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Central Asia and South Caucasus

Volume 722: debated on Tuesday 30 November 2010

Question for Short Debate

Asked by

To ask Her Majesty’s Government what are their current priorities as they take forward their relationship with the individual countries of central Asia and south Caucasus.

My Lords, long before the advent of oil as a prize, mystery and a heightened realisation of its impending post-independence importance first drew me to Asia and the south Caucasus. I now count with pleasure many friends from the region. I declare at this stage that I am the chairman of five central Asian APPGs, serve on the advisory council at Asia House of the Asia and South Caucasus Association, am vice-chair of the British-Azerbaijan interaction group and am associated with a global organisation that is active in infrastructure construction projects.

Central Asia and the south Caucasus have a mystical resonance in the British imagination, whether through the writings of the orientalists or the biographers of the Great Game. The colonial withdrawal and Soviet takeover of the region led to a steady decline in what was once a glorious tradition of scholarship and trade, as access to the region became restricted. The dissolution of the Soviet Union and liberalisation in China and Mongolia removed barriers to access to central and inner Asia, but the UK business and academic community is only now turning concerted effort to a region that we all once knew well, although there are already substantial British successes.

Thus, starting anew, I intend to draw attention to and elevate the profile of a region that has been substantially neglected in UK foreign policy in recent years but which has become greatly relevant both on the global political stage and to regional stability. The prospective importance of this area, politically, economically and strategically, can scarcely be over- estimated. We must work hard to secure interests such as counterterrorism, energy security, democratisation and the rule of law. No longer landlocked thanks to a new innovative pipeline grid, a new golden triangle of trans-Caspian oil and gas resources is emerging between Kazakhstan, Turkmenistan and Azerbaijan that could transform the regional economic potential for central Asia and the south Caucasus.

These countries are characterised by predominantly moderate and secular Governments who have proved to be reliable partners and rational actors on key issues. They remain favourably inclined towards the UK and recognise that we have a social, economic and political culture which they wish to partner. Indeed, these nations look to us as trusted brokers. We have the opportunity to act now to help secure their futures, as well as our national interests, amid the powerful spheres of influence exerted by adjacent nations.

The task is incumbent on us to listen intelligently to, to welcome and to benefit from these new voices at the table of nations. The need for a balanced foreign policy that accommodates a geopolitical approach cannot be overlooked. Afghanistan is part of the central Asian nexus and has natural affinities with that area to counterbalance external influences. Regional countries understand the culture of the ethnic groups in Afghanistan, and the essential economic development of Afghanistan will filter down from the north. I envisage the region becoming the rock around which an enduring peace can be built. The region possesses abundant agricultural, mineral and energy resources, including great potential for renewable energy, including hydropower and solar. It contains all the necessary ingredients for industrial growth, and has a widely educated workforce.

The scientific potential is also enormous. Kazakhstan’s Baikonur Cosmodrome, which is shared with Russia, remains the world’s first and largest space launch facility, and services global commercial satellites and shuttles to the International Space Station. It bears witness to considerable technological sophistication. However, industry, such as the Soviet cotton monoculture, requires vision and assistance in the continued transition from a command economy to market mechanisms that create jobs, exports and opportunities for UK partnerships.

Although this year saw a period of economic stagnation, it is predicted that these countries will experience strong economic expansion in 2011, with real GDP growth of 5 to 9 per cent for a combined regional population of 77 million and a total GDP of $400 billion. Economic engines, such as Azerbaijan, which was third in global GDP growth last year, and Kazakhstan and Turkmenistan, which have new Caspian oil and gas field production in the years ahead, position the region for solid growth, development and diversification. This will be fuelled by relatively high global commodity prices and stronger domestic demand.

The hydrocarbons sector is the backbone of the largest economies, but structural challenges undermine the full development of the natural resources sector. The lack of local technical skills and limited financial capacity to develop the energy sector make the search for foreign investors a priority, while corruption remains a disincentive to foreign investors. Regional interests should not fall into the trap of a single-commodity economy, however. There are real opportunities in the form of energy co-operation beyond hydrocarbons, and the potential for sustainable partnerships for western interests is immense.

Events of global relevance are also now coming from the region. Importantly, this year, Kazakhstan has been chairman of the OSCE. The priorities of Afghanistan and Nagorno-Karabakh, together with advancing dialogue on European security through the Corfu process, and the political, military and economic dimensions, go together with a theme of promoting interethnic and religious tolerance. I wish that country well in living up to the high expectations that it is anticipated will come from the upcoming summit in Astana.

Uzbekistan's presidency of the Shanghai Cooperation Organisation, comprising most of central Asia with China and Russia, has achieved considerable results in developing international contacts and the legal framework, as well as in implementing initiatives to strengthen security and stability and to combat terrorism, extremism and separatism. Importantly, President Karimov's speech to the Oliy Majlis on 12 November on the concept of the deepening of democratic reforms and the formation of civil society in Uzbekistan was a welcome milestone and should stimulate progress in the region. However, despite periods of continuing unrest in Tajikistan and Kyrgyzstan, the Kyrgyz Government recently held their first parliamentary elections, and both countries show signs of increased stability. The militant Fergana Valley tri-state region is, however, a concern.

The countries of the southern Caucasus, anchored by Baku and its management of key pipelines, serve as a gateway to central Asia and are evolving into a dynamic Eurasian artery of economic growth and development. Azerbaijan and Georgia, as well as Armenia, sit in a region that has vast potential. Transport corridors will not only link central Asian and south Caucasus countries with wider regional continental trade and transport networks, but will strengthen the sovereignty of the regional states and facilitate the opening of their political and economic systems.

Azerbaijan's strategic location and stability are vital to the West. The United Kingdom is the largest foreign direct investor in Azerbaijan's economy, and bilateral trade has doubled in the past year alone. Besides long-term energy co-operation, over the past few years bilateral ties have broadened into new areas such as finance, infrastructure projects, education and culture. For all these reasons and more, I believe it is essential for the UK to take a leading role in Europe to push forward relationships on political, economic and strategic fronts and to seek to balance the interests of Russia, the US and China in the multivector policies of the central Asian and south Caucasus states.

What ideas do we have for regional policy? The fragile nascent political systems should be encouraged to progress towards the growth of democratic and anti-authoritarian regimes. However, we will be more successful if we take a long-term view of reform. Our own democracy is an evolutionary process, and we should be seen as a partner, not a preacher. However, given the United Kingdom's professionalism and experience, I think we should mould a regional policy around strengthening the sovereignty of those states and facilitating the development of their political and economic systems. The democratisation of state power and governance, ensuring freedom of choice and the development of electoral legislation, reforming the judicial and legal systems and developing civil society are all areas in which we could usefully engage in the spirit of partnership and co-operation. This would strengthen the parallel-to-trade objectives in advocating the benefits of good governance, transparency and accountability, freedom of the press and human rights standards. In conclusion, engagement is essential. The central Asian and south Caucasus states have now completed their transition stage from independence. Twenty years on it is now a new game and a positive one in a region that should be one of our priority strategic areas. I thank the Minister and all those who are contributing today. In addition, through the Minister if he will allow me, I pay a special tribute to all the excellent London-based officials, together with his ambassadors in post.

My Lords, I thank the noble Viscount, Lord Waverley, for securing this debate. The fall of communism, and thus the Soviet Union, has provided opportunities for the former Soviet republics to gain access to the free market and to begin the journey towards becoming fully-fledged democracies. However, it has also left unresolved territorial disputes that have the potential to spread instability to the wider region. The central Asia and south Caucasus areas are vulnerable to a multitude of threats including terrorism, repression and separatist extremism. I register an interest as the vice-chairman of the All-Party Group on Central Asia.

The Asia House has launched a regional trade association to develop business interests, trade relations and cultural connections with countries in the central Asia and south Caucasus regions. The association was launched last week in the House of Lords, which I attended, and I commend my noble friend Lord Howell on his excellent speech at the launch. I am in favour of sending trade delegations to the region as there are a number of commercial opportunities for British companies. These delegations, however, need to be very high level, with captains of industry meeting their opposite numbers accompanied by senior politicians. As a freeman of the City of London, I am keen to promote investment from Britain to a diverse audience, including the emerging nations of central Asia and the southern Caucasus.

I feel that we need to do more to encourage and facilitate UK companies to transact business overseas and also encourage overseas countries to come to the United Kingdom. We have a structural deficit that we can rectify by applying cuts and increasing taxation. We need to create wealth and generate jobs by augmenting our trade not just with our European neighbours but with the wider world. There are many opportunities in the regions that we are discussing today for trade, financial services, advisory work, skills transfer, renewable energy sector development and other sectors, which we need to explore further. I also feel that our embassies and high commissions overseas should be more involved in helping us to trade, and we ought to engage business persons with the right acumen and experience at these missions.

I referred to this point when I spoke recently in your Lordships’ House on diplomacy. I visited Russia earlier this year where I spoke at a conference on Islamic finance in Kazan, the capital of the Russian Republic of Tatarstan. That may not appear to be an obvious destination for investment or Islamic finance, but it is important to look at all destinations where there are opportunities for successful trade and building new relationships. This year I also visited Turkey, Qatar, Kuwait, Brussels and the United Arab Emirates, where I spoke at international conferences on boosting trade and achieving sustainable development. We should also look at opportunities for future trade and active dialogue with developing nations in central Asia and the southern Caucasus that are making great strides to reach their potential. Azerbaijan was one of the first newly independent Soviet nations to recognise the importance of building new relationships with the West and swiftly welcomed foreign investment after gaining independence. Azerbaijan is a member state of the Council of Europe and is an active member of NATO's Partnership for Peace programme.

I know the Azeri ambassador to Britain and would strongly welcome any plans by Her Majesty's Government to strengthen our diplomatic relations with relevant counterparts in the wider Caucasus. The United Kingdom is the largest investor in Azerbaijan, and more than 175 UK companies are involved in commercial activities in the country. There are already more than 5,000 expatriates working in the country, and it hosts one of BP's biggest facilities in the world. However, more can be done by us in business and commercial activities.

The Caspian region is reported to contain one of the largest reserves of petroleum in the world. Efforts to promote the economic potential of the Caspian basin will lead to greater prosperity for the communities that inhabit the area. I welcome the agreement on security co-operation between the Caspian littoral states. This agreement commits the nations to general co-operation in fighting terrorism, organised crime, poaching and closer dialogue in rescue operations. The Government of Turkmenistan have initiated efforts to create a trans-Caspian gas pipeline between Azerbaijan and Turkmenistan, which has the fifth largest gas reserves in the world but has a fractious relationship with its neighbours.

The Governments of Azerbaijan and Kazakhstan are also forging closer ties in these areas. Azerbaijan has cemented its strategic importance to the war on terror by opening its territory for NATO military equipment transfers to Afghanistan. The tensions between Azerbaijan and Armenia over the disputed territory of Nagorno-Karabakh threaten to jeopardise the safe transport of strategic mineral resources to western Europe. A lasting resolution to this dispute is in the best interests of Britain and our European allies. I hope that the Minister will be able to share any plans that Her Majesty's Government have, along with our European partners, to encourage dialogue between these two nations in reaching a peaceful settlement. There is potential for future conflict involving Turkmenistan, Tajikistan, Kazakhstan and Uzbekistan, as these countries are all fighting for the same distribution of limited water resources. We in the United Kingdom should use our good offices through the EU, the United Nations Security Council and our diplomatic offices in resolving any difficulties relating to water. Its vast mineral wealth has made this region vulnerable to local and international terrorism.

My Lords, I am sure that we are all grateful to the noble Viscount, Lord Waverley, for initiating this debate. In fact, I have been much impressed by the way in which over the years he has concentrated on this area and on the need for us in the United Kingdom to devote more time and energy to being involved in this way in the various different countries that he mentioned. There is a lot to be done; it is a complicated area for western powers. The remote history of the Great Game has no connection with modern-day events for the United Kingdom, which, despite rumours, is still an enthusiastic European country as well. That enlarges to the notion that the European Union as a collective body, and in its individual member states, should take a much greater interest in this area for good and the promotion of peace. For example, using the external action service in these zones would be a very good idea. It takes time to create those new structures, but a lot can be done.

I have to declare an interest. With all-party groups you have to be very careful; if your attention strays or you doze off—I am not criticising anyone who speaks—you are liable to wake up and hear that you have been made treasurer and vice-chairman. I am a vice-chairman of one of the clusters—or at least a sub-segment—of groups of the noble Viscount, Lord Waverley, which I think is connected with Kyrgyzstan. I was appointed on the dubious proposition that I went there on an official IPU visit a couple of years ago led by Wayne David, who is now the opposition Europe spokesman in the House of Commons. That is why I am instantly dubbed an expert on Kyrgyzstan. Sadly I am not, but I had the pleasure of going to that fascinating country, which until only recently was a closed Soviet province. It has a lot of potential to offer, but it has a disgruntled youth who feel that the democratic weaknesses there are depriving them of the ability to be fully involved in civic and political life. The economic opportunities are scarce indeed, and that is a particularly serious problem in that country. My visit to Kyrgyzstan, which I think the noble Viscount, Lord Waverley, also knows—at least, to some extent—took place before the recent very unpleasant political unrest. One only wishes the Kyrgyzstan population well in the future.

I am sure that Azerbaijan will be mentioned by the noble Lord, Lord Laird, later in this debate, as he is an expert. He is basking in the glory of the recent launch of his book, not on that subject but on his background in Northern Ireland. I am half way through the book, so I thank the noble Lord.

I have a couple of points to make in this brief debate which I hope the Minister will have time to answer. Indeed, I shall deliberately emphasise one thing that he might find congenial because he mentions it frequently himself: that is, the Commonwealth. The subject of this debate is not an area immediately close to the Commonwealth, except for India, but there may be reasons for the Commonwealth as a body to take more interest in it, although it does not have the resources that other bodies have. NATO is gradually increasing its interest in the area, although it is really beyond it in terms of theatre. However, as we know, Kyrgyzstan has both a United States and a Russian military base—an interesting example of duality that is not repeated in many other places, but we will see how that develops.

As the noble Viscount, Lord Waverley, said, this is a cluster of very interesting countries with 80 million people. Although the near East crisis of Israel and Palestine and the failure to achieve a settlement and create a Palestinian state is a long way, geographically speaking, from these countries, it is amazing how people in these Muslim states watch closely to see what will happen with the attempt to achieve a solution there. Mahmoud Abbas has already exceeded his democratically elected mandate by a year and a half, which is something that the British press does not seem to mention very much. The groups that are accused of being violent—Hezbollah and Hamas—somehow have to be involved in these matters as well, and there is still a huge question mark over the future of Gaza. Unless those things happen, Muslim countries will feel very uneasy and believe that the political settlement in those wider areas is fundamentally unjust. That situation must be dealt with by the western powers, led by the United States, rather than just offering 20 Stealth bombers to the first-third country. That is an amazing offer from an American President, unless the press got it wrong. I have never heard of such a proposition. I hope that the United States will think again about these matters and return to realistic negotiations, including on the West Bank.

I conclude by asking the Minister to refer to the animadversion of the noble Viscount, Lord Waverley, to energy co-operation and the key pipelines. I hope very much that British companies will be more involved there in the future, as I do not think that we are involved enough. If the Minister has time, perhaps he could refer to the gradualist process of democratisation in a number of these countries. It would be interesting to hear how the UK Government regard these matters, although we would not wish to enter into indelicate criticism of countries that are emerging from difficult circumstances and are feeling their way forward.

I led a delegation on a visit to Turkey a couple of weeks ago. It is a very impressive country and is extremely interested in this whole area, as is India, which I also visited recently. Turkey is very interested in the development of all the “stans” and in the future of Afghanistan. It was very concerned to say to the West, “Don’t wag your finger or give us lectures. Just give us help and advice. We are developing ourselves. India particularly is a spectacularly successful democracy, despite the poverty. We will find our own solutions but we would welcome co-operation in the international field and far greater hands-on involvement from the United Nations”.

I, too, congratulate the noble Viscount, Lord Waverley, on getting this debate. It is an area in which he has taken a lot of interest, and we all appreciate that. I also thank the noble Lord, Lord Dykes, for his very kind reference to my book. It would be totally inappropriate to mention it here. It happens to be called A Struggle to be Heard, so I will not mention it here.

I declare my interest as chairman of the advisory board of the European Azerbaijan Society and a member of the All-Party Group on Azerbaijan. I have been to Azerbaijan a number of times and find it a fascinating and interesting country that compels people like me to take an interest in it. The United Kingdom has been a dominant player in the country since the fall of the Soviet Union and, as other noble Lords have pointed out, there is a lot of United Kingdom investment in Azerbaijan. The UK is already responsible for more than half the direct foreign investment.

However, I am interested in the Baku pipeline, which needs to be built if the West is to benefit fully from the vast oil and gas reserves in the Caspian area. Azerbaijan is important not just for energy security. I find that one of the good qualities that these areas have, particularly the young ones, is well educated, articulate, thoughtful people who are determined to make their voice heard in the modern world. I am of the opinion that we should always be on the lookout for ways to allow thinking from one of the great crossroads of the world—Baku and Azerbaijan—to be made available to us in the old West. We can add it to our thinking and perhaps solve some of the problems of today.

Azerbaijan is a strong partner of NATO and has sent troops to Iraq and Afghanistan. It also allows material for NATO’s ISAF to reach Afghanistan by road and permits overflights. However, as other noble Lords have pointed out, one of the big problems that besets that country is the occupation of Nagorno-Karabakh and seven surrounding regions. This is the cause of much instability throughout the area. As a result of this dispute, Armenia missed out on the existing BTC pipeline and will miss out on the proposed Nabucco pipeline, which could also bypass Armenian territory. We have seen in Georgia what happens when a territorial dispute goes unresolved for too long; there can be full-scale conflict.

I join other noble Lords in asking Her Majesty’s Government to ensure that there is as much British investment in the country as possible, not just in energy but in financial services and civil engineering. I also ask Her Majesty’s Government to help to find a resolution of the Nagorno-Karabakh dispute and, most importantly, to join the United Nations, NATO, the European Parliament and the European Commission in unequivocally supporting Azerbaijan’s right to reassert control over its sovereign territory. I look into the future and hope that there will be a not-too-distant day when we can welcome Azerbaijan into the European Union.

My Lords, I, too, thank the noble Viscount, Lord Waverley, for initiating this debate and express my appreciation to the Minister for his stamina in tackling so many world problems in one day. I, too, am a vice-chair and one of the members of the All-Party Group on Central Asia, which takes responsibility for human rights, good governance and the rule of law. Next week, I shall go to Tajikistan in that capacity for meetings with parliamentarians and civil society on a visit organised by the British embassy and the OSCE.

I shall concentrate on good governance and the rule of law in the central Asian countries. I have been involved with some of the countries of central Asia since 1993, when I made the first of my many visits to Kazakhstan. That visit related to legal and prison reform—I declare an interest as a trustee of the International Centre for Prison Studies. The visit was the beginning of a long and productive relationship.

In deciding one’s priorities in central Asia, it is always helpful to remind oneself of the origins of its countries. On a hill outside Astana, the capital of Kazakhstan, is a huge monument put up by the Kazakh Government that has engraved on it all the names of the labour camps that under the Soviet regime were located in Kazakhstan. Millions of people lived and died in them. The monument is a reminder of a not-very-distant past. It is important to remember, first, how recent the transformation of central Asia into independent states has been and, secondly, some of their enormous achievements.

The transformation of the gulag system in Kazakhstan into a prison system more consonant with human rights standards was a huge undertaking that required enormous dedication and commitment. At the same time, the public health system there broke down and prison authorities had to battle with an epidemic of tuberculosis, some of which was multi-drug resistant and deadly. Considerable law reform was undertaken, moving the country towards a system that humanised the penal code. It was an impressive achievement by some very impressive people. I also visited Kyrgyzstan in 1993, on the second anniversary of the country’s independence, as part of a Council of Europe delegation to discuss legal and penal reform. Much progress was made there, too.

We should also remember that the death penalty is either abolished or subject to a moratorium in all five central Asian states. I declare my interest as the chair of the All-Party Group for the Abolition of the Death Penalty. There is a wide range of civil society organisations in Kazakhstan. I declare one further interest as a member of the advisory board of the Legal Policy Research Centre in Kazakhstan. Both Kazakhstan and Kyrgyzstan have signed the optional protocol to the convention against torture. These are all substantial developments towards the rule of law. When we consider the current situation in the central Asian states today, it is perhaps helpful to do so against the background of developments in the recent past. Those developments make it clear, first, that the capacity exists among the people of those nations and, secondly, that ideas of human rights and the rule of law are widespread in the region.

However, it is undeniable that progress towards democracy and the rule of law has stalled. There is no need for a lengthy exposition of those problems as the Minister will be well aware of them. For those who, like me, have found so much to admire over the years, it is a great disappointment. It was disheartening to read reports earlier this month that prisoners in Kazakhstan are once again inflicting terrible mutilations on themselves to protest against their conditions and treatment, and to hear of the way in which the very moderate and responsible human rights worker, Yevgeny Zhovtis, has been treated. As other noble Lords have said, the developments in Kyrgyzstan have been tragic and a cause of great concern.

Yesterday, there ended in Astana a meeting of the parallel OSCE civil society conference, held prior to the summit. I have a draft of the declaration from that conference from which I shall quote briefly. It states:

“We recognize the unique role of the OSCE in Central Asia, as the only multi-lateral regional intergovernmental body in this region with a mandate to protect human security and promote respect for human rights and fundamental freedoms, democracy and the rule of law. In light of this unique role, the alarming situation with respect to human rights in the region, and the fact that the 2010 Astana Summit is the first one to be held on Central Asian soil, special attention is merited for this region. A number of severe, alarming and persistent problems in human rights observance are relevant for many countries in the OSCE space but must be noted for the Central Asian region as a whole … severe human rights violations, including violations of rights of persons belonging to national minorities, have in many cases contributed to or been at the core of conflicts and instability”.

We should respond to those civil society voices.

I therefore ask the Minister what strategy the Government have in mind to confront those problems. Does he accept the view that while there is no democracy and no rule of law, stability will always be at risk, so perseverance and a long-term strategy are necessary? I ask him, in particular, how he sees the European Union’s central Asia strategy and whether he regards it as a useful way forward. If he does, what support are the Government giving to it? How does he view the role of the OSCE and its human dimension arm—the Office for Democratic Institutions and Human Rights? Is its work effective and do the Government plan to make supporting it a priority? Finally, what other policies do the Government have in mind that might be effective in supporting the central Asian countries in moving forward on human rights and the rule of law?

My Lords, I, too, thank the noble Viscount, Lord Waverley, for initiating this debate today. Like the noble Lord, Lord Dykes, I commend him for the considerable time and energy that he has devoted to establishing a parliamentary group in support of the United Kingdom’s relationship with the central Asian states and the role that he has played and continues to play in furthering our relationship with the south Caucasus in our political and trading dialogue. I declare an interest as a member of the All-Party Group on Central Asia and as chairman of the British-Azerbaijan interaction group.

As has been clear from our exchanges this afternoon, this enormous region is now taking its own place on the world stage in foreign policy, economic influence and internal change. It borders Russia, the Middle East and Afghanistan, and it lives alongside Pakistan. Newly discovered mineral wealth, together with a strong sense of national identity, characterises the way in which many of these states are developing and increasing democracy. There is a conscious effort, as the noble Baroness, Lady Stern, demonstrated, to engage in human and civil rights and a powerful and growing sense of its ability as a centre for entrepreneurship.

A good example is Kazakhstan’s chairmanship of the OSCE, which has been well organised and is very effective, particularly in how it responded to the crisis in Kyrgyzstan in April. Kazakhstan has worked hard to increase the OSCE’s focus on the central Asian states and the south Caucasus, working closely not only with OSCE envoys but with the UN and the EU. In the run-up to the OSCE summit tomorrow and Thursday, Kazakhstan has facilitated an NGO forum on 26 November and a civil society parallel conference on 28 and 29 November. Those are both welcome initiatives, which demonstrate Kazakhstan’s willingness to engage with civil society in the way that has been demonstrated already.

The economies of the region vary enormously. Kazakhstan’s huge potential in the development of its oil and gas means that it is expected to be one of the top 10 oil producers by 2025, with exports of more than 3 million barrels a day. In addition, a quarter of the world’s uranium, as well as large reserves of gold, silver, zinc and copper, is thought to be in Kazakhstan. Moreover, it is the ninth largest country in the world and has vast potential in its arable and other forms of farming. Uzbekistan, too, has established national resources in its gas, oil, gold and silver, as well as being the world's third largest exporter of cotton. Turkmenistan is similarly rich in its long-term energy potential, with the world's fifth largest resources of natural gas. The development of the EU-led Nabucco pipeline project will lessen Turkmenistan’s reliance on Russia.

That is in stark contrast to the fate of Kyrgyzstan and Tajikistan, which are both among the poorest of the former Soviet states. Most Tajikistan manufacturing plants from the Soviet era were abandoned and have simply not been replaced by any forms of new production. In Kyrgyzstan, despite the backing of the western donors and the International Monetary Fund, the economy remains weak.

I stress those economic differences for an obvious reason. It is clear that international trade and investment will follow the natural resources: the oil and gas, uranium or gold and silver. However, in concentrating so much on the economic factors, it is very important to engage with the smaller economies of Tajikistan and Kyrgyzstan, to help to diversify their economic base and grow their future, without which there is real potential for instability and security problems, which might affect their near neighbour, and indeed the rest of the region eventually.

What level of engagement do the United Kingdom Government propose to sustain on trade and investment dialogues not only with the mineral-rich countries of central Asia but with the less well-placed economies of Kyrgyzstan and Tajikistan? Meanwhile, I strongly support the noble Viscount in his initiative to engage at parliamentary level with all the central Asian states. I visited Turkmenistan last year as part of the initiative, and was hugely impressed by the level of interest and engagement from Ministers, parliamentarians and civil society. They were enthusiastic about setting up parliamentary dialogue, and the noble Viscount has rightly ensured that the smaller economies of central Asia are included as important partners in establishing that dialogue.

Human rights are an important factor in all this, as my noble friend Lady Stern pointed out. When most of us think about the issues of the south Caucasus, Nagorno-Karabakh, which many of your Lordships have already mentioned, comes to the fore. Will those issues be discussed at the forthcoming OSCE meeting? I understand that the Deputy Prime Minister will attend that meeting. Do the Government believe that the Minsk group is still the best vehicle to facilitate the long-standing intraregional conflict? The UK is not a member of the Minsk group, but we have a strong relationship, particularly with Azerbaijan, including through our increased trade. It has increased by a staggering 72 per cent over the past year alone. Along with our EU colleagues, we have long thought that any solution to Nagorno-Karabakh should be based on the sovereignty of Azerbaijan, with real autonomy for the people of the Nagorno-Karabakh. Does that remain the Government's view? Also, has there been any direct discussion on those issues with either Azerbaijan or the Armenian Government in recent months?

As the noble Viscount, Lord Waverley, said, engagement with all those countries is important. Can the Minister tell us whether the FCO's global opportunity fund will continue to support the development of the Azerbaijan Parliament, and what the likely fate of the early transition initiative will be in the coming months?

Human rights were mentioned by the noble Baroness, Lady Stern. Can the Minister address the situation that arose in Uzbekistan? It was a matter of some worry and, as he will know, it was featured as what is described as a country of concern in the annual report on human rights which the Foreign Office produces. In my visits, I have found, as the noble Baroness said, that there is a great deal of willingness to engage on those issues. The countries of central Asia and the south Caucasus are not afraid of embracing a real dialogue with us on those issues. That is an important point for us to pursue.

I am conscious that I have asked a great number of questions on a wide range of countries. I appreciate that the Minister may not be able to answer them all, but I hope that, if he is not, he may be able to do so in writing.

My Lords, this has been a fascinating debate, and we all owe a debt to the noble Viscount, Lord Waverley, for promoting it and for bringing to our attention—not merely in this debate but with the great vigour that he has shown in dealing with this region—the tremendous potential and importance of an area with which, I would say quite frankly, not many of us were too familiar a few years back. In fact, if I think back to my schoolboy days, I would have had difficulty when I opened the map in establishing exactly which part of the world we were dealing with. Now—and this is evidence of the new international landscape with which we are all dealing—power, wealth, interest and influence have all shifted. As a trading nation and as a nation that wishes to contribute to the stability and good governance of the planet, we are right now to concentrate very much on these nations.

We are looking at two sets here, as the noble Viscount, Lord Waverley, knows: five central Asian nations and three in the Caucasus, all with unique qualities and some with problems, but all with a degree of dynamism. In a sense, on the biggest in the south Caucasus, we are much the biggest investor in Azerbaijan. At £85 billion, Azerbaijan has the biggest GNP in the south Caucasus. The noble Lord, Lord Laird, and many others spoke about Azerbaijan’s potential and the links; indeed, the noble Baroness, Lady Symons, has just mentioned that potential. I had some close connection with UK-Azerbaijan relations before I joined the Government and am very familiar with the dynamism of that place and its determination to move on from the distant, sovietised past and establish an entirely new and very welcome role for itself in the comity of nations and the world economy.

I shall take some of the comments made quite quickly; I then want to come to my own overview of how we should proceed. My noble friend Lord Sheikh, who is immensely familiar with this area, kindly mentioned the central Asian and south Caucasus association which has been formed. I had the privilege of sharing its launching occasion. It was a very dynamic occasion and Asia House has done an extremely good job in promoting and taking a lead on it. My noble friend also mentioned in particular Nagorno-Karabakh, which one obviously feels enormously involved in by visiting it. One only has to visit Azerbaijan to understand the centrality of the issue and the difficulties with its neighbour. We are concerned that this conflict goes on and on. It is, of course, a source of regional instability and the longer that it remains unresolved, the greater the deprivation and loss of life on the line of contact and the more difficult a settlement could become.

In answer to the noble Baroness, Lady Symons, the British Government support the OSCE’s Minsk Group peace process, and we encourage Azerbaijan and Armenia to accelerate efforts to achieve a negotiated settlement based on the principles of refraining from the threat of using force, territorial integrity and the people’s right to self-determination. We do not underestimate that this will involve some difficult decisions and necessary compromises on both sides, but compromises there must be. I have visited some of the displaced persons in the outskirts of Baku. They feel that they have lost their land, and I realise the intensity of feeling on both sides about this very difficult issue.

I owe a debt of gratitude to the noble Lord, Lord Dykes, for his success in bringing the issue of the Commonwealth—dear to my heart—into a region where, frankly, the Commonwealth does not feature very visibly. He brought home the point that the Commonwealth is a network, as is the area we are looking at. We have to understand these countries not as top dogs and lower levels and so on. They are all countries which deserve a great deal of respect and to be part of the new network of the planet, of which the Commonwealth is certainly a part as well. He urged, as others have done, more involvement in the energy question, and I shall say a bit more about that in my final remarks.

I mentioned the noble Lord, Lord Laird, in relation to Azerbaijan. He also raised the question of the network of pipelines and the pipeline politics that are developing around the region, the most prominent physical feature of which at the moment is the Baku-Ceyhan oil line. There are many plans for further gas development and for getting gas out of the region, even possibly from Turkmenistan across the Caspian, although there are difficulties there. A great deal of the Turkmenistan gas may, in any case, go eastwards rather than westwards.

Then we came to the noble Baroness, Lady Stern, who is tireless in her work for human rights and against torture and other hideous practices. She asked particularly about the case of Evgeniy Zhovtis in Kazakhstan. We and our EU partners have raised this case with Kazakh authorities on a number of occasions. Our concerns centre on the reliability of the legal process. Those concerns are reinforced in a report by the International Commission of Jurists published in March, which concluded:

“There are strong indications that the proceedings against Evgeniy Zhovtis failed to meet international fair trial standards”.

Therefore, we continue to encourage the Kazakh authorities to address the systemic weaknesses in the judicial system which his case appears to highlight. The noble Baroness also raised broader questions of human rights to which I shall return in my closing remarks. However, she asked about the EU/central Asia strategy. We fully support the strategy, which provides an effective framework for relations between the regions. I shall come back to other concerns in a moment.

The noble Baroness, Lady Symons, rounded off the debate with her usual skill. She spoke about the human rights issue. That is central to our concerns and part of our strategy, to which I want to turn, but I shall just say a word about Uzbekistan, because that was raised specifically. We have a good, constructive and balanced relationship with Uzbekistan and there have been some good exchanges recently. The Permanent Under-Secretary of State at the Foreign and Commonwealth Office visited Tashkent earlier this month. We are concerned about the overall level of respect for human rights in Uzbekistan, but there have been some positive steps; for example, the abolition of the death penalty, which we are all working for; the introduction of habeas corpus; the release of Sanjar Umarov; and enhanced co-operation with the EU and OSCE on issues such as criminal justice reform and police training. However, a lot more needs to be done. The UK and the EU stand ready to assist Uzbekistan in this respect.

Perhaps I may now sum up the excellent contributions to this debate, initiated by the noble Viscount, Lord Waverley. I want to put my thoughts under three themes: first, prosperity and economy; secondly, security; and, thirdly—although perhaps one should put this first because in a way it is the most important—human rights and good governance. Supporting our own nation’s prosperity is obviously the central theme in our foreign policy. We have to survive, perform and prosper in a very difficult new world. As I mentioned, we are very well placed in Azerbaijan, where we are the largest investor, and in Kazakhstan, where we are among the top five investors. The big names—Shell, BP, BG Group and others—are all taking forward huge and very important projects. Another country which is increasingly important is Turkmenistan, which, as I have already mentioned, is developing fast. In all these, energy is the big focus. Gas out of the Caspian, in particular, could be the vital contribution to pan-European energy security and could perhaps provide a better balance with the sometimes rather erratic domination of Gazprom from Russia.

At the same time, the general world gas situation, as noble Lords know, is becoming easier with the rise of Shell Gas. All of that is good for us because in the next few years, until we get fully into the renewable and green economy, we will have to see a growth in gas consumption. As the noble Lord, Lord Laird, reminded us, it is not just energy—there are financial services, law and education and all kinds of other exports of skills that we can contribute to this region. The noble Baroness, Lady Symons, mentioned Tajikistan and Kyrgyzstan, which we also think offer important opportunities, and there are UK companies already operating there. We welcome the recent increase in commercial activity in the whole of this region. The Minister of Trade, my honourable friend David Lidington, took a trade delegation down to Baku recently, and we have established a Turkmenistan-UK trade council and the Uzbek-British Trade and Industry Council. I have tried personally to contribute to these activities with various speeches and meetings.

Of course, there are barriers; there are problems of corruption and an absence of transparency, as well as other difficulties, but we think that we can crack these difficulties, and we intend to keep trying. On the security side, there is Afghanistan, with its vast frontier with Tajikistan, which is very relevant to our concern with the Caucasus generally. We need to look for alternative supply routes to our forces, and the central Asians in particular can help underpin the long-term security of the region. I have not got time to mention narcotics considerations, but they are also central to the area. I should add that my honourable friend the Minister of State and my right honourable friend the Deputy Prime Minister are at this moment at the OSCE conference; they are obviously in a position to take up and pursue all the issues, including the Minsk process issue that we have discussed. That is very good and positive.

I end on what is, in a sense, the most important area of governance and human rights. We need to underpin this whole engagement with central Asia and the Caucasus with substantive political dialogue, and we intend to work closely with the region to support development of its democratic institutions in all aspects. We have serious concerns, as does the noble Baroness, Lady Stern, but it is not just a question of lecturing. That will not work. We need to share experience and work together and, when necessary, to remind our friends in this dynamic new area of their growing international commitments. That benefits all of us and helps the long-term stability of the whole area.

The thread linking our policy is common interest and mutual gain. We stand ready to support central Asia and the south Caucasus and the countries of that region, which have been through many difficulties but have acted with heroism, to help them to meet the challenges ahead.

Sitting suspended 5.28 pm.