This week, the media reported on the joining of the Philippines in the Group of Friends of Sustainable Transport (GFST), the establishment of a Kazakhstan-China trade center in Nanjing, frequent rejection of remittances from Russia by Central Asian banks, the 22nd meeting of the SCO member states' Prosecutor Generals, Chinese companies mining copper in Afghanistan's Mes Aynak which is home to a major archeological site, the possibility of an energy shortage in Kazakhstan, the development of artificial intelligence products in Tajikistan, and the allocation of funds by the ADB to Tajikistan to support the climate-friendly business environment and SME development.

Trade

Following the President of Kyrgyzstan’s trip to Uzbekistan last week which resulted in an agreement to boost trade between the two countries to $2 billion, the Center for Economic Research and Reform (CEIR) published a report this week on Uzbekistan's foreign trade with Eurasian Economic Union (EAEU) countries in January-June 2024 (24 KG). According to the report, the volume of Uzbekistan's foreign trade with EAEU countries increased by 12.6% to $8.4 billion. Exports - $2.7 billion, imports - $5.7 billion. The volume of foreign trade with Kyrgyzstan amounted to 382 million dollars, of which exports amounted to 270 million dollars and imports - 111 million dollars. In the future, its growth can be seen.

Elsewhere, the Ministry of Trade and Integration of Kazakhstan has revealed this week that China's Jiangsu SOHO Holdings Group Co., Ltd. is constructing an 11-building complex in Nanjing, with one building designated as a trade pavilion to exclusively promote and sell Kazakhstani products. The Jiangsu–Central Asia Center is set to begin operations in September (Qaz Monitor). Initially, it will serve as a trade pavilion for Kazakhstani products, potentially expanding to include goods from other Central Asian countries. Besides the pavilion in Nanjing, plans are underway to establish a similar multifunctional center in Kazakhstan. This center will showcase Chinese and Kazakhstani products, facilitate business negotiations, finalize contracts, and provide financial and consulting services. Kazakhstan has proposed using the Kazakhstan-China Khorgos International Border Cooperation Center to establish foreign warehouses within its territory to support this initiative. The agreement for the establishment of the center was signed on March 31 this year, and it is planned to include four main areas: product sales, trade services, technology exchange, and cultural exhibition. According to the center's director, the establishment will support cross-border e-commerce vendors through Central Asian border warehouses, overseas warehouses, Central Asian overseas teams, and the Jiangsu International Freight Train Company (CCTV).

Logistics

Transportation companies PEK, Digital VED, GTL, and Logita Trade have reported that the banks in Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan have started to reject payments from Russian companies. In July, the rate of rejected payments increased by 30%, with processing times extending up to two weeks (Daryo). This issue is especially notable when they try to transfer funds to China through Central Asian banks. Russian companies have also complained that they have been asked to provide additional documents to explain the purpose of these transactions, while in the absence of clear regulations, financial institutions feel free to take any decision without explaining why (The Tashkent Times). Nikolai Dunayev, chairman of the Russian International Relations Support Committee, explained that banks are refusing payments because they are afraid of the threat of secondary sanctions by the US over the Russia-Ukraine war, a situation which may lead to reduced freight volumes. Entrepreneurs suggest that more extensive use of cryptocurrency for settlements could resolve this issue (24 KG).

In other news, the Republic of the Philippines confirmed its membership in the Group of Friends of Sustainable Transport (GFST) on July 23. Established by the Permanent Mission of Turkmenistan to the United Nations on July 6, 2022, GFST serves as an informal platform aimed at promoting safe, affordable, accessible, and sustainable transport systems to support economic growth, enhance social well-being, and foster international cooperation and trade (Turkmen Portal). Currently, 18 countries are members of the GFST. The group contributes to achieving the 2030 Agenda and the Vienna Program of Action for LLDCs with a focus on sustainable transportation (MFA of Turkmenistan). Last month, Qatar also joined GFST.

Mining

Afghanistan's Mes Aynak copper mine is set to begin operations, with copper extraction starting this weekend, Pajhwok reported on July 23. Located in Logar province, southeast of Kabul, Mes Aynak holds the world's second-largest copper reserves and is a major source of Afghanistan's natural wealth (Pajhwok). A former major Buddhist settlement, Mes Aynak is also home to archeological riches, a complex of Buddhist monasteries, and numerous cultural heritage items on the verge of extinction.

On July 24, officials from the Ministry of Mines and Petroleum signed a contract in Mohammad Agha district, Logar province, in the presence of Taliban officials (Khaama). Earlier in 2008, the Afghanistan government signed a 30-year mining contract with Metallurgical Corporation of China (MCC) and Jiangxi Copper, granting them full rights to explore and develop the Mes Aynak mine (CCCMC). However, mining was repeatedly interrupted due to archaeological works, military conflicts, and media pressure. With the Taliban regaining control in 2021 and the withdrawal of foreign troops, efforts to exploit Afghanistan's natural resources have resumed. The road, crucial for mining logistics, is expected to be completed early next year. MCC will need at least two years to extract the first batch of copper. The project includes a 400,000 kW power plant, a water pipeline, a smelter, and public facilities (The Kabul Times). MCC is also expected to pay $808 million in installments for mineral rights and construction-related infrastructure. The $3 billion project will generate $541 million annually for Afghanistan’s government and is said to create some 5,000 jobs. Media reports also note that current copper prices are quite high, boosted by a growing market for electric vehicles, renewable energy technologies, and artificial intelligence infrastructure (Daryo).

Energy

Kazakhstan is facing monthly shortages of 35,000 tons of liquefied natural gas (LNG) despite plans to increase gas injection volume by 10 billion cubic meters over the next five years, from 34 billion to 43 billion cubic meters. Energy Analytics noted that this increase will require more exploration efforts and greater reliance on imports (Daryo). Since 2006, Kazakhstan has banned gas flaring and venting, using the gas for re-injection to maintain reservoir pressure and boost oil production, which is also more environmentally friendly than flaring. Currently, over 30% of Kazakhstan's gas production is being re-injected. By 2030, this figure is expected to rise to 47-48%. The main gas injection volumes are concentrated in three key fields: Kashagan, Karachaganak, and Tengiz. From 2024 to 2030, other fields will account for less than 1% of total gas injection. Despite the benefits of re-injection, domestic consumption growth is causing gas shortages. If current production and injection dynamics continue, Kazakhstan will face increasing gas shortages in the coming years, necessitating more imports, likely from Russia. Developing and utilizing domestic gas deposits is crucial to avoid dependence on imports. Kazakhstan has significant gas resources (62 trillion cubic meters) and reserves (4.4 trillion cubic meters), providing opportunities for self-sufficiency. Almost half of the commercial gas in Kazakhstan is said to be used for power generation (approximately 10-15 billion cubic meters), one-third for household needs, and the remainder for industries and enterprises (Kaz Inform).

Climate Change Response

The Asian Development Bank (ADB) will provide $50 million to support Tajikistan's climate-friendly business environment and SME development, with an additional $500,000 for political and legal reforms. The "Climate-Adapted Business Environment Program" aims to transform Tajikistan's business landscape through reforms in digitalization, export enhancement, infrastructure management, financial transparency, and climate-adaptive SME support (Asia Plus). The program prioritizes financing for women entrepreneurs and supports digitalization and e-commerce by establishing innovative institutions and approving an e-commerce plan. This initiative aligns with Tajikistan's National Development Strategy until 2030 and the Green Economy Development Strategy 2023-2037, as well as ADB's Country Partnership Strategy for Tajikistan 2021-2025, which focuses on creating an inclusive and sustainable environment for economic growth. Additionally, a $500,000 technical assistance grant has been approved to support further reforms. Tajikistan joined ADB in 1998. Over the past 26 years, ADB has provided support totaling more than $2.6 billion, including more than $2 billion in grants, in a wide range of areas, including strategic road and energy infrastructure, health, education, agriculture, urban development, public sector management, and finance.

Security

On July 25, the 22nd Meeting of Prosecutors General of SCO Member States was held in Bishkek, Kyrgyzstan. Prosecutors General from Russia, China, Kazakhstan, Uzbekistan, Tajikistan, India, Pakistan, Iran, and Belarus, along with representatives from the SCO Secretariat and its Regional Anti-Terrorist Structure, discussed key aspects of crime prevention and priority areas for cooperation (Kaz Inform). They shared their experiences and agreed to enhance international cooperation in protecting personal data and combating cybercrime in light of modern information technology. Pakistan will assume the chairmanship of the next meeting (24 KG). On July 26, within the framework of the 22nd SCO Prosecutors General Meeting and the 3rd Meeting of the Prosecutors General of Turkic States, Kyrgyzstan's Prosecutor General Maksat Asanaliev held a bilateral meeting with Uzbekistan's Prosecutor General N. Yuldoshev. The two sides signed the "2024-2026 Cooperation Plan" aimed at enhancing mutual cooperation in legal and order enforcement, including information exchange, joint activities, staff development, and implementation of joint projects and initiatives (AKI Press).

Technology

Najima Noyoftova, Director of the A7σ Executive Office, highlighted Tajikistan's advancements in AI development, significantly contributed by zehn.ai, an advanced research and development lab. Zypl.ai, a fintech company specializing in credit scoring, launched the first project, zGAN, in collaboration with international researchers (Asia Plus). zGAN generates new synthetic data and predicts "black swan" events by considering statistical outliers. This project has been implemented in several global partner banks to develop sustainable credit risk models, including CredibleX (UAE), International Commercial Bank (UAE), Home Credit Bank (Kazakhstan), and Bank Center Credit (Kazakhstan). By the end of this year, zehn.ai plans to complete the zGAN application architecture across various economic sectors, from agriculture to e-government. Negotiations are underway with leading tech companies and government agencies in the CIS countries and regions from Latin America to the Middle East to use Zehn products. Recently, they signed an MoU with the UAE to develop a national AI strategy, with the UAE investing in Tajikistan's "green economy" and providing port access benefits. Under President Emomali Rahmon's initiative, Tajikistan became the first Central Asian country to adopt a "National AI Development Strategy until 2040." Noyoftova emphasized that the country is on the brink of a significant phase in AI development, comparable to historical innovations by Tajik ancestors, with the modern "algorithm" concept tracing back to the great Tajik scientist Al-Khwarizmi.