ASTANA – Bilateral and multilateral relations between the United States and the Central Asian republics will prosper over the next several years as long as all sides engage in diplomacy with mutual respect, common sense and business acumen, said Javier M. Piedra, specialist in international development, financial consultant and former Deputy Assistant Administrator for South and Central Asia at the US Agency for International Development (USAID) in Washington D.C.
Javier M. Piedra. Photo supplied by Piedra.
In a wide-ranging interview with The Astana Times, Piedra talked about the U.S.-Central Asia relations, bilateral trade and investment and the importance of having a win-win (not zero sum) mindset in geo-politics. He also reflected on the upcoming Shanghai Cooperation Organisation (SCO) summit, which will take place on July 3-4 in Astana.
The C5+1 framework should support mutually beneficial scenarios
Piedra said that to have a successful foreign policy, diplomats must pursue national interests that emphasize restraint and pursue judicious engagement and cooperation with other nations. Policies that see diplomacy through a simplistic win-loss geo-political lens are bound to fail in an increasingly multipolar world.
“Generally speaking, U.S.-Central Asian relations will flourish if diplomacy, whether at the bilateral or multilateral level, is practiced as the art of reasonable statecraft in search of win-win economic opportunities, peace, and stability. In this context, C5+1 exists for the mutual benefit of all its members and does not endeavor to achieve objectives that are detrimental to any one of its members or to the region as a whole,” he said.
“If, on the other hand, any one country senses that the C5+1 has morphed into a platform to create asymmetrical economic dependencies or to advance one party’s geo-political ambitions at the expense of others, the C5+1 platform could quickly run aground,” added Piedra.
According to him, U.S. interests in the region “should not be driven by geo-political considerations that insist on compliance with ideological agendas or one-sided rules that curtail the sovereign autonomy of Kazakhstan or any of its regional neighbors.”
“U.S.-Central Asian relations would stand to gain through increased trade and investment. Besides oil and gas and other big-ticket items, the U.S. should continue to focus on policies and programs that lead to shared economic development and prosperity for the people as a whole. And it should ditch any programs of a social-engineering nature that would be offensive to the peoples and culture of Central Asia – no matter what anyone else says or thinks,” said Piedra.
Diplomacy must be constructive. It must be built on trust, aiming to create advantageous scenarios for all parties concerned. According to Piedra, diplomats from Central Asia should continue to adhere to their well-known non-ideological “realpolitik.”
“They should carry on with their multi-vector foreign policy. Steering clear of geo-political entanglements has served Kazakhstan and the other countries in the region well for decades,” said Piedra.
Challenges and opportunities in trade
The U.S. has a deep interest in the region, which should extend well beyond the oil and gas sector.
“I am optimistic that non-oil related trade between the United States and Kazakhstan will expand over the coming years, barring the unpredictable. My optimism is anchored in the fact that Kazakhstan keeps improving its regulatory framework,” said Piedra.
“If anyone wants to get into the weeds on this, I’d point you to various studies that USAID has put out over the years on trade. One of the fruits of this work has been the annual Central Asia Trade Forum, the 13th edition of which took place this past May 14. Thanks to Kazakhstan-USAID cooperation, this event has gotten bigger and better over the years, except during the pandemic. Happily, small-to-medium-sized businesses have benefited the most, or so I understand,” he added.
With respect to challenges in the areas of trade and finance, Piedra said that as a general matter, any barriers – tariff or non-tariff – to the free exchange of goods dampens trade and economic development.
Kazakh President Kassym-Jomart Tokayev’s reforms in this regard are noteworthy – particularly those directed against the monopolization of power by certain elites and oligarchs.
“President Tokayev, in my opinion, understands this well, which explains his strategy for deep structural reforms in politics and economics. He has called for a fairer playing field for the average worker,” said Piedra.
Investing in Kazakhstan: the risk is not as high as perceived
Piedra said that for investors who may be deterred from investing in Kazakhstan due to higher political risk, Kazakhstan’s political landscape has proven resilient and flexible over the years.
“The countries of Central Asia have shown impressive flexibility and adaptability in the face of uncertainty and external pressures over the years. There is no reason to think that political risk is higher today than it was in the early 1990s. I’d like to draw your attention to one fact about Central Asia: since the collapse of the Soviet Union, the region has been, for the most part, calm,” said Piedra.
He pointed out that within the first 30 years of independence in the early 1990s, no foreign power has invaded any Central Asian state, in contrast to the United States, where British troops entered Washington D.C. and burned down the White House in 1814, twenty-five years after America’s Constitutional Convention.
Good leadership, Piedra said, is the result of having a clear understanding that political stability, the common good and economic prosperity must go hand in hand to have any chance of building nationhood, maintaining sovereign autonomy, and bringing about genuine human development.
“Skilled diplomats always work to keep the peace and protect the interests of their people – a mindset which Central Asia diplomacy is well-known for,” said Piedra.
Avoiding financial dependency is key
“Central Asian countries should keep a sharp lookout for geo-economic strategies that could result in dangerous financial dependencies such as debt or currency traps (whether in dollars, yuan, or rubles) that threaten strategic autonomy,” he said.
“It is welcome news that the United States and Kazakhstan are discussing the potential for enhanced dialogue in critical minerals in the face of supply chain problems in many parts of the world. Long-term financing in local currency should, in my view, be at the top of the agenda,” he added.
Piedra advised financing capital intensive projects in local currencies, which would hedge against currency devaluation and avoid unnecessary stress on government balance sheets.
“If foreign investment banks are to be involved in financing, regional governments should insist on financial structures that are beneficial to the country in the first instance. This means Kazakhstan should press for financing in local currencies, as I said earlier, rather than in hard currencies, especially when project earnings – cash flows – are in local currency. This approach makes more and more sense because Central Asia is increasingly the center of international attention in Eurasia and has many financing options compared to fifteen years ago,” he said.
What to expect from the SCO summit?
According to Piedra, at the upcoming SCO summit the countries are expected to advance integration processes further.
“At the strategic level, the countries attending the SCO in Astana are expected to agree to advance the process of Eurasian integration and convergence through deeper cooperation with the Eurasian Economic Union (EAEU), the Association of Southeast Asian Nations (ASEAN) and other interested states and multilaterals. The consolidation of East-West and North-South trade corridors will accelerate,” he said.
He also shared his expectations of countries that might soon join.
“I expect that Belarus will join the SCO this July as a full member, with (most likely) Mongolia and Afghanistan following in short order. In addition, Bahrain, Egypt, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates have all expressed an interest in joining at some point – sooner rather than later. And the SCO surely will not ignore signals from several other countries to participate: Azerbaijan, Cambodia, Myanmar, Nepal, Sri Lanka, and Türkiye,” said Piedra.
According to him, the member states will also work to improve Afghan reconciliation and prospects of stability in this long-suffering country after decades of conflict.
“The SCO summit will aim to attract increasing pools of long-term capital, facilitate trade and connectivity, harmonize regulations, and minimize barriers to economic activity while safeguarding the member states’ national interests and the common good of the region. This means, in turn, minimizing the negative effects of terrorism, separatism and religious extremism while promoting religious freedom and cultural diversity in an ethnically diverse region,” he said.
“As chair of the summit, Kazakhstan will be in the limelight. I think it is safe to say that Kazakhstan’s emphasis on engagement over confrontation, Eurasian integration, and a preference for win-win opportunities instead of zero-sum outcomes leaves Kazakhstan well-positioned to preside over a successful summit,” said Piedra.
Javier M. Piedra is currently a special correspondent for Asia Times, an English-language pan-Asia digital news platform.
