Publication: Eurasia Daily Monitor Volume: 2 Issue: 127

Kazakhstan’s President Nursultan Nazarbayev is gaining moral support for his initiative to form a union of Central Asian states, as declared in his annual address to the nation in February. Significantly, Nazarbayev recently noted that the Central Asian states strive for economic, as well as geopolitical, integration (Ekspress-K, June 20).

On June 10 the director of the Kazakhstan Electricity Grid Operating Company (KEGOC), Kanat Bozumbayev, announced the creation of an Electricity and Energy Coordinating Council (EECC) by Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan to work out common energy and water resources management policies across Central Asia. At its first session in Astana, the EECC founders (Kyrgyzstan’s National Electricity Grid, Tajikistan’s Barki Tochik Joint Stock Company, Kazakhstan’s KEGOC, and the and Uzbek national company Uzbekenergo) adopted a charter and, as a first practical step towards the implementation of concerted policy, signed an agreement on the development and rational use of energy and water resources in Central Asia.

KEGOC had proposed setting up a similar interstate coordinating body as far back as 2002. But the current situation in Uzbekistan provides an opportune moment to reach unanimity. Tashkent, finding itself stranded without American financial support to prop up its rickety economy after the withdrawal of U.S. air bases, is forced to show more flexibility. Kyrgyzstan needs Kazakhstan’s assistance to construct the Kambarata hydroelectric power station and to develop the water and energy resources of the Naryn and Syrdariya Rivers. The fact that Turkmenistan did not join the Central Asian quartet will have little significant impact on the integration process at the moment. More importantly, the EECC has been de facto promised substantial loans from the European Bank for Reconstruction and Development, which has poured more than $1 billion into Kazakhstan’s economy since 1993.

Leading the way toward Central Asian integration, Kazakhstan is not guided solely by its long-harbored ambitions to best Uzbekistan in its rivalry for leadership in the region. In more pragmatic terms, Nazarbayev knows he should minimize Kazakhstan’s dependence on expensive Russian electricity imports for the northern and western regions of the country.

Another reason for Kazakhstan’s accelerated integration drive is the unpredictability of Chinese policy regarding the shared Irtysh (Yertis) River. In October 2004 the Chinese Ambassador to Kazakhstan, Chou Xiao Pei, assured Astana that Kazakhstan has no reason to be worried about the dams constructed on the Chinese side of the river, since China was using only 20% of the water resources of the Irtysh. At the same time, however, Chinese authorities unveiled their plans to divert 40% of the Irtysh for irrigation purposes in coming years. The latest round of bilateral talks in Ust-Kamenogorsk (East Kazakhstan) on the Irtysh and the Ili Rivers, which begin in China and feed the Zaisan and Balkhash Lakes in Kazakhstan, did not eliminate the problem of water depletion in the Kazakh part of the rivers, and the session merely resulted in signing a protocol on information exchange.

Meanwhile, the number of farmers from eastern China working in border areas is growing. The excessive population growth on Chinese-Kazakh border adds to the problems of depletion and pollution of water basins (Kazakhstan TV, May 26). Government sources indicate, however, that Kazakhstan should first reach comprehensive agreements with Russia on the use of Irtysh River before concluding final water management accords with China. Russia is likely to increase the volume of its goods and timber shipped from Siberia to China via the Irtysh sector of Kazakhstan, but no agreement has been signed (Kazakhstanskaya pravda, June 21).

Kazakhstan’s agricultural researchers have expressed a great deal of concern that 66% of the country’s 180 million hectares of agricultural land have slowly been turning into deserts over the past several decades. They fear that in the next ten years the water volume of the Amudariya and Syrdariya Rivers and Aral Sea basin shared by Uzbekistan and Kazakhstan will decrease up to 40%. At the same time, there is no solution for the impending humanitarian and environmental crisis in sight.

While rice and cotton growers in Uzbekistan and Kazakhstan blame each other for overuse of water, third countries are trying to derive economic benefits from the situation. Kazakh government officials are worried over the recently disclosed plans of the Uzbek oil and gas company Uzbekneftegaz to prospect the Aral seabed for oil with the technical assistance from China National Machinery and Equipment Corporation (CNMEC) and an $8 million loan from the Chinese Eximbank (Aikyn, February 11). Paradoxically, southern parts of oil- and gas-rich Kazakhstan are still heavily dependent on expensive Uzbek gas supplies. Nevertheless, Kazakhstan Minister of Energy and Natural Resources Vladimir Shkolnik has boasted that the country has proven gas deposits of 3 trillion cubic meters.

Joint management of energy and water resources would bring the Central Asian states closer to economic integration to resist expansion from Russia and China. But to reach that objective, these countries should clearly define their common policy course and, above all, overcome their contradictory policies. In this sense, the Central Asian integration process is inching forward along very thin ice.