Is there a room left for the EU in Central Asia?
By: Paul-Arthur Luzu
Tags: Central Asia, Renewable Energy, Eu

The European Union, especially in the renewable energy field, has a card to play

On November 17, the 16th EU-Central Asia ministerial meeting occurred. The participants reaffirmed their traditional joint commitments to forge “a strong, ambitious and forward-looking partnership” and of course “to work together for peace, security, universal human rights, democracy and sustainable development”. However, beyond the traditional diplomatic formulas, one could notice a double change, punctual and enduring, and an absentee from the statement.

The pandemic issue popped-up, let’s hope for the first and last time. Economic issues, including renewable energy, confirmed that they deserve an enduring place in the interregional talks and, not surprisingly, diplomatic issues did not constitute the core content of the joint-communiqué following the meeting.

Indeed, there is an institutional framework, with recent progresses, to develop the economic relations between both parties. One shall notice the growing importance of renewable energy where EU companies can make a difference. However, it could still be optimized so that the EU seizes the opportunity to be a real player.

The EU and Central Asian countries reiterated the priorities set out in the EU strategy in Central Asia adopted in 2019 with an emphasis on the importance of the economic development, including renewable energy, to reach these objectives. Tangible results were obtained to create the conditions for a growing economic relation. The “UE — Central Asia economic forum” should be held in Bishkek in 2021. Tashkent could benefit a lot from a renewed interest of the EU. The following recent steps illustrate it:

- Uzbekistan accessed the EU’s GSP+ status (unilateral tariff preferences when exporting to the EU and the list of items exportable to EU countries will increase to 6,200)

- Uzbekistan and the EU progressed in negotiating the new Enhanced Partnership and Cooperation Agreement (EPCA)

- The EU committed support Uzbekistan’s renewed determination to join into the WTO via a new EU’s project of assistance.

These evolutions should enhance trade and investments between the EU and the region at large.

In practice, European companies are very active in Central Asia. Hungary plans to create an Uzbek-Hungarian Business Council and has already 37 investment projects of industrial cooperation on tracks. Meanwhile, Kazakhstan signed memorandums for 160 million USD at a forum in Germany. France is not the least active and Bpifrance, with Kazakh sovereign fund, announced a partnership for 100 million € co-investments in SME/midcap companies.

Renewable Energy is probably the sector with the most potential. One reason is the EU encouraging these investments in the region. For instance, among other elements, the EU called on Central Asian countries to submit new enhanced Nationally Determined Contributions by the end of 2020.

The second reason is the huge potential of the region for solar plants, wind farms and even hydropower projects. Meanwhile, Uzbekistan repeatedly called for foreign companies to come and invest in these fields while launching an important wave of privatizations and legal reforms. The latter includes providing companies with a renewable energy regulation.

Germany perfectly understood it with its ‘Green Central Asia Initiative’ but they are not the only one to get the importance of investing the renewable energy field. Far after the traditional players (Russia, China, Turkey and, to a lesser extent, Gulf Countries) the Spanish companies still have a significative presence in the list of companies answering call for tenders.

It is interesting to have a look at the list of prequalified bidders for the Syrdarya CCGT 1250–1500 MW project in Uzbekistan, where you have French and Spanish companies alongside Japanese, Korean and Saudi companies. Other similar projects in Uzbekistan have shown up to 20% of EU companies.

However, despite the inner quality of these companies, an enduring economic development in Central Asia shall be supported by a larger diplomatic vision of the EU at a time where Russia and the USA are defining a new regional policy to face the Chinese presence. So far, the EU diplomatic vision of Central Asia seems to be more based on opportunistic decisions and general principles rather than on an agenda with long-term goals.