Central Asia emerges as a priority for Gulf states
https://arab.news/rtbzv
In the past decade, the Middle East has been marked by an era of diversification. The Gulf states, in particular, have embarked on ambitious economic diversification programs, transforming their traditionally hydrocarbon-dependent economies by enhancing their non-oil sectors. Regional actors have invested in diverse sectors from renewables to sports to tourism. The spirit of diversification has also been evident in the region’s foreign policy and international partnerships. As the Gulf states have increasingly sought to reduce their dependence on Western partners in recent years, Central Asia has emerged as a priority.
The Gulf and Central Asia have historically shared strong trade relations focused almost exclusively on oil and gas. The majority of the region’s oil and gas reserves are concentrated in Kazakhstan and Turkmenistan. Uzbekistan and Tajikistan also hold oil reserves, with further explorations underway. Kyrgyzstan has abundant coal reserves and, on the whole, the region is rich in mineral resources.
In recent years, this strategically vital region has received significant economic interest from the Gulf states. While both the Gulf and Central Asia are home to rich oil and gas reserves, the Gulf states have been more successful in establishing robust hydrocarbon industries. Consequently, their ability to use this expertise to develop the Central Asian hydrocarbon industry has encouraged strategic cooperation between the two regions. Beyond hydrocarbons, Gulf investments in infrastructure, agriculture, and manufacturing in Central Asia are also avenues for guaranteeing food security in the Gulf.
Saudi Arabia and the UAE have been at the forefront of Gulf investments in Central Asia, although Oman and Qatar have also joined these efforts. While the Gulf sovereign wealth funds have actively invested in domestic non-oil sectors, diversifying international investments is also key to secure post-oil economies in the region. Gulf cooperation with Central Asia is not only at the bilateral state level, but also at the interregional Gulf Cooperation Council level. The second Foreign Ministerial Meeting of the Central Asia-GCC Strategic Dialogue was held in Tashkent in April.
This interest in economic cooperation and diversification has emerged equally from both regions. Gulf investments have allowed the five Central Asian nations to diversify their economic partnerships and reduce dependence on any single power. The Central Asian states, which were historically a part of the Soviet Union and are located in China’s immediate neighborhood, have traditionally relied on Russia and China for much of their economic activities.
However, the Central Asian states are wary of the debt-trap diplomacy that has characterized China’s Belt and Road Initiative investments. China’s challenging economic conditions domestically have also made its appetite for international investment increasingly uncertain. At the same time, Russian influence in the region has waned since the outbreak of the war in Ukraine, which has resulted in international sanctions and a reorientation of Russian resources toward the Ukrainian front. Seeking to avoid the cultural and economic expansionism of the two neighboring great powers and diversifying international partnerships, Central Asia has welcomed Gulf investments.
The growing relationship between the Gulf and Central Asia, however, comes with its own challenges. Central Asia is a crucial part of China’s Belt and Road Initiative, a major international trade route. Toward this end, China has made significant investments in infrastructure and energy projects in the region. In parallel, Russia is keen to preserve its historical economic and military influence in the region. Russia and China are also joined by Turkiye, a longstanding partner of Central Asia given their strong cultural and economic ties.
The recent spurt in Gulf investments in Central Asia has thus transformed the region into a new economic battleground.
Zaid M. Belbagi
There is, indeed, potential for Gulf investments in the region to coexist and collaborate with those of China, Russia, and Turkiye, particularly in the sphere of infrastructure and transportation. Gulf investments in transport and logistics infrastructure in countries such as Kazakhstan, Uzbekistan, and Turkmenistan could facilitate easier access to European and Asian markets, providing all the competing states with alternative routes for exports.
However, given each actor’s outsized focus on the sphere of energy investments, this has emerged as a source of geopolitical tensions and competition. Hydrocarbons and renewable energy, two resources Central Asia is well endowed with, are particularly lucrative for international investors. The convergence of Central Asia’s natural resources, strategic location, and growing markets with the geopolitical ambitions of investing countries has inevitably turned the region into an economic battleground.
This is further complicated by the fact that the competing states share positive economic and strategic relations with each other. Turkiye, which in the past has had tense relations with the Gulf, in recent years has witnessed a diplomatic thaw with the GCC states. Notably, Saudi-China relations have grown significantly, with an increase in Chinese investment in diverse sectors in Saudi Arabia, including AI, automated vehicles, solar power, and infrastructure. This indicates that the Gulf states will be wary of any partnership with Central Asia that may jeopardize their own cooperation with China. The growing bilateral and multilateral cooperation between these states is contrasted with their competing interest in regional influence in Central Asia.
The recent spurt in Gulf investments in Central Asia has thus transformed the region into a new economic battleground. Gulf states are not only competing with Turkiye, China, and Russia, but also with each other for regional influence. Its geostrategic location and economic potential has positioned Central Asia as a natural arena for competition. The Gulf states seek to leverage their individual economic strength to position themselves as influential diplomatic players in the region.
This comes as states across the global south are actively building international influence and new partnerships to move away from the shadow of the West. As such, over the next decade Central Asia will remain a strategic battleground for the Gulf states, witnessing both collaboration and competition. For their part, the Central Asian states are unlikely to favor any one international partner given their interest in diversifying investments to secure their economies. The competing powers may, therefore, seek to maximize cooperation in the region, notably in energy security, transport infrastructure, and counterterrorism.
• Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the Gulf Cooperation Council region.
X: @Moulay_Zaid
