Academic journal article Journal of International Affairs

The Caspian Energy Conundrum

Academic journal article Journal of International Affairs

The Caspian Energy Conundrum

Article excerpt

The region as a whole has a series of tense and complicated connections with bordering states and an unstable and shifting role in global politics and economics. All of these factors contribute to making the energy trade in Central Asia a dangerous game.

**********

Since 1991, Central Asia's vast oil and gas deposits have promised economic development for the impoverished region and have attracted the attention of major powers interested in accessing those resources for themselves. Nonetheless, these promises have not been realized: the energy situation is extremely complicated, leaving the region's natural resources as inaccessible as ever. Each Central Asian republic has complex domestic political problems and difficult relationships with its neighbors. The region as a whole has a series of tense and complicated connections with bordering states and an unstable and shifting role in global politics and economics. All of these factors contribute to making the energy trade in Central Asia a dangerous game. The political vacuum left by the fall of the Soviet Union has led to greater instability throughout the region, further compounding the difficulty of access to Central Asia's natural resources.

Arguments abound about how this instability may develop. Many worry that the Central Asian republics will succumb to so-called "Dutch disease," whereby energy exports cause the domestic currency to appreciate, making domestic agriculture less competitive at home. As a result, farm unemployment increases, triggering mass internal migration to cities and the potential for political instability. (1) Others criticize the "enclave" style of Central Asian development, as the energy sector is developing within the national economy but without the linkages to other sectors that are necessary to drive development. Finally, some argue that political disorder will arise from the disparity between a country's new and wealthy super-elite and the vast majority of its poverty-stricken population. (2)

The dynamic of the "Dutch disease" is well studied and documented; warnings about imbalances in development arising from the emphasis on a single commodity and the absence of spillover effects to the rest of the national economy are not unfounded. Likewise, the human suffering caused by income inequalities and the sub-optimization of social and economic opportunity should not be minimized. The misery and lost opportunities experienced by individuals can result in economy-wide impoverishment, often encouraging criminal activities as a means of compensation. Such are the lessons from existing economic development studies that are transferred to Turkmenistan and Kazakhstan. (3) From them, it follows that the energy sector may be developing in such a manner as to unbalance national economies, putting the security of all of Central Asia in peril. (4)

To see this in proper perspective, it is useful to bear in mind the interaction of energy networks, economic development and political sustainability in Central Asia. For ease of presentation, this article reduces the inherent complexity of these themes to three levels: the national, the subnational and the international. I will first detail the national level, focusing on economic development in Kazakhstan, Turkmenistan and Uzbekistan. Second, at the subnational level, I examine how domestic political change alters energy economics in each of the three states. On the third level, I address the impact of the European Union (EU) and United States and then look at the Eurasian scale, where I examine the influence of Turkey, Russia, Iran, and other players. (5) In sum, I argue that Central Asia's energy trade could still bring prosperity to the region, but its domestic political volatility and complicated regional and global relationships may spoil such efforts.

THE NATIONAL CONTEXTS OF ENERGY GEO-ECONOMICS IN CENTRAL ASIA (6)

Kazakhstan

Kazakhstan's vast energy resources, and the Tengiz oil field in particular, drew significant Western attention to Central Asia following the disintegration of the Soviet Union. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.