Look Out Kid, It’s Something You Did

by Asher Kohn on 11/3/2009 · 11 comments

Let’s try something different today. A big part of some folks’ frustration with getting involved in Central Asian happenings is that they have a difficult time jumping in to the deep-end of the subject matter that gets covered here. To remedy that, I’m going to try to explain some trends in energy policies within Central Asia…using lyrics of Bob Dylan’s Subterranean Homesick Blues.

The Man in the Coon Skin Cap / In the big pen / wants eleven dollar bills / you only got ten
Any of the large energy projects that are going to, by definition, require a whole lot of investment. None of the -stans would be able to drum up enough capital by their own governments alone. They are all just branded as more-or-less inept, blundering, kelptocracies by people who are ignorant of the area. And this won’t change without the opportunities that real investment will afford. But the IMF-esque sources of money tend to come with the sorts of conditions that can cripple a developing country. Check that link…note how the astute writer notes that Central Asia is between South Asia and East Asia. Unfortunately, the IMF has really put the screws to the folks they want to help. In their 2009 projection, they note that “In contrast [to the rest of the countries], Azerbaijan, Turkmenistan, and Uzbekistan are projected to register robust growth in 2009…” So the three countries with the least IMF support are the ones weathering the global depression the most. Hmm. Fortunately, China, India, the Aga Khan Foundation, and Iran would be more than ready to fund projects that the IMF won’t.

Maggie comes fleet foot / Face full of black soot / Talkin’ that the heat put / Plants in the bed but
China’s pollution is pretty much the stuff of legends at this point. Any project they get a part of in Central Asia will likely be gargantuan, but it’ll also lead to who-knows-what sort of consequences. I’m actually returning from an energy conference where one of the keynote speakers praised that “China is a country run by engineers while America is a country run by lawyers.” That statement can be parsed in many ways, but it does sort of explain some of the more awkward parts of China’s Central Asian policies. Who knows what would happen if policies like that started happening in the Fergana Valley. But as glaciers melt and the Fergana becomes that much more fertile, especially relative to the rest of Central Asia), it could become the Next Big Economic Region.

You don’t need a weather man / To know which way the wind blows
OK, this is sort of a stretch, lyrics-wise, but Central Asia is home to some of the flattest stretches of the flattest land on Earth. As such, it makes a pretty good sandbox for emerging wind-power technology. Mongolia has gotten a pretty decent start, but its a country with low energy usage…it can support those sort of possibilities. It will be really interesting to see what happens with Uzbekistan’s experimentation with wind power. It’s another country that is a pretty big energy importer (as well as water importer) for the region that badly needs to diversify. Wind power is too expensive to be practical now, but I’m open to anyone who could prognosticate the future of wind power in Uzbekistan better than I. Again, depending on the practicality of wind power, it could become just as important as hydropower is for Kyrgyzstan and Tajikistan. Any frame of energy independence for the steppe states would seem to change future relations between the water importers and exporters as related to dam-building.

Lookin’ for a new fool / Don’t follow leaders / Watch the parkin’ meters
Carbon Sequestration is the new big thing in the energy world. Or at least was at the energy conference, which was led by Big Coal…sequestration allows them to keep doing what they are doing without any changes, just burying stuff and hoping it will go away (just plants are not enough to sequester the sort of CO2 being thrown up there). But even experts are skeptical about it, mostly because nobody has any clue whatsoever at what the long-term effects are of shoving noxious gasses far underneath the surface. Central Asia is a long way from US Voters, though, and projects like this get serious consideration…because what’s the Tien Shan from New York? If the opportunity comes to get a sweetheart deal from some corporation in exchange for the opportunity to do carbon sequestration in the Kazakh or Turkmen gas fields, I would be skeptical, to say the least. Unless this turns out wonderfully or something.

The pump don’t work / ‘Cause the vandals took the handles
It’s not related to Central Asia per se, but it’s worth quoting John Robb‘s fuzzy math at length:

ROI (return on investment) for Nigeria’s MEND. Four years of attacks that disrupted one million barrels a day of production (on average) = ~ 1.4 billion barrels disrupted. Direct costs at an average price of ~$70 a barrel and a $20 extraction cost to Nigerian kleptocrats and their corporate allies = $70 billion. Impact of the loss of 1 m barrels a day on the world, assuming a ~$10 premium due to the loss and ~80m barrels a day of global output = $800 m a day or $1.17 trillion. Loss of global economic output due to the premium = ~.5% of $50 trillion global GDP = $0.75 trillion. Total cost = ~$2 trillion. Cost of attacks = ~$1 m. ROI = 200 million %.

ROI = Return on Investment. MEND essentially costs the global economy $200,000,000 for every $1 they spend. I’m sure that the Taliban/Haqqani/IMU/what-have-you have numbers similar to that in their accounts…maybe I should just ask Abu Walid al Masri. At that rate of return, this is less of an insurgency, more of a social and economic revolution.

So hopefully that’s some stuff to chew on, and it should be enough fuel for many blog posts down the road. But one of my favorite quotes about historiography is Philip Roth’s “The terror of the unforeseen is what the science of history hides, turning a disaster into an epic.”

The study of Central Asia is just so fascinating because there are so many open-ended questions that could be answered in a hundred different ways. The young people (myself included) of all educational, ethnic, national, or whatever backgrouns who are getting in on the bottom floor now have the opportunity to do incredible things in the region.

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This post was written by...

– author of 33 posts on 17_PersonNotFound.

Asher is currently in law school at Washington University in Saint Louis. He is studying natural resource law in Central Asia and its intersection with different theories of jurisprudence. Besides Registan.net, Asher has written for The Los Angeles Times, Run of Play, İstanbul Altı, and Istanbul Eats. He has worked with the Natural Resource Law Center and the International Crisis Group, where he studied legal and political traction over a variety of issues.

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Asher Kohn November 3, 2009 at 8:40 pm

Hmm, I’m not sure how to edit posts once they’re already posted on this site, but I meant to link to this article when I mentioned Abu Walid al Masri: http://allthingsct.wordpress.com/2009/10/29/abu-walid-al-masri-responds-again/

highwaychickens November 3, 2009 at 9:24 pm

Awesome post.

Karaka November 3, 2009 at 11:51 pm

As such, it makes a pretty good sandbox for emerging wind-power technology.

This is absolutely true. Not only does it have conditions that make the generation of clean energy fruitful, but it doesn’t face the population/urbanization problems of first world countries when trying to implement the technology in largely uninhabited stretches of land.

In the first world, a wind turbine can usually pay for itself in 1-6 years, depending on the conditions, which is pretty great for a consistent clean renewable energy source. The problem, as you identify, is clear: wind turbines are currently of significant expense, and the economy that would pay out the cost of the turbine in kWh simply doesn’t exist. It’s a shame, and a big one–wind power would be an excellent way to not only generate clean renewable sustainable energy, but would be a great chit towards establishing an electricity grid that could feed the otherwise sparse population an energy source besides. As it is, it’s really more of a pipe dream.

great post.

Alex Visotzky November 4, 2009 at 1:39 am

Good post, but I’m going to have to disagree on a couple points:

Fergana Valey becoming more fertile because of glacier melting. Maybe that’ll happen, but Uzbekistan’s record of water management and irrigation suggests it’s unlikely.

Wind power–it’s a great idea and hopefully that will in fact be the future. Wind power, however, is extremely expensive, and as long as Russia and Kazakhstan offer discount rates on gas and oil to their neighbors in order to keep them politically pliant, I doubt these poor countries will be willing to invest in such a long-term project.

Otherwise I really enjoyed the post, although I can’t really say you’ve simplified the issues of Central Asian energy through Subterranean Homesick Blues. If it’s not a secret, may I inquire about what energy conference you’re coming from (I dabble in energy meself)

AJK November 4, 2009 at 10:21 pm

This one: http://www.wustl.edu/energyfuture/

And after looking at your blog, you probably would be interested in this, too: http://www.youtube.com/watch?v=tv2tTRg9QuU

OK, I have to go back to posting with a serious face, now, I think.

Alex Visotzky November 5, 2009 at 6:19 am

You sir, seem to know me better than I know myself.

Alex Visotzky November 5, 2009 at 6:19 am

You sir, seem to know me better than I know myself.

Ahad_Abdurahmon November 4, 2009 at 9:45 am

What is the overall point of the article, I am sorry, I could not understand it.

tictoc November 5, 2009 at 12:00 am

It’s a bit stupid to attribute better economic growth in Uzbekistan and Turkmenistan to the lack of “IMF support”. These countries are also the most closed off economies and thus, aren’t as affected by a global downturn in trade. They also weren’t as affected by the global “boom times”.

Do you really believe Kazakhstan (a ‘stan the last time I checked) can’t find funding for “energy” projects?

As for Kyrgyzstan and Tajikistan struggling (perpetually) to find funding for building or overhauling energy facilities, the cause is more likely that potential investors don’t see any way to earn money on investments in this area. These projects are essentially high-risk, low-return … which isn’t a winning combination.

As for wind power, the same issue that limits its growth in the US keeps the Central Asian steppes from becoming wind power money makers — the absence of transmission lines connecting desolate, wind-blown places to the (generally non-windy) population centers where electricity is needed. And in Central Asia, you’re talking about building out a transmission grid that crosses international borders. These countries already don’t play well together with the existing electrical grid. I can’t imagine how they’d come to agreements on building new transmission lines, on who pays what, and how much, etc.

Turgai Sangar November 5, 2009 at 7:14 am

“As for wind power, the same issue that limits its growth in the US keeps the Central Asian steppes from becoming wind power money makers — the absence of transmission lines connecting desolate, wind-blown places”

You’re referring to this steppe country, I suppose? 😉

Ahad_Abdurahmon November 5, 2009 at 10:47 am

nice arguments tictoc.

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