Historically, it is the ultimate crossroads between Europe, the Middle East, South Asia and East Asia – and the central component for most of the Silk Road.

Central Asia – a region encompassing Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan – has emerged as a pivotal economic battleground since the fall of the USSR. The countries in this region have been pursuing multi-vector foreign policies as they attempt to balance their relations with rival global parties, to maximise economic benefits. This can be seen by the numerous schemes and entities from across the world which are active in the region. Jostling for space at the top are competing infrastructure and investment initiatives, notably the Western-backed Middle Corridor and China’s Belt and Road Initiative, and Russia, Iran and India’s International North-South Trade corridor.

Both land trade routes through Central Asia and the region’s resource bounty are increasingly coveted by global actors. Alongside the West and China, Russia, South Korea and other players like the Gulf States, India and Iran are injecting significant capital into this resource-rich but capital-starved region. 

Foreign direct investment (FDI) is a useful metric for comparing the amounts that have been and are being invested into the region – and the influence they could carry. Different sources report different results. The EU claims that in 2022 it accounted for the most incoming FDI into Central Asia with 42% of all investment in the region, 14.2% from the US, 6% from Russia, 3.7% from China, and with all other countries making up the remaining 34.1%. Other figures have placed China in pole position, given the opaque nature of BRI funding.

FDI is not the only component of foreign investment, with indirect investment and portfolio investment also making up significant proportions, especially for non-western investors that have a more local and dispersed economic presence compared to the West. Broadly speaking, investments tend to be focused on infrastructure and resource extraction, the latter usually being either metals or hydrocarbons.

Trade is similarly split among all relevant parties: China, the EU and Russia are the largest trade partners of Central Asia, with approximate trade volumes of $70-100bn, $50-60bn and $44bn in 2023. In addition to exports of resources, the region relies on imports of consumer goods, capital goods and capital flows in general, given the weaknesses of regional economies.

Finally, the role of remittances is also important, as one of the major exports of the region is labour, with millions of nationals of the region emigrating. In this article, we explore the key institutions, actions and plans of the ‘Big 4’ players in the region – and how they tesselate and compete.

Europe

The EU has been the largest investor in Central Asia, with an estimated $270-280bn in FDI since 1991, dwarfing other players. In 2024, the EU pledged €10bn for transport connectivity, focusing on the Middle Corridor’s rail, road and port infrastructure.

Poland and the United Kingdom have also begun accepting numbers of Uzbek migrants to augment their naturally shrinking working age populations over the last few years. These countries have higher wages and are more migrant friendly than Russia, and if they fully commit to Central Asia as a labour source, they have the potential to replace the cultural and economic dependency Kyrgyzstan, Tajikistan and Uzbekistan have on Russia with their own influence.

Finally, Europe invests in and influences Central Asia via both pan-European organisations and via the individual countries’ development banks and governments.

Pan-European organisations

European Bank for Reconstruction and Development

The European Bank for Reconstruction and Development (EBRD) operates in both EU and non-EU countries. In Central Asia, it funds transport projects and plays a key role in mediating commercial disputes.

European Investment Bank

The EU-owned European Investment Bank (EIB) focuses on Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, prioritising oil and gas transport, oil and gas extraction, power plants and transmission lines, via modernising outdated and polluting infrastructure.

National investors

French Development Agency (FDA)

The FDA’s Eurasia branch in Istanbul finances projects in Kazakhstan, and Uzbekistan, primarily through loans. From 2019-2022, it invested €4bn in these two countries.

KfW (Germany)

Germany’s development bank has allocated €200mn to Central Asia and the Caucasus, though half was spent on Afghanistan, prioritising social services (31%) and environmental projects (14%). A key initiative was Tajikistan’s Ak-Suu hydropower plant (HPP).

SECO (Switzerland)

Switzerland’s 2022-2025 programme commits CHF40mn each to Kyrgyzstan and Tajikistan, plus CHF15mn to Uzbekistan, alongside support for regional development banks.

UK International Development

The UK has invested over GBP78mn in Central Asia since 2016, including GBP31mn for the CASA 1000 energy project.

Global Gateway

The EU Global Gateway is an initiative to boost sustainable infrastructure and connectivity worldwide as a direct analogue and counter to China’s Belt and Road programme. It focuses on digital, energy and transport projects in emerging economies, prioritising climate-friendly and transparent investments.

An EU-funded Regional Transport Programme will be implemented in 2025. With this new programme, the EU will provide technical help to existing and future transportation projects regionally. This adds to the €1.5bn allocated by the European Commission and the European Investment Bank to advance Central Asia's transport development agenda. The formation of a Coordination Platform to monitor progress, improve cooperation and ensure that the Middle Corridor is developed on time.

In the following months, the coordination and organisation of specific meetings on soft connection will begin. Tajikistan is currently the subject of one of the largest single GG projects, building the Rogun Dam. This dam is an over $6bn project that has the potential to meet almost all of the country’s energy needs, and the Italian company WeBuild is constructing it. Other than the EU, Kazakhstan’s Eurasian Development bank, Saudi Arabia and China have all provided funds, once again demonstrating that these different countries also cooperate as well at times.

Middle Corridor

The Middle Corridor, or Trans-Caspian International Transport Route, is a key trade link between the EU, Central Asia and China, bypassing Russia and Iran. It runs through Turkey, Georgia, Azerbaijan and Kazakhstan via the Caspian Sea, offering a faster alternative (15-20 days) to traditional shipping routes (35-40 days) while avoiding the Suez Canal. Central Asia’s energy resources and Europe’s manufactured goods rely on this route, which currently handles 33,000 TEU containers but could eventually manage 5-15% of intercontinental rail trade with infrastructure improvements.

Challenges include inadequate infrastructure, limited container ships in Caspian ports and bureaucratic hurdles across multiple countries, the latter of which the Middle Corridor aims to solve via easing logistics by coordinating and standardising transport and customs systems, along with streamlining tariffs.

The corridor’s significance as a China-Europe link has also led to greater interest, with funding and support from the USA, Turkey and China in addition to European funding for the middle corridor. Beyond facilitating Central Asian exports and European imports, the route positions Central Asia as a logistics hub between China and Europe.

On the other hand, support for a hypothetical trans-Caspian gas pipeline that would allow for direct Central Asian gas imports to Europe has been ongoing for many years, but it seems that, due to the EU’s plans of transitioning from hydrocarbons, the project will be a non-starter.

United States of America

The US has disengaged somewhat from Central Asia, given that Central Asia was central to American activities in Afghanistan and the Middle East more generally in the 2000s, and priorities have shifted towards Eastern Europe and the Pacific since then. Despite this, America is still a major investor in the region, a major trade partner, and provides support for both the Middle Corridor as well as other EU efforts in the region.

Overall, though, it seems like the US is happy to play a crucial supporting role to Europe’s major efforts in the region, as it has significantly less involvement than its European allies and favours promoting EU schemes.

USAID

The US also uses its overseas development aid programmes such as the United States Agency for International Development, or USAID, to spread Western cultural, political and economic influence in Central Asian countries. A large number of programmes aiming to strengthen civil society and align the region with western norms have been implemented by USAID since 1991, but the future of this may be in doubt given Trump’s hostility to USAID and overseas development in general.

World Bank

The US also plays a major role due to being the home of the World Bank, which is highly active in Central Asia. In total, the World Bank has 83 lending projects worth $12.2bn in Central Asia, along with 130+ analytical & advisory services projects. $4.8bn of this is explicitly climate related and all has to be Paris Agreement compliant.

Asian Development Bank

The Asian Development Bank (ADB) is an Asian-focused regional development bank, headquartered in Manila in the Philippines. Japan, along with the USA are also the largest stakeholders in the ADB with 15.571% stakes each, though other countries have significant stakes, with China holding 6.429% and India 6.317%.

Central Asia Regional Economic Cooperation, or CAREC, is an ADB regional programme focused on economic development and sustainability in the region. It is important to note that despite the title, some of the members of CAREC are not Central Asian/Caspian countries. These countries are: Afghanistan, Azerbaijan, the People’s Republic of China, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan. While the ADB is the largest individual contributor to CAREC, other institutions also play major roles in CAREC as investors and partners.

In total, CAREC alone has invested over $31bn in Central Asia by the end of 2023.

China

China is now one of the main players Central Asia's economy, and its influence expanding further. It accounts for 34% of Kyrgyzstan's trade and 20% of Kazakhstan's. The trade dependency is lopsided, with Central Asia makes up just 1.1% of China’s global trade in return. China also serves as the source of many of the manufactured goods that are imported by the undeveloped countries of the region as well.

China’s interest in Central Asia is multifaceted. Economically, the region serves as a critical transit hub for goods moving between China and Europe, reducing reliance on maritime routes vulnerable to Western interdiction. Central Asia’s vast energy resources, including oil and natural gas, are vital for China’s energy security, particularly for its western provinces like Xinjiang.

The region exports raw materials, while China supplies machinery and electronics, though the region has emerged as a promising target for Chinese outsourcing as the country develops its economy further. Already, China has begun the construction of heavy industry in Kazakhstan in particular, marking the beginnings of high-value added industry in the region and allowing the resource-rich countries to put their resources to good use via processing them into intermediate and finished products.

Belt and Road

Launched in 2013 by Xi Jinping, the Belt and Road Initiative, or BRI, is one of the most ambitious infrastructure and economic development projects in modern history. With an estimated investment of over $1 trillion, the BRI aims to connect Asia, Europe, Africa and beyond through a network of six economic corridors, including the China-Central Asia-West Asia Corridor encompassing the Central Asian states. In addition to infrastructure projects, BRI also composes policy coordination, trade and investment facilitation, infrastructure connectivity, financial integration and cultural exchange.   

For Central Asia, the BRI represents a transformative opportunity to modernise its infrastructure, boost intraregional and extra-regional trade, and integrate into global markets.

Projects such as the China-Kyrgyzstan-Uzbekistan railway and the Khorgos land port, a major rail transshipment centre on the Chinese-Kazakhstani border, have already yielded results.

In total, it is unknown just how much China has spent on the Central Asian part of BRI. The region is key to its overall plans given that it is one of only two land routes out of China, the other being Russia, but exact figures are difficult to find given the fuzzy nature of what exactly constitutes BRI projects, the fact that many BRI projects are not transparent with regards to funding or are even secret. A 2017 statement from the Chinese Ministry of Commerce noted that $304.9bn in contracts had been signed with countries along the terrestrial axis of BRI, including Central Asia between 2013 and 2017. While additional spending has slowed in recent years, it is clear that the figure of BRI spending in Central Asia could be up to the hundreds of billions at most.

Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank, headquartered in Beijing, is a Chinese-led development bank focused on financing infrastructure and assisting the BRI in its operations.

The AIIB collaborates with other institutions in the region, most notably the Islamic Development Bank, while also providing consulting, informational and technical services for Central Asian countries.

The AIIB has a strong focus on physical infrastructure and development. In total, $4.6bn has been committed to projects in Central Asia, with projects being of unusually large size on average.

Russia

Russia is by far the most influential foreign country politically in Central Asia. Much of Russia’s influence hinges on inter-elite relationships and security arrangements, shown by the membership of all the states other than Turkmenistan in the CIS, an intergovernmental organisation that acts as a regular, high-profile meeting of the respective heads of state. Many Central Asian figures maintain these close links with Moscow due to both Soviet-era ties and current personalistic relationships with their Russian counterparts.

Russian security ties are exemplified by the Collective Security Treaty Organisation (CSTO). Russia’s 2022 intervention in Kazakhstan to quell unrest underscored its role as a regional stabiliser, and it has also mediated heavily in the past between Kyrgyzstan and Tajikistan, though this role seems to have waned with Uzbekistan participating to arrange their 2025 peace treaty. Moscow also exerts soft power through media and cultural ties, as well as a large number of ethnic Russians living in the region, especially in Kazakhstan. While low birth rates and emigration had led to a decline in the presence of ethnic Russians in the region since 1991, the trend was reversed after the outbreak of the Ukraine war, which has led to large numbers of Russians migrating to Central Asia.

In general, however, the popularity of the Russian language may face an uncertain future with the prominence of cultural and linguistic revival movements, such as in Kazakhstan, causing these countries to desire both cultural independence and to a lesser extent closer links with other Turkic countries.

Russia is a major trade partner of the region. The outbreak of the Ukraine war has had a seemingly contradictory effect on relations here, with Kazakhstan and Kyrgyzstan curtailing Russian banking services due to US secondary sanctions threats, while also benefiting heavily from being entrepot countries to the Russian market for Western and other goods and seeing rapid economic growth as a result. Central Asian countries also engage in price arbitrage of Russian gas as well, buying cheap Russian gas and exporting it or domestic supplies to China at higher prices. This has led to every country in the region experiencing rapid growth, with the slowest growth in Kazakhstan still at a brisk 4.8% in 2024, and Kyrgyzstan, the Central Asian country most dependent on and loyal to Moscow, benefiting from 9.6% growth.

International North-South Transport Corridor

The International North-South Transport Corridor (INSTC) is a 7,200-km multimodal trade route linking Russia, Central Asia, Iran and India via ship, rail and road. Initiated in 2000 by Russia, Iran and India, it now involves 13 member states, including Kazakhstan and Uzbekistan, but the infrastructure will also undoubtedly be used by the other three countries in the region via existing and future transport links.

Since Russia’s 2022 invasion of Ukraine, the INSTC has become vital for bypassing sanctioned routes, boosting trade among Russia, Central Asia and Asia. In 2024, Russia and Iran pledged $25bn to develop it, aiming for 15mn tonnes of cargo annually by 2030.

Eurasian Economic Union

The Eurasian Economic Union (EEU) was established in 2015 and is led by Russia. In many ways it is analogous to the EU. Like the EU, the EEU is a regional economic and customs union with some political elements and abides by similar principles of free movement of goods, services, capital and labour, common external tariffs, coordinated macroeconomic policies and digital and transport integration. This single market has been one of the drivers behind the rapid growth in intra-EEU trade in recent years, which has only continued to grow rapidly since Russia was cut off from the west in 2022.

The EAEU includes Kazakhstan and Kyrgyzstan as Central Asian members. Belarus, Armenia and Russia are also full members, while another Central Asian country, Uzbekistan, holds observer status.

Remittances from Central Asian migrant workers in Russia, numbering over 10mn in 2022, are critical. The share of remittances relative to GDP was exceptionally high in Tajikistan, at 45.4%, Kyrgyzstan at 23.7% and Uzbekistan at 16.9%, and the vast majority of remittances are sent back from Russia. The EEU facilitates the free movement of Kyrgyzstani and Kazakhstani nationals to Russia, but restrictions on the other three Central Asian countries are harsher.

21^st Century shift

As we move into the second quarter of the twenty-first century, this soup is starting to boil – and the decision-making of the individual states is becoming more multi-vector and self-determined. The trends seen since the start of the century will shift, and centres of trade and investment for Central Asia will be more numerous and more spread out – but also more Eurasian. Neighbouring forces on all sides are being evened out and the decisions for each state are becoming ever more complex.

Urus Advisory is a risk intelligence consultancy working across Eurasia. urusadvisory.com

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