The Steppe #16: Trade Winds and a Nuclear Option
Montfort Eurasia's newsletter covering Central Asia and the Caucasus
Hello, and welcome back to The Steppe, your newsletter bringing you the latest business- and investor-relevant happenings in the South Caucasus and Central Asia, brought to you by Montfort Eurasia. In this edition, we look at these key developments:
Central Asia’s Great Wall of Trade
Mongolia Logs in
Kazakhstan Goes Nuclear
Armenia’s Winds of Trade Change
Turkmenistan’s Trade Tease
Please don’t hesitate to contact us for feedback and tips at eurasia@montfort.london
The Trade Battle for Central Asia: Is the U.S. Even in the Fight?
As the Trump Administration escalates its trade wars with China, imposing steep tariffs to restrain Beijing’s power, Central Asian countries’ trade patterns face changes. While China has already cemented itself as the region’s dominant economic player - overshadowing Russia - U.S. tariffs and changing global supply chains could introduce new geopolitical and economic alignments. For Central Asian countries, balancing reliance on Chinese investments with newly emerging U.S. opportunities, the path forward remains uncertain - doubly so given Trump’s sudden decision to enact a 90-day pause and his administration’s approach of ‘flooding the zone’, all serving to undermine the reputation of the US as a reliable trading partner.
In 2024, China’s economic influence on Central Asian nations became further entrenched, hitting a trade turnover of $94.8 billion - a 5% increase from the previous year. Beijing’s exports, accounting for more than two-thirds of total trade, are ubiquitous in the region, while Central Asian nations supply China with oil, gas, rare earths, and minerals - further integrating their economic relationship.
The Belt and Road Initiative further reinforces this interconnection, with $1 trillion in investment reached since its inception in 2013 - most of it in energy and transport projects. At the same time, the U.S. tariffs will reshape global supply chains in unpredictable ways, and Central Asian states will have to adapt to navigate these shifts.
"Will U.S. tariffs impact this balance of power in trade? In many respects, no—China is already the leading player in the region,” noted a source in trade finance. “Central Asia holds strategic importance for China, and Beijing is naturally increasing its focus there." It remains to be seen how China will respond to the trade tariffs, including redirecting experts through Central Asia as a way to bypass U.S. markets. But the U.S. could make other moves.
One potential shift could come through U.S.-Europe cooperation on the Central Asia Transport Corridor Network (CTCN). “This would require substantial investment in infrastructure - in ports, customs systems, and roads. Over the next 20 years, this could be a way for the U.S. to counterbalance China’s economic dominance,” the source said. That’s something that could potentially bring Central Asia closer to Western markets.
Despite Washington’s push, Beijing’s economic dominance in the region seems unshakeable––at least for the foreseeable future. The U.S. still isn’t a major trade partner in the region, and it faces an uphill battle in turning this trend around, as China’s economic integration, energy investments, and infrastructure projects have made it an indispensable partner for the nations of the region. Still, the trade war’s ripple effects have yet to become clear, as the nations of the region navigate supply chain transitions and changing costs.
From Copper to Clicks: Mongolia’s Digital Trade Week
Mongolia’s Digital Trade Week kicked off on March 24, marking the start of a five-day event in Ulaanbaatar showcasing the country’s growing digital trade landscape. Co-organized by the nation’s Ministry of Foreign Affairs, the event brought together policymakers, business leaders, and civil society to talk digital trade policies, sustainable development, and hands-on training.
As an expansive, landlocked nation heavily dependent on mining - primarily copper, coal, iron ore, and gold - Mongolia sees e-commerce as a way to future-proof its economy in the face of new geographical challenges.
One example is the Women Exporters in the Digital Economy (WEIDE) Fund, launched in February 2024 by the WTO Secretariat and the International Trade Centre (ITC). Just this month, on March 7, Mongolia was selected as one of four pilot beneficiary countries, along with the Dominican Republic, Jordan, and Nigeria. The program aims to empower women entrepreneurs by providing them the resources needed to expand their businesses through international trade and digitalization.
Mongolia has already made noticeable strides in e-commerce in recent years. Mobile broadband subscriptions in the country rose from 80 to 142 per 100 people between 2017 and 2022, according to the International Telecommunication Union and the World Bank. Meanwhile, the percentage of Mongolians aged 15 and older who shop online grew from 7% in 2017 to 42% in 2021—the highest growth rate among landlocked developing countries and one of the most significant globally.
This reflects a broader trend of government backed digitisation initiatives across Central Asian countries, with considerable investments already made to spur tech sector growth Kazakhstan, Uzbekistan, and Kyrgyzstan. Kazakhstan remains the most advanced digital economy in the region, with over 50% of all transactions digital as of 2023 and an e-commerce penetration rate of 16.6%.
Kazakhstan Gives Green Light for Nuclear
Kazakhstan is charging ahead with its first nuclear power plant in a bold move for a nation historically dependent on its own vast reserves of fossil fuels. While nuclear energy has been on the country’s agenda since the 1990s it is deeply controversial due to the country being used as a historic testing site during the Soviet Union with wide ranging consequences for the health of local residents and the environment.
However, the project is now gaining momentum with government approval and the public’s seal of approval––a landslide 71% yes vote in an October 2024 referendum sealed the deal. To make this high-stakes shift, Kazakhstan created the Agency for Atomic Energy, a presidentially overseen body tasked with regulating and pushing the sector forward.
In February, the Zhambyl district in Almaty got the nod as the site for the power plant’s construction. Four international companies—CNNC (China), KHNP (South Korea), Rosatom (Russia), and EDF (France)—have been shortlisted as potential technology suppliers. The Ministry of Energy estimates that the plant will take approximately eight years to complete, aiming at an operational launch in the early 2030s.
Kazakhstan might not yet have nuclear power capacity, but it’s been playing a crucial role in the global nuclear industry for some time––it has been the world’s leading uranium producer since 2009. In 2022 alone, the country accounted for 43% of global uranium production. With 12% of the world’s uranium resources, Kazakhstan has the raw materials and the expertise to become a key player in nuclear energy.
Aiming for 2 GW by 2050 under Strategy 2050, the nation’s roadmap towards a sustainable and efficient economy through green energy, the move is aimed at locking in energy security and becoming the region’s newest nuclear player.
With much of the uranium used in power plants across the West sourced from Kazakhstan, it remains to be seen how a shift towards domestic consumption might influence global supply chains and dependencies.
Armenia’s Shifting Trade Ties
For the past few years, Armenia’s economy has been charting churning waters, navigating changing trade patterns, shaped by recent geopolitical upheavals. But new trade data from January 2025 paints a clear picture: key characteristics of that era may be changing.
In particular, Armenia’s re-export boom driven by Russia’s sanctions evasion seems to be fading. Armenia’s trade numbers, artificially inflated by gold and other re-exports, are showing signs of slowing down.
But the broader transformation of Armenia’s trade landscape is far from over. Instead, we’re seeing a new phase where Armenia will develop deeper dependencies on China, closer relations with the EU, and the long-term implications of a reduced Russian trade presence. The question remains: can Armenia transition from being a trade intermediary to a more self-sustaining economy with diversified partnerships?
Trade with Russia—the foundation of Armenia’s external commerce—has dropped dramatically, falling by 53.8% compared to the same period last year. This is a striking reversal for a country that had seen booming trade with Moscow following the imposition of Western sanctions on Russia in 2022. At the same time, Armenia’s trade with the United Arab Emirates (UAE), which had skyrocketed due to gold and diamond re-exports to Russia, has collapsed by 59%.
The sharp downturns point to a broader shift––the re-export boom that fuelled Armenia’s unprecedented trade expansion in recent years is slowing down. With stricter enforcement of sanctions on Russian trade and Armenia’s own economic recalibrations, the country seems to be entering a new phase—one where it has to rely more on direct trade and industrial production rather than being a middleman for Moscow’s sanctioned goods.
Even as trade with Russia and the UAE declines, Armenia is diversifying its economic partners. China is now Armenia’s second-largest trade partner, surpassing the UAE. While overall trade volume with Beijing remained stable, its structure changed: Armenian exports to China plummeted by nearly 60%, while Chinese imports into Armenia grew by 54%. This signals the nation’s growing dependence on Chinese goods—a trend that mirrors broader regional shifts as Beijing strengthens its economic footprint across Eurasia.
Meanwhile, trade with the European Union (EU) is on the rise. Although the absolute numbers are still relatively small, the EU’s share of Armenia’s total foreign trade nearly doubled from 6.1% to 11.2% in one year. Imports and exports with the EU grew, suggesting that Armenia is increasingly looking westward to balance its trade dependencies.
Turkmenistan to U.S.: Let’s Talk Business (For Real This Time?)
Turkmenistan is intensifying its diplomatic and economic engagement with the United States, using business cooperation and multilateral diplomacy to strengthen bilateral ties. Recent high-level engagements are proof: a Washington meeting between the Turkmen Ambassador and U.S. giants like Boeing, ExxonMobil, and John Deere, alongside the upcoming Third UN Conference on Landlocked Developing Countries in Ashgabat, shows Turkmenistan’s ambitions to raise its global profile and attract investment.
At the Washington talks, both parties explored expanding their economic ties, with American companies eyeing energy, agriculture, and security partnerships. Turkmenistan signalled a greater openness to foreign business, aiming to diversify beyond its traditional reliance on China and Russia. U.S. trade with Turkmenistan hit $400 million in 2023 - potentially a burgeoning relationship. Yet, doubts persist: will these discussions yield concrete investments, or will they remain symbolic given Turkmenistan’s historically restrictive business environment?
Diplomatically, Turkmenistan is using multilateral platforms to reinforce its neutrality and international relevance. The upcoming UN Conference in Ashgabat, which will include U.S. participation, serves as an opportunity for Turkmenistan to raise its profile globally. A reported letter from U.S. President Donald Trump praised Turkmenistan’s “ongoing reforms” and reaffirmed U.S. support for its sovereignty. While potentially just a diplomatic gesture, it could reflect Washington’s interest in countering Russian and Chinese influence in Central Asia (a topic explored in the leading story of this newsletter.)
Stat of the Month
$14.8 billion: The amount of remittances received by Uzbekistan in 2024 alone. As millions depart Central Asia in search of better opportunities, migration continues to rewire the economies and societies of the region. A new World Bank report zeroes in on labour migration and its economic impact on the region, particularly in Uzbekistan, Kazakhstan, Kyrgyzstan, and Tajikistan.
Russia remains the primary destination for Central Asian migrants, with over 80% of Tajik and Kyrgyz migrants heading there in 2023. Uzbek migration is more diversified, with 57% in Russia, 15% in Kazakhstan, and 10% in Ukraine.
Migration is crucial to many Central Asian economies. In 2024, remittances accounted for: 45% of Tajikistan’s GDP, 24% of Kyrgyzstan’s GDP, and 14% of Uzbekistan’s GDP.
For many households, these remittances are the only thing standing in the way of poverty. Without them, the poverty rate among Kyrgyz families with migrants would skyrocket from 10% to 50%, and in Uzbekistan, from 9.6% to 16.8%.
What We’re Reading
Kazakh Volunteers' 'Yurts Of Invincibility' Leave A Legacy Of Helping Ukraine's War Victims, RFE/RL