Is Energy Central Asia’s Curse or Cure?

The International Crisis Group has just released a new report detailing all the woe Central Asia will face as it comes to grips with its vast energy wealth. In the first few paragraphs of the introduction, however, some really strange biases show up.

This rising interest [in Central Asian Energy] has often failed to take account of the potential for instability in the region. Oil and gas are linked to violent conflict in a number of ways:

• the risk of interstate conflict over reserves and supply routes, though this has become less common in recent decades, and Central Asia’s disputes over pipelines and gas and electricity trade have not turned violent;
• the “resource curse” in which energy-rich countries waste the income in corruption and spending on security forces, while failing to diversify their economy, educate their people and develop effective institutions or stable democracies; and
• grievances surrounding production: oil-producing areas often suffer poverty, repression, environmental degradation and labour tensions without seeing benefits from the wealth that is created.

Central Asia shows signs of particularly the latter two. Combined with poor governance, worsening poverty in many areas and widening political gaps among the states, they put it at risk of a variety of forms of conflict.

Now, with respect to the authors, who are clearly making a good point that isn’t repeated often enough (energy exploitation has disastrous consequences far more often than not), their selection is a bit narrow. Though they make it a point to say that only three of the five (I’d say six, but whatever) countries of the region have energy resources to speak of, those “latter two” problems only apply to two of them. While Kazakhstan is by no means perfect, democratic, or uncorrupt by European or American standards, it is definitely leading the way in the region, and has shown encouraging hints of moving toward adopting European-style governance (unlike Nathan, I share the State Department’s guarded optimism for evolutionary change through engagement).

So, the risks they lay out are really only in evidence of two of the five republics. Why this warrants a report entitled “Central Asia’s Energy Concerns” (the email announcing it had the subject, “Central Asia Cannot Solve Europe’s Energy Problem”) eludes me.

This is, however, a minor quibble. A more substantive one would be their analysis of Kazakhstan’s economy: relying on “income gap” analysis and similar indicators can say what the spread of income is, yes, but it says very little about growth—in particular, wage growth, which is a much more concrete way of viewing economic development. So while a small number of people are certainly getting richer than everyone else, the very fact that, despite starting at generally the same place when the USSR collapsed, Kazakhstan has a larger per-capita GDP than the other 4 ‘Stans combined should say something very definite about their economic policies: to a large degree, they have worked. At least some anecdotal evidence supports this: when I was last in Almaty, even the Turkish cab driver swerving to the train station was crowing about how easy it was to make money there, and my students in Astana were all very positive on their prospects for the future (optimism is a surprisingly good indicator of a country’s development prospects).

But the report generally says the economy in Kazakhstan is going well, with the caveats (pointed out here as well) that Nazarbayev’s so far merely amusing Napolean complex and weird decision to build Astana might pose problems if it continues to result in underinvestment in education and healthcare (though even there one can find some encouraging signs of moving in the right direction).

What of the report’s other two examples, Turkmenistan and Uzbekistan? They’re both psychotic messes. But we already knew that. Their analysis of the general situation, though, is not really why I’m talking about the report at all—that section, which is the majority of the report, is very well researched and nicely laid out.

My problem stems from how the report shifts, from discussing the economic underpinnings of the region’s dictators, to the potential for further humanitarian abuse, to whether or not Europe can use Central Asian energy to balance Russian influence on the smaller former Eastern Bloc countries (the gas games). Normally the ICG is good at avoiding such a (please pardon the term) Orientalist outlook on the situation it analyzes. Given the bounds and hypotheses in the report, such an extensive section on Europe doesn’t make that much sense. Were two reports hastily combined?

Additionally, there is reckless fear mongering about instability and violent conflict. The way the authors addressed instability and violence reminded me for all the world of that ludicrous STRATFOR report discussing all the ways the region will collapse into a blood-soaked loose collection of failed states (Nathan piled on as well). While you could maybe make the case that without Karimov running Tashkent Uzbekistan will split, there isn’t any evidence (at least, convincing evidence) that Kazakhstan or Turkmenistan are a price fluctuation away from becoming Ingushetia.

Despite these concerns, I must recommend reading it, as it is an excellent overview of many of the concerns facing the region over the next ten years or so.

Update: The ever-insightful Ben P. piles on with a much closer look at some of the other economic indicators in the ICG report, and finds them needlessly negative on Kazakhstan. We’re both in agreement that Kazakhstan is far from perfect, but that the ICG is also far from even in its treatment of the country. What’s up with that?

This post was written by...

Joshua Foust – author of 1801 posts on Registan.net.

Joshua Foust is a Fellow at the American Security Project and the author of Afghanistan Journal: Selections from Registan.net. His research focuses primarily on Central and South Asia. Joshua is a correspondent for The Atlantic and a columnist for PBS Need to Know. Joshua appears regularly on the BBC World News, Aljazeera, and international public radio. Joshua is also a regular contributor to Foreign Policy’s AfPak Channel, and his writing has appeared in the New York Times, Reuters, and the Christian Science Monitor. Follow him on twitter: @joshuafoust

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