Afghan Authorities Accelerate Push for Road and Rail Projects

As the Taliban government pursues an assertive policy to enhance Afghanistan’s logistical infrastructure, interest in the country’s role as a southern transit hub is gaining momentum across West Asia, facilitating the joint implementation of a wide range of new road and rail projects. Leading the charge is Uzbekistan, which has revived its ambitions through the Termez–Mazar-i-Sharif–Kabul–Peshawar railway—better known as the Kabul Corridor—positioning itself at the forefront of regional integration.

Meanwhile, Turkmenistan, backed by Kazakhstan, is advancing a parallel railway initiative through western Afghanistan to secure more direct access to Pakistan’s seaports. In a symbolic move, the foundation for the 22-kilometre Torghundi-Sanobar railway line was laid in September 2024, making a significant step towards reshaping regional connectivity.

The growing engagement between the Central Asian republics and Kabul in the development of transport infrastructure reflects a shared ambition to diversify foreign trade routes and establish more efficient supply chains to access the vast South Asian market. Alongside ongoing projects involving Uzbekistan, Turkmenistan, and Kazakhstan, Afghan authorities have announced plans to construct the Mazar-i-Sharif–Herat–Kandahar railway. This line has the potential to become the shortest trade route between India and Russia, enabling New Delhi to build transport links with Afghanistan and Central Asia while bypassing Pakistan.

Even Iran, which remains the primary conduit linking Central Asia to the warm waters of the Indian Ocean, and, by extension, to global trade, is seeking stronger transport links with Afghanistan. Tehran is planning to launch two railway connections to Afghanistan simultaneously: the Khaf–Herat line in the north and the Zahedan–Zaranj line in the south-west. The railway from Khaf to Herat is nearly complete, and the Taliban intend to extend it to Mazar-i-Sharif, a key Afghan trade hub already connected to the Uzbek-built Hairatan–Mazar-i-Sharif railway (launched in 2011) and the planned Kabul Corridor. Integrating these routes could eventually allow Iran to reach the Wakhan Valley in Afghanistan’s Badakhshan province, which is the narrow strip of land separating Afghanistan from China.

Notably, during a Taliban delegation’s two-day visit to Tashkent in February 2025, Uzbek and Afghan authorities agreed to jointly implement the Mazar-i-Sharif-Herat railway route. According to the Afghan Deputy Prime Minister for Economic Affairs, Mullah Abdul Ghani Baradar Akhund, this project would expand Tashkent’s trade with South Asia, Iran, and China, reinforcing the idea that Tehran could utilise the Kabul Corridor to reach the borders of China’s Xinjiang region. Another potential route could see the Zahedan-Zaranj railway extended to Kandahar and Kabul with its subsequent link to the Wakhan Corridor.

In 2020, Iran began constructing the Chabahar–Zahedan railway line, with plans to extend it to Zaranj in Afghanistan’s border province of Nimroz and further onward to Dilaram and Kandahar. Engineering surveys have already been conducted on the Afghan side for the Zaranj–Kandahar railway, which could offer Tehran an alternative access route to Afghanistan beyond the Herat Road—bringing it one step closer to creating a new overland trade route to China.

Nevertheless, the prospect of reviving the Wakhan Corridor— an outcome eagerly anticipated by Tehran—remains uncertain. In 2024, Afghanistan’s Ministry of Rural Rehabilitation and Development announced the completion of gravel laying on a 50-kilometre stretch of the road. However, substantial investments are needed to turn the ancient route into a viable commercial transit point. The Taliban are striving for help from China, although Beijing has so far adopted a cautious, wait-and-see approach and is in no rush to open its arms to Afghanistan.

Despite this limited progress, Tehran appears unlikely to back down, particularly as it pursues other ambitious projects. One of these is the proposed Iran–Afghanistan–Tajikistan–Kyrgyzstan–China railway corridor, also known as the Five Nation Road.

Its initial section will be the Khaf-Herat railway, scheduled to begin full operations later this year. The route would continue through Sheberghan, Mazar-i-Sharif, Khulm, and Kunduz, ultimately reaching the Tajik border at the Sherkhan Bandar crossing. It would then stretch eastwards across Central Asia to Kashgar in western China, spanning an estimated 2,000 kilometres. In this context, the Taliban’s proposed Mazar-i-Sharif–Herat railway becomes a strategic segment of a broader transit route from Iran to China.

The creation of a Five Nation Transit Corridor could also benefit Turkmenistan, which has long pursued a railway link to Tajikistan via Afghanistan through the TAT project. This initiative emerged in 2013 amid rising tensions between Tashkent and Dushanbe over transit routes and the desire to bypass Uzbekistan.

Turkmenistan completed the first stage of the TAT railway in 2016, spanning from Atamurat (Kerki) through Ymamnazar to Akina. The Akina–Andkhoy segment followed in early 2021. However, the Taliban’s return to power in summer 2021 brought work to a halt, as regional actors reassessed the group’s stance on cross-border infrastructure and foreign engagement. Yet contrary to initial concerns, the new Afghan leadership has shown a pragmatic approach to regional connectivity.

In February 2025, Afghanistan and Turkmenistan agreed to carry out survey and design work for the 55-kilometre Andkhoy–Sheberghan railway line, a project first announced by the Taliban in 2024. Meanwhile, in July 2024, Tajikistan’s Ministry of Transport and the Korea International Cooperation Agency signed a protocol to develop a feasibility study for a 51-kilometre Jaloliddini-Balkhi–Panji Poyon railway, linking Tajikistan to the Afghan border. Both developments indicate a resumption of the TAT project, which could raise concerns in Uzbekistan, given its longstanding role as a key transit country for several of its neighbours’ access to global markets.

The development of trans-Afghan logistics infrastructure is also of growing interest to Russia, which sees the new corridors as a means of extending its flagship International North–South Transport Corridor (INSTC) to Pakistan.

A clear indication of this was the visit of a Russian delegation led by Security Council Secretary Sergei Shoigu to Kabul on 25 November 2024, during which the construction of the Trans-Afghan Railway was discussed. Following talks with the Taliban, Russian Deputy Prime Minister Alexei Overchuk stated that the Russian Federation considers this project as an integral component of the INSTC.

The Russian Ministry of Transport later announced that it would collaborate with Uzbekistan to prepare a feasibility study for a railway through Afghanistan, based on two agreed routes: Mazar-i-Sharif–Herat–Dilaram–Kandahar–Chaman and Termez–Naibabad–Logar–Kharlachi. But this announcement was not confirmed by Uzbekistan Railways.

Russian involvement in constructing both the western and eastern Afghan railway routes—starting from the borders with Turkmenistan and Uzbekistan, respectively—would allow Ashgabat and Tashkent to secure a share of cargo flows between Northern Eurasia to South Asia. Increased competition along these routes is likely to drive down the cost of transit transport over time.

The opening of new trade routes through Afghanistan presents significant opportunities for realising Central Asia’s economic and transport-transit potential. Several key factors should be considered when assessing further developments in this area.

One consideration is the potential reorientation of Uzbekistan towards the western Trans-Afghan railway route. The relative cost-effectiveness of the Kandahar Corridor, compared to the railway via Kabul, could serve as a catalyst for such a shift. Although the Mazar-i-Sharif-Herat-Kandahar-Chaman route (1,468 km) is longer than the Kabul Corridor (647 km), it offers advantages in terms of terrain and security. Additionally, the route can branch towards Iran through the border province of Nimroz in south-western Afghanistan, providing a valuable strategic link for future transport corridors.

Another important factor is the growing security risks in Pakistan, coupled with increasing tensions in Afghan-Pakistani relations. These dynamics may prompt Tashkent and its external partners to reconsider their preferences on the trans-Afghan track, favouring the Kandahar Corridor instead. In this context, prioritising a transit route that connects to the southern regions of Pakistan—those closest to the ocean—would be more appropriate.

Given the growing significance of Afghan transit in transregional logistics, Central Asian countries will need to balance the interests of all stakeholders to prevent the emergence of intensified geopolitical rivalries along these evolving trade corridors. Harmonisation of the trans-Afghan routes currently under development appears to be both the most likely and most favourable scenario for the future. In such a case, the key stakeholders, particularly Uzbekistan, Turkmenistan and Kazakhstan, could pool their resources to establish a unified transregional railway corridor through Afghanistan.

This collaborative approach would enhance the prospects for attracting external investment and accelerating project implementation. Moreover, a consolidated approach is vital for strengthening the region's role in shaping the emerging architecture of trans-Afghan connectivity. If done successfully, Afghanistan could gain a genuine opportunity to position itself as a new transit hub at the heart of Eurasia.

Photo: Asian Development Bank

Kazakhstan’s Path to Carbon Neutrality Could Run Through the Gulf

The Gulf states hold a unique position among Kazakhstan's international partners, as demonstrated by Kazakhstan's involvement in the 2023 Central Asia-Gulf Cooperation Council (GCC) Summit. Addressing the summit in Jeddah, Kazakh President Kassym-Jomart Tokayev highlighted the potential for synergy between Central Asia’s resources and the Gulf states’ economic innovation. He emphasised the vast opportunities in this relationship and their collective capacity to elevate their multifaceted partnership.

At the summit, discussions centred around expanding energy collaboration, with a focus on advancements in green energy and the modernisation of power generation infrastructure. President Tokayev reaffirmed Kazakhstan's willingness to engage in close partnerships with Persian Gulf energy companies.

Decarbonisation policy is an emerging development priority for Kazakhstan, reflecting global trends in sustainability and climate action. The transition to a low-carbon economy presents a significant challenge, requiring comprehensive measures for the technological modernisation of the national economy, especially in the extractive industries.

At the Climate Ambition Summit in December 2020, Kazakhstan announced its goal of achieving carbon neutrality by 2060. This commitment was formalised in February 2023 with the adoption of the Strategy for Achieving Carbon Neutrality by 2060.The strategy seeks to balance carbon dioxide emissions with removals from the atmosphere, with an interim target to decrease greenhouse gas emissions by 15 percent by 2030 compared to 1990 levels. This reduction could be increased to 25 percent, provided international assistance is secured for the decarbonisation efforts. 

Transitioning to a decarbonised future requires a fundamental shift away from Kazakhstan’s coal-dependent energy system. The strategy estimates a total investment of $610 billion, with over half of this funding reallocated from conventional industries to more sustainable sectors. The remaining portion will be sourced from newly established investment channels.

Prominent financial organisations, including the European Bank for Reconstruction and Development (EBRD), remain committed to backing decarbonisation projects. Simultaneously, Kazakhstan is actively enacting reforms to encourage private sector investment in renewable energy sources.

Recognising the financial and technological commitments needed for decarbonisation, Kazakhstan is diligently fostering international partnerships. This approach is yielding support from key partners such as the EU, China, the World Bank, and the EBRD, thereby attracting further investment and the adoption of cutting-edge technologies. But additional sources of climate financing are needed—the Gulf is stepping up its commitments.

In December 2023, the sixth session of the Kazakh-Saudi intergovernmental commission convened in Riyadh to explore new opportunities for collaboration. During the meeting, ACWA Power, a Saudi company, announced plans to invest approximately $10 billion in Kazakhstan's green energy sector. This investment would support the growth of wind and hydrogen energy, thereby aiding Kazakhstan's broader decarbonisation efforts.

In March 2024, Kazakhstan and Saudi Arabia formalised this partnership for the ACWA Power project through an intergovernmental agreement, outlining their commitment to build wind power plants with a combined capacity of 1 GW, equipped with an integrated energy storage system. The project's initial investment is expected to exceed $1.8 billion. Additionally, both nations have partnered to establish a shared innovation hub in Riyadh, designed to promote Kazakhstan's IT solutions and burgeoning startups in the Middle Eastern market.

Kazakhstan is also working on its collaborations with the UAE on solar and wind initiatives. A significant milestone in this partnership was the signing of an investment deal with Masdar in 2022, aimed at building a 1 GW wind farm in the Zhambyl region. This project incorporates advanced energy storage solutions, enhancing the reliability and stability of Kazakhstan's power grid while increasing the share of renewables in the nation's energy mix and reducing carbon emissions.

Kazakhstan's regional prominence stems from its position as Central Asia’s largest economy and a leading hydrocarbon exporter, attracting roughly 60 percent of FDI inflows into Central Asia. Recognising its responsibility to curb greenhouse gas emissions, the country has pioneered the region’s first carbon trading system, creating economic incentives for businesses to decrease their emissions.

With an estimated renewable energy capacity of 1 trillion kilowatt-hours, Kazakhstan also shares its expertise with neighbouring countries, contributing to broader regional environmental improvements.

Kazakhstan is also strengthening green cooperation with Central Asian neighbors through initiatives like the International Fund for Saving the Aral Sea, which addresses environmental degradation, and the Central Asian Regional Environmental Center, which supports cross-border water and biodiversity projects. In 2024, The Presidents of Kazakhstan, Azerbaijan and Uzbekistan signed a strategic agreement on the intersystem integration of the energy systems of the three countries. Collaborative efforts are also emerging through the Central Asian Regional Environmental Center (CAREC), facilitating cross-border projects focused on water resource management and safeguarding biodiversity.

Concurrently, Gulf countries are also deepening green partnerships in the region. Masdar of the United Arab Emirates is leading major projects in Uzbekistan, including the 100-megawatt Nur Navoi solar power plant. Masdar has also signed an agreement with the Kyrgyz Republic’s Ministry of Energy to develop a pipeline of renewable projects in the Central Asian nation, with a capacity of up to 1 gigawatt, starting with a 200-megawatt solar photovoltaic plant. Tajikistan is partnering with the Abu Dhabi Development Fund and is being considered as a potential investor in the Rogun project. These collaborations drive regional energy transformation and deepen links between Central Asia and the Gulf through sustainable development and shared climate objectives.

In correspondence with the shift towards climate action worldwide, Kazakhstan is not only aligning with global sustainability trends but is also crafting its own unique model for a green economy, setting a precedent for the entire region. Through a combination of national strategies and active regional partnerships, Kazakhstan is positioning itself as a hub for clean energy innovation and sustainable development in Central Asia.

Photo: Eni

Uzbekistan’s President Hopes a Decree Will Spur Green Economic Growth

In November last year, during the parliamentary meeting of the Oliy Majlis, Uzbekistan’s legislature, Uzbek President Shavkat Mirziyoyev proposed that 2025 would be the “Year of Environmental Protection and the Green Economy.” He emphasised that the strategic goal of “New Uzbekistan” is to achieve environmental sustainability and economic growth by transitioning to a resource-efficient, green development model.

Each year since gaining independence, the Uzbek president has issued a decree on the eve of Constitution Day, observed on 8 December, setting the strategic priority for his administration for the coming year. These decrees generally reflect development priorities, as reflected in the Year of Support for Youth and Business (2024), Year of Development of Science, Education and the Digital Economy (2020), Year of Active Investments and Social Development (2019), and so on. While not all goals are fully achieved within a given year, these decrees provide a foundation for advancing the country’s socioeconomic development by setting out a framework for further legislation and policy formation at various levels of government.

As the most populous country in Central Asia with 37 million inhabitants, Uzbekistan faces pressing environmental challenges, including water shortages, soil erosion, desertification, and air pollution. The ongoing Aral Sea crisis, for instance, remains the country’s most significant ecological disaster, affecting not only Uzbekistan but also its neighbouring countries. While Uzbekistan has made strides in economic modernisation in recent years, environmental policy has often lagged behind. 

Declaring 2025 as the Year of Environmental Protection and the Green Economy signals a shift toward making sustainability a central development priority. A successful implementation of this year's decree will determine whether the country can transition to a low-carbon economy, improve resource efficiency, and enhance climate resilience—aligning with global commitments such as the UN Sustainable Development Goals and the Paris Agreement.

The 2025 programme aims to improve the country's environmental situation by focusing on several areas of intervention. The main objectives of the decree are community-level initiatives, such as creating green spaces, encouraging technical assistance to reduce emissions, and attracting financing for large projects. 

In terms of community-level initiatives, the decree emphasizes public engagement by linking health and lifestyle improvements to its environmental vision. For example, the programme promotes a national movement for “green families,” encouraging environmental stewardship alongside healthy eating, daily physical activity, and the use of eco-friendly transportation. This holistic approach aims to cultivate an eco-conscious culture, ensuring that residents actively participate in and benefit from the country’s environmental transformation efforts.

Equally important is technical assistance to reduce emissions, which is critical given Uzbekistan’s current reliance on fossil fuels and outdated industrial practices; these factors exacerbate air and water pollution, undermine public health and economic productivity.

Complementing these efforts, securing funding for large-scale projects is essential for modernising infrastructure and expanding renewable energy technologies. This, in turn, supports sustainable economic growth, generates new job opportunities, and reduces vulnerability to environmental shocks. Together, these initiatives form a comprehensive strategy that balances immediate community-level improvements with the broader systemic changes necessary for a resilient and sustainable future.

Small projects have also been underway, spurring forward the goals outlined in the state programme. This has included a tree-planting campaign organised by the Ministry of Ecology, Environmental Protection, and Climate Change in cooperation with the Zamin International Public Foundation, held on 19 March 2025. The Oxygen Park Project was developed as part of the national Yashil Makon ("Green Space") initiative to enhance Tashkent’s greenery, create a favourable environmental setting, and improve recreational spaces for residents and visitors. Projects like this one demonstrate how the decree seeks to mobilise support for grassroots projects while also securing investment for wide-reaching impacts, such as advancements in renewable energy.

If administered successfully, the initiative will not only continue to expand urban green spaces but also enhance the overall ecological aesthetic of neighbourhoods through improved street landscaping and the development of “shaded walking streets” where trees and greenery are strategically planted. These measures aim to provide residents with accessible recreational areas, reduce urban heat, and improve air quality.

In recent years, Uzbekistan has already been actively working to reduce its carbon footprint by developing green energy and implementing energy-saving technologies in cooperation with companies such as Masdar and ACWA Power. As part of the state programme, the share of renewable energy sources out of total electricity generated is set to increase significantly to 26 percent. To achieve this, 16 new green power plants with a total capacity of 3.5 GW will be launched, alongside the construction of hydroelectric power stations with a combined capacity of 160 MW.

Additionally, the programme plans to install small solar panels in 35,000 households and 27,000 private and social facilities. By the end of 2026, 3,000 small hydropower plants with a combined capacity of 164 MW are set to be constructed. A key step in advancing the ‘green’ economy will be the introduction of special tariffs for electricity generated from solar and wind power, as well as waste utilisation, starting from 1 April 2025.

To support these efforts, significant investments are expected, with the state programme explaining how the government plans to take measures from 2025 to attract concessional loans and grant funds to support green and low-carbon development projects from international financial institutions and investment banks. Up to EUR 200 million will be gradually attracted from the European Bank for Reconstruction and Development, while the World Bank will provide USD 10 million to help reduce methane emissions in the energy sector. Additionally, the Korea International Cooperation Agency, through the Global Green Growth Institute, will contribute USD 6.5 million in technical assistance to enhance green cooperation between Uzbekistan and Korea. Under the World Bank’s iCRAFT project, USD 7.5 million will be secured to support the reduction of 500,000 tons of greenhouse gas emissions. Furthermore, the German Society for International Cooperation will invest EUR 20 million to promote industrial greening and reduce harmful gas emissions from nitric acid production facilities.

Beyond the year-long government scheme, Uzbekistan is already taking noteworthy steps to position Central Asia as a key hub for the development of a green economy and clean energy, particularly in solar and wind power. Each year, Uzbekistan commissions about 2 GW of new solar and wind generation capacity, contributing to the region’s efforts to develop sustainable energy infrastructure. Though, additionally, one major initiative is the revival of the Great Silk Road through regional energy interconnectivity, linking Central Asia, the Caucasus, and Europe via a unified energy corridor. A recently signed multilateral agreement with Kazakhstan and Azerbaijan at COP29 will enable the export of renewable electricity through the Middle Corridor, with Azerbaijan constructing an undersea cable along the Black Sea to connect to Europe. This initiative will establish reliable transmission routes for environmentally friendly energy, further strengthening Uzbekistan’s role in the global energy transition. 

Another major initiative is a large-scale environmental restoration project designed to mitigate the effects of climate change. This includes establishing 100,000 hectares of green zones on the dried seabed of the Aral Sea and expanding forested areas in the Aral region to 2.1 million hectares. Given the profound environmental and socio-economic impacts of the Aral Sea crisis on its littoral states, this initiative is a crucial step towards regional ecological recovery and long-term sustainability.

Yet, for a country rich in natural resources, significant challenges remain. This includes resistance from traditional energy sectors reliant on fossil fuels and concerns over the financial burden of large-scale green investments. Uzbekistan ranks 11th globally in natural gas production and 14th in reserves, making it crucial to balance fossil fuel export interests with energy transition efforts. The challenge lies in balancing the energy transition and green economy measures with its interests in the fossil fuel trade, where a strategic approach is needed to leverage existing energy assets while investing in renewable alternatives 

Promisingly, previous decrees, such as the Year of Active Investments and Social Development, which took place in 2019, appear to have delivered tangible results. That year, the value of foreign direct investment reached  $4.2 billion, more than tripling the previous year’s total. The share of investment in GDP rose to 37 percent, also reflecting substantial growth. Additionally, Uzbekistan secured its first international credit rating and successfully placed $1 billion in bonds on the global market. While the decree may not have been solely responsible for these economic outcomes, it nonetheless helped direct the focus of relevant government ministries and agencies.

Translating the 2025 ambitions into tangible results will require sustained political will and transparency, particularly from government agencies responsible for policy execution. President Mirziyoyev has been a key advocate for the green transition, backed by institutions such as the Ministry of Ecology, Environmental Protection, and Climate Change. 

In this regard, the declaration of 2025 as the Year of Environmental Protection and the Green Economy may build a foundation for energy transition and sustainable development. By institutionalising environmental priorities, the government is signalling its intent to balance economic growth with sustainable development.

Photo: Uzbekistan Presidential Administration

Gulf States Offer Development Assistance in Central Asia as Western Donors Step Back

Recently, bilateral and multilateral relations have intensified between the five Central Asian republics and the six member states of the Gulf Cooperation Council (GCC). In addition to a surge in diplomatic visits and meetings at the state level, there are also signs of increasing GCC investment plans in Central Asia. This is accompanied by growing people-to-people and business  contacts; operators report a rise in travel between the two regions, while experts highlight the GCC as a potential labour migration destination for Central Asian workers. 

Against the backdrop of a seemingly encouraging overall picture, it is also important to consider development assistance. In Central Asia, Kazakhstan, and Turkmenistan are upper middle-income countries, with Kyrgyzstan, Tajikistan and Uzbekistan being lower middle-income countries. The latter three Central Asian republics receive development assistance to a larger extent, while Kazakhstan has started developing its own development agency. Nonetheless, all five countries remain assistance recipients. 

Traditional development assistance providers are based in the Global North, particularly among Western states. As such, many of the world’s leading development actors, such as the United Kingdom and France, are also former colonial powers. This often raises debates on how to approach aid and ensure historical injustices are addressed. So-called ‘new development assistance’ includes recently emerged major economic powers, who have received development aid themselves in the past, including China, India, and Brazil, among others. 

The GCC states thus represent an emerging wave of development assistance providers, having only recently begun to establish their profiles as global development donors. Central Asia, on the other hand, offers opportunities to engage in development aid in a politically safe and transparent manner. Having long been a recipient of development assistance, Central Asia still requires external support but has also accumulated sufficient knowledge and experience to engage with donors efficiently and transparently. 

The United Nations recommends developed nations to allocate 0.7 percent of their gross national income (GNI) to development assistance. The leading development assistance providers in the GCC—Saudi Arabia, Kuwait, Qatar and the United Arab Emirates—collectively contributed $9.2 billion in development aid in 2022 alone, concretising the region’s role in global development. Moreover, these states have established formal aid agencies and report significant outbound assistance

At the regional level, the GCC states have contributed to multilateral organisations such as the Islamic Development Bank, where they are major stakeholders. These efforts are often announced at GCC summits or ministerial meetings, with funding decisions aligning their collective strategic priorities. According to a 2023 report by the Center for International Policy Research, in 2021, the UAE provided $47.2 million in development aid to Central Asia, while Qatar allocated $5.2 million. Saudi Arabia contributed $43.6 million, and Kuwait distributed $33.3 million in further development assistance to the region. 

Inter-regional multilateral relations are becoming increasingly substantial and regular. The inaugural GCC-Central Asia Summit took place in the Saudi city of Jeddah on July 19, 2023. The next summit is scheduled to be held in May 2025 in the Uzbek city of Samarkand. In between these two milestone meetings, there have been a series of ministerial meetings, where cooperation in trade, economic, investment, transport and communications, cultural, humanitarian, environmental, and tourism sectors were discussed.

However, there remains a gap in the regional landscape in climate finance in Central Asia that must be addressed. The Trump administration’s recent suspension of all foreign aid sent shockwaves across the global development sector, sparking confusion and panic. While the full impact of this decision is yet to be realised and analysed, it is clear that at least some areas of economic development and welfare worldwide—including Central Asia—will require additional support. 

In addition, the GCC states, alongside other development donors, have a unique opportunity to carry out a conceptual overhaul of the global development aid approach. Conventional development assistance has faced significant criticism, ranging from neocolonial allegations to concerns about inefficiency. The GCC has both the resources and the strategic positioning to create something new, innovative, and more effective. Entering Central Asia as a relatively neutral actor, the GCC is unburdened by a complicated shared past, unlike Russia, or politically motivated aid, as seen with the EU or the US. This neutrality could help facilitate a mutually beneficial and more equitable partnership between the two regions. 

Engaging in development assistance in Central Asia provides the GCC with an opportunity to boost its soft power in the region. There are numerous avenues for bilateral and multilateral cooperation to choose from, including, but not limited to, public healthcare, education, tourism, and poverty alleviation. 

However, two key challenges may impede smooth development cooperation between the GCC and Central Asia. First, the GCC lacks a designated agency focused on multilateral development cooperation and the pooling available funds to support developing countries. In contrast to certain nations and other international entities that have separate organisations—such as USAID or EU AID—there is no specific GCC development assistance agency with a distinct name and brand. Branding is crucial in international development, particularly for visibility and public support on the ground. Development assistance serves various objectives, one of which is to build a positive image of the donor, thereby strengthening its soft power on both global and local levels. 

The closest equivalent to a dedicated development agency within the GCC is the coordinated effort under the GCC Secretariat General, often linked to initiatives like the Gulf Programme for Development (AGFUND). However, the execution of these efforts is largely delegated to national entities like the Saudi Fund for Development or Kuwait Fund for Arab Economic Development. National institutions within the GCC's member states occasionally collaborate in distributing development assistance and work with regional mechanisms or funds set up under the GCC's guidance.

Second, there is a clear lack of in-depth knowledge and understanding of the local and regional context in Central Asia, as well as the specific needs on the ground. It is no secret that, until recently, the GCC-CA interaction has been fairly limited; both regions have prioritised closer partnerships elsewhere in the world. However, the high-level GCC-C5 Summit in 2023 and the upcoming Summit in Samarkand this year signal a growing commitment from both sides to deepen ties. 

Policymakers in the GCC might consider streamlining regional development assistance, channelling it through intra-regional cooperation paths. This approach will help donor coordination, on one hand, and increase the visibility and impact of development assistance on the other. Meanwhile, policymakers in Central Asia could prepare and pitch ready-made proposals on how external national donors might contribute to the region’s economic development and welfare. Clear and transparent requests would make it easier for willing donors to justify their contributions domestically and internationally, creating the space for growth within this delicate dynamic.

While there is limited recent history of deep and meaningful interaction between the GCC nations and the Central Asian republics, the future of inter-regional cooperation appears cautiously bright. As the conventional development partners, such as the US and the EU, either withdraw completely from the international development sector or turn their focus to regions like Ukraine, the GCC countries are emerging as the new key actors in development assistance. 

At this stage, Central Asia has accumulated notable experience and expertise in engaging with development cooperation. Countries like Kazakhstan are on the verge of a transition from being recipients of development assistance to becoming providers themselves. But the majority of the region still requires external support, especially in the areas of economic development and transition to renewable energy. In light of this, the GCC could become a much more powerful player in this field.

Photo: Presidential Administration of Uzbekistan

Facing New Alignments, Iran and Tajikistan Relaunch Partnership

Earlier this month, Mahmoud Khosravi Vafa, the head of Iran’s National Olympic Committee, met with Shamsullo Sohibov, Vice-President of Tajikistan’s National Olympic Committee, to discuss improving sports cooperation. The meeting was more than just a consultation between two bureaucrats, it marked the latest step in the recent rekindling of the relationship between Iran and Tajikistan, two countries with deep linguistic and cultural ties.

Once described as “one spirit in two bodies" by the ex-president of Iran, Mahmoud Ahmadinejad, the relationship between Iran and Tajikistan underwent an unexpected breakdown in the mid-2010s. Now, as Iran continues to struggle under Western sanctions, contend with a new hostile US administration, and adapt to its weakened position in the Middle East, it is again turning east. For its part, Tajikistan is pursuing a multi-vector foreign policy, diversifying relations with as many international partners as possible to secure economic and political assistance.

After the collapse of the Soviet Union, Iran was the first country to recognize Tajikistan’s independence and establish an embassy in the capital, Dushanbe. Tajikistan reciprocated by opening one of its first foreign embassies in Tehran in 1995. Subsequently, during the civil war in Tajikistan between 1992 and 1997, Iran was part of a foreign coalition that helped mediate the conflict. In this period, Tehran also cautiously supported the Islamic opposition to the current regime in Dushanbe.

After Tajikistan’s civil war ended, Iran made lofty pronouncements of friendship but took few concrete steps towards collaboration. But following the September 11 attacks and the deterioration of Western economic and political relations with the Middle East and its surrounding countries, Iran began to reinvigorate foreign policy towards Tajikistan to compete with the growing Western influence in West Asia.

During two terms in office, former Iranian President Mohammed Khatami committed to funding large-scale infrastructure projects in Tajikistan, such as the strategically significant Anzob Tunnel and Sangtuda-2 hydropower plant. Total trade between the countries tripled from $40 million in 2000 to $140 million in 2007. However, the relationship rested primarily on economic diplomacy; politically, Iran was more focused on counterbalancing the US presence in Afghanistan and on deferring to Russian decisions in Central Asia due to Russia’s support for Iran’s nuclear program.

Mahmoud Ahmadinejad’s presidency led to a complete reorientation of Iran’s foreign policy towards its eastern neighbors and against the Western agenda in the region. While in office, Ahmadinejad met annually with Tajik President Emomali Rahmon, whose government remained quietly wary of Iran, given its role in the Tajik civil war, the accelerating nuclear program, and the desire to avoid being dragged into Iran’s conflicts with Israel and the US. Prioritization of economic diplomacy over politics remained the foundation of Dushanbe’s foreign policy, allowing it more flexibility in playing its allies against each other and extracting more concessions. However, at the time, Tajikistan accepted Ahmadinejad’s overtures, lacking better options in the face of minimal Western economic assistance.

Nonetheless, Iran’s investments proved to be problematic. The Anzob Tunnel was shoddily and hastily finished just in time for President Ahmadinejad’s first visit to Tajikistan in 2006, and poorly maintained even a decade after its construction. Moreover, the construction of Sangtuda-2 was finalized only in 2013—significantly behind schedule—and the power plant was shut down briefly over Tehran’s concerns that Dushanbe could not eventually repay the construction loan. Finally, the US government turned its attention to Iran’s use of Tajikistan’s then largely unregulated financial sector to circumvent Western sanctions and to launder money for Iran’s Islamic Revolutionary Guard Corp (IRGC), as exemplified in the case of Iranian businessman Babak Zanjani.

Zanjani, who owned a bank, an airline, a taxi service, and a bus terminal in Tajikistan, was sentenced to death in Iran for allegedly embezzling over $2.7 billion from the country’s state-owned oil industry. His foreign investments were expected to be seized and returned to Iran’s government. But the Tajik authorities denied having any of Zanjani’s assets, angering counterparts in Iran.

In December 2015, Iran, which supported Tajikistan’s moderate Islamic Renaissance Party (IRPT) during the country’s civil war, invited its leader Muhidin Kabiri to an Islamic conference where he was warmly welcomed by the Supreme Leader Ali Khamenei. The government of Tajikistan, which had accused IRPT of an alleged coup attempt just a few months prior, arrested several of its members. Moreover, the Tajik authorities designated the only religious political party in Central Asia a terrorist organization, immediately issuing a note of protest to Iran. The Foreign Affairs Ministry of Tajikistan angrily summoned the Iranian ambassador. The head of the Council of Ulema of Tajikistan described Iran's invitation of Muhidin Kabiri as "abetting terrorism."  

Dushanbe’s reaction echoed not only the tensions of the civil war but also the country’s deep commitment to secular government, a legacy of the Soviet Union. The Tajik government distinguishes between traditional Islam, which it supports as part of Tajik social life and culture, and political Islam, which it views as a potential threat to state power. Dushanbe’s secular stance allows it to play up the threat of religious extremism to crack down on political rights domestically. The avowed opposition to political Islam has also allowed the country to seek Western aid–a strategy that always stood in conflict with theocratic Iran’s politics.

In response to Iran’s reception of Kabiri, Tajikistan halted the imports of Iranian food products, including poultry, cooking oil, and tea, for the alleged poor quality of these products, as well as a lack of compliance with Tajikistan’s language regulations for product labels. In July 2016, the Transportation Ministry of Tajikistan publicly accused Tehran of violating the terms of the contract to build a key regional railway. Later, the authorities suspended the Tajik branch of the Imam Khomeini Relief Committee, a charity organization supported by the government of Iran. 

Arguably, the most significant blow to the countries’ relationship landed in August 2017. In a 45-minute documentary aired on Tajik state television, the Internal Affairs Ministry accused Tehran of fomenting the civil war in Tajikistan, providing financial assistance to the now-pariah IRPT, and training Islamist militants on Iranian soil to then be sent back to Tajikistan to carry out political assassinations—claims the government of Iran vehemently denied. 

At the time, it seemed as though the only pan-Persian alliance in the region was over. Yet the sudden American withdrawal in May 2018 from the Joint Comprehensive Plan of Action under President Trump once again highlighted Iran’s urgent need to continue building relationships with its eastern neighbors. Supreme Leader Ali Khamenei has repeatedly emphasized that Iran must “look to the East” for strategic allies who can help Iran resist Western pressure and overcome the banking and trade issues brought on by Western sanctions.

Thus, in 2019, Tehran and Dushanbe resumed communications. The volume of bilateral trade rose from around $55 million in 2020 to $121 million in the following year. Former Iranian president Hassan Rouhani visited Dushanbe in June 2019. In September 2021, the late Iranian president Ebrahim Raisi made Dushanbe the destination in his first foreign trip.

In May 2022, Iran inaugurated a drone production factory in Tajikistan, the first such facility that Iran has built in a foreign country. The factory builds and exports Ababil-2—a reconnaissance and combat drone that has been widely used by Russia in Ukraine—and represents not only Iran’s resumed security cooperation with Tajikistan but also attempts to counter its regional rivals’ influence in the country. This comes in response to Saudi Arabia taking advantage of the preceding period of ruptured relations between Iran and Tajikistan. During this time, Saudi Arabia invested in several economic and development projects in Tajikistan, pure geopolitical opportunism from Riyadh seeking to deprive Tehran’s position as a key ally and investor in Tajikistan. Iran’s drone factory is also an attempt to outrun both Turkiye, who reportedly sold its Bayraktar TB2 drones to Tajikistan in April 2022 during a brewing border conflict with Kyrgyzstan, and Israel, who regularly attacks Iran’s domestic drone-producing capabilities but will likely avoid doing so outside of Iran’s borders.   

A few months later, in September 2022, Iran signed a memorandum of accession to the Shanghai Cooperation Organization (SCO) at the organization’s summit in Samarkand, Uzbekistan, becoming a full member in July 2023— a development that Russia and China strongly favored. Soon after, President Rahmon and President Raisi held talks on the margins of the 78th session of the United Nations General Assembly, where they discussed further expansion of bilateral cooperation. A flurry of high-level visits and signed agreements followed, including a historic establishment of a visa-free regime between the countries in November 2023.  

The relationship between the two countries reached a new high in January 2025 during President Masoud Pezeshkian’s three-day visit to Dushanbe. Pezeshkian was warmly received as the guest of honor at the Tajikistan-Iran Trade, Economic Investment, and Tourism Forum. The two sides signed two dozen agreements on security, combatting drug trafficking and corruption, simplifying trade and customs, and improving transportation and education links. But while President Pezeshkian spoke of discussions between the sides covering the situation in Afghanistan and the war in Gaza, President Rahmon of Tajikistan emphasized developing cooperation in mining, pharmaceutical, industrial, and agricultural sectors, a reflection of Dushanbe’s continued desire to avoid controversial political topics and stick to economic and cultural collaboration.

Notably, the two presidents reopened the Institute of Tajik-Persian Culture in Dushanbe, which had been shut in the mid-2010s during the nadir in bilateral relations. President Pezeshkian also laid a wreath at the statue of Ismoil Somoni–a significant figure in Persian culture and history–and visited the Avicenna Tajik State Medical University, where he received an honorary professorship. The concluding government statements called on both sides “to find new and profitable ways of cooperation.”

The rekindling of the partnership between Iran and Tajikistan benefits both sides. Iran gains access to a largely untapped, albeit minor, market for its exports and diversifies its trade relations, allowing it more flexibility in the face of Western sanctions on Tehran and Moscow. A presence in Tajikistan brings Iran even closer to Russia and China, the two major geopolitical players in Central Asia, and provides Iranian leaders another avenue for security collaboration on Afghanistan. Finally, a foothold in Tajikistan allows Iran to counter the growing influence of Saudi Arabia and Turkiye in Central Asia after major losses in its political weight in the Middle East since 2024.

For Tajikistan, Iran is another source of foreign direct investment and a minor opportunity to ease its labor migration, trade, and economic assistance dependence on China and Russia, especially as the war in Ukraine and its fallout drag into its fourth year. Access to Iran’s regional transportation links and especially its security capabilities is another important consideration as Tajik authorities prepare for a long-awaited presidential transition. As President Rahmon prepares to transfer power to his son Rustam, his regime is looking for as many allies as possible to ensure stability during the transition.

Rekindling ties with Iran has its benefits. But it will also force Tajikistan into an old dance of balancing Iran’s internal and external politics with its own relationship to political Islam and its desire to stay neutral on the world stage. The two countries may share the same spirit, but they do not yet appear to share the same interests.

Photo: IRNA

Uzbekistan's Energy Transition Depends on Systematic Reforms

In the realm of global and energy security, 2024 was a year of unprecedented uncertainty. With issues ranging from ongoing conflicts in Ukraine and Gaza, tensions around Taiwan, and escalating populism and nationalism in the US and Europe, there were heightened concerns over energy security and the control of supply chains. US President Donald Trump’s first month in office has further fuelled the sense of an impending crisis, particularly with regards to his rhetoric around the conflicts in Ukraine and Gaza, the adoption of tariffs, and the abandonment of green policy.

Any discussion of energy transition trends must therefore be visualised in the form of a triangle, ensuring that the competing and often contradictory goals of energy security, minimising climate impact, and ensuring energy affordability are in tension. Each country, sector, and policy crystallise a set of trade-offs between different points on this triangle.

To achieve net zero by 2050, unprecedented changes in industrial structures and infrastructure are needed. The transmission and storage systems required to support a greater and faster reliance on renewable power generation may not yet exist. While energy efficiency is acceptable politically, it is a complex challenge that requires action in disparate area—not least in consumer behaviour.

Whilst the government of Uzbekistan has adopted ambitious plans to double GDP by 2030, it has underlined its aim to achieve this sustainably, scaling up its commitments to mitigate climate change and reduce the emissions intensity of GDP. In its Nationally Determined Contribution to 2030, Uzbekistan aims to generate at least 40 percent of its electricity from renewable sources and cut greenhouse gas emissions by 30 percent per unit GDP from 2010 levels. The challenge of reforming the energy sector and achieving such goals is inflated, however, by the predominance of outdated infrastructure, the continuation of unsustainable subsidies, and significant fluctuations in energy demand.

It should be noted that the decision as to when to promote what energy source is not binary; the process involves numerous trade-offs and, on occasion, political messaging, in order to achieve energy security. On a practical level, however, these resources cannot be deployed in an expedient and uniform manner that substitutes fossil fuels. In an inflationary cycle combined with facing the prospect of a global recession, the price of energy remains as important as energy security and climate change mitigation. An affordable energy transition is taking precedence and governments are opting towards the natural inclination of regulating prices and softening the price impacts for customers.

Yet with fluctuations in energy demand significant, the ability of a power system to cope with peak demand is crucial. The introduction of pricing that corresponds with demand is an unavoidable element in attracting investment in energy capacity. Power shortages have also triggered sectoral reforms and tariff increases. Electricity tariffs for businesses were increased in October 2023, and tariffs for households increased in May 2024, allowing the government to partially cut subsidies, as well as their plans to establish a unified platform for electricity trading by the end of 2024 and a liberalized wholesale power market by 2026.

That being said, Uzbekistan is making progress toward diversifying its power generation with the use of renewable sources. For example, in terms  of the economy, over 80 percent of total energy use is still generated by gas; as far as power generation goes, its genesis remains equally dominant.

Although significant attention has been given to Saudi Arabia’s ACWA Power securing agreements to invest $15 billion in expanding power generation capacity, and the United Arab Emirates’ Masdar sponsoring both conventional and renewable power plants, Uzbekistan’s reliance on Russian gas continues to grow. Following a dramatic decline in domestic gas production, Uzbekistan started importing Russian natural gas in October 2023, annual gas imports of 2.8 billion cubic metres (bcm) agreed for a period of two years, with a potential increase up to 10bcm per year by 2030. 

The economy’s heavy reliance on natural gas is a risk to the country’s decarbonisation, with gas consumption having to decline by 40 percent in order to achieve net zero in 2060. By minimising reliance on gas imports and pursuing the decarbonization of its economy, Uzbekistan can strengthen its energy security. Uzbekistan’s decarbonization efforts depend on strengthening cross-border energy flows, particularly through enhanced power transmission and a more flexible regional electricity trade. By optimising the use of regional energy resources, Uzbekistan can not only prevent power shortages but also contribute to greater regional stability and security.

It has been estimated that over $200 billion of investment is needed in the Uzbek energy system to achieve net zero by 2060. Given the scale of resources required and limitations within government finances, the private sector must be the primary investor for the green transition. In turn, accelerating the development of the country’s private sector is critical to absorb the costs and take advantage of the opportunities of the transition. The focus on decarbonisation and adaptation to climate change functions as a catalyst for the continuation of economic reforms and further support for investment.

The government has repeatedly expressed its intentions to create a better environment for private investment, using public-private partnerships (PPPs) in the energy and infrastructure sectors. Private capital can be secured to fund projects through the active participation of other stakeholders, including the use of blended finance. The strategic use of public money and development finance reduces the risk for private capital by allocating certain risks to governments or development financial institutions (DFIs). DFIs can play other roles beyond direct funding to incentivise the flow of private capital. They do this by developing new products and mechanisms that extend beyond political risk insurance to cover technology. Moreover, they ramp up risk for new technology, trade and foreign exchange risks, such as insurance products or co-lending mechanisms with the private sector through which a DFI provides subordinated debt.

What is necessary in the context of energy transition, however, goes beyond a project-by-project approach. Instead, a systematic approach and large-scale commitments by governments are required to encourage the development of a stable pipeline of investible and bankable projects, rather than a series of one-off projects in an uncertain regulatory environment. Global experience demonstrates that the key to attracting private capital for energy transition projects is assuring potential investors that political leadership remains committed to net-zero targets and will not change course. It also requires creating strong market demand through policies and regulations that encourage growth and establishing a competitive, stable tax regime that incentivises investment.

In Uzbekistan, structural reforms are needed to encourage foreign direct investment as a capital flow. The government must implement a comprehensive package of reforms, including strengthening market competition, eliminating preferential treatment, increasing energy prices, and removing subsidies. Stronger financial regulations should be adopted, and trade should be facilitated through measures such as accession to the World Trade Organisation. Additionally, climate concerns must be at the core of public investment decisions.

On this foundation, local demand and market signals can be created through incentive programs. These may include standards and tradable certificates, tax credits, and feed-in tariffs or contracts for different structures. As is already the case in Uzbekistan, PPPs can also play a role, with governments supporting market development by acting as quasi-private offtakers or by creating markets for ancillary services.

Crucially, only by reforming state-owned enterprises (SOEs) and subsequently providing attractive investment opportunities can an accelerated privatization process and a decarbonised economy be achieved. Whilst the government has recognised the need to improve energy efficiency and reduce carbon emissions for effective policy adoption, several challenges remain. There is a need for greater transparency and information on the activities and impact of SOEs, which are the largest carbon emitters. Additionally, an inventory of fossil fuel subsidies must be created to establish energy pricing, reduce subsidies, and introduce price incentives.

This remains a significant challenge due to ongoing concerns about the corporate governance and financial reporting of SOEs. Yet, only by addressing these issues can the government begin to implement a policy aligned with the country’s Nationally Determined Contribution and develop a realistic roadmap for the green transition. It will also enable better project prioritisation for climate change mitigation.

The Uzbek government must gain credibility through the implementation of consistent medium-term fiscal policies and by providing the predictability that is a prerequisite for medium-term economic growth. Indeed, the quality of government expenditure is increasingly important, with policy trade-offs required in response to the reduction of the fiscal space available. This also extends to the need to manage the inevitable tensions arising from price increases.

Not only does the unbundling of utilities require consumer prices to rise to offset the cost of their modernization, there also needs to be a demand for the green transition. Goods and services with a higher environmental impact need to be made more expensive. With regards to the social aspect of the green transition, such price increases must be well-conceived and gradual. The raising of energy prices should not lead to the impoverishment of parts of the population: a just transition should be ensured through the protection of vulnerable households.

Finally, policies need to be adopted to promote and support regional connectivity—an important catalyst for regional economic growth in the face of global uncertainty, economic fragmentation, and increased costs. Regional policy dialogue and coordination can provide a foundation for the structural reform in trade, a process realised through the harmonisation of technical regulations and standards and their revision with international green standards and practices.

The development of cross-border connections and regional power trading platforms can facilitate the expansion of renewable energy generation while improving coordination in water resource management to prevent shortages and their consequences. Given the region’s diverse energy mixes, establishing a balanced system for regional trade is essential to ensuring its energy security and economic growth.

Photo: ACWA Power

GCC and Central Asia Want More Trade, But Connectivity Remains a Hurdle

Over the course of the past five years, the six countries of the Gulf Cooperation Council (GCC) and the five republics of Central Asia have taken several important steps to expand their economic and diplomatic relations. In addition to the advancement of bilateral relations among members of these two blocs, efforts have also been made at the regional level involving multiple countries from both sides. This includes several gatherings at the ministerial level, as well as the 2023 GCC-C5 summit that convened the six GCC and five Central Asian countries—Kyrgyzstan, Kazakhstan, Uzbekistan, Tajikistan, and Turkmenistan—in Saudi Arabia. The high-level summit resulted in a joint statement on the framework for economic relations. Preparations are currently underway for a follow-up summit in May 2025 in Samarkand.

The volume of trade between the two blocs is currently small. According to data compiled by the World Bank, the share of GCC countries in total exports of goods by Central Asian countries was only 0.8 percent in 2022. The ratio was even smaller for Central Asia’s largest economy, Kazakhstan, which exported only $462 million to GCC countries. This amounted to 0.55 percent of its $83.5 billion total goods exports in that year.

Trade relations are expected to expand from this low base if the forthcoming summit in Samarkand is fruitful. Not only is the GCC interested in the minerals, metals, and agricultural commodities that Central Asia can offer, but both regions are moving toward economic diversification. This will increase the range of manufactured and semi-processed goods that they can exchange.

While both sides have expressed a strong desire to expand their investment and trade relations in many sectors, transit routes and transportation costs pose important considerations for their respective political leaders and business communities. In their July 2023 summit, the leaders of GCC and Central Asia were already mindful of this issue. Connectivity was addressed in the Article 12 of the Summit’s Joint Statement: “The leaders stressed the importance of developing connected transportation routes between the two regions, building strong logistical and commercial networks, and developing effective systems that contribute to the exchange of products.”

The transport networks between GCC and Central Asia cross through several countries. Three distinct transport routes can potentially provide land connectivity between the regions in the coming years. These are the North-South Transport Corridor (NSTC) that runs mainly through Iran, the Development Road Project (DRP) that runs through Iraq, and the Trans-Afghan Corridor. Each of these multi-modal routes presents its own unique opportunities and challenges.

Firstly, it is important to consider the NSTC route through Iran. Currently the Central Asian countries have access to highway and rail transit through Iran to the Persian Gulf and the Gulf of Oman. With cooperation of Iran, Russia, and several Central Asian countries the rail connectivity has been operational since 2016. The trans-Iranian Railway connects the Sarakhs railway station on Iran-Turkmenistan border to the Bandar Abbas port on the Persian Gulf and this route is already in use by the Central Asian countries. 

Highway transit for cars and trucks is also operational; Iran’s network of roads and highways connects the Iran-Turkmenistan border crossings to several seaports in the Persian Gulf, from which containers can be transported to GCC countries by ship. The railroad transit will expand further with the completion of the Sarakhs-Chabahar railway line. Nearly two thirds of this route is already complete. The only remaining piece is the Chabahar-Zahedan segment which is currently under construction, though progress is slow due to economic sanctions. Iranian government officials expect this project to be completed by late 2025.  

These transit routes through Iran are safe,  offering the shortest and most cost-effective routes for GCC-CA connectivity. However, many GCC economic operators will avoid using this route in compliance with the U.S. economic sanctions against Iran. GCC countries have demonstrated high compliance with the U.S. sanctions against Iran because of their heavy reliance on American security and military protection; this cooperation is likely to continue in the future. 

Another transit route that can be used for trade between the GCC and Central Asia is the proposed north-south Development Road Project, which will, using rail and highway, connect Iraq’s Faw port at the tip of the Persian Gulf to Turkey’s broader transport network. This project is currently in its final planning stage according to Iraq’s Transport Minister, Razzaq Muhibis Al-Saadawi. After the recent improvement of diplomatic relations between Iraq and GCC countries, Qatar and the UAE have expressed an interest in providing additional financial support, assisting Iraq and Turkey in the endeavor. 

The DRP offers a significantly longer transit route compared to the Iran option. Additionally, it requires greater international coordination, as it passes through multiple countries—Iraq, Turkey, Georgia, and Azerbaijan—before requiring sea transport across the Caspian Sea to reach either Turkmenistan or Kazakhstan for connections to Central Asia. The Turkey-Turkmenistan segment, which is part of the Belt and Road Initiative’s middle corridor between Asia and Europe, is already operational. If Azerbaijan and Turkey can convince Armenia to provide them with a transit corridor, this route will become shorter and more cost efficient, yet still less economical than the Iran option. 

The DRP also faces several geopolitical and governance challenges. Kurdish militias that are in war with Turkey operate in the mountainous regions of Northern Iraq, near the Turkish border, posing a security risk to the road both during its construction and after completion. The Iraqi government’s opposition to the participation of the Kurdish Regional Government (KRG) poses another obstacle to the viability of this project as disagreements between Baghdad and KRG can lead to more disruption. 

Another challenge is the many governance issues in Iraq’s fragmented government structure, which has reduced the government’s efficacy and ability to implement long-term plans. Fortunately, Iraq’s political system has become more stable in recent years, contributing to better conditions for the implementation of the DRP. A recent security agreement between Turkey and Iraq might also reduce the security risks in northern Iraq.

A third land transit route between the GCC and Central Asia is the Trans-Afghan option, which will offer rail transit from Uzbekistan to Pakistan’s Karachi and Gwadar seaports on the Arabian Sea through Afghanistan. Cargo would be able to be transported from these ports to various GCC destinations in the Persian Gulf by ship. The Trans-Afghan Corridor has received support from Kazakhstan and Uzbekistan as the primary Central Asian stakeholders. Uzbekistan has also approached Qatar and the UAE for financial investment in this project, which is estimated to cost $7 billion.

Under the previous Afghan government, the Taliban posed a security risk to the Trans-Afghan Corridor. Now, in a turn of events, the Taliban-led government is a strong supporter, engaging in active negotiations with all stakeholders to expedite the project. In 2024, Afghanistan signed an agreement with Uzbekistan and the UAE to launch a feasibility study for the project. Pakistan is also lobbying the Central Asian countries, Qatar, and the UAE for support. 

Another important tailwind behind this project is the support of several other countries, including Russia and Belarus, which are also interested in development of the Afghan route. For Russia, which faces sanctions and security risks along its Baltic and Mediterranean transit routes, the Trans-Afghan Corridor will serve as an additional branch of the already operational NSTC route through Iran. In addition to the Uzbek option, Russia is also advancing an alternative branch of the Trans-Afghan railway via the Turkmenistan-Afghanistan border, further expanding the capacity of transit routes through Afghanistan.

The transit corridor competition that is currently underway between Iraq, Iran, and Afghanistan will increase the land connectivity options among the GCC and Central Asian countries in the coming years, reducing exposure to the risk factors in any single country that lies between the two blocs. While at present the only operational route is via Iran, it is encumbered by sanctions risks. The completion of the DRP and the Trans-Afghan Corridor will provide valuable alternatives despite being lengthier and hence more expensive. Their development will be reassuring to both the GCC countries and the Central Asian countries as they seek to boost trade ties as part of a process of West Asian integration.

Photo: Leonid Andronov

Central Asia Relies on Gulf as it Targets Energy Transition

Since gaining independence in 1991, states in Central Asia and the Caucasus have historically had the strongest energy ties with Russia and China. Yet in the past 5 years, they have significantly expanded their energy cooperation with the member states of the Gulf Cooperation Council (GCC). This cooperation is unidirectional: Gulf companies and institutions are investing substantial capital in energy assets and infrastructure across Central Asia and the Caucasus, but not vice versa.

The GCC and Central Asia have a history of ties in the traditional energy sectors of oil and gas, but the new interregional cooperation prioritizes alternative energy sources—including solar, wind, hydropower, and hydrogen. This shift reflects a change in the GCC’s wider energy diplomacy agenda: to transition from being the world’s leading fossil energy center to being the world’s leading energy center more broadly. Recent Gulf investments in Central Asia and the Caucasus are the active edge in this effort.  

To explain why these new Gulf-Central Asia energy connections are being developed, it is necessary to understand who is involved in bringing them to life. In both regions, the energy sector is defined by blurred lines between private and government-owned companies. The result is that the distinction between private and public interests at stake in strategic energy decisions can also be blurry in both regions. Nonetheless, the new Gulf investments in Central Asia’s energy landscape are typically led by a GCC company or a GCC government, though their specific project is routinely supported by the other.  

Today, the two largest Gulf companies involved in developing new energy assets in Central Asia and the Caucasus include the UAE-based Masdar, and Saudi-based ACWA Power. Masdar, once a wholly-owned subsidiary of the UAE’s Mubadala sovereign wealth fund, is now jointly owned by Mubadala, the Abu Dhabi National Oil Company (ADNOC), and Abu Dhabi National Energy Company (TAQA) since December 2022. ACWA is 44 percent owned by Saudi Arabia’s PIF sovereign wealth fund, alongside a number of wealthy individuals and institutional investors. In both cases, Masdar and ACWA cannot be considered solely private or solely governmental companies. While they are inarguably driven by basic financial motives, they also remain accountable to the political elites in the UAE and Saudi Arabia, who are well represented on their boards and among their shareholders.

If Masdar and ACWA are the largest Gulf companies active in Central Asia and the Caucasus, their projects vary significantly across the region. Masdar currently has the broadest range of projects. In Uzbekistan, this includes five solar parks (ranging from 100-457 MW), two wind projects (one 500 MW project already underway, plus a new 1GW park announced at COP29), as well as plans to explore pumped hydropower. In Azerbaijan, Masdar already operates three solar parks (ranging from 230-445 MW) and one 240 MW onshore wind park. Next door in Armenia, Masdar also has a 200 MW solar park. In Kazakhstan, Masdar does not have any completed projects, but at COP29, the company signed an agreement to develop 1 GW solar park, including 600 MW of battery storage. Likewise, in Kyrgyzstan, Masdar only has a set of agreements,  including a vague promise offered in January 2023 to develop 1 GW of renewables, followed by, in December 2023, a commitment “to explore” 3.6 GW of hydropower and  renewables alongside the British EDF energy provider. Notably missing here are investments in Turkmenistan, Tajikistan, and Georgia. 

ACWA Power’s regional assets currently include a 240 MW wind park in Azerbaijan, and in Uzbekistan, four wind parks (ranging from 100-1500 MW) already completed or soon to be finished. They also have several utility-scale solar parks in Uzbekistan’s Samarkand region, which include large battery energy storage systems (BESS), and a new project underway for a 1500 MW Combined Cycle Gas-Turbine (CCGT) facility in the Sirdarya region. In each of these cases, the National Electric Grid of Uzbekistan is listed as the sole off-taker, and each facility is described on the company’s website as being a “Build, Own, Operate, Transfer” project, in which ACWA Power has claimed it ‘will take the lead in the construction, engineering, operation and maintenance the plant.’ What, when, or how the “transfer” phase will take shape remains unclear, however.

The COP29 United Nations climate talks in Azerbaijan in November 2024 saw a wide range of new energy cooperation agreements between the regions, with Saudi Arabia showing the most ambitious outlook to the developing energy landscape of Central Asia and the Caucasus. At COP, the Saudi Minister of Energy signed an agreement with three of the region’s presidents—Azerbaijan’s Ilham Aliyev, Kazakhstan’s Kassym-Jomart Tokayev, and Uzbekistan’s Shavkat Mirziyoyev—to enhance cooperation in renewable energy development and transmission and to push forward a long-elusive goal of regional power grid interconnection. The Saudi renewable energy champion ACWA was also involved in these agreements, being named as the company responsible for the renewable energy projects in the three countries. 

At COP29, the Saudi Electricity Co. also signed an MoU to develop regional interconnection projects with its counterparts in Azerbaijan, Kazakhstan, and Uzbekistan. COP29 also yielded a new bilateral energy “roadmap” between Saudi Arabia and Azerbaijan, but the larger 4-country agreements that Saudi officials take interest in include extending their bilateral energy diplomacy to regional energy diplomacy. This symbolizes a move beyond the more limited series of bilateral energy agreements they have been signing with the other state’s leaders since 2022.

Another notable development at COP29 was the joint agreement between Masdar, ACWA, and SOCAR Green—a branch of the State Oil Company of Azerbaijan established to implement “renewable energy projects, green hydrogen production, [and] carbon capture, utilization, and storage.” This three-country initiative is focused on exploring a 3.5 GW offshore wind project within Azerbaijan’s Caspian domain, as well as a green hydrogen and water desalination plant. The new energy projects discussed in the MoU are not surprising in and of themselves, but the fact that Masdar and ACWA are working together is notable as GCC actors are often assumed to be in competition. Rather, this project may demonstrate the possibilities for cooperation between the Gulf’s two green energy pioneers– both across the GCC borders, as well as with the Central Asia and Caucasus states hosting their investments. 

By working with SOCAR Green, Masdar and ACWA are well positioned to teach Azerbaijanis about the Gulf model of “greening” oil money by funneling it into the alternative energy sector. Regardless of whether energy watchers deem this model to be good or bad, it is expanding at a rapid pace in the Gulf. As the GCC governments and companies continue to promote non-fossil energy projects abroad, including in Central Asia and the Caucasus, they are laying the groundwork for a cooperation model that puts the GCC at the center of the post-oil energy future. In this role, the Gulf’s political and business leaders aspire to do more than offer capital to undercapitalized regions; they also aim to reap the most profits possible from controlling the vast networks of technology, infrastructure, knowhow, and resources that are needed to realize the transition to alternative energy sources. 

The Gulf’s investments in Central Asia and the Caucasus thus reflect a broader energy diplomacy agenda: to leverage their role as the world’s leading fossil fuel producers in order to remain an energy epicenter, whatever the fuel system. In this respect, the GCC’s interregional cooperation with Central Asia and the Caucasus is already a success. But whether these high-level agreements and large-scale projects will yield the kinds of financial and political returns that their Gulf proponents hope for remains an open question.

Photo: Dunyo

Ageing Energy Infrastructure is Holding Central Asia Back

Blackouts and "rationalisation" of energy consumption (a euphemism for coordinated blackouts) are all too frequent in Central Asia. Energy shortages arising from limited generation, insufficient energy imports, or the poor state of the transmission network mean that blackouts recur. This winter, however, the situation grew significantly worse. Amid exceptional cold weather, many households, businesses, and schools remained without heating and electricity for days on end. Unusually, the blackouts not only afflicted communities in remote regions but also capital cities.

Most of the region’s inefficient power generation and transmission infrastructure dates to the Soviet era. Central Asia faces rising demand for energy, spurred by population growth and climate change. Steadily rising energy consumption has strained power grids. Demand from new types of consumers, such as cryptocurrencies miners, has also exacerbated recent crises.

At the same time that they face chronic energy shortages, Central Asian states must also significantly cut carbon emissions and accelerate the transition to clean energy—a challenging path, especially for Kazakhstan, Uzbekistan, and Turkmenistan, where domestic production of hydrocarbons secures the majority of domestic energy consumption.

Besides generation capacity, natural gas supplies and distribution present their own technical and political problems. Kazakhstan is the world’s ninth-largest exporter of coal and crude oil and twelfth largest exporter of natural gas; its total energy production covers more than twice its energy demand. Yet, it has not been able to reliably supply electricity within its own territory. In mid-January, Turkmenistan, despite sitting on one of the world's ten largest natural gas reserves, disrupted gas supplies to Uzbekistan for over a week due to technical problems. Last year, several regions of Uzbekistan, Kazakhstan, and Kyrgyzstan were hit by blackouts caused by a technical incident in the so-called “energy ring,” a Soviet-era grid connecting border regions of these three countries, including the Kyrgyz and Uzbek capitals and Kazakhstan’s largest city, Almaty.

Central Asian authorities and international stakeholders have acknowledged the urgent situation facing the energy sector. The existing infrastructure is being operated “well beyond its shelf-life,” and loses caused by inefficiency may reach around 20% in the electricity sector.

But addressing all these demand-side and supply-side challenges simultaneously is impossible; governments in the region will have to prioritize specific sub-areas of their energy sectors. In the meantime, they will need to grapple with new economic challenges arising in part from Russia’s invasion of Ukraine.

The recent blackouts sparked considerable public anger given the financial impact, health risks, and general discomfort. Protests took place in several cities across Kazakhstan, Kyrgyzstan, and Uzbekistan. While these recent protests were small, the “Bloody January” protests in Kazakhstan and the Karakalpakstan protests in Uzbekistan point to the possibility that social and economic grievances can give rise to more significant unrest. Furthermore, many families relied on stoves to keep their homes warm, adding to the already high levels of pollution in Central Asia cities, resulting in further complains.

These extensive blackouts are also of concern to potential international investors. Without stable supplies of such basic utilities, investors will be deterred from Central Asia, leading to further economic stagnation. The ongoing crisis is a big test for Kazakhstan and Uzbekistan, and to a lesser extent Kyrgyzstan, three countries whose presidents have linked their political legitimacy with improving the economic and social conditions inside their country. To create jobs for their growing populations, these countries must grow their economies. But to grow their economies, the countries must boost energy production and significantly improve the distribution network. Securing the necessary financial resources for the extensive renovation of energy infrastructure is they key step for solving the energy shortages in the region. But securing new financing has become even harder because of the Russian invasion of Ukraine, which has significantly added to the already significant risks of investing in Central Asia, resulting from power struggles and corruption within the ruling regimes.

This has not stopped Central Asian leaders from promising new injections of investment in energy generation and improvement of the existing grid. President Shavkat Mirziyoyev of Uzbekistan announced a package of $1 billion to be invested in energy generation in the Tashkent region. But Mirziyoyev’s promise of new investment was clearly a political ploy, an effort to respond to public anger. The details of the investment and the expected economic, social, and political impact remain unclear. Governments in the region are luring new investors in the renewable energy sectors by setting ambitious targets. Kazakhstan aims to introduce new projects totaling 6.5 GW by 2035 and Uzbekistan plans to launch 7 GW of new capacity by 2030. However, many of these projections include nuclear power projects involving Russia’s Rosatom, which are now very unlikely to break ground.

Successful renovation of the energy sector at the national level also requires stronger political partnerships between countries given knock-on effects in the broader region. Tajikistan and Uzbekistan deliver electricity to Afghanistan, but domestic power outages in Uzbekistan briefly halted the export last month. Such disruptions in the national or regional grids are bound to reoccur and will add to the hardships faced by Afghans.

ADB predicts that demand will rise 30 percent across the entire CAREC region (which includes Central Asia, the Caucasus, Mongolia, and Pakistan). This means that no country has significant excess capacity it can share with its neighbors. The bank’s estimates put the cost of energy infrastructure modernisation for the region at between $136 billion to $339 billion by 2030. Upgrading transmission and distribution infrastructure alone is estimated to cost between $25 billion to $49 billion.

There are also other hidden costs. For example, the state usually subsidises electricity, gas, and coal, and any price increase brings a high risk of public dissatisfaction. Furthermore, there is a vast discrepancy in consumption between the winter seasons and the summer, which both generation and transmission infrastructure needs to reflect. The revenue potential of energy exports is deeply intertwined with the global economic situation. Hence, current estimates and political promises are bound to be revised sooner or later.  

The recurring blackouts and subsequent deep freeze in Central Asia were caused by three decades of neglect, corruption, and poor planning. Any significant improvement in the situation would require years of persistent effort to overcome economic and political challenges. After the disruptions of the pandemic and the Russian invasion of Ukraine, valuable time has been lost to begin the urgently needed modernisations of power plants and grids. For ordinary people in Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan, the countdown to the next winter has already begun.

Photo: David Trilling

Long-Awaited Uzbek-Kyrgyz Border Deal Sparks Unrest

In October, the final demarcation of the Uzbek-Kyrgyz border was expected to be successfully concluded after three decades of negotiations. The agreement was supposed to be a tremendous political victory for Kyrgyzstan, especially for President Sadyr Japarov. But instead of celebration, the agreement has spurred domestic unrest and intensified repression.

Most visibly, the unrest is due to the Kempir-Abad water reservoir in the Uzgen district. The local population in Uzgen believes that the government and president’s close ally Kamchybek Tashiev's negotiating team failed to fully address state borders, land ownership, and water management in the area and did not adequately explain the deal to the public. Concerns about ceding the important reservoir to another country and abandoning Kyrgyz land were frequently voiced, but the government downplayed concerns. Some members of a parliamentary committee responsible for the preliminary approval of the new border also complained about the secrecy of the agreement. The exact full wording of the deal was not published, which led to uncertainty about what they were actually voting for, and some parliamentarians refused to vote at all.

Japarov faced opposition to the announced border agreement both in media and in the streets. On October 22, a committee for the protection of Kempir-Abad reservoir was formed. Activists also organised a demonstration denouncing the deal and demanding transparent public discussions. However, Japarov labeled the protests as the product of the "evil intentions” of a few opponents.

To succeed, the regime has resorted to silencing the opposition voices until the deal is officially signed. On October 23, there was a mass detention of two dozen vocal opposition activists in Bishkek and elsewhere around the country. The Kyrgyz government also decided to take action against the local operations of Radio Free Europe and blocked the broadcaster’s website for two months over the alleged spreading of disinformation. Later, the National Security Committee—headed by Tashiev—ordered Demir Bank to close RFE’s local account.

The crisis over Kempir-Abad and the entire border demarcation process illustrates one of the core problems of the current Kyrgyz government: an authoritarian approach to sensitive domestic issues. On the agreement with Uzbekistan, Japarov and Tashiev decided to push the deal through the opposition using their political influence and power. There is no exact date of the official signature announced, and under the current circumstances, neither the official implementation nor peaceful acceptance of the deal by the Kyrgyz society is certain. 

Since his ascendence to power after large public protests in October 2020, Japarov has relied on his image as a strong national leader. Issues regarding territory, national interests, mineral resources, and economic prosperity have formed the core aspects of his political agenda. In recent months, however, he has faced mounting challenges in every domain. Moreover, attempts by Kyrgyzstan to present a border agreement regarding Kempir-Abad failed last year. Experiencing the same failure again would be a huge blow to Japarov’s political career.

Aside from its border issues with Uzbekistan, Kyrgyzstan also lacks fully demarcated borders with Tajikistan. Various factors have delayed the demarcation process since the dissolution of the former Soviet Union. These include complicated physical geography, mixed ethnic populations, and domestic political stakes. Tensions between Kyrgyzstan and Tajikistan have been rising in the past few years and there is little hope that the situation will improve in the foreseeable future.

The government’s nationalist rhetoric has not helped. This rhetoric has been accompanied by armed clashes and unprecedented levels of violence earlier this year. Neither Bishkek nor Dushanbe are interested in launching a full-scale war against one another, and destabilisation of the wider region is against the interests of their neighbours too. Even so, neither side has shown the willingness to engage in negotiations. For the time being, leaders in Kyrgyzstan and Tajikistan are using to justify consolidation of power at home.

While condemnable, Japarov and Tashiev’s attempts to secure the regime's position by silencing critics are hardly surprising. But the scale of the repression is concerning. Despite domestic turmoil, Kyrgyzstan still enjoys a reputation as a country with a more vibrant civil society and greater democratic mechanisms than its neighbours in Central Asia. However, researchers, activists, and civil society members interviewed by the author in recent months unanimously pointed to a worsening outlook and cited the disappearance of previously understood “red lines” and the unpredictability of authorities’ punitive actions.

Tashiev’s participation at a meeting with Vladimir Putin in Moscow last week under the auspices of the Commonwealth of Independent States illustrates Kyrgyzstan's slide towards more oppression. During the meeting in Moscow, non-governmental organisations and international bodies were labeled as threats and destructive forces.

The unrest and regime instability in Kyrgyzstan may have a negative impact also on other international projects, including the China-Kyrgyzstan-Uzbek railway, which has been on the table for two decades with no traction until last month when it was finally put forward. If the unrest persists, the parties to the rail deal may run out of patience. Moreover, Uzbekistan may either delay the ratification of the border agreement or demand more favourable conditions at Bishkek’s expense.

But even if the border deal materialises and both Kyrgyzstan and Uzbekistan implement the agreement, issues on the ground will likely persist. The newly demarcated border requires effective border management, trust, and mutual endorsement by the locals on both sides. Without a proper arrangement, even a minor skirmish might escalate to a major border conflict. Moreover, the contested future of the Kempir-Abad water reservoir further adds to the complexity to an already fragile situation at the Kyrgyz-Uzbek border.

Photo: Press Service of the President of Uzbekistan

As Iran Faces Domestic Crises, Raisi Must Seek Stability in Foreign Policy

This article was originally published in Persian in the Iranian newspaper Etemad.

The Raisi administration faces numerous challenges. In the domestic sphere, the resurgence of COVID-19, the limping economy, and the spectre of a climate emergency have tested the patience and resilience of the Iranian public, who increasingly doubt the ability of the government to respond to the many crises facing the country. The Raisi administration must make these internal crises its foremost priorities.

But in order to do so, the administration must ensure that Iran’s foreign policy serves to minimise external challenges, so that the capacity of the government can be focused where the needs are most acute. In this regard, the Raisi administration is not unique—governments throughout the region and the world are responding to unprecedented internal crises. The regional and global situation therefore requires a foreign policy doctrine that is rooted in pragmatism and multilateralism. For the Raisi administration, such a doctrine should focus on three priorities. 

 First, Iranian leaders have rightly pointed out that the sanctions relief provided by the P5+1 following the implementation of the JCPOA was imperfect, lacking the necessary “verification.” While trade did rebound, Iran’s reintegration into the global economy was impeded by the hesitance of banks to engage in Iran-related transactions. By the time President Donald Trump withdrew from the JCPOA in May 2018, reimposing secondary sanctions, little foreign direct investment had materialised, and the most important energy and infrastructure projects had yet to break ground. For this reason some Iranian leaders, consider the JCPOA fundamentally flawed. But the Raisi administration must recognise that the only means for addressing issues related sanctions relief is to remain a party to the nuclear deal, ensuring the U.S. renters the agreement, and then demanding greater attention to issues of implementation from the P5+1. There were only 11 months between the implementation of the JCPOA and the election of Donald Trump—too short a time for many of the complex issues surrounding sanctions relief to be solved. Of course, arriving at solutions will also require economic reforms by Iran, such as full adoption of the FATF action plan. These reforms will also take time as they are carefully considered by Iranian lawmakers. Should the Raisi administration move swiftly and confidently to restore the JCPOA on the basis of mutual compliance, there will be at least three years under the Biden administration, and possibly seven years, in order to work with the P5+1 in a multilateral manner to ensure that the trade and investment promised under the JCPOA materialise, returning Iran’s economy to robust growth.

Second, President Raisi needs to expand Iran’s regional policy to more successfully include multilateral diplomacy with Central Asia. One of the most positive developments of the last year has been an upswing in regional diplomacy. Iran has resumed bilateral negotiations with Saudi Arabia and the United Arab Emirates. The recent initiative of Iraqi Prime Minister Mustafa al-Kadhimi to organise a regional summit in Baghdad is an excellent opportunity to build on this recent dialogue in a larger multilateral format. But there have also been important developments to Iran’s northeast, with a growing effort among the Central Asian states to address regional challenges through multilateral formats. Despite the shared interests over regional connectivity, economic development, and security, Iran has yet to participate in these formats in a serious way. The deteriorating situation in Afghanistan will in particular require coordination with Central Asian neighbours. Javad Zarif completed a tour of Central Asia earlier this year, showing the potential for high-level engagement. But the Raisi administration must develop a clearer strategy for multilateral engagement in Central Asia in parallel with its engagement with Arab neighbours, thereby completing a regional policy that encompasses all of West Asia.  

Finally, for the sake of multilateral diplomacy, the Raisi administration must ensure that the Iranian public can access global digital and communications platforms. While the debate in Iran has largely considered it an internal issue, definitive filtering of cyberspace would negatively impact foreign policy in two ways. First, it is important consider that Iran’s most effective diplomats are its own people, who have an outsized impact on the global discourse through their presence on social media platforms. To deny Iranians access to these platforms would prevent Iranians from seeing themselves as global citizens, engaging in a global exchange of ideas, and participating in global commerce. Second, limiting access to cyberspace in the manner proposed would fundamentally change the perception of Iran in the international community, making it more difficult for Iran to engage as an equal and respected party in multilateral formats. In short, should Iran isolate itself in cyberspace it will isolate itself on the world stage.

Iranian has demonstrated remarkable resilience in a period when the country has been isolated and embattled. Because Iran’s strength will not be doubted, the Raisi administration should confidently pursue a foreign policy of pragmatism and multilateralism, ensuring that the country does face the many crises alone.

Photo: IRNA

Iran Can Solve Turkmenistan’s Natural Gas Dilemma

Bordering Iran on the northeast, Turkmenistan is a Central Asian country with a population of 6 million. What Turkmenistan lacks in population it makes up in enormous energy reserves. Domestically produced natural gas accounts for 80 percent of the feedstock used for electricity production. In 2006, discovery of the world’s second largest natural field, Galkynysh, saw the country become the country with the fourth largest natural gas reserves worldwide.

From the first days of independence from Soviet Union, Turkmen energy policy has focused on the diversification of its export destinations. At the time, Russia was the primary customer. But tensions in energy negotiations with Russia in 1997 led to concerns over dependence on a single country for energy exports. Turkmenistan launched negotiations with Iran to create a new market for its natural gas exports. That same year, the Korpezhe–Kurt Kui pipeline was commissioned and began exporting 6 billion cubic meters (bcm) per year of natural gas to Iran as part of a 25 year-long contract.

Since then, Turkmenistan has pursued other destinations for its natural has exports, with mixed success. In 2006, Turkmenistan and China signed a production sharing contract to develop a large portion of Turkmenistan’s natural gas reserves as well as an agreement on the construction of the Turkmenistan–China gas pipeline. The initial phase of the pipeline was inaugrated in 2009. That same year, the Turkmen government failed to agree upon the new contractual terms with Russia, leading to a 75 percent decrease in the volume sold to their primary customer. China became Turkmenistan’s leading customer, with construction of parallel lines on the Turkmenistan–China gas pipeline continuing through 2014.

The collective capacity of the three pipelines equaled 55 bcm per year, making China the largest buyer of Turkmenistan natural gas with more than 30 percent share of exports. Today, Turkmenistan is seeking new customers to prevent over-dependence on the Chinese energy market. For this purpose, in 2015, Turkmenistan launched construction a new pipeline connecting Turkmenistan’s natural gas fields to Afghanistan, Pakistan, and India—this project is known as TAPI pipeline.

Despite these efforts, Turkmenistan has failed to find a reliable means to increase its export capacity and its natural gas production surplus is only set to grow. Turkmenistan’s largest natural gas field, Galkynysh, currently produces 30 bcm per year. Predictions show that the number may rise to 70 bcm per year by 2025. Moreover, offshore fields which are producing at their minimum capacities, may see production rise to 20 bcm per year in near future. In addition, there are several undeveloped small fields, production potential of which estimated to be 20 bcm per year. Turkmen officials have made even more optimistic predictions of future production of natural gas. For instance, Ashirguli Begliyev, CEO of state energy giant Turkmengaz, has declared that production totals will reach as high as 230  bcm per year by 2030.

Looking to consumption side, subsidies have led to natural gas consumption figures higher than international averages. In 2015, domestic consumption was 34 bcm and is expected to rise 5 percent annually. Therefore, domestic consumption will ultimately reach to 55 bcm per year by 2030. Looking at difference between production and consumption, and subtracting the 50 bcm per year of exports to China, Turkmenistan’s surplus natural gas production can be expected to rise to at least 40 bcm per year by the end of the decade.

For Iran, Turkmenistan’s growing surplus is not only a potential source of competition in the global natural gas market, but also an opportunity. Turkmenistan will need to find ways to export its production to various new and existing customers at higher volumes than every before. Turkmen policymakers have four options.

First, Turkmenistan may rely on the TAPI pipeline. This pipeline is designed to export 30 bcm per year of natural gas through Afghanistan and Pakistan to its final destination, India. Although TAPI is the main prospect for Turkmenistan’s natural gas exports, particularly because the project is supported by the United States as an alternative to the suspended Iran–Pakistan gas pipeline, also known as the Peace pipeline, the TAPI project remains hampered by instability and security issues in Afghan territory.

Second, Turkmenistan may rely on the planned Trans-Caspian pipeline. If constructed, the pipeline would connect Turkmenistan’s gas fields to the European customers through Azerbaijan. However, the technical complexities of pipeline construction in deep sea areas, legal issues around maritime boundaries, the negative views of Russia and Iran towards the project, and Azerbaijan’s reluctance to extend the pipeline to Turkmenistan all make implementation an unlikely prospect.

Third, Turkmenistan could seek the construction of a new pipeline to China, relaying on a route across its Central Asian neighbors of Uzbekistan, Tajikistan, and Kyrgyzstan. However, such an option would be at odds with Turkmenistan’s efforts to diversify its export destinations.

Finally, Turkmenistan could seek to increase export volumes to Iran, either through the full utilization of the 24 bcm per year of capacity available in existing pipelines or through the construction of new infrastructure. Increasing natural gas exports to Iran may prove Turkmenistan’s best option. For Iran, there are also numerous benefits. Due to Iran’s proximity to Turkemistan’s natural gas fields import costs would be low. The addition of supply from Turkmenistan would enable Iran to supply the northeast, while using its southern natural gas fields to increase export volumes to Iraq and other customers. Iran’s central role in the region can also enable the country to serve as a natural gas hub, including for liquid natural gas shipments through the Persian Gulf.

Considering the difficulties associated with facilitating exports to Azerbaijan, Afghanistan, and China, Turkmenistan and Iran have an opportunity to enter new gas deals on the basis of clear mutual benefits. Iran’s strategy to become the natural gas hub of the region depends on developing several gas corridors with its neighbors—gas-rich Turkmenistan ought to be a key partner in this strategy.

Photo: IRNA

Iran Looks to Central Asia in Effort to Grow Exports

Over the past year, Iran has faced disruptions in its foreign trade relations following the withdrawal of the United States from the Joint Comprehensive Plan of Action.  Trade with partners like Europe and China has suffered because of U.S. secondary sanctions. In the face of these uncertainties, Iran has adopted a “neighborhood policy” as it seeks to protect trade flows. The policy has been recently expanded to Central Asian states, which serve both as an export market as well as the geographic bridge as Iran seeks to strengthen integration with Russia and China. For the landlocked Central Asian states, Iran is a vital conduit to international waters. In a May 2018 speech, President Rouhani described closer ties with Central Asia as a “fundamental policy.” The policy is now in the early stages of implementation.

At the beginning of December, Tehran hosted two economic summits with Tajikistan and Kyrgyzstan, the first such meetings in two and three years respectively. A week later, an Iranian delegation traveled to Tashkent in an effort to deepen trade ties.

On December 2, a joint commission of economic cooperation was held between Iran and Tajikistan. Iranian energy minister Reza Ardakanian presided over the meeting, which focused primarily on cooperation in energy and transportation projects. Iranian contractors have a history of infrastructure development in Tajikistan, such as the Anzob Tunnel completed in 2015 and Sangtuda 2 hydroelectric power plant. But discussions at the joint commission focused on new projects that would improve Tajikistan’s links to export markets through Iran, and also help support increased bilateral trade, such as the construction of warehouse facilities at Chabahar Port, and the completion of a railway corridor that would link Tajikistan and Turkey through Iran as part of the integration efforts of the Economic Cooperation Organization. 

As part of a broader effort to reset political relations, Iran’s President Rouhani made a state visit to Dushanbe in March 2019. Tajik President Emomali Rahmon may soon make his first visit to Iran in six years.

Just a day after the summit with Tajik officials, Iran held a similar high-level commission with Kyrgyzstan. Mohammad Eslami, Iran’s minister of roads and urban development, led the Iranian participation in what was the first commission meeting in three years. The negotiations, which resulted in an extensive memorandum, included a focus on banking ties and transport links.

In the area of banking the Iranian and Kyrgyz officials discussed the establishment of a protocol to ease trade conducted in national currencies among commercial banks. Iranian economy minister Farhad Dejapsand and his Kyrgyz counterpart, Hukan Batov, also discussed the establishment of a joint export bank and export credit agency to help facilitate trade. In the area of transit ties, Iranian and Kyrgyz officials continued dialogue on the use of Iran’s Chabahar port, where Kyrgyzstan has owned land since 2007 following a land swap with Iran, but has yet to develop warehouses or other infrastructure at the site. Iran has sought expanded ties with Kyrgyzstan in recent years. Kyrgyzstan so far is the only Central Asian state to have agreed a 10-year strategic roadmap with Iran—the agreement was signed in December 2016.

A week after the Tajikistan and Kyrgyzstan summits, Iranian industries minister Reza Rahmani led a delegation of over 50 Iranian companies for a two-day business summit in Tashkent, Uzbekistan. Like Tajikistan and Kyrgyzstan, Uzbek companies use Iranian ports to get their goods to global markets. But with a population of 33 million, Uzbekistan also represents a significant potential market for Iranian exporters. Iran’s Zagros Airlines has re-established a direct light between Tehran and Tashkent, after a three-year hiatus. Bilateral trade between Iran and Uzbekistan grew 40 percent in 2018.

Increased trade with neighbors such as Iraq and Turkey has been a key contributor to Iran’s economic resiliency over the past decade, particularly as sanctions depressed exports to markets like Europe and China. In this regard, improved relations with Central Asian states have a strategic importance for Iran in the face of the U.S. “maximum pressure” sanctions companies. Moreover, the Central Asian states will also play an important role in China’s growing sphere of economic influence and as part of the Russian led Eurasian Economic Union, with which Iran has recently concluded a free trade agreement. If the plans discussed by Iran with its Central Asian neighbors are properly implemented, a new pathway for regional economic development will be opened in the medium-term.

Photo: Railnews.ir