The writing has been on the wall for Central Asia for months now -- an economic crisis was coming to Central Asia and there was no way of avoiding it. There were unfortunately all too few ideas about how to mitigate it.
By Qishloq Ovozi
The writing has
been on the wall for Central Asia for months now -- an economic crisis was
coming to Central Asia and there was no way of avoiding it. There were
unfortunately all too few ideas about how to mitigate it.
Image Attribute: The exchange
rates of all the Central Asian national currencies have been devalued, in
Kazakhstan's case from about 180 tenges to the dollar, to more than 360 tenges
to one dollar in barely six months / Source: Reuters
One month into
2016 it is clear Central Asia has entered a difficult period, but it is unclear
when and how the region might recover and what effect these particularly hard
times might have on the people of the region.
To discuss this
new reality of Central Asia, today and for the foreseeable future, RFE/RL's
Turkmen Service, known locally as Azatlyk, assembled a "majlis," or
panel discussion.
Azatlyk director
Muhammad Tahir moderated the talk. Participating from London was Alex Nice, who
covers Russia, the Caucasus, and Central Asia for the Economist Intelligence
Unit, and Nate Schenkkan, the project director for Nations in Transit, Freedom
House's annual survey of democratic governance from Central Europe to Eurasia
and also author of a recent article in Foreign Policy, A Perfect Storm In
Central Asia. And I...well, you know.
Most of Central
Asia's current problems originate with the falling price of oil and natural
gas. This had a direct effect on Kazakhstan, where the economy is dependent on
oil sales, as Nice said. "[In] Kazakhstan, the government estimates [the
economy] grew by I think by 1.5 percent last year. We at the Economist
Intelligence Unit think now that it will move into recession this year and
contract for the first time since 1998," Nice said.
Falling
commodity prices have had an effect on Turkmenistan, where the economy is based
on gas sales. However, as the panelists noted, Turkmenistan is so opaque that
it is virtually impossible to know what is really happening inside the country.
Falling
commodity prices also directly affected Russia, where for years, millions of
migrant laborers from Central Asia have found work. Remittances from these
workers fell sharply in 2015 and Tajikistan and Kyrgyzstan are the two most
remittance-dependent countries in the world, with money sent home being
equivalent to more than 40 percent of Tajikistan's GDP and nearly 40 percent of
Kyrgyzstan's GDP. Until the crisis hit Russia, citizens of Uzbekistan had been
sending back more than $6 billion annually.
Schenkkan
pointed out that beyond the reduction in money these workers send back home,
another "area of uncertainty, big uncertainty, is who comes home in terms
of migrants."
There are not
many jobs waiting back in their homelands. Reports show some of these migrant
laborers are migrating to other places within Russia. Some have suggested some
of these Central Asian migrant laborers might simply go to another country to
try to find work.
But Nice
suggested the options are fewer than some people believe. "Russia is
obviously more attractive because of historic ties and the visa situation.
However complicated it is for migrants to live in Russia, it's probably
nevertheless easier than going to the Middle East, let alone Europe or other
parts of Asia," Nice explained.
Faced with a
deteriorating economic situation, the response of the Kazakh and Tajik
governments so far has been to crack down on potential dissent. Schenkkan drew attention
to Tajikistan, where the government last year eliminated Central Asia's only
registered Islamic party, the Islamic Renaissance Party of Tajikistan (IRPT),
the second-largest party in Tajikistan. Schenkkan recalled that "the
banning of the IRPT happened after the IRPT was essentially pushed out of
parliament entirely after fraudulent elections, even more fraudulent than
usual, and the IRPT has now been declared an extremist organization."
Schenkkan also
noted that while eliminating these potential political opponents, Tajik
President Emomali Rahmon has been moving family members into high-level
government posts, Rahmon's son Rustam Emomali, 28, is the head of the State
Agency for Financial Control and Fight on Corruption (after serving as deputy Customs
Agency chief and prior to that member of the Dushanbe parliament) and Rahmon
just named daughter Ozoda, 38, head of the presidential administration on
January 27.
Kazakh President
Nursultan Nazarbaev has been moving family members into prominent state
positions for many years but last September eldest daughter Darigha became
deputy prime minister, and just before the year ended Nazarbaev appointed his
nephew Samat Abish, 37, to be deputy chief of the Committee for National
Security.
Squashing
potential opposition and critics and consolidating the inner circles of power
might provide a modicum of security for the ruling elites but the authorities
nonetheless must implement austerity measures that in some cases are already
proving unpopular with the people.
The exchange
rates of all the Central Asian national currencies have been devalued, in
Kazakhstan's case from about 180 tenges to the dollar, to more than 360 tenges
to one dollar in barely six months.
A group of
people in Kazakhstan, where demonstrations are rare, who took out home loans
based on dollars conducted a "gray mass" protest outside major banks in Almaty
on January 16, demanding their loans be recalculated to the tenge rate when
they acquired their loans.
Some homeowners
in Kyrgyzstan are demanding the same from their government.
Even in
Turkmenistan and Uzbekistan, where protests are unheard of, there are signs the
people's patience is nearing an end. Some 200 unpaid workers in Turkmenistan's
gas industry staged a protest over unpaid wages in the eastern city of Lebap in
April 2015, the first reported protest in authoritarian Turkmenistan in 20
years. There are reports from Turkmen opposition websites that around half the
workers in Turkmenistan's gas industry will need to be cut due to falling
revenues.
Reports from
Uzbekistan indicate a growing number of workers, including state employees, are
not receiving regular wages and banks are running short of money. Frustrations
appear to be boiling over in, for now, isolated cases.
Citizens of
Uzbekistan have been unhappy but tolerant of frequent shortages of gas in their
homes or gasoline for their cars for several years now. But on the evening of
December 18 some 200 residents of a district in the city of Ferghana blocked
the road leading to the nearby town of Margilan to protest a halt in gas to
their homes.* Police and officials were able to disperse the crowd only after
promising to deliver gas canisters to the district.
The Central
Asian governments have no solution to these problems; they cannot because the
situation is out of their control for the most part.
Schenkkan
pointed out this puts Central Asian governments in a difficult situation since
for years the leadership has said, "We can't have policies that present a
picture of uncertainty to the population, we need to show everybody that this
situation is stable." It will be a challenge to maintain this facade as
social programs are cut, wages are reduced, arrears build up, and real
unemployment rises.
As Nice said,
"It's hard to see really what the response is except unfortunately they
will experience a couple of years of misery and a sharp fall in purchasing
power and household wealth. It's difficult to see how that will be
resolved."
About The Author:
Qishloq Ovozi is
a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the
events that are shaping Central Asia and its respective countries, connect some
of the dots to shed light on why those processes are occurring, and identify
the agents of change. Content will draw on the extensive knowledge and contacts
of RFE/RL's Central Asian services but also allow scholars in the West,
particularly younger scholars who will be tomorrow’s experts on the region,
opportunities to share their views on the evolving situation at this Eurasian
crossroad. The name means "Village Voice" in Uzbek. But don't be
fooled, Qishloq Ovozi is about all of Central Asia.
Copyright (c)
2015. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio
Liberty, 1201 Connecticut Ave NW, Ste 400, Washington DC 20036.
