What is happening?

During German Chancellor Olaf Scholz’s visit to Central Asia, regional leaders made it clear that trade cooperation with Europe will require reciprocal benefits, especially in terms of technological and economic collaboration. Scholz met with the leaders of Kazakhstan, Uzbekistan, and other Central Asian states, in the Kazakh capital Astana on September 17, with a primary focus on energy cooperation, particularly Germany’s desire to diversify its energy sources and reduce dependency on Russian supplies. Despite the lack of concrete agreements, both sides expressed optimism about future partnerships and a commitment to continued dialogue.

Kazakh President Kassym-Jomart Tokayev highlighted the importance of energy cooperation but stressed that Central Asia is seeking more than just financial compensation for its resources. The region aims to leverage German technological expertise to develop its own industries, especially in sectors such as finance, agriculture, logistics, and information technology. For example, the German car manufacturing industry could benefit Uzbekistan's secondary exporting sector by providing advanced automotive technology and expertise, enabling Uzbekistan to enhance its production capabilities, create higher-value goods, and establish a stronger presence in global export markets. Tokayev emphasised the need for German investment in localising production and increasing the value-added output of Central Asian economies. This marks a shift in the region’s approach, as it moves from being a primary exporter of raw materials to a manufacturer of finished goods with higher economic value.

A key area of potential cooperation discussed was the development of green energy. Tokayev invited German participation in a regional initiative involving Kazakhstan, Uzbekistan, and Azerbaijan to develop solar and wind power projects, with the aim of exporting green energy to Europe. This aligns with the EU’s broader sustainability goals, such as the European Green Deal, and could strengthen long-term trade relations between Central Asia and Europe.

Scholz’s earlier stop in Uzbekistan focused on a migration deal, allowing Germany to send Afghan migrants to Uzbekistan for repatriation while opening up opportunities for Uzbek skilled workers to fill jobs in Germany. This agreement not only helps Scholz address migration concerns at home but also aids Uzbekistan’s economic transformation efforts, as the country seeks to diversify its labour force and promote more skilled migration.

The Taliban could also indirectly benefit from this arrangement if they cooperate with the safe and secure return of Afghan migrants, which may improve their standing in the international community and contribute to the stabilisation of the region. Overall, the visit underscored the complex geopolitical and economic dynamics at play, with Central Asia seeking to balance its growing role in global energy markets with demands for technological and economic support from Europe.

What is in it for you?

For our readers in Central Asian states, Chancellor Scholz’s visit signals an evolving relationship between the region and Europe, offering both opportunities and challenges. Efforts to diversify Europe’s energy sources, especially through reducing dependency on Russian supplies, could elevate Central Asia’s importance as a key supplier. This would potentially bring economic growth and increased foreign investment, especially if agreements in green energy projects such as solar and wind power materialise.

However, the region’s leaders made it clear that they are looking for more than just financial gains from energy exports. Central Asia is seeking German technological expertise and investment to modernise its industries, create more value-added goods, and diversify its economies. For citizens, this could mean job creation, enhanced infrastructure, and better access to technological advancements, especially in agriculture, logistics, and IT sectors.

Moreover, if you are a skilled worker in Uzbekistan, the migration deal provides a path from the region to access job opportunities in Europe, which could lead to improved living standards and economic prospects for individuals. For the broader region, stronger ties with Germany and the EU may also mean greater international influence and stability, especially if long-term partnerships are built on mutual benefits beyond energy.

However, the geopolitical complexities, particularly involving Afghanistan, might affect regional stability. Cooperation with the Taliban, as suggested through the migration deal, could have broader implications for security and international recognition of the regime. Central Asians may see these developments as a balancing act between economic benefits and political risks.

For our readers in Germany, Chancellor Scholz’s visit to Central Asia highlights several key developments with potential national implications. First, Germany’s efforts to diversify its energy supply by engaging with Central Asia are a critical step toward reducing reliance on Russian energy imports. If you live in Germany and are concerned about energy prices, this development could contribute to greater energy security and stability. However, it will require ongoing negotiations and possible investments in Central Asia’s energy infrastructure, particularly in green energy, aligning with Germany’s climate goals.

Second, the visit emphasised Germany's interest in leveraging Central Asian resources not just in energy but also in technological and economic collaboration. For German businesses, especially those in sectors such as finance, agriculture, and technology, this could mean new opportunities for partnerships and market expansion in a region that is eager for industrial modernisation.

On the political front, the migration agreement with Uzbekistan offers a pragmatic approach to managing refugee and skilled worker flows. It addresses domestic concerns about migration by repatriation of Afghan migrants while creating pathways for skilled Uzbek workers to fill labour shortages in Germany. A survey in May 2024 revealed that this sentiment is stronger in Germany than in any of the other 53 countries surveyed, with 44% of respondents wishing the German government would take greater action to restrict migration. For the index, the market research firm Latana conducted a survey involving nearly 63,000 participants across 53 countries, representing three-quarters of the global population, with approximately 1,200 respondents from each country. This could help Scholz’s government mitigate domestic political pressure, particularly from right-wing parties critical of his handling of migration issues.

Ultimately, the visit underscores Germany’s active role in reshaping its geopolitical and economic partnerships, with potential benefits for both energy security and labour markets. However, this deeper engagement with Central Asia also presents new challenges, including the region’s political stability and the broader impact of cooperation with regimes such as the Taliban.

What happens next?

Continued negotiations between Central Asian states and Germany are likely, particularly around energy cooperation and technological investments. Germany’s push to diversify energy sources, including potential green energy projects, could lead to concrete agreements in the future. If successful, this would strengthen Central Asia's role in supplying energy to Europe, potentially boosting economic growth in the region.

On the economic front, the interest in shifting from raw material exports to higher-value manufacturing could drive Central Asian countries to seek more investment from Germany in key sectors such as agriculture, IT, and logistics. This could lead to job creation and industrial modernisation within the region.

The migration deal with Uzbekistan could expand, benefiting both countries. For Uzbekistan, it opens up avenues for skilled migration to Germany, while Germany addresses domestic labour shortages and migration pressures. Similar migration agreements could be extended to other Central Asian states, further strengthening economic ties between the region and Germany.

The Polis Team on the Gold Coast