Sep 13

BRI in Kyrgyzstan and Kazakhstan: Transnational practices and national discourses

Unveiled in the early autumn of 2013 in Kazakhstan, the BRI was presented as a transformative initiative that will change the political, economic, and social landscape of the whole of Eurasia. China’s most ambitious project of all times promised nearly US$1 trillion in investments to be channelled by China into the construction of economic corridors. Beijing’s “open to all but up to each” development initiative was portrayed as a Chinese contribution to the international public good and was lauded by a great many observers, but predominantly those in China (Chen 2018; Renwick, Gu and Gong 2018; Wang 2016; Liqun 2017; L. Zou 2018, 347; Liu, Dunford and Gao 2018). Accordingly, much of the Chinese literature focused on how BRI can be operationalised (W. Liu 2015; Renwick, Gu and Gong 2018; W. Liu 2017; Cheng, Dong and Li 2018; Li and Chen 2018; Yiwei 2017; Xian-Jun 2018; Liu, Song, et al. 2018; Y. Liu 2017; Zou, Hu and Wang 2016).  What was left unanswered, deliberately or unintentionally, is what BRI really embodies for host and frontier states along the BRI route, even though these states are the ones exposed most to China’s greater ‘coming out’ (Sternberg, Ahearn-Ligham and McConnell 2017). This is particularly evident by growing frustrations with Beijing’s adaptation of the Classic Silk Road and a wider suspicion of China’s genuine intentions. There are even views that BRI was never a well-thought and strategized endeavour, but rather an ad hoc initiative, the initial goal of which was to emphasise the leadership of Xi Jinping (Denisov 2017).

The fundamental challenge of analysing the BRI in any region or locale, as Jones argues in the concept paper for this conference, is that of charting ‘the intersection of [Chinese] political economy dynamics with those of prospective host countries’ (Jones 2019).  Whether these dynamics are shaped by a specific post-2008 crisis in Chinese capitalism, or merely driven by the more general phenomenon, that “the circulation and accumulation of capital cannot abide limits” (Harvey 2010) is a separate question.  Although capital “works assiduously to convert [limits] into barriers that can be transcended or by-passed” (Harvey 2010), the exercise of agency by transnational coalitions of political-business elites to strike deals whether or not they conform either to the logic of market or of national security remains causal with constitutive of the spatial form of political relations.  This memo embarks from the assumption that such intersections are best analysed as transnational assemblages (Movik & Allouche 2020, 2-3), which overcome the limits presented by the global market and geopolitics.  The capacity of the autonomous nation-state, even that presided over by the Chinese Communist Party, to police these limits or exercise central control over the national interest is mythical.  Rather, what we see are coalitions formed of powerful actors on a project-by-project basis occasionally forming into sustained transnational assemblages.  As such, the shift from the focus on the nation state as a sovereign actor to the state as a domain for decentred spatial dynamics (or ‘fixes’) is therefore the first analytical move required (Heathershaw et al, 2018).

A second move is founded on the fact that centred discourses, especially those of national security, cannot merely be jettisoned but remain part of the symbolic order of the BRI and thereby constitutive of its political reality.  While striking white elephant projects and extracting opportunities for graft, transnational coalitions of Chinese and ‘host state’ elites will nevertheless frame their actions in terms of both ‘China’s peaceful rise’ and the given national development strategy.  The both/and formulation here is important as it hints at the multiple and contradictory forms which discourse (on BRI or any other matter of transnational relations) takes to different audiences without ever being held to account in the aggregate for its specific contradictions.  In central Asia, for example, BRI is both evidence of China’s peaceful rise (in public relations with Beijing and state actors) and the insatiable appetite of the Chinese dragon to gobble up the region (to domestic audiences where nationalism drives political discourse).  The very same Central Asian actors may drop in and out of these discourses, depending on the political context and audience.  They do so not entirely instrumentally but according to the discursive order which makes meaning of and provides cover for their otherwise meaningless and self-serving transnational practices.

This paper takes these two elements — decentred transnational practice and centred national discourse — as the two constitutive elements of a broad analytical framework for a summary assessment of BRI in the two Central Asian states of Kyrgyzstan and Kazakhstan.  Within the region, these are neighbouring but most-different states: the large, resource-rich and middle-income economy of Kazakhstan whose stable autocrats aspire to regional leadership and the small and relatively poor economy of Kyrgyzstan whose polity has seen sometimes violent political competition and questions about the survival of the state.  The paper does not analyse the literature (for which see Jones 2019) or provide an overview of the BRI across the whole region (see Owen, this conference).  Moreover, the granular work required to trace the project-level interactions between transnational assemblages of practice and national discourses is currently absent and may be the object of a subsequent research project.  Regarding BRI in Kazakhstan, this is the object of Tokubayev’s ongoing PhD work.  Beyond BRI, it has been hinted at in the prior work of the authors and colleagues (Toktomushev 2017, Cooley & Heathershaw 2017, and Heathershaw et al 2018). The paper will proceed to consider comparatively Kazakhstan and Kyrgyzstan before concluding with some thoughts for further research.

BRI in Kyrgyzstan

What does BRI really means to the states of Central Asia and particularly to Kyrgyzstan? After vising each Central Asian state in 2013, Xi Jinping pledged to contribute US$40 billion to the Silk Road Fund as part of China’s commitment to BRI. The fund itself was swiftly established a year later, in December 2014, to promote development and prosperity of China and other countries involved in BRI (Carsten and Blanchard 2014; Silk Road Fund n.d.). As of now, however, the investments from this Fund have not reached Kyrgyzstan. Instead, within the mandate of the Silk Road Fund, China invested $1.65 billion into the construction of Karot Hydropower dam in Pakistan, $1.2 billion into the Russia’s Yamal liquefied natural gas field, $100 million into the China International Capital Corporation, $7.7 billion into the China National Chemical Corporation to buy out Italian tyre maker Pirelli, and undisclosed amounts into Hassyan clean coal power station in Dubai and into Russian gas processing and petrochemicals group SIBUR (Gabuyev 2016; Pantucci 2016; Arosio and Masoni 2015; Dubai Electricity and Water Authority 2016; SIBUR 2017).

Accordingly, in a narrow sense, BRI has not arrived to Kyrgyzstan yet. However, the examination of BRI as a broader concept that assumes the repackaging of all China-financed projects under one umbrella posits a much more complex picture. In a span of twenty years, China emerged as the Kyrgyzstan’s key trading partner and the main source of development finance and FDI. The trade volume between Kyrgyzstan and China has been growing since 2000s, and in 2018 Kyrgyzstan’s imports from China reached nearly US$1.94 billion. The total costs of public infrastructure projects financed by Beijing are estimated to be around US$2.2 billion, whilst China’s cumulative gross FDI inflow into the economy of Kyrgyzstan totals US$2.3 billion, which comprises 25-50 per cent of total FDI to the country (Mogilevskii 2019).

Where such investment has occurred it does so with Chinese state support and/or guarantees, and is framed as being in the national interest of Kyrgyzstan, but principally benefits the business-politicla elites involved.  Chinese loans were used to finance large public infrastructure projects that ranged from the construction of roads and an electricity substation to the modernisation of the Bishkek’s central power plant by Chinese company Tebian Electric Apparatus Stock Co. Ltd. (TBEA). In 2018, after the power plant failed over an especially cold winter, former Kyrgyz Prime Minister Sapar Isakov faced corruption charges relating to the faulty redevelopment which deprived thousands of residents of heating during temperatures of minus-27 degrees over the winter of 2017/18.  There had been no tender process for the $386 Million contract financed via China’s EximBank (Putz 2018).  “The choice of TBEA,” Isakov explained in his parliamentary testimony, before he was forced to resign, “was the official position from China and we could not change this” (Djanbekova 2018).  However, TBEA contracted the Kyrgyz private company Electrical Stations, paying fees for goods far in excess of their market value, thereby enabling $100 Million of embezzlement for Kyrgyz as well as Chinese business, while failing to adequately invest in chemical treatment units that were necessary for the operation of the plant’s boilers (TAG News 2018).

Similarly, in June 2018, local investigative reporting in Kyrgyzstan revealed that an $850 Million project under the Export-Import (Exim) Bank of China to build a new North-South highway was riddled with corruption schemes where Kyrgyz ministers colluded with the Chinese contractor to ensure that over-payments were built into the construction project.  That said, none of those mega projects were presented as part of BRI. In fact, the narratives of BRI are practically absent in public discourses. Even such projects as the North-South highway and the rehabilitation of the road in a touristy area of Issyk-Kul have never been unveiled as belonging to BRI, even though these projects were financed by the Chinese loans and clearly fit the general philosophy of BRI connectivity. This observation is also relevant to FDI projects. Much of Chinese FDI to Kyrgyzstan flows into oil and gas and extractive industries, with a specific concentration in geological exploration, mining and downstream petroleum operations. Yet, these projects are viewed locally through the lenses of private investments and are rarely linked to official Beijing.

A lack of direct association of Chinese projects in Kyrgyzstan with BRI though does not render wider connections with Beijing redundant. Chinese involvement in Kyrgyzstan is clouded by conspirological, ethnonationalist and imperialist narratives. Kyrgyzstan’s active borrowings from China even earned Kyrgyzstan a place in the list of the top states most susceptible to debt distress (Hurley, Morris and Portelance 2018). According to recent data, Kyrgyzstan owes China nearly US$1.78 billion out of $4.1 billion of its total external debt. This mixture of nationalist politics with general fears of predatory lending, corruption and environmental damage foment anti-Chinese sentiments, which from time to time lead to violent manifestations of anger against both the Kyrgyz ruling elites and Chinese investors.

BRI in Kazakhstan

The picture of as BRI which flatters to deceive is repeated in Kazakhstan.  Two years after the grand opening of ‘One Belt One Road’ in Astana, in 2015 the two governments signed an intergovernmental agreement to strengthen cooperation in the field of industrialisation and investment by joining Kazakhstan’s development program ‘Nurly Zhol’ with BRI. Within the framework of the agreement, it was planned to implement 55 joint projects worth $27.6 billion (Atameken Business, 2019) to be implemented during 2015-2019. Despite claims about the strategic importance of Kazakhstan in creating an economic corridor for BRI, only two of these directly related to creating BRI infrastructure, Dry port Khorgos (completed) and Construction of industrial park on SEZ ‘Khorgos — Eastern Gates’ (still in progress). The rest of the projects are related to the commercial goals of Kazakh enterprises and interests of Chinese investors to import/export technologies, products and workforce. For instance, ten projects in the field of renewable energy, where Kazakhstan provides for investors land, infrastructure and assures purchase of produced energy, while 20 projects related to oil and gas spheres, where products can be used for needs of Chinese companies in Kazakhstan or imported to China (China Dialogue, 2019). Although some projects have been running long before the announcement of BRI, in Kazakhstan they are framed as a part of the Xi’s initiative (Bitabarova, 2018).

Chinese money is attractive for Kazakhstan due to a perceived lack of investment in the country (Svoik, 2019). Perhaps more importantly, interest in Chinese money derives from the fact that it lacks the conditions which come with loans from Western-backed international development banks. It was clearly stated by former President of Kazakhstan Nazarbayev at a meeting with the Chinese media that “China never dictates its terms. China never says, ‘live as we live’, as the West always teaches us… This is China’s policy. I like it; it attracts” (Nazarbayev, 2019). Playing to the peaceful rise narrative also eases the flow of Chinese money in the form of investments and loans allows increasing capacity for the ruling elite. Chinese investments in the energy pipelines have allowed Kazakhstan to diversify its oil and gas exports from Russia oriented infrastructure and increase its revenues. However, primary beneficiaries of such cooperation tend to be elites, who become more secure in their political position.

Kazakhstan is no exception in the general trend of Chinese businesses feeding embezzlement opportunities to local private and public elites. Widespread corruption, low level of transparency and unchecked executive branches are the factors through which Chinese businesses secure their interests in Kazakhstan (O’Neill, 2014). Prior to the launch of BRI, the sale of 25.12% of shares of the national oil company Aktobemunaigas to a subsidiary of the Chinese CNPC caused a well-publicised corruption scandal.  The initial price of the stake was valued as $386.4 million but was eventually sold for $150.2 million. Investigations revealed that CNPC International (Caspian) after purchasing shares of the company had resold 49 per cent of shares to a BVI company affiliated to the son-in-law of Nazarbayev for $49. Later CNPC and its subsidiaries have repurchased these shares, but this time for $165.9 million (The Wall Street Journal, 2010).

If prior BRI cases of money laundering activities involved mainly high-profile elites, the BRI has facilitated the illegal practice of bribery and embezzlement among a broader range of public and private actors. Chinese businesses are able to easily adapt to new conditions and use such connections as the means to get things done both commercially and politically (Satpayev, 2019). The most recent case was related to the Astana Light Railway Transportation (Astana LRT) project, which once was abandoned for being too costly. Nevertheless, in 2015 project became a part of the joint BRI projects before being abandoned again as a result of embezzlement by actors from both sides (Tokayev, 2019; Umirbekov, 2019).

Despite claims of officials about the selection of joint projects under strict criteria of novelty and necessity, and their approval by central governments of parties, projects seem to be selected for these opportunities provided to private and public actors. Former Vice Minister of Investment and Development Ministry Oshakbayev (2019) stated that the initial list of projects has been formed exclusively by Kazakh side based on proposals of territorial administrations and business enterprises (Oshakbayev, 2019). The projects had been due to complete by 2019. However, by 2019 only 15 out of 55 projects reached their estimated goals, 11 in the process of realisation, 27 still undergoing discussions about expediency and 2 defined as passive, one of which is Astana LRT. Furthermore, the list of projects and their implementation periods have been subject to changes on the initiative of both sides. Only in 2019 parties have proposed to replace seven projects, three by Kazakh and four by the Chinese side (Informburo, 2019).  We may hypothesize based on prior examples that behind the scenes of these projects are elites in transnational struggles over opportunities for graft and side-payments to shell companies. 

If BRI is seen by the government as a way of facilitating the economy, the general public and experts are more sceptical. Suspicious arises not only about China’s geopolitical ambitions but from mistrust of the ruling elite in the vacuum of information about BRI projects and how foreign investments are handled in general. The list of active BRI projects remained a secret even after the protest of 2016 against land reform, related to allowing foreign ownership (China Dialogue, 2019). The first official visit of the President Tokayev to Beijing sparked a new wave of anti-Chinese protests in different parts of the country. There was general confusion about transferring 55 old Chinese factories to Kazakhstan (Eurasianet, 2019). General distrust and a lack of transparency in the projects are often identified as causes of such narratives about BRI. Along with these reasons, Satpayev (2019) points out specific Kazakh-Chinese reasons including historical tensions, a declining socio-economic situation, ethnic cleansing in Xinjiang and growing economic presence of China in neighbouring Kyrgyzstan and Tajikistan, where 44.8% and 54.1% of foreign debt respectively belongs to China. Satpayev does not exclude the possibility of anti-Chinese sentiment being used by elites struggling for power as an instrument for political mobilisation. He states that “fanning fears in relation to internal or external ‘enemies’, as world experience shows, is one of the political technologies to divert public attention from serious internal socio-economic problems that are not effectively addressed by the authorities” (Satpayev, 2019).


The picture emerging from this brief comparison is one of grand pronouncements, minimal delivery, and abundant opportunities for side-payments, graft and, in a few cases, the lucrative fulfillment of state-guaranteed contracts.  Favoured Chinese partners such as TBEA appear across many countries — in Central Asia, not just Kazakhstan and Kyrgyzstan but also Tajikistan — and are able to find local political-business clients in each. Such mutually beneficial transnational connections are not determined or governed by inter-state relations but are dependent on the guarantees that inter-governmental agreements offer. There is no reason to believe that the fundamental political-economic character of relations with China has been dramatically transformed by BRI as pre- and non-BRI project look similar. It is merely that the volume of such projects has increased and with that the number of opportunities for local political elites to accrue capital.

As Jones (2019) remarks, it is a matter of speculation to find some grand strategic objective in these messy and sometimes controversial projects.  Elite and popular discourse nevertheless engages widely in this speculation.  The challenge for researchers is twofold: Firstly, to uncover the transnational political-economic conditions under which certain projects proceed and others are stymied, and secondly, to accept that, however superficial, the discourses of geopolitics and ethno-nationalism will continue to dominate how both elites and publics frame BRI.  A thorough research project must consider inter alia: i) the (in)stability of ties between the Chinese company and Chinese state elites; ii) the (in)stability of ties between the Chinese company and local political and business elites; iii) the presence of offshore vehicles to allow for secrecy and side-payments; iv) the relationship between a project’s failure in practice and a project’s controversy in discourse; v) the conditions under which certain projects remain non-controversial and are accepted. 


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