The Gulf’s pivot to Central Asia and regional implications Redefining regional dynamics

On July 19, Saudi Arabia hosted another regional summit of Gulf Cooperation Council (GCC) member countries in Jeddah, including the delegations of Central Asian states. The summit, which was chaired by Saudi Arabian Crown Prince Mohammed bin Salman, was the first-ever meeting between the six Gulf Arab countries and five Central Asian nations: Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan, and Kazakhstan.

According to the official statement, the GCC recently initiated a strategic dialogue with the countries of Central Asia, and the Ministerial Council has approved a plan for strategic dialogue and partnership between the two sides and ordered the conclusion of memoranda of understanding and the development of plans for joint action.

In recent years, the Gulf states, namely Saudi Arabia and the United Arab Emirates, significantly boosted their presence in the energy-rich Central Asian region, getting the lion's share in various infrastructure projects. For example, the United Nations Conference on Trade and Development (UNCTAD) report revealed a 40% increase in net investment inflow in Central Asia to $10 billion last year.

Moreover, the energy sector has become the key prize, with natural gas being of the greatest importance. Increasingly, gas is a significant source of exports for the region. Central Asia accounts for about 4 per cent of global energy deposits.

The oil reserves in Central Asia and along the Caspian Sea coast amount to 17 to 33 billion barrels per day (bpd). As such, the Gulf monarchies have been particularly active in this area in recent years, signing several memoranda and partnerships in the region.

Kazakhstan is the biggest regional state, accounting for 60 per cent of the total Gulf investments in the last three years. The Gulf countries have invested about $3.6 billion in Kazakhstan's economy. Therefore, Kazakhstan expressed willingness to launch similar cooperation mechanisms with all Gulf member states and use advanced tools, such as the Astana International Financial Centre (AIFC).

This June, Riyadh and Astana signed a new agreement entailing collaborating in the fields of petroleum, gas, refining, petrochemicals and electricity, which aligned with the Kingdom’s Saudi Green Initiative, bolstering Saudi Arabia’s reliance on clean energy, offsetting emissions and protecting the environment.

While Riyadh hedges toward Astana, another regional actor, Tajikistan, also eyes a closer partnership with the kingdom. Hence, Riyadh – Dushanbe cooperation strengthened in 2015 when Tajikistan received additional Saudi loans to build infrastructure. The relations with Dushanbe seem critical for Riyadh given the former’s close cultural and linguistic ties to Iran, its regional arch-foe.

In addition to the Saudi Kingdom, another influential regional actor, the UAE, gradually increased its presence in the Central Asian region. Central Asia has become a key fixture in the UAE’s vision for regional connectivity. For Caspian Sea littoral states Kazakhstan and Turkmenistan, the UAE sees an opportunity to utilize their ports to access Belt and Road Initiative-linked transportation and energy corridors.

In this vein, the UAE media reports that more than 200 Emirati companies are operating in Kazakhstan as of 2023. In late 2022, both states agreed to implement investment projects worth $900 million in different sectors of the economy as part of Kazakh Prime Minister Alikhan Smailov’s visit to the UAE.

Notably, UAE leaders travel quietly to Kazakhstan to hunt in the country’s southern provinces, hunting grounds that replaced Emirati lands in Pakistan. Al-Falah Fund, a subsidiary of Mubadala, has recently heightened activity to boost the UAE's presence in Kazakhstan by providing additional funding for Kazakh commercial, residential and infrastructure projects. Notably, a separate agreement was signed between the UAE and the Kazakh Sovereign Wealth Fund Samruk-Kazyna for this particular project, which is planned for operation by 2025.

As for Turkmenistan, the UAE-based Dragon Oil has been working in the country for 15 years, extracting 90,000 barrels of oil per day. In addition, Dragon Oil remains the only foreign producer that exports Turkmen oil to global markets, providing a key source of income for Ashgabat, which has been embroiled in crisis since 2015.

The Gulf’s leading states’ strong commitment to bolstering interregional partnerships with Central Asia would yield significant results in terms of critically important economic projects. Therefore, the current summit in Jeddah, Saudi Arabia's financial capital, aims to systematize and institutionalize the interactions between the Gulf countries and their projects in Central Asia.

Consequently, the "CA + GCC" inaugural summit marks a significant step in fostering interregional cooperation between the Gulf countries and Central Asia. As Central Asia continues to attract attention from global powers, the region’s future will be shaped by the actions and strategies of these key players. The geopolitical landscape remains dynamic, with each actor seeking to secure their interests and influence in this pivotal part of the world.