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BISHKEK (TCA) — Although Uzbekistan has taken steps to improve bilateral relations with its Central Asia neighbors, some unresolved issues still remain in the region — from the use of water resources to cooperation within regional economic integration and security blocs, such as the Eurasian Economic Union and Collective Security Treaty Organization. We are republishing this article by George Voloshin on the issue, originally published by The Jamestown Foundation’s Eurasia Daily Monitor:

The president of Kazakhstan, Nursultan Nazarbayev, paid an official visit to Uzbekistan in mid-September, highlighting improving relations between Central Asia’s two largest states. There, he met with his Uzbekistani counterpart, Shavkat Mirziyaev, for the sixth time since the latter took office last December, following the death two months earlier of the incumbent (since 1990) Islam Karimov. Mirziyaev had previously chosen Kazakhstan as a second stop on his first foreign tour as head of state, visiting the country in late March, right after Turkmenistan but before going to either Russia or China (Mir24.tv, Tengrinews.kz, September 16; Sputniknews.kz, March 23).

Since the early 1990s, Kazakhstan and Uzbekistan have been locked in a bitter, yet unstated rivalry for regional leadership. Despite its population of nearly 33 million people, in contrast with Kazakhstan’s 18 million, Uzbekistan had largely failed under President Karimov to open up the economy to foreign investors. The 2005 uprising in Andijan and the crackdown that followed drove the country into years of isolation. The European Union opened its permanent mission to Tashkent only in 2011, while the US embassy has existed since 1992 (Uz.usembassy.gov, March 22, 2017; Fergananews.com, January 24, 2012; Lenta.ru, May 16, 2005).

Much of Nazarbayev’s time in Uzbekistan was dedicated to the discussion of bilateral economic cooperation, given both sides’ publicly acknowledged intention to strengthen trade and investment ties. Last year’s trade turnover amounted to $2 billion, but the leaders said it could increase to at least $5 billion by 2020, if all unexploited potential could be put to good use. Kazakhstan is now home to 130 Uzbekistani companies; meanwhile, 130 Kazakhstani firms are active in the neighboring market (Abctv.kz, September 16; Podrobno.uz, June 9; Sputniknews-uz.com, February 23).

Mirziyaev’s efforts to liberalize the economy and attract foreign investors seem to have already started paying off. Kazakhstani-Uzbekistani bilateral trade grew 35 percent year-on-year during the first seven months of 2017, largely due to the opening of additional border crossings at Mirziyaev’s direct orders. The two governments have successfully launched a new car assembly line this year and are currently jointly renovating a major highway. The national air carriers have further announced plans to open extra flights between provincial capitals (Repost.uz, Uza.uz, September 17; Kapital.kz, Kazpravda.kz, September 16).

Bilateral cooperation is also set to expand dramatically in the strategically important energy field. Following the discovery of several oil deposits in the 1990s, Uzbekistan almost stopped importing crude oil. However, those oil fields ultimately dried up. And now, with its refineries (capable of processing up to 11 million metric tons a year) running at only half capacity, the country regularly experiences shortages of gasoline and diesel. Earlier this year, the Mirziyaev administration negotiated a supply agreement with Russia’s Transneft to buy up to 500,000 tons of Russian oil. Total imports should rise to 1 million tons in 2018–2020 and gradually reach 5 million tons, beginning in 2021. Kazakhstan is keen to supply Uzbekistan with its own oil, but that would require the construction of a 100-kilometer-long pipeline, linking the Omsk–Pavlodar–Shymkent main pipe to Uzbekistani territory (Anhor.uz, September 18; Interfax, September 7; Zonakz.net, July 28).

The expected launch of up to three large-scale investment projects in transport and gas processing should contribute to solidifying the bilateral relationship. This stands in stark contrast to decades of mutual distrust during the late Karimov’s controversial presidency. Yet, Uzbekistan is unlikely to change its mind with regard to the broader issue of regional integration, especially if this integration is carried out under Russia’s leadership within the scope of the Eurasian Economic Union (EEU) or, as far as common defense is concerned, the Collective Security Treaty Organization (CSTO). Tashkent exited the CSTO in 2012 and has never agreed to join the Kazakhstan-Russia-Belarus Customs Union, let alone its successor, the EEU. Mirziyaev’s successful visits to Turkmenistan and Kazakhstan indicate his approach to regional politics, which will consist of intensifying bilateral cooperation on mutually advantageous terms (Regnum, July 5; Rg.ru, June 29, 2012).

While improved relations between Kazakhstan and Uzbekistan can only be seen as a positive development for the whole of Central Asia, their renewed friendship could also result in unintended costs. Before Islam Karimov and Nursultan Nazarbayev launched their own strategic partnership in 2013, surprising many with their proclaimed willingness to turn the page and start anew, there had been much talk since 2012 about the need to ensure better water management in the region. The two presidents had spoken at length about the “irresponsible” actions of upstream states—that is, Tajikistan and Kyrgyzstan—whose extensive hydropower generation plans were said to pose a danger to regional water security. Both Kazakhstan and Uzbekistan are downstream countries and depend on their neighbors for water supply from the Amu Daria and Syr Daria rivers, which flow into the Aral Sea (Catoday.org, June 14, 2013; Avesta.tj, September 27, 2012; Azattyq.org, September 6, 2012).

Even as Uzbekistani-Kazakhstani ties strengthen, the emergence of new rifts among Central Asian states remains quite possible. In mid-September 2017, Tajikistan successfully placed $500 million worth of bonds with institutional investors in the United Kingdom and the United States. It plans to use the proceeds to pursue construction of the much-criticized Rogun Dam, in the works since the 1970s, which Uzbekistan and Kazakhstan claim could undermine the regional water ecosystem (Today.tj, September 23).

Meanwhile, unsettled tariff issues between Kazakhstan and Kyrgyzstan, both of whom are now members of the EEU, put pressure on their bilateral relationship. Following Nazarbayev’s meeting with an independent candidate in Kyrgyzstan’s upcoming presidential election, Bishkek issued a note of protest, on September 20, and accused its neighbor of seeking to influence the vote (see EDM, September 27). Even if these tensions drive Kazakhstan and Uzbekistan closer together, overall regional stability would still suffer: in a region historically dogged by the spillover effects of Afghan insecurity and intra-regional territorial disputes, a coordinated approach among all neighbors is what is most needed in Central Asia (Kloop.kg, September 20).

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