Note: this report will specifically focus on the Tajikistan case study for key indicators in the wider region’s competitive rivalry.
Key Takeaways:
· KSG assesses that despite the developing political rapprochement between Iran and Tajikistan, substantial bilateral economic cooperation remains unlikely in the near future due to Iran's relative economic challenges and the lack of diversity in Tajikistan's export offering.
· The implementation of the Iranian-Tajik visa arrangement signals Iran's continued interest (despite a change of government) in building its presence in Central Asia to maintain regional security in the face of Taliban rule in Afghanistan and to offset growing Turkish influence in Azerbaijan and Turkmenistan.
· However, rapprochement with Iran indicates that Tajikistan is trying to balance and reduce its economic dependence on Russia; however, Russian economic influence in Tajikistan (and Central Asia more broadly) will likely remain significant in the foreseeable future despite countries seeking to diversify their international partnerships.
· KSG assesses that China is highly likely to emerge as the primary beneficiary of Central Asian states' increasingly multi-vector foreign policy, as Russia's receding presence creates opportunities for China to access Tajik critical minerals (notably lithium and aluminium) and natural gas from Turkmenistan, Kazakhstan, and Uzbekistan. This is likely to cause significant concern among Western governments, as it creates an opportunity for China to dominate the critical minerals supply chain.
On August 10th, an agreement between Iran and Tajikistan will take effect, allowing visa-free travel between the two countries to boost tourism. The initial phase will enable citizens with a valid passport who travel between the capital cities of Tehran and Dushanbe to enter without a visa. Citizens can remain in Iran/Tajikistan for up to 90 days a year, with the first visit limited to 30 days.
While this agreement in isolation would appear relatively insignificant, it indicates a broader shift in the Central Asian strategic landscape as Russia's ability to continue as the primary provider of regional security and economic opportunity fades due to its war in Ukraine. Therefore, Tajikistan (and most other Central Asian countries) have sought to expand ties with alternative partners, with China increasingly emerging as the beneficiary of Central Asia's multi-vector foreign policy.
Iranian-Tajik Rapprochement
This initiative implements one of the many high-level memoranda signed in November 2023 outlining regional security and economic cooperation until 2030 across infrastructure, technology, and scientific sectors. Implementing the memorandum on visa-free travel signals mutual intent towards restoring historically amicable relations between the two countries, which have been strained since a 2015 diplomatic spat in which Tehran hosted the leader of the Tajik 'Islamic Renaissance Party' – which Dushanbe had designated a terrorist organisation.
Crucially, further implementation of these memoranda would allow landlocked Tajikistan access to the Indian Ocean through Iran's Chabahar port, significantly improving Tajikistan's access to the global trade market. However, extensive bilateral economic cooperation beyond improving transport routes is unlikely to develop in the near future. Tajikistan's exports to Iran are almost exclusively cotton; in contrast, Iranian exports are more diversified, with construction materials forming most of their exports to Tajikistan. The outlook for the Tajik economy does not indicate a leap in growth that would significantly increase the demand for Iranian exports, which, regardless, is not among the top trading partners for the Central Asian nation.
Russian influence in Tajikistan
Russia has historically been the most significant external actor in Central Asian affairs; however, there is now a significant likelihood that Russia will lose some of its importance as a regional economic power, security guarantor, and destination for Central Asian labour migrants. Harassment and attacks on Central Asian citizens after the Crocus City Hall attack and subsequent legislation passed by the State Duma, including an expedited deportation procedure, caused thousands of foreign workers to either be deported or leave Russia voluntarily. While Russia is likely to remain the most attractive destination for Tajik (and other Central Asian) workers due to its accessibility and high demand for labour, the Tajik government has warned its citizens against travelling to Russia. A potential drop in migrant labour would put additional pressure on the Russian economy, which is facing an acute labour shortage; moreover, a significant drop in migrant workers from Tajikistan would erode one of Russia's main points of economic leverage over the nation – remittances from migrant workers.
A reduction in remittances is likely to pressure the Tajik economy, as capital sent home by its citizens abroad accounts for almost 40% of GDP, acting as a significant driver of internal demand and providing capital for domestic investment. Meanwhile, large-scale reform towards economic diversification and liberalisation is unlikely in Tajikistan, given it would disrupt the patronal governance system around the country's long-time leader, Emomali Rahmon. Therefore, migrant workers from Tajikistan are increasingly seeking alternative employment outside of Russia; this could lead to more Tajik workers finding employment in Central Asia (especially in Kazakhstan) and other countries accepting seasonal workers from Tajikistan, such as the UK and Japan.
China's Growing Dominance in Tajikistan and Central Asia
Since February 2022, Russia's strategic focus and devotion of resources to its war in Ukraine has led Central Asian countries to look elsewhere for security guarantees and foreign investment, with China being well-placed to fill the vacuum. In April 2022, Chinese President Xi Jinping introduced the Global Security Initiative (GSI), a basis for Beijing to establish legal mechanisms to provide security or military assistance to foreign partners. The introduction of the GSI signals China's intention to become more active in global security; KSG assesses that the GSI is likely to draw in Central Asian countries (where Russia is no longer considered a reliable security guarantor or investor) and provide Beijing with a basis for maintaining political stability and expanding commercial ties with mineral and resource-rich Central Asian countries. Although there is no formal mechanism for joining the GSI (such as with NATO), Tajikistan, Uzbekistan, Turkmenistan, Kazakhstan, and Kyrgyzstan have all expressed their support for the GSI in joint documents signed alongside Chinese counterparts.
China already has a significant advantage over Western enterprises in the global critical mineral supply chain, accounting for around 60% of global critical mineral production and 85% of global processing capacity. Moreover, China's advantage extends to the Central Asian critical minerals market, where China's geographic proximity (and, more recently, Russia's decline) has enabled China to establish a degree of dominance in the market. For example, Chinese imports of molybdenum (used in the production of wind turbines) from Kazakhstan grew by 444% between 2017 and 2020. Furthermore, most licenses for the extraction of critical minerals in Kyrgyzstan and Tajikistan are owned by Chinese companies. China owns 45% of Kyrgyz and 52% of Tajik external national debt, and Chinese trade with Central Asia reached a record $ 70.2 billion in 2022, making China the biggest economic actor in Central Asia.
However, Kyrgyzstan provides a pertinent example of how Chinese mining projects in Central Asia are subject to significant opposition and operational risk. Over the last 14 years, Chinese projects in Kyrgyzstan have faced significant grassroots opposition for their contamination of freshwater sources and general environmental pollution, in addition to controversies surrounding alleged political corruption in the licensing process. Demonstrations were so severe in 2019-2020 (centred around the Kyrgyz elections) that several mines were forced to suspend operations temporarily. The Kyrgyz example reveals that there is an underlying risk to mining projects in Central Asia; given that many Chinese global mining companies have notoriously poor environmental records, the issues experienced in Kyrgyzstan are not unique, are unlikely to be credibly resolved, and are likely to lead to continued unrest and impediments to mining. Therefore, KSG suggests that Western mining companies looking to operate in Central Asia should emphasise adherence to environmental regulations in order to avoid the challenges of civil unrest faced by Chinese mining companies in Kyrgyzstan.
Looking forward:
· The rapprochement between Iran and Tajikistan will likely remain primarily political, focused on mending a historically amicable relationship. Economic cooperation is likely to be limited to improving transport corridors and access to Iranian port infrastructure, which could significantly strengthen the Tajik economy.
· Growing economic cooperation between Iran and Central Asian countries is highly likely to continue under the new government of Masoud Pezeshkian. The implementation of the visa agreement shortly after Pezeshkian's inauguration signals continuity in Iranian efforts to strengthen their presence in Central Asia, as Iran seeks to balance growing Turkish influence in Azerbaijan and Turkmenistan in addition to the regional security threat posed by the Taliban's leadership in Afghanistan.
· Central Asian countries (including Tajikistan) will almost certainly continue expanding multi-vector foreign policies to de-risk their economies and national security from Russian dependence in response to Russia's ongoing war in Ukraine. Iranian-Tajik rapprochement forms part of a wider effort by Tajikistan (and other Central Asian nations) to diversify political and economic ties away from Russia. For example, Sino-Tajik relations have recently seen a significant expansion, with a bilateral security agreement signed in November 2022 and a strategic partnership signed in July 2024.
· As a result, KSG assesses that Chinese influence in Tajikistan (and Central Asia more broadly) is highly likely to increase as the decline in Russia's economic leverage and ability to provide regional (military) security creates a vacuum that will encourage Central Asian nations to look eastwards.
· Meanwhile, Russian influence in Tajikistan (and Central Asia more broadly) is likely to see a limited decline due to Tajik migrant workers increasingly seeking alternative destinations and the Tajik government looking to China as a more reliable guarantor of national security (as Russia's military resources are heavily concentrated in Ukraine) against the threat posed by the Taliban in Afghanistan. This trend will likely diminish Russia's political influence on Tajikistan and increase pressure on the Russian economy by exacerbating Russia's acute labour shortage. Despite this, Russia will highly likely maintain significant influence over Tajikistan for as long as Tajikistan relies heavily on Russian fuel exports.
· China's increased presence and critical mineral extraction in Central Asia is a significant concern for Western governments and corporations. China already dominates the critical minerals supply chain; by creating favourable conditions for Chinese mining companies in Central Asia through levers such as security arrangements and national debt ownership, China threatens to leave Western manufacturers reliant on China for critical materials necessary for advanced computer chips and decarbonisation technologies.
· Therefore, KSG suggests that to balance China's emerging dominance in the critical minerals sector, the US and the EU should (and are likely to) support the increased presence of Western extractive corporations in Central Asia. The Biden administration met with Central Asian leaders in September 2023 and proposed a 'C5+1 Critical Minerals Dialogue' to assist Central Asian countries in developing their respective critical minerals sectors. Despite the proposal and the C5+1 Joint Statement being relatively politically lightweight, KSG assesses that the high-profile engagement suggests a willingness from Central Asian leaders (and high interest from the US) to bring in Western support to develop their critical mineral mining sector.