Publication: Eurasia Daily Monitor Volume: 5 Issue: 79

On April 22 Uzbek President Islam Karimov visited Astana to meet with Kazakh President Nursultan Nazarbayev. Both leaders agreed to boost bilateral economic cooperation by creating a common trade area at the borders. Karimov’s harsh criticism of Nazarbayev’s Central Asia Union (CAU), however, raised eyebrows among many in Kazakh political circles.

In particular, Karimov found the Central Asian Union to be an inadequate initiative that failed to consider differences in economic development among Central Asian states. He also reminded Nazarbayev that the Eurasian Economic Community (EurAsEC) already represents a regional institution of this sort. “I want to state right away that this initiative is unacceptable for Uzbekistan,” Karimov said.

Nazarbayev officially announced his Central Asia Union initiative a year ago at a bilateral meeting with Kyrgyz President Kurmanbek Bakiyev. The initiative promotes political and economic integration in the region, but to date only Kazakh and Kyrgyz officials have conducted a series of meetings within its framework. The fact that Nazarbayev introduced the initiative and Kyrgyzstan was eager to support it is yet another sign of Kazakhstan’s emergence as a regional leader. Kazakh and Russian mass media regarded Karimov’s bitter words about the Central Asia Union as an expression of informal competition between the two presidents over leadership status in the region. Karimov is unlikely to stop Bakiyev-Nazarbayev cooperation, but he has made it clear that Uzbekistan will remain outside of the process.

Few days prior to Karimov’s visit, Bakiyev also traveled to Astana. While Karimov’s presence was sensational news, the Nazarbayev-Bakiyev meeting was rather quiet, following the usual tradition of exchanging promises to continue cooperation. Bakiyev once again validated his readiness to contribute to the strengthening of Central Asia Union and bilateral links.

In Kazakhstan’s political circles Kyrgyzstan is considered as an increasingly important regional partner for its water resources. As one Kazakh political analyst said to Jamestown, “Water will soon be more expensive than oil and gas,” therefore Kazakhstan is interested in securing stable cooperation in water resources with Kyrgyzstan.

Meanwhile in Kyrgyzstan, the government’s recent decision to permit ownership of four resorts on Issyk-Kul Lake to Kazakhstan produced widespread public discontent. Leaders of the opposition party Social Democratic Party of Kyrgyzstan announced that over 250 people from Issyk-Kul region would march in protest to Bishkek. Arguments against Kazakh ownership of these resorts are often tainted with ethnic and nationalist rhetoric.

Uzbekistan, the region’s largest consumer of water, will be an important factor in Kazakhstan’s pursuit of effective water management in the coming years, but Nazarbayev’s Central Asia Union will not be able to provide a framework for working out trilateral cooperation among Kazakhstan, Kyrgyzstan and Uzbekistan.

Uzbekistan represents a lucrative market for Kazakh banks and investors, but they are rarely allowed to enter the Uzbek market. Despite the fact that trade volume between the two countries has doubled in the past two years to $1.4 billion and the number of Kazakh enterprises in Uzbekistan has risen from 73 to more than 400, Kazakh business circles complain about numerous obstacles in both countries’ economic cooperation. “Unlike Russia, Kyrgyzstan, and Georgia, where Kazakhstan’s economic presence has been expanding, the Uzbek government is closed to its neighbor,” says a Kazakh entrepreneur who owns business in Bishkek.

This is not the first time Karimov has rejected Nazarbayev’s initiatives. Some Kazakh experts are skeptical about the possibility of increasing trade relations. In the past decade, both the Central Asia Cooperation Organization and EurAsEC proved to be more organizations on paper than actual frameworks for integration. Nevertheless, trade volume between Kazakhstan and Uzbekistan will probably increase following Karimov’s visit as it did after their last official meeting in Astana in September 2006. The increase will not be due to institutional frameworks but rather to inter-personal relations between the two leaders.

Karimov also visited some of Astana’s new landmarks especially, the state of the art medical institutions and the mammoth entertainment center. At Astana’s neurosurgical center, Nazarbayev commented, “I personally think that this will be one of the best centers in Kazakhstan and maybe in the world.”

In May Kazakhstan is expected to host yet another high official from a neighboring country–Dmitry Medvedev who will come after his inauguration as the new President of Russia (www.akipress.kg, www.liter.kz, www.ca-news.org, Kazinform, April, 15-22).