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James Durso

James Durso

James D. Durso is the Managing Director of Corsair LLC, a supply chain consultancy. In 2013 to2015, he was the Chief Executive Officer of AKM…

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Iran And Uzbekistan Look To Boost Central Asian Cooperation

  • In June 2023, Uzbek president Shavkat Mirziyoyev met Iran’s president, Ebrahim Raisi, and Iran’s supreme leader, Ali Khamenei.
  • The countries plan to increase annual trade to $3 billion USD.
  • Iran is increasingly attractive to the landlocked Central Asian republics that are seeking new trade routes.
Iran oil

The Central Asian republics are self-organizing in the wake of the NATO evacuation from Afghanistan in August 2021. The republics are wedged between Russia, China, Iran, and Afghanistan, and are pursing multi-vector foreign policies to ensure economic growth, and to ensure they can navigate among the local powers, and the U.S. and Europe, even though the latter have antagonistic relations with Russia, China, Iran, and Afghanistan. The republics know, “When the elephants fight the grass suffers.”

Uzbekistan is an example of the political entrepreneurship demanded of the republics as they press ahead in an environment shaped by the twin shocks of the Taliban victory in Afghanistan and the NATO-Russia war in Ukraine.

In June 2023, Uzbek president Shavkat Mirziyoyev met Iran’s president, Ebrahim Raisi, and Iran’s supreme leader, Ali Khamenei. The meeting netted cooperation pacts in areas as diverse as agriculture, energy, customs affairs, sports, science, technology and innovation, cultural exchanges, health care, Chabahar port, the environment, industry, and tourism. It was the first visit to Iran by an Uzbek leader in over 20 years. 

The countries plan to increase annual trade to $3 billion USD, according to Raisi (trade was $431 million USD in 2021), and intend to develop a transport corridor through Turkmenistan, which Mirziyoyev first discussed with Turkmenistan’s president Serdar Berdimuhamedow in October 2022. (Transportation cooperation between Tashkent and Ashgabat started in 2017 with the opening of the Turkmenabat-Farab railway and car bridges that will link the countries and open opportunities for long-distance trade.) Raisi pledged“The Islamic Republic of Iran is able to easily connect Uzbekistan to high seas via Turkmenistan and Afghanistan.”

The June meetings were the follow-on to the March 2023 visit by Uzbekistan’s foreign minister who met Iran’s ministers of Foreign Affairs, and Industry, Mines and Trade. Afterwards, the parties announced efforts to increase trade turnover, and foster business links and people-to-people ties. The ministerial meetings built on the September 2022 visit by Raisi to Uzbekistan that produced 17 agreements in areas such as energy, transport, and agriculture, and discussed how to double trade from the current $500 million annually, though in less than a year the trade target has ambitiously increased to $3 billion. Related: Mass Fighting Breaks Out At Giant Russian Gas Field

Iran is increasingly attractive to the landlocked Central Asian republics that are seeking new trade routes. In June 2021, Tashkent hosted a conference to highlight Central Asia-South Asia connectivity via Afghanistan and Pakistan. Two months later, the U.S. and NATO retreated from Afghanistan and the country plunged in chaos, so the republics had to consider alternatives. In February 2022, the Russia-Ukraine war forced Kazakhstan to develop a trans-Caspian route to avoid the effects of the Russian-Ukraine war, and the other republics followed suit. 

Central Asia can now consider trading through Iran’s ports of Chabahar and Bandar Abbas. (In January 2022, Iran and Uzbekistan concluded an agreement to give Uzbekistan access to Chabahar port on the Gulf of Oman.) Iran can offer a space free of the violence by the Islamic State and the Pakistani Taliban that plagues Afghanistan and Pakistan; organized and functioning government agencies; and ports adjacent to the markets of India (Chabahar) and the Persian Gulf (Bandar Abbas). Iran is also a large market of almost 90 million people. 

The U.S. has promoted the Middle Corridor to the republics as an alternative to Iran, but avoiding the “Southern Corridor” via Iran or Afghanistan-Pakistan, deprives the republics of ready access to Asia and the Persian Gulf. The republics are not burdened by Washington’s sense of grievance against Iran that has festered since 1979, especially as there would be an economic cost of joining Washington’s campaign against the Islamic republic, with no offsetting benefits other than a thank you for “doing the right thing.”

The republics want a reliable partner who can also help them deal with instability in Afghanistan. Iran shares that interest and has no territorial aspirations in Central Asia, though it will seek political support from the republics in fora such as the United Nations, as it implements its “Look East” policy and seeks a larger regional role through groups like the Shanghai Cooperation Organization (SCO). (All the republics, less Turkmenistan, are full members of SCO; Turkmenistan is not a member but attends SCO meetings.) The people of Tajikistan are Persian-speaking and many historic cities in the region, such as Samarkand and Bukhara in Uzbekistan, and Eastern Uzbekistan, are home to Tajik people who are indigenous to the region, so Iran will use cultural links, old and new, as tools of influence.

Though the potential for more Iran-Uzbekistan trade is a big deal for the politicians, many  Iranians and Uzbeks were watching the final match of the 2023 CAFA Nations Cup finals in Tashkent which saw a 1-0 victory by Iran. Football’s governing body, FIFA, noted the contest was an opportunity “to strengthen regional ties and foster camaraderie among the participating nations,” showing that the guys in shorts can sometimes do as much as the guys in suits.

Uzbekistan and its Central Asian neighbors are also deepening their ties with Beijing, and the dwindling relevance of Washington and Brussels to Central Asia was on display when Chinese leader Xi Jinping hosted the leaders of the five republics at the China-Central Asia Summit in Xi’an, the terminus of the ancient Silk Road. (In the future, the meetings will alternate between China and a Central Asian capital; the next meeting will be in Astana, Kazakhstan in 2025.)

After the group pictures the leaders for to work and, according to Silk Road Briefing, “…approved US$3.72 billion in regional grants, signed 54 major multilateral agreements, created 19 new regional platforms and signed a further 9 multilateral cooperation documents.”  

Among the agreed points were to coordinate China’s Belt and Road Initiative with the republics’ national development strategies, expand agricultural exports to China, award scholarships to Central Asian students to study in China, and develop cooperation in irrigation and green energy. 

Uzbekistan and China adopted a “comprehensive strategic partnership” and inked 41 official documents, and Chinese and Uzbek businesses concluded $25 billion in deals. The official agreements addressed joint efforts in higher education, alternative energy, agricultural innovation, hydroelectric power, and logistics. 

A “comprehensive strategic partnership” is just below a “comprehensive strategic co-operative partnership,” which is generally regarded as the highest level of bilateral relations for China. Uzbekistan now joins Kazakhstan and Turkmenistan as the third Central Asian republic at this level of engagement with China, giving China privileged access to the two biggest economies in Central Asia, and the country with 10% of the world’s natural gas reserves, and that sit astride Eurasia’s East-West transport links. 

The country  now known as Uzbekistan has long dealt with Moscow, first as part of the Russian Empire (as the khanates of Tashkent, Kokand, Samarqand, Bukhara, and Kiva), then as a constituent republic of the Union of Soviet Socialist Republics (the Uzbek Soviet Socialist Republic.) The republic gained independence in 1991 but still shares many links with the Russian Federation. Though Moscow’s influence in the region has waned as China’s economy has grown, the leaders in Tashkent have tried to balance doing business with Russia with taking an independent stand on many issues, e.g., none of the republics has recognized the Ukrainian regions of Luhansk and Donetsk as independent. 

In some years Russia is Uzbekistan’s biggest trade partner and when it isn’t China takes the top position. 

Though Uzbekistan and Kazakhstan donated medical supplies to Ukraine, practical business took precedence when Uzbekistan and Russia’s Gazprom agreed to the import of 2.8 billion cubic meters of natural gas per year. The deal was prompted by gas shortages in late 2022 which led to widespread discontent and forced the country to suspend gas exports. 

What can U.S. do to compete in Central Asia?

To start, it can pull the republics out of the Jackson-Vanik Amendment that limits trade with the U.S. as retaliation for Cold War-era limits on Jewish emigration.  The Uzbeks have requested it, and Congressmen have responded by introducing bills to give Uzbekistan, Kazakhstan, and Tajikistan “permanent normal trade relations” status, and to “extend nondiscriminatory treatment” to Uzbekistan on the date Uzbekistan enters the World Trade Organization. 

For Washington, the moment may have passed when it could have used the prospect of investment and trade as leverage, but Tashkent moved first and supported the U.S. retaliation against the Taliban after 9-11, gave U.S. forces use of Karshi-Khanabad Air Base, and facilitated the Northern Distribution Network to resupply NATO forces in Afghanistan after Pakistan closed the southern supply routes due to U.S. bombing of Pakistani troops.

Then Uzbekistan continued sprinting downfield and secured deals with Iran and China. U.S. pressure may have helped reforms in the cotton sector, but that pales next to airports, power plants, 5G mobile telephony, and student exchanges. Jackson-Vanik is a wasting asset for the U.S. and while Uzbekistan will benefit economically if it is removed from the amendment, Washington may not be able to move the needle on its substantive concerns in Eurasia.

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In June 2022, the G7 announced the Partnership for Global Infrastructure and Investment (PGII) which will mobilize $600 billion to counter China’s Belt and Road Initiative. PGII is the rebranded Build Back Better World," which was announced in 2021 but stalled. How PGII will complement the European Union’s EUR 300 billion Global Gateway is unknown, but PGII will focus on clean energy, health systems, gender equality and information and communications technology, reinforcing the old saw, “China does civil engineering and the West does social engineering.”

The republics know all about social engineering campaigns as they survived the 1918 Revolution, the Russian civil war, collectivization, the Kazakh famines of 1919-1922 and 1930-1933, which killed half of all Kazakhs; the Great Terror; the Great Patriotic War (though Uzbekistan prefers “World War II”); and the stagnation of the Brezhnev era. Local culture has proved resilient despite all that, and they now prefer assistance be limited to the material realm only, thank you.

The U.S. may have an opportunity as Uzbekistan seeks to modernize its financial sector, capital markets, and banking, but Tashkent and its neighbors are interested in “building, not blocking,” and will be suspicious if Washington’s assistance is an attempt to stop Eurasian economic integration. 

The republics understand that they need collaborative action and diversified political and economic portfolios to thrive, that is, productive relationships with China, Russia, Iran, Turkey, and the U.S. and Europe, and that competition among the great powers means more choices for them. They are uninterested in the zero-sum policies in favor in faraway Washington and Brussels and cannot afford the exclusionary practices that are the indulgences of rich countries. They are “neighbors forever” with Tehran, Kabul, Beijing, and Moscow.

While the U.S. was distracted by the wars in Iraq and Afghanistan, the annexation of Crimea following the 2014 coup in Kiev, and the NATO-Russia war in Ukraine, its internal culture wars, and endless bickering over the national budget, the leaders of Central Asia have stayed focused on economic growth. They have no choice: Uzbekistan’s population will grow to 50 million by 2040, and 60% of Uzbeks are under 30 years old. (The region is expected to grow to 95 million by 2050.) The youth don’t remember life in the  Soviet Union and have the same expectations as their peers in the rest of Asia: a stable, safe society, and economic growth and opportunity.

By James Durso

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