In September, in addition to Afghanistan, in the articles of foreign media, the countries of the region are mentioned from the point of view of economy (the scandal with the sale of Kyrgyz gold in foreign markets and the mining of cryptocurrency in Kazakhstan), authoritarian initiatives (restriction of freedom on the Internet) and, of course, not without mentioning Uzbekistan.
The Diplomat: Cryptocurrency Mining Rises In Kazakhstan Despite Emissions Concerns
Kazakhstan has become the third-largest country in terms of energy consumed to “mine” Bitcoin, the world’s most renowned cryptocurrency, an impressive development for a country essentially running on coal, notes The Diplomat.
Data from the Cambridge Bitcoin Electricity Consumption Index shows that Kazakhstan’s global share of cryptocurrency processing power has increased significantly, while other major “crypto mining” countries have decelerated. China, by far the largest producer of cryptocurrency units, has tightened the regulation on digital coins, leading many to switch to servers in Kazakhstan.
The official position of Kazakhstan has radically changed from skepticism to regulation of the cryptocurrency mining industry. In June 2020, President Kassym-Jomart Tokayev approved amendments to the country’s “digital code”, which effectively legalized crypto mining in Kazakhstan. In addition, lenient regulation and an optimistic view that banks will start offering cryptocurrency accounts give the market unprecedented potential. According to recent amendments to the Tax Code of Kazakhstan, from January 2022, miners will have to pay one additional tenge (0.23 cents) per kWh, which will allow the government to receive more taxes from mining cryptocurrency.
Kazakhstan offers an attractive market with prices averaging 5 cents per kWh compared to 9-11 cents in Russia, China and the United States. At about half the price, the financial results of mining in Kazakhstan look better than those of competitors.
However, the transaction price could be higher as cryptocurrencies have a significant carbon footprint. Cryptocurrencies are produced or “mined” through a network of computers that consume huge amounts of electricity in the process.
Electricity in Kazakhstan comes primarily from fossil fuels, with the lion’s share of coal accounting for two-thirds of the total. In the United States, cryptominers claim their carbon footprint is lower due to the higher share of renewables in electricity generation. The new demand for cryptocurrency mining in Kazakhstan can only mean an increase in dependence on coal.
It is unlikely that, with current plans for the electricity sector, Kazakhstan will be able to keep up with increased consumption, whether it be mining cryptocurrencies or supplying industry and households with new forms of production, be it renewable energy or nuclear energy.
The Wall Street Journal: Kyrgyzstan Blocked from London Gold Trading Over Missing Bars
The American business newspaper The Wall Street Journal writes that the decision to restrict the supply of Kyrgyz gold is likely to stop the gold-dependent economy of the Central Asian country from selling bullion on the international market.
In September 2021, the London Bullion Market Association (LBMA) excluded Kyrgyzaltyn OJSC, the seller of all gold produced within Kyrgyzstan, from the list of acceptable gold processors. This list sets the standard for the London gold market, one of the largest in the world, and is considered an international benchmark. Traders and officials say the move will likely prevent Kyrgyzaltyn from selling bullion in other gold centers, including Switzerland and New York.
The LBMA’s actions were prompted by accusations by the London arm of trading firm StoneX Group Inc that the Kyrgyz refiner was unable to deliver half a ton of gold bars. StoneX also accused Kyrgyzaltyn of attempting to divert about $ 29 million in bullion owed to a division of Canada’s Centerra Gold Inc. The Kyrgyz side denies the charges.
The controversy surrounding Kumtor, already a former Centerra Gold Inc mine, has become a central element in the fight against corruption of the new Kyrgyz authorities. The government has arrested a number of high-ranking former officials, including former prime ministers and several ex-deputies. For the sake of this case, the first president of Kyrgyzstan, Askar Akaev, unexpectedly visited the country for several days (for the first time since the overthrow 16 years ago) to cooperate with law enforcement agencies on his role in the Kumtor case.
Legal battles are not limited to Kyrgyzstan itself. Centerra has filed a lawsuit in US courts against government attempts to seize the mine and bring its subsidiaries to bankruptcy. The company disputes financial figures provided by the Kyrgyz government.
The suspension of gold sales could deprive Kyrgyzstan of a key source of income and slow the country’s exit from the recession caused by the pandemic. According to the World Bank, gold exports account for 9% of Kyrgyzstan’s gross domestic product. The bank predicts the economy will grow 3.8% this year after contracting 8.6% in 2020 and will return to its pre-pandemic level in 2023.
The LBMA has suspended Kyrgyzaltyn’s participation in its list, rather than eliminating it entirely, which gives the Kyrgyz processing plant the potential to remedy the situation: the state-owned enterprise must take corrective measures by November to demonstrate compliance with LBMA rules. If Kyrgyzaltyn does not do this, it will be excluded from the compliance list and will not be able to reapply for five years.
Even if the state refiner is not approved in London, the country will be able to sell gold in the markets of China, India and the Middle East. According to traders, the price of Kyrgyz gold in these markets will be lower compared to international prices if Kyrgyzaltyn is not recognized in London.
Big Brother-style internet controls expand in Central Asia
Japanese business newspaper Nikkei Asia writes that new laws in Kazakhstan and Kyrgyzstan raise concerns about press and personal freedom.
In Kazakhstan, proposed legislation would force social media companies like Facebook and popular messenger services like WhatsApp and Telegram to open representative offices in the country or face restrictions on their activity. In Kyrgyzstan, a law passed in August requires internet service providers and website owners to identify their users to combat “false information.”
Kazakh authorities hope that by forcing foreign social media outlets to register in Kazakhstan, it will be easier to compel them to swiftly remove content deemed unsuitable. According to the draft legislation, the head of the local office, who must be a Kazakh citizen, would be responsible for removing content deemed to be illegal within 24 hours or face prosecution.
Across the border in Kyrgyzstan, the authorities have taken aim at the dissemination of “false information” via “fake” accounts. The new law is supposed to stop this from happening by making all ISPs and website owners identify their users and submit this data to a centralized storage system.
Other parts of Central Asia have similar restrictions on online activity, the Nikkei Asia notes. Uzbekistan introduced a law this year requiring companies operating in the country to store the personal data of Uzbek citizens on servers in Uzbekistan or face fines or blocking.
Uzbekistan has also introduced legislation making it a criminal offense to insult the head of state. This law was approved in March after RFE/RL’s Uzbek service published a report on a luxurious mountain resort, allegedly built at taxpayers’ expense, for the private use of President Shavkat Mirziyoyev. The government has strongly denied any wrongdoing and said that the property is not for the president’s personal use.
In the other two Central Asian states, Tajikistan and Turkmenistan, the authorities rely on blanket blocking of websites that are not to their liking, rather than following the legal routes being adopted by its neighbors. International news outlets and social networks are routinely censored. Only one messenger app, IMO, works in Turkmenistan, while in Tajikistan messenger services are blocked when criticism of the president or the government appears.
Uzbekistan and Tajikistan Calibrate Approaches to the Taliban
The America think tank “Jamestown Foundation” writes about the different approaches of the two Central Asian countries towards the Taliban (representatives of a terrorist organization banned in Central Asia. – Ed. Note). On September 11, the grand mufti of Tajikistan, Saidmukarrim Abdulqoddirzoda, issued an edict calling the Taliban a “terrorist group” and declared that the Taliban’s behavior was “far from Islam.” In particular, the grand mufti focused on the Taliban’s treatment of women, including their “not being allowed to leave the house.” Only if the Taliban practiced the “basics of Islam,” according to the grand mufti, could the “whole world” recognize its state.
These comments mirror Tajikistan’s national policy to possibly provide haven for what remains of the anti-Taliban resistance in exile and to continually accuse the Taliban of “oppression”. However, Tajikistan’s religious position regarding the Taliban is not uniform. The Omani grand mufti, for example, immediately congratulated the Taliban after its victory and considered it the “fulfillment of God’s sincere promise”. This was despite Oman’s foreign policy being open to “normalizing” relations with Israel.
In contrast to Tajikistan, Uzbekistan has begun to take a more neutral position regarding the Taliban, with a focus on supporting the Afghan people. Uzbekistan has, for example, offered its town of Termiz, located on the border with Afghanistan, to be used as a logistics hub for humanitarian efforts involving, among other organizations, the World Food Program. At the same time, Uzbekistan has faced pressure from the new Taliban government to return to Afghanistan nearly 600 soldiers who crossed the border in the wake of the Taliban’s conquest of Kabul, including with warplanes and helicopters. While Uzbekistan has refused to allow Afghan civilians to flee to Uzbekistan, which assuages the Taliban, any decision to provide haven to the defector soldiers would antagonize the Taliban. Ultimately, Uzbekistan worked with international agencies to find a third-country home for the defector soldiers and sent them to the United Arab Emirates.
Meanwhile, whatever approach Tajikistan and Uzbekistan adopt toward the Taliban will require some form of Russian approval. Yet Russia has been more hesitant than other countries to openly embrace the Taliban. China, Russia, Pakistan, Qatar, Iran and Turkey were invited along with Russia to participate in the Taliban’s inauguration ceremony of its new government on September 11, but Russia decided to opt out. The Taliban itself ended up canceling the inauguration. Russia may, therefore, support some of Tajikistan’s or Uzbekistan’s policies that run counter to the Taliban’s demands, at least as a card that Moscow itself can hold against the Taliban to win certain concessions or exert influence on Afghanistan going forward.
Central Asia in EU’s spotlight as region faces stability question over Afghanistan
European media network Euractiv writes that the role of the European Union in Central Asia may increase due to the events in Afghanistan. Europeans since the start of the crisis have expressed fears that a fragile Afghanistan could have the potential to destabilise the region. In August, EU’s chief diplomat Joseph Borrell said the bloc should provide financial support to countries neighbouring Afghanistan, while Austria, Germany and some other member states have also floated the idea of relying on Central Asia to limit refugee flows from Afghanistan to Europe.
EU diplomats in the region for now, however, do not see a danger of Afghanistan migration destabilising the region in the short term, as potential Central Asian migration pathways – through Tajikistan, Uzbekistan or Kazakhstan – would not represent the ‘classic routes to the West’.
At the same time, unrelated to Afghanistan, there is notable frustration and incomprehension among EU diplomats in the region that Brussels is not, in general, paying more attention to the region.
The author believes that it is not clear from the updated EU strategy for Central Asia what importance the EU attaches to this region.
The scope of EU relations is linked to the readiness of individual Central Asian countries to undertake reforms. However, in the strategy, the EU played down concerns that Beijing is slowly gaining control over strategic infrastructure important to its internal security agenda.
Is Uzbekistan on the Verge of Rejoining the CSTO?
The Jamestown Foundation analyzes Russia’s desire to see Uzbekistan again in the ranks of the CSTO. On September 20, Tashkent hosted a conference on the topic “Russia and Uzbekistan facing the challenges of development and security at a new historical stage of interaction.” This gathering, jointly organized by Russia’s Valdai International Discussion Club and the Institute for Strategic and Interregional Studies Under the President of the Republic of Uzbekistan, was attended by high-level diplomats from both countries. During the conference, Russian Deputy Foreign Minister Andrei Rudenko implicitly suggested that the Kremlin would like Uzbekistan to rejoin the Collective Security Treaty Organization (CSTO), the Moscow-led regional security alliance whose other members are Armenia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan.
Importantly, when referring to Uzbekistan’s withdrawal from the CSTO in 2012, Russian commentators and officials always use the word “suspended” (“priostanovil”), implying that leaving the alliance is temporary and would be reversed in the future. But when describing the same situation, Uzbekistani officials notably prefer to use the word “exited” or “left” (“vyshel”). In a similar fashion, when asked if Uzbekistan would be joining the CSTO again, Russian high-level representatives routinely say that “Tashkent is not yet planning to rejoin the CSTO,” while their Uzbekistani counterparts are more categorical in their answers, declaring that the “issue of joining the CSTO is not being considered” or “Uzbekistan has no plans to join the CSTO”.
Uzbekistan’s President Shavkat Mirziyoyev has long been planning to visit Moscow and will most likely do so after the October 24, 2021, presidential election. According to Russian Deputy Foreign Minister Andrei Rudenko, during Mirziyoyev’s expected visit, the two countries will sign a substantial package of bilateral agreements, which will also include defense cooperation and arms purchases.
In the aftermath of the Western withdrawal from Afghanistan, Uzbekistan refused entreaties to host a US military facility on its territory, which, Tashkent noted, is precluded by its Foreign Policy Doctrine. Russian officials immediately applauded that decision and expressed hope that the Uzbekistani government would remain true to its laws. However, Russian officials and commentators often forget that the same law prohibits Uzbekistan from joining any military-political alliances and blocs—which includes the CSTO.
So far, no compelling indications exist that President Mirziyoyev is planning to take Uzbekistan into the Collective Security Treaty Organization. If anything, the recent increase in joint Uzbekistani-Russian military drills and interactions suggest that Tashkent believes Moscow can serve as a useful and preeminent security and military partner even without Uzbekistan reentering the CSTO.