[Senate Hearing 118-49]
[From the U.S. Government Publishing Office]
S. Hrg. 118-49
GEOPOLITICAL COMPETITION
AND ENERGY SECURITY
IN CENTRAL ASIA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON NEAR EAST,
SOUTH ASIA, CENTRAL ASIA,
AND COUNTERTERRORISM
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MARCH 8, 2023
__________
Printed for the use of the Committee on Foreign Relations
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
52-836 PDF WASHINGTON : 2023
-----------------------------------------------------------------------------------
COMMITTEE ON FOREIGN RELATIONS
ROBERT MENENDEZ, New Jersey, Chairman
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware MITT ROMNEY, Utah
CHRISTOPHER MURPHY, Connecticut PETE RICKETTS, Nebraska
TIM KAINE, Virginia RAND PAUL, Kentucky
JEFF MERKLEY, Oregon TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland BILL HAGERTY, Tennessee
TAMMY DUCKWORTH, Illinois TIM SCOTT, South Carolina
Damian Murphy, Staff Director
Christopher M. Socha, Republican Staff Director
John Dutton, Chief Clerk
SUBCOMMITTEE ON NEAR EAST, SOUTH ASIA,
CENTRAL ASIA, AND COUNTERTERRORISM
CHRISTOPHER MURPHY, Connecticut, Chairman
BENJAMIN L. CARDIN, Maryland TODD YOUNG, Indiana
JEANNE SHAHEEN, New Hampshire MITT ROMNEY, Utah
TIM KAINE, Virginia TED CRUZ, Texas
CORY A. BOOKER, New Jersey MARCO RUBIO, Florida
(ii)
C O N T E N T S
----------
Page
Murphy, Hon. Christopher, U.S. Senator From Connecticut.......... 1
Young, Hon. Todd, U.S. Senator From Indiana...................... 3
Lu, Hon. Donald, Assistant Secretary of State for South and
Central Asian Affairs, U.S. Department of State, Washington, DC 4
Prepared Statement........................................... 6
Pyatt, Hon. Geoffrey, Assistant Secretary of State for Energy
Resources, U.S. Department of State, Washington, DC............ 7
Prepared Statement........................................... 9
Additional Material Submitted for the Record
Responses of Mr. Donald Lu to Questions Submitted by Senator
Jeanne Shaheen................................................. 24
Responses of Mr. Geoffrey Pyatt to Questions Submitted by Senator
Jeanne Shaheen................................................. 24
Responses of Mr. Geoffrey Pyatt to Questions Submitted by Senator
Cory Booker.................................................... 25
(iii)
GEOPOLITICAL COMPETITION AND
ENERGY SECURITY IN CENTRAL ASIA
----------
WEDNESDAY, MARCH 8, 2023
U.S. Senate,
Subcommittee on Near East, South Asia,
Central Asia, and Counterterrorism,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:20 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Christopher
Murphy, chairman of the subcommittee presiding.
Present: Senators Murphy [presiding], Kaine, and Young.
OPENING STATEMENT OF HON. CHRISTOPHER MURPHY,
U.S. SENATOR FROM CONNECTICUT
Senator Murphy. I am going to call this meeting of the
Subcommittee on the Near East, South Asia, Central Asia, and
Counterterrorism to order. Someday we will find a way to rename
this subcommittee that--something shorter.
Senator Young. Have you thought about the acronym?
Senator Murphy. Yes, I have not yet. I have not worked it
out.
For now we are Near East, South Asia, Central Asia, and
Counterterrorism and we welcome both the Honorable Donald Lu
and the Honorable Geoffrey Pyatt to testify before us today.
Senator Young and I will make some brief opening comments
and then we will turn to both of you for your opening
statements and then questions from the members.
We are convening this subcommittee today to discuss Central
Asia, and when we talk about Central Asia we are talking about
Kazakhstan, Uzbekistan, Tajikistan, Turkmenistan, Kyrgyz
Republic.
This hearing comes at a really opportune time a week after
Secretary Blinken traveled to the region for the first time and
a year after Russia's full-scale invasion of Ukraine has,
frankly, shifted the geopolitical landscape in Central Asia.
Russia's invasion of Ukraine has accelerated geopolitical
competition that was already underway in the region as Central
Asian states seek to balance their dependence on any one
regional power.
Preoccupied in Ukraine, Russia is struggling to preserve
its traditional influence--some might say dominance--in the
region or parts of the region.
It has redeployed many of the troops that were stationed in
the region to Ukraine and Central Asian governments appear to
be rethinking Russia's ability to serve as a dependable
security provider and mediator on regional security and
economic issues.
Meanwhile, China, like it is everywhere, is ramping up its
already active engagement in Central Asia seeking to build on
its really big economic investments in the region and expand
its influence into the diplomatic and security spheres.
This is the same story we hear everywhere around the world,
but maybe more acute in neighboring Central Asia. Turkey,
India, Iran, and the EU are also exploring new openings and
offering Central Asian states opportunities for greater
connectivity to the outside world.
Now, the United States has been a friend and a partner to
Central Asian states for the last 30 years. When the Soviet
Union collapsed in 1991, we were the first nation to recognize,
for instance, Kazakhstan's independence, and our support for
the independent sovereignty and territorial integrity of
Central Asian countries, it has been a cornerstone of U.S.
policy ever since.
Russia's brutal war of aggression in Ukraine reminds us
that the words, these principles of sovereignty and
independence, they have real meaning, especially for a region
long dominated by Moscow.
Frankly, the invasion has reminded these Central Asian
countries that relying on Vladimir Putin to guarantee your
independence is a really, really bad bet.
The United States is also, frankly, rethinking whether the
ways we have dealt with these nations needs to change. I would
argue that it does.
For the last 20 years our engagement in Central Asia was
focused, arguably, primarily on ensuring supply routes for U.S.
military operations in Afghanistan.
However, it is past time to recognize that our efforts and
our interests in Central Asia are broader and that one of the
benefits of our withdrawal from Afghanistan is that now our
policy in Central Asia does not need to be dominated by
protecting our presence inside the Afghan civil war.
This is a part of the world that does have incredible
untapped potential and that is one of the things we want to
focus on today. The people of Central Asia, they want a
connection with the American people.
Central Asia, as we know, is rich in critical resources
like hydrocarbons and rare earth minerals. There are investment
opportunities, connections between U.S. businesses and Central
Asian businesses, and we also want to work closely with Central
Asian states to maximize the impact of our sanctions against
Russia and provide alternatives to Russian-made military
equipment.
However--this is the final thing I will say--our policies
in Central Asia do need to be realistic and our eagerness to
build new ties should not unnecessarily tie us to despotic
regimes there.
This is a region whose countries are ranked among the least
free and least democratic in the world, and let us be honest,
we have had little success in a lot of our engagement there on
human rights issues.
This is a region where Russia and China are still deeply
invested and engaged and where we saw time after time the
limits of our influence during the war in Afghanistan.
I am so encouraged by the Biden administration's focus on
the C5+1 diplomatic platform. I am eager to learn more about
that today, but also how we can really set a digestible series
of objectives for our engagement in the region.
I look forward to hearing more about the Administration's
vision for a right-sized U.S. role in the region in the post-
Afghanistan war post-Ukraine invasion world.
I look forward to hearing how Secretary Blinken's visit to
the region last week helped advance these objectives, including
a firsthand account from Assistant Secretary Lu, who was on the
Secretary's trip.
Finally, I look forward to our witnesses' views on the
steps the United States Congress can take to improve our
relations with Central Asian states.
Senator Young.
STATEMENT OF HON. TODD YOUNG,
U.S. SENATOR FROM INDIANA
Senator Young. Thank you, Mr. Chairman, for holding this
hearing. I want to welcome Assistant Secretary Lu, Assistant
Secretary Pyatt, to the subcommittee.
As we have said in other subcommittee hearings, this topic
is critical for us to examine because we know that great power
competition is not confined to one particular geographic
region.
Similarly, America's role in an often under-resourced
region of the world has never been more important. Building on
Secretary Blinken's recent visit and in light of the ongoing
tragic conflict in Ukraine, I am glad we are holding this
hearing to examine our relationship with Central Asian
countries and to identify where opportunities and challenges
exist.
As we look at geopolitical competition in Central Asia we
must do so with the people in mind. The future in Central Asia
must be one where human rights are valued, where economic
activity is flourishing, the private sector is engaged, and the
people are determining their own future for themselves.
Neither Russia nor China can help deliver this future for
these societies. As evidenced by the continuing crisis in
Ukraine, Russia does not care about human lives nor does it
value a country's sovereignty.
The tragedy in Ukraine must be a wakeup call to those in
the region who still see relations with Russia as something to
be pursued.
In China we have witnessed horrific policies in Xinjiang
targeting ethnic minorities who also call these countries home
and yet many are still content to trade with China and deepen
ties via the Belt and Road Initiative.
These countries must realize the nature of who they are
working with and realize that partnering with the United States
and others presents a much better opportunity.
Of course, we must take actions to become that partner of
choice. The chairman mentioned adjustments to Jackson-Vanik. I
am open to discussing this and other ideas further.
With Russia occupied by the war in Ukraine, now is a
historic opportunity for Central Asian countries to chart for
themselves a new course in their history, one that secures
their sovereignty and economic stability for their people and
avoids dependence on a larger coercive neighbor in either
Moscow or Beijing.
I believe we are at a crossroads in our relationship with
the region and we must seize this opportunity to be the partner
of choice. I am pleased we are here to discuss such an
important issue.
Mr. Chairman, I thank you so much.
Senator Murphy. Thank you, Senator Young. Looking forward
to your questions.
I will introduce both of our witnesses and then ask
Secretary Lu to begin, followed by Secretary Pyatt.
It is our pleasure to introduce the Honorable Donald Lu,
Assistant Secretary of State for South and Central Asian
Affairs. Assistant Secretary Lu previously served as U.S.
Ambassador to Kyrgyzstan and Albania, held other important
positions in India, Azerbaijan.
Secretary Pyatt, well known to this committee, is the
Assistant Secretary of State for Energy Resources. Assistant
Secretary Pyatt previously served as U.S. Ambassador to both
Greece and Ukraine, holding other important positions in India
and Vienna.
First to you, Secretary Lu, then to you, Secretary Pyatt.
Look forward to your testimony today.
STATEMENT OF THE HONORABLE DONALD LU, ASSISTANT SECRETARY OF
STATE FOR SOUTH AND CENTRAL ASIAN AFFAIRS, U.S. DEPARTMENT OF
STATE, WASHINGTON, DC
Mr. Lu. Thank you.
Mr. Chairman, Mr. Ranking Member, colleagues, as was
mentioned, I just returned on Friday from Central Asia with the
Secretary. It was his first visit to the region as Secretary of
State and I am pleased to report each of the countries is eager
for more U.S. engagement.
We saw real and substantial opportunity there. What I would
propose to do is say a few words about Central Asia and
Ukraine.
Then I will talk about the economies of the region and how
Russia's war in Ukraine is affecting the lives of everyday
people. Finally, I want to say a few words about human rights.
The governments of Central Asia have been under intense
pressure to support Putin's invasion of Ukraine. They have been
pressured to send troops from Central Asia to fight and they
have refused.
They have been pressured to recognize Russia's purported
annexation of parts of Ukraine and they have refused. They have
been pressured to publicly endorse Putin's claims that Ukraine
is merely a part of Russia. Not only have they refused, several
have loudly and clearly said that they support Ukraine's
sovereignty, independence, and territorial integrity.
Now, it is true that Central Asian countries have abstained
on U.N. resolutions condemning the Russian invasion, but I
would argue that even that is a courageous act as they have
been under enormous pressure to vote against these resolutions.
People in Central Asia have historically had strong ties to
both Russia and Ukraine. Many of them studied in Ukraine, did
business there, or have friends and family living in Ukraine.
People in Central Asia have responded with compassion to
the suffering of Ukrainians. They have sent tons of
humanitarian supplies--blankets, clothing, food, medicine.
When Russia destroyed some of Ukraine's electrical grid,
Central Asia sent generators. Private citizens in Kazakhstan
raised money to send yurts to Ukraine where regular people who
suddenly found themselves without electricity and without heat
could come out of the cold, get a hot cup of tea, charge their
cell phones. They call these the yurts of invincibility.
Secretary Blinken told his Central Asian counterparts that
the United States sees the hardship in Central Asia caused by
Putin's war of aggression and we want to help. We see the
rising food and fuel prices. We see the rising unemployment
levels. We see difficulties in importing and exporting goods to
and from the region. We see large numbers of migrants coming
from Russia to escape conscription.
Last year, the Congress generously provided $41.5 million
in new assistance to help Central Asia meet these challenges.
Of that amount, $16.5 million is being used to promote food
security. The remaining $25 million is being used to retrain
workers to reduce unemployment, to pilot new trade routes that
do not go through Russia or China, and to help private sector
businesses to succeed and to grow.
Last week, Secretary Blinken announced that we would be
working with the Congress to secure an additional $20 million
to support these programs. He also announced $5 million to
support regional connectivity through economic and energy
programs.
We want to show that we are a reliable partner that
acknowledges the hardships caused by Russia's war of
aggression.
Mr. Chairman, I have had the opportunity to work and live
in Central Asia on and off for the past 20 years. Most of us
expected to see progress on human rights proceeding at a
snail's pace.
I am happy to report that we have seen some important
strides just in the past year. In Uzbekistan, the International
Labor Organization has recognized the end to systemic state-
sponsored forced labor and child labor in the cotton harvests.
The Government of Uzbekistan achieved this through
implementing a series of presidential decrees that prohibited
the use of force and child labor in the cotton production and
abolished cotton quotas at the national and local levels.
In Kazakhstan the courts convicted three policemen in
January for torturing detainees after video footage emerged
showing beatings and other physical abuse.
In February, the courts convicted five more policemen
charged with torturing detainees with a hot iron. These are
small numbers and steps remain to hold security services fully
accountable, but these convictions reflect a presidential
priority to end torture and physical abuse in places of
detention.
This is a goal that we fully support. There is a lot more
that needs to be done in Central Asia to prevent human rights
abuses, to promote freedom of religion and labor rights, and to
secure a free press.
Seeing these steps over the past year makes me optimistic
that with the help of partners, Central Asian countries can
make important progress in the short term in improving respect
for human rights.
Let me end where I began. The countries of Central Asia are
under tremendous pressure from Moscow. They do not want to be
caught up in Putin's war. They want to live in freedom and
decide their future for themselves.
We can support these aims through well-crafted foreign
assistance programs with support for human rights, and, most
importantly, with our sincere engagement.
Thank you.
[The prepared statement of Mr. Lu follows:]
Prepared Statement of Mr. Donald Lu
Mr. Chairman, Mr. Ranking Member, colleagues, I just returned on
Friday from Central Asia traveling with Secretary Blinken. This was his
first visit to the region as Secretary. I am pleased to report that
each of the countries is eager for more U.S. engagement. We saw real
and substantial opportunity there.
I propose saying a few words about Central Asia and Ukraine. Then
I'll talk about the economies of the region and how Russia's war in
Ukraine is affecting the lives of everyday people. Finally, I want to
say a few words about human rights.
central asia and ukraine
The governments of Central Asia have been under intense pressure to
support Putin's invasion of Ukraine. They have been pressured to send
troops from Central Asia to fight. They refused. They have been
pressured to recognize Russia's purported annexation of parts of
Ukraine. They refused. They have been pressured to publicly endorse
Putin's claims that Ukraine is merely a part of Russia. They have not
only refused, but several have loudly and clearly said they support
Ukraine's sovereignty, independence, and territorial integrity.
It is true that Central Asian countries have abstained on UN
resolutions condemning Russia's invasion, but even that is a courageous
act as they have been under enormous pressure to vote against these
resolutions. People in Central Asia have historically had strong ties
to both Russia and Ukraine. Many studied in Ukraine, did business
there, or have friends and family living in Ukraine.
People in Central Asia have responded with compassion to the
suffering of Ukrainians. They sent tons of humanitarian supplies--
blankets, clothing, and medicine. When Russia destroyed some of
Ukraine's electrical grid, Central Asians sent generators. Private
citizens in Kazakhstan raised money to send yurts to Ukraine, where
regular people who suddenly found themselves without electricity and
heating could come to get out of the cold, have a hot cup of tea, and
charge their cellphones. They called them Yurts of Invincibility.
the economies of central asia
Secretary Blinken told his Central Asian counterparts that the
United States sees the hardship in Central Asia caused by Putin's war
of aggression, and we want to help. We see rising food and fuel prices.
We see rising unemployment. We see difficulties in importing and
exporting goods to and from the region. And we see large numbers of
migrants coming from Russia to escape conscription.
Last year, the Congress generously provided $41.5 million in new
assistance to help Central Asia meet these challenges. Of this amount,
$16.5 million is being used to promote food security. The remaining $25
million is being used to retrain workers to reduce unemployment, to
pilot new trade routes that do not go through Russia, and to help
private sector businesses to succeed and to grow.
Last week, Secretary Blinken announced that we would be working
with Congress on securing an additional $20 million to support these
programs. He also announced $5 million to support regional connectivity
through economic and energy programs. We want to show that we are a
reliable partner that acknowledges the hardships caused by Russia's war
of aggression.
human rights
Mr. Chairman, I have had the opportunity to work and live in
Central Asia on and off for the past 20 years. Most of us expect to see
progress on human rights proceeding at a snail's pace. I am happy to
report that we have seen some important strides over the past year.
In Uzbekistan, the International Labor Organization has recognized
the end to systemic state-sponsored forced labor and child labor in the
cotton harvest. The Government of Uzbekistan achieved this through
implementing a series of presidential decrees that prohibited the use
of forced and child labor in cotton production and abolished cotton
quotas at the national and local levels.
In Kazakhstan, the courts convicted three policemen in January for
torturing detainees after video footage emerged showing beatings and
other physical abuse. In February, the courts convicted five more
policemen charged with torturing detainees with a hot iron. These are
small numbers, and steps remain to hold security services fully
accountable, but these convictions reflect a presidential priority to
end torture and physical abuse in places of detention--a goal we fully
support.
There is a lot more that needs to be done in Central Asia to
prevent human rights abuses, promote freedom of religion and labor
rights, and secure a free press. Seeing these steps over the past year
makes me optimistic that with the help of their partners, Central Asian
countries can make important progress in the short-term in improving
respect for human rights.
closing
Let me end where I began. The countries of Central Asia are under
tremendous pressure from Moscow. They do not want to be caught up in
Putin's war. They want to live in freedom and decide their future for
themselves.
We can support these aims with well-crafted foreign assistance
programs, with support for human rights, and most importantly, with our
sincere engagement.
Senator Murphy. Thank you.
Secretary Pyatt.
STATEMENT OF THE HONORABLE GEOFFREY PYATT, ASSISTANT SECRETARY
OF STATE FOR ENERGY RESOURCES, U.S. DEPARTMENT OF STATE,
WASHINGTON, DC
Mr. Pyatt. Chairman Murphy, Ranking Member Young, members
of the subcommittee, thank you for the opportunity to appear
today to discuss the Administration's efforts to strengthen
energy security and accelerate energy transition in Central
Asia.
Over the past year, Vladimir Putin's brutal invasion of
Ukraine and weaponization of energy have disrupted global
markets in ways that will ripple for years to come, including
in Central Asia.
For most of the world Russia will never again be viewed as
a reliable energy supplier, but facing setbacks in Ukraine,
Putin has sought to reassert influence over the countries that
Russia traditionally considered within its sphere.
Although Central Asia has some of the world's largest
fossil fuel deposits and notable renewable energy potential,
the region is also landlocked and vulnerable with access to
global markets presenting logistical and geopolitical
challenges.
My colleagues in the State Department's Bureau of Energy
Resources and I seek to strengthen Central Asia's energy
security, provide a strategic counterweight to malign actors,
and support Central Asian countries in achieving their climate
goals.
Reflecting today's energy security challenges and the
Administration's focus on energy security transition and
access, ENR has increased its foreign assistance budget
requests within the Department's overall request to $30.5
million in FY23.
We appreciate Congress' past and continued support for our
work to ensure the United States is the preferred partner for
Central Asian countries in energy security and transition.
Since my first week as Assistant Secretary I have
prioritized ENR engagement with Kazakhstan, reflecting that
country's potential on a broad range of bureau priorities,
including energy security, renewables, methane abatement,
nuclear, and critical minerals.
At a time when global energy markets are tight, every
barrel counts. Kazakhstan exports 1 percent of total global
crude oil production, most of which is handled by two American
energy companies.
Eighty percent of its exports leave through the Caspian
Pipeline Consortium, which terminates in the Russian port of
Novorossiysk. Through the revitalized U.S.-Kazakhstan strategic
energy dialogue, ENR, along with the Department of Energy and
other State Department stakeholders, is supporting the
Government of Kazakhstan to strengthen its energy security by
accelerating transition and diversifying export routes.
In February, with U.S. encouragement the state-owned energy
companies of Kazakhstan and Azerbaijan finalized a commercial
agreement to ship an additional 1.5 million tons of oil per
year via the Caspian and Azerbaijan to global customers,
covering about 2 percent of Kazakh net exports.
By focusing further on regional connectivity and export
routes across the Caspian, Central Asian countries will have
options that enable them to stand firm in the face of malign
influence.
In addition to Russia, China plays an important role in
Central Asia's energy sector and is the dominant recipient of
Central Asia's exported gas. In 2021, the PRC imported 26
percent of its natural gas from Central Asia, mainly
Turkmenistan.
The United States encourages Turkmenistan to consider
options for diversifying its natural gas exports, including to
Europe. That will hinge, however, on the Turkmenistan
Government making their market more attractive to Western
energy companies.
Aging fossil fuel infrastructure and poor leakage controls
lead to high methane emissions from oil and gas production in
Kazakhstan and Turkmenistan.
Turkmenistan, for instance, is the world's fourth largest
emitter from oil and gas, methane. Just yesterday, I joined
former Secretary Kerry urging the Kazakh energy minister to
join the Global Methane Pledge through which participants
commit to contribute to a collective effort to reduce global
methane emissions by at least 30 percent from 2020 levels by
2030. Of course, the most effective way to increase energy
security is for all the Central Asian countries to accelerate
their clean energy transitions.
Central Asia has abundant wind and solar potential.
Tajikistan and Kyrgyzstan use hydroelectricity for significant
portions of their power generation, but as climate change
shrinks the mountain glaciers supplying hydroelectric dams,
that zero carbon power source dwindles, harming energy security
and exacerbating regional conflicts over water access and
management.
In Istanbul last October I met with the deputy energy
ministers of Tajikistan, the Kyrgyz Republic, and Uzbekistan,
all of whom emphasize the need to preserve and develop the
region's renewable energy resources.
A pacing factor in the energy transition will be the
availability of critical energy minerals. As the world
transitions to a clean energy economy, global demand for these
critical minerals is set to skyrocket by 400 to 600 percent.
Central Asia has sizeable critical minerals and rare earth
element resource potential and the State Department is
expanding our work in this area.
Kazakhstan, meanwhile, produces 45 percent of the global
uranium supply and is looking to deepen cooperation with the
United States, including on technologies like small and modular
reactors.
When Central Asia gained independence from the Soviet Union
31 years ago, the United States was among the region's first
partners and first sources of foreign direct investment in the
oil and gas sectors.
As we face today's pressing challenges, Central Asia has
the potential to be a valuable partner in our work on the
geopolitics of energy, and ENR is eager to develop this
opportunity.
Thank you again for the committee's support in this effort
and I look forward to addressing your questions.
[The prepared statement of Mr. Pyatt follows:]
Prepared Statement of Mr. Geoffrey Pyatt
Chairman Murphy, Ranking Member Young, and members of the
subcommittee, thank you for the opportunity to discuss the
Administration's efforts to strengthen energy security in Central Asia.
During the past year, the consequences of Putin's war against
Ukraine have echoed around the world, including in Central Asia.
Putin's weaponization of energy has disrupted global markets in ways
that will ripple for years to come, and I have seen the effects
everywhere I travel. These effects include rising energy and commodity
prices, surging demand for non-Russian gas, and an increased
determination to accelerate the transition to clean energy sources. For
most of the world, it is clear Russia never again will be viewed as a
reliable supplier of energy. In the face of widespread condemnation on
the global stage, Russia has sought to reassert its influence on the
countries it traditionally considered within its sphere.
Although Central Asia has some of the world's largest fossil fuel
deposits and notable potential to increase renewable energy and clean
technology, the region also is landlocked and vulnerable--with access
to global markets through Russia to the north, Iran to the south, and
the PRC to the east--presenting both logistical and geopolitical
challenges. To support a secure, clean, and resilient energy future, my
team in the State Department's Bureau of Energy Resources (ENR) seeks
to strengthen Central Asia's energy security, provide a strategic
counterweight to malign actors in the region, and support Central Asian
countries in achieving their climate goals and protecting their
sovereignty and territorial integrity.
Given today's energy security challenges and the Administration's
focus on energy security, transition, and access--including
increasingly in Central Asia--ENR steadily has increased its foreign
assistance budget requests within the Department's overall request to
$30.5 million in FY 2023. We appreciate Congress's past and continued
support for our work to ensure the United States is the preferred
partner for Central Asian countries in both energy security and energy
transition.
At a time when global energy markets are tight thanks to Putin's
weaponization of oil and gas, every barrel counts. Kazakhstan exports
over 1 percent of total global crude oil production, most of which is
handled by American energy companies. Eighty percent of its exports
leave through the Caspian Pipeline Consortium (CPC), which terminates
in the Russian Black Sea port of Novorossiysk. Through the newly
revitalized U.S.-Kazakhstan Strategic Energy Dialogue, ENR, in
conjunction with the Department of Energy and other stakeholders at the
State Department, is engaging with the Government of Kazakhstan to
strengthen its energy security by diversifying export routes and
reducing dependence on Russia. As part of this work, we aim to address
infrastructure needs in the ``Middle Corridor'' trade route across the
Caspian and through Azerbaijan into Europe to better allow countries to
export goods--including energy products and critical mineral
commodities such as uranium--to global markets.
In conjunction with the Bureau of South and Central Asian Affairs
and the Partnership for Global Infrastructure and Investment in the
Department of State, ENR has also worked with the Government of
Kazakhstan to pursue diversification of exit routes for crude oil. In
February, KazMunayGaz and SOCAR, the respective state-owned energy
companies from Kazakhstan and Azerbaijan, implemented a commercial
agreement to ship 1.5 million tons of oil per year via the Caspian and
Azerbaijan to global markets on the Mediterranean. By focusing on
stronger regional connectivity among the states of Central Asia, and by
seeking to expand export routes across the Caspian, Central Asian
countries will have options that enable them to stand firm in the face
of malign influence.
The Central Asian countries that produce fossil fuels rely on the
PRC as a critical export market. Turkmenistan and Kazakhstan are two of
the top 10 natural gas exporters to the PRC, shipping gas via
pipelines. Nearly all of Turkmenistan's natural gas exports are
destined for the PRC, providing the Turkmen treasury with the great
majority of its revenue. In 2022, the PRC imported 67 percent of its
pipeline gas from Central Asia--approximately 34 billion cubic meters
(bcm) from Turkmenistan with an additional four bcm from Kazakhstan and
four bcm from Uzbekistan. As domestic demand increases in Uzbekistan,
and Kazakhstan seeks to transition its coal-based electricity
generation to run on natural gas and renewables, the countries' exports
to Beijing likely will decrease, increasing PRC demand for
Turkmenistan-origin gas and deepening ties between Beijing and
Ashgabat. The United States continues to discuss with Turkmenistan
options for bringing Turkmenistan gas to Europe, perhaps via the
Southern Gas Corridor, but that will hinge on decisions by the
Turkmenistan Government to make their market more attractive to western
international oil companies.
Greater energy integration is one way to bolster energy security in
Central Asia. Natural gas transmission within the region is limited by
infrastructure gaps and historically low levels of trade and
connectivity. Furthermore, aging infrastructure and export cuts during
periods of high domestic demand--particularly during the heating
season--contribute to rolling blackouts, hampering economic activity
and putting population safety at risk. In 2022, a major technical fault
in the regional power grid caused a blackout throughout large parts of
Uzbekistan, Kazakhstan, and Kyrgyzstan as the entire Central Asian grid
system collapsed. A week of near-freezing temperatures this past
January caused widespread power outages in Uzbekistan, disrupting
transportation, heating, natural gas distribution, and water supplies.
These infrastructure failures are not only an issue for human welfare,
but also of energy security: as part of an effort to address limited
supplies of natural gas, Uzbekistan and Kazakhstan both signed new
cooperation agreements with Gazprom, as Moscow seeks new markets for
its natural gas to replace Europe and as Central Asian countries face
growing domestic natural gas demand.
Aging fossil fuel extraction infrastructure in the region and poor
emissions control lead to disproportionately high methane emissions
from oil and gas production in Kazakhstan and Turkmenistan--resulting
in significant wasted energy resources and major climate impacts. Based
on data from the International Energy Agency and the World Bank, more
than 400 billion cubic feet of natural gas (or about 12 billion cubic
meters) is wasted every year from the region due to vented, leaked, and
flared methane. This wasted volume is equivalent to Romania's entire
annual gas demand. As a greenhouse gas, methane is over 86 times as
potent as carbon dioxide in the near term, making Central Asian methane
emissions a substantial contributor to climate change. Turkmenistan is
the fourth-largest emitter of methane from the oil and gas sector
worldwide, while Kazakhstan's sector is the 12th largest. The State
Department and ENR, alongside other agencies, such as USTDA, EXIM, and
DFC, have a strong interest in supporting investment in methane
mitigation. We have engaged all the region's governments in signing up
to the Global Methane Pledge, through which participants commit to
contribute to a collective effort to reduce global methane emissions by
at least 30 percent from 2020 levels by 2030.
Of course, the most effective way to increase the energy security
of all five Central Asian countries is through the clean energy
transition. Shifting from fossil fuels to clean technologies would also
contribute substantially to climate action goals and reduce air
pollution, though this would require greater electric power integration
among the countries.
Worldwide, a pacing factor in the energy transition will be the
availability of critical energy minerals. As the world transitions to a
clean energy economy, global demand for these critical minerals is set
to skyrocket by 400-600 percent over the next several decades. For
minerals such as lithium and graphite used in electric vehicle
batteries, demand will increase by even more--as much as 4,000 percent.
Building stable, secure, and resilient supply chains for the minerals
critical to our clean energy transition is important to our engagement
with Central Asia. Central Asia has sizable critical mineral and rare
earth element resource potential. The region has produced commodities
such as bauxite, chromite, copper, iron ore, manganese, titanium,
uranium, and zinc, but the actual extent of the region's mineral
resource potential--in terms of diversity and quantity--is still to be
fully determined. The use of modern exploration technologies and
investment will be essential to unlocking the complex geology
associated with these resources. With sound governance and experienced
private sector partners, Central Asia could become an important
contributor to advancing the global clean energy transition. At the
State Department, ENR inaugurated the Minerals Security Partnership
(MSP) to facilitate diversification and securing of critical minerals
supply chains. The MSP, which includes 12 countries and the European
Commission, aims to facilitate investment in mining opportunities using
the highest environmental, social, and governance standards. As the
partnership evolves, I expect the MSP will also look at projects in
Central Asia that can diversify global critical minerals supply chains
in ways that strive to meet our stated goals of high environmental,
social, and governance standards.
Our emphasis on secure and stable supply chains also has
applications for nuclear fuel supply chains. Kazakhstan produces 45
percent of global uranium supply and seeks to increase its exports to
global markets. As we engage with allies and partners on reducing
Russia's role in the oil and gas sectors, the Department also is
working to build safe, diverse, and reliable supply chains for nuclear
fuel and other critical supplies and services. Soviet-built reactors in
the European Union, for instance, leave Moscow playing an outsized role
in the nuclear sector. G7 nations have resolved to reduce their
reliance on Russian nuclear energy and to help other countries seeking
to do the same.
Central Asia also has abundant solar and wind energy potential.
Each country varies in its readiness and willingness to act on
renewable energy expansion, which would also require greater
electricity grid integration. Uzbekistan has shown notable ambition in
tackling the climate crisis, with plans to reduce greenhouse gas
emissions per unit of GDP by 35 percent of 2010 levels by 2030 and to
increase the share of renewable energy sources to 25 percent of total
power generation. Kazakhstan's National Green Growth Plan envisions the
significant drawdown of coal as an energy source by 2030 and an
increase to 50 percent renewable energy by 2050. Tajikistan and
Kyrgyzstan both use hydroelectricity for power generation, providing 90
and 53 percent of total power generation, respectively. As climate
change shrinks the mountain glaciers supplying their hydroelectric
power plants, that zero-carbon power source dwindles, diminishing
energy security and exacerbating regional conflicts over water access
and management. In my October travel to Istanbul, I met with the deputy
energy ministers from Tajikistan, the Kyrgyz Republic, and Uzbekistan,
and they emphasized the need to preserve and develop the region's
renewable resources. Our foreign assistance, including USAID's Power
Central Asia project, advances the clean energy transition and
decreases energy sector methane emissions throughout Central Asia.
When Central Asia gained independence from the Soviet Union 31
years ago, the United States was among the first partners and sources
of foreign direct investment, notably in the oil and natural gas
sector. As we face today's pressing geopolitical challenges, including
issues of energy supply security and the needs of the clean energy
transition, Central Asia has the potential to be an effective and
valuable partner in our work on the geopolitics of energy. Thank you. I
look forward to addressing your questions.
Senator Murphy. Thank you both for your testimony. We will
begin questioning. We have got members of the subcommittee that
are tuning in from offices and we may be joined later by other
members in-person.
Let me direct my first question to you, Secretary Lu. When
you testified before the House Foreign Affairs Committee in
September, you stated the Administration's support for the
repeal of the 1974 Jackson-Vanik Amendment as it applies
towards Kazakhstan, Uzbekistan, and Tajikistan.
This strikes me as a really smart idea and a pretty easy
way for Congress and the Administration to stand together in
our support for deeper engagement with the region.
This is an amendment that is a pretty major irritant in our
bilateral relations. It comes up a lot when you talk to these
nations. It sort of suggests that we still view Central Asia
through a Soviet-era lens, but we have failed to repeal the
amendment as it applies to three of these countries even though
we have repealed the amendment as it applies to Russia, amongst
some of the others in the region.
Can you just explain the rationale for repealing Jackson-
Vanik as it applies to Kazakhstan, Uzbekistan, and Tajikistan?
Mr. Lu. Thank you, Mr. Chairman.
In Secretary Blinken's trip to Central Asia last week, this
was raised at each one of the meetings with his counterparts in
Central Asia. It is a real drain on the sense of trust between
our countries.
The Jackson-Vanik, as you know, was originally created to
put pressure on the Soviet Union to allow the emigration of
Soviet Jews from the Soviet Union to the United States and to
Israel.
It provides four criteria to judge countries on, looking at
their ability to let people emigrate--to leave the country.
Kazakhstan, Tajikistan, and Uzbekistan have fulfilled those
criteria for 25 years.
We completely agree with your statement that at a time when
we are trying to help them diversify away from Russia that this
would be a strong signal that we are interested in deepening
our economic engagement.
Senator Murphy. Great, and I was glad to hear Senator
Young's interest in this issue and I look forward to working
with him and others.
This strikes me something we could do on a bipartisan basis
to support the Administration's efforts.
Secretary Pyatt, I want to--sort of pulling the
conversation out of the weeds, the problem you described in
Turkmenistan seems to be a problem without a current solution
from the United States.
This is a country rich in natural resources. They are
selling predominantly to China today and we are not getting the
benefit of those resources because, as you identified, internal
conditions--aging infrastructure, a set of rules that investors
cannot count on.
The problem is there is not a lot of reason for
Turkmenistan to change because they have got a very willing
partner who is willing to pay them what they see as a fair
price, a partner, in fact, who has invested in sort of keeping
that country a backwater, a country that does not support the
rule of law.
To me, public shaming or small-scale incentives do not seem
to be the answer here. I have never understood why--this is my
editorial--why we do not spend more hard dollars on energy
security, why we spend $700 billion on the military and next to
nothing on actually helping to connect countries in Central
Asia to Europe and to the United States, for instance, because
if we have learned anything in our fight in Ukraine alongside
the Ukrainians is that you cannot have territorial integrity
without energy security and that Russia is using Europe's lack
of energy security in particular, but also our lack of energy
security as a means to undercut the territorial integrity of
both Ukraine and Europe.
How do you--take Turkmenistan, take other countries in the
region where we want to have a more robust energy relationship.
We want to help them connect to Europe, but it is corruption,
old infrastructure, that stands in the way. Do we have the set
of tools right now to help change that reality or do we need to
think about a new suite of tools?
Mr. Pyatt. Thank you, Senator, and let me start my answer
by noting that I spent yesterday and Monday in Houston at what
is arguably the world's biggest energy conference, meeting with
ministers and corporate leaders from around the world, and it
was really striking to me in that setting how the consensus has
now emerged on the point I made in my opening statement that
Russia is off the table.
This is an enormously important development. The world has
seen that Russia will not be a reliable energy supplier.
Vladimir Putin talks a lot about finding new markets in Asia
for the gas which is no longer going to Europe, but it is
notable that Gazprom was resorting to coercion with Uzbekistan
and Kazakhstan just last month, trying to force them to sign up
to new gas import agreements because he does not have a lot of
good options.
A very large volume, perhaps on the order of 140 BCM of
Russian gas, is going to be shut in, which means that for the
next few years the world is going to need all the gas that it
can find elsewhere.
That is particularly the case for our European allies. I
had good discussions with my EU counterpart on exactly this
issue, and one of the places that Europe is looking to is the
Caspian region and Central Asia.
The Azeris have made commitments with President von der
Leyen for a significant increase there, but there are also
options and the most important one is the one you alluded to,
Chairman, on Turkmenistan.
There is infrastructure that would have to be built in
order to make that diversification of Turkmen gas feasible, but
there are also American companies and European firms that are
interested in this.
I have committed to our engagement in ENR. I know Assistant
Secretary Lu has been working on the same issues. We very much
look forward to Foreign Minister Meredov coming to Washington
before too long where we can continue that conversation.
I also will say I remember discussing exactly the same
issue with Foreign Minister Meredov 10 years ago when I was the
PDAS in Don's bureau, which tells you how embedded some of the
challenges are.
The other issue I would flag quickly in this regard is that
this is one of those areas where we are really trying to do two
things at the same time. We want to advance fossil energy
security in order to deal with the fallout of Russia's invasion
and Putin's weaponization of his oil and gas, but we also want
to accelerate energy transition, and I think one of the areas
where we have potential to do a great deal more in Central Asia
is helping those countries to build out their capacity for
wind, for solar. I am very excited about the interest I heard
yesterday from the Kazakh energy minister on small and modular
reactors.
USAID has a program in this area called Power Central Asia,
which is looking at the electricity interconnectors. My bureau,
ENR, has done work in the area of the regulatory structure for
grid interconnections.
I would love to see us doing more in this area. I know,
having talked to four of the region's energy ministers, that
there is appetite from the--for the United States to be more
involved.
This is where our toolkit like EXIM and DFC and the work
that Congress has done in this area is so important, but we
have to keep pushing because, as you noted, Chairman, China has
sought to expand in this space and, again, Turkmenistan is the
most dramatic example the way in which China has hardwired
Turkmen gas production into the PRC's energy supply.
Senator Murphy. Well, and why I think it is so important
that you have constructed a process that brings all of these
countries together is they also have some pretty powerful
rivers, right. They have got real hydropower capacity, but what
comes with that is potential conflict with those who are
downstream and so if you have a better, more functional forum
to talk together about renewables you can also make some
progress on hydropower.
Senator Young.
Senator Young. Thanks, Mr. Chairman. We will stay on the
topic of Turkmenistan for a moment.
Secretary Pyatt, you indicated that the country is plagued
by internal corruption which inhibits them fully realizing
their potential as it relates to oil and gas production and, by
extension, countries like the United States benefiting from
such production.
They are also plagued by decrepit and dated infrastructure.
Let us talk about a distinct potential vulnerability. I would
like your assessment of Turkmenistan's vulnerability to
economic coercion from China on account of their reliance, what
I would characterize based on all that I know about this topic
is, perhaps, an over reliance on China's market for their oil
and gas products.
Mr. Pyatt. Senator, I would characterize Turkmenistan as
vulnerable to malign influence from both Russia and China.
Turkmenistan was one of the poorest regions of the Soviet
Union and saw tremendous environmental degradation because of
the way that the Soviet Union approached the exploitation of
Turkmenistan's oil and gas resources.
I think in the case of China as well Turkmenistan by
definition has tied itself very closely to China through the
dependence on gas, which is the major source of the Turkmen
budget, 75 percent of which is going to China.
That, again, is why it would be quite healthy to have
American companies that are interested involved there and I
would just point right next door to Kazakhstan and the very
constructive role that ExxonMobil and Chevron have played in
helping to modernize the Kazakh energy system.
I would also emphasize that for those two American
companies, Kazakhstan is a very important part of their global
production chain and they are companies that have been there
for more than two decades now and are committed to further grow
that investment, bringing with them the package of values and
business practices that we adhere to as Americans.
Senator Young. In addition to some of the lines of effort
that Senator Murphy teased out of his conversation with you, I
would suggest that any instruments that we can provide our
Administration with to assist countries in dealing with these
coercive or malign economic activities on the part of China or
Russia in the future would be a positive thing and Senator
Coons and I have offered some legislation--it is been well
received so far--that would assist countries who are
experiencing economic coercion through short-term provision of
aid, reduction of tariffs and nontariff barriers and all manner
of other measures.
Other governments are in the process of passing their own
legislation to assist such countries that have been coerced--
Japan, for example--and the ultimate vision is to weave these
different lines of effort together. I think that will be a
subject of conversation at the G-7 in Hiroshima in May.
I want to ask you about a couple of other topics. Central
Asia, Mr. Pyatt, has, in addition to being a main source of oil
and gas for the global economy since the collapse of the Soviet
Union, we have seen an increased demand for critical minerals
and the region could have significant potential to be a
geopolitical hotspot for mineral production.
We know that China is actively increasing its economic
clout across the region, including in the mining sector,
through their Belt and Road Initiative.
Unfortunately, without some proactive efforts from the U.S.
working with our allies, China is going to continue to
strengthen their already strong position in the global critical
minerals supply chains and markets.
Secretary Pyatt, in your opinion, what role can Central
Asia play in the global supply of critical minerals and do you
believe the region is strategically important with respect to
great power competition over critical minerals?
Mr. Pyatt. Thank you for raising the question, Senator, and
I have spent the past few months going around the world with a
chart that shows the level of Chinese domination across all the
key elements of the clean tech supply chain from hydrogen
electrolyzers to solar cells to battery minerals.
We need to focus on this issue systematically. The Biden
administration is doing so domestically through the IRA, but we
are also working on these issues internationally.
Central America is a potentially significant partner. Right
now you have got Tajikistan and Kyrgyzstan where China
dominates those countries' mining sectors. I was discussing
this issue just yesterday with the Kazakh energy minister and
noting our strong interest in continuing to develop our
critical minerals, both extraction and processing relationship,
with Kazakhstan.
I am very pleased to report that there is a new agreement
between USGS and the Kazakh Government to establish a Kazakh
geographic survey and to perform the baseline that is necessary
to answer your question because most of the mineral maps of
Central Asia date back to the Soviet Union, so it is a matter
of developing new baselines of what the possibility is.
Then, lastly, I would just like to circle back quickly on
the issue I mentioned in my statement of uranium, which is so
important to our collective commitment as the G-7 to decoupling
from Russian energy supplies and the fact that the United
States, like many other countries, still has a level of
dependency on Russia for our nuclear fuel supplies, and
Kazakhstan is a willing and eager partner with the United
States in that effort to diversify.
Senator Young. That strikes me as very encouraging, whether
it is uranium or other critical minerals that the Kazakh
Government has agreed to partner with our USGS on conducting
that survey.
Have we seen other governments in the region also cooperate
with USGS and strike similar agreements?
Mr. Pyatt. Senator, I do not know the answer to that
question. I suspect the answer is no because we--but I will
defer to my colleague in SCA whether, Don, you have got
anything on any other prospects.
From the United States side what I would flag, Senator, is
an initiative called the Mineral Security Partnership, a State
Department program, basically, to create an alternative to
China.
We have an agreement among MSP partners to set high ESGs
and to make clear to countries with resource endowments that
China is not the only option because that has been an
overwhelming tendency, for instance, in Africa.
We have made clear that as the MSP develops and we are
focused now on the initial project development in the MSP
framework with our other partners--13 other parties, 13
countries--that we are willing to expand this exercise out to
Central Asia as we find interest from the governments.
Senator Young. Thank you.
Senator Murphy. Senator Kaine.
Senator Kaine. Thank you to my colleagues and thank you to
the witnesses for your service.
Secretary Lu, I would like to begin with you, if I could.
Virginia is home to one of the largest Uyghur-American
communities, proudly so. China has monitored and harassed these
individuals on U.S. soil for their advocacy, but they have also
monitored and harassed their family members in China,
imprisoning some of them, and we are working on a number of
constituent cases because of this.
The domestic policy of China toward not only Uyghurs, but
Kazakhs and Kyrgyz minority groups in China who do endure
horrific atrocities and human rights abuses is important.
Talk to us about your engagement regarding the PRC's
atrocities against ethnic groups.
Mr. Lu. Senator, my last job before this one was ambassador
in the Kyrgyz Republic. I engaged every person I could in the
government about the situation in Xinjiang and was surprised to
find very little interest in the Kyrgyz Republic about the
genocide happening there.
As you have suggested, it is not only Uyghurs. There are
ethnic Kyrgyz people related to people in the majority in
Kyrgyzstan and they were not willing to raise their heads or to
call out what is happening there.
I think this goes back to Senator Young's views that
economic coercion really works in this part of the world, that
the Chinese have loaned so much money to some of these
governments they are unwilling to be seen as angering Beijing
even when it comes to emotive issues like the treatment of
fellow ethnic people very close by into China.
If I could add one other issue that I think gets very
little attention. In Kazakhstan, they also have not raised
publicly human rights abuses in Xinjiang, but they are
successfully helping ethnic Kazakhs to leave China.
They are doing this in cooperation with the Chinese
Government under the rubric of family reunification, but
thousands of ethnic Kazakhs have been able to leave Xinjiang to
find lives in Kazakhstan, have been fast tracked to
citizenship, and provided assistance and housing. I think that
is something we should celebrate.
Senator Kaine. I appreciate you mentioning that. I want to
ask now a question about security assistance.
The National Guard-State partnership program has been a big
success. I know many of my colleagues talk about the
partnerships they have. Virginia seems to have an unlikely
partnership, as far as I am concerned.
It has been a successful one with Tajikistan and there has
been direct military-to-military contacts, training in such
areas as infantry tactics and combat casualty care.
Tajik forces will travel to Virginia this summer to
celebrate the 20th year of this partnership agreement with the
Virginia National Guard.
I wonder about security cooperation in the region
generally. Has the shifting geopolitical landscape in the
aftermath of the Russian invasion of Ukraine opened up any more
opportunities for security partnership in the region?
Mr. Lu. Absolutely is the answer.
Let me first say our State partnerships are amazing in
Central Asia, a place that has historically been quite
sensitive to outside militaries operating. Our State
partnership programs are just so successful everywhere
throughout the region.
In terms of expanding security engagement, what we all know
is Russia has consumed a lot of defense equipment in Ukraine,
has gobbled up a lot of its munitions, and is going to find it
very difficult to resupply its own stockpiles, but certainly to
export to other countries will be very difficult for a long
time if it ever is able to restore its position as a defense
exporter.
This is critical for countries in Central Asia, all of
which rely on Russian hardware to defend their borders. Imagine
if you are one of the frontline states with Afghanistan.
Suddenly you are worried about getting spare parts for your
airplanes or bullets for your rifles. This has got them very
concerned, and so we are talking with them about where they
might source defense equipment from us, from European partners,
from South Korea, from Japan, from Israel.
Senator Kaine. Would they have reticence about
incorporating us deeper into these partnerships because of the
first point that you raised, which is the economic coercion
from China, create some challenges or just the fact that we
have already had these State partnership programs give us a
good toehold that we can potentially expand in this time when
Russia's influences may be a little bit on the decline?
Mr. Lu. I think China has the advantage in being a
replacement supplier because of costs.
Senator Kaine. Yes.
Mr. Lu. All the other countries I mentioned have an
advantage because of quality. Everyone has seen how the Russian
equipment has performed on the battlefield in Ukraine.
Frankly, the Chinese equipment is derived from Russian
technology and so everyone wonders whether that will work
either. There is a real interest in diversification and I think
this is a perfect opportunity for these countries because the
Russians know it will be very hard for these countries to be
supplied from Moscow.
Senator Kaine. Thank you. I have one more question, Mr.
Chair. Could I extend?
Again, for Secretary Lu, I have got a lot of constituents
in Virginia who have been raising questions about violence
against protesters in the Karakalpakstan region of Uzbekistan.
I would like you to share any conversations you had with the
Uzbek Government about the need for accountability, need for
due process for defendants standing trial, and other human
rights concerns.
Mr. Lu. Thank you, Senator.
The Secretary did raise the violent protests in
Karakalpakstan, the need for accountability, both on behalf of
those who may have committed violence as protesters, but also
on behalf of the security forces who may have committed
excesses. As we know, dozens of people were killed in that
violence.
What he was told is that there will be accountability. We
are seeing right now open trials for the protesters. We were
assured there would be open and transparent trials also for
police and other security forces, some of whom have already
been arrested for excesses committed in Karakalpakstan.
Senator Murphy. Thank you very much, Senator Kaine. We will
do a second round if members have questions and then get you
guys on your way.
Let me ask you, Secretary Lu, about Afghanistan. I framed
in my opening remarks how our policy towards the region is
transformed by our lack of a need to have access to Afghanistan
dominate that relationship, but the countries in the region are
not eager for us to isolate Afghanistan. Obviously, they are
right now focused on the question of maintaining their own
stability, ensuring their own security.
Uzbekistan and Tajikistan have seen missile strikes into
their sovereign territory, but those same countries are
recommending that the United States not write off Afghanistan,
that, in fact, they believe we have to have some functional
relationship with the Taliban government if we also want to
have a functional relationship with Central Asia because they
see their future, whether they like it or not, connected to the
future of Afghanistan, and if we send Afghanistan down the
river to perish that has consequences for Central Asia.
I know this is a very difficult question about how we--if
we reengage with the Taliban, but what is this--what do our
Central Asian friends tell us about what they would like to see
our policy towards Afghanistan be and how our Afghanistan
policy can help or hinder our relationship with Central Asia?
Mr. Lu. The Central Asians do not speak with one voice, as
you may know. Uzbekistan and Turkmenistan, both who share
borders with Afghanistan, are eager for more international
influence on the Taliban to try to stabilize the situation
there, to normalize it, to normalize borders and trade and
security.
Tajikistan has had a very different view. Tajikistan feels
incredibly threatened by the Taliban and they believe the
Taliban to have killed tens of thousands of ethnic Tajiks in
Afghanistan. They have quite a confrontational perspective on
this.
I think two of the governments on the border would like us
to be engaged with the Taliban. Actually, the Tajiks are
resistant to that. I think they want to see us helping them to
reinforce security along their border. That is where they see
the answer.
In response we are certainly talking to Central Asians
about what influence they have on the Taliban, how we can work
together on issues such as the rights of women and girls, how
we can work together to talk about the potential for pressuring
the Taliban to fulfill their commitments to not allow terrorist
groups from operating in their territory.
Both Tajikistan and Uzbekistan have had rocket attacks from
ISIS-K from northern Afghanistan. They are very aware of the
threat that is posed to their societies.
Senator Murphy. Finally, Secretary Pyatt, I wanted to sort
of circle back to this conversation about rare earth minerals
and sort of ask a version of the same question I asked you
about Turkmenistan and natural gas.
You talked about how China dominates that space right now
and how we, of course, would like to effectuate a policy that
changes that.
My question is the same. Do we have currently a suite of
policies that allow us to make a different offer that is better
than the Chinese offer? Is, for instance, the DFC a player here
of consequence?
It strikes me that we can offer USGS, right. The United
States Government can do a survey, but we cannot extract. We
need a private sector partner to extract, and the private
sector in the United States or Europe looks at these countries
and says fraught with too much peril.
Again, on rare earth minerals, what is the way to solve
that? What is the way to get U.S.- or European-aligned private
sector companies in to do the extraction?
Mr. Pyatt. Chairman, that is exactly what we are trying to
do through the Minerals Security Partnership, which is to bring
together countries with a resource endowment with countries
that have the capital and the industries to create, as I always
put it, a door number two.
Door number one is China, which has been very good at going
out to the world hoovering up or bringing it back to China
where all the processing and value addition happens and then
selling it to the world.
We are now trying to break that model. MSP depends on and
the projects which MSP is developing depends on the resources
that MSP partners are able to bring to bear.
In the United States case those resources are provided to
State and USAID by Congress. EXIM and DFC play a critical role,
and then we also have what Amos Hochstein is doing with the
Partnership for Global Infrastructure and Investment, in a
similar way trying to rack up the infrastructure and commodity
opportunities where we need to bring the whole toolkit of U.S.
economic statecraft to bear.
I think if I had to prioritize, looking at Central Asia
today I would prioritize it exactly as I did in my statement,
first, on Kazakhstan, because it is so vast and because there
is such a clear signal from President Tokayev's administration
in terms of the desire to deepen ties with the United States
and because it is a much more developed economy. That is why
having this initiative from USGS is so welcome and so
important.
I have spoken to a lot of mining company CEOs in my new
role. They all emphasize to me the incredible long lead time
that it takes. These are sectors where 10 or 15 years is the
usual period for the first return on investment.
It is really important that we get moving now if we are
going to have the resources that we need to power our own
energy transition, and I am constantly asking industry people
whether they think that we are going to hit the cliff on copper
or on cobalt or on lithium. We are all hoping that the market
does what is necessary and that some of this will come from the
United States.
I was just with Secretary Granholm yesterday in Houston and
she, too, was emphasizing that the United States is not going
to be able to fulfill these needs even for our domestic
requirements from mining here in the U.S. We need to build
these international partnerships setting the highest ESG
standards.
Senator Murphy. As you mentioned, that requires the
partners in this initiative, the United States included, to
come to the table with capital that is provided to you by
Congress.
It strikes me that this issue of critical mineral security
is not a partisan one. I think there is support on both sides
of the aisle. Yet, we are hearing murmurs from the House that
they are going to propose a 40 percent cut to State and USAID.
There is really not much separation between soft and hard
power these days, and to rob this Administration of the ability
to help secure critical minerals overseas seems like an effort
to cut off our nose to spite our face.
I will leave it there.
Senator Young.
Senator Young. Thank you.
Seems to me as we think about mineral security and that
topic we also, of course, would need to consider regulatory
reform. I do agree with the President's refrain that domestic
security is national security and economic security.
Hopefully, we will find some willing partners from the
Administration on that front. I am not here to ask you about
that today.
I do want to ask a question, broadly, about the region. As
Russian dominance in the region is waning it seems to be viewed
as an opportunity for others to play a leadership role in the
region, whether that is Turkey, Iran, India, or others.
Turkey has formed its own regional C4+1 organization of
Turkic states. Both Turkey and Iran have exported combat drones
to the Central Asian region and promised to produce them in
Kyrgyzstan and Tajikistan. Indian Prime Minister Modi held his
own virtual C5+1 last year as well.
Secretary Lu, as we reflect on Secretary Blinken's recent
visit, what actions are we taking and what can this committee--
this subcommittee--do to help ensure these countries remain in
a favorable position toward the U.S. and our interests?
Mr. Lu. Senator Young, when we were in Central Asia last
week, several of the governments actually thanked us for the
C5+1 format because so many other countries have now copied the
format.
Russians have copied it, the Chinese, South Koreans,
Japanese, the EU, and we saw just this week a few days after
Secretary Blinken traveled to the region to have this face-to-
face meeting with five foreign ministers, the Chinese have
announced they are going to do exactly the same thing.
They want to have the first ever face-to-face meeting of
the C5. We see Putin getting on the phone and calling up the
presidents of Kazakhstan and Uzbekistan, the same two
presidents Secretary Blinken saw last week.
I think it is a good sign that other countries are noticing
our engagement, are nervous about it, and want to compete.
As you suggest, there are many competitors in Central
Asia--Turkey, Iran, India, the EU. I, for one, think that the
best thing the Central Asians can do is take what all of us
have to offer and take the best deal.
Where we have seen real problems is when there is not
competition. I served in the Kyrgyz Republic. For more than a
decade the Chinese were allowed to give loans to this country
without any other countries stepping forward and they produced
terrible outcomes.
My daughter has asthma thanks to Chinese investment. They
have a renovated Soviet electricity and heating plant in the
capital that just belches smoke all winter long, and kids and
adults end up in the hospital because this is just terrible
infrastructure investment. That is because no one was there to
compete.
Go to Kazakhstan. The U.S. is the number-two investor in
Kazakhstan. China is number seven. Number one is the
Netherlands. Actually, investment there works pretty well and
the Chinese are forced to build quality infrastructure and
actually abide by normal rules of operation.
We need to compete and so that is DFC. It is private
investment. What Congress can do is give us the tools to
compete.
Senator Young. Thank you.
Congress--one thing, if we are less comfortable providing
resources it seems we are always comfortable sanctioning bad
actors and sometimes to the detriment of the larger goals we
are trying to realize.
I wrestle sometimes with how much we sanction. Russia is a
great example. Their economy grew. According to the IMF, I
think it was 2.1, or declined 2.1 percent last year. That is a
decline. That is a contraction, but not as significant as many
may have thought they would, and with that in mind--and
sanctions, of course, have their place--as we continue to
consider additional sanctions against Russian leaders and
others, how do we balance our desire to sanction Russia and
cripple the Russian military machine and the military
industrial complex without driving these Central Asian
countries which depend on their relationship with Russia
towards adversaries?
Mr. Lu. Senator, that is a great question and I think many
of our Central Asian partners echo that sense that they want to
hear from us loud and clear that they are not the targets of
our sanctions.
When Secretary Blinken was in the region last week, he said
loud and clear to the presidents of Kazakhstan, Uzbekistan, and
the foreign ministers of all five it is not the intention of
the U.S. Government to target the people of Central Asia. It is
our intention to target Putin's war machine and we are going to
work with you to make sure we minimize the impact on your
economies.
Some of the best examples of our ability to do that have
been in the oil sector that Geoff referred to. Ninety percent
of Kazakh oil transits Russia to get out to world markets. It
is important to us that that oil reach world markets to
stabilize the price to get to European and other consumers.
It was important for us early on right after the invasion
for us to give a letter of comfort that the CPC pipeline, which
is built across Russia, is not subject to sanction because that
is where that oil passes through.
Also, just today we saw a second bank in Kazakhstan able to
be given a letter of comfort so it would not be subject to U.S.
sanctions. It was subject to sanctions initially. These were
big Russian banks--Alpha Bank and what is now called Bereke
Bank.
They have now become Kazakh banks because smart people in
Kazakhstan realized these banks under U.S. sanction would not
be able to continue to perform profitably, and this was a
business opportunity for Kazakh people to take those assets at
pretty reasonable prices and turn them into assets for Central
Asia.
That is the kind of use of the sanctions that we want to
see and we are working very closely with all five countries to
try and make sure that is possible.
Senator Young. If I am looking for a magic recipe to tease
out of that, robust diplomacy to inform the development and the
evolution of a particular sanctions regime and then where
possible provide alternatives to these countries, to the
existing economic relations they have with a malign actor like
Russia, is that a pretty good----
Mr. Lu. Completely agree. Yes.
Senator Young. Okay. Chairman.
Senator Murphy. Great.
Senator Kaine.
Senator Kaine. Just one more question for you, Secretary
Pyatt.
I was reading your written testimony. I arrived after you
delivered your verbal testimony, but I was intrigued about your
reference to your October visit in Istanbul with the deputy
energy ministers from Tajikistan, Kyrgyz Republic, Uzbekistan,
and their emphasizing the need to move forward in the renewable
resources space.
Talk to me a little bit about the move toward renewable
resources in the region.
Mr. Pyatt. No, thank you for raising it, Senator. Let me
say there is not a week that has gone by in my job where I have
not thought about your observation during my confirmation
hearing about the different objectives that we are trying to
balance in our energy security and energy transition agendas,
and Central Asia really encapsulates that in so many ways.
It is a region of significant fossil fuel endowment. It is
also a region of high vulnerability--the two mountain
countries, Kyrgyzstan and Tajikistan, acutely vulnerable to the
effects of climate change, destroying their hydroelectric
potential with melting glaciers. They are also in the
geopolitical crosshairs squeezed between Iran, Russia, and
China.
Frankly, when I was in Istanbul and had this opportunity, I
was really pleasantly surprised, coming back to this region
after 10 years, to hear how strongly focused in particular the
Uzbeks were on their energy transition and I think it is
because it is an existential issue for them.
They wanted to talk to me about how to better access
resources from the EBRD to finance new grid infrastructure, and
just like here in the United States the Central Asians have
huge challenges if they are going to electrify their Soviet-era
energy systems. They have----
Senator Kaine. They have been having blackout problems that
are pretty notable.
Mr. Pyatt. Exactly. There is a real eagerness for
engagement there. Those three countries do not have the
attractiveness that Kazakhstan has in terms of the size and the
economic opportunity that draws in big American investors.
There, in particular, the work that we are able to do with
USAID and DFC and EXIM is critically important, but I think
what is striking to me is that we do not have to convince any
of these countries about the criticality of the climate crisis
because they see it. They are vulnerable to it.
Many of them agriculture is a significant part of the
economy and that agriculture is dependent on seasonality and
melting glaciers and water access.
I think we have got a real opportunity there, especially in
the context of the geopolitical moment that both Chairman
Murphy and Senator Young referred to.
Russia's stock is falling because of Putin's egregious
actions in Ukraine and the fear that that has induced that
Central Asia could be subject to the same kind of revanchist
appetite.
China, especially by the smaller countries, is viewed, as
Don alluded to, as not a terribly good corporate citizen, but
also very big and very, very hungry.
We have an opportunity to make a little go a long way. A
lot of that is what USAID and others do, but I am very proud of
what ENR is able to do with a very small budget with our
programming in areas like helping on critical minerals surveys
and helping to develop grid infrastructure and building the
software that these countries require to stand on their own.
Senator Kaine. Thank you very much. I yield back, Mr.
Chairman.
Senator Murphy. Thank you very much, Senator Kaine.
Thank you, both of you, for your testimony today. I think
this has been a very fruitful and helpful discussion.
Members are going to be allowed to submit questions for the
record until the close of business on Friday.
With thanks to the subcommittee and the staff that makes
this possible, this hearing is adjourned.
[Whereupon, at 3:22 p.m., the hearing was adjourned.]
----------
Additional Material Submitted for the Record
Responses of Mr. Donald Lu to Questions
Submitted by Senator Jeanne Shaheen
Question. The Taliban's campaign of repression against Afghan women
and girls seems to grow more sinister and inhumane every day.
Meanwhile, Islamic State-affiliated terrorist groups have been
responsible for multiple missile strikes that have hit Afghanistan's
Central Asian neighbors.
How do you assess Central Asian governments' relations with
Afghanistan since the August 2021 Taliban takeover? Which, if any, of
the Central Asian governments are engaging the Taliban or in a position
to influence the situation there? Are any willing to engage the Taliban
on women's rights?
Answer. Central Asian governments' relations with Afghanistan since
the August 2021 Taliban takeover vary, with Uzbekistan being the most
forward-leaning in its relations with the Taliban and the most likely
to influence the Taliban. Tajikistan has an adversarial relationship
with the Taliban. Both countries continue to urge the Taliban to
recognize the rights and education of Afghan women and girls.
Question. How has the Taliban takeover impacted the security
situation in Central Asia? What new threats or challenges exist, and
how can they be effectively addressed?
Answer. The Taliban takeover of Afghanistan has raised concerns
among Central Asian states about their security, especially among those
that share a border with Afghanistan. The United States supports
improved border security, law enforcement, and counterterrorism efforts
in the region to help mitigate these threats. We are working with the
Congress to identify security assistance to help Central Asian partners
address these security challenges from Afghanistan.
Question. How do you believe the U.S. Strategy for Central Asia
should evolve in light of the U.S. withdrawal from Afghanistan and the
war in Ukraine?
Answer. The U.S. withdrawal from Afghanistan and the war in Ukraine
have caused Central Asian states to reevaluate their existing security
and economic relationships with Russia. They seek greater cooperation
with each other and with the United States to increase their security
and prosperity and reduce their dependence on Russia. The U.S. Strategy
for Central Asia will continue efforts bilaterally and in the C5+1
regional forum to advance our Central Asia objectives and to support
the sovereignty, independence, and territorial integrity of these
states.
Question. How do you assess the current state of U.S. investment in
the region? What factors could make U.S. investment more attractive to
Central Asian countries than working with China?
Answer. While there is promising investment in the region from U.S.
companies, and in some countries a long history of significant
investment, there is room for improvement. We are distinguished from
China in our commitment to market-based principles and helping states
improve their business climate to attract U.S. and international
investment. I believe Central Asian countries recognize that Chinese
investment often comes with significant downsides, such as corruption,
shoddy construction, overreliance on imported labor, lax environmental
standards, and burdensome debt.
______
Responses of Mr. Geoffrey Pyatt to Questions
Submitted by Senator Jeanne Shaheen
Question. Two weeks ago, Senator Durbin and I traveled to Georgia
and Romania, two Black Sea countries with considerable potential to
support Europe's energy diversification efforts. One of the
consequences of Russia's failing gambit in Ukraine, in part due to U.S.
and international sanctions, is that Russia's traditional trade
partners--including Black Sea countries and the Caucasus--are actively
exploring alternative transit routes and new infrastructure projects to
diversify their energy sources. This is why I am reintroducing my
legislation to ensure that the Administration develop a robust,
interagency strategy toward the Black Sea that not only considers the
security challenges in the region, but also the opportunities to
increase economic connectivity in the region.
Now, Georgia, Romania, Azerbaijan and Hungary have pledged
agreement to construct the world's longest and deepest undersea power
and fiber optic line that will allow electricity produced in
Azerbaijan, Georgia and other countries to be delivered directly to the
European market, advancing climate goals and reducing reliance on
Russia as a source of energy imports. Does, or can, the United States
play a role to support this project?
Answer. The United States supports the Memorandum of Understanding
(MOU) signed in December 2022 between Georgia, Azerbaijan, Romania, and
Hungary. This MOU can lead to a more connected South Caucasus and
European Union with decreased reliance on the Russian Federation for
energy. We await the results of the ongoing World Bank feasibility
study for the submarine cable. The United States is committed to
working with our partners on efforts to increase electricity exports to
Europe, advance our climate goals, and further reduce reliance on
Russian energy.
Question. What are the prospects for expanding oil and gas trade
across the Caspian Sea, via the Trans-Caspian Gas Pipeline or other
potential projects? How realistic is establishing natural gas supplies
from Central Asia to Europe?
Answer. Linking natural gas supplies from Central Asia to Europe
diversifies Central Asian export routes and improves European energy
security. The United States has encouraged developing a Trans-Caspian
Gas Pipeline since 1995. Turkmenistan has built an overland pipeline to
bring natural gas across its territory to the Caspian Sea. A
Transcaspian pipeline would bring Turkmenistan natural gas onward to
Azerbaijan and Europe via the Southern Gas Corridor. In addition to
technical and financial challenges, the prospects for a Trans-Caspian
pipeline hinge on Turkmenistan's political will and a strong demand
signal from Europe.
Question. In recent years, a number of countries in the region,
particularly Kazakhstan and Uzbekistan, have sought to diversify their
economies away from commodities and to promote renewable energy
development. How extensive have these efforts been? To what extent have
they been successful? How can the United States support these efforts?
Answer. Uzbekistan has embraced the need for renewable energy. It
is a member of the Global Methane Pledge and has established a policy
to generate 25 percent of electricity from renewable energy by 2030.
Kazakhstan is positioned to lead the way on clean energy transition,
but the fossil fuel sector retains a sizeable price advantage in power
generation, hindering the development of renewables. The United States,
through USAID, is providing technical assistance for Kazakhstan's
national market liberalization reform, clean energy development, and
the establishment of a reliable Central Asia Regional Electricity
Market to help the electrical grid handle increased renewable energy.
Question. The war in Ukraine has brought increased interest in the
Trans-Caspian International Transport Route, also known as the Middle
Corridor, which aims to connect rail freight transport networks in
China and the European Union via Central Asia, the Caucasus, and
Turkey, bypassing Russia.
Should the United States promote the development of the Middle
Corridor and, if so, how?
Answer. The development of the Middle Corridor is consistent with
the broader U.S. objective of diversifying export routes in Central
Asia. The Department of State regularly meets with the Government of
Kazakhstan to explore potential strategies for diversifying exit routes
for crude oil via the Middle Corridor, including through the newly-
revitalized U.S.-Kazakhstan Strategic Energy Dialogue. As a result of
these meetings and engagement, State-owned energy companies from
Kazakhstan and Azerbaijan recently signed a commercial agreement to
ship 1.5 million tons of oil per year via the Caspian and Azerbaijan to
global markets on the Mediterranean.
______
Responses of Mr. Geoffrey Pyatt to Questions
Submitted by Senator Cory Booker
Question. In June 2022, the United States and 12 countries
established the Minerals Security Partnership (MSP) to coordinate their
use of export or development finance to help develop critical mineral
mine or processing projects abroad. The MSP is open to any country, but
so far it only includes key industrialized partners such as Australia,
Canada, the UK, France, Germany, Japan, and South Korea. On February 6,
Under Secretary Jose Fernandez touted MSP at the Mining Indaba
Conference in South Africa while MSP partners engaged African countries
at a vice-ministerial meeting, according to a State Department media
note.
How were Under Secretary Fernandez's remarks at Indaba received?
How did African participants react to MSP's Statement of Principles for
environmental, social, and governance (ESG) standards? What is the
MSP's due diligence standard?
Answer. Both African officials and Minerals Security Partnership
(MSP) member officials welcomed the emphasis Under Secretary Fernandez
placed on high environmental, social, and governance (ESG) standards
and benefits for local communities that are home to mineral resources.
Our foreign interlocutors recognize that responsible supply chains that
uplift local communities are more resilient and create greater benefit
for all involved. Officials shared that they believe the African
continent has an important role to play in the clean energy transition
through its mineral resources, but that increased investment will be
necessary for African countries to fully contribute to and benefit from
this historic opportunity.
African officials expressed support for the specific principles in
the MSP's joint statement on ``Principles for Responsible Critical
Mineral Supply Chains.'' Officials noted that minerals projects must
benefit both industry and local communities, including through
environmental stewardship and local employment and infrastructure
development. The MSP's principles provide a strong framework to support
the responsible development of African countries' critical minerals
industries.
The MSP does not endorse a single ESG standard or accreditation
framework to the exclusion of others. MSP projects receiving financing
from government agencies will be benchmarked against internationally
applicable ESG standards in accordance with agencies' existing project
review and due diligence procedures.
Question. How does the MSP operate in practice? What are some of
the MSP projects under consideration?
Answer. To achieve concrete, project-level results, the Minerals
Security Partnership is sharing information among partners about
minerals projects and then developing action plans to support the most
promising projects, including through financing, promoting high
standards for responsible mining and processing, and engaging project
operators and governments.
MSP partners considered over 200 projects in 2022 and winnowed that
list down. MSP partners are currently assessing the most promising
projects to identify how we can best support those that will contribute
to more diverse and secure supply chains and promote the highest
standards for responsible industry. These projects range from mining to
processing to recycling and offer a distinct value proposition, based
on partnership with governments, local citizens, and other
stakeholders.
To give one example, two partners are working to develop battery
materials and attract transparent investment and trade in the Pacific.
MSP partners are also assembling a public-private consortium to develop
a state-of-the-art processing facility in Latin America which will help
form a complete value chain in the region for a mineral crucial to the
energy transition. If successful, the project will show how
sustainability and the circular economy can be part of project design
from day one. In another example, an MSP partner launched a strategy to
incentivize the growth of battery recycling and create a closed-loop
supply chain for battery manufacturing; the MSP is also considering
support for a recycling plant for end-of-life lithium-ion EV batteries
in that country.
Question. What role can Congress play in supporting implementation
of the MSP?
Answer. It will be critical for the Executive Branch and Congress
to work together to develop a response to the challenge of building
resilient, diverse, and secure critical mineral supply chains and to
resource that response appropriately. To that end, the President's
Budget for Fiscal Year 2024 requests additional staffing resources for
the Bureau of Energy Resources to address critical minerals policy,
additional assistance funds to secure resilient and transparent mineral
supply chains for the clean energy transition, and a new Department of
State and USAID critical minerals initiative.
Other countries' willingness and ability to finance upstream and
midstream critical minerals projects domestically and abroad have
contributed to the structure of supply chains we see today--a structure
that will leave the United States vulnerable as the demand for clean
energy technologies increases. The United States' ability to support
strategic critical minerals projects in a meaningful, agile way could
determine whether these supply chains evolve to meet the growing needs
of the U.S. economy and U.S. national security.
Currently, many private sector lenders perceive these projects as
too novel or too risky, so public support is needed to encourage more
private investment. By way of example, Japan recently allocated
additional financial support for investments in critical minerals by
Japanese companies, a budget Japan can draw on to support MSP projects.
By leveraging U.S. private-sector innovation and the United States'
global partnerships, the Executive Branch and Congress can formulate
and implement an approach that supports more responsible and better
diversified critical minerals projects abroad and at home that can
support the future energy needs of the U.S. economy.
Question. Certain mineral-rich countries have not joined EITI
despite the importance of the mining sector to those countries'
economy. What can the U.S. do to encourage broader participation in
EITI?
Answer. The United States plays an active role in encouraging
increased membership in the Extractive Industries Transparency
Initiative (EITI), as well as enhanced uptake and implementation of the
EITI Standard. The U.S. Department of State and USAID are also actively
working to ensure that the EITI governance Standard addresses critical
energy minerals.
Additionally, USAID programming helps countries apply for EITI
candidacy, launch national and subnational EITI implementation
processes, facilitate effective multi-stakeholder engagement, and
ensure implementation of the EITI Standard. Our embassies regularly
promote the importance of transparency, anti-corruption, and high
environmental, social, and governance standards in extractive
industries, which underlines the importance of EITI's mission.
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