As New Delhi cements its position as one of the fastest-growing major economies of the world, its increased engagement with the Central Asian region can lead to mutually beneficial gains — both in economic and strategic terms.
Central Asia, located in the heart of Eurasia, forms a part of India’s extended neighbourhood. Its geographical proximity, strategic location, and historical linkages make it an important partner for New Delhi. As part of its ongoing efforts to boost strategic partnership with the region, the second India-Central Asia Dialogue was hosted virtually on 28 October 2020, under the chairmanship of India’s External Affairs Minister, Dr S. Jaishankar. His counterparts from Kazakhstan, Turkmenistan, Uzbekistan, and Tajikistan and the First Deputy Foreign Minister of Kyrgyzstan participated in the dialogue along with the acting Foreign Minister of the Islamic Republic of Afghanistan, Haneef Atmar, who was invited as a special guest.
Engagement with the region in 2020 saw a clear focus on issues of regional economic development, connectivity, and security — apart from the immediate need of dealing with the ongoing pandemic. Among the highlights was the announcement of an additional 1 billion USD Line of Credit extended by India for priority development projects in energy, healthcare, connectivity, IT, agriculture, education, etc. India’s ‘Connect Central Asia Policy’ covers an entire gamut of a multi-model approach to strengthen politico-economic, security, and cultural ties between the two. To that endeavour, India proposed grant assistance for the implementation of High Impact Community Development Projects that aim to boost socio-economic development in the region.
Engagement with the region in 2020 saw a clear focus on issues of regional economic development, connectivity, and security — apart from the immediate need of dealing with the ongoing pandemic.
This development came at a time when countries around the world are still struggling with the COVID-19 pandemic. India has provided humanitarian and medical assistance to the Central Asian partners in their fight against the pandemic. Although Central Asian countries are heading towards Russia-based vaccines, the rollout has been slow. India, which has already supplied 5.5 million doses of COVID-19 vaccine to its neighbours, is now looking to further expand its outreach. It would be worthwhile to consider including Central Asian countries in this effort.
Apart from dealing with the latest challenge of the pandemic, long-term security threats emanating out of the region remain a common concern. For enhanced security cooperation, all the countries emphasised the need for an Afghan-led, Afghan-owned, and Afghan-controlled peace process for conflict settlement. The joint statement on the India-Central Asian dialogue also focused on the need to combat terrorism by destroying safe havens, infrastructure, networks, and funding channels. It underlined the need for every country to ensure that their territory is not used to launch terrorist activities against others. For India, a stable Afghanistan and Central Asian Region (CAR) are inextricably linked to its security, thereby, underscoring the need for establishing deeper linkages through trade, foreign direct investment, technology, and human resources.
Long-term security threats emanating out of the region remain a common concern.
Towards this end, India and Uzbekistan recently conducted the first virtual bilateral summit in December 2020. This was the seventh bilateral interaction between the two leaders in five years. New Delhi and Tashkent signed an MoU where the Indian side confirmed the approval of a US$ 448 million Line of Credit for road construction and development of the IT sector for digital connectivity. In 2019, Uzbekistan also invited India to join its proposed Afghanistan-Uzbekistan rail link project. This project aims to bolster regional trade and promote growth especially in the case of Afghanistan. As Uzbekistan seeks a diversified portfolio of foreign policy partners beyond the major regional powers, India has the potential to further its bilateral as well as regional ties.
Another step in the direction was taken at the Trilateral Working Group Meeting between India, Iran, and Uzbekistan on the joint use of Chabahar Port on 14 December 2020. EAM Jaishankar highlighted the strategic importance of the port for India’s outreach to Afghanistan and Central Asia, and further to Russia and Europe through the International North-South Transport Corridor (INSTC). Also, apart from the economic benefits of enhanced connectivity, India has focused on Chabahar with one eye on the neighbouring Gwadar Port in Pakistan that is being developed by China.
India must redouble its efforts in the area of connectivity to further its regional presence.
The INSTC also came up for discussion with India noting the importance of Uzbekistan joining the project for the overall improvement of connectivity in Eurasia. Since its inception in 2000, the project has witnessed slow growth due to a combination of factors including low trade volumes, incomplete infrastructure, and sanctions. While this transcontinental corridor has now expanded its geographical stretch to include 11 more members and it holds immense potential, there is an urgent need to address its shortcomings to reap its benefits. It is hoped that the entry of Uzbekistan along with Turkmenistan will help in expanding the regional connections along the corridor and bring additional economic and strategic gains.
Apart from these ongoing projects in Central Asian countries, some of which are double-landlocked, there remains much scope for digital connectivity as well. India must redouble its efforts in the area of connectivity to further its regional presence. This becomes all the more important in the context of China’s Belt and Road Initiative, with two of its six corridors running through Central Asia.
Regional powers in Central Asia
The CAR has historically been rich in natural resources and is a major transportation hub for gas and oil pipelines and multi-modal corridors connecting China, Russia, Europe, and the IOR. As regional states seek to diversify their foreign policies in the post-Soviet period, the focus has moved more towards satisfying their strategic interest.
China has been expanding its regional presence, as seen in the ‘5+1 format’ launched in 2020 to further its clout. However, its advances are already causing concerns of ‘debt-trap diplomacy.’
Russia, while still a widely influential political and security player in the region, has seen China take its place as the leading economic player in the post-Soviet period. As the latter’s influence has grown, Russia has been promoting its own Eurasian Economic Union (EAEU) to pursue regional and economic integration. The EAEU, which has become an established actor in the region, has not coalesced into a political union due to objections by member-states reluctant to accept Russian proposals to this effect. Since its inception in 2015, it has only attracted two Central Asian countries, Kazakhstan and Kyrgyzstan, as members and thus it is far from a happy union.
Meanwhile, China has been expanding its regional presence, as seen in the ‘5+1 format’ launched in 2020 to further its clout. However, its advances are already causing concerns of ‘debt-trap diplomacy’ given the economic situation of Central Asian countries. Turkmenistan owes at least US$ 8 billion in loans to China and the latter holds roughly 50 percent of Tajikistan’s US$ 2.8 billion foreign debt. Kyrgyzstan has turned to China for debt relief to deal with the economic impact of the pandemic. The Export-Import Bank of China holds US$ 1.7 billion of the country’s US$ 4 billion foreign debt. China’s largest trading partner in the region, Kazakhstan, is also growing conscious of China’s manoeuvres as the BRI expands.
India’s trade with the region amounts to US$ 2 billion, owing to limited connectivity and low economic engagement.
These developments create an opening for India, which benefits from possessing goodwill and a positive image among Central Asian states. As New Delhi cements its position as one of the fastest-growing major economies of the world, its increased engagement with the region can lead to mutually beneficial gains — both in economic and strategic terms. The presence of multiple strong powers in the region offers options to regional actors to balance external pressures.
However, India has been a latecomer and has turned its attention to the region only in recent years. It has sought to deepen linkages through the regular exchange of high-level visits, cooperation in areas of mutual security concerns, and improving trade ties. PM Modi’s comprehensive visit in July 2015 to all 5 CARs was a step in the same direction.
Yet, India has a long way to go before it can present itself as a key player in Central Asia. India’s trade with the region amounts to US$ 2 billion, owing to limited connectivity and low economic engagement with the region. This amount is less than 0.5 percent of India’s total trade, whereas the region’s trade with China amounts to US$ 100 billion.
The way ahead
Efforts are now being made to address the weak trade ties by encouraging cooperation among businesses on both sides, as is evident in the launch of the India-Central Asia Business Council in 2020. India also needs to direct investment to the region to reap the economic benefits of the strategic location of Central Asia that puts it at the crossroads of key trade and commerce routes. Sectors like the construction industry, sericulture, pharmaceuticals, IT, and tourism offer potential for collaboration.
Multilateral organisations like SCO, EAEU, and CICA can serve as platforms for sustained engagement and regular exchange of ideas.
Beyond strategic and economic cooperation, India must increase its developmental and humanitarian aid to the region and promote closer people-to-people ties through education, knowledge transfer, medicine and health, culture, cuisine, and tourism. Multilateral organisations like SCO, EAEU, and CICA can serve as platforms for sustained engagement and regular exchange of ideas. The SCO is a crucial grouping that provides India a strategic convergence with Russia and China on addressing new security challenges, enhancing infrastructural development projects, and creating a network of regional oil and gas pipelines for the larger benefit of the Central and South Asian region. It bears high potential to give India a stake in the Eurasian integration process. Although several challenges such as China’s aggressive posture in the region and the unholy nexus of Pakistan and China looms large over its success, a calibrated coordination with the stakeholders will enable New Delhi to accentuate its own role not only in the Eurasian region but also in South Asia.
In a region where Russia and China remain the key players, India has a long way to go before it can be recognised as a consequential actor in Central Asia. The proposals and ideas discussed in the 2020 virtual summits possess the potential to form the bedrock of a sustained, balanced, long-term strategy — which New Delhi will have to capitalise on to achieve its policy goals in the region.
“Observer Research Foundation”
Aarti Bansal
09.02.21