Military Chiefs of SCO nations meet in Beijing; Turkey, Kazakhstan to start joint venture in defense-related items; Kazakhstan hopes to settle Karachaganak dispute by June this year;
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    • Chen Bingde, Chief of the General Staff of the Chinese People’s Liberation Army met here on 23 April with his counterparts from Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbek’s deputy defense minister. The military chiefs of the Shanghai Cooperation Organization (SCO) have pledged to improve bilateral military relations and cooperation on SCO defense and security. The military chiefs will attend a meeting Monday in Shanghai to review SCO cooperation in the defense and security sectors. They will also discuss the progress made since last year, when SCO states signed an agreement on defense and security cooperation in the Tashkent SCO summit. The meeting is the first of its kind since the SCO was founded 10 years ago.1

    Reports noted that Turkish defense contractor and military electronics firm Aselsan will set up a $30 million facility in Kazakhstan to make night vision systems for armored vehicles and electro-optical equipment. Kazakhstan Engineering and visiting executives from Turkey’s leading defense firm penned the deal in the Kazakh capital Astana to create a 50-50 joint venture named Aselsan-Kazakhstan Engineering. Once the plant begins operation in a year, it will meet the needs of the Kazakh defense industry as well as to satisfy the defense requirements of Kazakhstan’s regional neighbors.2

    Meanwhile, Kazakhstan hopes to settle by June its long-standing disputes with the foreign-led energy consortium that operates the giant Karachaganak energy field—the Karachaganak Petroleum Operating Group (KPO) led by Britain’s BG Group and Italy’s ENI. Kazakh authorities have levied several punitive measures against KPO for allegedly flouting ecological and tax regulations and overstating operating costs. Karachaganak project produces almost half the country’s gas and 18 percent of its oil. As Kazakh state fuel producer KazMunaiGas holds no stake, it is believed that it wants a share of the lucrative project and has been pressing KPO to part with 10 percent.3

    In another development, a Russian military rocket the length of a truck veered off course during training exercises Thursday and landed 10 miles inside Kazakh territory. Kazakhstan’s Emergencies department in the Western Atyrau region set up a special commission to look into the incident. Major General Vladimir Gradusov said trainee air defense units in southern Russia’s Astrakhan region failed to shoot down the dummy target, which imitated a rocket after it went off course.4

    According to reports, Kyrgyz opposition party Ata Meken is not in favor of joining the customs union with Russia, Kazakhstan and Belarus. This opposition comes after Prime Minister Almazbek Atambayev announced that Kyrgyzstan will seek membership of the customs union of post-Soviet countries by the end of 2011. Ata Meken faction leader Omurbek Tekebayev questioned how Kyrgyzstan could afford to join the trilateral union of Russia, Kazakhstan and Belarus. “The Minister of Economic Regulation Uchkunbek Tashbaev stated that Kyrgyzstan stands ready to pay about $2 billion compensation to WTO (World Trade Organization) members. Where he's going to take the money?” he asked.5 Apart from this, party is apprehensive of deepening dependency on Moscow. Meanwhile, Kyrgyzstan’s prime minister held talks with visiting experts from the International Monetary Fund (IMF) on improving Kyrgyzstan’s troubled state finances. The IMF team will figure out if the government will be able to stick to its state budget for this year, will look at the fiscal sustainability over the medium term and discuss the progress made in setting up development institutions in the country. The IMF mission will wind up its fact-finding trip on May 4.6

    Tajikistan will produce enough energy in three years to satisfy all its domestic needs. Tajik President Emomali Rahmon said “Tajikistan’s energy independence will be ensured in the next three years with the commissioning of the Sangtuda-2 hydroelectric power station”. Dushanbe suffers regular power shortages during winter months forcing it to buy natural gas from neighboring Uzbekistan.7

    Apart from this the leadership is trying to aim for energy independence in terms of gas self-sufficiency. Russia's 201 Motorized Rifle Division began week-long military exercises in Tajikistan on April 18. The aim was to better prepare the troops for mountainous and desert scenarios, to check the readiness of the military base to carry out tasks for the intended use, improve practical skills of the commanders of all levels in the organization of the fighting and management offices in close to combat situations. Russia first established a military base in 2004 and has several thousand military personnel stationed in Tajikistan.8

    Reports noted that Turkmenistan’s President Gurbanguly Berdimuhamedov held talks with the visiting Saudi Oil and Mineral Resources Minister Ali Bin Ibrahim Al Naimi on April 21 on bilateral cooperation in the fuel and energy sector. Turkmenistan’s opening up of new opportunities for foreign investment enables it to explore its energy resources through foreign modern technologies that it lacks. It aims to raise its energy output and refining capacities while seeking to diversify its energy export routes.9 Meanwhile, Iranian Foreign Minister Ali Akbar Salehi said on 24 April that Islamic Republic of Iran, Turkmenistan and Kazakhstan will take part in a joint project for construction of a railway connecting cities in three countries to each other which will play an important role in boosting trade transactions. Foreign ministers of Iran, Turkmenistan, Uzbekistan, Qatar and Oman will sign a transit cooperation pact in Ashgabat.10

    Uzbek President Islam Karimov visited Beijing on two-day state visit from 19-20 April. His visit coincided with an announcement by China’s central bank that the two countries have agreed a currency swap.11 The People’s Bank of China (PBOC) forged deal with Central Bank of the Republic of Uzbekistan for a $106 million currency swap for the purpose of promoting bilateral trade, investment and financial cooperation. The deal has an extendable three-year period.12 Uzbekistan and China agreed to cooperate in $5 billion worth of joint projects. More than 25 projects will be undertaken in accordance with the new deals. One of them is the construction of a new pipeline from Uzbek gas fields to China having the capacity to transport 25 billion cubic meters (bcm) of gas annually. China would lend Uzbek banks $1.5 billion to help finance joint transportation, energy, and chemical production projects and both sides agreed to work together to crackdown down on separatism and terrorism in Central Asia.13

    In other developments, reports noted that Uzbek state-owned oil and gas company Uzbekneftegaz have signed a deal with Chinese real estate and gas conglomerate Xinjiang Guanghi Industry Investment Group to transport liquefied national gas (LNG) to China and Kazakhstan. The signed deal stipulates that the two firms will jointly transport 600 million cubic meters (mcm) of gas from Uzbekistan.14

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