It was a prevalent trend in 2022 in the geopolitics of energy for state actors to grow further away from Russia and attempt to diversify their energy sources and international relations. This was the case even for neighbouring countries such as Kazakhstan and Uzbekistan. However, this overall pattern comes to an end. In an unexpected turn of events, Russian President Vladimir Putin reportedly talked about a potential three-party agreement with his Kazakh counterpart, Kassym-Jomart Tokayev, that would also entail Uzbekistan. During his visit to Moscow, Tokayev asserted that the primary goal of these discussions was to pump more Russian gas into Central Asia.
The reason is that the region is facing gas shortages despite its abundant natural resources, and the relevant figures are only expected to worsen. It has been projected that the overall gas deficit only in Kazakhstan (the largest market in the region) will be as high as 1.7bcm as of 2024. Even though it might seem benign, the expected agreement might be seen by the Kremlin as a lifeline for future gas exports when Europe is exploring ways to wean off Russian gas completely. Could this agreement be a breath of life to the Russian economy, opening its energy export horizons further to the East? How could other state actors stop such an approach or even benefit from it, and what kind of behaviour is expected from them?
A Move Wanted by None but Needed by All?
After the Russian invasion of Ukraine, a pattern of Moscow’s allies in Central Asia growing apart has been all the more observed. There are examples in virtually all Central Asian states. President Tokayev apparent avoidance of supporting in any way the waging war and also audibly condemning it. President Mirziyoyev has been looking for investment and political support in Paris and Brussels, attempting to attract the EU’s attention. At the same time, the woes of the Tajik President, Emomali Rahmon have also been heard on a global scale, according to which Dushanbe wants Moscow to “respect all of its allies”. According to such claims, it becomes apparent that most of the state actors would not want to engage with the Kremlin. However, is it something that they need?
The Directly Interested Ones – Uzbekistan & Kazakhstan
Even though the two most significant states in the region, Uzbekistan and Kazakhstan, are rich in oil and gas, bad winter conditions combined with the overall distortion of the energy market have led to shortages in both countries. As mentioned, the expected 1.7bcm deficit in Nur-Sultan comes together with another set of devastating news. Exports are expected to cease by next year if this trend resumes. As a major exporting country, Kazakhstan might see a huge blow to its economy, which is bound to have detrimental effects on its efforts to stabilize the society, especially the local communities in regions like the Mangystau region, from where the unrest of 2020 surfaced.
Uzbekistan lies in a similar predicament. On November 16, 2022, Deputy Prime Minister Sherzod Khodjayev maintained that exports saw a fall of 90%, whereas imports increased by 20% in the energy field. Such enormous shifts in the import-export equilibrium can have substantial negative impacts, especially when there is no clear roadmap on where imports will be sourced from, which is the case for Tashkent. For both cases, Moscow can become that roadmap that will help the economy bounce back and potentially find investments to tap into its resources.
The Downstream Representative – Turkmenistan
In Turkmenistan, the fourth wealthiest gas nation in the world, the main concern is to make this gas accessible to as many markets as possible. Given the technical, financial and political constraints that the Trans Caspian pipeline has faced throughout the past decades, TAPI and downstream distribution seem like the way to go for Ashgabat. These ambitions were the point of focus of Alexei Grivach, the Deputy Head of the National Energy Security Fund, a Moscow-based think tank, who claimed that sending gas to Central Asia could make the region a hub, from where gas can then be transported to the South, namely markets like Pakistan, India, Iran and beyond. To make even better use of these ambitions, on November 28, 2022, according to Iran news agency IRNA, Tehran and Moscow agreed on the supply of gas from the latter to the former, while the agreement also entailed ways for transit of this gas eastward to Pakistan. So far, as mentioned, Turkmenistan has yet to find a way to distribute its gas to partners other than Beijing. There is a need for diversification, and it seems that Russia is offering a viable alternative.
The Less Fortunate – Kyrgyzstan and Tajikistan
For Bishkek and Dushanbe, the situation is much simpler. In Kyrgyzstan, the deficient water levels in the Toktogul reservoir, the country’s energy lifeline, show that power outages will increase from the previous years, worsening the situation and leading to societal unrest and devastation. Tajikistan faces similar challenges. However, electricity outages are becoming increasingly frequent every year and have been considered among the roots of the revolt in GBAO last year. Every state actor would not only benefit from such a connection with Russia but there also seems to be a huge need. Bringing Russian gas to Central Asia opens infrastructure improvement and interconnection opportunities and expands to other markets, such as South Asian one. Nonetheless, severe challenges might inhibit such a large-scale project in the region.
The post-war landscape has significantly changed the tides for the Russian economy. Most predictions talk about a constant shrinking of the country’s GDP, starting from a modest 2.3% shrinking to a worst-case scenario of 4.5%. Imports are expected to drop by around 25%, which is a colossal figure considering Russia is predominantly an exporting country. This is bound to affect the outward-looking policy of Moscow. Considering that the foregoing strategy would require substantial funds and most international institutions are refraining from collaborating with the Kremlin, securing the necessary funds will be a significant challenge.
First, political challenges start from the overall coolness and, in some cases, the opposition of Central Asian states to the appeals from Russia to support its actions in Ukraine and elsewhere. Despite the mentioned needs, the fear of sanctions towards the countries collaborating with Moscow financially is still intense. Since no agreement has been penned yet, some might see this as sheer leverage from regional states to other key players (EU, USA etc.) to take action to provide Central Asia with the proper energy infrastructure. In addition, other regions will get involved in the process through this infrastructure, including South Asia, with India and Pakistan being the most prominent stakeholders. India has even fewer ties to Russia than Central Asia, and President Modi has kept his distance from Moscow’s overall stance.
The people of Central Asia and Russia are intertwined in a series of levels. First, ethnic Russians are a majority in regions like Northern Kazakhstan and a massive chunk of the population in some areas of Uzbekistan. In addition, virtually all Central Asian nations are connected with Russia through remittances, as labour migrants to large cities like St Petersburg are common. Such a large project with significant needs for labour and infrastructure might bring further distortion to an already destabilized society and, coupled with the threatening claims from President Putin towards countries like Kazakhstan; it is the perfect combination to bring mayhem.
A Need for a Potential Mediator?
With tensions rising at unprecedented levels, it will be acutely challenging to get all stakeholders on board with a clear goal in mind, which is to bring gas to Central Asia, both to reduce energy insecurity and also to create a hub to send gas further downstream and increase the region’s extracting capacity. Turkey is ideally situated to play that role. Earlier this year, President Erdogan agreed to become Russia’s gas hub to Europe, should there be any such need. A similar approach can be taken in Central and South Asia. Ankara has successfully assumed the role of a leader of the Turkic world, increasing the outreach of the Organization of the Turkic States and making even neutral Ashgabat consider membership status.
Turkey still needs to be taken into consideration for any sanctions package and could support the relevant stakeholders in securing funding from international institutions or including countries like China in the loop. However, it also helps states that are wary of currently getting involved with Russia to agree to participate in such a project. The issue here is that President Erdogan would not go to extreme lengths to support this movement, as the current neutral stance amidst the war on Ukraine has yielded good results for Ankara and there is no intention to cause a shift to the current state of affairs.
Moscow feels that the European markets are gradually closing their doors. If no action is taken, a steep export fall and a devastating shrinking of the economy are the only certainties. With that in mind, Russia sees the needs and weaknesses of the post-Soviet Eurasian states as an opportunity to find new ways to distribute its gas by paving the way for it to go into the South of Asia and, through Pakistan and Iran, to be able to be distributed to new markets globally. For that to happen, however, obstacles on the financial, societal and political aspects will need to be resolved. The current neorealist stance from the Kremlin is not expected to move these impediments any time soon.
Two ways have been indicated as the most promising in that regard. The first one involves following a neoliberal approach and offering incentives to Central Asian states to further integrate their energy markets with the Russian one e.g under the EAEU, with the incentives being chiefly financial, under a scheme that all member states will be treated as equal. The second would encompass going through the channel of the world’s emerging mediator, Turkey. While the first one is an approach that depends only on the will of Moscow and the interested parties in Eurasia, the second one seems more feasible at this time. President Putin will have to consider all trade-offs if he wants to move forward with the only viable lifeline for his energy exports.