A weak plank in Asia’s infrastructure drive. ENO & ASIA TIMES

Eurasia News Online

Pepe Escobar

Europe, relatively integrated, lives today in a de facto two-speed reality. Eurasia integration, a work in progress and with vastly more reach, is for the moment a three-speed process, as seen through the positioning of three Central Asian “stans”

Away from the hysterical 24/7 news cycle, Turkmenistan quietly went to the polls. President Gurbanguly Berdymukhamedov, in power for 10 years now, amassed a positively North Korean 97.69% of the vote among 3.22 million registered citizens.

Chances are Gurbanguly’s name will never be correctly pronounced in the Beltway, as Melissa ‘Spicey” McCarthy hinted in a by now legendary TV sketch. No worries for someone who had a gold statue of himself erected in Ashgabat and doubles as a superstar folk singer.

Gurbanguly is guaranteed seven more years in power thanks to a constitutional reform approved last September. He’s the former dentist of the previous leader, the larger-than-life paramount eccentric Saparmurat Niyazov, who died of a heart attack in December 2006.

The Central Asian “stans” configure the proverbial crossroad of empires: China to the east, Turkey to the west, Russia to the north, Afghanistan and India to the south.

Those were the days in the late 19th century when London and St Petersburg fought The Great Game over their vast territory. Those were also the days when after 9/11 Washington advanced The New Great Game via its expanding Empire of Bases and Dick “Dark Side” Cheney sent mission after mission to probe eye-popping Caspian oil and gas deals.

Now the name of the game is the slowly but surely interpenetration and integration of the China-led One Belt, One Road (OBOR) and the Russia-led Eurasia Economic Union (EEU) into a Great Eurasian Emporium.

And what’s striking is that idiosyncratic, self-isolated Turkmenistan, the quintessential gas republic (world’s fourth largest reserves) is not part of the game.

Worse; because of indecipherable geoeconomic mismanagement, Ashgabat not only jeopardized relations with its two top buyers of natural gas – Iran and Russia – but also failed to strike a lucrative deal to sell gas to the willing and able European Union. Hence the uber-surrealist scenario of a gas republic unable to fully monetize its natural wealth – apart from the Turkmenistan-China pipeline, the first to bring Central Asian natural gas to China.

Pipelineistan though is an ever-evolving box of surprises. The possibility of Turkmen gas hitting the West via Iran still stands, considering a trans-Caspian pipeline to Azerbaijan remains a certified geopolitical, logistical and financial nightmare.

The best options would be either a Turkmenistan-Iran pipeline to a LNG export terminal in Oman, or another one connecting to Turkey via Iran and then linked with the Trans-Anatolian Pipeline and the EU’s Southern Gas Corridor.

Brussels, obsessed with European dependence on Gazprom, is all for it, as that would also imply lower gas prices. Moscow, competing with Ashgabat, is not exactly thrilled.

A possible spanner in the works would be – what else – Daesh. The ultimate Central Asian security nightmare revolves around Daesh setting up an alternative Caliphate in the agricultural/water oasis along the Murghab river, the Karakum canal, and the Amu Darya river shared by Turkmenistan with Uzbekistan.

Picture the possibility of a Central Asian Caliphate with close access to unlimited supplies of natural gas. No wonder the Shanghai Cooperation Organization (SCO) – snubbed, so far, by Ashgabat – is already on red alert.

Putin does Tajikistan

Compare Turkmenistan’s blue gold idiosyncrasies with energy-deprived Tajikistan, which may be on the verge of becoming a full member of the EEU, currently uniting Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.

President Putin will soon be on a Central Asian tour of Tajikistan and Kyrgyzstan. The proverbial cooperation in trade, investment, energy, education and science will be on the table.

And then there’s the key Tajik issue: migrant labor. That has even spawned an aviation row, as in how many Russian and Tajik airlines are allowed to regularly fly in and out.

Tajikistan may be a large importer of Russian goods and services. But most of all Dushanbe exports its workforce. Remittances account for half of GDP, roughly $4 billion a year. According to the Main Directorate for Migration Affairs in Moscow, there were almost 900,000 Tajik residents in Russia late last year. Counting the black market, it’s way more.

So migration matters must be cleared should Tajikistan join the EEU. Popular support is high, at 68 percent, according to a recent poll by the Eurasian Development Bank.

Have corridor, will travel 

The star of the Central Asian show remains, unquestionably, Kazakhstan. Oil and gas paradise; loads of uranium; heart of Eurasia; a working, highly “investable” economy; and directly linked to both OBOR and the EEU.

The official geoeconomic policy reads like Kazakhstan First, which implies Astana keeping indiscriminate good relations with Moscow, Beijing and Washington.

The Syria peace talks, the ones that really matter, are taking place in Astana. President Nursultan Nazarbayev is on a roll. He was largely responsible for the Erdogan-Putin détente last year, which culminated in hosting the tentative Syria peace process and solidifying Astana’s place as a multicultural, multi-ethnic top geopolitical player. It does not hurt that Kazakhstan is now on a two-year stint on the UN Security Council.

The spectacular coming-of-age in the world stage is set for this summer at the EXPO-2017 international fair, running from June to September. The overall theme is Future Energy; clean energy, new construction materials and smart-grid technologies. That translates as Astana cleverly positioning itself as way more than oil and gas.

EXPO-2017 is costing around $3 billion, financed by a public/private mix. The site will be reconverted into the Astana International Financial Center, an ambitious hub for everyone from Central Asia to the “Caucasus, West China, Mongolia and Europe.”

The US angle in Kazakhstan may turn out to be key during the Trump administration. Exxon has been doing business in Kazakhstan for over 20 years now. Mostly it’s all about the exceedingly complicated and immensely expensive Kashagan field, north of the Caspian close to Atyrau – which only started exporting oil late last year.

US Secretary of State T. Rex Tillerson has a previous history of trying to stall selling Exxon’s stake in state oil company KazMunayGas below the price he wanted. In the end he gave in. But should oil prices rise, Exxon will inevitably be back in Kashagan in a flash.

And then there’s the Tengiz field, where Exxon, Chevron and (currently US-sanctioned) Lukoil agreed to invest a whopping $37 billion last year. They signed the original partnership before the Obama administration sanctions.

Unsurprisingly, a lot hinges on sanctions being lifted. That would signal the green light for renewed US-Russia Big Oil partnership. Exxon, strategically, has funded higher education programs at the KIMEPUniversity in Almaty as well.

China, also unsurprisingly, is already Kazakhstan’s top investor. In this case, it’s all about OBOR, as a detailed report by the European Council on Foreign Relations on the privileged “transport and gas hub of Central Asia” has stressed. 80% of all foreign investment in the Central Asian “stans” goes to Kazakhstan.

The World Bank foresees GDP growth of 4% by 2019. Kazakhstan – alongside Iran – features as one of China’s prime trade corridors in the Holy Grail of a single-tariff Eurasia emporium. Kazakhstan’s former Foreign Minister Erlan Idrissov could not be more explicit; the aim is to become a “logistics hub for China and Eurasia”.

OBOR? EEU? Prime trade corridors? Eurasia integration? It don’t mean a thing if it ain’t got that Kazakh swing.

Source: https://sputniknews.com/columnists/201702251051036266-eurasia-integration/

A weak plank in Asia’s infrastructure drive

A weak plank in Asia’s infrastructure drive

Myanmar’s armed conflicts threaten to complicate and divert various regional integration schemes, including China’s One Belt, One Road initiative

YANGON, MARCH 29, 2017 
A Buddhist Monk walks along a 1.2 kilometer wooden bridge in Mandalay, central Myanmar. Photo: AFP Forum

A Buddhist Monk walks along a 1.2 kilometer wooden bridge in Mandalay, central Myanmar. Photo: AFP Forum

This week a super tanker steamed towards Myanmar’s Kyaukpyu port to offload the first consignment into an oil supply pipeline with the capacity to supply 260,000 barrels per day from the Indian Ocean to Kunming in southwestern China. Some analysts trumpeted the port call as evidence of Myanmar’s emergence as a new key link in the quest for regional integration.

Indeed, Myanmar is in the middle of many grand connective schemes, including China’s One Belt, One Road, Japan’s East-West Economic Corridor, the Association of Southeast Asian Nations’ (ASEAN) Free Trade Area, India’s opening of its remote ‘seven sisters’ northeast region as well as the multilateral Great Asian Highway Network.

The economic imperative of these initiatives for Myanmar is that infrastructure integration will be the key that unlocks its many untapped consumer markets, abundant natural resources and underlying trade potential.

Myanmar’s potential to implement and benefit from these infrastructure initiatives, however, will require state planners to manage a host of issues, not least among them state fragility and the government’s unproven capacity to handle internal or external shocks and still function.

With several internal armed conflicts, a large illicit trade environment, chronic human rights abuses, widespread corruption perceptions and high difficulty of doing business, Myanmar is arguably more comparable to sub-Saharan Africa than its ASEAN neighbors. Myanmar’s fragility and instability may thus pose an insurmountable challenge for integration into emerging regional infrastructure.

4. FFP Index Map

The proposed routes that will integrate Myanmar with southwest China, Thailand and India run through Myanmar’s most fragile and conflict-prone areas. For routes into China this includes the conflict-ridden Shan State, where an alliance of ethnic armies is fighting against central government control and refusing to enter into any ceasefire initiative.

For routes into Thailand, major highways pass through territory controlled under tenuous ceasefire terms with the rebel Shan State Army South, the Karen National Liberation Army and the New Mon State Army. Insurgents active in these areas have attacked connecting infrastructure projects, including roads and pipelines, in the past.

The Kyaukphyu terminal is situated in western Rakhine state, where human rights abuses by security forces are raising new concerns that militancy will take hold among the disenfranchised ethnic Rohingya population. Routes into India’s fractious northeastern region pass through the remote, underdeveloped Chin state.

The “greed and grievance” academic theory often used to analyze factors that drive conflict is arguably relevant in Myanmar’s context. The underlying political grievances of Myanmar’s marginalized minorities have often been subordinated to the imperatives of powerful armed groups that fight to protect their economic interests, including the illicit narcotics trade and natural resource extraction.

5. Myanmar Fragile Link Conflict Map

The proposed new infrastructure running through these conflict areas will provide another rich source of rent-seeking for some of these armed groups. Government-aligned militias in conflict areas are also known to be involved in illicit trades. Given these entrenched interests in sustaining conflict there is a spectrum of scenarios that could develop, ranging from the doggedly optimistic to the cataclysmic.

Integration and Equitable Development: This is a place for optimists. Myanmar’s unique geo-strategic position as a hub for regional integration will unlock vast domestic consumer markets, resource reserves and export trade potential. Increasingly competent democratic politicians will harness this bounty for wide-based economic development. This will in turn have a normative effect on the armed groups, bringing them into peace processes and ending seemingly intractable conflicts.

Centrifugal Forces and Patchwork Development: An alternative narrative suggests that there will be pockets of development but significant challenges. Initiatives will function – oil will be pumped, highways will be built – but corruption will erode wide-based growth, development of remote areas and fuel inequality. Regional warlords will plunder rents to support their ethnic armies and pull further away from central control.

Conflict and Bypass: The most pessimistic observers see a scenario whereby everything could grind to a halt. Initiatives will falter as regional conflicts flare, as they have recently in Shan State and could erupt in western Rakhine state. The government will be unable to either implement policy or manage multiple crises. Ultimately Myanmar will be bypassed in favor of other regional contenders for connectivity and miss a big opportunity for growth and development.

Policemen stand guard as firemen work to extinguish fire during fighting between Buddhist Rakhine and Muslim Rohingya communities in Sittwe June 10, 2012. Secretary of State Hillary Clinton has voiced deep concern over sectarian violence in Myanmar, unrest that threatens to endanger democratic and economic reforms in the country after decades of military-ruled isolation. Picture taken June 10, 2012. REUTERS/Soe Zeya Tun (MYANMAR - Tags: SOCIETY CIVIL UNREST CRIME LAW) - RTR33H1N

Much will depend on Myanmar’s ability to manage shocks and adapt to fast-changing circumstances, both at home and abroad. The indications to date are that the state, now nominally led by the elected National League for Democracy government, but still widely steered by the autonomous military, and wider society lack this capacity.

For the super tankers docking in Kyaukpyu, gathering storm clouds inland could make for choppier waters and stronger headwinds in the future. The risk for Myanmar is whether such tankers choose to brave the country’s still volatile conditions or move to calmer waters.

Christopher Briggs is a security expert and manager at Ardan Risk Management