Navigating the modern-day 'Great Game' in Central Asia: Economic Multi-Vectorism
Investing in Central Asia: Exploring the New Business Hubs for Profit
The geopolitical chessboard of Central Asia is currently undergoing a shift, with economic factors dictating the terms of the new power struggle. Gone are the days of politics ruling the region; now it's all about the almighty dollar, as explained in a report by the Talap Center for Applied Research.
Titled "Pursuing Multi-Vectorism Through Business Diplomacy: The Path for Central Asia," the report reveals a significant change in the dynamics of global rivalries, with regional states now wielding more influence on the outcomes than outsiders.
According to the report, Central Asia, a once vital battleground of the Great Game, is aiming to transform into an opportunity zone.
The unprovoked attack by Russia on Ukraine in 2022, followed by Western sanctions, changed the region's landscape dramatically by rekindling interest in Central Asia from the United States and European Union. This, in turn, incited the diversification of trade and investment, altering East-West trade patterns intertwining China and Europe. The Western sanctions have diminished the effectiveness of the Northern Corridor via the trans-Siberian railway, while fueling the growth of the Middle Corridor via Central Asia.
This shift in geo-economic gravity has seen China surpass Russia as the region's largest trade partner, with a clear trend toward diversifying trade partners. The West's share of Central Asian trade under the current circumstances is expected to increase.
The report stresses that the trade and investment dynamics in the region show a significant shift towards diversification with non-traditional markets of Europe, North America, South Asia, and the Middle East since 2022. This diversification has been made possible due to a traditionally multi-vector policy for the region, which, under the stress of escalating conflicts, was transformed into a policy of firm rejection of any involvement in the conflict.
Since the outbreak of the Russia-Ukraine war, contacts between the European Union and Central Asian states have gained a new momentum, the report highlights. Moreover, a majority of regional residents do not desire to get enmeshed in the confrontation between the West and Russia, backed by China.
Balance is the key for Central Asian states, as they strive to develop their ties with the Western world while being encircled by Iran, Afghanistan, China, and Russia – countries with strained or tense relations with the West. To achieve economic multi-vectorism, the report advises Central Asian governments to address the existing institutional and regulatory barriers to attract domestic and international companies and investors, strengthen the rule of law, enforce fair and open competition, implement business-friendly tax regulations, and align trade, customs, and logistical standards.
The investment climate in Central Asia represents a delicate balance between the ambition of governments to capitalize on growing interest in the region and the inertia of institutional barriers. To seize the opportunities, the countries of the region need to address the challenges posed by vaguely defined trade rules, uncertain property rights, unreliable judicial systems, and the lack of mechanisms to enforce contracts or resolve corporate disputes, all barriers that hinder Western investment. The report further recommends reforms to regional tax codes to foster more equitable business environments.
- The report by the Talap Center for Applied Research, titled "Pursuing Multi-Vectorism Through Business Diplomacy: The Path for Central Asia," reveals that the region's focus has shifted from politics to business, with the new power struggle centered around economic factors, such as trade and investment.
- In light of the unprovoked attack by Russia on Ukraine and subsequent Western sanctions, Central Asia is aiming to diversify its trade partners, with a significant shift towards non-traditional markets in Europe, North America, South Asia, and the Middle East.
- To achieve economic multi-vectorism, and attract domestic and international companies and investors, the report advises Central Asian governments to implement business-friendly regulations, strengthen the rule of law, enforce fair competition, and address institutional and regulatory barriers in their jurisdictions.
