The Shanghai challenge

The leaders of China, Russia and five Central Asian states meet July 5 in Kazakhstan for the Shanghai Cooperation Organization (SCO) summit. They will be joined by the leaders of India, Pakistan and Iran, the SCO observer members.

The SCO, established in June 2001 by China and Russia, ostensibly to fight terrorism in Central Asia, has thus far refused to allow U.S. participation as an observer. Instead, Iran, China and Russia are interested in creating a geopolitical counterweight to the United States.

However, important U.S. interests are at stake in Eurasia’s heartland. These are support for U.S. presence in Afghanistan, neutralizing the growing Islamist influence in Central Asia, and prevention of a Russian-Chinese-Iranian “condominium” there.

The U.S. also wants to ensure the growth of oil and gas production in the Caspian basin, and regional democratization. These American interests are interconnected and require a nuanced U.S. approach, which involves limited military power, diplomacy, investment and the work of nongovernment organizations (NGOs).

Since the Soviet Union’s collapse, two development models have emerged in Central Asia. The first is seen in Kazakhstan and Kyrgyzstan. It includes a relatively liberal economic policy, development of civil society and openness to the West.

Harshly authoritarian Uzbekistan and Turkmenistan exemplify the second model: a one-man dictatorship that stifles local economic activity and harshly represses human rights.

President Nursultan Nazarbaev, host of the July SCO summit, led his country to independence, overcoming multiple challenges. These included creating a nation-state from two diverse groups: Muslim Turks (Kazakhs) and Christian Orthodox Russian-speakers; building a national government where none existed before; giving up nuclear weapons; and managing a challenging transition to a market economy based on natural resources. Mr. Nazarbaev runs a small country sandwiched between two giants with imperialist histories, Russia and China.

Kazakhstan committed military engineers to the war in Iraq, sent more than 3,000 of its best students to study in the West — all expenses paid — and is considering sending as much as 800,000 barrels a day of its oil to the Baku-Tbilisi-Ceyhan pipeline from the Caspian Sea to the Mediterranean. But the performance of its Uzbek neighbor has not been as spectacular.

President Islam Karimov repeatedly promised Presidents Bill Clinton and George W. Bush he would democratize and allow the market economy to grow. Instead, he has presided over the killing of hundreds of protesters in the Ferghana Valley town of Andijan on May 13, despite numerous warnings from Washington that his regime is heading for a political dead end.

In response, the U.S. has downgraded operations at its air base in Khanabad and may further cut assistance to Uzbekistan. As Mr. Karimov prevented secular and moderate Islamic opposition from rising, the only thriving political forces in Uzbekistan are radical Islamist. These include the al Qaeda affiliate Islamic Movement of Uzbekistan and the global clandestine “Party of Islamic Liberation” Hizb ut-Tahrir.

SCO members also are in dire need of political modernization and economic development. Here, Kazakhstan is an example of steadfast leadership and long-term planning. In February, President Nazarbaev unveiled a comprehensive reform program, which synthesizes Western and East Asian models. If successful, it will further secure Kazakhstan’s role as the regional leader of Central Asia.

In this program, Kazakhstan will decentralize the government, including elections of mayors and governors, boost a court system, and launch an electronic government project.

In the economic sphere, Kazakhstan plans to move away from energy and raw material dependency, to machine building, construction and services. On a visit to Almaty this past April, signs of progress were visible: a construction boom and proliferating shopping centers. Due to high oil prices, the per capita income more than quadrupled during the last decade. And oil production is scheduled to quadruple by 2012.

Importantly, President Nazarbaev seeks to balance the country’s foreign policy course between Russia, China, the U.S. and Europe. Chairing the SCO summit is part of the puzzle.

Mr. Nazarbaev is expanding a pipeline to the Russian port of Novorossiysk, building a pipeline to China and negotiating with the Baku-Ceyhan consortium lead by British Petroleum. He has been responsive to U.S. demands not to build a pipeline to Iran.

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