First Russia, Then China, Now (Again) the United States

The five countries of this region — Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan — comprise a quarter of the ex-Soviet population and have twice the economic output of Ukraine. Central Asia has been and still is a prize. While Russia has not annexed territory in the region, economic multilateralism such as the Eurasian Economic Union (EEU), established in 2014, mask Russia’s geopolitical consolidation project.

China is competing hard too. Last year Chinese purchases accounted for 50bn cubic meters of natural gas from Central Asia, about 60% of the region’s total exports, and Belt and Road Initiative (BRI) investment in the region topped $136bn across 261 projects. While China lacks Russia’s historical and cultural legacy in Central Asia, it makes up for it in ambition. China’s willingness to operate according to different standards than many western firms also gives it an edge working with the region’s strong and centralized leadership.

Rather than lose their sovereignty to either of these powerful neighbors, Central Asian nations call on China to balance Russia, and the U.S. and Europe to balance both.

As China and Russia ratcheted up their engagement of the region, the U.S. presence waned. In 2014 the United States closed its air force base in Kyrgyzstan, the last of several in the region used for operations in Afghanistan. Then after the 2016 election, the Trump administration’s insular focus accelerated American retrenchment.

These days, as temperatures rise between the United States and Russia and China, the region seems to be getting some practical attention from policy-makers in Washington, DC. In December, the taxpayer-funded U.S. International Development Finance Corporation (DFC) launched an alternative to state-directed investments by authoritarian regimes. In February, the Department of State’s 2020 Strategy for Central Asia highlighted a renewed focus on regional stability through business and trade.

Through regional economic cooperation, the United States can demonstrate the benefits of an energetic and uncorrupted American alternative to Putin’s status quo and China’s debt diplomacy traps. The contrast will be instructive for all concerned.

This is not a charity project. Central Asia’s geostrategic benefits to U.S. interests are wide-ranging. Turkmenistan holds the fourth largest natural gas reserves in the world, investment led by Chevron and ExxonMobil in Kazakhstan’s Tengiz oil field nears $40 billion, and Uzbekistan and Kyrgyzstan provided America airbases.

Increasing American influence in the region requires creativity and nimbleness. Former Defense Secretary Robert Gates noted recently in Foreign Affairs that the United States “needs to get a lot smarter about using economic tools to win over other countries” — exactly what the DFC is designed to do. Efforts involving Russian and Chinese partners such as joint investment funds and free-trade zones are vulnerable to their sabotage. To be successful, the United States needs independent, local allies.

Uzbekistan is a good candidate. It is Central Asia’s most populous country with a large and diversifying economy, and since the election of President Shavkat Mirziyoyev in late 2016, has also become less repressive. The potential democratic transformation of a large Muslim country has geostrategic implications. Uzbekistan has not joined the EEU, retaining flexibility in pursuing an independent economic relationship with American interests. The DFC’s Chief Executive, Adam Boehler, made a timely first visit to the Uzbek capital, Tashkent, in June.

Kazakhstan is also important. It claims Russia’s longest border, the world’s ninth-largest landmass, and vast oil and gas deposits. Having applied economic reforms consistently since its independence in 1991, Kazakhstan’s state apparatus is easier for western businesses to navigate than Uzbekistan’s nascent one.

Practical opportunities abound in both countries. For example, Uzbekistan recently embarked on reforms in the housing and construction sector. By 2021, according to the president, all government-funded construction projects must adhere to international building standards. Last year Kazakhstan’s First President Nursultan Nazarbayev allocated almost $4bn in part to develop housing and infrastructure and establish a government company to support citizens’ repayments of mortgage loans.

The United States could demonstrate the superiority of its design and construction capabilities over Russian and Chinese rivals. Joint U.S.–Uzbek and U.S.–Kazakh manufacturing initiatives, especially for sophisticated building components, could turn a profit while amplifying those countries’ export capabilities.

Central Asia’s demographics are promising too. The median age is only 28, 12 years younger than Russia and 10 years younger than China. An improved U.S. image among the youthful population will resonate with their Russian and Chinese counterparts.

The decision to postpone this month’s 2020 Shanghai Cooperation Organization (SCO) summit over coronavirus concerns provides an unexpected opening for the United States. The SCO, a Eurasian political alliance established in 2001, counts China, Russia, and four of the five Central Asian countries among its members. The DFC should use this break in SCO continuity symbolically — offer quick and attractive alternatives to Russian and Chinese investment in Central Asia in the vacuum of the usual annual media blitz. The region is starved for fresh options, and amidst the confusion wrought by covid-19, America can smartly increase its strategic presence.

Michael Sellman is co-Chief Executive of the real estate firm CGC.