Upgrading ­EU-Central Asia Cooperation

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Introduction

Since Russia’s full-scale war against Ukraine began in 2022, the EU’s interest and engagement with the Central Asian (CA) countries of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan has grown significantly. Europe sees the resource-rich countries as important partners in diversifying its energy relations and transport corridors to reduce dependencies on Russia. Based on the EU Strategy on Central Asia, updated in 2019, the EU and the five countries adopted a joint roadmap to strengthen cooperation in October 2023. At the EU and member-state level, high-ranking meetings with representatives of the five countries have increased significantly. In September 2023, the first summit between German Chancellor Olaf Scholz and the heads of state of the CA countries took place in Berlin. Building on this, Scholz will travel to the region in fall 2024. The EU is also planning an EU-CA Summit later this year. While the summits and declarations send important political signals, the EU has not been willing to update or upgrade its strategy on CA to adapt it to the new geopolitical reality. 

We argue that, in light of the new geopolitical environment and domestic challenges in CA, EU institutions and member states must better coordinate their policies in the region and systematically raise their commitment to the highest political level. The EU’s CA strategy must be better coordinated with other EU policies, including the Eastern Partnership policy and connectivity agendas that aim to strengthen economic and political ties. Global Gateway, the European Commission’s program to foster sustainable connections in digital, energy, transport, health, education and research systems worldwide, is a key element of connectivity in CA. But it needs more funding, more political support and better coordination with other EU policies. Within the current CA strategy, there is sufficient room to deepen and concretize EU policy. As a normative power of global governance, the EU is setting its own norms and standards and tries to expand them to other countries. But it must become more transactional to build up leverage through economic cooperation and connectivity. This will help the EU react to shifts in regions like Central Asia and the South Caucasus and make it a more impactful actor beyond its enlargement policy which is the main tool of its foreign policy but not available for CA. It will also help to more successfully promote civil society engagement and the rule of law. Enhanced connectivity with CA countries can be a driver of political and societal transformation in the region.

Growing Significance of EU-Central Asia Economic Cooperation 

Russia’s war against Ukraine has reinforced the mutual interest of Europe and CA countries in reducing dependencies on Russia and diversifying trade and energy relations as well as transportation routes. Both the CA countries and EU member states have changed their risk assessment of Russia. This has created windows of opportunity for strengthened cooperation. 

Up to now, CA states have depended on Russia as a key trading partner and investor, for export infrastructure, and for remittances of CA labor migrants working in Russia. In terms of security, Russia had until now functioned as a provider of stability and security – due to its arms supplies and military bases in Kazakhstan, Kyrgyzstan, and Tajikistan. With its war on Ukraine, it is now unclear if Russia still has the necessary resources to be the key security actor in CA or if it is becoming a threat for the countries themselves.

As a result, the five states have distanced themselves to some extent from Russia’s war, albeit without openly criticizing Moscow. Because Western secondary sanctions would have major economic consequences, they want to avoid being perceived by the West as a warring party. At the same time, they have benefitted from the circumvention of Western sanctions and have taken a hedging strategy toward Russia to avoid provoking the Kremlin. The combination of distancing and cooperation is not new, but rather a continuation of their policy of neutrality and balancing practice for decades and confirmed by their decision not to recognize Russia’s annexation of Crimea in 2014. The full-scale war serves as a catalyst for further gradual diversification from Russia. 

To this end, all states have stepped up their engagement with Europe. Access to the European market is key for them. For the lower-middle income countries, Tajikistan, Uzbekistan and Kyrgyzstan, access to the European market is facilitated by the Generalised Scheme of Preferences (GSP) or GSP+, which offers lower or no customs duties to incentivize sustainable development and good governance. Against the backdrop of Russia’s war, in 2022, EU-CA trade increased significantly. The import of EU goods – in particular crude oil, gas, and metals – from all five countries combined rose by 67 percent in 2022, EU exports – especially machinery and transport equipment – rose by 77 percent. In terms of total trade volume, the EU27 combined was Kazakhstan’s largest trading partner in 2023, accounting for 27.9 percent of its trade. For Uzbekistan and Turkmenistan, the EU27 ranked third, and for Tajikistan and Kyrgyzstan fifth. 

Central Asia at a Glance: Economic Figures and Relations with the EU

For those EU member states, particularly Germany, that had the strongest dependency on Russian gas, the interest in relations with resource-rich countries as an alternative to Russia has grown since February 2022. With their rich oil, gas, and critical raw material reserves as well as renewable energy potential, the CA states can contribute to the diversification of Europe’s energy and resource security. Kazakhstan was Germany’s third-largest natural oil supplier in 2023. Astana, as the main Central Asian supplier of oil and gas to Europe, exported more than 70 percent of its oil to the EU and was the third largest non-OPEC supplier to the bloc. The Swedish-German company Svevind signed an investment deal with Kazakhstan in October 2022 for one of the biggest green hydrogen production projects in the world. And the EU concluded strategic partnerships on raw materials with Kazakhstan in 2022 and Uzbekistan in 2024. 

In the framework of Global Gateway, the EU launched a Team Europe Initiative on Water, Energy and Climate Change in CA, which aims to help countries in the region improve their management of limited water resources and their resilience to climate change. Water is one of the most disputed resources among the CA countries and climate change will deplete supplies further in some. At the same time, there is huge potential for renewable energy in Central Asia, an opportunity for the countries to diversify their energy supply and tackle air pollution as well as for the export of green hydrogen to the EU. Global Gateway will also support investment in transport infrastructure in Central Asian countries that provides an alternative to routes through Russian territory.

The development of the Trans-Caspian Transport Corridor (TCTC) from Europe to Asia via CA aims to reduce dependence on the Northern Corridor via Russia. Although container traffic via the TCTC increased by around 30 percent in 2022, the lack of modern transport infrastructure, as well as coordination and harmonization between the numerous players involved, have so far made transport expensive, risky, and therefore not competitive. To significantly improve the network, a study by the European Bank for Reconstruction and Development (EBRD) identified investment needs in all five countries totaling €18.5 billion. At an investors’ forum organized by the European Commission in January 2024, European and international financial institutions committed a total of €10 billion in investment. In mid-June 2024, the EU and CA launched a Corridor Coordination Platform, an important step forward in their relations. Whether it can improve coordination and cooperation substantially remains to be seen, however. 

Contradictions of Central Asian Countries’ Relations with Europe 

Despite increasing mutual interests and potential for cooperation, EU-CA relations face multiple challenges linked to questions of governance, security, and economic interests for CA countries. 

CA-Russian Relations Are a Tightrope Act 

The growing interest of CA governments in engaging with Europe does not imply that they are turning away from Russia. While they have distanced themselves from Russia’s war, they also strive to benefit from Russia’s international isolation and have intensified economic relations with Moscow. 

CA has gained importance for Russia, which lacks trading partners and transport routes due to Western sanctions. In conflict with their official compliance with Western sanctions, CA serves Russia as a hub for the re-export of sanctioned goods. It is no coincidence that, just as Western exports to CA were growing, export volumes from CA countries to Russia rose by nearly a third in 2022. Significant are the re-exports of Western technology and dual-use goods that support Russia’s military-industrial complex. The re-­exports to ­Russia also include Chinese technology, since China also uses CA as a transit hub for its goods to avoid being hit by secondary sanctions. With its eleventh sanctions package, the EU expanded its measures to prevent sanction circumvention via third countries. While this led to some positive developments in Kazakhstan in 2023 after the government introduced an online tool to track the movement of goods, the effectiveness is questionable and re-exports continue. 

Energy relations with Russia have also grown, for example with Uzbekistan starting imports of Russian gas via Kazakhstan in October 2023 and planning to increase volumes from 2.8 billion to 11 billion cubic meters per year by 2026. To ensure Uzbekistan’s energy security against the backdrop of its quickly growing population and outdated infrastructure, Uzbek President Shavkat Mirziyoyev in May 2024 also signed an agreement with Russian President Vladimir Putin allowing Russia to construct a nuclear power plant in Uzbekistan. The CA states currently have neither the interest nor the ability to turn their backs on Russia. Although their bargaining position has improved due to Russia’s international isolation, their dependence on Moscow remains strong. 

Limited Interest in Alignment With the EU

To counterbalance Russia’s residual role, the war has reinforced the multi-vector foreign policy CA states were already pursuing. While the EU and its member states are important partners, there are a number of other cooperations. CA countries have no interest in a genuine alignment with Russia, the EU, or China. This pragmatic policy means they re-adjust but maintain very close relations with Russia while strengthening cooperation with as many other states as possible to maximize profits and reduce critical dependencies. 

Alongside Russia, China is the key trading partner and investor in the region. Their already strong relations have continued to grow in recent years. In the framework of its Belt and Road Initiative, China is investing particularly in transport infrastructure and the energy and mining sector. Since the war, the China-Kyrgyzstan-Uzbekistan railway project has advanced. As an alternative connection with China versus the route via Kazakhstan, the railway has been discussed for years but was hampered by Kyrgyzstan’s and Uzbekistan’s reservations about indebtedness to China. Construction is planned to start in fall 2024. 

To balance China’s strong role, the countries have intensified relations in particular with Türkiye and the Gulf States. Next to the West and East, the Southern vector is key for CA. The war has given new impetus to the Trans-Afghan Railway project, which aims to connect Uzbekistan via Afghanistan with Pakistan. Uzbekistan pursues a pragmatic policy toward Afghanistan of ensuring regional stability by strengthening economic relations. Alternative trade routes to the strong dependency on Russia and China are crucial for landlocked CA countries. Europe is one direction and market, but from a CA perspective it makes sense to develop options in all directions that allow trade without Russia and China. 

CA countries have also stepped up bilateral security cooperation with China and Türkiye. For example with China cooperation takes place in military training and exercises, law enforcement, and emergency management, and with Türkiye on drones. Multilaterally, while Russia’s regional integration projects – EAEU and the Collective Security Treaty Organization (CSTO) – are losing attractiveness, the role of regional organizations such as the Shanghai Cooperation Organization (SCO) and the Organization of Turkic States (OTS) is growing. EAEU still serves Russia’s interest to circumvent sanctions, but integration is not moving forward and is also not in the interest of most of the participating states. CSTO was never a really functioning security organization, but since Russia is focusing all its resources on the war against Ukraine, it is even less attractive.

In addition, the war has given new impetus to regional cooperation between CA states, which was previously hampered by border and water conflicts. Water management, power production, and questions of regional security have become topics of increased coordination. The interest of all CA countries to hedge and balance Russia and China can help to bring CA countries closer together. At the same time, as international attention on the region grows, so does the competition between the states for investments, trading partners, and the leading role in the region, in particular between Kazakhstan and Uzbekistan. Both are competing for regional leadership. 

These developments are a challenge for EU policy toward the region because there will be no alignment with EU policy in many areas. At the same time, the CA countries are all authoritarian states with an interest in maintaining power. This means they have overlapping interests with China and Russia in controlling civil society, the internet, and media, while corruption and a lack of political competition and rule of law are main features of their political systems.

Limits for EU-CA Civil Society Dialogue: Shrinking Spaces for Societal Transformation

Areas of growing Russian influence in governance practices  are the control of civil society and the internet as well as the strengthening of authoritarian rule and repression against civil society. Russia is in these areas not only a partner and model but also a kind of norm-setter. 

In Kyrgyzstan, which was the most free country in the region until the last presidential election in 2021, political power is increasingly concentrated with the president while the protection of fundamental rights like media freedom is declining. Legislation on “foreign representatives,” adopted in April 2024, following the example of Russia’s Foreign Agent Law, brings NGOs receiving foreign funding under strict control. It limits the EU’s civil society cooperation with Kyrgyzstan, a central part of EU relations with the country. Turkmenistan continues to be one of the most closed and repressive regimes in the world. Kazakhstan and Uzbekistan have introduced broad reform agendas that officially aim to foster liberalization and democratization, yet, in reality, they are cracking down on activists, NGOs, and the media. There is concern in Kazakhstani civil society that leaders in Astana plan to introduce a foreign agent law as well. Kazakhstan’s recently adopted mass media law further restricts the freedom of expression and media. In 2022, the regimes in Kazakhstan, Uzbekistan, and Tajikistan brutally suppressed protests that started peacefully due to discontent over rising energy prices and attempts to weaken regional autonomy. 

Growing external insecurity increases the regimes’ efforts to secure their authoritarian rule and internal stability. The countries learn from both Russia’s and China’s experiences in controlling society and are adopting tested practices. The leaderships’ main interest in ensuring regime survival and power leads to increasing internal instability, fueled by persistent low living standards, growing inequality, corruption, and the challenges of climate change. This internal backsliding contradicts the EU’s interest in deepening cooperation. It further impacts a rather negative business climate and persistent corruption practices which continuously limits investment from EU member states despite the growing interest in deepening economic and resource cooperation. There is an increasing trade-off between economic interests and European norms and standards as well as universal principles at a time when the bargaining position of the authoritarian leaders in CA countries is growing.

Yet, while Russia remains a partner and role model for the ruling elites, CA societies are progressing faster in distancing themselves from Russia. Despite the continued presence of Russian media and disinformation, (anti-colonial) criticism of Russia and its war is growing. The war is acting as a catalyst for the decline of Russian attractiveness and soft power in CA. People are increasingly questioning Russia’s colonialism and the dominance of the Russian language and culture. In Kazakhstan in particular, the young urban population is becoming more interested in their national language and identity. Instead of shrinking freedoms, people desire development opportunities and future prospects. 

Conclusions and Policy Recommendations – Adapting European Central Asia Policy 

Russia’s war against Ukraine is impacting not only regional cooperation in Central Asia but is also stoking the mutual interest of CA and the EU in deepening their engagement. The EU needs alternative sources for energy and raw material imports, and CA countries want to diversify their exports routes and economic partners. Despite increasing trade, there is a limit to EU-CA cooperation due to structural issues like governance, domestic trends, and investment conditions – but also a lack of ambition and coordination on the part of the EU. The EU and its member states would like to boost trade, but they lack substantial strategic engagement with CA countries and commitment at the highest political level – beyond summits. 

The EU needs more ambition to shape and upgrade relations in its own interest. This requires a more transactional approach to build up leverage and a better bargaining position with countries in the region and its big neighbors. EU policy should enhance its role in the region in line with its interests and values to support the strategic autonomy of CA countries. That does not mean the EU will be able to overcome its structural differences with CA states, but it would make Brussels a more relevant player in CA, and it could also support regional cooperation as an alternative to more engagement with Russia and China. The following recommendations should help to overcome the challenges in bilateral relations and make the EU a more relevant player in Central Asia.

The Crucial Role of EU Member States

Deepening relations with CA largely depend on the interests and commitment of the EU member states. Germany, which unlike other member states has had relations with and representations in all five CA states since their independence, currently plays a leading role. This is reflected, for example, in last year’s summit with Chancellor Olaf Scholz and the leaders of the five countries, growing business relations, and Germany’s coordinating role in the Team Europe Initiative on Water, Energy and Climate. The German Chancellery should play a more prominent role in the engagement with CA leaders, but also follow up with involvement from other ministries like the Foreign Office, the Ministry for Economic Affairs and Climate Action, and the Ministry for Economic Cooperation and Development. Germany should play a bigger role at the EU level in driving relations with CA to the next level and garnering more attention from the new Commission. Berlin could strengthen coordination between the member states in their bilateral relations with CA, especially with interested countries like France and Italy. A lack of coordination between member states and EU institutions poses the risk of CA states playing member states off against each other.

Building up Leverage

The EU competes with other players such as Russia, China, and Türkiye, which are willing to offer major resources without demanding fundamental standards of human rights and good governance. At the same time, CA countries have no interest in being too dependent on these countries. The EU should interlink its policy of enhancing connectivity, economic relations, and sustainable development more closely with promoting domestic resilience, emphasizing the benefits of, among other things, the guarantee of rights and freedoms and the rule of law. The EU and European donor institutions should ensure compliance with international standards of human rights protection, good governance, environmental standards and anti-corruption in investment projects. Relying only on local laws and monitoring institutions is not sufficient. The Enhanced Partnership and Cooperation Agreements (EPCA) that the EU is preparing with Kyrgyzstan, Uzbekistan, and Tajikistan, while already in force with Kazakhstan since 2020, provide a framework that should be utilized more effectively. This will help improve the business climate and thus encourage European private investment, which has been limited by high risks. Civil society and expert institutions can also assume a role in monitoring progress and informal practices and clear communication when conditions do not improve can help build up pressure for change.

CA states have a high interest in access to the EU market, which gives the EU the ability to build up leverage on other issues. One instrument for that is GSP+. The EU has included Uzbekistan and Kyrgyzstan in the scheme, although they only partially comply with the 27 international conventions on human rights, good governance, and environment, which membership requires, in the hope of creating incentives for compliance. While the EU monitors the implementation of the standards, it lacks sanction mechanisms. If the countries do not fulfill their obligations or undermine questions of human rights, civil society development, and environment, there should be a credible threat of suspension from GSP+. In its engagement with the region and investments, the EU should increase the incentives for regional cooperation. 

Improve Alignment with EU Foreign Policy and Reduce Dependency on Russia

The EU must be more resolute in addressing the circumvention of sanctions by CA countries. The EU’s anti-circumvention policy should be better integrated with its trade policy with CA countries. Central Asian countries have an interest in keeping good relations with Europe (and the US). There should be more transparency about trade practices and a continuous institutional dialogue on the implementation of sanctions policy between EU member states and institutions. A key shortcoming is that the EU member states and European businesses do not have sufficient capacities to monitor compliance. There is a need for closer coordination between policymakers, responsible institutions in the EU member states, companies, and among the individual member states. There must be greater incentives and political will to better control the export of European dual-use goods to CA as well as higher penalties for non-compliance. This requires more resources in companies, member states, and the EU. 

Improving Coordination

The proposed cross-cutting policy and issue linkage require improved coordination between all stakeholders and institutions involved. This concerns, for example, the Directorates-General (DGs) of the Commission and the European External Action Service (EEAS). It is a positive development that DG for International Partnerships (INTPA) is driving cooperation forward. But embedding the CA policy first and foremost in international (development) cooperation also creates the risk that other areas will be insufficiently involved. Moreover, the private sector and civil society need to be more engaged. Coordination with the private sector is especially crucial, since businesses have firsthand experience with the problems on the ground. Furthermore, since business and politics are deeply interconnected in CA countries, it is also crucial for the EU to better coordinate its politics with the business sector. 

Connecting Regions

The EU needs to improve coordination between its regional policies, particularly between Central Asia, Eastern neighborhood and Black Sea policies. For example, currently, the EU sees the development of the Trans-Caspian Transport Corridor primarily as a project in its CA policy, although it runs through the Black Sea and South Caucasus and has an impact on the development of the wider region. Due to the geographic location, these regions are interlinked by similar opportunities and challenges. Conflicts in one country affect the others and the EU’s relationship with those. The EU should link its Eastern Partnership program and CA policy more closely through its cross-cutting policies in the context of connectivity. This interconnection will also help remedy a lack of funding and ensure it can be used more effectively and sustainably for both regions. 

EU as a Security Actor

The EU has been running security projects in the region for years, for example on border management, combating terrorism, and drug trafficking, especially against the backdrop of the security situation in Afghanistan. Yet, the EU is not a classical hard security actor. But since many threats are connected to comprehensive security questions like disinformation, corruption, or a lack of administrative capacities, the EU has much to offer to strengthen resilience and intra-regional cooperation. It is also closely linked to the rule of law, an independent media, and a thriving civil society. But there are limits to cooperation with the EU due to the interest of authoritarian governments in staying in power and undermining the activities of civil society and the independent media.

Supporting Civil Society

With repression on the rise, it is important to engage with civil society. Not only is it necessary to push at the highest political level to withdraw restrictive NGO legislation and to ensure respect for fundamental rights and freedoms, but programs to protect and promote civil society should be expanded. For this, it is crucial that the EU has a stronger presence and visibility on the ground.  EU delegations need more resources. Support for independent media and projects to strengthen media literacy and counter disinformation are of particular importance. The EU should increase its visibility in local media and support access to independent information in Russian and national languages. The EU should promote visa facilitation for all CA countries, which has recently progressed with Kazakhstan. People-to-people contacts, support of academic exchanges, and funding for independent academics should be increased.