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BEIJING’S ENERGY PROJECTS IN CENTRAL ASIA
ANDREY GROZIN,
Head of the of Central Asia and Kazakhstan Studies Department, Institute of the CIS Countries, Moscow
Laying of a gas pipeline to China, through which the Turkmen gas will be pumped via Kazakhstan and Uzbekistan, is a result of Beijing’s well thought-out strategy to diversify its raw materials sources. In this respect China’s foreign policy resembles that of Russia, since it is built only on pragmatism. The differences are that China puts more serious financial resources into its plans and programmes trying to minimize the expenses.
China is not going to pay for gas that will be pumped through the new gas pipeline. China pays for energy resources by way of barter (by Chinese goods) and by issuing credits at low interest. But unlike Russia, China demands the return of the whole debts. It does not write off debts as Russia sometimes does. The elites of the Central Asian countries hope again that the debt will be remitted, but they cannot expect that from China.
China’s interest in the Central Asian energy sector is understandable. The Chinese elite do not want to depend on the energy supplies from the Middle East. Those supplies are not very stable, there are many risks here. That’s why Beijing diversifies its energy sources and is active not only in Central Asia, but also in Latin America and especially in Africa.
The project itself is not of great importance to China, since in the near future little gas will be supplied through the new gas pipeline. The design capacity of 40 billion cubic meters is expected to have been attained by 2013, and only 30 billion of this figure will be supplied to China, which is also little. Apart from that, Kazakhstan is going to join the pipeline to make its Southern areas independent of the Uzbek gas. In addition, Kazakhstan and Uzbekistan will hope to buy some of transit gas.
There are big risks for China here. The leaders of the Central Asian countries believe that as the leading world powers pay great attention to Central Asia, the Central Asian countries have a special status and regard China’s investments as its payment for satisfying Beijing’s economic and geopolitical interests. Beijing, in its turn, thinks that it has given enormous help to the Central Asian elites.
The Central Asian elites have pro-European, pro-Russian and other interest groups, but they do not have pro-Chinese ones. Some leaders seek to serve China’s interests, but they do not hold high posts for a long time. The reaction of the local, especially Kazakh, mass media is significant. Some so-called independent mass media speak about the Chinese expansion threat, while the official mass media said that China was of no danger. As a matter of fact, the Central Asian countries distrust China and there is xenophobia in the society. So, the Central Asian countries have no lobby factions.
The gas pipeline construction does not change the geopolitics in Central Asia. In 2006 Kazakhstan-China oil pipeline “Atasu-Alashankou” was put into operation, but it has never proved its value. This oil pipeline goes via only one country - from Kazakhstan to China. The Baku-Tbilisi-Ceyhan oil pipeline is not considered to be successful either.
But the Turkmen gas pipeline goes via three Central Asian countries. It means that the number of problems will treble. Each state will champion its interests ignoring those of the neighbours. We know how this happens from the disintegration of United Energy System of Central Asia. The gas pipeline may become another floor where neighbouring countries would fight against each other concerning tariffs, prices, and the foreign-policy factor would play its role too.
Russia and the Russian businessmen are calm about the gas pipeline laying. More than that, the Russian companies took part in this project in several aspects and they will even control a number of operations in some segments.
Why is Moscow so calm? There may be several versions here. The first one is the Russian elite are short-sighted and since the gas pipeline is put into operation, there is nothing else left for them to do but to put a brave face on a sorry business. The second version is Moscow regards those projects as the potential to change the geopolitical situation in the region including Central Asia and China, for example, by means of the Shanghai Cooperation Organization. The third version is Moscow and Beijing have reached informal agreements on taking into account each other’s interests in Central Asia’s energy sphere.
The recent meeting between Russian President Dmitry Medvedev and his Turkmen counterpart Gurbanguly Berdimuhamedov is unlikely to indicate Russia and China competition for Central Asia. The Russian and Turkmen Presidents recently visited Italy, which can also be evidence of mutual agreements of the countries showing interest in Central Asia’s energy sector.
In this connection we would like to know the reaction of the Anglo-Saxon countries’ mass media, how they would assess the putting of the gas pipeline to China into operation. I believe that they would speak about Russia-China competition in the region and about the danger of this project for Russia. It has long been known that the West tries to set Moscow and Beijing at loggerheads. But in fact, the West is a loser here. Laying of a gas pipeline to China is a blow to the West’s energy projects in Central Asia that would be alternative to energy transportation via Russia.
So, China masters the free energy potential of Central Asia. Beijing secures free niches that may be of interest neither to Russian nor to Western businessmen, and, apart from that, Beijing overpays. That’s why Russian businessmen do not regard China as their competitor. So far, it is unclear what the reason for that is: either the situation is not understood, or the mutual agreements have been reached. The West will continue to play off Moscow against Beijing, which can be seen in the near future.
December 16, 2009
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