Not one but two new Silk Roads are being born from the ashes of the ancient trade routes that were for centuries central to cultural interaction through regions of the Asian continent.
In effect, a new Great Game – a term used to describe the 19th-century contest for political and diplomatic primacy between Britain and Russia over Central and Southern Asia – is beginning to play itself out between Japan and China across Asia, partly revolving around the 1,800 km. Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI) which started construction on Dec. 15 after a 30-year delay.
The more celebrated Chinese New Silk Road (One Belt One Road) was launched with great fanfare by Chinese President Xi Jinping in 2013 as the Silk Road Economic Belt (the land belt) and the 21st Century Maritime Silk Road (the maritime branch). It promises to bring development and stability across more than 60 countries, involving 60 percent of the world population, 75 percent of energy resources, and 70 percent of the global GDP.
Then there is the Japanese New Silk Road, less well known, more technological and driven by the export of know-how. It gained momentum two years ago with Shinzo Abe's historic tour of Central Asia, the first by a Japanese premier to have embraced all the five "Stans". At the time, Abe pledged to financially support infrastructure projects worth more than $24 billion, of which 18 billion just in Turkmenistan.
Elaborating the symbolic meaning of the visit, a Japanese Foreign Ministry official clarified that "with China increasing its presence, it will be important for Japan to show a posture of wanting to be engaged in the development of this area," more than Tokyo has done so far through the platform of dialogue "Central Asia plus Japan" established in 2004.
That the message has been heard and understood is shown by a refurbish engagement in the region, culminated in an increase in Japan’s public development aid for the first time in 17 years. What is more, it was recently announced the institution of a new financial vehicle, in addition to the ADB and the Japan International Cooperation Agency: the Japan Infrastructure Initiative, a joint venture between Mitsubishi UFJ Lease & Finance, Hitachi Capital and Bank of Tokyo-Mitsubishi UFJ, which aims to provide US$878 million in infrastructure projects throughout Asia, Europe, and the US.
It is not difficult to see in it a reply to the Chinese Silk Road Fund and the Asian Infrastructure Investment Bank, launched three years ago specifically to shore up China's New Silk Road and from which Tokyo decided to stay away.
Offering a "Partnership for Quality Infrastructure" – as opposed to the improving but still generally poor management of the Chinese companies - Japan can act as a “safety valve,” since more trade with and investment from Japan can reduce their reliance on China and Russia.
"Some Chinese officials are worried by the possibility that the Japanese Silk Road would end up indirectly benefiting Russia,” said Samuel Ramani, a PhD candidate in International Relations at the University of Oxford, specialized in post-1991 Russian foreign policy. “But the close ties Japan enjoys with Ukraine and the pending issue of the Kuril Islands – controlled by Moscow and claimed by Tokyo – suggests that there is little evidence in support of any secret Russian-Japanese cooperation against China in Central Asia. "
In fact, if the aims of the two Asian cousins apparently look alike, their implemented strategy differs in sophistication and organizational skills, putting in doubt the real capacity of the new regional player. It is not just a problem of expenditure capacity (in favor of Beijing). While so far the Japanese companies have proceeded "disorderly" on their own, the Chinese counterparts have been operating for decades under the state flag, with the ease of those accustomed to dealing with the corruption of authoritarian regimes.
That is a competitive advantage that, however, does not constitute assurance of success. According to the Economist Intelligence Unit, the rivalry into which Japanese and Chinese companies are being drawn is also not without risk. Political pressure to secure major infrastructure contracts could lead companies and lenders into supporting investments that are unlikely to generate major returns or subject to significant operational risk. And the TAPI is one of them
Speaking to the leaders of the countries engaged in the project, the Afghan President Ashraf Ghani said that the TAPI will revive Afghanistan's importance in the region, contribute to the realization of at least 12,000 local jobs.
It takes shape after a year of record conflict deaths among Afghan civilians. More than 1,600 people died in the first six months of 2016, the highest death recorded since the United Nations started methodically counting the victims of the conflict between Kabul and the Taliban.
The approximately 1,800-km. pipeline project starts at the Galkynysh Gas Field (the second largest gas field in the world with reserves of 27.4 trillion cubic meters), in the Mary region of Turkmenistan. It can carry 90 million standard cubic meters a day for 30 years. India and Pakistan will have 38 mmscmd each while the remaining 14 mmscmd is to be supplied to Afghanistan. After leaving Galkynysh, pipelines will cross Herat and the Afghan province of Kandahar before entering Pakistan.
As it will be the first significant land connection to India, the pipeline has the potential to permanently reshape regional connectivity. The energy infrastructure is likely to be followed by roads and railways. Then – according to official reports – the infrastructure gap between Central Asia and South Asia will be finally filled.
The strategic implications are more nuanced, but easily visible. The roots of this project lie in the involvement of international oil companies in Kazakhstan and Turkmenistan at the beginning of the 1990s. As Russia, which controlled all export pipelines of these countries, consistently refused to allow the use of its pipeline network, these companies needed an independent export route avoiding both Iran and Russia. But the political instability of the countries involved in the project and the Sept. 11 attacks have caused numerous interruptions and postponements, despite its endorsement by the Taliban.
After more than two decades, many obstacles still remain and the interests at stake are many as well While the pipeline track faces political pitfalls (it not only passes through territories under the control of insurrectionist groups, but it is also threatened by a long history of enmity between Delhi and Islamabad), the technical and financial issues are not less thorny. Turkmenistan’s company Turkmengas was earlier scheduled to achieve a financial close on the mega project by December 2016, but now it is supposed to attain it in June 2017. This has actually delayed the commissioning of the project until 2020.
But Ashgabat can no longer afford to waste time. Gas prices have almost halved from three years ago, when Turkmenistan’s gross domestic product was growing at 11 percent. Meanwhile the Berdymukhammedov regime, heavily dependent on hydrocarbon exports, has recently lost two good clients (Russia and Iran), falling into the arms of Beijing, now its main and almost sole buyer. Unfortunately, China buys Turkmen gas at bargain prices (US$185 per 1,000 cubic meters, less than the amount paid to other suppliers), and most of the supplies to Beijing have so far served to write off the debt contracted with the China National Petroleum Corporation (CNPC) for the construction of the Turkmenistan-China gas pipeline, in operation since June 2014.
From Ashgabat's perspective, the TAPI is above all else aimed at diversifying its customer base. The facts, however, demonstrate the irreversible reliance on foreign investments that makes the project a battlefield for major regional stakeholders. In fact, despite the Turkmen unwillingness to open the gas field to participation by foreign firms, the TAPI project has ended up being the target of two Asian powers.
Unexpectedly Moscow is not among them. As Western-imposed sanctions forced the former regional actor Russia to scale back its expenditures, Japan and China are emerging as new leading players, promoting their own model of connectivity through Eurasia.
Last August, an unnamed Chinese company won a contract to lay pipeline over 300 kilometers in the territory of Turkmenistan, beating Russian and European competitors. Earlier, a consortium of Japanese companies was awarded a contract to develop the Galkynysh Gas Field in Turkmenistan in return for a service fee – a more explicit involvement of Tokyo after the Japan-led Asian Development Bank joined the project as Transaction Advisor and investor.
Gone are the days when Central Asia was merely considered a "supermarket" selling natural resources. Today, the region is being turned into a network of road, pipeline and railway, stretching from Asia to Europe.
"Most of the Central Asian countries – shortly after their independence and up to today – are not able to finance transportation system (pipelines, grid etc.) without external support,” said Nadine Godehardt, author of The Chinese Constitution of Central Asia: Regions and Intertwined Actors in International Relations. “Hence, what China did is not gaining fast control over the resources but gaining control (or at least more control) over the pipeline system."
At the same time, Tokyo, once an avid buyer of uranium, has scaled down its nuclear ambitions in the wake of the devastating Great East Japan Earthquake of 2011, turning an eye on the region's poor infrastructure and fragmented logistics.