Belt and Road Initiative and its impact on Central Asia

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Shah Fahad

Once bitter rivals turned economic and military partners, the Sino-Russia relationship has been through many phases. There was a time when the fear of a nuclear war between Moscow and Beijing looked inevitable. There were border disputes between the two countries. In the early 1950s, both nations saw a dream of communism but by the late ’60s, Sino-Russian relations were troubled. With the fall of the (erstwhile) Soviet Union, the then Russian President Boris Yeltsin visited China later in 1992 and relations began to normalize. Since then Sino-Russian relations have achieved many milestones and Belt and Road Initiative will be the most important one.

Russia has always played a dominant role in Central Asia but its geopolitical outlook is continuously evolving with time. The primary objective of Moscow’s foreign policy is to ensure little or no western influence in Central Asia. Since the fall of the Soviet Union, Moscow has invested $20 billion in Central Asian Republics, around $37 billion worth of remittance flow from Russia to Central Asians states and 150,000 students are studying in Russia, most of them on scholarships. Moscow has granted $6 billion in bilateral and multilateral aid coupled with debt write-off worth $488 million to Kyrgyzstan and $865 million to Uzbekistan. With these efforts, the Putin Administration has deep ties with Central Asian countries, hence successfully keeping the western influence at bay.

Sino-Russian relations make the capitalist powers very uncomfortable. While the relations between the Kremlin and the White House got tense, Mr. Trump started a trade war with China. These diplomatic failures of the US created an opportunity for the Russian and Chinese counterparts to come close to each other. The warm diplomatic relations that started in 1992 transformed into cooperation and the giant powers have converted this cooperation into a sort of a friendly alliance. China’s vision of the One Belt One Road Initiative (BRI) has provided an opportunity for the two powers to establish a Duopoly in Central Asia. According to some experts Russia controls the defence and political stability, whereas China controls the economic front. That does not only keep the Western influence out but also serves the greater good for the region since countries like Mongolia and Uzbekistan still lack basic infrastructure yet they are rich with huge natural reserves.

The most common criticism on Belt and Road Initiative is that China will have a very strong hold and all the partner countries will fall victim to the debt overburden but the point this criticism doesn’t address is: how all these Central Asian countries that are willing to develop themselves are going to achieve their targets, what options do they have to find a market for their exports. Under the BRI, Uzbekistan has signed $15 billion worth of investment deals with China for the development of the extraction of their resources. Every month 3000 tonnes of cotton gets exported to China from Uzbekistan. Because of the BRI, international brands have started coming to the country since their cotton industry has a huge potential. In 2017 the administration announced a 5-year plan to transform its economy that is brimming with natural resources like uranium, gas and oil. Uzbekistan is a double landlocked country, which means that to reach the port you need to cross the borders of two countries. The BRI will give Uzbekistan access to reach other markets and attract more tourism which has already witnessed a boom in the past few years. This led to a phenomenal rise in the country’s economic activity, contributing not only towards the development of the State but ensuring a stable income for the household as well.

Mongolia shares borders with the two powers, Russia and China but has been cut off from the world because the country lacks basic infrastructure. Tavan Tolgoi has the world’s largest coal reserves in the Gobi desert, estimated to be around 6.4 billion tonnes. This is the biggest earning source for Mongolia but the country is landlocked. Mongolia exported this coal to China for about $169.2 million in January 2019 alone but due to poor roads, transportation transit is a major issue. Under the BRI, the infrastructure of the country will improve to better connect it with the world and once again it will make the Mongolians benefit from the Silk Route of the modern era.

So far we have discussed how the BRI can benefit the economically weaker countries but what does this project mean for Russia. After sanctions, the Russian government broke all ties with the EU from where they used to purchase vegetable and fruit. To meet its requirements, Moscow imports vegetable and fruit from Beijing to fulfil its needs worth $1 billion and $300 million respectively. In response to that Russia has Cherkizovo Group, they export 3,000 tonnes of chicken meat monthly to China and have plans to expand its capacity to 48,000 tonnes this year. With the construction of roads, the time to reach the market has been cut in half as compared to a few years ago. The Sino-Russian contract of exporting gas to China for 30 years’ worth $400 billion has already been launched as part of Polar Silk Road.

China has invested $500 million in Russia, establishing Great Wall Motors (GWM) which is the biggest SUV manufacturer in China. The project has an estimated yield of $2.6 billion. This is Beijing’s biggest investment in the manufacturing sector of Russia. Both countries have also agreed to trade in domestic currencies instead of US dollar. Criticism of BRI from those Western nations that invaded weaker countries and exploited their resources does not sound fair when we realize the output potential of these projects on which economically weaker countries depend. It encourages the host nations to fulfil each other’s demands. China is already the biggest buyer for many Central Asian countries and with improved connectivity, the chances to grow together will be even higher. Depending on one country for your exports is the first step for these nations and this should not be seen as a weakness or vulnerability. BRI is a ray of hope after prolonged years of darkness.