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| April 13, 2000 |
| April 13, 2000 |
Central Asia: Will Oil and Democracy Mix?
Tomas Valasek, Senior Analyst, tvalasek@cdi.org
Secretary of State Madeleine Albright visits Central Asia this week, a region of great mineral riches but unfulfilled dreams of prosperity. The five "Stans" in the south of the former Soviet Union -- Uzbekistan, Kazakhstan, Tajikistan, Turkmenistan, and Kyrgyzstan -- have largely failed to capitalize on the control of their resources gained with independence in 1991. Even Kazakhstan, home one of the largest oil fields in the world (Tengiz) and Turkmenistan, which sits on trillions of cubic feet of natural gas, underwent a drastic decline in living standards. Central Asian regimes are turning increasingly authoritarian and the region's poverty woes continue. U.S. hopes and policies in Central Asia may be due for a revision.
Former Presidential advisor for the region, Richard Morningstar, summed up U.S. policy toward Central Asia and the neighboring Caucasus region as: 1) strengthening the independence and prosperity of the new Caspian states and encouraging political and economic reform; 2) mitigating regional conflicts by building economic linkages between the new states of the region; and 3) bolstering the energy independence of the Caspian region by ensuring the free flow of oil and gas to the world market place. The policy focuses on the region's mineral resources: oil and gas. Oil exports, the logic goes, will pull Central Asia's countries out of their economic crisis and prevent their internal collapse or a takeover by an outside power, most likely Russia. And because getting the oil and gas to the markets in Europe and Asia will require building pipelines and other lines of transportation across national lines, the governments will have to resolve their disputes.
The U.S. policy, however, makes several hefty assumptions about the links between a nation's economy and politics. Do oil and gas exports guarantee stability and democracy? On the one end of the scale are countries like Angola or Nigeria, whose mineral resources brought nothing but war and misery. In other places, such as Saudi Arabia or Kuwait, oil brought wealth and stability but not democracy. But some nations made excellent use of their resources: in Norway, gas and oil finds in the North Sea led to an economic boom while preserving the democratic system.
What determines if an oil-exporting nation goes the way of Norway or Nigeria? Two particularly useful indicators are the level of corruption in the country and the state of democracy. Corruption has the power to stunt economic development by discouraging outside investors, and it puts oil proceeds in the pockets of bureaucrats rather than in domestic companies or the state budget. Similarly, when authoritarian regimes replace democracy, oil and gas profits are almost guaranteed to remain within the ruling circle and not benefit the population at large. Often in the past, as in Iran, social disparities led to upheaval that wiped out all economic gains.
Unfortunately, on both these counts Central Asian countries score poorly and show every sign of regressing. The Freedom House, a U.S. non-profit organization, annually ranks all the world's countries based on the citizens' political rights and civil liberties. On a scale of 0-7 with 0 being completely free and 7 not free at all, Central Asia scores an average of 6. The gas-rich Turkmenistan leads the group with a solid 7 in both political rights and civil liberties; Kazakhstan scored 6 and 5 respectively. The Freedom House labeled all five countries "not free" overall.
Even more worrying is the trend over time. Kyrgyzstan, the second stop on Secretary Albright's visit, went from a 1992-93 rating of 4 and 2, respectively, to 5 and 5 in 1998-99. Kazakhstan scored 5 and 4 in 1990-91 but only 6 and 5 in 1999-99. Finally, Uzbekistan, the last country Secretary Albright will visit, went from a 6 and 5 rating to 7 and 6. After an abysmal start, the state of political freedom and civil liberties in Central Asia has only declined.
The State Department's own 1999 Country Reports on Human Rights Practices had this to say about the democracy in the Kyrgyzstan: "Although the 1993 Constitution defines the form of government as a democratic republic, President Askar Akayev dominates the Government." The Parliament, the report continues, "does not check the power of the President effectively; The Judiciary is dominated by the executive branch." Uzbekistan fared even worse. "Uzbekistan is an authoritarian state with limited civil rights; President Islam Karimov and the centralized executive branch that serves him dominate political life," the State Department observed. These countries are still relatively more free than either Turkmenistan and Tajikistan, which the Secretary wisely chose not to visit.
On the second count, corruption, the outlook is equally bleak. Transparency International, an international group monitoring business and government practices worldwide, publishes a yearly Corruption Perception Index (CPI). CPI ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians. Again, the three countries Secretary Albright visits rank near the bottom of the index. On a scale of 0-10 where 0 is highly corrupt and 10 highly clean, Uzbekistan scored 1.8 and finished 94th of the 99 countries ranked. Kyrgyzstan fared only a little better with a score of 2.2 and 87th place while Kazakhstan, finishing 84th, scored a 2.3.
Oil itself is not to blame for the country's woes. Turkmenistan exported little gas since 1997 after it fell out with its Russian export partner, Gazprom. Kazakhstan's new export pipeline is still several hundred miles short of completion and its current oil production is a fraction of the projected maximum. Uzbekistan and Kyrgyzstan, who have minimal oil and gas reserves, were equally affected.
However, the authoritarian and corrupt nature of the Central Asian regimes casts doubt on their ability to convert future oil and gas proceeds into prosperity and better living standards for the population. The danger is that the governments in the region and foreign investors, including the United States, fail to pay an equal emphasis to the political and economic structure of the country. The United States is financing several democracy and institution-building programs in Central Asia but they failed to check the growing power of local strongmen. If the trend continues, oil may bring neither the prosperity nor regional cooperation for which the U.S. Administration hopes.
Congress Set to Boost Pentagon Spending
Christopher Hellman, Senior Analyst, chellman@cdi.org
This week Congress finished its work on the Fiscal Year 2001 Budget Resolution. It sets federal spending for FY'01 at $1.87 trillion, and includes $310.8 billion for defense -- $4 billion above the Administration's request and $18.2 billion more than FY'00.
The annual congressional budget resolution sets overall spending limits for federal functions, but does not specify how funds will be allocated in each account. Specific spending proposals are set later during the authorizing and appropriating process. While the Budget Resolution does not require the President's approval, nor is it subject to a veto, it does present the first indication of what Congress's spending priorities will be during the coming fiscal year.
Because of spending caps included the Balanced Budget Act of 1997, it was expected that any Congressional increases in Pentagon spending for FY'01 would be modest, and in fact, the House version of the budget resolution raised military spending by only about $1 billion. However, the Senate boosted the increase in its version of the budget resolution after the House version of the FY'00 Emergency Supplemental Appropriations Act, which contained a $4 billion add-on for the Pentagon, was killed by Senate Majority Leader Trent Lott (R-MS).
The budget resolution includes $600.2 billion in discretionary spending -- the money the president and Congress must act on to spend each year. The remainder of the federal budget, roughly two-thirds of all federal spending, is mandatory spending. This is money that is spent in compliance with exiting laws that govern the particular program or function, and includes such things as Social Security, Medicare, and interest payments on the national debt.
The budget resolution's discretionary budget is $25 billion below the Administration's request. Thus, while Pentagon spending continues to increase, non-defense discretionary spending is cut by nearly $29 billion. Under Congress's plan the military will account for nearly 52% of all discretionary spending.
Not surprisingly, the proposed cuts in non-defense discretionary spending are unpopular with many Democrats, but they have even upset some leading Republicans, particularly members of the Appropriations committees, whose spending levels are set by the budget resolution. House Appropriations Committee Chairman C.W. Bill Young (R-FL) expressed his frustration with the proposed spending limits; "We're working really hard to try to figure out how we can appropriate in a responsible fashion."
Other members raised concerns about the effect the proposed budget will have in an election year, when the pressure to spend more is acute. According to Representative John Porter (R-IL), Chairman of the Health, Labor and Education Appropriations Subcommittee, "this resolution puts us exactly in the same position we were in last year, putting our necks in the noose and handing the President the rope."
For more on the FY'00 Supplemental, see "Congress Scuttles Kosovo Funding Package," Weekly Defense Monitor, April 6, 2000.
China and India Sowing the Seeds for Conflict
Corwin Vandermark, Research Assistant, cvanderm@cdi.org
Aircraft carriers and nuclear submarines have come to be a symbol of national might. This concept is not lost on China and India, two countries that are striving for recognition as great powers in Asia. To this end they are both developing their respective navies into modern, technologically advanced "blue-water" forces, which they perceive as symbolic of a great power. However, future acquisitions of carriers and nuclear submarines could be part of a broader trend that is likely to raise tensions in Asia.
In addition to establishing itself as a great power, India is building its armed forces to deter long-time foe Pakistan and any other potential adversary. New Delhi has recognized the need for nuclear-powered ballistic missile submarines, which the Indian Navy considers crucial if it is to have a second strike capability. In addition, India believes it needs to replace the smaller, outdated Viraat and the decommissioned Vikrant aircraft carriers if it is to have a powerful surface fleet. After years of negotiations, the Indian Navy expects to acquire the 44,900-ton Admiral Gorshkov from Russia within the next two years. After a refit of the flight deck, the Gorshkov will hold approximately 34 aircraft. India will pay only $700 million, enough to cover the cost of the refit and around 50 MiG-29Ks that would arm the carrier.
China's National People's Congress (NPC) has allocated larger portions of the defense budget in recent years for the purchase and construction of naval vessels. In December construction began on the first of six strategic nuclear submarines. The advanced craft, capable of launching Julang-2 missiles, should be ready for launch in 2002. In January there was a report that Beijing would also begin constructing a $580 million light carrier. The vessel would house approximately two dozen aircraft, most likely the $2 billion worth of Russian Su-30 fighters that China recently purchased. Officials from the People's Liberation Army Navy (PLAN) have denied that they will build the 48,000-ton vessel, but evidence points to the contrary. In addition to the fighter purchase and the allocation by the NPC, nationalist elements advocate building an aircraft carrier as a symbol of national pride. One businessman has gone so far as to start a fund for its construction. Pilots have also been training to land on the flight deck of a decommissioned carrier in northern China, while designers study various models of carrier construction through reverse engineering.
The deployment of these new vessels will be part of a series of events likely to cause friction between China and India. The greatest danger is that both countries are trying to increase their power-projection capabilities in the Bay of Bengal. China is helping Myanmar build or renovate bases and radar installations along the Andaman Sea, and in return, the PLAN will have access to maintenance and refueling facilities located there. While China states that it merely wants to protect its sea lines of communication and its energy import routes, New Delhi perceives this as a possible challenge to India's cultivation of Southeast Asia as a sphere of influence. In response, the Indian Navy is considering establishing a "far-eastern" command on the Andaman and Nicobar Islands, which lie south of Myanmar. India has also secured continued Russian assistance in the development of its air force in order to make India's air defenses more self-sufficient and capable of covering a larger area offshore.
Although China and India share common interests -- both want to promote mutual economic prosperity as well as resistance to what they consider "the growth of American hegemony" -- they also have many differences. They still remember their short, bloody border war of 1962, which failed to resolve issues such as control over Aksai Chin, a section of northeastern Kashmir occupied by China. By building its nuclear capabilities and demanding a permanent seat on the UN Security Council, New Delhi has signaled to Beijing that there is another rising power -- and a potential competitor -- in Asia. As both nations assert themselves militarily in the Indian Ocean, the question arises as to whether their quest for a multi-polar balance of power in Asia will become a major rivalry.
Russian Duma Approves Start II... -- At the urging of new Russian President Vladimir Putin, the Duma, Russia's lower house of parliament, has approved the START II treaty. The U.S. Senate ratified the treaty in January, 1996. It has been stalled in the Duma since then, as U.S.-Russian relations have soured. The treaty, which would cut the number of nuclear weapons deployed by each country to no more than 3,500, now goes to the Russian Federation Council, the parliament's upper house, were swift approval is expected.
...But No U.S. Concessions Needed to Get Further Russian Reductions -- Meanwhile, a leading arms control opponent says that U.S. negotiators need not make significant concessions in follow-on negotiations to further reduce U.S. and Russian nuclear arsenals. Senator John Kyl (R-AZ) says that the Russian arsenal will shrink of its own accord since the country simply can't afford to maintain strategic forces greater than 1,000 warheads. "I'm all for bringing the numbers down," said Senator Kyl, "but it's all going to happen naturally and we don't have to give away the store."
Protests Against U.S. Marines in Greece -- Protestors hurled paint and rocks at U.S. Marine vehicles in Katorini, Greece, smashing windshields but injuring no one. The troops from the 24th Marine Expeditionary Unit were returning from a military exercise in Kosovo via the Greek port city of Litohoro, about 30 miles from Katorini. Greek protesters also attacked Marine units last year when they moved through Thessaloniki on their way to deploy in support of NATO's air war against Yugoslavia. Thessaloniki denied the Marine's request to allow the loading and unloading U.S. troops on their way to the Dynamic Response 2000 exercise, forcing the shift to Litohoro.
No More NATO Air Wars, Says U.S. Admiral -- The war against Yugoslavia was "so ugly," so difficult to manage and coordinate, that it may have instilled a never-again attitude within the NATO alliance, retired Navy Admiral Leighton W. Smith Jr. told the National Journal. Adm. Smith ran the military operations in Bosnia in 1996. Among other things, he also said that NATO miscalculated in the 1999 war. "They got into something they didn't have a stomach for" and didn't plan for, the National Journal quoted Smith. The remarks echo Smith's speech to a Navy conference in February, in which he said "I doubt very seriously if NATO will ever respond to another crisis simply because this one was so painful."
U.S. to Open Base in El Salvador -- "Inside the Pentagon" is reporting that the United States and the government of El Salvador have signed an agreement allowing the U.S. to operate a counternarcotics base at the commercial airport in San Salvador. The agreement, signed March 31, will permit the U.S. to use the base for a period of ten years, and is renewable for five year increments thereafter. The base replaces facilities lost by the U.S. in Panama as a result of the Panama Canal Treaty. The U.S. also operates similar facilities in Ecuador and the Dutch Caribbean islands of Curacao and Aruba.
This Week on America's Defense Monitor: "Nuclear War Between India and
Pakistan?"
What are the underlying factors that caused these nations to join the declared nuclear power club? Is a nuclear war in South Asia possible? The aftermath of such a conflict would have worldwide consequences. This program describes why such a war is possible, and what actions could be taken to prevent a war between these long-time adversaries.
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