Central Asia, Global View

Recent evolutions regarding the economic relations between Europe and Central Asia

On June 19, 2017, The Council of the European Union adopted the conclusions of the European Union Strategy for Central Asia, 10 years after the first strategy was signed. Thus, the Council of the European Union, through the official delegates of its member states, recognizes the importance of this region’s states as partners of the European Union (EU). At the same time, it reaffirms its commitment to develop strong and durable relations with the countries in Central Asia, which will pursue a sustainable, prosperous and stable development of the region, in line with the European Union Global Strategy and the United Nations Sustainable Development Goals (UN).

The Council of the European Union emphasizes the importance of promoting an attractive investment climate in Central Asia and underlines the correlation between factors such as the rule of law, good governance and a more efficient business environment. The Council also points out that, regarding the cooperation between the EU and Central Asia in the field of energy, transport and infrastructure, the interconnection of countries in the region and their integration into international transport markets and routes should be a priority. Moreover, the conclusions of the Strategy emphasized the importance of supporting education and a continued dialogue with these countries on human rights.

Furthermore, Stefano Manservisi, Director-General of the European Commission’s Directorate-General for International Cooperation, together with the EU Special Representative for Central Asia, Peter Burian, met on July 13, 2017, in Dushanbe with Tajikistan’s President Emomali Rahmon and with the Tajik Deputy Prime Minister, Dalatali Said, in order to discuss about the EU-Tajikistan relations and the implementation process of the New Tajikistan Development Strategy 2016-2030. With this occasion, the EU reiterated its support for the implementation of reforms and Tajikistan’s Development Strategy 2016-2030 through financial and technical assistance in the field of health, education and rural development.

Moreover, on July 13, 2017, the European Commission, the German Government and the Aga Khan Foundation signed a new 20 million EUR program that involves the construction of a bridge at the border between Tajikistan and Afghanistan. The goal of the program is to promote trade and to connect the two states. Together with the necessary infrastructure, the project will make available the necessary infrastructure and support for  800 micro-enterprises and 1200 entrepreneurs, while helping the expansion of 64 small and medium-sized enterprises in the Khatlon and Takhar provinces. The new project is funded by the European Commission and implemented by the PATRP Foundation and The Development Agencies Aga Khan. This complements the efforts of other partners such as Norway, Switzerland, Germany, the United States and the United Kingdom to develop local communities and encourage cross-border trade.

The EU is currently the main trading partner of Central Asian states. While the EU imports from Central Asia especially oil, gas, metal and cotton, it exports transport equipment and other manufactured goods. In 2016, the EU exports to Central Asia amounted to 8.4 billion EUR, while imports totaled 13.7 billion EUR. The EU’s bilateral trade relations with Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan are governed by the Partnership and Cooperation Agreement that ensures the most-favored nation treatment principle and prohibits quantitative restrictions of bilateral trade.

Also, the European Bank for Reconstruction and Development (EBRD), whose capital is owned by 65 states, the EU and the European Investment Bank (EIB), continues to support economic development projects in Central Asia.

Thus, on May 11, 2017, the EBRD announced the financing, together with the EU and the EIB, of four Kyrgyz Republics (Balykchy, Maili-Suu, Toktogul and Uzgen, with a total population of more than 141,000), focused on modernizing the water infrastructure. The Kyrgyz’s Economy Minister Arzybek Kozhoshev and EBRD First Vice President Phill Bennett signed the 30 million EUR financing agreement at the EBRD annual meeting in Nicosia, Cyprus. Also, on August 2, 2017, the EBRD announced that it will grant a 9.1 million EUR loan to improve the municipal heating system in the city of Ust-Kamenogorsk in Kazakhstan, with the project being additionally financed with 5.5 million EUR from the Kazakh government.

Established in 1991 to support the transition to a market economy and private sector development, the EBRD supports investment projects mainly in the former communist states of Central and Eastern Europe and Central Asia. By the end of 2015, the EBRD has invested more than 10 billion EUR in Central Asia, while the highest value of investments was 1.4 billion EUR, being reached in that year. So far, the EBRD invested 7.5 billion EUR in Kazakhstan, 0.7 billion EUR in Kyrgyzstan, 0.6 billion EUR in Tajikistan, 0.3 billion EUR in Turkmenistan, and 0.8 billion EUR in Uzbekistan.

Regarding the cooperation between EU member states and Central Asia, we recall the recent visit of the Polish President Andrzej Duda to the Kazakh President Nursultan Nazarbayev on September 6, 2017. On this occasion, the two signed a ministerial agreement on economic cooperation and participated in a Kazakh-Polish business forum. The Kazakh President mentioned the results of the Kazakh-Polish business forum organized last year: 15 deals totalizing 1 billion USD and the launch of direct flights between Kazakhstan and Poland by LOT Polish Airlines. In 2016, 115 Polish-owned enterprises in Kazakhstan invested 200 million USD, with the economic environment being favorable to investments in machinery, agriculture, energy, transport and construction. Poland is one of Kazakhstan’s main trading partners in Central and Eastern Europe, with trade between the two accounting for over 80% of Poland’s total trade with Central Asian states.

Concerning the relations between Romania and Central Asia states, on August 16, 2017, Romania’s Ambassador to the Republic of Kazakhstan, Tajikistan and Kyrgyzstan, Cezar Armeanu, presented to The Astana Times publication the possible opportunities for cooperation between Romania and Kazakhstan and the priorities of his mandate. He emphasized that he aims to develop bilateral relations at all levels and congratulated Kazakhstan for organizing such a major event as EXPO 2017 and for obtaining the status of non-permanent member in the UN Security Council.

Moreover, Armeanu mentioned that, in 2016, the value of bilateral trade between Romania and Kazakhstan reached 975.7 million USD, of which Romania’s exports amounted for 64.5 million USD and imports for 911.2 million USD. In the first 4 months of 2017, trade increased 99% compared to the same period of last year, reaching 510.5 million USD. The Ambassador said that there is potential to increase these figures and to conclude new agreements. Through the acquisition of the Romanian enterprise Rompetrol by the Kazakh national company KazMunayGas in 2009 and the integration of the Constanţa Port into the international trans-Caspian route in 2017, Romania and Kazakhstan benefit from new business opportunities. The collaboration between the two countries can be extended at the level of the development cooperation agencies RoAid and KazAid, which could form a trilateral cooperation platform to support other countries as donors.

Between July 27-28, 2017, the Romanian Foreign Affairs Minister Teodor Melescanu visited the Republic of Kazakhstan to celebrate 25 years of diplomatic relations between the two states and to participate in Romania’s National Day at the international exhibition “EXPO 2017 Astana Future Energy”. Thus, the Minister of Foreign Affairs met with the Kazakh Prime Minister Bakytzhan Sagintaev, with whom he held talks on the development of political, economic, academic, cultural and educational bilateral relations. He also met Kazakh Foreign Affairs Minister Kairat Abdrakhmanov with whom he discussed the regional and international issues. Abdrakhmanov highlighted Kazakhstan’s interest in the participation of Romanian investors in Kazakhstan’s economic modernization program. Teodor Melescanu also met the vice-president of the Senate of the Republic of Kazakhstan, discussing about a better capitalization of the possibilities for parliamentary cooperation.

During this visit, the Romanian Foreign Affairs Minister signed an Anniversary Declaration to mark the celebration of 25 years of diplomatic relations, as well as the Cooperation Agreement between the Romanian Chamber of Commerce and Industry and the Kazakhstan International Chamber of Commerce. At the end of the visit, he mentioned that the Republic of Kazakhstan is Romania’s most important economic partner in Central Asia and the cooperation on energy sector is the main element of bilateral economic relations. This is the first visit of a Romanian Foreign Affairs Minister to Kazakhstan in the past nine years.

On July 21, 2017, the Foreign Affairs Ministers of Romania and Turkmenistan exchanged congratulatory messages on the occasion of the 25th anniversary of diplomatic relations between the two states. According to the Ministry of Foreign Affairs of Romania, the relationship between Romania and Turkmenistan is built around energy cooperation, with solid premises for the development of collaboration across all fields. Turkmenistan is Romania’s second largest economic partner in Central Asia, with total trade between the two states reaching 108.5 million USD in 2015.

Regarding Romania’s economic relations with other Central Asian states, the Ministry of Foreign Affairs of Romania mentions that the trade volume between Romania and Tajikistan has always remained at a low level, reaching 360.6 million USD in 2015. The international trade between Romania and Kyrgyzstan is also low, considering that the volume of trade between the two states was 5.2 million USD in 2015. The trade between Romania and Uzbekistan could also be improved, considering that the total value registered in 2015 was 17.6 million USD.

 

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