A new era of engagement between the Persian Gulf and Central Asian states was launched this month, surprisingly promoting investments that diversify both regions away from oil and gas. High-level Saudi ministers touched down in Bishkek and Astana, bringing with them the promise of large-scale infrastructure investments to be funded by the Saudi Fund for Development (SFD), which is actively seeking to expand its more than $20 billion portfolio across Central Asia. 

On March 7, Kyrgyzstan President Sadyr Japarov welcomed Waleed Al-Khuraiji, the Deputy Foreign Minister of Saudi Arabia. The meeting was the latest episode in a burgeoning economic and diplomatic relationship between the Saudis and the Kyrgyz, defined primarily by the Saudi’s provision of millions in development finance. At the meeting, Deputy Minister Al-Khuraiji indicated that his trip would be followed by a visit from Saudi Arabia’s Minister of Investment, a sign that the Saudis are interested in continuing to bolster the countries’ economic collaboration. 

On the same day, the Saudi Minister of Energy, Abdulaziz bin Salman Al Saud, was in Astana to meet with Kazakhstan President Kassym-Jomart Tokayev. President Tokayev described an “unprecedented level” of bilateral relations between the two countries, which have grown as their economic and strategic interests have aligned. Kazakhstan seeks to reduce its economic dependence on neighbors like China and Russia, while Saudi Arabia aims to use its disposable capital to expand its regional and global influence. At the meeting, the leaders discussed a joint investment to build a wind power plant in the Almaty Region of Kazakhstan. 

Trends Driving Gulf-C5 Engagement

Changing economic and geopolitical dynamics are motivating both regions to forge new strategic partnerships. Central Asia is experiencing a period of unprecedented economic sovereignty as Russia’s invasion of Ukraine has weakened the country’s influence across the post-Soviet region. While China remains a major economic player in Central Asia, C5 countries are wary of becoming reliant on Chinese finance. Central Asian states see an opportunity to use new relationships to balance against their traditional partners and are aggressively seeking engagement with influential global powers. 

Gulf states, equipped with vast capital resources, are natural partners. Geopolitically, Gulf countries including Saudi Arabia, the United Arab Emirates (UAE), and Qatar want to translate their financial capacity into soft power to become regional leaders and diplomatic heavyweights. Economically, these countries view their reliance on oil exports as a serious risk and are using their energy-derived wealth to invest massively in non-oil sectors across the Global South. C5 countries are well-endowed with clean energy sources including solar, wind, and hydropower, but they need large-scale investments to realize their potential. 

The energy transition is another factor motivating Gulf-Central Asia collaboration. Both regions have been major sources of oil and natural gas, limiting their need to trade with one another. However, clean energy has emerged as a feasible alternative, and diversification has become a strategic imperative for traditional energy producers. On the sidelines of COP28 in Dubai, Masdar, UAE’s state-owned renewables developer, announced it was exploring the development of hydropower and renewable projects in Kyrgyzstan. In addition to investment, Gulf states can provide Central Asia with technical assistance based on their own experiences diversifying beyond oil and gas production. 

Platforms for Gulf-C5 Collaboration

These changing dynamics have produced meetings, summitry, and investment between the Gulf and C5. President Japarov has filled his schedule with trips to the Gulf, meeting with UAE President Sheikh Mohammed bin Zayed Al Nahyan in Dubai in February, attending COP28 in Dubai in December, and participating in an Islamic Summit in Riyadh in November. All the C5 heads of state were in Jeddah in July for the Gulf Cooperation Council (GCC)-Central Asia Summit, which produced a Joint Action Plan centered around expanding mutual trade and security partnerships. More summits are on the horizon, including a GCC-Central Asian Investment Forum hosted by Turkmenistan and Kyrgyzstan later this year and another GCC-Central Asia summit in Samarkand, Uzbekistan in 2025. 

Samarkand, an important site along the ancient Silk Road, is an appropriate location given the GCC-C5’s interest in improving trade routes. Since Russia’s invasion, westbound cargo along Russian railways has plummeted. In January, Europe pledged €10 billion to expand the Middle Corridor, an overland trade route between China and Europe that has the potential to move a substantial portion of Central Asian trade. Gulf states would also benefit from an expanded Middle Corridor; goods transported across the Caspian Sea could then be sent to the Gulf via land transport. The UAE has recognized a strategic interest in developing reliable trade across the Caspian. AD Ports, a UAE state-backed firm, operates five oil tankers in the Caspian as part of a joint venture with Kazakhstan’s state-owned transportation company. Last year, the firm pledged to help Kazakhstan’s National Oil Company “in the development of a marine fleet and coastal infrastructure.”

Another focus of Gulf investment in Central Asia is renewable energy. In addition to Masdar’s announcement at COP28, the UAE state-owned firm had already planned on building a solar power plant in Kyrgyzstan, with construction expected to begin this year. In Uzbekistan, Masdar’s investments have reportedly surpassed $4 billion and include three solar plants and a wind farm. The Saudi’s PIF owns a 44% stake in ACWA Power, a firm that has pledged $13.5 billion to developing Kazakhstan and Uzbekistan’s clean-energy sectors. The Chairman of ACWA was present at the March 7 meeting between the Saudi Energy Minister and President Tokayev, an indication that the Saudis would like to continue growing their renewable energy portfolio in Kazakhstan. 

Moving Forward

The trends that brought the Saudi Ministers to Central Asia this month show no signs of subsiding. At the two meetings, discussions were focused on scaling-up Saudi economic cooperation with Central Asia. While the UAE has historically been the more prominent financial presence in the region, the Saudis have the funds to compete. In November, the Saudi Investment Minister’s trip to Tashkent was accompanied by $12 billion in SFD investments in Uzbekistan’s energy, IT, and agriculture sectors. The March 7 visits—with the promise of more to come—suggest that the Saudis are actively working to enhance their economic and political ties to the region. 

It is important that Central Asian states use Saudi and Emirati finance to encourage economic diversification, nurture their emerging industries like renewable energy, and support broad-based economic prosperity. These large-scale investments have the potential to catalyze economic growth, but they come with risks. If not properly managed, a massive infusion of capital can reinforce weak governance structures, foster corruption, and land countries in unsustainable debts. Saudi Arabia and the UAE are just two of many bilateral, multilateral, and commercial creditors providing funds to the region, which is experiencing unprecedented growth in investment and economic partners. Central Asia must direct finance towards key goals, like diversifying away from oil and gas, building renewable energy supply chains, and supporting inclusive growth. If they can do so effectively, Gulf states’ investments will help the region charter a course towards sustainable development.