MAC: Mines and Communities

The Stans debate Russia's energy politics

Published by MAC on 2009-03-16

Disputes between central Asian states over the trading of oil, gas and coal for water (in the shape of hydropower) show few signs of being resolved.

The following is a "think piece" from a region where few people can even pronounce the names of the states, let alone grasp the politics.

Moscow's New Energy Policy Worries Central Asian Nations

By Asyl Osmonalieva

Reporting Central Asia, produced by the Institute for War and Peace Reporting

4th February 2009

BISHKEK, Kyrgyzstan- Central Asian leaders gathered for a summit of former Soviet states last week amid signs that Russia was beginning to show a more active interest in their region's water and energy disputes. However, regional analysts were divided over whether Moscow's engagement would help bring the different states closer together, or deepen the existing divisions between them.

When the heads of member states of two post-Soviet blocs, the Collective Security Treaty Organisation and the Eurasian Economic Community, EurAsEC, met in Moscow on February 4, the headline news was Kyrgyz president Kurmanbek Bakiev's surprise announcement that the United States military airbase in his country was to close.

There was, however, another issue occupying the minds of many summit participants - Russia's apparent change of stance on how Central Asian water and energy disputes should be managed. For the leaders of Kyrgyzstan and Tajikistan, one of the key questions being asked behind close doors is what exactly Russian president Dmitry Medvedev meant by remarks he made during a visit to Uzbekistan in January.

Speaking on January 23 after meeting his Uzbek counterpart Islam Karimov, Medvedev said Russian investment in projects to build hydroelectric power stations in Kyrgyzstan and Tajikistan would only go ahead if the schemes took into account the interests of other states in the region.

Such projects involving rivers that cross state borders had to be agreed to by all the countries affected, not just the direct beneficiaries, and needed to adhere to environmental and other international standards.

The Russian leader's comments represented a major departure from Moscow's previous position, which had favored hydroelectric projects in Tajikistan and Kyrgyzstan without seeming to consider objections from Uzbekistan, which fears that damming up rivers that feed the great Amu Darya and Syr Darya waterways will starve it of the irrigation on which its agricultural sector depends.

Medvedev's apparent about-face came as a shock to Kyrgyz and Tajik leaders. On January 26, the Tajik foreign ministry sent a diplomatic note expressing astonishment at what Medvedev had said regarding hydroelectric plant investment.

Then, on February 2, Tajik president Imomali Rahmon sent an even stronger message by suddenly announcing he would not be attending either summit in Moscow. The official reason was that Tajikistan was experiencing a severe energy crisis. This was a major statement of discontent from a government that has maintained strong ties with the Russians over many years.

However, the following day that position was reversed and Rahmon went to the Moscow meetings after all.

Nevertheless, political analysts say Rahmon's initial decision not to attend an important regional meeting showed just how angry his administration was with Moscow for apparently cosying up to the Uzbeks at the expense of his country.

The Tajiks feel Medvedev's remarks violate at least the spirit of agreements signed by Moscow.

In 2004, then president Vladimir Putin announced a major deal under which Russian firms would complete work on the Rogun and Sangtuda-1 power stations. The Rogun deal fell apart because of differences of opinion over the eventual size of the dam, and since then the Tajiks have proceeded with construction work by themselves. Last August, however, Medvedev signaled that Russia was still interested in being part of this major project.
In neighboring Kyrgyzstan, the Russians have expressed an interest in extending a US$1.7 billion loan to build the Kambarata scheme, a series of linked power stations on the Naryn River, a tributary of the Syr Darya.

Uzbekistan voiced its discontent with the way things were going by announcing its withdrawal from EurAsEC last autumn. The decision came as the Central Asian states appeared to be closer than ever to a comprehensive deal on water and energy. The Uzbeks refused to sign up to it, as they have always preferred to discuss water supplies from Kyrgyzstan and Tajikistan and sales of their own natural gas to those countries on a one-to-one basis rather than within a regional framework.

According to Ernest Karybekov, who heads the Kyrgyzstan-based Institute for Research into Water Use and Hydropower Resources in Central Asia, believes that Uzbekistan's concerns about the environmental impact of the new dams are unfounded, and that it is high time all the states involved "stop flexing their muscles... and sit down at the negotiating table."

However, Mars Sariev, another regional expert based in Kyrgyzstan, argues that the Uzbeks have reason for concern about the consequences of new hydroelectric projects.

"Launching a hydroelectric power station involves filling up the reservoir over several years, and over that time the Uzbeks will experience a colossal shortfall in water, which will be catastrophic for their agriculture," he said.

The water dispute dates from the collapse of the Soviet Union in 1991, when new countries emerged with separate, sometimes conflicting interests.

Prior to that, the constituent Soviet republics existed within a unitary economic system, so that Tajikistan's and Kyrgyzstan's power stations were designed to supply the entire Central Asian electricity grid and also regulate water flows to the downstream republics. In turn, the Tajiks and Kyrgyz would be supplied with oil, gas and coal from Uzbekistan, Kazakstan and Russia.

In the post-Soviet economic order, the Kazaks and Uzbeks began selling their oil and gas on a commercial basis. Tashkent is now charging the Tajiks and Kyrgyz near world market prices for gas, but it regards water as a free natural commodity and complains when its mountainous neighboring states withhold it in the crucial growing season in order to fill up their reservoirs and avoid running short of electricity in winter.

From the point of view of Tajikistan and Kyrgyzstan, Tashkent needs to recognize that water has a value just like fuel and that it should contribute financially or in kind to the upkeep of regulatory systems such as dams.

Coal, oil and water

The agreement signed last October by Kazakstan, Kyrgyzstan and Tajikistan on reciprocal supplies of water, oil and coal was therefore a massive breakthrough, but the abstention of Uzbekistan makes it impracticable. The Uzbeks use a high proportion of the river water originating in Tajikistan and Kyrgyzstan and are the main suppliers of gas to those countries.

If anything, the trilateral agreement made things worse in the short term as the Uzbeks walked away from EurAsEC and bumped up gas export prices.

The impasse came at a time when both Tajikistan and Kyrgyzstan were enduring a chronic shortage of domestically produced electricity, a result both of low reservoir levels caused by climatic conditions coupled with exceptionally high electricity consumption in the harsh winter of 2007-08.

Remote parts of those countries are currently suffering power cuts of 10 or more hours a day, and they have had to slash gas imports from Uzbekistan because of the price hike.
At this point, Russia has stepped into the arena as a potential arbitrator and dealmaker between the Uzbeks on one side and the Kyrgyz and Tajiks on the other, and above all with its own interests to advance.

For the moment, access to greater supplies of Central Asian gas appears to be driving Kremlin policy.

Tagay Rahmonov of Tajikistan's Centre for Strategic Studies believes Medvedev conceded a point to the Uzbeks on the hydropower dispute in order to secure their cooperation on a gas pipeline project that would supplement the existing Central Asia-Centre export.

Last year, Turkmenistan agreed to a project to expand an existing pipeline and built a new one alongside it leading northwards along the eastern Caspian Sea shore via Kazakstan to Russia. Rahmonov believes the Uzbeks have signed up to an extension of this route allowing their gas to go straight to Russia.

At the same time, Moscow may not be about to sacrifice all its interests in Tajikistan and Kyrgyzstan for the sake of Uzbek gas. According to a Tashkent-based analyst, the real objective may be to figure out the best workable compromise whereby Moscow keeps everyone more or less on side.

"The geopolitical and strategic importance of an alliance with Uzbekistan could outweigh Russia's interests in the smaller countries which are poor in natural resources. But then again, the Kremlin is hardly likely to want to see Kyrgyzstan and Tajikistan peeling away and moving towards the United States and the West," he said.

If, for example, the Tajiks and Kyrgyz were able to demonstrate that their hydroelectric schemes would not disrupt the flow of water to Uzbekistan, then Moscow could still invest in them without breaking its promise to Tashkent.

As other commentators point out, there are other players jostling to get into the Central Asian electricity market. The United States wants to supply power generated in the region to Afghanistan and South Asia. The Iranians are investing in one of the Sangtuda dams in Tajikistan, and others like the European Union and China are interested in playing a greater rule.

"Whoever controls the water tap in Kyrgyzstan and Tajikistan also has geopolitical control over the whole of Central Asia," said Sariev. "So far the Russians have had the advantage, but other players like America and China will seize the moment."

{Mukammal Odinaeva in Dushanbe, Tajikistan, and Estelle Erimova, the pseudonym of a journalist in Kyrgyzstan, contributed to this report.

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