Beyond the “Deal Zone”

Given Central Asian leaders’ goals going into the first C5+1 summit to be held at the White House, the November 6 meeting was a success. Secretary of Commerce Howard Lutnick helmed a “Deal Zone” at an exclusive Department of State event where nearly twenty agreements between Central Asian states and US companies were announced. To the delight of Kazakh officials, two bills were introduced in the US Congress to remove Cold War-era trade restrictions on Kazakhstan. And Sodiq Safoyev, first deputy chair of the Uzbek Senate, acknowledged at an Atlantic Council event the same week that Central Asian states should no longer be considered “passive objects” in the Great Power game among the United States, China, and Russia.

There is a caveat to these successes. None of these Central Asian states has a strong track record on government transparency, which poses a risk to the stability of deals made by international investors. All five states—Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan—have faced significant challenges in mitigating corruption in their government and private sectors since they became independent in 1991.

The defining characteristic of resource deals in Central Asia is secrecy. Whether these commercial partnerships take place among Central Asian states or with Western countries, the details are often hidden from public view. Kazakh President Nursultan Nazarbayev's dubious ties to his son-in-law Timur Kulibayev’s natural gas firm, TenizService, serves as an example. Western oil giants such as Chevron and Exxon, looking to invest in the region, conveniently overlooked not only these ties, but also bribery risks and cost overruns.

Similar nepotism dominates Uzbekistan’s natural resource space, as business and family associates of President Shavkat Mirziyoev have enriched themselves by more than $100 million by securing state contracts to deliver natural gas. These shadowy deals occurred against a backdrop of domestic oil consumption that had outpaced production and worsened an already chronic shortage of gas for Uzbek citizens.

Turkmenistan, too, is no stranger to opaque dealings between its natural resource industry and Western oil companies. President Serdar Berdimuhamedow controls most of the business in Turkmenistan, enriching himself and his family in a country where unemployment is estimated at about 60% in certain regions.

Business and government leaders in the United States cannot ignore the corruption among Central Asian leaders. Doing so would threaten the viability of their future business dealings in the region and enable authoritarian governments. After all, how reliably can these nations deliver on procurement obligations when the risk of political interference and fraud is so high?

US officials should ensure that accountability measures are integrated into negotiations with Central Asian governments going forward. Voluntary standards proposed by the International Council on Mining and Mineralsand the Extractive Industries Transparency Initiative can offer a framework for negotiations that would safeguard transparency efforts. Without implementing the necessary accountability checks, US companies risk a failed business venture at best, and at worst, the prospect of funneling their wealth into the pocket of an authoritarian leader.

The views expressed herein are those solely of the author(s). GMF as an institution does not take positions.