In 1862 the eminent Prussian statesman Otto von Bismarck delivered a speech on behalf of his King, Wilhelm I, to the State Diet stressing the need for military preparedness. At the close of this speech, he spoke what became his most famous words, “Not through speeches and majority decisions will the great questions of the day be decided, but by iron and blood.”
On the banks of a chilly river some 4,600 km away, a gigantic dam sits unfinished, the victim of a process of speeches and votes between rivals far more bitter than Prussia ever faced – Uzbekistan and Tajikistan.
One side is dependent upon the water flowing past the dam, while the other desperately needs the electricity the dam could provide, and, as you will see, both sides have compelling arguments in their favor. Already in a state of “cold war” over this and other issues, is the collision between the two inevitable? Can this issue be decided only by blood and iron?
The Rogun Dam was originally conceived in 1959 as just one of several hydroelectric projects to be built throughout the Soviet Union. Developed in an era of gigantic Soviet projects, construction began along the banks of the Vakhsh River in 1976 but was not complete by the time of the collapse of the Soviet Union in 1991. Related: This JV Could Trigger A Shale Boom In An Unexpected Venue
A new agreement was forged between Russia and Tajikistan in 1994, but the agreement fell through and no progress was made on the dam. Another agreement was made ten years later with the Russian aluminum company RUSAL in which RUSAL would finish the dam and build a new aluminum plant; only the plant has been built, as the agreement was terminated one year later. Another agreement was sought between Russia and Tajikistan, but none was forthcoming.
In order to continue funding for the dam, the Tajik government issued stock and compelled its citizens to purchase US$700 of it (a major investment for a country whose average yearly income is just over US$1,000). Only US$184 million of the planned US$1.4 billion was raised, which funded construction for another two years. Upon the request of Tajikistan’s neighbors (spearheaded by Uzbekistan), the World Bank engaged the services of the French engineering firm Coyne et Bellier, among others, to furnish a Techno-Economic Assessment Study (TEAS) and the Finnish engineering firm Pöyry to complete an Environmental and Social Impact Assessment (ESIA). Although the reports were both delayed for over two years, they indicated that the impacts of the dam were “small and easily mitigated,” if any.
The advantages for Tajikistan in finishing the project are many. When finished, the dam would provide 13 billion terawatt hours of electrical power per annum. This would turn Tajikistan from a country that experiences power rationing and blackouts in winter into a year-round exporter of electricity. In addition to the income from selling electricity to countries like Afghanistan, Pakistan, and Kyrgyzstan, it would provide steady electrical power domestically, allowing industry to gain a foothold in one of Central Asia’s poorest countries. Related: Scuttled Iran Nuclear Deal Could Be Catalyst For Oil Price Rebound
Completing the dam would benefit neighboring states as well. The Rogun Dam would be an integral part of the long-planned Central Asia South Asia Regional Electricity Trade Project (CASA-1000). Under the memorandum of cooperation for this project, Tajikistan and Kyrgyzstan would transmit up to 1,600MW of its summer energy surpluses to Afghanistan and Pakistan. This program has several top-shelf supporters, including the United States, which is looking for a cheap, sustainable energy source to leave with the Afghanis as the U.S. draws down its forces there.
However, the project has attracted little more than obstacles. Citing security fears in Afghanistan, the Asian Development Bank pulled out of the project in 2013. In addition, governmental corruption in the countries involved is a major concern. Transparency International ranked Tajikistan 154th of 172 countries in 2013, citing drug trafficking and Islamic insurgency, among other factors.
As advantageous as the dam may be to Tajikistan, it would be a major problem to neighboring countries, especially Uzbekistan. As the world’s second largest exporter of cotton, Uzbekistan has substantial water needs, and it meets those needs from the glacial runoff that forms the Vakhsh River. The importance of the cotton industry can scarcely be overstated, but the Uzbek government has a poor record in terms of labor rights in the cotton industry.
Should the dam be completed, it would impound almost 14 square kilometers of water, severely restricting the badly needed flow into Uzbekistan and likely devastating the domestic cotton trade. Related: Oil Prices Driven Lower By Everything Except Fundamentals
In addition, Uzbekistan has unquestionably valid concerns regarding the physical stability of the dam owing to the fact that it is located in a seismically-active area. Dozens of potentially devastating earthquakes have taken place in the Rogun area, including a 5.5-Richter temblor in late May that damaged buildings and triggered landslides.
Uzbekistan is officially strongly opposed to the project – the Uzbek president called it a “stupid project” in 2010, and the deputy prime minister stated last summer that “Uzbekistan will never and under no circumstances” support the project. Cooperation and agreement on this project will be hard to come by between Sunni Uzbekistan and Shia Tajikistan, as the two countries have been unable to agree on one-fifth to one-half of the heavily-landmined border between the two countries in the years since the fall of the Soviet Union.
The waters of the Vakhsh River hold the answers to the needs of two bitter enemies. The answers themselves are as different as the parties involved, and there is very little common ground between them for finding a solution. For the foreseeable future, diplomatic progress on the Rogun Dam will be as intractable as the frozen Vakhsh in the cold Central Asian winter, but with uncertainty of what lies beneath the ice – cooperation, or blood and iron?
By Christopher Stakhovsky for Oilprice.com
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