Japanese Involvement in Central Asia An Early Inter-Asian Post-Neoliberal Case?

Asian Journal of Social Science 43 (2015) 50–79 brill.com/ajss

Japanese Involvement in Central Asia An Early Inter-Asian Post-Neoliberal Case?* Nikolay Murashkin University of Cambridge Cambridge Central Asia Forum

Abstract This paper looks into the role of policy-making carried out by various government officials in the Japanese financial community who contributed to the formulation and implementation of Japanese “Silk Road Diplomacy” in the 1990s and 2000s. Furthermore, it examines the role of key Japanese ministries in the overall Japanese geopolitical engagement in Central Asia. When the five Central Asian republics of the ussr became independent in 1991, they soon encountered a proactive engagement of Japanese diplomacy toward them. Besides boosting bilateral assistance and economic ties, official Tokyo has vigorously promoted the Central Asian states’ eligibility in many international financial institutions and provided extensive advice on reform policies. Both Japanese and Central Asian officials shared a preference for gradualism in economic reforms as a popular approach alternative to the Western neoliberalism in Central Asian countries, although the extent of embracing gradualism varied upon individual republics and advising officials. Spurred by the failures of the Washington consensus and financial crises of the 1990s, Central Asian gradualism can be regarded as an early precursor attempt at post-neoliberalism.

* The author would like to express his immense gratitude for the research support received from St. Catharine’s College Cambridge, Department of East Asian Studies, the Japan Foundation, Cambridge Central Asia Forum, the Open Society Foundation and the Great Britain Sasakawa Foundation. Note: Japanese and other East Asian names are given in reverse order, with the last name preceding the first name.

© koninklijke brill nv, leiden, 2015 | doi: 10.1163/15685314-04301004

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Keywords Japan – Central Asia – Silk Road – developmental finance – political economy – foreign policy-making, diplomacy

Introduction In the mid-1990s, Magosaki Ukeru, the first Japanese ambassador to Uzbekistan and a proponent of assisting Central Asian countries in their transition from planned economy to the market, supported this policy by quoting the statements of the Uzbek President Islam Karimov, according to which “Asian approaches are suitable for Asians” and “Japan would be the best model [for Central Asia]” (Magosaki, 1994) Nevertheless, despite rhetoric praising Japanese-style capitalism, as well as a strong cooperation with other Asian countries, Central Asian republics1 have evolved into a sui generis economic model, that would be equally distant from neoliberalism and the “flying geese” of the East Asian economic miracle. Understanding the role and evolution of Japanese developmental diplomacy toward the region helps us shed light on the greater phenomenon of post-neoliberalism and, more specifically, its limits and failures in Central Asia (ca), which this case study exhibits. I propose to test the hypothesis according to which Central Asian transition to market economy and the Japanese contribution thereto could be viewed as an earlybird case of inter-Asian post-neoliberalism. In the first decade of the special relationship between Japan and the Silk Road countries,2 official Tokyo and, more specifically, its diplomats and finance officials acting as advisors strongly encouraged gradualist transition policies in

1 In this paper, “Central Asia” refers to the post-Soviet republics of the region. At the same time, as far as Japanese involvement in Central Asia is concerned, it refers by far to Kazakhstan, Kyrgyzstan and Uzbekistan, thus side-lining Tajikistan and Turkmenistan for two reasons. Firstly, the Japanese involvement in these latter countries is more recent and of smaller scale than in the case of their neighbours. Secondly, unlike its neighbours, Turkmenistan has adopted a position of strict neutrality in its foreign affairs, whilst Tajikistan suffered a civil war in 1992–1997, which was a force majeure precluding the implementation of economic reforms both during the war and post-conflict reconstruction. 2 The term often used in the Japanese official language to designate either Central Asia or Central Asia and the Caucasus. Methodologically, this paper relies on the analysis of official government documents, in-depth interviews with various stakeholders, such as government and corporate officials, academics and journalists, as well as in secondary literature.

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the region, as opposed to radical shock therapy. Such stance varied throughout specific Central Asian republics and endorsed a critical perspective toward neoliberalism in the region, thus providing, for instance, an eventual insulation effect for certain Central Asian countries (especially Uzbekistan) during the 2008 financial crisis. It also had its limits and side-effects, which this paper attempts to highlight in order to establish whether we can speak of postneoliberalism in ca and, if so, whither post-neoliberalism. Besides, the Asian crisis of 1997 and the 2008 global financial crisis happen to roughly coincide with the time boundaries of, respectively, highs and lows in Tokyo’s developmental interest toward the region. More specifically, this paper looks into the role of policy making carried out by various government officials in the Japanese financial community who contributed to the formulation and implementation of Japanese “Silk Road Diplomacy” (as this policy is discursively placed within official Tokyo’s diplomatic agenda) in the 1990s and 2000s. Furthermore, it examines to what extent the Ministry of Finance (mof) was influential in the overall geopolitical engagement of Japan in ca,3 as compared to remaining key ministries of the sanshōchō system—as the Ministry of Foreign Affairs (mofa) and the Ministry of Economy, Trade and Industry (meti). This paper argues that understanding post-neoliberalism in the context of ca implies a critical perspective of not only neoliberal transition policies, but also various side-effects of policies wary of neoliberalism that governments of the region branded as gradualist. In addition, Central Asian context is clearly distinguishable from Latin American and many Asian cases by the specifics of post-Soviet capitalist transition, such as the strong welfare legacy, dominance of extractive economies reliant on rent from natural resources and its resulting impact on neo-patrimonialism in local elites. In particular, in certain ca countries penchant toward gradualism was underpinned by witnessing the harsh effects of neoliberal transition policies in neighbour post-Soviet countries. But gradualism in ca also became possible to a large extent owing to its endorsement by Japan as fairly disinterested development sponsor and role model, where the government elites were fighting the consequences of the 1991 bubble burst and highly critical of the 1997 Asian financial crisis neoliberal origins.

3 The terms “Japanese involvement”, “Japanese contribution” or “Japanese cooperation” are synonymic and refer to the activities and policy courses carried out by the Japanese officials from various ministries vis-à-vis ca.

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Alter-Neoliberalism or Foreign Policy Pragmatism? Prima facie, there are two common misperceptions about the motivation behind the Japanese contemporary involvement in Central Asia. In terms of geopolitics, it may be overemphasised that Tokyo was providing financial aid in exchange for access to raw materials and in American interests as part of burden-sharing within its alliance with the United States.4 Secondly, from the viewpoint of political economy, Japanese cooperation with ca may appear as expansion of neoliberal practices to post-communist newly-independent states. From such perspective, Japan as a part of Western-dominated international financial institutions and a key element in the world economy, as well as a key American ally in Asia, could be interpreted to wield the “carrot” of transition to the capitalist Western-dominated society, whilst the eu and especially the United States would use both “carrots” and “sticks” (sanctions, tougher reform requirements in exchange for foreign aid). However, both such perspectives would be oversimplified and reductionist. Tracing the history of actual agency of the Japanese finance officials, one of major constituencies in shaping Tokyo’s ca policy, reveals counter-intuitive and human dimensions in the motivation behind this policy, which establish a firm evidence for validating a more idealist view of the subject. Japanese post-Cold War involvement in ex-Soviet Central Asia emerged and evolved at the same time with what can be viewed as precursor and early stage of post-neoliberalism. I use the definition of neoliberalism provided by Bob Jessop, who views it as “a political project that is justified on philosophical grounds and seeks to extend competitive market forces, consolidate a marketfriendly constitution and promote individual freedom” (Jessop, 2013). Postneoliberalism could thus be viewed as a form of governance retaining some features of neoliberalism but considering its failures and making respective adjustments, in particular in welfare policies. In particular, what one can view as a version of post-neoliberalism in the subject case is the gradualism transition philosophy with a Stiglitzian focus on investment in the public sector and a criticism of the Washington Consensus (also in line with J. Stiglitz) that was promoted by Japanese government officials

4 For more detailed prospective of this kind, cf. Kent E. Calder, “Japan’s Energy Angst and the Caspian Great Game”, nbr Analysis 12(1), Seattle: The National Bureau of Asian Research, 2001, www.nbr.org/publications/analysis/pdf/vol12no1.pdf; Essen Usubaliev, “Politika Yaponii v stranakh Tsentral’noi Azii v kontekste vozmozhnogo poiavleniia novogo tsentra sily,” Tsentral’naia Aziia i Kavkaz, No. 5, 2001: 159–165

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and Japanese representatives of international financial institutions. These individuals combined a positive attitude toward the region with several important powers: advisory on reforms; provision of bilateral financial aid; and promoting ca with access to diversified capital sources via promoting its assistance eligibility in various international clubs where Japan was already a member. At the same time, the capital in question was predominantly international capital of various origins and not strictly Japanese. The Japanese involvement was thus not as fdi-intensive as in Southeast Asia and relied more on developmental guidance. The policy’s inception took place in the immediate aftermath of the Washington Consensus, while its further crystallisation came alongside subsequent criticisms in the late 1990s. The 1997 Asian and the 1998 Russian financial crises, as well as the development of the Third Way in the United Kingdom coincided with the first official formulation of the Japanese Eurasian diplomacy by Prime Minister Hashimoto Ryutaro. The downsides of “shock therapy” reforms in neighbouring Russia and Eastern Europe provided an additional justification of economic gradualism in the minds of Central Asian elites, which at the same time marked their tilt towards authoritarianism. Uzbekistan, which is the region’s largest and arguably the most industrialised republic, as well as Turkmenistan, which is increasingly neo-sultanist, according to Kunysz (2012), embraced gradualism more firmly than Kazakhstan and Kyrgyzstan, which followed the International Monetary Fund (imf) and World Bank (wb) policy courses, while Tajikistan in the 1990s was more preoccupied dealing with raging civil war. The peak development of Japanese Silk Road Diplomacy took place under Prime Minister Koizumi Junichiro, branded for neoliberal reforms inside Japan attempting to spur growth, including the reduction of state paternalism and the welfare state, and the privatisation of the postal service. Nevertheless, by the time Koizumi came to power, Japanese developmental involvement in ca had already gained full traction in the 1990s. Moreover, Koizumi-era mof officials became more dissatisfied with the pace of ca reforms. His successors Abe Shinzo and Aso Taro emphasised the promotion of democracy in a value-based diplomacy and criticised resource nationalism, while other Japanese officials denounced the “closed regionalism” of the Shanghai Cooperation Organisation (sco). The 2008 global financial crisis unfolded at the same time with the maturing stabilisation of Japanese involvement. It hit Kazakhstan due to its reliance on commodity exports and insufficiently prudent operations with exotic commodity-related derivative securities. The country, however, demonstrated resilience and did not take long to rebound. Meanwhile, Kazakhstan’s rival for

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regional leadership Uzbekistan had a comparatively narrower international financial exposure and less liberalised business environment. On the one hand, it can be viewed as benefit for insulating the country from the crisis and preventing it from recession. On the other hand, Uzbekistan’s economic firewalls cushioned not only adverse effects of the crisis, but also hindered the post-crisis development of the country, which boasted solid growth rates in the previous decade. Kazakhstan was not only more exposed, but also more agile for a turnaround than its regional neighbours. For instance, it champions itself as unchallenged regional investment leader. According to United Nations Conference on Trade and Development (unctad), in post-crisis years (2010–2012), Kazakhstan attracted foreign investment three times the size of all the other ca countries combined. Turkmenistan’s performance of this index is one-fifth of Kazakhstan’s result, despite Turkmenistan’s position in second place. Uzbekistan’s accumulated investment ranked third in the region; 13 times less than that of Kazakhstan. Kazakhstan also ranks better in corruption perception indexes and in indicators of statehood strength (International Institute for Political Expertise, 2013b: 3–4).

Origins of Japanese Developmentalism in Central Asia When the five Central Asian republics of the ussr became independent in 1991, they soon encountered the benign and proactive engagement of Japanese diplomacy toward them. Besides boosting bilateral assistance and economic ties, official Tokyo has vigorously promoted ca states in many international institutions, in particular the Asian Development Bank (adb), the European Bank for Reconstruction and Development (ebrd), and the Development Assistance Committee of Organisation for Economic Cooperation and Development (oecd dac). The simultaneous membership in two regional banks was unprecedented, thus providing ca with multi-entry access to international finance to sponsor their transition to market economy (Drifte, 2004:280). Official Development Assistance (oda) and infrastructure building is arguably the key “big account” on Tokyo’s diplomatic agenda in Central Asia, while infrastructure has traditionally been the focus of the Japanese oda. Therefore, political analysis of the Japanese “Silk Road Diplomacy” necessitates both a thorough empirical account of oda and, especially, an examination of key decision makers relevant to financial decisions. What kind of agency do they exercise that affects the overall diplomacy? While the activity of official diplomats and diplomatic rhetoric may provide an indication of Tokyo’s general position, it is large-scale hardware infrastructure projects that materially redesign the

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region’s connectivity with the outer world and influence its foreign economic relations. In addition, the examination of this constituency, i.e., decision makers involved in the Japanese Central Asian oda, is important in understanding the historical development of the relationship: its inception in early 1990s, coming of age at the turn of the century, attempt to institutionalise in early 2000s and stagnant pragmatism since late 2000s. This paper believes that this constituency was a key driving force in furthering Japan’s relations with the region. Most post-Soviet ca transition economies, with the partial exception of Kyrgyzstan, have embraced neoliberal recipes with comparatively lesser zeal and effect than their Eastern European counterparts in the early 1990s, and this trend has further strengthened into the 2000s. Although there were domestic reasons for such policy course vested in the nature of ca regimes and regional clan structures relevant for all the five subject post-Soviet republics, certain external factors are of key importance, namely the assistance of Japan, which is the focus of this paper, and its north-east Asian neighbours, China and South Korea. The Japanese government would not only provide advice on reforms, taking a posture of development sponsors/mentors comparable to that of the Western countries in Eastern Europe, but also contribute funds through bilateral and multilateral institutions. Such contribution would be made on different conditions than, for instance, the Bretton Woods institutions or the European Bank for Reconstruction and Development (ebrd). Gradualism was and remains a popular approach alternative to the Western neoliberalism in certain ca countries, especially Uzbekistan, for various political and economic reasons, such as the maintenance of the power grip of the elites and insulation from external economic influences and shocks. At the same time, it is important to note that the special relationship between Japan and gradualist Uzbekistan is not only due to the fact that economic policy makers in Japan and Japanese officials in the international financial institutions (ifis) prefer gradualism over shock therapy. Another reason is quite practical: during the first decade of independence, Kazakhstan simply did not find itself such “patrons” in Japan as Uzbekistan and Kyrgyzstan did (Uyama, 2003:168).

Vernacularisation of Post-Neoliberalism … The attempts of implementation of neoliberalism in ca led to its certain vernacularisation, which can be observed in Kazakhstan and Kyrgyzstan, both early starters accepting the Washington Consensus conditionality. Kyrgyz President Askar Akayev was the only ca leader to implement such conditionality

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in full, aided inter alia by a Bank of Japan (boj) official, Tanaka Tetsuji, who became an active promoter of Kyrgyzstan in the Japanese government circles (Zokirov and Umarov, 2011:233). Kyrgyzstan’s subsequent accession to the wto and absence of strong domestic industry increased its commercial dependence on the Chinese imports. Furthermore, this dependence became one of the stumbling blocks on Kyrgyzstan’s way toward joining the Customs Union of Belarus, Kazakhstan and Russia, which are wary of Kyrgyzstan becoming a simple channel for low-cost Chinese goods (Ibid.). The probability of getting flooded by Chinese imports via Kyrgyzstan, which is a fully-fledged wto member, thus became another hindrance to further trade liberalisation in ca. For Uzbekistan, given its complex animosity with Kyrgyzstan over several issues, such liberalisation thus became a negative example. In the meantime, as mentioned above, Kazakhstan did not benefit from a special relationship with Japanese finance officials at its early transition stage because of its own reluctant attitude and its perception by the Japanese as “insufficiently Asian” due to heavy Russian influence (interviews 2011, 2012). On the contrary, Uzbekistan was perceived as having preserved an authentic Asian identity and therefore more suitable for an adoption of the Japanese economic model (Uyama, 2003:178). Had such perception not influenced the Japanese-Kazakh relationship, Kazakhstan’s transition may have been leaning more toward gradualism, rather than in favour of the Washington Concensus conditionality. The attraction of the East Asian economic miracle and the model prioritising economic stability and prosperity over political liberalisation and democratisation has remained consistently strong among ca political elites and was less influenced by the 1997 Asian financial crisis than one might expect. Gradualism’s endorsement by Japan as a developed country legitimised local leaders’ wariness of market reforms promoted by shock therapy and allowed them to have a development mentor and sponsor alternative to the West. If one is to engage in counterfactual history, would Japan be absent from the equation, ca leaders’ reluctance to liberalisation reforms would be likely to encounter a stronger criticism in the West, as well as stronger suspicions of authoritarianism.5

5 Indeed, three of the five countries (Kazakhstan, Tajikistan and Uzbekistan) still have the same leaders as in the early 1990s, Turkmenistan has had a leadership change mainly due to the demise of its first president, and even Kyrgyzstan, which is often viewed as the most democratic of all the five, has had two presidential oustings following uprising revolutions and only one as a result of election, itself a post-revolutionary one.

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… or Vernacularisation of Post-Soviet Non-Liberalism? Is Gradualism a Synonym for Authoritarianism? ca economic transition also shows that favouring gradualism resulted in considerably authoritarian governmentalities,6 which perpetuated the leadership of former Communist party nomenklatura strongmen but politically brought about inherent issues of succession and power transition, particularly sensitive in a region vulnerably located next to Afghanistan. ca’s scholars have often conceptualised the region’s regimes as personalist, neo-patrimonialist and, at certain instances, neo-sultanist.7 In certain aspects, the post-Soviet legacy was preserved with cosmetic change of façade and survived through the turbulence of transition. This can be observed in a specific socio-cultural understanding of rights, whereby the mechanisms of providing social justice were used for co-optation purposes. Both the Soviet social contract and its various postSoviet successors in the cis relied on the trade-off between socio-economic rights, on the one hand, and certain political and civic liberties, on the other hand, whereby the former would be granted through vast welfare programmes enabled by rent from the natural resources in exchange for curtailments in the latter. At the same time, welfare programmes were necessary to prevent social unrest in an environment easily prone to destabilisation due to proximity to Afghanistan and the local Islamist underground movements. The post-Soviet transition to the market resulted in commercialisation prevailing over privatisation, reflected in the state’s role of a rent-creator for certain groups or classes. This is particularly the case in ca capitalism, which is operating via a kind of clan-based neo-patrimonialism8 involved in sharing the rent from abundant natural resources between patrons and clientele. Exposure to commodity and other markets provides sources of rent for the patron-clientele

6 This section further provides more specifics on such governmentality with the example of clans and mahalla communities. 7 This mostly concerns Kazakhstan, Turkmenistan and Uzbekistan. Kyrgyzstan used to be marginally more stable than Tajikistan, disposed of a comparatively more modest natural resource endowment than its neighbours (it is rich in rare earth metal deposits, but poor in hydrocarbons); however, it has gone through two revolutionary regime changes over the past eight years. The threat of Islamic fundamentalism is primarily a shared concern of the countries having common borders in the Fergana Valley: Kyrgyzstan, Tajikistan and Uzbekistan. 8 The phenomenon of patrimonialism in general was developed by Max Weber and later expanded by Shmuel Eisenstadt. For detailed analysis of neopatrimonialism in sultanistic regimes, see Chehabi and Linz (1998).

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relationship. Either the key rent-generating assets are nationalised (e.g., natural monopolies of Kazakhstan or Turkmenistan) or effective control over them is subject to (and a reward resulting from) the loyalty of clan groups to the central government, which acts both as inter-clan arbiter and as allocator of access to rent sources between various clans (especially in Uzbekistan but also to a certain extent in Kyrgyzstan). Clan politics were already present in the Soviet era but were subject to the relationship between the Moscow government and republican ones. In Uzbekistan, for instance, from the time of gaining independence, the national authorities were primarily concerned by the problem of maintaining stability and governability of the country. A strict control over various industries, in particular over the banking sector, was deemed necessary for this purpose. Integrating national banking into globalisation processes was seen as a way to a significant loosening of such control. One of the key Uzbek statesmen with a long track record of involvement in banking and finance is Rustam Azimov, often regarded as one of potential successors to President Karimov (International Institute for Political Expertise, 2013a). Incidentally, alongside Elyor Ganiyev, he was also considered one of key counterparts of Japanese officials working in Central Asia (interview, 2011). The patronage-clients relations and power struggle between clans is quite an obscure matter and a barrier for better understanding of the region for many Japanese government advisors and oda practitioners. Despite ultimately reaching out in aid programmes to the grassroots, the subject officials are still mostly involved with the local powers at the superstructure level (national government), rather than at the infrastructure (regional clan) level (Op.cit.). According to Professor Kitamura (2010:105) of Waseda University, himself a former mof official with past involvement in ca, the region’s informal clan and tribal networks are worth a dedicated inquiry similar to Ruth Benedict’s seminal work in Japanese anthropology The Chrysanthemum and the Sword (1946), given relevant similarities with Japanese culture. One of such features would be factionalism for which the Japanese language uses the same term habatsu 派 閥 as for Central Asian clans. Although the clan system predates Central Asia’s post-Soviet transition experience, during that experience it strengthened its institutionalisation and merged in the post-Soviet patron-client governmentality system. Another peculiarity of ca governance practices that attracted the Japanese interest was mahalla, the local community in Kyrgyzstan, Turkmenistan and especially Uzbekistan. Several mahallas would be centred around a bazaar or a tea shop, sometimes viewed as loci of collective self-organisation and selfregulation. In the Soviet era, however, mahallas in Central Asia were used for the vertical state control of the communities. The new authorities in Uzbek-

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istan who inherited this governance model both praised mahalla as an authentic social model of nationhood natural for Central Asia, but also maintained its role as control instrument, thus implementing a governmentality encompassing traditions invented in different periods and exercising a top-down control over what is a self-regulatory façade. Besides the aforementioned grey areas of the economy, the macro-economic downsides of encouraging gradualism became quite visible in 2000s, in particular in Uzbekistan that chose a path of lesser conciliation with the imf and the World Bank, ultimately ending up with an unfavourable investment and business climate. On top of corruption and the instability of tax legislation, which are typical for post-Soviet and most developing countries, Uzbekistan still lacks free convertibility of the national currency. The inconvertibility of the Uzbek Sum and resulting issues of import and circulation of cash regularly receive frequent mentioning from various stakeholders and experts on the Uzbek economy (International Institute for Political Expertise, 2013a: 12). Notwithstanding the “Toshkent” national stock exchange operating in Uzbekistan, the secondary securities market did not get developed, the stocks of attractive companies were encountering difficulty with circulating on the open market, whilst investors’ access to the shares of most liquid assets is restrained in case of an ipo. In the conditions where one part of the economy is still managed, in fact, by command-and-control methods and the other represents a traditional bazaar element, it is fairly difficult to consider the prospects of a developing stock market and financial services sector. For that purpose, the leaders of Uzbekistan would face the opportunity of renouncing “manual steering” of the economy and the priority of purely political objectives (such as maintaining political stability) over economic ones. Secondly, the leaders would have to cease limiting the opportunities of Uzbekistan’s inclusion in the processes of financial globalisation for political reasons (Ibid.:18).

Central Asia and Southeast Asia: Differences for Japan The case of Japanese Central Asian oda is also special in its juxtaposition to and its difference from such a well-researched aid recipient region as Southeast Asia. Firstly, the purely mercantile dimension of Japanese foreign aid appears less prominent in case of ca, which in comparison with Southeast Asia represents a much less lucrative market given its size (64.7 million people versus 610 million), more complex regime for investment and trade, and much less accessible (at least by sea) landlocked geographical location. For many Japanese companies, ca oda projects are not foot-in-the-door pathways for

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further business origination, as is often the case with economic aid in many countries—they are the bulk of their business operations and sometimes the only raison d’être for regional presence. Such ca specificity increases the rationale for extractive natural resources projects vis-à-vis other commercial operations. The model of East Asian economic miracle was thus impossible to adopt due to ca’s low export capacity besides natural resources, smaller domestic markets and a labour force, which is neither much cheaper, nor more productive. In this sense, the 1997 consequences of the East Asian crisis not only reinforced an already reluctant attitude toward neoliberal policies, further strengthened by the 1998 Russian debt crisis, but also brought about doubts in the resilience of the East Asian model per se. These doubts may have potentially resulted in acceptance of reliance on natural resources as a source of economic growth to the detriment of re-industrialisation in sectors with higher added value. Although such a deliberate drift toward the Dutch disease, which coincided with an influx in fdi at the Caspian, may have been viewed as a temporary measure, the commodities boom of the 2000s further entrenched the raw material specialisation of ca states in the world economy. Secondly, geopolitically ca is not as vital for Japanese national security as Southeast Asia. Although Japanese involvement in both regions has often been viewed as a way of balancing or containing China via its neighbours, a consensus has not been reached on this matter.9 On the one hand, infrastructure projects supported by Japan directly or via multilateral agencies such as the adb (in particular, carec and tapi10) will have an evident effect of diversifying the export routes of the landlocked region. ca neoliberalism was embedded in different political and economic settings vis-à-vis other countries that we can talk about the presence of post-neoliberalism. It is a newlyindependent post-communist region on the path of transition to market econ-

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Many Japanese scholars (Kawato Akio, Uyama Tomohiko, Yuasa Takeshi) deny balancing China as Japan’s ca oda’s main purpose. Certain former officials of the Japanese mof and meti, Chinese authors and some Western authors are, however, more supportive of such premise (Zhao, 2009; Townsend and King, 2007; Kitamura, 2012; Maeda, 2010). carec, or the Central Asian Regional Economic Cooperation, is a large-scale adb-led programme that involves multiple ifis including ebrd and jica and is aimed at unlocking the landlocked ca countries via improving their connectivity. It is important to note that the programme owes its early development to Chino Tadao, who was also one of key Japanese financial advisors and proponents of gradualism in Uzbekistan. tapi stands for Turkmenistan-Afghanistan-Pakistan-India pipeline project, which was also strongly supported by the adb during Chino’s term as adb head (1999–2005).

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omy and nation-building following more than a century of being incorporated as provinces in what was initially the Russian Empire and later became the Soviet Union. ca economists named regional and global diversification of trade as key to the region’s further transition from autarchy to interdependence (Islamov, 1999:94). Not only is ca sandwiched between large powers (China, Iran, Russia), but its pipeline and road networks are inherited from the Soviet era and thus mainly connected to the outer world via Russia. In the 2000s, China succeeded in improving its road and pipeline access to ca, but the link with southern routes toward the ports of the Indian Ocean remains unstable. And yet, Southeast Asia serves Japan as a benchmark for engaging with ca: the “Central Asia plus Japan” framework was modelled on asean (Summary of Central Asia Plus Japan Tokyo Dialogue, 2013), while Central Asia and Southeast Asia are key areas for the adb’s activities, and the Japanese International Cooperation Agency’s (jica) dedicated Japan Centres consolidating humanitarian projects exist in Central Asia, Mongolia, Cambodia, Laos and Vietnam, thus covering all former socialist economies in Asia.11 However, Japanese cooperation with Southeast Asia and ca has had different historical origins. East and Southeast Asian states benefited from Japanese reparations as a result of the Second World War and in the context of the Cold War. The adb was initially created as vehicle for channelling these funds. The adb was founded as part of settling post-war reparations to the Asian states that suffered from Japanese aggression. The reparations particularly concerned Southeast Asian states with which Japan had a rapprochement in 1970s, in particular within the so-called Fukuda doctrine.12 Throughout the entire history of the adb, Japan has been a key stakeholder, while all its directors have been

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The only non-Asian jica centre is in Ukraine. There were also Japan Centres of similar nature and activities created in several major Russian cities; however, those were founded by the Ministry of Foreign Affairs and are always distinguished from the jica ones by the Japanese officials. The Fukuda doctrine, named after Prime Minister Fukuda Takeo was a set of principles for the Japanese foreign policy outlined in 1977, when Fukuda announced that Japan should not become a military power and ought to build a mutually beneficial cooperation with asean and other Southeast Asian countries. In fact, Japan wanted to facilitate the interaction between Communist and non-Communist countries of the region under its own economic auspices. Some scholars have drawn parallels between the Fukuda doctrine and the Arc of Freedom and Prosperity, noting their kinship in terms of value-oriented diplomacy and an element of liberal idealist paradigm of international relations (Nishihara, 1985:16; Fouse, 2007).

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Japanese (as a rule, from the Ministry of Finance). In 1999, when the carec programme was in its initial stages, Chino Tadao took over the Bank’s governance. Development in its post-Second World War shape was suggested by American President Harry Truman as a counterbalance against international Communist expansion, including Asia. Japan, further to entering into the 1960 security alliance with the United States, heavily engaged in international development. For instance, archival materials show that in the 1960s the provision of Japanese financial aid to Indonesia sparked an internal debate inside the Japanese government: The Ministry of Finance was reluctant to provide assistance, while Ministry of Foreign Affairs was strongly advocating for such aid for foregoing political reasons and ultimately succeeded (National Archives of Australia). In the 1970s, the Japanese government stepped up its commitment to cooperation with Southeast Asia with the so-called Fukuda doctrine (for more details, see the section Personal and institutional continuities in the financial aspect of the Japanese Silk Road Diplomacy below). ca was a different case altogether, because Japanese financial assistance started coming to this region after the end of the Cold War as part of bilateral and international effort to help the transition of post-Soviet and post-socialist countries to capitalism. Another difference was that when arriving in ca, the East Asian economic miracle was not only a fait accompli, but an attractive brand in a certain way alternative to neoliberalism. However, the geographical location of the newly-independent states was quite the opposite of Southeast Asia. Although, historically, the Silk Road was a crossroad of civilisations and merchant routes, in the immediate aftermath of the ussr collapse this was nothing more than a romantic past: ca’s export competitiveness was severely hindered by its remoteness from major international communications and transport networks, thus enhancing its “resource curse”. At the same time, newly-independent ca did not need primary industrialisation when the advisors from the West and Japan started their activity: It had already been carried out during the Soviet period, while the population had a 98% literacy rate, with 20% having a university / college degree. The main development challenges in ca were not the creation of an industrial base in transition from agriculture or the prevention of subversion to socialism like in Cold War Southeast Asia. It was to modernise the dilapidated infrastructure, to convert and diversify the economy from planned military-oriented autarky into a market one, to re-shape manually-created regional division of labour inherited from the Soviet era and favouring monocultures. The progressive increase of Japanese oda to ca countries, in line with general expansion and Japan’s position among their top oda donors (varying from first to third position) kept

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since 1998 is one of the major indicators of Tokyo’s closer attention to this emerging region, which needs large-scale investment.13,14 However, Japan’s aid has maintained its traditional pattern: in aggregate, the region’s two large countries with regional leadership ambitions (Kazakhstan and Uzbekistan) have benefited from the bulk of the total Japanese ca aid. More specifically, this is reflected in a high proportion of loans made possible by their creditworthiness underpinned by natural resource endowment and resulting political weight. At the same time, financial assistance to Kyrgyzstan and Tajikistan that rank among the world’s poorest nations was stable but of a much smaller scale. The following section clarifies the considerations behind such policy.

Personal Factor and Institutional Continuities in the Financial Aspect of the Japanese Silk Road Diplomacy Since the inception of this relationship, officials and politicians affiliated with the Japanese Ministry of Finance have been key in shaping the Japanese approach towards ca states. Their strategic motivation was driven, on the one hand, by considerations of Japan acting as a responsible Asian and global citizen, and, on the other hand, dealing with rising China, which they observed with particular attention. The overseas developmentalist posture of the mof decision makers was consistent with their domestic strategic behaviour in Japan. Their gradualist penchant and wariness of radical liberalisation at the time was underpinned inter alia by a strong public scrutiny inside Japan that both mof officials and the ldp came under in the mid-1990s. This pressure was due to painful failures in earlier deregulation reforms that abolished firewalls between financial institutions in order to liberalise the Japanese money market (Kamikubo, 2007:14–16). The way in which Japanese institutions historically developed themselves plays an important role in how they later approached issues of development in recipient countries. As described in the seminal 1993 World Bank policy research report The East Asian Miracle: Economic Growth

13 14

Approximately ¥ 260 billion over the period 1992–2004 and ~¥54 billion in 2006 only, both on bilateral and multilateral bases. Source: jica Annual Report 2007. The scale of oda provided followed the same year-on-year evolution as overall Japanese oda, with a notable exception of a major increase in assistance to Kazakhstan and Uzbekistan (two claimants of regional leadership) in 2003–2004, on the eve of the establishment of “Central Asia plus Japan” framework. Source: Japan’s oda Data by country. Central Asia and Caucasus: http://www.mofa.go.jp/policy/oda/data/03ap_ca01.html (accessed 25 April 2010).

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and Public Policy, the institutional basis for Japanese growth relied, inter alia, on the principle of shared growth promising the benefit from economic expansion to all groups of population. On the one hand, Japan, like other East Asian developmental states, had “powerful technocratic bureaucracies shielded from political pressure” and were thus able to “devise and implement well-honed interventions”. On the other hand, the report qualifies such a view by the fact that leaders of East Asian high-performing economies were also cooperative in willingness “to grant a voice and genuine authority to a technocratic elite and key leaders of the private sector” (World Bank, 1993). In addition, as the Japanese scholar Michael Green (2001:27) noted, the 1990s saw a strengthening of Japanese Asian identity as “allied with America but serving as Asia’s breakwater against the chaos of Anglo-American capitalism and culture.” The mof officials shaped initial approaches in the philosophy and practice of financial aid towards transition economies of ex-Soviet ca. Many of those professionals would, on the one hand, have a strong background and developmental ethos of international financial institutions, such as the imf, World Bank or Asian Development Bank. On the other hand, this sub-community, albeit having its internal differences, would on average lean towards stronger gradualism in economic reforms than the adherents of the Washington Consensus, although the extent of actual gradualism would differ from official to official and from country to country. For instance, Chino Tadao, who can be viewed as one of major patrons of ca in the Japanese establishment, and his colleague Nakayama Kyoko who served as ambassador to Uzbekistan, favoured a step-by-step approach, while their peers supported a more radical transition (interview, 2011). Chino was a key figure in the Japanese caoda and other assistance projects, including counselling on economic reforms, from early 1990s up to mid-2000s. Chino’s contribution was paramount because the first contacts between Japan and post-Soviet republics of the region, especially Uzbekistan, in the immediate aftermath of the ussr collapse were taking place with his participation. It is in many regards thanks to his activity in the Ministry of Finance (where he was Vice-Minister of Finance in charge of international affairs in 1991–1993 and held several other important offices), the European Bank for Reconstruction and Development (where he was Temporary Alternate Governor for Japan in 1992) and the adb (through which Japan has become a key donor of the Silk Road countries), whilst many of his like-minded colleagues from mof have taken over positions related to the region. For instance, Chino’s colleague and ally Nakayama Kyoko served as Japan’s ambassador to Uzbekistan from 1999 to 2002. Her background in finance, institutional affiliation with financial technocracy, strong advocacy in favour of

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fostering links with ca and Uzbekistan and personal ties with the Diet members significantly contributed to the relationship’s evolution. Nakayama was the part of ldp faction Seiwa Seisaku Kenkyukai, noted for its relatively highprofile stance in relations with Eurasian countries. Meanwhile, her husband Nakayama Nariaki was the Secretary General of this key faction that regained the ldp leadership upon Mori Yoshiro’s premiership in 2000 (1999), becoming known as Mori-ha. According to several interviewees, such a personal link was helpful for implementing Japanese projects with Uzbekistan. Nakayama’s ambassadorial appointment to Tashkent sealed and strengthened the confidential relationship that Chino managed to build with the Uzbek presidents during his visits in early 1990s. This is important for two reasons: first, despite his formal incongruence to the head of state as Vice-Minister, Chino has regularly been received by the Uzbek President Karimov, which is a virtual pre-requisite for having successful clout in post-Soviet republics known for strong personalist regimes; and secondly, it later helped Chino in furthering the projects of the adb once he assumed the Bank’s leadership. As a reminder, Uzbekistan is one of two countries with regional leadership claims, the other being Kazakhstan. Uzbekistan is the most populous (representing almost half of the ca population), disposing of certain developed resources and industrial potential, and is also the only country bordering all other Central Asian countries, including Afghanistan, the northern parts of which are home to a large ethnic Uzbek community. At the same time, those ambitions and strategic location provide an impetus for Tashkent’s pressure on its neighbours and frequent confrontation. In this context, Chino’s personal connection with the Uzbek leader was essential for securing the commitment of a centre-piece element in a trans-border puzzle. Moreover, according to Japanese diplomats, in the 1990s, Uzbekistan was maintaining a more open attitude towards both Japanese investors and foreign economic advisors, whilst Kazakhstan, on the contrary, treated the Japanese in somewhat arrogant fashion—a trend that was ultimately reversed in the 2000s, as will be shown below (Kawato, 2008; Uyama, 2003). This is where the observer will inevitably face the question of diplomatic agency and the possibility of equating the behaviour of specific actors and furthering Japan’s national interests. Formally speaking, Chino and his fellow colleagues from the government’s financial circles did not have a diplomatic mission. Japanese foreign policy is the eminent domain of mofa, whose control over jica’s activities in the 1990s was tighter than presently, while the adb is a multilateral institution fighting poverty. Is it possible in such a case to consider Chino and his like-minded allies from the Ministry of Finance as foreign policy makers, often sharing an alma mater, a certain professional ethos

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of the development economist, as well as career track in international financial organisations (the Bretton Woods institutions, adb, ebrd)? On the one hand, it would be far-fetched to view the mof activities as an extension or instrument of mofa policy, especially in the adb’s case. On the other hand, financial aid matters have traditionally served Tokyo as a overt pragmatic instrument spelling of foreign policy and fostering commercial interests of Japanese companies overseas. Such an attitude was heavily criticised by many oecd dac members (from Western Europe and America) in late 1980s and early 1990s (Mawdsley, 2012:38). At the same time, the moral side of this criticism could also be disputed given the pragmatism of the critiques. Furthermore, the Ministry of Finance’s role is fundamental, since it has the last say in budget allocation and inter-agency conflicts over aid issues have been occurring since the very beginning of the Japanese “chequebook diplomacy”— starting from aid decisions regarding Indonesia and other Southeast Asian countries in 1960s (as described in the previous section on Southeast Asia). In addition, the political nature of ca oda could be exemplified by cases of providing or renewing loan aid in the interests of relationship building despite negative creditworthiness implications of the borrower.15 This interaction between the ministries has confirming evidence, simultaneously highlighting its other side—already mentioned above, irregular coordination between various actors inside the Japanese government. For instance, former ambassador to Uzbekistan Kawato Akio, who replaced Nakayama Kyoko, is saying in his article about the Japanese Silk Road diplomacy that the Diet and mof ties of his predecessor have greatly facilitated her ambassadorial activity, in particular, in terms of budget approvals, whilst he as career diplomat from mofa needed to make supplementary efforts (Kawato, 2007). At the same time, “Chino’s group”16 motivation for promoting the ca relationship pro-actively goes beyond domestic political interests. As his colleagues

15

16

This was, for instance, the case of Kyrgyzstan in the early 2000s—the country benefited from financial aid despite an unattractive repayment capability. Private communication with former adb employee and former Japanese senior diplomat. “Chino group” is a term used only by the author for the purposes of this research and not used in the existing scholarship or media. This essay means by it not an organised community with formalised ties and central subordination (given the absence of data suggesting such institutionalisation), but rather an ad hoc community of professionals and colleagues at the Ministry of Finance, with a past or present record of work in various governmental or intergovernmental organisations (adb, ebrd, jica, jbic, World Bank, imf) and not only related to ca by virtue of respective charge assigned, but actively promoting the cooperation with the region.

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and partners note, he was in many ways driven by personal romantic sympathies towards a charming region that turned out to be a “distant cousin” for the Japanese civilisation (interview, 2011). These sympathies transformed into a benevolent patronage if not lobbying (in the positive sense of the term), becoming a cornerstone for long-term stability of aid channels for ca. The personal nature of such preference could be indirectly supported by the fact that Chino has spoken in favour of assisting Russia during the 1993 g7 summit in Tokyo (Chino Tadao ga shikyo, 2008)—something that mofa was disproving of due to the Kurile Island / Northern Territories dispute, albeit ultimately yielding after the American pressure (Miyashita, 2003:27).

Economic Paradigms at Diplomatic Service: Changing Narrative The Japanese financial officials providing policy assistance to the Silk Road countries (whether working at the Ministry of Finance or muted to the World Bank, jica, adb or ebrd) were mostly favouring gradual reforms in transition from socialism to capitalism, implying the maintenance of a high profile for the government in regulation. Although there were minor divisions between individual officials, overall the Kasumigaseki financiers would assign priority to economic prosperity and stability, which would in their turn provide grounds for political reforms and liberalisation, but not vice versa. This formula, natural for the East Asian economic miracle is oft-quoted in the second (and the last, to date) conceptualisation of the Japanese foreign policy involving Central Asia—the Arc of Freedom and Prosperity proposed by Aso Taro in 2006 when he served as Minister of Foreign Affairs in the first Abe Shinzo government.17 In both his 2006 speech that inaugurated “The Arc of Freedom and Prosperity” and homonymous manifesto book of the same title published in 2007, Taro Aso (then Foreign Minister) made a tacit parallel to Zbigniew Brzezinski’s “Arc of Instability” concept going through vulnerable countries mostly situated in Asia where Japan’s contribution towards further democratic reforms and stability (value-oriented diplomacy) is necessary, according to Aso. The volume features and dedicates a separate chapter to the Silk Road countries that are situated in this vulnerable zone. Besides Central Asian countries, the arc includes 17

Shinzo Abe who succeeded Koizumi as Prime Minister in September 2006 and had a tough stance towards China, mentioned the importance of cooperation with ca, albeit marginally, in his programme book Towards a Beautiful Country (Bungeishunju, 2006) in the same chapter where he stressed the need for Japan’s partnership with India and Australia.

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Cambodia, Laos, Vietnam (together referred as clv), Georgia, Azerbaijan and Ukraine. While these entire countries share in common a socialist past and some share rich energy resources (Central Asia, Azerbaijan), most of them (i.e., Central Asia and clv) also share the concern over rising China, which they perceive as a challenge. The fragility of ca countries is metaphorically portrayed by Aso as “interior continental magma”. He suggests three pillars for Japanese policy in ca: security and development (to cool the “magma”); open regional cooperation; and universal values, closing the chapter with the ideas of integrating Afghanistan into the Central Asia plus Japan framework. Such an approach can thus be regarded as consistent with the past Japanese involvement in ca. All the more that Aso was also seeing it as part of Japan’s engagement with the West and linkage with nato in particular, echoing Hashimoto’s reasoning for Eurasian diplomacy. Besides that, Aso, Director General of the Economic Planning Agency in Hashimoto’s premiership, shared Hashimoto’s views on the relations with ca and was actually a member of the high-ranking delegation sent to the region following Hashimoto’s announcement of Eurasian diplomacy in 1997. At the same time, Japan was a particularly comfortable partner for the states in the region: it was seen by the local authoritarian leaders as neutral (unlike Russia or Turkey, whose intentions could might be seen as expansionist) and less demanding on the issues of democratisation and human rights (unlike Western countries), which was proved by the much less politically conditional nature of Japanese economic assistance to the region. Adopting the Japanese 1950–1970s model of political, social and economic development implied for the ca countries a greater degree of independence from Europe and the United States, which had a strict stance on the implementation of reform plans and policy concepts in accordance with the Western model. The bursting of Japanese bubble in 1991 and resulting “lost decade” of domestic economic problems for Japan were probably considered by the ca leaders as the price of progress and an avoidable distant scenario, rather than inevitable stage of the “Japan Way”. It is no surprise that the heads of states that had ambitions of claiming regional leadership in ca—Kazakhstan and Uzbekistan— declared their orientation towards the Japanese developmental model as part of maintaining equilibrium between various powers dealing with the region. Media-discourse of ca states addressing relations with the European Union, the United States and Japan highlighted local preference of Asian values, as opposed to European ones (Kaiser, 2001). Such values and the developmental model based thereupon imply that democratisation follows the establishment of a market economy, as was the case in South Korea (Calder and Kim, 2008). For Eastern European countries in transition, however, democratisation and

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market reforms had to be simultaneous, as was the case in Czechoslovakia, Hungary and Poland. Although Japan was not trying to outmatch the Western countries in ca, the competitive nature of its developmental involvement could not be ignored by its officials. And what about the foreign policy of ca states and implications for hegemony? Did greater exposure to neoliberal reforms imply a greater coordination of foreign policy with the West (e.g., Kazakhstan and Kyrgyzstan) and did gradualism, on the contrary, imply a more independent posture and/or a more anti-Western one (Uzbekistan and Turkmenistan)? As it turned out, the answer is rather negative and in favour of pragmatism. The region’s almost full (except Turkmenistan’s) membership in the Collective Security Treaty Organisation (csto) and the sco stems from both security concerns and the rationale of maintaining stable relations with Russia and China, both wary of the nato expansion. At the same time, ca republics managed to prevent their relationships with the West and its Eurasian rivals from becoming a “zero-sum game”. On the one hand, regional leaders developed suspicions over the Western “regime change” policy following the Tulip revolution in Kyrgyzstan and sanctions imposed on Uzbekistan in relation to Tashkent’s suppression of the Andijan uprising, the most noticeable outcomes of this wariness were a joint sco statement calling on the withdrawal of American military bases from the region and an actual removal of such a base in Khanabad, the only precedent so far. At the same time, even the withdrawal of Khanabad base ordered by Uzbekistan and hailed as a significant blow to the u.s. presence in the region, actually happened in a much less abrupt and irreversible fashion than it was promoted in the media. The base was ordered to be removed only after Uzbek diplomats spent several months attempting to have settlement consultations with American counterparts via diplomatic channels but to no avail. Meanwhile, the American base in Manas, Kyrgyzstan survived several rounds of closing attempts always followed by the increase of rent, but remains operational despite being renamed as a transport centre. Kazakhstan opted for a “multi-vector” foreign policy expressed in cooperation with all major powers (prc, Russia and the United States) and various international organisations (the osce, the oic). Uzbekistan demonstrated a more vacillating approach by alternating several-year rapprochements with the West and Russia, whereby a warming with Russia would result in Tashkent joining Moscow-dominated international institutions and harsher criticism of democratic record from Washington (1996–1999, 2005–2010), whilst a drift toward West would involve a suspension of such memberships combined with an appraisal in democratisation progress from Washington alongside financial aid (1999–2004, 2011-present). Kyrgyzstan also resorted to a pragmatic approach

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maintaining both Russian and American military bases (in Kant and Manas, respectively), participating in regional security organisations led by China and Russia, with benefiting from various aid programmes from Western financial institutions. Turkmenistan adopted neutrality and a non-alignment policy, at the same time using a new gas partnership with China and Iran to reduce its reliance on Russia-dominated export routes.

Relationship Maturity in the Mid-2000s: Generational and Geopolitical Change As was mentioned earlier, the adb is a development bank that helps the governments of recipient countries finance social and public infrastructure, but does not qualify its disbursement policy subject on the quality of reforms conducted by the government. It distinguishes the adb from the ebrd or the World Bank that are more involved in the private sector and more demanding with regards to the reform course. The nature of state capitalism and post-privatisation era’s ca economies is such, however, that private property rights become increasingly intertwined with the local political and government figures. In other words, for strong personalist presidential regimes of ca countries regularly criticised by the West for sluggishness in democratisation and market reforms, adb with its focus on public sector is a more preferential and easy partner than its “Atlantist” equivalents. At the same time, the interaction between these institutions in Central Asia has always been rather cooperative than competitive, as exemplified by carec, for instance, due to their complementarity and inherent multi-vector nature of ca countries’ foreign policies. The ebrd, in its turn, has historically developed an informal geographical “division of trusteeship labour”, whereby the ca area was placed under the responsibility of Japan. Japan became one of key Bank shareholders at its founding, with direct involvement of both R. Hashimoto, then Minister of Finance, and T. Chino, Vice-Minister of Finance for International Affairs. According to Special Adviser to the Minister of Finance Nakahira Kosuke, by 1996 Japan had been by far the ebrd’s largest counterpart for co-financing, involving such key players as the Export-Import Bank of Japan and the Overseas Economic Cooperation Fund (which later merged and formed the Japanese Bank for International Cooperation, or jbic), as well as a partnership with the then-miti (now meti) (Nakahira, 1997). As has already been mentioned, Japan has promoted ca’s membership in both regional development banks at the oecd Development Assistance Committee, such cross-membership being an unprecedented matter to that date. The ebrd’s focus was the private sector,

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whilst the adb concentrated on the public sector. This is why, when the first cooling in Uzbekistan’s relations with the West appeared in 2003 due to the criticism of Tashkent’s poor human rights record voiced by ebrd officials (nonJapanese ones and probably against the opinion of their Japanese colleagues) at a conference with Islam Karimov, Uzbek-Japanese relations suffered much less than those between Uzbekistan and Europe or the United States, not least thanks to the described alternative partnership via adb. A more serious cooling-off started to take place in the mid-2000s, when several tectonic trends coincided. Most notably, the “Chino generation” benevolently regarding economic trusteeship of ca, started to have a decreased presence in policy making. This was induced by regular frequent rotations and natural generational change, as well as reforms in the Ministry of Finance itself at the turn of the century, resulting in the departure of many ca specialists from the positions related to the region to other jobs.18 Chino left the adb in 2005, but his successor Kuroda Haruhiko, incumbent boj president, as well as his more junior colleagues have maintained a positive view of the region and a personal cultural interest towards it. Yet, with Chino’s death in 2008 the republics of ca have certainly lost one of their best mentors, proponents and active promoters in Japan. The new generation of government financiers appointed during the neoliberal tilt of Koizumi Junichiro’s cabinet was marked by lesser enthusiasm towards Uzbekistan due to its sluggish reform pace and marred investor environment. They preferred Kazakhstan whose modernisation was carried out in a more rapid fashion welcoming openness to foreign investors and dismantling the currency control inherited from the ussr. Even Kyrgyzstan that was long considered by policy reform advisors from Tokyo a manadeshi (Japanese for “favourite pupil”) and an example of a new democracy free of the resource curse, entered, first, corruption stagnation prior to 2005 and a turbulent period following the subsequent 2005 Tulip Revolution that replaced President Askar Akayev with Kurmanbek Bakiyev, in his turn overthrown by an uprising in 2010. The 2005 Andijan events in Uzbekistan have had their influence too: Despite a comparatively less critical attitude than in the West towards Tashkent’s brutal repression of potentially Islamist-driven civil unrest, Japan has supported a un resolution denouncing Uzbekistan. For Uzbek diplomats such actions came across as a surprise and were taken negatively, since Oqsaroy19 views any intervention into its domestic affairs as a fierce challenge to its national

18 19

Many of them were transferred to the government’s watchdog for financial markets. Personal communication with an ebrd official. March 2013. Official residence of Uzbekistan’s President Islam Karimov.

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interests. The reaction of the Uzbek diplomatic corps was almost immediate— Uzbekistan withdrew its traditional support of Japan’s bid for a permanent seat in the United Nations Security Council. Such demarche in its turn was unexpected by Tokyo’s un ambassador Oshima Kenzo. Uzbekistan’s voice in favour of the Japanese bid was one of early quiproquos in Japan’s relations with ca. The bilateral relations were thus stalled for a long while due to Tashkent’s pendulation in foreign policy—periodical oscillation between Russia and the United States. Formally, Japan’s dialogue with the region continues but is relenting: Since the foundation of the Central Asia plus Japan forum in 2004 in Astana, only two ministerial meetings have taken place under ldp rule (before 2009), whilst another two were conducted under the Democratic Party of Japan (dpj) governments in 2010 and 2012. The same turning point of 2005–2006 marks a tectonic geopolitical change in the configuration of outer power balance in ca. Firstly, unlike the 1990s, when China was still settling its border issues with Russia, Kazakhstan, Kyrgyzstan and Tajikistan, thus being less free in its regional action, by early 2000s not only were those questions solved, but a new bloc emerged from it—the Shanghai Cooperation Organisation, which made ca countries gravitate away from the West into the orbit of Russia and China. Secondly, this power shift in favour of Beijing is evidenced by Chinese economic success, which became more marked than in the last decade of 20th century and allowed Beijing to convert it into vast aid programmes in ca, thus outcompeting Japan due to the naturally higher stakes for prc. For instance, since 2005, the carec programme has seen a drastic increase in involvement of Chinese officials in charge, whose numbers amounted to a few dozens compared to only one or two Japanese counterparts (interview, 2012). Thirdly, Sino-Japanese relations have their own cooling after leadership changes. In Japan, a less mainland-friendly faction Seiwa Seisaku Kenkyukai was in power upon Mori Yoshiro and, especially, Koizumi Junichiro becoming prime ministers, thus marking a shift from rival ldp faction Heisei to which Hashimoto and Obuchi belonged. At the same time, Chinese power succession from Jiang Zemin to Hu Jintao had a similar cooling effect vis-à-vis Japan. In addition to this, the compliance and reporting procedures for Japanese businesses become tighter making it less attractive to take ca risks and thus letting Chinese and South Korean companies rise to prominence in the region, indirectly suggesting Japan’s retreat to a secondary position. In other words, if we view ca countries as development clients on the demand side of the development sponsorship market and outside powers as suppliers of development sponsorship, then in the 2000s the supply side became more competitive and politicised in terms of hard power projection required, which ultimately lead to increasing Japan’s disinterest.

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The dpj’s advent to power in 2009 marked further slowdown of the relationship. By this time, Kazakhstan largely graduated from Japanese aid programmes due to amassed hydrocarbon manna, while Uzbekistan’s investment and currency climate remain stagnant. In addition, dpj was set to improve ties with China and sought to avoid any irritation or accusations of “China containment”. The “Arc of Freedom and Prosperity” was removed from the mofa’s website, while Japanese diplomatic officials in its stead started to use the term the “Arc of Peace and Prosperity”, replacing freedom by a less “red-cloth” term. Moreover, dpj Foreign Minister Okada Katsuya introduced a reform plan for oda (mofa, 2010), which rendered oda parliamentary approval process much more difficult spurring the criticism of the party’s lack of vision by oda professionals (interview, 2013). Russia, on the other hand, changed the energy game in East Asia by the late 2000s through constructing its pipeline system, the Eastern Siberia-Pacific Ocean (espo). espo made a difference since it materialised crude oil supply diversification for Japan, thus downgrading even further the importance of ca as alternative source of hydrocarbons. After the 2011 Fukushima incident and resultant changes in Japan’s energy policy, Russia’s natural gas joined oil as a looming benefit from rapprochement with Russia. One may argue with optimistic but sufficient credibility that chronologically the adb’s aid programme for the Silk Road region’s public sector brought about a good infrastructural basis for the region’s unlocking sought by Japanese allies, most notably the United States, thus questioning the anti-hegemony nature of the Japanese involvement. However the main achievement of Japanese financial assistance is that carec and other constructions cross-flashed the landlocked region, improving its connectivity with the outer world and its functional potential for further integration. Given the 2012 return to the government of several prominent political figures from the past familiar with the region’s knowledge (T. Aso, S. Yachi and S. Abe himself20) the value-oriented diplomacy declared in the Arc of Freedom and Prosperity is back in the diplomatic discourse, including mofa’s website, which may imply a renewal of Japanese ties with ca.

20

Former adb head H. Kuroda could also be highlighted here due to his already-mentioned interest and positive attitude towards ca, however his responsibilities as boj governor leave little space for ca, bar none, in his current schedule.

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Conclusion Throughout its two-decade existence, Japanese oda in ca has featured elements of both pragmatism and idealism, confirming its function as currency for relative gains that Japan as mercantile middle-power is eyeing. On the one hand, Japanese financial aid toward ca infrastructure projects yielded tangible results of long-term geostrategic benefit, while Tokyo’s official diplomatic posture was rather cooperative and reactive, adjusting in response to reconfiguration of both international and domestic variables, namely Japan’s relations with China, Russia and the United States, as well as partisan and factional politics inside Japan. Meanwhile, these tangible results can be attributed a large extent to one specific group of actors inside Japanese bureaucracy, namely the officials of the Ministry of Finance. With their active “developmentoring”, ca gained international recognition (such as membership in the ifi s) and access to capital, which it acutely needed for the transition and that otherwise would be more expensive. The “elder” generation of officials in the 1990s demonstrated a pro-active, predominantly gradualist and, to an extent, romantic approach toward the Silk Road region; whilst their successors in the 2000s took a more risk-averse and critical stance on the sluggish pace of ca economic and financial reforms, which led to a revision of further Japanese commitment to them. It is technically difficult to consider the Japanese ca involvement one of the first post-neoliberal experiences, since: – Despite a preference toward gradual reforms, their proponents on the Japanese side did not have a (post-)neoliberal conceptualisation in mind at the time, apart from post-bubble mind-set and criticism of the Washington Consensus in particular due to the 1997 Asian financial crisis; – They had internal divisions on the extent of reforms radicalness; – Inside Japan, the term “neoliberalism” is mostly associated with Japanese government reforms under the Koizumi cabinet (2001–2006); – The discussion of post-neoliberalism sensu stricto sees the light following the 2008 global financial crisis, while the subject involvement takes place in the 1990s and early 2000s. At the same time, it is an inter-Asian form of developmentalist governance that retained features of neoliberalism, while combining it with welfare policies. In doing so, however, it distinguished itself from many counterparts in that prior to adopting such governance ca countries were already planned economies with a strong welfare as part of domestic social contract. Japan,

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as an Asian paragon of the developmental state, acted as suitable early-stage developmental mentor for newly-independent ca countries. Nonetheless, the Japanese backing for gradual reforms was potentially at least a precursor of post-2008 post-neoliberalism. More importantly, it is a lesson to learn, since what was intended was an Asian model alternative to the Anglo-American capitalism and, in that sense, it was post-neoliberal, given that its origins stem from negative effects of post-Soviet liberalisation in early 1990s, even though the latter was never fully accomplished. Gradualism in ca was facilitated by its endorsement by Japan as fairly disinterested development sponsor and role model. Engaging in counterfactual history, one might speculate that without Japanese involvement the region would adopt either a more neoliberal reform course or more isolationist one. Japan both validated the scepticism toward radical neoliberalism and, at the same time, did not entirely take advantage of such posture to the benefit of either its own hegemony or hegemony of other powers. Finally, both the successes and the failures of gradualism in ca can be helpful in showing the limits and side-effects of post-neoliberalism, at least with regards to the post-Soviet space.

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