In February 2022, Central Asia was highlighted in the foreign press in light of the looming economic crisis in the region due to Russian military actions in Ukraine; the disclosure of secret bank accounts of the Kazakh president; the potentially dangerous situation in GBAO; the transit of power in Turkmenistan; and the humanitarian disaster in neighbouring Afghanistan.
The Offshore Secrets of Kazakhstan’s President Tokayev
The OCCRP investigation points out that Kasym-Jomart Tokayev has his own foreign secrets: townhouses on a lake, Moscow flats, Swiss bank accounts, and a money trail that goes deep into the offshore.
As it turns out, Tokayev’s family had secretive wealth, safely stored in Europe, as far back as 1998 — when nearly half of Kazakhstan’s population lived under the poverty line. A leak of banking data from Credit Suisse shows that a Swiss bank account for Tokayev’s then-wife Nadezhda and 14-year-old son Timur was opened that year, even as Timur attended an expensive boarding school in Geneva.
It’s unknown how much money passed through the account over the years. According to the Swiss leak, it reached its maximum value of 1.5 million Swiss francs ($1 million) in 2005.
Documents from an offshore services provider, corporate files, and property records all show that, in the years to come, the family continued to accumulate significant wealth outside of Kazakhstan. In 2012 — after the Swiss account was closed — the Tokayevs opened offshore companies in the British Virgin Islands that had their own bank accounts in Switzerland and controlled a U.K. company with $5 million in assets at one point in 2014. They also amassed properties in Moscow and Geneva worth at least $7.7 million.
During those years Tokayev held a series of senior government positions, including minister of foreign affairs, prime minister, and Senate chair. Neither he nor his wife had any known businesses or sources of wealth. Only their son Timur has ever been connected to any real business — and even that deserves considerable scrutiny. As reported by Kazakh media, he was listed as the co-owner of an oil company that won lucrative development rights to a Kazakh oil field, and later earned millions in profits, at just 18 years old.
Timur may also be the family’s original connection to Switzerland. It recently emerged that he attended College du Leman, one of Geneva’s most expensive boarding schools, and also has a diploma from the U.S.-accredited Webster University branch in Geneva.
The Tokayevs also made property acquisitions in and around Geneva, all in Timur’s name: An apartment in a quiet district in the city, an apartment in a lakeside townhouse in the nearby municipality of Versoix, and another townhouse apartment in the village of Saint-Prex.
Timur Tokayev’s properties in Geneva. Photo: Edin Pasovic / Google Earth
It is unknown how long Timur spent in Geneva after graduating, but his father did live in the area while he was serving as Director-General of the United Nations’ Geneva office in between 2011 and 2013.
Meanwhile, Timur had moved on to Moscow, reportedly cruising around the Russian capital in a Lexus and BMW with diplomatic plates and receiving an advanced degree from the Diplomatic Academy of the Russian Foreign Ministry.
He and his mother also acquired several expensive apartments in Moscow. Curiously, as an investigation by now-imprisoned Russian opposition leader Alexei Navalny showed, the Russian government appears to have wiped any mention of them from Russian property records. (Navalny’s team discovered the Tokayevs’ ownership from records they had downloaded before they were deleted from the registry.)
Some of their real estate has since been sold. Their remaining Moscow properties include a large apartment in an elite downtown residence called Fusion Park, and another large, two-floor apartment two kilometers from the Kremlin. Tokayeva was also registered at a third apartment in the city’s northwest.
The Tokayev’s secrets also extend outside of Europe. Thanks to documents from the Pandora Papers — a trove of files from offshore service providers that were shared with OCCRP by the International Consortium of Investigative Journalists — reporters were able to trace their activities to the British Virgin Islands (BVI), a jurisdiction used by wealthy people around the world to secretly hold their assets.
In 2012, the year after the Tokayevs’ Credit Suisse account was closed, the family established two offshore companies in the BVI. The companies — Wishing Well Group Inc, owned by Tokayev’s ex-wife, and Wisdom Invest & Finance Inc., owned by Timur — appear to be corporate vehicles created for the purpose of owning a U.K. company called Edelweiss Resources. (Records also indicate that each of these shell companies also held its own Swiss bank account.)
Because Edelweiss has only filed abbreviated financial statements, little is known about its activities. But its latest filing from March 2014 does show that it had just over $4 million cash in the bank and nearly $1 million in investments that year.
The same summer, the Tokayevs took another step to hide their investments even more deeply. A Cyprus registration agent involved in the formation of their companies asked its BVI office to remove the Tokayevs as shareholders and replace them with nominee, or proxy shareholders that would effectively hide their ownership. The request came in an email leaked in the Pandora Papers. The three Tokayev companies have since been shut down.
Kazakhstani officials’ are not obliged to make public their asset declarations, leaving the source of the Tokayevs’ millions a mystery. The family did not respond to requests for comment.
Kyrgyz Opposition Leader in Hot Water Over a 2009 Border Deal
The online magazine The Diplomat notes that the document, signed in 2009, is now at the centre of a scandal in which the Kyrgyz government is accused of treason.
Over a dozen years ago, in March 2009, a Kyrgyz delegation met with their Tajik counterparts in the Tajik city of Khujand and signed a protocol that included a 49-year lease of a patch of land along the countries’ disputed border to Kyrgyzstan to build a road and a bridge.
The document, and the then-head of the security council who signed it on behalf of Kyrgyzstan, is now at the center of a scandal that has the Kyrgyz government crying treason.
On February 10, the Kyrgyz parliament received a petition from the Prosecutor-General requesting permission to bring a criminal case against a sitting member of parliament: Adakhan Madumarov, the leader of the opposition Butun Kyrgyzstan Party. Madumarov has been summoned for questioning over the matter several times in recent weeks; last October Kyrgyz President Sadyr Japarov raised the matter of the “275 meters” of land as one of the hurdles to negotiating a solution to the perpetual (and increasingly violent) conflict over the border.
The particular parcel of land, reported as encompassing 5 hectares and being 275 meters long, is in the village of Kok-Tash (called Tort-Kocho by the Kyrgyz) and sits at the intersection of roads from Batken to Isfana in Kyrgyzstan and the road toward the Tajik enclave of Vorukh. The area has been the site of many clashes over the years, including the most recent flare up last month. The violence in late April 2021, which resulted in dozens killed and a significant amount of damage, was spread more widely across the long, contested, Kyrgyz-Tajik border.
Madumarov denies any wrongdoing, stressing that the 2009 protocol, having never been ratified by parliament, was nonbinding. He also argued that the Batken-Isfana road, which enables travelers to avoid going through Tajik villages, would not have been constructed without the agreement. He said this week that the state’s case against him was “100 percent politically motivated.”
Madumarov is not the only Butun member to face legal trouble or the threat thereof recently. As the party leader faces possible treason charges — if the parliamentary commission gives consent — another party member is already in detention. Mirlan Uraimov was detained, reportedly at his home during the night, on February 8 in connection with charges under Article 327 of the Kyrgyz criminal code, which relates to public calls for seizure of power.
According to the State Committee for National Security (SCNS) and Uraimov’s lawyer, the alleged crime relates to a Facebook post by a user with his name, which stated, in part, that it is necessary to change a government that does not work well. The post also reportedly mentioned Orozayym Narmatova, another Butun member and activist who was detained in September after sharply criticizing Japarov — which the authorities equated to calling for the overthrow of the government. Narmatova previously was a supporter of Japarov but was elected to parliament in late November with the Butun faction. Last month she was accused of fraudulently obtaining a university degree and booted from her seat after being interrogated (the SCNS also summoned her father for questioning).
Uraimov, for his part, denies making the post, saying his page had been hacked a while ago. Meanwhile, Kyrgyz bloggers have commented on how easily any of them may find themselves in Uraimov’s shoes. Where is the line between political activism and what the authorities view as calls to bring down a government?
Madumarov came in second in the January 2021 presidential election, with under 7 percent of the vote against Japarov’s nearly 80 percent. Butun holds six seats in the 90-member parliament.
Scapegoating Madumarov for the eternal problem of the Kyrgyz-Tajik border may be politically convenient for the Japarov government right now. But pursuing such a line inadvertently throws into possible question other agreements made by an array of past Kyrgyz governments: which will Bishkek honor, and which will Bishkek label “treasonous”? All the while, none of this serves to address the very real problem of the border.
Jamestown.org: Moscow and Kabul Beef up Forces on Tajikistan’s Border as Badakhshan Deteriorates Again
The Jamestown Foundation analytical journal wrote that in mid-February, as Russians and Afghans marked the 33rd anniversary of the final withdrawal of Soviet troops from Afghanistan, both countries were building up their forces on the Afghan-Tajik border.
The trigger has been a renewed deterioration of the security situation in the Gorno-Badakhshan Autonomous Province, which forms a third of the territory of Tajikistan geographically and is defined by the rugged Pamir Mountains. But this time, the growing chaos in this periodically restive area comes with a dangerous twist: outside powers are increasing their presence there as well. The surge in Russian and Afghan forces in the region as well as intensifying Chinese activity at military “bases” in eastern Tajikistan raise both the stakes and the risks that a local ethnic conflict will grow into something much larger. Indeed, what has been a conflict within the trans-border Pamir region and between it and Dushanbe now appears on the brink of becoming a dangerous international incident if any of the sides tries to exploit the situation or miscalculates how others may respond.
The state of affairs in Gorno-Badakhshan has never been completely stable since the end of Soviet times; and conditions have again been deteriorating there since the November protests over an extrajudicial murder of a local activist by state security police. But developments in the past two weeks, both inside the nominally autonomous region and those involving outside powers, have raised tensions, with some Moscow-based analysts now predicting Tajikistan will be the site of the next serious violent clash in the post-Soviet space.
Gorno-Badakhshan has been on edge since last fall, when Tajikistani security services killed a Pamir activist while he was in detention and then refused to launch an investigation into what protesters call his murder. Dushanbe made some concessions but did not meet this demand. Now, the situation has worsened: Tajikistan’s authorities seek to arrest Makhmadbokir Makhmadbokirov, a local leader whom they accuse of involvement in the drug trade and of attacking local officials. Makhmadbokirov denies the charges, claims the drugs were planted on him, and has called on the Pamir people to back him. In a video appeal, he says he supports Dushanbe but contends that the people of Gorno-Badakhshan view him as their defender against the arbitrary actions of the central government and are ready to resume their protests. At the very least, they are not going to hand him and his six alleged accomplices over to the police.
The risks that an unstable Pamir region present to Moscow are obvious. If the central government of Tajikistan loses control there, northward drug trafficking and refugee flows from Afghanistan could increase. A danger also exists that Islamist radicals among ethnic Tajiks and Pamiris in Afghanistan will exploit the situation to undermine Dushanbe and seize power in the eastern portion of the country. Finally, Moscow analysts warn of a serious risk that Dushanbe might cut its losses there and (de facto or de jure) hand over this part of Tajikistan to the Chinese, as it has actually done with other parts of its territory in the past. Such an outcome would compromise Russia’s position not only in Tajikistan but in Central Asia more generally. At the same time, fears this may in fact come to pass are also agitating many Tajikistani Pamirs, who are concerned they may soon come under Chinese rule.
To try to prevent these kinds of developments, Russian President Vladimir Putin promised his Tajikistani counterpart, Emomali Rakhmon, last December that Moscow would boost its economic assistance to Tajikistan as well as beef up its military presence there. Specifically, the Kremlin leader said that “we are actively working in the direction of strengthening the defense capacity of Tajikistan. In recent times, necessary supplies of weapons and technology for that purpose have been delivered so that Tajikistan can effectively counter any threats that come from the outside. The [Russian] military base is developing and it is one of the significant elements of security in the region”.
A little over a month later, that buildup is now happening, with Russian officials simultaneously expressing concern about the inability of Tajikistan’s authorities to control the situation on their own. Just how worried Moscow is was reflected in a statement by Russian Defense Minister Sergei Shoigu during a recent telephone call with United States Defense Secretary Lloyd Austin focusing on Ukraine: as Russian television played up, the two apparently also pointedly discussed the problems on Tajikistan’s border with Afghanistan.
Meanwhile, and partially in response to this Russian move, Kabul announced this week that it is dispatching 10,000 of its troops to northern Afghanistan, adjoining Tajikistan. The Afghan authorities have additional reasons to do so, of course. On the one hand, the ruling Taliban is largely a Pushtun movement and faces a restive Tajik minority in the north. And on the other hand, there are numerous Islamist radicals in the northern portion of that country, which the capital does not effectively control. But the timing of this deployment is clearly intended to send a message to Russia. Namely, Kabul wants help from Moscow to end the US’s blocking of Taliban bank accounts; and if such assistance does not come, Afghan forces may downgrade their efforts to control the border with Tajikistan, which would create worsening security conditions there that Russia hardly wants.
Turkmenistan: An Upcoming Dynastic Transition?
The US-based think tank The Central Asia-Caucasus Analyst writes about Turkmenistan’s impending power transition. Turkmenistan’s Halk Maslahaty extraordinary session, scheduled for February 11, 2022, was expected with great expectations within the Turkmenistan expert community. Unlike formal and ritual phrases usually accompanying the event, President Gurbanguly Berdimuhamedow’s rhetoric differed in this case. The proclaimed adoption of the strategy for the next 30 years was connected with the new leader, expectedly his son Serdar Berdimuhamedow. The Halk Maslahaty announced an extraordinary presidential elections for March 12, 2022, yet another step in the power transition in Turkmenistan. However, several external and internal as well as long- and short-term factors determined the timing of the transition. At the same time, the transition will not be fully accomplished as the current president does not fully step back from power.
The grooming of the son of Turkmenistan’s second president started several years ago, as Serdar Berdimuhamedow returned from his studies in Moscow and Geneva and started his career in Turkmenistan’s state institutions. His promotion accelerated from 2019 onward, when he was shuffled through the different positions each year. He also strengthened his role in the formal constitutional system, starting from a member of Parliament to Deputy Prime Minister – in fact, the second position in the state. The constitution of Turkmenistan was reformed in 2016 with one substantial change, decreasing the age limit for the presidency to 40, the age that Serdar Berdimuhamedow achieved in 2021. Since then, Turkmen media started to dedicate more attention to his activities, widely seen as another sign of an upcoming power transfer. In parallel, he became increasingly involved at the international stage and was received as the genuine Head of State in many countries, mainly in the post-Soviet area.
Gurbanguly Berdimuhamedow (and other leaders in the region) learned the lessons from previous changes in the Central Asian area. He wanted to avoid any uncertainties that might arise after the passing of the leader in the absence of a designated successor. The recent events in Kazakhstan could also accelerate the transition process, leaving no doubts about the new Turkmen leader. However, attempts to find analogies with Kazakhstan may lead to misinterpretations. Turkmenistan’s situation differs from Kazakhstan at least in two fundamental respects. Firstly, unlike Kazakhstan, the power in Turkmenistan prefers a dynastic way to the selection of loyal successor outside the family; and secondly, the Turkmenistan elite is much more consolidated, with no power group capable of challenging the presidential “tokhum”. This “family corporation” captured the most profitable parts of the Turkmen economy and eliminated all other economic groups, including those considering themselves untouchable. In addition, constant rumors about the health of Gurbanguly Berdimuhamedow may have contributed to the expected power transition.
Finally, the economic hardships of the last years in Turkmenistan may have also impacted the power transition. Turkmenistan’s leadership has become increasingly unpopular in the country itself with food shortages, border closures and different caprices that make the already problematic living conditions in the country more difficult. Substantial amounts of Turkmen people are ready to leave the country at the first possible moment. Although there is no expectation of rapid economic changes among the population in Turkmenistan, the transfer of leadership might be connected with hope that at least partial reforms in the country will take place. Either way, “the Family” should not be expected to share its political and economic power. Most of those who have tried to challenge it in recent years have disappeared.
The new presidential elections in March 2022 mean that the formal power transition will likely be accomplished in less than one month. The elections or decrees issued by state institutions in authoritarian countries mostly confirm the decisions adopted at the top of the informal power hierarchy. Nevertheless, the process of handover from one long-term leader to another is considered a highly vulnerable matter. In the Turkmen case, Gurbanguly Berdimuhamedow apparently did not risk any complications in the power transfer leaving a little uncertainty and proceeding with this precarious changeover phase smoothly.
Even if the election results are somewhat expected, the elections will not be the end point of the power transition in Turkmenistan. Gurbanguly Berdimuhamedow, the outgoing president, will probably keep “a control package” of power in the informal elite network. From the formal point of view, Berdimuhamedow senior will probably remain the head of Halk Maslahaty, the supreme political organ, and keep some political function to monitor the country’s internal politics. As he was also promoted to the real head of the family after his 89-year old father passed away last year, he is expected to control the family’s business and resolve any disagreements within the family.
As for internal politics, significant changes in a strictly hierarchical system should not be anticipated. At the informal level, the system of a single leader will be, at least temporarily, replaced by a kind of father-son dualism. Serdar Berdimuhamedow will have to rely on the same mechanisms to keep power – political legitimacy based on elections and Halk Maslahaty decisions, executive power derived from the position of prime minister, and security provided by the security services. Informally, real power could oscillate between father and son and will undoubtedly undergo some changes as the new leader will be able to manage his power to maintain the family corporation.
The dualism of two Berdimuhamedows will also impact the personality cult, a traditional part of political culture in Turkmenistan. At least, temporarily, we are likely to observe the dual sacralization of the two presidents with the gradual elevation of Serdar, who has thus far not been an object of veneration. The Halk Maslahaty proclaimed the new era in its February 2022 session, which, in the past, indicated the introduction of the new ideological system.
Possible shifts in Turkmenistan’s foreign policy are yet another issue for discussion. The geography of the recent visits of Serdar Berdimuhamedow principally focused on post-Soviet countries, in which he was introduced to other presidents. He also visited Japan during the 2021 Olympic games, traveled to China, Iran and the Glasgow climate summit. In this regard, however, we could expect the continuity of balanced foreign policy with economic cooperation and gas supplies to China and political and security cooperation with Russia and other Central Asian countries. Neither of these vectors can be entirely overlooked, although Serdar Berdimuhamedow may incline more towards Moscow due to his close connections (particularly in Tatarstan) and his educational background. He also maintains good relations with Central Asian younger generation leaders, for example Tajikistan’s designated next leader Rustom Emomali. In this context, the cautious opening of the relationship with Central Asian neighbors observed in recent years will likely to move on. However, as the regime prioritizes internal stability inside Turkmenistan, people-to-people relations will be excluded from any eventual foreign policy thaw.
The results of the March 2022 presidential elections will probably lead to the change of the president from the father to the son. Several factors caused the timing of this operation, which comes on the heels of continuous hereditary grooming, observation of other transitions in the broader region, and the introduction of the designated successor on the international scene. Recent events in Kazakhstan also speeded up the process. If the transition happens, Turkmenistan will become the second country in the post-Soviet space successfully undergoing a dynastical transfer of power (after 2003 in Azerbaijan). However, it does not mean that the process of transition from the second to the third Turkmen leader will come to its end.
As Putin Invades Ukraine, Uzbekistan Feels Vindication and Fear
The Bourse & Bazaar Foundation, a British think tank, wrote that among Putin’s claims against Ukraine was that its leadership “preferred to act in such a way as to have all rights and benefits in its relations with Russia, but not to have any obligations”. It is conceivable that a similar accusation could be made against Uzbekistan. The unfolding crisis in Ukraine is the latest evidence of Putin’s irredentist obsessions and how these obsessions threaten the political and economic integrity of Russia’s neighbours.
Last week, Uzbekistan marked Ukraine’s “Day of Unity,” a Ukrainian national holiday. The façade of the historic Hotel Uzbekistan, overlooking Tashkent’s main square, was lit in the colors of the Ukrainian flag. Beyond shared affinities, Uzbekistan and Ukraine are both confronted by the challenge that is Putin. For Uzbekistan, the events unfolding in Ukraine validate a decades-long effort to hedge relations with Russia. But they also raise the spectre that Putin will no longer tolerate divided loyalties among the former Soviet republics.
As Maximillian Hess has written, Uzbek president Shavkat Mirziyoyev has sought to rebuild relations with Russia since coming to power in 2016. Mirziyoyev‘s predecessor, Islam Karimov, who led Uzbekistan from 1989 until his death in 2016, believed that “Moscow’s vision for Central Asia was to keep it as a colonial backwater.” In both security and economic spheres, Karimov challenged Russia’s regional dominance. Uzbekistan was an on-again, off-again member of the Collective Security Treaty Organization (CSTO), a military alliance of post-Soviet countries. Uzbekistan served as a staging ground for NATO operations in Afghanistan from 2001 to 2005. Karimov also delayed joining the customs union that preceded the founding of the Eurasian Economic Union (EEAU), Putin’s grand vision for an economic bloc.
Mirziyoyev’s ascendence to the presidency required horse-trading. Developing more constructive ties with Putin was an important aspect of his attempts to consolidate his authority after a power struggle with Rustam Inoyatov, the chief of Uzbekistan’s intelligence services. Inoyatov was eventually sacked in January 2018. In October of that year, Putin visited Uzbekistan bringing with him a large delegation of Russian companies. The visit saw the signing of contracts totalling $9 billion, including provisional agreements for the construction of a nuclear plant that would help Uzbekistan free its natural gas production for export.
But Mirziyoyev has also sought to limit Russian political and economic influence in Uzbekistan by pursuing a multilateral foreign policy and economic liberalisation. While Uzbekistan is expected to join the EEAU, Mirziyoyev has slow-rolled accession, meanwhile pursuing formalised ties with the European Union, including preferential trade terms under the EU’s Generalized Scheme of Preferences. Uzbek officials have continued to engage with counterparts in the United States, building on a state visit by Mirziyoyev to Washington in May 2018. Since the outset of his term, Mirziyoyev has also sought to develop better relations with neighbours. At the heart of this strategy is a series of “consultative meetings” among Central Asian leaders that exclude the presence of either Russia or China, the two states that typically wield convening power.
In this way, Uzbekistan has hedged in its relations with Russia. While developing more constructive bilateral relations, it has also ensured that parallel developments in its foreign policy and economic agenda serve to circumscribe Russian influence. Recent events have shown the prudence of such an approach.
In January, as protests accelerated into a full-blown political crisis in Kazakhstan, the Uzbek government reacted cautiously. But Putin’s deployment to Kazakhstan of a “peacekeeping” mission comprised of CSTO forces raised concerns over Russia’s respect for the sovereignty of its neighbours. Likely commenting on the circumspection of Uzbek leaders, Belarussian president Alexander Lukashenko issued a veiled threat to Uzbekistan, suggesting that the country’s failure to join CSTO would leave it vulnerable to “terrorists.”
For many Uzbek political commentators, the threat underscored the risks of posed by the increasingly irredentist Russia. Xushnudbek Xudoyberdiyev, deputy director of state news agency UzA and a prominent blogger, criticized Lukashenko, calling the CSTO a “trojan horse.” In a lengthy interview published two days after the threat, political analysts Farhod Tolipov and Kamoliddin Rabbimov questioned the wisdom of joining the EEAU.
Similar dynamics can be seen in the response to the Russian aggression against Ukraine. While Uzbek officials have yet to issue statements on the crisis, Uzbek editors and bloggers have been quick to label Putin a “savage,” a “criminal,” and a “bandit,” who has “lost his mind” and “spit on international law.” Political commentators have questioned the slow response to the new crisis from the Uzbek Ministry of Foreign Affairs and have also wondered about the risk posed by deepening economic ties with Russia.
Uzbekistan does not share a border with Russia—perhaps a silver lining of being one of just two double landlocked countries in the world. But the Ukraine crisis does have a bearing on Uzbekistan’s place in the political and economic order in West Asia. As Putin takes a more confrontational approach with the West, he may begin to see Mirziyoyev’s hedging of its relations with Russia as an afront, putting Uzbek elites with strong ties to Russia in a difficult position.
Moreover, if Western countries place Russia under significant sanctions as is expected, the consequences for the Uzbek economy could be profound. Russia hosts 3 million migrant workers from Uzbekistan, whose remittances shore Uzbek household consumption. As the rouble comes under pressure and as the economy falters, these workers, already struggling due to Russia’s general economic malaise, will see their employment prospects diminish and the value of their earnings erode. The devaluation of the rouble would also hit Uzbekistan’s economic elite who maintain assets in Russian banks. Moreover, financial sanctions placed on those banks could see a significant portion of Uzbek wealth effectively frozen.
Over the last five years, Uzbekistan has been one of the few former Soviet republics to enjoy political stability and economic prosperity. That alone sets Uzbekistan apart. But the country’s political and economic agenda is also unique given the ways in which it has sought to modulate Russian influence. Putin’s invasion of Ukraine vindicates that agenda, but it will also stoke fear. Among Putin’s complaints about Ukraine is that its leadership “preferred to act in such a way that in relations with Russia they had all the rights and advantages, but did not bear any obligations.” One can imagine a similar charge being made against Uzbekistan.
Al Jazeera: The Russia-Ukraine crisis is squeezing Central Asian economies
Qatar’s Al Jazeera news agency writes that the scale of proposed economic measures against Russia could cause remittances to Central Asian republics to dry up like never before.
Millions of Central Asian migrant workers in Russia risk becoming indirect victims of ongoing tensions between Moscow and the West over Ukraine. While Washington’s proposed measures are directed against Moscow, they could also harm the economies of Tajikistan and the Kyrgyz Republic, as well as significantly harm Uzbekistan, as these countries depend on the money sent home by citizens working in Russia.
More than 3 million migrant workers from Uzbekistan, nearly 1.6 million from Tajikistan and 620,000 from Kyrgyzstan entered Russia between January and September 2021, according to the Interior Ministry in Moscow. Simply put, every tenth citizen from these three countries works in Russia. Remittances – mostly from Russia – account for 30 percent of Tajikistan’s gross domestic product, 28 percent for the Kyrgyz Republic and nearly 12 percent for Uzbekistan, according to the latest World Bank figures.
This is not the first time Central Asian migrants have found themselves squeezed by geopolitical battles between Russia and the West. Sanctions imposed by the US in 2014 halved Tajikistan’s incoming remittances between 2013 and 2016. In Uzbekistan, remittances fell by almost 30 per cent in a year and in the Kyrgyz Republic by 25%.
But previous crises pale in comparison to the punishment the West is imposing on Russia this time around. In the past, sanctions have been largely targeted – they have targeted individuals and entities considered close to Putin, or those implicated in Moscow’s actions in Ukraine. This time, the sweeping nature of the proposed economic measures could result in remittances to the Central Asian republics drying up like never before.
The timing could not have been better for these countries: before tensions arose between Moscow and the West, remittances were just beginning to recover from the blow of the COVID-19 pandemic.
Uzbekistan, for example, saw a 23 percent increase in remittances from Russia in the first half of 2021. Some countries, like resource-rich Uzbekistan, may fare better in the coming storm, but for the most part, their economies are already struggling.
For these countries, the timing couldn’t be better: before tensions arose between Moscow and the West, remittances were just beginning to recover from the blow of the COVID-19 pandemic.
Uzbekistan, for example, saw a 23 per cent increase in remittances from Russia in the first half of 2021. Some countries, like resource-rich Uzbekistan, may weather the coming storm better, but for the most part their economies are already struggling.
And there is no other economy in its immediate neighbourhood that can absorb as many migrant workers. This is why millions of migrant workers are constantly drawn to Russia, despite frequent economic problems and – in recent years – increasing xenophobia.
Does Central Asia have Southern options for transport and trade?
The US political magazine The Hill notes that the Central Asian republics have long lacked reliable trade and transport routes to the south, but have recently seen a flurry of activity that could make southern trade and transport routes redundant for the republics.
In January, India’s president, Narendra Modi, hosted a virtual India-Central Asia summit with the presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The conference covered trade and connectivity issues, cultural exchanges, and security cooperation, among others, and followed the December 2021 signing of nine agreements in areas such as renewable energy, digital technologies, cyber security, and community development projects.
In an apparent conflict, in July 2021 Uzbekistan hosted a conference on connecting Central Asia and South Asia, and has prioritized transport through Pakistan to the ports of Gwadar and Karachi over routes through Iran to the port of Bandar Abbas. Later that month, Pakistan and Uzbekistan signed a transit trade agreement that “would give access of Pakistani seaports to Uzbekistan and offer access to all five Central Asian States for Pakistani exports.”
Securing a trade route to Central Asia has been a longtime goal of Pakistan, a matter that acquired urgency after the country’s cotton crop failed in 1994. Now that it is almost in hand, will Islamabad finally be successful?
Despite the recent public bonhomie between the leaders of Pakistan and Uzbekistan, Tashkent is likely aware of the potential for Islamabad to weaponize transport links from Central Asia against India to bolster its policy of “strategic depth” — which would surely disrupt the Indian-Uzbek bilateral investment treaty that was a topic at the January meeting. In fact, Pakistan removed may doubts when it blocked Indian food aid and medicine shipments to Afghanistan demanding that Pakistani trucks transfer the goods, later relenting to let Afghan trucks move the cargo.
Uzbekistan is a member of the India-Uzbekistan-Iran-Afghanistan Quadrilateral Working Group on the joint use of Iran’s Chabahar port. In early 2021, India proposed that Chabahar Port be part of the International North-South Transport Corridor (INSTC), and invited Uzbekistan and Afghanistan to join the multi-lateral corridor project. The INSTC is a 7,200 km multi-modal project that links India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia and Europe — and this option should be in the back of Pakistan’s mind at all times.
The Central Asian republics — which need new export routes and want to avoid Afghanistan — may find Iran’s Chabahar the best option for trade with India and its market of 1.4 billion people. Pakistan’s market is 212 million people, and a per capita GDP two-thirds that of India. Cooperation with India’s technology sector will be key to Tashkent’s goal of a 1.6-time increase in per capita GDP by 2026.
Normally isolated Turkmenistan sees Chabahar as a key part of a Eurasian transport route that would include its Caspian Sea port of Turkmenbashi. Iran and Turkmenistan recently discussed expanded trade relations, new arrangements in rail transit, energy, gas and electricity, and maritime transport — and are anxious to restore trade to pre-COVID levels.
Even more isolated Taliban-controlled Afghanistan also seeks an Iranian option — both for buying and selling and establishing peaceful links with Iran’s government, which will be more active in the regional economy once it has secured access to the $29 billion in overseas banks that has been blocked by sanctions. Afghanistan should try to reinvigorate trade with India, which was worth $1.5 billion annually before the Taliban takeover. One way to do that would be to abide by the 2021 India-Afghanistan Preferential Trade Agreement, though Kabul will be challenged by a lack of institutional depth to successfully execute the deal.
Humanitarians Fear Afghan Hunger Crisis Could Kill More Than War
“Voice of America” writes that six months after the Taliban’s takeover of Afghanistan, humanitarian missions fear that a growing hunger crisis could kill more Afghans than in the previous 20 years of war.
Nearly two-thirds of the population – about 23 million people – are in need of humanitarian aid. That is 30% more than just a year ago, and the need is urgent. According to the World Food Programme, 9 million Afghans are one step away from hunger.
The country’s economy is in freefall. Billions in foreign aid, which supported the national budget, have dried up since the Taliban seized power. The population is also suffering the cumulative effects of years of conflict, the COVID-19 pandemic and a succession of severe droughts.
The Taliban have acknowledged that they need international assistance and have allowed aid workers to operate virtually unhindered. Over the past six months, the United Nations has increased aid. It has reached about 19.6 million people in 2021 and about 8 million people with food and medical aid since 15 August.
The World Food Programme (WFP) transports about 100,000 tonnes of food a month. In January, the agency had more than 300 trucks a day on the roads carrying supplies. As the response expands, that number could rise to 500. WFP reached 8.5 million Afghans in January and hoped to almost double that number in February.
One of the main obstacles the aid agencies are trying to overcome is the rapidly deteriorating Afghan economy. Since the withdrawal of US troops, Washington has cut off the supply of dollars to the country, causing a cash crisis that has affected both aid agencies and ordinary Afghans. Washington has also frozen about $9.5 billion in Afghan foreign reserves held in the U.S. to prevent the Taliban from accessing them.
Seven billion of this money is held at the Federal Reserve Bank of New York. Some relatives of victims of the 9/11 attacks tried to access this money after the Taliban seized power to pay compensation. On 11 February, President Joe Biden signed an executive order that would freeze half of this money in case of possible lawsuits, while access to the remaining $3.5 billion would be facilitated to help the Afghan people. Even before the February 11 announcement, the Biden administration had already taken steps to allow humanitarian operations to continue by amending US laws and passing a resolution in the UN Security Council.
The World Bank is also keeping $1.2 billion in its Afghanistan Reconstruction Trust Fund. In December, it allocated $280 million for humanitarian aid.
The International Rescue Committee urged US lawmakers to look at the link between humanitarian aid and broader economic support for the country. The committee stressed that if the economy collapsed, there was no way the humanitarian system could cope.