Central Asia and South Caucasus

Lord Sheikh Excerpts

Tuesday 30th November 2010 Grand Committee

[Lord Sheikh]

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.