World Bank guarantees $100 million energy deal in Uzbekistan

As they often do, goodies from "International Finance" have gone hand in hand with goodies from the Pentagon, as the World Bank has just provided a $100 million guarantee for a natural gas deal in Uzbekistan, according to an article by Robert C. Murphy in Asia Times Online.  This is the first major such financing provided to Uzbekistan by the World Bank, under its "Multilateral Investment and Guarantee Agency" (MIGA), as well as the first major example of the World Bank's 7-month old "Country Partnership Strategy 2011-2015 (PDF)" with Uzbekistan taking hold.  Of note, the Partnership Strategy was agreed to at the same time (December 2011) that reports first began to come out about the Pentagon's "military transfers" to Uzbekistan, Tajikistan, and Kyrgzistan.

According to Murphy, a senior research fellow at Canada's Carleton University and a longtime commericial analyst, the new MIGA financing amounts to:

US$100 million loan from a consortium of commercial banks having BNP Paribas Suisse as agent, for development of natural gas deposits in the Kandym Field group and the Khauzak-Shady bloc, of which the latter is already a producing reservoir, in the Bukhara-Khiva region of southwestern Uzbekistan.

Moreover, the World Bank's political backing was "a necessary condition" for the gas developments to receive so much attention from commercial banks.

Interestingly enough, the Anglo-American oil giants do not seem to be on the receiving end of any of this World Bank largesse.  Instead, the financing is being used mostly by Russia's Lukoil (through its subsidiary Lukoil Overseas Uzbekistan), as well as a South Korean company that plans to build a gas and chemical complex at Uzbekistan's Surgil field.  As I have discussed before, China is also heavily invested in the Uzbek energy sector, most directly with its ever-expanding Central Asia-China gas pipeline, which passes through Uzbekistan. In 2010, Uzbekistan agreed to export 10 bcm of gas a year to China through the pipeline, with a planned start date of earlier this year.  Although legal issues have mired this process, Uzbek officials say that they expect to export 2-4 bcm of gas to China this year.

Taking all this in, it seems that the World Bank financing, and perhaps entire 5 year "Partnership Strategy," is simply a Washington grab for political influence in Tashkent, and is not deeply rooted in the national interest of the U.S.  While previously Western multi-national corporations always had the upper hand, and were thus able to benefit from International Finance loans, now it is Russian and Asian multinationals that are on the ground.  As Washington hopes to greatly reduce its military footprint in Afghanistan, it still wants to assume its facsimile  of "control" over the region.  The political and economic reality on the ground, however, is currently much more rooted in the Shanghai Cooperation Organization bloc, which has its own postwar strategy for Afghanistan.  This means that states like Uzbekistan will continue to happily take Washington's guns and dollars, but are feeling no obligation to consider this a trade for U.S. long-standing influence in the region.