Central Asia emerges as a priority for Gulf countries
Saudi Arabia and the United Arab Emirates have been at the forefront of Gulf investment in Central Asia. (AFP)
The past decade has seen the Middle East enter an era of diversification. Gulf states in particular have embarked on ambitious economic diversification programs to transform their traditionally hydrocarbon-dependent economies by strengthening their non-oil sectors. Regional actors have invested in sectors ranging from renewable energy to sports and tourism. The spirit of diversification is also evident in the region's foreign policies and international partnerships. In recent years, Gulf states have sought to reduce their reliance on the West, and Central Asia has emerged as a priority.
The Gulf and Central Asian countries have historically shared strong trade ties focused almost entirely on oil and natural gas. The majority of the region's oil and natural gas reserves are concentrated in Kazakhstan and Turkmenistan. Uzbekistan and Tajikistan also have oil reserves, with further exploration underway. Kyrgyzstan has extensive coal reserves, and overall the region is rich in mineral resources.
In recent years, this strategically vital region has attracted significant economic interest from the Gulf states. While both the Gulf and Central Asia have large oil and natural gas reserves, the Gulf states have been more successful in establishing a robust hydrocarbon industry. As a result, the ability to leverage this expertise in developing Central Asia's hydrocarbon industry is facilitating strategic cooperation between the two regions. Beyond hydrocarbons, Gulf investments in Central Asia's infrastructure, agriculture and manufacturing are also a means of ensuring food security for the Gulf states.
Saudi Arabia and the United Arab Emirates have been at the forefront of Gulf investment in Central Asia, with Oman and Qatar also joining the group. While Gulf sovereign wealth funds are actively investing in domestic non-oil sectors, diversifying international investments is also key to ensuring the region's post-oil economy. Cooperation between the Gulf and Central Asia is not only taking place at the bilateral national level, but also at the regional Gulf Cooperation Council level. In April, the second meeting of foreign ministers of the Central Asia-GCC Strategic Dialogue was held in Tashkent.
The interest in economic cooperation and diversification comes equally from both regions. Gulf investments have enabled the five Central Asian countries to diversify their economic partnerships and reduce their reliance on any single power. Historically part of the Soviet Union and located right next to China, the Central Asian countries have traditionally relied on Russia and China for much of their economic activity.
However, Central Asian countries are wary of the debt-trap diplomacy that characterizes Chinese BRI investments. China's tough domestic economic situation also makes its appetite for international investments increasingly uncertain. At the same time, Russian influence in the region has weakened since the outbreak of the Ukrainian war, leading to international sanctions and the reallocation of Russian resources to the Ukrainian front. Seeking to diversify their international partnerships and avoid the cultural and economic expansionism of their two major neighbors, Central Asia welcomes investments from the Gulf states.
But growing ties between the Gulf states and Central Asia also bring their own challenges. Central Asia is a key part of China's Belt and Road Initiative, a major international trade route. To this end, China has invested heavily in infrastructure and energy projects in the region. At the same time, Russia is eager to maintain its historic economic and military influence in the region. Russia and China are joined by Turkey, a long-standing Central Asian partner with strong cultural and economic ties.
A recent surge in Gulf investment in Central Asia has transformed the region into a new economic battleground.
Zaid M. Berbaghi
Certainly, Gulf investments in the region have the potential to coexist and cooperate with Chinese, Russian and Turkish investments, especially in infrastructure and transport. Gulf investments in the transport and logistics infrastructure of countries such as Kazakhstan, Uzbekistan and Turkmenistan could ease access to European and Asian markets and provide alternative export routes for all competing countries.
However, each player's excessive focus on energy investment has become a source of geopolitical tension and competition. Two resources that Central Asia is rich in are particularly attractive to international investors: hydrocarbons and renewable energy. The combination of Central Asia's natural resources, strategic location, and growing markets, along with the geopolitical ambitions of investing countries, has inevitably turned the region into an economic battleground.
The situation is further complicated by the fact that the two rivals share good economic and strategic ties with each other. Turkey, which once had tensions with the Gulf states, has improved its diplomatic relations with the GCC countries in recent years. Notably, Saudi Arabia’s relationship with China has developed significantly, with increasing Chinese investment in various sectors in Saudi Arabia, including AI, autonomous vehicles, solar power, and infrastructure. This indicates that the Gulf states are wary of any alliance with Central Asia that could jeopardize their cooperation with China. The growing bilateral and multilateral cooperation between these countries is also in contrast to their rivalry for regional influence in Central Asia.
The recent surge in Gulf investments in Central Asia has transformed the region into a new economic battleground. Gulf states are not only competing with Turkey, China, and Russia for regional influence, but also with each other. Central Asia, due to its geopolitical location and economic potential, is a natural arena for this competition. Gulf states are leveraging their respective economic strength to position themselves as influential diplomatic players in the region.
This comes at a time when the Global South is actively building international influence and new partnerships to break out of the shadow of the West. Thus, over the next decade, Central Asia will remain a strategic battleground for Gulf states that will witness both cooperation and competition. Meanwhile, Central Asian states are unlikely to favor any particular international partner, as they are interested in diversifying investments to protect their own economies. Thus, competing powers may seek to maximize cooperation in the region, including on energy security, transportation infrastructure, and counterterrorism.
• Zaid M. Belbagi is a political commentator and advisor to private clients in London and the Gulf Cooperation Council region.
X: @Moulay_Zaid
Disclaimer: The views expressed by the authors in this section are their own and do not necessarily reflect the views of Arab News.
