India’s “Connect Central Asia Policy” rebooted
With one eye on energy and natural resource security and another on checking China’s expansionism in Central Asia, deepening ties with Tajikistan, Kyrgyzstan, Turkmenistan, Uzbekistan and Kazakhstan will gain importance in the years ahead.
India’s cultural and business engagement with the Central Asia dates back thousands of years, predating even the vibrant Silk Route trade that eventually underpinned economic vibrancy in the region centuries ago. Reimagining it in the modern context of India’s “Connect Central Asia Policy” when land transport routes have become challenging, requires a careful alignment of international interests in the region along with both infrastructure and local capacity building. Rich in oil, gas, metals and minerals, the former Soviet republics offer access to commodities crucial for supporting the “Aatmanirbhar” manufacturing programme while simultaneously enabling India to check the development of China’s Belt and Road Initiative (BRI). Ably supporting this will be the India-operated Chabahar Port and the rail line that connects it up to Zahedan in northern Iran, opening a gateway for trade with Central Asia.
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Tajikistan, India’s “almost” neighbour
Officially, India northernmost outpost which borders Afghanistan stands a mere 30 kilometres from Tajikistan, however with the occupation of the Gilgit region of the erstwhile state of Jammu and Kashmir by Pakistan, the second best option to route traffic to India is via the upcoming Chabahar-Zahedan rail line which would further link to Tajikistan via Afghanistan. The bilateral relationship runs deep, with India having supported the Tajik-led Northern Alliance in Afghanistan and even going so far as to renovate a military airbase in the country. Indian militarization of the base did not ensue, much to the disappointment of New Delhi. However, with the US withdrawing from Afghanistan and with China creeping into Afghanistan’s Wakhan Corridor – the narrow strip of land separating Pakistan Occupied Jammu and Kashmir from Tajikistan – the stakes could not be higher as are the chances for revival of the Indian strategic, commercial and military interests in the region.
It comes as no surprise that nearly half the landmass of a country that hosts vast deposits of gold, silver, nickel lead and zinc has recently been claimed by China as a part of Xinjiang. This move, however, has irked Moscow for whom this region falls within Russian sphere of influence. Falling in the trap of predatory debt-diplomacy, Tajikistan has already ceded 1,158 square kilometres to China, who is acutely aware that control over the Pamir mountains means having a stranglehold over the flow of natural resources. Recognising this, Indian Defence Minister Rajnath Singh and External Affairs Minister Dr S. Jaishankar held what they termed “productive” and “fruitful” meetings with his Central Asian counterparts on the sidelines of the Shanghai Cooperation Organization (SCO) meeting in Moscow, to further the bilateral Strategic Partnership and build defence ties.
External Affairs Minister, Dr. S Jaishankar participated in the meeting of the Foreign Ministers of CICA where Kazakhstan takes over the chair of CICA from Tajikistan@MEAIndia @DrSJaishankar @KazEmbassyIndia @indembastana @IndEmbDushanbehttps://t.co/3GzA0mmcos
— indiaties (@indiaties) September 25, 2020
Turkmenistan, the CAR’s gas hub
As India’s energy mix mirrors the world’s shift towards the use of low-carbon intensive fossil fuels, Turkmenistan, which hosts the world’s fourth largest gas reserves, will play an important role. Sitting on largely untapped resources, Ashgabat has been keen on developing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, but with the Afghan security situation still uncertain and Pakistan remaining a state sponsor of terror, it its unlikely that the project will see the light of day. On the other hand, they have been able to secure sales to China through a new pipeline that bypasses Afghanistan, into Xinjiang/East Turkestan. For India, the only option is to utilize the north-south axis, leverage the short existing gas pipelines that move gas into northern Iran, and develop a separate network that will pipe it to a new liquefaction facility – should Chabahar choose to build one – or undersea system to India. Ambitious as it may seem with high upfront costs, these options remain lucrative with the marginal cost of gas production in Turkmenistan sitting below that of other major producers. Entrenching Indian interests through midstream “pipeline diplomacy” and upstream investments has the potential to both ensure energy security while also denying China hegemonic strategic depth in CAR and Iran.
Uzbekistan and Kazakhstan, fuelling India’s nuclear fleet
India signed deals with Uzbekistan in 2019 for supplying 1,100 tonnes of uranium ore over the four year between 2022-2026, a period that would see a nearly 80per cent increase in domestic nuclear power capacity. With a new free economic zone in Navoi, it is expected that investment in the region would help scale up local mining capabilities which in turn could help India play a central role in even third-party uranium sales. A similar, but more extensive deal was signed with Kazakhstan, a nation that produces 43per cent of the world’s uranium. It currently supplies 80per cent of India’s import needs and building on a 5,000-tonne contract struck in 2015, a renewed deal with over 7,500 tonnes was discussed at the end of last year. Furthermore, holding equity in upstream mining projects would keep interests aligned and give India an attractive entry point into the impending uranium super cycle. On the oil and gas front, Kazakhstan has attracted investment from India over the last four years. Trade has been growing at 20-30 per cent a year to $1.2 billion, much of it led by oil and gas investments.
Kyrgyzstan, powering Indian interests in the region
With over 90per cent of power generation coming from hydro, and large untapped capacity in the region, India would be well placed to develop power grids across the CAR. It both builds revenues for the landlocked nation and importantly, it would help get Afghanistan on its feet again. Large natural resource development projects are energy intensive and with clean sources in the Pamir mountains, all-round development would be less carbon intensive. India has developed expertise in small scale hydro projects both domestically and internationally and transferring this expertise to both the Kyrgyz and Tajik cases will help provide end-to-end power supply and energy security for projects.
Surya Kanegaonkar is a commodities professional with ten years of experience in research and trading for a hedge fund, utility and miner.