, petty rivalries, and the lack of economic and trade expertise make the prognosis cautious for the newly created body at best. Lacking adequate budget and trained staff, the new organization may face a mountain of mandates and lack of resources - a well-known prescription for failure.
BACKGROUND: The last days of December 2001 witnessed the creation of yet another regional association in the territory of the former Soviet Union: the Central Asian Cooperation (CAC). It was born after a number of bilateral and multilateral meetings in Tashkent on December 27-28 between the host, President Islam Karimov, and Presidents Nursultan Nazarbaev of Kazakhstan, Askar Akaev of Kyrgyzstan, and Imomali Rakhmonov of Tajikistan. The "permanently neutral" Turkmenbashi was absent. The new organization replaces the Central Asian Economic Commonwealth, and joins the Moscow-dominated Eurasian Economic Cooperation Commonwealth (EEC); the GUUAM (Georgia, Uzbekistan, Ukraine, Azerbaijan, Moldova); and the Shanghai Cooperation Organization as yet another attempt at searching jointly for regional political and economic cooperation solutions.
This time, the regional powers, such as Russia and China, the godfathers of SCO, were absent from the scene and none of the aspirants for regional influence, Pakistan, India, Iran or Turkey, were present either. Presumably, New Delhi and Islamabad had other fish to fry at the moment, or trying to avoid frying each other. Speaking at the press conference on December 28, President Karimov declared that CAC would have in its purview issues of military policy, economy, and humanitarian cooperation. This is understandable in the aftermath of the war in Afghanistan. Moreover, the four founding members declared that they will work together to create joint electricity, gas, transportation and irrigation networks.
The Tashkent Declaration, adopted by participants, proclaims an increase in political, economic and humanitarian cooperation; joint fight against international terrorism; drug smuggling; and religious and political extremism. The leaders patted themselves on the back for maintaining "stability" for 10 years after the Soviet collapse, and "maturity" in dealing with divisive and complex issues, such as water and road building. In the negotiations preceding the quadrilateral summit, Presidents Karimov and Imomali Rakhmonov covered issues of mutual trade ($80 million in the first three-quarters of 2001); border delineation; and security and law enforcement cooperation. To boost trade, Uzbekistan promised to loosen restrictions and open its borders to Tajik transit trade. Tajikistan will receive $12 million debt forgiveness (10 percent of the total debt), and Uzbekistan promised to restructure the rest of the debt ($108 million). Dushanbe is also hoping to receive more Uzbek oil and gas for hydroelectric power it generates. There were also promises of reduced tariffs on goods imported to Uzbekistan from Tajikistan and talk about cutting the price of the Uzbek natural gas flowing to Tajikistan.
IMPLICATIONS: Central Asia desperately needs joint efforts to solve a number of problems, from trans-border terrorism and border delineation, to environmental threats, to trade and foreign investment and refugees. In this sense, efforts to improve regional cooperation are needed. However, the prognosis must remain guarded - for four reasons.
First, Uzbek landmines have killed dozens of civilians since Tashkent buried thousands of mines along its borders, fearing radical Islamic incursions. This breeds resentment and suspicion between Uzbekistan and its neighbors. Uzbekistan behaved in a heavy-handed way, throwing its weight around in order to receive water from Kyrgyzstan for free. Persistent refusal of Tashkent and Astana to pay for water - the vital resource of the arid region, left a bitter taste in the mouths of many in Kyrgyzstan. According to sources in Bishkek, Tashkent also violated the gas-for-water agreement with Kyrgyzstan, starting in August 2001. However, the Uzbeks are fond of reminding that they are selling gas at about half price comparing to the prevailing global prices: In 2002, Tashkent would like to raise the price from $42 to $45for a thousand cubic feet.
Second, the true trading bloc is not likely to emerge, as there is almost melodramatic obsession with honor and prestige, little bureaucratic culture of compromise, and squabbles and suspicions between the top leaders. These suspicions, and fear of alien domination, have also hampered the development of closer economic ties with Moscow and Beijing within the SCO and the Eurasian Economic Commonwealth. Despite the common and equal roots in the Soviet nomenklatura hierarchy, some leaders see themselves as more equal than others.
Third, the scarcity of trade and market economic expertise is a major impediment. After all, the Western Europeans managed to launch the European Economic Community (EEC), and later the European Union, only after prior experience with customs unions, such as the pre-unification Germany and the Austro-Hungarian Empire in the nineteenth century. Furthermore, the Western European domestic economic models were more or less defined after World War Two, which is not the case in Central Asia.
Today, Uzbekistan is still struggling to make its currency convertible; there are serious problems with privatization and capitalization of state-owned enterprises in all countries of the region; and the rule of law facing serious challenges. In such conditions, developing a workable economic association is a truly Herculean task.
CONCLUSIONS: Despite the need for regional cooperation, the chances for success for the CAC remain tenuous. After all, nothing changed fundamentally since the launch of its predecessor, the Central Asian Commonwealth, and GUUAM has so far failed to create a trading organization. An equitable free trade association or a customs union is still far away, despite the positive historical experience with such formations. This is because the region consists of two larger and resource-rich countries (Kazakhstan and Uzbekistan) which are vying for local domination, and two small, poor and weak states: Kyrgyzstan and Tajikistan.
Russia is not likely to let the former dependencies to go their own merry way. Moscow controls practically all oil and gas pipelines out of the region, and is likely to frown at the gas pipeline to be constructed via Afghanistan, to take Turkmen and Uzbek gas to the Pakistani and Indian markets. Moreover, Moscow is likely to attempt to revitalize the Eurasian Economic Commonwealth, which also includes Russia, and Belarus in addition to Kazakhstan, Kyrgyzstan and Tajikistan. With the former KGB general Grigory Rapota at the helm of EEC, and the Kremlin controlling 40 percent of the EEC voting rights, Moscow is likely to keep the Central Asian falcons under its gimlet eye.
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