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Must Central Asia rely on one belt one road to get rich? | Suen Chiu-kwan

蘋果日報 2020/09/18 10:01


Many low-key countries like the five Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) have started to attract Chinese media attention because of the recent One Belt One Road initiative (OBOR) brought out by China. At the moment, the little information the public has about these countries are mostly related to OBOR, which has given the false impression that only China is willing to work with these countries that have no strategic value, and these dictatorship countries can only use OBOR as a corruption tool in order to get rich.
But this is just a stereotype. These countries are, in fact, already well integrated into the international system long before China launched OBOR. They have gradually embraced globalization after the disintegration of the Soviet Union. However, those in power have only selectively opened their markets and promote privatization. They only benefit people who are close to them and monopolize interests. They profit from the globalized structure and use the unsupervised transnational network to conduct money laundering and buy overseas properties to hide the wealth they have stolen from the people. The irony is, multinational businesses and other countries all assist them for profits. Decades after the countries turned independent, they have chosen crony capitalism as their development model and became an upstart by integrating into the mainstream international system.
Professor Alexander Cooley from the Department of Political Science at Columbia University pointed out in his book “Dictators Without Borders” that, long before China’s OBOR, the dictatorships in Central Asia has already expanded their survival space by relying on the capitalist system during Soviet time. Those in power in Central Asia knew the rules of the game very well. Apart from exploiting Interpol’s Red Notice to hunt down overseas political enemies, they also skillfully use the international finance system to operate illegitimate businesses.
Here is a typical case. The family confidant of Tajikistan President Rahmon has used an offshore company and emptied the national treasury. During the 2000s, they opened a shell company CDH in the British Virgin Islands, which was responsible for the overseas trade settlement of their aluminum corporation Talco in Tajikistan. Talco became its aluminum raw material from the company Norsk Hydro, then on paper, handed it to CDH for aluminum smelting, afterward sold it back to Talco at market price. Talco then sold the aluminum back to Norsk Hydro at a dirt-cheap price. So where did Talco’s money come from? The taxpayers in Tajikistan of course. During the process, most of the profit was pocketed by the private offshore company which belongs to the President’s private circle. It shows the dictatorship not only makes good use of capitalism to materialize “kleptocracy,” but there are multinational companies also joining the dirty deeds.
Kyrgyzstan’s fuel supply contract scandal has broken the myth that Central Asia was neglected by international society. In 2001, the U.S. declared war on Afghanistan. At the time the U.S. had rented Kyrgyzstan’s airbase as logistics supplies for the NATO. The families of former Kyrgyzstan presidents Akajew and Bakijew, both of whom were overthrown by revolution, had through a Gibraltar offshore shell company controlled by their befriended foreign agents, indirectly got the extremely profitable fuel supply contract from U.S. Defense Logistics Agency without going through any tendering process. The scandal only came to light when Bakijew was overthrown in 2010. The new government suspected the U.S. corrupted the two former presidents by accepting the contract. Therefore, not only the dictators profit themselves by sacrificing others during the war, the “foreign power” also condone their illegitimate actions for strategic interests.
Although the above, which is just the tip of the iceberg, has broken the myth I mentioned above, we cannot deny OBOR has continued, if not worsen the current situation of Central Asia. According to the report from Kiel Institute for the World Economy (IfW), China has on the surface without conditions, but actually taken state assets as collateral to lend money to OBOR countries to finance the infrastructure projects. The lack of supervision on the process made it very easy for those involved to conduct corruption activities. That’s why this model has been very popular among Central Asian countries.
The power plant in Bishkek, the capital of Kyrgyzstan is the biggest corruption case in recent years. In 2013, The Export-Import Bank of China (CEXIM) lent money to Kyrgyzstan so that it could pay a Chinese company TBEA to renovate the capital’s power plant. However, within a year of the jobs completed in 2017, the power plant was broken down again. The authority immediately started an investigation. During the investigation, the person previously in charge of the power plant said that over 90% of the material and equipment needed for the project were bought at a very high price, and it was suspected to be a “tofu-dreg project.” In addition, a former Kyrgyzstan PM, who opposed to the renovation, told the reporter during an interview with Eurasianet that “the government officials and power plan’s senior management involved in the project were invited to Hong Kong by TBEA. They have been receiving special hospitality and generous gifts by the company.” In the end, most officials involved have been penalized by the government, such as former Prime Minister Isakov, who has been sentenced to prison for accepting corruption from China.
The reason dictatorship never falls, not just by “internal circulation,” but those stakeholders under globalization have also contributed to the situation; the problem is not just China’s OBOR strategy, but also the entire global economic and trade structure and actual political needs. A corrupted system cannot be changed overnight, but let’s try to think like Machiavelli, if these countries will bow down for wealth, a reverse operation would perhaps also work?
(Suen Chiu-kwan, Researcher at Global Studies Institute in Hong Kong and The Glocal.)
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