Alwaght- Due to their extent and influence, the geopolitical changes after Ukraine war have pushed developing countries to seek further cooperation, and meanwhile the Asian nations are stealing the thunder from other parts of the world. In the latest development in this regard, heads of Central Asian bloc (C5) met heads of (Persian) Gulf Cooperation Council on Wednesday in Jeddah, Saudi Arabia, to decide on the prospects of their economic relations.
In his opening speech, Crown Prince Mohammed bin Salman of Saudi Arabia said: “The gross domestic product of our countries has reached $2.3 trillion, and we are eager to cooperate in various fields, and we thank and appreciate the announcement of the Central Asian countries to support Saudi bid for Expo 2030.... We stress on the importance of respecting the sovereignty of countries and not interfering in their internal affairs. The challenges facing our world require strengthening regional cooperation and stability. We emphasize the need to intensify joint efforts to deal with everything that affects energy security.”
Kazakhstan President Kassym-Jomart Tokayev, for his part, stressed the need for boost of cooperation.
“The scope of commercial and economic relations between our region and the countries of the Gulf Cooperation Council should be expanded. The net investment flow to Central Asia has increased by 40 percent last year, and we proposed to hold the International Energy Forum in Kazakhstan, and we invite oil and gas exporters from the (Persian) Gulf countries to participate in it.”
The secretariat of the (P) GCC stated that the main goal of the summit was to strengthen C5-(P) GCC relationship based on the principles and objectives of the Arab bloc in its 1981 statute and creation of a kind of partnership and development of mechanisms to ensure constant consultation and dialogue.
This summit is comes after the first joint meeting of the C5-(P) GCC strategic dialogue that was held September 2022 in Riyadh. In the joint statement published at the end of the meeting, the leaders highlighted the importance of strengthening political and strategic relations between the two blocs at collective and bilateral levels and continuing political and security coordination in order to achieve regional and international stability.
Economically, the leaders underscored the importance of efforts to boost trade and economic ties and to encourage joint investments through boosting relations between financial and trade institutions in favor of exploration of cooperation grounds and existing opportunities.
They emphasized on ensuring the flexibility of supply chains, transportation and communication, food security, energy security and water security, on pushing to establish relations for the development of green and renewable energy resources and technologies, on creating business opportunities, and also on supporting investment opportunities.
In the meeting, the program for joint action on strategic dialogue and cooperation between the two sides for 2023-2027 was approved. The summit also agreed that Saudi Arabia later this year hosts the C5-(P) GCC investment forum. It also agreed to discuss Kyrgyzstan and Turkmenistan bid to host 2024 investment forum. The leaders also thanked Riyadh for hosting the forum and approved next summit to be held in Uzbekistan in 2025.
Jeddah summit’s significance
Jeddah summit is significance as it was the first of its type and demonstrated the Persian Gulf states’ interest to engage in the active international blocs to bolster their bloc’s position globally.
Due to their geographic location, geostrategic importance, and natural resources, Central Asian nations are eligible for major development jumps. Though landlocked, according to the prominent English Halford John Mackinder, Central Asia is the heart of the world.
The five countries of Central Asia in an area of more than 4 million square kilometers, with a total population of 73 million and a GDP of about $300 billion bear many attractions for other countries. These countries have huge reserves of minerals, oil, natural gas, coal and even water. Turkmenistan and Kazakhstan have the largest oil and gas resources, which qualify them to play an effective role in global energy security. Tajikistan has huge water resources, which account for 60 percent of Central Asia's water resources, enough for hydroelectric power production of several countries.
Before Ukraine, due to large-scale Russian influence in Central Asia, non-regional countries had no opportunity to get a toehold in the region, but Russian involvement in confrontation of Europe has created an opportunity for the (P) GCC and others to test their chances for entry to this beneficial and rich region three decades after its republics’ independence from the Soviet Union.
Economic cooperation is one of the emerging elements in the relations between Central Asian countries and (P) GCC. So far, bilateral relations have been based on limited economic aids from the Persian Gulf states and support to five Central Asian countries. According to Al-Quds Al-Arabi newspaper, for example, Kuwait Development Fund provided about $18 million in loans to the Central Asian republics between 1995 and 2006. Also, Saudi Development Fund provided 11 development loans to help finance the implementation of projects in the health, education, road, irrigation, drinking water and housing sectors of Uzbekistan worth more than $22.6 million.
According to statistics, from 2008 to 2021, Saudi Arabia provided more than $333 million for 18 projects in infrastructure, water and environmental restoration, agriculture, forestry and fishing, transportation and storage, education and health sectors in Central Asia. With the economic boom of Central Asian republics, bilateral relations are moving towards investment and economic partnership.
In March, Saudi company ACWA Power struck a deal worth $1.5 billion with Kazakhstan’s energy ministry and Investment Development Fund for construction of a wind farm and storage of renewable energies. Moreover, Uzbekistan hosted $14 billion in Saudi and $3 billion in Emirati investments.
In trade, the two blocs’ trade volume in 2021 was around $3.1 billion, and $2.06 billion was the share of the Persian Gulf exports to Central Asian countries. Machinery and electric appliances are the most important export goods exported to Central Asia. Copper and its products worth $450 million are the most important goods imported from C5, followed by gold, precious metals, precious stones, iron and steel. The growing cooperation and trade agreements have pushed up trade between the two sides over the past year.
Kazakhstan’s ambassador to Saudi Arabia holds that "the economic scene in Central Asia is very promising, and the countries are moving at a high speed like winning horses that should be bet on."
There are common historical, religious and cultural bonds between C5 and (P) GCC showing that there is a suitable field for expanding relations in a way that includes all areas of interest to both sides.
Having lost Russian routes to Europe, the Central Asian states are seeking alternative ones for their exports, and that is the driving force behind them expanding their ties with Iran and Arab states, something allowing them out of geographical constriction beside diversifying their trade routes.
Challenges ahead of trade relations expansion
Though inter-regional economic summits by themselves are an important step towards further cooperation among countries, differences among members of blocs can make the road to success of partnership bumpy. It is certain that the (P) GCC members are in a variety of areas, even in economy, are rivals.
Saudi Arabia and the UAE, two countries that over the past decade have collided over a set of regional cases and tried to get toehold for themselves in various areas, are top on the list. The military presence in Africa, the normalization of relations with the Israeli regime, and extensive interaction with Turkey are the movements that have been focused on by UAE and Saudi Arabia in recent years, and now Central Asia has become the competition setting of the two Arab monarchies.
Riyadh and Abu Dhabi are trying to have a larger share of the Central Asian market, and this desire for a share can reach a point of conflict at some points. And this is because the economies of Saudi Arabia and the UAE are complementary and they have to export similar goods to Central Asia, and if regional states buy more from Saudi Arabia, the UAE's hand will be cut short from the region's lucrative market, and the opposite is also true.
As a vindication of this claim, we can refer to covert and overt Saudi-Emirati tensions in Yemen and Sudan, two countries scene to proxy wars between the former allies. Another important point is that Saudi Arabia, due to its Islamic world leadership claim, considers Muslim countries to be areas of its influence, and in the past decade, in the Central Asian republics, it made moves such as building religious schools for promotion of Wahhabi thoughts and providing financial aids to the regional states, and therefore, the Saudis do not want the Emiratis to rise as their disruptors in Central Asia.
Also, the UAE has its eyes on Central Asia and its strategic position. Its energy minister attended summit of transportation ministers of landlocked countries in Turkmenistan and inked gas, chemicals, and transportation contracts. The contracts also included financing an airport in the Turkmen town of Jebel and construction of a hybrid power plant.
On the other hand, though Central Asian countries are present in regional blocs like Shanghai Cooperation Organization and Eurasian Economic Union, they are competing for hosting trans-regional powers, and this competition shows itself in relations with Arab countries, especially when it comes to attraction of investments. As a conclusion, despite the blocs’ agreements to ratchet up cooperation, the prospects for deepening their ties remain dim.
