German Chancellor Olaf Sholz's visit to Uzbekistan and Kazakhstan, the first in decades, attracted public attention because it involved a strategic area: Central Asia.
Central Asia consists of 5 countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) with an area of about 5.6 million km2, is a region rich in natural resources: oil, natural gas and coal (found in most countries), rare earths such as lithium, uranium with the largest reserves in the world, abundant potential for hydropower, many mines of iron, copper, gold, salt... With a population of nearly 80 million people, Central Asia is emerging as a region of important geopolitical significance, with rich historical characteristics, diverse cultural heritage, and a strategic location at the intersection of Asia and Europe.
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Central Asia is a land with many advantages in the strategies of major countries. (Source: TCA) |
Opportunity in conflict
The conflict in Ukraine has had a negative impact across Europe, with devastating effects in Ukraine and the Russian economy stagnating. However, one region that has benefited greatly from the conflict is Central Asia. Five countries in the region have not only avoided the severe consequences of the war, but have also increased trade and investment, thereby promoting economic development. Global financial institutions have published positive assessments of the economic growth of the Central Asian region in 2023. According to the IMF and the World Bank, the GDP of the countries in the region in 2023 increased by 4.6% and is expected to increase by 4.2% in 2024.
Since the West imposed sanctions on Russia for launching a military campaign in Ukraine, Central Asian countries have maintained a flexible, multi-directional foreign policy, skillfully performing a “multi-dimensional balancing act” in relations with major powers such as the United States, China and Russia.
Despite pressure from both Russia and the West, Kazakhstan and other Central Asian countries have continued to maintain trade with Russia while developing relationships with Western partners, quickly seizing the opportunity to fill gaps in the supply chain. Kyrgyzstan, Uzbekistan and Kazakhstan have become intermediaries for Russia, with goods banned from direct import from Europe being rerouted through Central Asia. This has helped these countries dramatically increase their trade with Russia, China and Europe. In 2022, two-way trade between Kazakhstan and the BRICS countries, mainly Russia and China, reached $45 billion.
The small country of Kyrgyzstan in particular has seen a significant increase in budget revenues, doubling by 2023. Money raised from trade and foreign investment is being reinvested in development projects, particularly in the hydropower sector. One prime example is the Kambarata-1 hydropower plant, which is being built to increase the country’s electricity capacity by half. This will not only help Kyrgyzstan power its booming economy, but also create opportunities to export electricity to neighboring countries that are starved of energy.
Along with Kyrgyzstan, Kazakhstan has also been a major beneficiary of the conflict. EU exports to Kazakhstan have surged, particularly in goods such as machinery and electronics. Kazakhstan’s technology sector has grown significantly, with technology exports to Russia increasing nearly sevenfold from 2021 to 2023. This reflects a shift in international supply chains and has enabled Central Asian countries to expand their role in the global economy.
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| Mechanical engineering is one of the main sectors of Kazakhstan's economy. (Source: Office of the Prime Minister of Kazakhstan) |
Policy Adjustment
In the current complex geopolitical context, the US has made more realistic changes in its policy towards Central Asia, from considering the region as only a supplier of fuel and strategic transportation routes to a policy of expanding strategic partnerships with Kazakhstan and Uzbekistan, especially in the fields of clean energy development, climate change response, and mining, considering the Central Asian region as a Partner in global infrastructure and investment.
EU countries are also making great efforts to strengthen relations with Central Asian countries with the aim of finding alternative sources for Russian oil and gas, meeting the energy needs of the old continent, including nuclear energy (Kazakhstan accounts for 40% of the world's uranium reserves, producing 22 million tons in 2023), and at the same time trying to influence regional leaders to change their views on Russia. However, due to over-reliance on the US, these efforts are only a formality.
Recently, Modern Diplomacy commented that Central Asia's abundant oil and gas reserves give Western countries an important option to help ensure energy security. This region rich in natural resources and mineral reserves also brings attractive opportunities for Western economies to expand their supply chains.
For a long time, companies from Kazakhstan - the largest country in Central Asia - have been a source of titanium, beryllium, tantalum, niobium, etc. for the economies of European Union (EU) member countries. At the end of 2023, French President Emmanuel Macron's visit to Kazakhstan brought about significant agreements that helped Paris purchase important minerals and metals for industrial production. Trade turnover between Kazakhstan and Germany in 2023 increased by 41%, reaching 3.9 billion USD, and in the first 7 months of 2024, the turnover exceeded 2.3 billion USD. Since 2005, Germany has invested nearly 6.7 billion USD in Kazakhstan.
Promoting regional cooperation
The conflict in Ukraine has not only increased trade but also stimulated intra-regional cooperation in Central Asia. Previously, these countries often had conflicts over economic and political interests, but now they have a sense of solidarity to take advantage of development opportunities, a series of projects have been built and implemented in the spirit of strengthening intra-regional economic links.
By fostering closer economic and diplomatic ties with its neighbors, Central Asia is seeking to tap its potential as a hub for trade, investment and cultural exchange, promoting sustainable growth and prosperity, and addressing common issues such as energy shortages and border management. Trade, investment and tourism between countries in the region are growing rapidly, promoting economic and social development.
In addition, the development of transport and logistics infrastructure in the region is also being fueled by investment from international partners. These investment projects not only improve the conditions for transporting goods but also facilitate the development of other industries, from agriculture to technology. In particular, since the outbreak of the Russia-Ukraine conflict, the emergence of the Trans-Caspian International Transport Corridor (TITR), a transport network spanning Central Asia, the Caspian Sea and the Caucasus, has emerged as an alternative to Russian-controlled transport routes.
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| The Trans-Caspian International Transport Corridor (TITR) has emerged as an alternative to Russian-controlled transport routes. (Source: Dreamstime) |
Over the past 30 years, the route has seen an increase in traffic, especially after February 2022. According to TITR Association Secretary General Gaidar Abdikerimov, there are currently 25 shipping companies from 11 countries participating in TITR. In the first 10 months of 2023 alone, more than 2,256 million tons of cargo were transported through the corridor. In early 2024, European and international financial institutions announced a commitment of $10.8 billion to develop TITR, aiming to reduce dependence on Russia's Northern Sea Route (NSR).
As unrest in the Red Sea escalates due to Houthi attacks and Western sanctions against Moscow, traditional shipping routes become less secure. Routing shipments around the Suez Canal also significantly increases costs and transit times. In this context, TITR suddenly becomes a breakthrough solution, benefiting the global supply chain, helping to keep trade between Asia and Europe uninterrupted.
It is noteworthy that the Central Asian countries have joined together to form the so-called C5 format, creating a unified bloc in international negotiations. This cooperation not only strengthens the region’s position in the international arena but also helps these countries better take advantage of opportunities from both “East and West”. Last September, US President Joe Biden hosted Central Asian leaders for the C5+1 Summit (a cooperation mechanism between the US and five Central Asian countries) in New York - a historic event marking the first time a US President attended a C5+1 meeting. Washington and its partners discussed a range of topics including regional security, economic cooperation and sustainable development, thereby emphasizing the growing US interest and contribution to the region. In late 2023, French President Emmanuel Macron’s visit to Kazakhstan resulted in significant deals that enabled Paris to secure important minerals and metals for industrial production. Visits by international leaders such as Russian President Vladimir Putin, Chinese President Xi Jinping, French President Emmanuel Macron and German Chancellor Olaf Scholz have demonstrated the growing importance of Central Asia in the global geopolitical landscape. |
Germany "bumper crop"?
Chancellor Olaf Scholz became the first German Chancellor to visit Central Asia in decades. According to experts, during this trip, Mr. Olaf Scholz seeks closer ties with Central Asian countries, with a special interest in the energy and economic sectors, exploiting Central Asia's abundant oil and gas resources to replace supplies from Russia.
In 2023, Kazakhstan exported 8.5 million tons of oil to Germany, accounting for 11.7% of Germany's total oil imports and up from around 6.5 million tons before the Russia-Ukraine conflict. The increase made Kazakhstan Germany's third-largest supplier after Norway and the United States, according to data from the German Federal Statistical Office. Meanwhile, German investments in Kazakhstan increased by 64% in 2023 compared to 2022.
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| German Chancellor Olaf Scholz and heads of state of Central Asian countries in Astana, Kazakhstan on September 17. (Source: EFE) |
A very important task for Mr. Olaf Scholz is related to geopolitical issues. The German Chancellor wants to hear from the leaders of the Central Asian partners about the developments in Russia and the issue of compliance with Western sanctions against Russia in Central Asia. However, Mr. Olaf Sholz was “poured cold water” by Kazakh President Tokayev when he affirmed that Russia is “invincible” militarily. The escalation of the war in Ukraine will lead to irreparable consequences for all of humanity, first of all for all countries directly involved in the Russia-Ukraine conflict.
The Kazakh leader's remarks are sure to make the German chancellor rethink her policy of escalating "confrontation with Russia" in Ukraine, in the face of growing domestic opposition to the German government's support for Kiev.
However, the German Chancellor did not leave Astana empty-handed. His trip to Central Asia contributed to strengthening Germany's relations with the region's leading countries, Kazakhstan and Uzbekistan.
With Uzbekistan, Germany reached a migration agreement with Tashkent, aiming to recruit highly skilled workers in Germany. In Kazakhstan, the two sides reached an agreement to continue cooperation in 66 investment projects with a total investment of 55 billion USD, especially in the fields of energy, construction, oxygen production, airport construction, and the mining of potassium salt and boric acid.
Central Asian countries and Germany pledged to strengthen and promote strategic partnership in economics, trade, energy, mineral exploitation, combating climate change, fighting illegal migration, terrorism and extremism.
Source: https://baoquocte.vn/luc-hut-mang-ten-trung-a-286803.html
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