More Gulf outreach

Ahmed Mustafa
Saturday 29 Jul 2023

A new alliance with Central Asian countries opens up new economic and security horizons to the Gulf.

 

Last week, Saudi Crown Prince Mohamed bin Salman hosted Gulf and Central Asian leaders for a Jeddah summit. Uzbekistan, Turkmenistan, Kazakhstan, Tajikistan and Kyrgyzstan (the C5 countries) thus conferred with the six Gulf Cooperation Council (GCC) nations at the highest level with a view to greater cooperation and stronger ties.

Relations between the GCC and the C5 countries have been gathering momentum in recent years since most are fellow members of the Islamic Cooperation Organisation (ICO), but it is now clear that the de facto leader, Saudi Arabia, is keen to take those relations to the next level. The summit approved a Joint Action Plan for Strategic Dialogue and Cooperation between GCC members and Central Asian states.

Trade between the two blocks has the potential to grow from its current volume of about three billion dollars a year. Moreover, foreign direct investment – mainly by Gulf countries and businesses in Central Asia – is also poised to grow. Some Gulf investors and companies, especially from the UAE and Saudi Arabia, have reasonable presence in the C5 countries. The talks were therefore an opportunity to build on existing foundations, especially with those countries going through an economic revival.

Some commentators were sceptical about the outlook for cooperation between the two blocks as both are still reliant on natural resources. Both the GCC and the C5 countries are big exporters of oil and gas, with Turkmenistan for example resting on one of the world’s major natural gas reserves while Kazakhstan and Tajikistan are also oil and refined oil product exporters. Their energy exports became additionally significant after the war in Ukraine last year. As Europe banned energy imports from Russia, it increased reliance on Kazakh oil and refined products, along with gas imports from Turkmenistan along with other new sources.

Two energy-reliant blocks might more plausibly compete against each other. But Saudi Arabia, as an OPEC kingpin, appears to have chosen a path of alliance rather than rivalry with global energy producers and exporters. Even though there is no indication of an imminent widening of the coalition of OPEC+, which brings in nearly a dozen non-OPEC producers including Russia.

Saudi Arabia and other Gulf countries have another energy-related issue in common with Central Asian and other oil producers. Fighting climate change is at the forefront of current affairs and, fossil fuels being the main perpetrator of global warming, climate activists are adamant on weaning the world economy off oil and gas. In the process of resisting these efforts and striking a balance for the energy transition, galvanising efforts with other producers and exporters looks logical.

But areas of mutual benefit between the two blocks are not confined to energy. C5 countries are rich in mineral resources, for example, and the GCC imports copper and other metals from them. Central Asian countries are big exporters of gold and copper. But they also contain good reserves of other minerals like mercury, uranium, and aluminium. The mining sector could be a promising target of Gulf investments.

Another factor that favours cooperation over competition is that economic transformation being paramount is a common element between the two blocks. Various phases of plans to diversify the economy and move away from reliance on energy and raw materials are underway, and cooperation might be a catalyst for speeding up diversification to the benefit of all parties.

The C5 countries began the process of economic restructuring to transform the model they adopted when they were part of the former Soviet Union. Some have left the socialist economy behind while others continue with the slow transformation. Gulf money would be another window of opportunity for them to increase the foreign investment needed to speed up the transformation.

Sectors other than energy, from agriculture to tourism and services, are vital areas of cooperation. Even in energy transformation away from fossil fuels and renewables, Central Asian countries can benefit from established experiences in some Gulf countries.

Yet, cooperation is not only economic. Both blocks have joined forces before in combating terrorism and Islamist extremism. It could also be apposite to enhance such security cooperation while the world faces greater geopolitical and security challenges. Ultimately, and probably most importantly to the Gulf’s relatively young leaders, cooperation with the C5 block is another step towards diversifying strategic alliances away from the US and the West. Gulf leaders are building good relations with China, India and other rising powers, and Central Asia is a significant addition to that roster.

* A version of this article appears in print in the 28 July, 2023 edition of Al-Ahram Weekly

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