Central Asia

Peak of a ten-to-twelve year cycle: Moroccan locusts.
Earlier this month, IWPR reported that Tajikistan’s efforts against the current anti-locust plague was proving to be only partly successful.  55,000 hectares of grainland has been treated with pesticide, but lacks of equipment have made the effort less than what is needed.  The locusts migrate from Afghanistan and Uzbekistan.  Tajikistan’s infestation is wider than officially acknowledged, affecting grain, cash, and vegetable crops.

Kyrgyzstan has also been battling locusts and is reporting success.  According to Reuters, agricultural output contributes 30% to Kyrgyzstan’s GDP and 50% of its employment. 

Though the locusts are allegedly migrating from Afghanistan and Uzbekistan, no mention of locusts is currently in the news about either state, which I find interesting and indicative.

With plan in hand:
Further proof of a draconian agricultural regime in Uzbekistan: this week, Uzbekistan’s wheat farmers are harvesting green wheat: not yet ripe, but their field’s scheduled harvest day has arrived.  The schedule is made to compensate for a lack of agricultural harvest equipment, but its consequences for this year’s crop and next year’s planting are disastrous.  Green wheat does not make quality flour: if it is dried properly, it can be used, but not well.  (If you are a breadmaker: the gluten properties do not develop and the bread doesn’t rise). 

Worst of all, farmers have been forbidden to note and mention what they see with their own eyes: that their grain is not ready, and that (by extension) the plan is a failure.

Contrasting to these reports, President Karimov visited Namangan, where he discussed the new Uzbekistan agricultural policies.  Mr. Karimov spoke to farmers and agricultural specialists: 

“In reforming the agricultural industry, we have chosen a path which has proved efficient in many developed countries – the path of farming,” said the President. “Life is confirming its correctness, positive results are obvious. This is particularly confirmed by the fact that the share of farms in the cotton production in Namangan region has totaled 82%, and in grain-growing – 86%.

Not directly related to the above:
Yesterday, the US House of Representatives Foreign Affairs committee approved a food aid bill increase of USD 600 million minimum against future famines–one step in a long process.  While this does not yet have the status of law, it does show some changes in U.S. lawmaker perceptions of foreign aid needs.

The aid approved would be untied to US domestic farm production, which allows a greater efficiency in aid distribution and purchase.    With locust infestation and drought in Central Asia, lacks of agricultural equipment and inefficient cultivation systems, food aid may well become more relevant to the region than before.

No drugs, no gala pageants, more military reform, and no Trust of Saparmurat Niyazov: This is a thrilling article for those of us who have been watching Turkmenistan over the years.  Mr. Berdymuhammedov is making several initiatives that indeed have been crying out to be made:  The article says it all and it’s short.  Check it out!

I received an e-mail from the Eurasian Transition Group that a newpaper interview between Dr. Rakhat Aliev and Vremya newspaper on June 16 is actually a fictional account.  Confirmation that the interview was comes from RFE/RL Newsline of June 19.  Several of us in the Central Asia blogosphere have reported on this interview, but unfortunately, it’s just not good information.

Here is a copy of the false article.  

Last month, the World Bank approved a USD 2.96 million loan to help Uzbekistan address the problems of Avian Influenza.  Though most of the other states of the Caspian region have reported bird flu incidence, Uzbekistan has had no recorded cases.  This could either be good luck or a lack of reporting.

With this loan, Uzbekistan can develop some prevention plans (such as bird immunization or agricultural education programs).  They can also develop some containment and isolation techniques to help assist in the event of an outbreak.  With pandemics, the world community is better off as each develop responses to the threat.

You can collect stamps from all over the world, of course, so why not the stamps of Central Asia?  It’s a great way to discover aspects of national culture.  First, there are national symbols: flags, Great Seals, and historic heroes.  There are the nation’s significant crops, native animals, and national leaders. 

Another thing to note: sometimes stamps are issued for the collector’s market, which is one reason why Kyrgyzstan issued Superman stamps.

Here is a  one celebration of ethnicity, and one celebration of capability, from Kazakhstan:

Architecture of the Capital of Kyrgyzstan:

and a bilingual collector’s page of Kyrgyzstan’s heroes:

Tajikistan sometimes features notable Islamic scholars such as Abu Ali al-Husain ibn Abdallah ibn Sina (known to the West since Medieval times as Avicenna).

I was surprised that Turkmenistan had so much variety:  frankly I expected all of the stamps to be Turkmenbashi stamps.

And I searched in vain for a Gulnara stamp.  That’s okay though.

Photos: Kazakhstan, Answers.com, Cira.colostate.edu; Kyrgyzstan, stamps.elcat.kg; Turkmenistan,  Tajikistan, jeff560.tripod; Uzbekistan, Pomexport.com .

Thanks to all the stamp collectors who scanned these collectibles into the Internet.

U.S. Foreign Aid News:
June 5: According to the Wall Street Journal, The House Appropriations Committee is planning to reduce Bush’s Foreign aid budget by about USD 700 million.  The bill would still be an increase over last year.  Congressional changes that might impact Central Asia: reduction of restrictions of family planning aid; less money for Millenium Challenge grants; and less money for Pakistan’s defense force.  This latter may have some impact upon the conduct of war in Afghanistan and border troubles for Tajikistan.  The USD 34.2 million bill passed the house this past week 223-201; it must still survive the Senate and Mr. Bush’s probable veto.

According to Reuters on May 15th, the U.S. Farm Bill overhaul currently bending and porking its way through Congress will also include a new set of directives for food aid to foreign states.  U.S. food aid comes to USD 2 billion annually–but–65% of its cost goes to overhead.  (!).  New directions may include untying food aid–which would help its efficiency markedly.  The confluence of domestic interest groups and foreign policy directions in this bill will be very complicated.  More on the farm bill here, and for U.S. voters, here.

IMF:
On April 30 (Okay, I’m really behind), the International Money Fund (IMF)  is forecasting a USD 165 million shortfall on funds.   Just as a backdrop, eh?

Development Banks
The Islamic Development Bank (IsDB) is about to make operational a USD 10 billion for poverty alleviation. HIV and other Millenium Development Goals will be targeted.  Though it looks like Africa will be the main focus of this fund, there are certainly opportunities for Central Asian members to participate.  Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan are each members of the IsDB.

In the meantime, on May 8 the Asian Development Bank (ADB) is confronting a change in directive.  Extreme poverty–populations with less than USD 1 per person per day–is becoming less frequent in the region.  The ADB is planning new environmentally focussed initiatives, greater concentration on Millenium Development Goals, and infrastructure development.  What if they raised the poverty level number to USD 2 per capita per day?  Just curious–I think they have plenty they can do in Central Asia at the very least.  And there’s no doubt the ADB has great relevance in Central Asia’s development today.

Further reading:
IsDB Home Page
World Bank’s Private Sector Development blog

Photos: Baron Foods; Pamir.Org

This week BP released the new annual report: The Statistical Review of World Energy 2007.  This report is considered the standard for those who work in the energy field and those who write about it.  Since BP has international connections and relationships, its finding are much less politically biased than say, country reports from domestic energy adminstrations.  Its statistical nature reflects that extraction and distribution aspects of oil commerce deal strictly in real product in real time frames-short, medium, and long.  Other aspects of the oil market, such as the spot market, are driven by perceptions of more immediate realities.  Peak oil theory has become such a driver of public debate every time oil prices jack up.  But the real cause of what sometimes seems like daily price volatility has to do with political situations and conflict.

As a market bias, oil companies depress claims of peak oil, and please note: when they are talking about short-term effects, that is a proper stance to take.  Political and military situations in the middle east, burgeoning conflict in Nigeria or other states, expropriation of assets by politicians, and new regulations each have much more to do with your gas pump price today then the sinking well levels that have been occurring all along.  However, one cannot dismiss the theory because it is based upon a bottom-line fact.  Underlying all peak oil claims is the fact that oil is a non-renewable resource, and eventually its suitability/ubiquity for meeting energy consumption needs is going to diminish.  Nevertheless, this post is not going to argue, even with thoughtful people, whether the peak oil production has already occurred or will show up next week, or for your great grandchildren.  The peak oil conflict from a state-based or region-based point of view has to do with a window of opportunity.  For Central Asia, there are direct effects and indirect effects that will come from the region’s peak oil problems–if not the world’s overall peak supply constraints.

Europe and Eurasia are shown to have 144.2 thousand million barrels in reserve.  This would include all of Russia; the Caspian basin, which includes Central Asia; and various European sources such as the North Sea, where production is in decline.  According to the BP report and RFE/RL, the years of production that Kazakhstan has at present levels of extraction is 76.5 years; Azerbaijan, 29.3 years; Turkmenistan, 9.2 years; and Russia, 22.3 years.  This assumes that a. current discoveries, tapped or untapped, are total discoveries; b. current reserves are properly estimated; c. technological advance will keep extraction ratios and waste ratios much the same as now; and d. oil and gas will pump at the same rate that they are pumping now.

For each oil/gas supplier state, these reserves represent a window of opportunity. Ideally, states use that “oil revenue window” to develop a varied economy using oil income as a jumpstart for a new economic engine.  When that money no longer comes in under increasing amounts, traditionally the states that had oil have been in worse, not better straits (Nigeria, for example, whose oil economy started before development banks had developed a school of thought about oil revenue). 

For this reason, the World Bank and the IMF, as well as other development banks, continue to try to play hardball with petro-states, insisting upon fund accountability and transparency, and cutting up stiff when or if it doesn’t occur.  They always advise that these states create oil funds, so that state budgets do not become dependent upon oil money for revenue.  Instead, that revenue is to be used for long-term investments in human capital (primarily education), sustainable infrastructure development (dams, power plants, transportation planning, and in post-Soviet states, legacy pollution cleanup).   One can see from the windows that Turkmenistan has a decade; Kazakhstan four generations; and Russia one generation to derive this benefit.  It’s not a long time when measured against a future without oil.

So for the supplier states, peak oil is a grim reminder to use oil proceeds wisely.  This goal is a heck of a lot easier to state than it is to accomplish.  For the region, it is even more important and difficult to implement.  In fact, it is a warning: the largesse from Russia, for instance, it entirely tied to oil revenues.  States such as Kyrgyzstan and Tajikistan need to realize that their ally with the cash is not going to be able to donate funds in twenty years the way it can today.  Therefore, they also need to look at the present oil economy of Russia and Central Asian oil-supplying neighbors as a window of opportunity as well.  Like the oil supplier states, they need to put Kazakhstan’s offers of aid, and Russia’s offers of aid, to extremely efficient use for future development. 

If they don’t, they can expect another dreary set of decades that resembles the early 1990’s in future.  Though they are not petrostates, they have to act like the most responsible of oil supplier states, by developing within that reflected window of opportunity.  The alternative is just too grim.

This is either the Golden Age or the Foundation Age for Central Asia.  It would be far better for it to be the foundation age for a future golden era.

Well, Mark Seidenfeld’s trial did indeed begin (at last) on Friday June 15th.  

The judge ordered that the initial complainant, Mr. Zhunssov, be present on Monday, June 18th, the second day of the new trial.

On Monday, Mr. Zhunussov, the complainant, was nowhere in court.  Instead, he was in China, running in a Marathon. 

Marathon No. 2
Mr. Seidenfeld’s Marathon has lasted since his unexpected arrest in December of 2005.  It has included the Russian Prison Endurance event; the Prison Train competition; and then a stretch of Kazakhstan Imprisonment.  I suppose one could actually call it a triathlon.

Next trial date is June 27–I will keep checking on this case and giving updates.

On June 12, Lukoil cemented a contract with Turkmenistan to develop three offshore fields .   LUKOil joins the UAE’s Dragon Oil PLC and Malaysia’s Petronas as foreign direct investors in Turkmenistan’s petrochemical industry.  LUKoil currently produces 19% of Russia’s crude oil, and operates in 25 other states besides the Russian Federation.

Last month, Kazakhstan, Turkmenistan, and Russia developed a new pipeline deal.  Though most stories focus on the fact that Russia will continue to control Turkmenistan’s gas (rather than shipping it through the South Caspian line through the Caucasus), the news really represents an advance for Turkmenistan’s ailing distribution infrastructure.  Non-Russian sources lost because they did not offer what Turkmenistan needed, and in a workable time frame.

In May, President Berdymuhammedov invited ChevronTexaco to make offers.  One value of engaging Chevron is that they have very strong relations with Kazakhstan, and own part of the CPC pipeline out of Atyrau to Russia’s port of Novorossiysk.  Work with Chevron would therefore introduce Turkmenistan to new customers but also engage Russia and the veteran-of-many-multiparty-oil-deals Kazakhstan.  Personally I hope Chevron moves out of this gate.  It is a fabulous opportunity.

Azerbaijan is also taking an active role in courting Turkmenistan, chiefly for the Trans-Caspian line and the Nabucco project (I always think crackers and not oil when I see this name).  These two projects were discussed at the Baku Oil & Gas Exhibition.  Turkmenistan’s gas was part of an overall view of non-Russian gas transit at this week’s GUAM meeting.  GUAM is an economic collective security organization composed of Georgia, Ukraine, Azerbaijan, and Moldova.

Further information:
LUKoil’s web site (does not yet have a press release on the Turkmenistan deal, but still interesting) 
Wikipedia explains NABUCCO Pipeline project, which lives on hope and paper, as it has yet to be developed

Kazakhstan’s President has announced a new phase of pipeline construction for oil shipments to China.  The previously-constructed Atasu-Alashankou pipeline will be extended to the Caspian.  Atasu is in Central Kazakhstan. 

The existing phase of transit was certified in July of last year, and shipped 1.1 million tons of oil to China in the first quarter of this year.  (88,000 barrels/day).  New construction may not appreciably change quantity shipped, only make it more convenient.

President Nazarbaev also noted, in a conference with officials and investors in Eastern Kazakhstan, that further trade between Kazakhstan and China could be developed through new railway avenues. 

Further reference:
Oil equivalency conversion table