By Anton Evstratov
The Covid-19 pandemic turned out to be a sensitive negative factor for the economies of Central Asia, but its political consequences are ambiguous.
The most dangerous consequences of coronavirus restriction have been in developing countries. This thesis is relevant for the Central Asian region, all of whose states clearly fall into this category. A decline in economic activity throughout the world also took place in Central Asia, resulting in lower prices for resources (especially hydrocarbons), more expensive loans, capital outflows, and other factors. Restrictive measures do not contribute to the influx of foreign investment, which for some countries of the region (for example, Kyrgyzstan, Uzbekistan and Tajikistan) is almost the only serious source of foreign currency.
However, this also applies to a seemingly more wealthy and independent Kazakhstan due to the availability of oil. The fact is that it also depends on investments in the oil and gas sector. So, most of the foreign investment income of the past year (about $ 26 billion) fell precisely on the sphere of hydrocarbon production. It, in turn, is also experiencing a serious recession due to lower prices for these products by objective (decrease in economic activity) and subjective (Russian-Saudi confrontation, the consequences of which are still taking place in the form of low oil prices).
As for the “poorer” states, they will indirectly suffer losses due to the economic downturn in more developed countries – mainly in Russia, Kazakhstan and Turkey. This is where most of the labor migrants from Uzbekistan, Tajikistan, Kyrgyzstan and Turkmenistan go. Quarantine measures make foreign labor irrelevant at the moment, labor migrants do not receive money and, accordingly, are not able to send them to their homeland, calling into question the material support of their families.
At the moment, it is known that the volume of remittances from Russia to Tajikistan has already decreased by 50%, and experts predict similar indicators for other countries throughout the current year.
However, real problems will begin if the crisis in Russia and Kazakhstan drags on – then millions of labor migrants who cannot find a new job will have to return home. And without that, the Central Asian economies in crisis will simply not be able to accumulate these millions of people, which will inevitably transform into a threat of a social explosion.
The only country in the region capable of at least some time experiencing difficulties that have fallen all over the world is Kazakhstan, which has such a National Fund. Of the latter, $ 10 billion has already been allocated to support the economy, as well as the most vulnerable. Other states do not have such a fund, and will be forced to seek funds abroad. However, for Kazakhstan, the national fund is by no means a panacea – on the one hand, it may not be enough, but on the other, the government of the republic may simply not agree to use it to the end, considering that really difficult times are yet to come.
Having lost a significant part of investments and other mentioned cash receipts, the states of the region will have to rely mainly on loans. One of the sources here will be international financial institutions – the IMF, the Asian Development Bank, etc. Another is the People’s Republic of China.
The third and most insignificant are the USA and the EU. And here the role of China for the whole of Central Asia should grow immeasurably, because it is he who has the ability to give more loans, invest more in the economies of local states. On the one hand, this will be facilitated by a faster exit of the PRC from the pandemic crisis, and on the other, the strategic importance of Central Asia for Beijing.
Moreover, the Central Asian states will be forced to ask China for more funds, sometimes being unable to service existing loans. To date, Beijing has already received requests for deferred interest payments from Tajikistan (which owes $ 1.1 billion to China) and Kyrgyzstan (debt – 1.8 billion). Moreover, China is currently very active in providing humanitarian assistance to the countries of Central Asia against the coronavirus – this mainly applies to Kazakhstan, Uzbekistan and Kyrgyzstan.
Thus, the PRC, on the one hand, is strengthening its economic influence in the mentioned states, and on the other, it is seriously increasing its image in their societies. The result may be even greater dependence of specific countries and the region as a whole on the Celestial Empire – at the moment it is only economic and conditionally political, but after some time other spheres can also fall into this dependence, including the military, the contours of which can be traced, for example in Tajikistan.
The possibilities of international financial institutions, compared with Chinese, are relatively small. The total loan in the framework of assistance in the fight against COVID from the IMF to Kyrgyzstan is $ 242 million, to Tajikistan – $ 189 million. As for ADB, it is providing $ 1 billion to Uzbekistan. Active in the region is the World Bank, which paid Uzbekistan $ 200 million, and Tajikistan – 11.3 million.
All these payments support some influence of the USA and the West as a whole in Central Asia, however, they certainly cannot compete with the Chinese and are not able to turn the economies and political lines of regional states in the direction opposite to Beijing.
The weakest link in the number of external players influencing the Central Asian region is Russia, which already experienced financial difficulties against the backdrop of Western sanctions, and now has suffered huge economic losses from the consequences of the pandemic.
On the whole, the picture that has emerged earlier of the political and economic realities of Central Asia remains unchanged – Russia is “responsible” for security, China – for the economy, and the role of the West in the region is tertiary. The difference will be, perhaps, only some strengthening of Beijing.
At the same time, coronavirus and its consequences were much more pronounced in the internal political situation in Central Asian countries. So, Tajikistan, which ranks first in the region in terms of the number of deaths from Covid-19, for a long time did not recognize the presence of infection on its territory and did not introduce restrictive measures just to ensure the necessary changes in power.
It is about the election of the son of President Emomali Rahmon Rustam Emomali as chairman of the upper house of the Tajik parliament. He received the corresponding position, following all the necessary procedures, on April 17, and the fact of the presence of coronavirus in the country was recognized on the 30th. As a result, Rakhmon “reserved” support for himself in the upcoming parliamentary elections in autumn, and his republic took the lead in the number of deaths from Covid.
As for the far less centralized and authoritarian Kyrgyzstan, the situation there is qualitatively different. On the one hand, coronavirus was brought into the country by religious radicals – members of the Tablighi Jamaat organization, which was banned in a large part of Eurasia.
On the other hand, it was religious organizations, including radical ones, in the conditions of an open confusion of the authorities, that took upon themselves the functions of assisting citizens – with food, medicine, etc. Even though many of these organizations deny the very fact of having an infection, they are gaining more and more popularity among the population.
It is also necessary to note the decline in popularity of President Jeenbekov personally, who, according to some, is not qualified enough to fight the pandemic, but, in the opinion of others (the secular intelligentsia opposing him), is associated with Tablighi Jamaat. Meanwhile, in October 2020, parliamentary elections are also planned in the country, which will be a real test for the current government.
In this situation, Uzbekistan looks relatively stable, retaining investment activity indicators (largely due to the absence of any other choice), but much will depend on the return of the labor migrants mentioned above from Russia.
As for the “well-being” of Turkmenistan, which still denies the presence of coronavirus on its territory, it is obvious that this provision is artificially supported and displayed – in fact, there are restrictive measures (for example, restriction of communication between regions and regions), and their economic consequences are manifested – this is especially characteristic of the province, which had previously experienced economic problems, but now faces the danger of interruption in food supplies.
In turn, a state of emergency was introduced in Kazakhstan, which concentrated maximum power in President Tokayev’s hands. On May 2, her rival, seemingly his rival, was the daughter of former president Darig Nazarbayev. Moreover, the president received the right to remove officials of any level from his posts, which undoubtedly greatly stabilized his controversial hitherto position.
Thus, the economic consequences of the coronavirus pandemic in Central Asia look extremely dangerous, and, on the one hand, put the region in danger of social upheaval, and on the other, literally throw it into the arms of China. This applies to both the poorest Central Asian states, such as Tajikistan, and the relatively wealthy Kazakhstan.
At the same time, in some countries the pandemic became an occasion to strengthen the power of the current leaders (Kazakhstan, Tajikistan, Uzbekistan), while in others it put this power into question (Kyrgyzstan). In any case, much will depend on how Russia and, to a lesser extent, Kazakhstan emerge from the crisis, because not only the socio-economic, but also the political stability of the region will directly depend on the direction of movement of labor migrants working there from the poorest Central Asian countries.
(The views expressed in this article belong only to the author and do not necessarily reflect the views of World Geostrategic Insights)