The week, the media in Central Asia reported on multiple critical diplomatic events, including the ECO summit in Khankendi, Azerbaijan, President Mirziyoyev’s state visit to Azerbaijan, President Japarov’s visit to Moscow, the CSTO Foreign Ministers’ Council meeting in Cholpon-Ata, Kyrgyzstan, and Russia’s recognition of the Taliban-led government in Afghanistan. They also covered several energy and investment stories, such as Kazakhstan’s announcement that investment rose by 10% last year, Uzbekistan, Kazakhstan, and Azerbaijan launching a new joint venture to realize the Central Asian Green Energy Corridor project, and Kazakhstan’s commissioning of a new uranium processing plant. Other sources also noted that inflation remained steady at 8.7% in June.

Energy:

Uzbekistan, Kazakhstan, and Azerbaijan have agreed to launch a joint venture to develop the Central Asia Green Energy Corridor (The Astana Times). Representatives of Azerbaijan’s Azerenerji, Kazakhstan’s KEGOC, and Uzbekistan’s National Electric Networks met in Baku on July 1 to officially launch the “Green Corridor Union.” The project aims to expand renewable electricity generation, integrate national power grids in the region, and export green electricity to Europe. In April, the three partner countries signed a memorandum of understanding with the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) to conduct a feasibility study of the project. The heads of state previously signed off on the project at COP29 in Baku last November.

Tajikistani President Emomali Rahmon inaugurated the new 11 MW Sebzor hydropower plant (HPP) in the Roshtqala district (Asia Plus). The EU Ambassador to Tajikistan, Raimundas Karoblis, the Ambassador of Germany to Tajikistan, York Schuegraf, and the Regional Director of KfW’s Central Asia Office, Andreas Schneider, also attended the ceremony. The new run-of-river HPP uses three vertical-axis 3.7 MW Pelton turbines to generate 70 million kilowatt-hours of electricity annually, reducing greenhouse gas emissions by 45000 metric tons per year. The new HPP will significantly strengthen energy security in the region and improve electricity supplies to the 220000 residents of the Gorno Badakhshan Autonomous Oblast and 430000 people in northern Afghanistan. The project’s Livelihood Restoration Program also supported entrepreneurship and community projects throughout the region. For instance, it funded the construction of recreational infrastructure and a new school as part of the Resettlement Action Plan. Given the environmental and social standards adhered to by the project, it received a gold certification under the Hydropower Sustainability Standard, the first HPP to receive this certification globally. Pamir Energy, a public-private partnership between the Tajikistani government and the Pamir Energy Company, a subsidiary of the Aga Khan Fund for Economic Development, constructed the HPP. Meanwhile, the German Climate and Technology Initiative and the EU’s Global Gateway Initiative financed the project. The EU’s Global Gateway Initiative seeks to enable the sustainable and secure development of the IT, energy, and transport sectors while increasing social investments in health and education. The Initiative will allocate $300 billion in private and public investment between 2021 and 2027.

The Kyrgyzstani government has approved an investment agreement for a 1900 MW solar power plant in the Issyk-Kul region (Fergana News). At a recent cabinet meeting, Kyrgyzstani Energy Minister Taalaibek Ibraev noted that the country experiences electricity shortages of 3-4 billion kilowatt-hours during winter. This new solar plant will help to address this seasonal shortfall, bolstering the country’s energy security. Nevertheless, the government neglected to reveal specific details about the project’s cost and potential investors. Several renewable energy projects have been completed in the Issyk-Kul region in recent years, including a 300 MW solar plant in Toru-Aygyr, costing $300 million, and another 400 MW solar plant in Kara-Talaa, costing $400 million. Bishkek Solar is constructing the plant in Toru-Aygyr and plans to expand its capacity to one gigawatt in the near future.

Infrastructure:  

According to the Deputy Chairman of the Cabinet of Ministers, Bakyt Torobaev, construction work has begun along the entire Kyrgyzstani section of the China-Kyrgyzstan-Uzbekistan railway (UZ Daily). The Kyrgyzstani part of the new railway spans 304 kilometers and will cost $4.7 billion. Due to Kyrgyzstan’s mountainous landscape, roughly 40% of the railway will pass through tunnels and across bridges. Overall, they expect to build 41 bridges and 27 tunnels. The official groundbreaking ceremony occurred in December 2024, and the construction of critical support infrastructure began in April. The Deputy Chairman also confirmed that the railway will have a planned capacity of 10-15 million tons annually (AKIpress). The railway will be completed by 2030, significantly improving trade and connectivity throughout Central Asia. Additionally, Tajikistan expressed an interest in joining the project at a recent meeting of SCO transport ministers (The Times of Central Asia). 

Diplomatic Events:

Russia has officially recognized the Islamic Emirate of Afghanistan, the Taliban-led government of Afghanistan (Daryo). The announcement followed a meeting between the Russian ambassador in Kabul and the Afghan Foreign Ministry. Russia’s Special Presidential Envoy for Afghanistan, Zamir Kabulov, confirmed Russia’s recognition of Afghanistan’s Taliban-led government. Following the confirmation, the Afghan flag introduced by the Taliban was raised at the Afghan embassy in Moscow. Russia is among a number of countries, including several Central Asian States, that have attempted to normalize relations with the Taliban after it took power in Afghanistan in 2021, following the U.S. withdrawal from the country. U.S. Secretary of State Marco Rubio has indicated that the U.S. may reconsider its designation of the Taliban as a terrorist organization, noting recent success in securing the release of several Americans held in Afghanistan. However, he emphasized that the Taliban must cooperate in combating terrorist organizations, such as ISIS-K.

Kyrgyzstani President Sadyr Japarov paid a working visit to Moscow on July 2 (Daryo). He met with his Russian counterpart, Vladimir Putin, to discuss bilateral trade, migration, and education cooperation. President Putin praised the growth in trade turnover in recent years and the achievements of the Russian-Kyrgyzstani Development Fund, which has financed various critical projects throughout the country. The two leaders also explored the expansion of Russian language education in Kyrgyzstan. President Putin highlighted that 200 Russian teachers are working in 43 schools in the country and thanked Kyrgyzstan for granting the Russian language a special status, emphasizing the contribution this status makes to reinforcing the economic and cultural relationship between the two countries. Earlier, it was reported that President Japarov rejected a proposal from the Kyrgyzstani parliament for all candidates for political office or civil service roles to be proficient in the Kyrgyz language (Kabar). In his remarks at the meeting, President Japarov praised relations between Russia and Kyrgyzstan, noting the progress of the intergovernmental commission. He restated his commitment to further developing their strategic partnership.

Uzbekistani President Shavkat Mirziyoyev paid a state visit to Azerbaijan on July 2 (Kun). He met with his Azerbaijani counterpart, Ilham Aliyev, to discuss bilateral cooperation before co-chairing the Supreme Interstate Council. Trade between the two countries has increased by 25% in the last year, with both countries currently implementing $4 billion worth of joint projects. They praised recent developments in their bilateral relationship, such as the first Interparliamentary Forum in Khiva, the Intergovernmental Commission meeting and Forum of Regions in Baku, and the Rectors’ Forum in Andijan. Overall, the two countries concluded sixty cooperation agreements at these meetings. They explored raising trade turnover to $1 billion and considered the new cooperation program concerning industry, infrastructure, healthcare, tourism, finance, and agriculture. They also discussed launching new dialogue mechanisms, including the Entrepreneurs' Council and the Forum of Industrial and Economic Zones (Daryo). In addition, they focused on logistics, specifically the Trans-Caspian International Transport Route. Uzbekistani cargo shipped along the route exceeded one million tons last year, an increase of 25%. They have also introduced electronic permits for cargo transit. Regarding energy, they considered the Central Asian Green Corridor project to export renewable electricity to Europe. During the visit, construction began on a new Uzbekistan Park in Baku and the new Uzbekistani embassy was opened. President Mirziyoyev also noted that construction will soon start on an Azerbaijan Park and a Sea Breeze resort in Uzbekistan. After their deliberations, they signed several documents: a roadmap for 2025-2029 regarding the implementation of the Treaty on Allied Relations, two intergovernmental agreements on environmental protection and higher education, an industrial cooperation program for 2025-2026, a program to increase trade to $1 billion annually by 2030, two action plans for agricultural cooperation and social protection for 2025-2027, a protocol on shipping and ship-building, and two agreements twinning the Tashkent region and Sumgait, and Navoi and Qabala (Kun). Several trade negotiations concerning agricultural processing, the chemical and electrical engineering industries, and construction occurred on the sidelines of the visit (Daryo).

On July 4, President Mirziyoyev attended the Economic Cooperation Organization (ECO) summit in Khankendi, Azerbaijan on July 4 (Kun). Iranian President Masoud Pezeshkian, Turkish President Recep Tayyip Erdoğan, Kyrgyzstani President Sadyr Japarov, Tajikistani President Emomali Rahmon, Pakistani Prime Minister Shahbaz Sharif, Kazakhstani Prime Minister Olzhas Bektenov, Afghan Deputy Prime Minister Abdul Ghani Baradar, and Turkmenistani Foreign Minister Rashid Meredov also attended the summit. The summit focused on regional security, non-proliferation, the Palestinian-Israeli conflict, and regional economic cooperation. Addressing the summit, he proposed several initiatives, such as the Council of ECO Energy Ministers, a meeting of the member states’ trade ministers in Tashkent to explore trade facilitation, and a “green corridor” system to remove barriers to agricultural exports. In addition, he outlined an “Eco-Invest” program to boost regional investment. Highlighting the importance of improving regional transport infrastructure, he called for the establishment of a Digital Transport and Customs Office to facilitate the digitalization of logistical infrastructure. He proposed launching new flight routes, holding a National Airlines’ Forum in Samarkand, and adopting a “Roadmap for Expanding Tourism Services.” He also recommended the development of a green initiative within the organization to combat desertification. Lastly, he urged member states to adopt the “Strategic Goals of Economic Cooperation – 2035,” developed by Uzbekistan and praised the work of the High-Level Committee charged with enhancing the functioning of ECO.  Meanwhile, Kazakhstan’s Prime Minister Olzhas Bektenov reiterated his country’s readiness to invest in Afghanistan’s Turghundi-Herat railway (The Astana Times). At the summit, he also met with Afghanistan's Deputy Prime Minister Abdul Ghani Baradar. Kazakhstan previously announced plans to invest $500 million in the railway project. Moreover, the leaders also discussed establishing an ECO AI Centre and an ECO Free Trade Zone (bne IntelliNews).

The Council of Foreign Ministers of the Collective Security Treaty Organisation (CSTO) met in Cholpon-Ata, Kyrgyzstan, on June 30 (Kazinform). During their meeting, the foreign ministers considered issues pertaining to regional and international security (Kazinform). Moreover, they also discussed the CSTO’s collaboration with the Commonwealth of Independent States (CIS) and the Shanghai Cooperation Organisation (SCO). Following the Council meeting, the foreign ministers adopted several joint statements concerning combating radicalisation and terrorism, international information security, the situation in the Middle East, and the UN Regional Centre for Sustainable Development Goals for Central Asia and Afghanistan in Almaty. The next meeting of the Council will occur at the end of 2025 in Bishkek before the next CSTO Collective Security Council meeting.

Investment:

Kazakhstan’s Deputy Prime Minister Roman Skylar confirmed during a joint session of the Kazakhstani parliament that investment in fixed assets increased by 10% in 2024 (Daryo). He added that investment in fixed assets grew by 55% to $37.3 billion over the last five years. The share of private investment stood at 79%, down slightly compared to the previous year. Nevertheless, private investment rose from $28.3 billion to $29.4 billion. On the other hand, public investment surged from $5.6 billion to $7.9 billion. He cited the government’s efforts to liberalise the economy, reduce bureaucratic obstacles, and develop infrastructure. Kazakhstan remains focused on attracting long-term investors in the agriculture, engineering, and logistics sectors. For instance, they have launched projects involving several leading corporations, including John Deere, KIA, YTO Express, and Fufeng Group. The government has also developed a national digital investment platform, a green corridor for strategic projects, and a Unified Register of Investor Problems to aid potential investors. The government’s Investment Headquarters also plays a crucial role in this regard, reviewing projects and improving regulations. It has evaluated 137 projects worth $70 billion and initiated 140 pieces of legislation. They have also concluded numerous investment agreements defining the terms and obligations of the government and investors. They signed six agreements worth $2.3 billion in 2024. By May 2025, they had concluded fifteen deals valued at $15.8 billion. Additionally, Baiterek Holdings continues to play a substantial role in attracting funding and providing it to key sectors through concessional loans. However, as reported earlier, Kazakhstan recorded its first net outflow of foreign direct investment (FDI) last year (The Astana Times). In 2024, net FDI fell from $3.7 billion to -$2.6 billion as key investors repatriated rather than reinvesting profits.

Tajikistan has received a $30 million loan from the Saudi Development Fund to construct the Kulob ring road project (The Caspian Post). Tajikistan's Finance Minister, Faiziddin Qahhorzoda, and the Saudi Fund for Development CEO, Sultan bin Abdulrahman Al Marshad, signed the loan agreement recently.

On July 1, the Kazakhstani government issued a decree establishing the Khorgos-Eastern Gate Special Economic Zone (SEZ) (Kazinform). The new SEZ will consist of a new airport, as reported last week, and various industrial and commercial enterprises. The SEZ will accommodate 85 companies by 2030 and 95 by 2035, employing 20500 and 22000 people, respectively. Additionally, total investment in the SEZ will amount to 522.7 billion tenge by 2030 and 715.5 billion tenge by 2035, with FDI totalling 10.2 billion tenge by 2030 and 15.5 billion tenge by 2035. Earlier, it was reported that the government established another SEZ in the Kyzylorda region (Kazinform).   

Inflation:

Annualised inflation in Uzbekistani remained steady at 8.7% in June, compared to 10.6% in June 2024, according to the Uzbekistani National Statistics Committee (UZ Daily). The consumer price index (CPI) rose by 4.2% in the first half of 2025, in contrast to 5.2% during the same period in 2024. The average growth in the monthly CPI stood at 0.7% at the end of June. Overall, the country witnessed deflation of 0.2% in June, compared to a 1.5% rise in prices in May (Daryo). However, as reported earlier, annualised inflation fell from 10.1% in April to 8.7% in May. A sharp decline in food prices by 1.2% drove the drop in inflation. Nevertheless, prices for manufactured goods rose 0.2% in the month. Annual food inflation currently stands at 6%, while the prices of manufactured are 7.5% higher. On the other hand, service prices grew 0.8% during the month and at an annualised rate of 15.8%. This surge is mainly attributable to the liberalisation of energy tariffs in late 2024. Earlier, we noted that the IMF expects inflation in Uzbekistan to fall to 5% by 2027, which would be in line with the Central Bank’s target.    

Mining:

Kazatomprom, Kazakhstan’s national atomic company, recently inaugurated a new uranium processing plant at the Tortkuduk deposit in the Turkestan region (Kursiv). KATCO, a Kazakhstani-French company jointly owned by Kazatomprom (49%) and Orano Mining (51%), will operate the plant. The new plant can produce 2000 tons of uranium annually. KATCO has exploration and mining rights for two sections of the Moiynkum deposit, Tortkuduk and Yuzhny. The government granted them exploration and mining rights in 1999 for 25 years. They later extended this term to 2039. Last year, they recorded a $294 million profit, an increase of 109%.