Central Asia Digest | May 2022

HIGHLIGHTS

● Political Developments
● Economic Developments
● India-Central Asia Relations

Political Developments

In his state of the nation address, Kazakh President Kassym-Jomart Tokayev outlined major political initiatives and programs to contribute to a consistent democratization, and ensure the stability of the country. The implementation of the initiatives will require approximately 30 amendments to the Constitution and the adoption of more than 20 laws before the end of the year. The ten main areas of focus for political reforms include limiting the powers of the President. This reform continues the reforms launched in 2017 when the powers of the President to regulate socio-economic and organizational processes began to be redistributed. The term “Second Republic’’ implies a structural change in the country and a transition to a new political model; a transition from a super-presidential form of government to a presidential form with a strong parliament. Close relatives of President will not be allowed to hold senior positions of political civil servants and senior positions at the quasi-public sector. The amendments seek to reduce the presidential quota in the Senate of the Parliament from 15 to 10 deputies. Five of these deputies will be recommended by the Assembly of the People of Kazakhstan. Previously, the President took part in the formation of the Supreme Judicial Council’s composition and appointed the Chair of the Constitutional Council. Now, these rights will be transferred to the deputies of the Senate of the Parliament. The Supreme Judicial Council’s composition will be determined by law. The Majlis, the lower house of the Parliament, will transition to a mixed proportional-majoritarian model, where 70 percent of deputies will be elected by a proportional model, and 30 percent by a majoritarian rule. There are also amendments related to the termination of the President’s right to suspend or cancel the acts of akims (governors) of districts and cities of republican significance, as well as the right to dismiss district and rural governors.

During his visit to the US at the head of a Kazakh delegation, First Deputy Chief of Presidential Staff Timur Suleimenov spoke about Kazakhstan’s economic outlook against the backdrop of Western sanctions against Russia. He said that Kazakhstan’s economic ties with Russia are strong and Western sanctions against Russia have the potential to seriously affect investment and economic growth in Kazakhstan. As Kazakhstan is trying to mitigate what he described as collateral damage from the sanctions, opportunities for Kazakhstan are also emerging. He said that he was visiting the U.S. with two goals in mind – to reinvigorate the bilateral ties with the U.S., both with the government and think tanks, and meet in person with the International Monetary Fund and World Bank officials – something that has long been impossible because of the COVID-19 pandemic. A key goal of the Kazakh delegation was to talk to American partners so that the sanctions are designed to cause the least collateral damage to Kazakhstan.

In Kazakhstan, only 162 families own half of the country’s wealth, according to a 2019 KPMG report, while half of the population has a monthly income per capita of no more than 50,000 tenge (US$110).

The Amanat party which is the new name of the ruling Nur-Otan party, took some significant decisions at its 23rd congress. The first was that President Tokayev will no longer lead the party. On paper, this is a huge departure from the past. Until earlier this year, the party was led by Tokayev’s predecessor, Nursultan Nazarbayev, who stepped down as president in 2019. (The very name Nur-Otan, Radiant Fatherland, was a tribute to the former leader). But Nazarbayev was unceremoniously shunted out of the chairmanship in the wake of the public unrest that broke out in early January, much of which was fueled by anger at his decades of crony rule. Tokayev declared that he didn’t want the position. He is advocating “deep de-monopolization of all spheres,” implying that he doesn’t want the executive branch to be seen as dominating the political scene also. There is still room for some constitutional overlap, though. The new leader of Amanat will be Yerlan Koshanov, who is also speaker of the Majlis. Koshanov is a former chief of staff to Tokayev and, accordingly, an uber-reliable ally.

The continuing influence of Nazarbayev and his extended network of wealthy relatives and cronies appears to be behind much of this reorganization of the party. Tokayev appears genuinely committed to creating the appearance – or possibly even the reality – of a competitive electoral scene.

81-year-old Nazarbayev’s star appears to be constantly on the decline. More of his relatives and allies, many of whom grew exceptionally wealthy under his watch, keep getting into trouble. The most high-profile victim of the purge so far has been his nephew, Kairat Satybaldy, who was thrown behind bars in March pending investigations on major embezzlement charges. Barely a week passes without somebody in Nazarbayev’s wider circle either being arrested, losing their job, or becoming the subject of rumors they are about to be arrested or lose their job. Until now, Nazarbayev himself has been off-limits, but even his position looks weaker than ever in the past. Under planned changes to the constitution, he is expected to lose the perks that came with his title of Elbasy, or Leader of the Nation, a position that granted him lifetime immunity from prosecution and ensured that his riches, of which he is said to have very many, would be protected. Nazarbayev will continue to be honored as the “founder of the state,” so there is no suggestion that he would be thrown into jail, but whatever authority he once wielded from behind the scenes will vanish almost entirely.

Pope Francis will be visiting Kazakhstan to participate in 7th Congress of Leaders of World and Traditional Religions in September, 2022. While Muslims constitute 70 percent of the population, Christians, mostly Orthodox, number about 30 percent. However, Catholics are a tiny minority of hardly 2 percent of the population. Kazakhstan’s Catholic hierarchy is relatively new. In 2019, the Vatican established one diocese and three apostolic administrations in Kazakhstan with a clergy comprising 50 priests serving in 27 parishes of the Latin rite and of the Greek Catholic rite.

It is reported that some guards have been withdrawn by Kyrgyzstan from an area along the Kyrgyz-Tajik border where shooting broke out on April 12. Talks have begun to de-escalate the situation. Two shootings occurred earlier on the Kyrgyz-Tajik border. According to Kyrgyz officials, the first was a shoot-out between Kyrgyz and Tajik border guards. Almost half of the 970-kilometer Kyrgyz-Tajik border has yet to be demarcated, leading to repeated tensions since the two countries gained independence after the breakup of the Soviet Union more than three decades.

Kyrgyzstan has banned the "Z" symbol from being used during Victory Day celebrations on May 9. The State Committee for National Security said in a statement that the use of the symbol, which has been used by Russia's armed forces to mark their vehicles and equipment during the invasion of Ukraine, will be considered to be "inciting ethnic hatred."

Kyrgyz Minister of Foreign Affairs Ruslan Kazakbaev was relieved of his post. In his place, Jeenbek Kulubaev was appointed as acting Minister of Foreign Affairs of Kyrgyzstan.

The fifth meeting of the Foreign Ministers of the countries participating in the Dialogue "Central Asia - Russia" was held as a videoconference. The foreign ministers reviewed the interaction in the political, trade, economic, cultural, and humanitarian spheres between the countries of Central Asia and Russia. Delegates also touched upon the issues of maintaining regional stability and security in the region.

Central Asia is currently the focus of Turkey’s foreign and economic policy, as demonstrated by numerous visits by high-ranking politicians and officers to Turkic nations, increasing economic links and the institutionalization of bilateral and multilateral relations. Multilateral cooperation has sent Turkey soaring to become a political power in Eurasia. Central Asia is increasingly significant for Turkey – trade and diplomacy with the region, tourism, technology transfers and energy exports to Turkey are constantly growing. Turkey has historical cultural, ethnic and religious links to Central Asia, in particular, it’s where Turkey’s history and identity began.

Kazakh President Tokayev said that Kazakhstan has launched an unprecedented decentralization of state power, enhancing checks and balances. Speaking about Kazakhstan’s fundamental priorities, he pointed out the importance of “strengthening the trust of foreign investors and trading partners in the Kazakh economy.” He added that Kazakhstan will ensure the continued openness of the national economy, the sanctity of contracts, and a relentless fight against corruption. Tokayev said that the growing tension in international relations negatively impacts world development and expressed hope for a swift and fair resolution of the conflicts in accordance with the Charter of the United Nations.

Kazakhstan President Tokayev stated in an interaction with the Executive Director of CICA (Conference on Interaction and Confidence-building Measures in Asia) Secretariat Ambassador Kairat Sarybay that transformation of CICA into a full-fledged international organization is a priority goal of his government. CICA is an inter-governmental forum for enhancing cooperation towards promoting peace, security and stability in Asia. Sarybay spoke about the preparation for the sixth CICA Summit which will be held on October 12-13 in the Kazakh capital.

In Kyrgyzstan, Next TV director Taalai Duishenbiev faces up to seven years in prison on charges of spreading false information and “inciting ethnic hatred” because of a report about the war in Ukraine that this opposition TV channel reposted on its social media accounts.

A regional affiliate of Islamic State on Monday said it had carried out a rocket attack on Uzbekistan from neighboring Afghanistan, the first strike by the terrorist group against the Central Asian nation. Islamic State Khorasan Province (ISKP) said that it had fired 10 rockets at an Uzbek military base in the border town of Termez. The claims were accompanied by video footage of the rockets allegedly used in the assault. The office of Uzbek President Shavkat Mirziyoyev responded within hours, however, to deny any rockets had landed on Uzbek territory. The Defense Ministry followed up on to reaffirm the denial. The Uzbek Defense Ministry urged its citizens not to believe such “false” reports and rely only on “official sources” of information. The ISKP’s extravagant claim arrived just as it apparently embarked on a recruitment drive across Central Asia. The group has “recently ramped up the production, translation, and dissemination of propaganda directed at Uzbek, Tajik, and Kyrgyz speakers in the region.” Russia has been an active disseminator of alarm about the ISKP’s threat to Central Asia. Russian foreign minister said that units of Ansarullah Jamaat and the Islamic Movement of Uzbekistan are building up on the Afghan-Tajik and Afghan-Uzbek borders.

The main areas of cooperation between Central Asia and Japan are political dialogue, development of intraregional cooperation, promotion of business, intellectual dialogue, cultural ties and strengthening of human capital. During online talks with ministers and officials of the Central Asian countries, Foreign Minister of Japan Yoshimasa Hayashi condemned Moscow’s invasion of Ukraine as a serious breach of international law. These countries pledged to closely communicate over their responses to Russia’s invasion of Ukraine, the Japanese Foreign Ministry said.

On a visit to Kazakhstan and Uzbekistan the Japanese Foreign Minister requested the countries to keep in line with the international community against Russia's invasion of Ukraine. Kazakh foreign minister who doubles as deputy prime minister responded by saying his country is ready to make diplomatic efforts toward a peaceful solution. Japanese FM also met with Kazakh President Tokayev.

Economic Developments

Uzbekistan plans to transform its stock and bond markets to attract much-needed capital from abroad. Roadshows, tax cuts and easing of restrictions are on the agenda as Uzbekistan prepares to sell off state assets. Uzbekistan’s officials are keen to carry out a slew of privatizations, IPOs and debt issues so that by offering a wider array of stocks and bonds, they can draw foreign investors and raise much-needed funds for the government and to rejuvenate state and private-sector companies. Uzbekistan’s economy weathered the Covid-19 pandemic relatively well. It grew 1.7% in real growth terms in 2020, one of the few countries to maintain positive real growth. GDP growth in 2021 is expected to register 6.5%.

Several million Central Asian migrant labourers work in Russia, mainly from Kyrgyzstan, Tajikistan, and Uzbekistan. Due to the damage to the Russian economy as a result of the western sanctions, the income of the Central Asian labourers has been severely impacted, which would mean lesser chances of sending home remittances and reverse migration in search of livelihood. The money sent back home by the workers is crucial for the economies, and makes up 31, 27, and 12 per cent of their GDP, respectively. The World Bank estimates that the value of remittances from Russia would drop in Uzbekistan by 21 per cent, in Tajikistan by 22 per cent and by 33 per cent in Kyrgyzstan.

Remittances sent by labor migrants have an overwhelming significance for families in Kyrgyzstan, Tajikistan, and Uzbekistan who are supported by these funds. Russia is the destination for most Central Asian labor migrants and therefore the main source of remittances. Russia’s economic activities have begun to contract under sanctions, a trend that is likely to continue.

According to latest estimates, remittances to Kyrgyzstan are the most dependent on Russia. Last year (January-September 2021), the share of remittances from Russia constituted 83% of all remittances to Kyrgyzstan. The same statistics for Tajikistan and Uzbekistan indicate less dependence on Russia: 58% of all remittances to Tajikistan and 55% of all remittances to Uzbekistan came from Russia.

In absolute dollar amounts, remittances from Russia to Uzbekistan are the highest compared to Kyrgyzstan and Tajikistan, given the greater number of Uzbeks traveling abroad for work, a product of the country’s vastly larger population. In 2020, Uzbekistan migrants remitted $6.98 billion, Kyrgyzstan migrants $2.4 billion, and Tajikistan migrants $2.18 billion.

Migrants who lost jobs in Russia and whose earnings have been devalued have started returning to Central Asia. Tashkent reported 133,000 returned migrants from Russia in the first quarter of the year. Dushanbe reported 60,337 returned migrants from Russia in the first quarter of this year, which was 2.6 times more compared to the same period in 2021.

Another area where Central Asian countries are affected by Russia’s economic troubles is trade. For Uzbekistan (using 2020 data) Russia is the second largest export partner, accounting for 12.5% of exports and 21% of imports. Inevitably, Russia’s economic difficulties will push Uzbekistan to seek other markets to sell and buy, but these adjustments will take time. For Tajikistan, Russia is not a big export market; Dushanbe only sends 2.56% of its exports to Russia. But Russia is Tajikistan’s second largest import partner. For Kyrgyzstan, 9% of its exports go to Russia and 21.8% of imports come from Russia.

Polls conducted among Central Asian migrants a month after Russia’s invasion to Ukraine indicated that around 40% of migrants from Uzbekistan and Kyrgyzstan were ready to return home after losing jobs or income. That share is probably similar for Tajikistan migrants as well.

Kazakhstan's decision to ban wheat exports is bad news for its Central Asian neighbors, which get some 90% of their wheat imports from their northern neighbor. One of the world's major wheat growers, Kazakhstan also imports relatively inexpensive wheat from Russia to use domestically and to resell its own more expensive wheat to other countries. But Russia, the world’s largest wheat exporter, temporarily banned grain exports to its fellow members of the Moscow-led Eurasian Economic Union (EEU) -- Kazakhstan, Kyrgyzstan, Belarus, and Armenia -- in March, 2022.

The Kazakh Agriculture Ministry now says it will limit wheat and flour exports to 1 million tons and 300,000 tons, respectively, for three months starting on April 15. Russia said it was suspending wheat, rye, barley, and maize exports until June 30 to “protect the domestic food market in the face of external constraints” amid harsh Western sanctions over its invasion of Ukraine. Tajikistan annually buys nearly 1 million tons of wheat from Kazakhstan, which accounts for up to 94 percent of Dushanbe’s grain imports. Kyrgyzstan gets about 40% of its imported wheat from Kazakhstan. Bishkek’s main grain supplier is Russia.

Many workers in South Kazakhstan went on strike because of dissatisfaction with salaries paid out by the Chinese subcontractor: between $130 and $260 per month for 10-hour workdays. Worker unrest has been rippling across Kazakhstan in recent months, the latest cause for Chinese investors to reconsider ventures in the country. Popular opposition to Chinese investments has led to several political protests since 2016, and simmered under the surface of many others.

The business portal LSM.kz has tracked several Chinese pull-outs. LSM cited the Aktobe regional administration, in Kazakhstan’s oil-rich west, as saying that a Chinese firm had backed out of a $35 million project to produce carbon black. In 2020, LSM reported that Chinese firms had withdrawn from a $1.4 billion fertilizer production project in the same region, a tungsten development project worth nearly $1 billion in the central Karaganda region, and a deal to build a silicon plant worth $115 million in the northern region of Pavlodar.

Abu Dhabi-based Masdar, one of the world’s leading renewable energy companies, has signed a MoU with Kyrgyzstan to develop renewable energy infrastructure and support its clean-energy objectives. Masdar will explore the development of and investment in a range of renewable energy projects, including ground-mounted solar photovoltaic (PV), floating solar PV and hydropower projects, with a potential capacity of up to 1 gigawatt (GW). Masdar will support Kyrgyzstan’s efforts to diversify its energy sources, cut greenhouse gas emissions and deliver carbon-free development by 2050. Kyrgyzstan has abundant potential to develop a wider range of clean energy resources, including solar and floating solar, which will deliver greater energy security and support better management of water resources. Kyrgyzstan has set a target to reduce greenhouse gas emissions by 44% by 2030, and achieve carbon neutrality by 2050. While the country already generates around 90% of its electricity from hydropower, this is almost exclusively from ageing plants.

IMF has stated that rising prices for food, energy and other goods could trigger social unrest, particularly in vulnerable developing countries. Reduced supplies of oil, gas and metals produced by Russia, and wheat and corn – produced by both Russia and Ukraine – have driven up prices sharply inter alia in Central Asia among others and were particularly hurting lower-income households around the world.

The U.S. Agency for International Development (USAID) hosted a two-day meeting with Deputy Ministers of Energy from around Central Asia to enhance regional cooperation and strategize on the implementation of a fully functional and sustainable Central Asia regional electricity market (CAREM).

Uzbekistan plans to expand investment, trade and economic cooperation with Saudi Arabia. This was discussed between Deputy Prime Minister - Minister of Investments and Foreign Trade of Uzbekistan and Minister of Investments of the Kingdom of Saudi Arabia. They discussed the prospects for the implementation of new projects in such areas as the chemical, metallurgical, mining and textile industries, as well as agriculture, and agreed to work together to attract Uzbek and Saudi businesses to participate in these projects. Currently, about 40 enterprises with Saudi capital operate in Uzbekistan. Projects with such leading Saudi companies as ACWA Power, Al-Habib Medical Group and others are being successfully implemented. During the negotiations, special attention was paid to projects aimed at ensuring food security. They agreed to form a separate investment portfolio in the field of agriculture and processing of agricultural products, which provides for the introduction of innovative and water-saving technologies. Cooperation in the textile industry was also discussed

Uzbekistan is hoping to increase its trade with Russia. Uzbek President Mirziyoyev and Russian Minister of Industry and Trade Denis Manturov discussed bilateral cooperation. The Russian minister was taking part in the international industrial exhibition “Innoprom. Central Asia 2022” in Tashkent. The focus was on increasing mutual trade, implementing investment programs and promoting new localization projects, and cooperation between the two countries’ regions. Particular attention was paid to implementation of joint projects in the field of mechanical engineering, metallurgy, agriculture, light industry, chemical and pharmaceutical industries. Russia remains one of the largest investment and foreign trade partners of Uzbekistan. The investment of Russian companies in Uzbek economy are above $10 billion.

For the first time in a decade, Tajikistan sent a delegation to Washington to seek aid from international financial institutions. Facing risk of default, the Tajik government has finally run out of alternatives. Earlier this month Tajik President Rahmon instructed his public to stockpile two years’ worth of food.

Consumers in Turkmenistan may pay a lot more than money for their daily bread after officials warned that anyone found buying more than their allotted share of the item could be jailed. Police monitor lines at state grocery stores, taking pictures and filming customers to prevent them from returning to buy extra bread. Police warned that anyone found buying more than their allotment of bread will face a penalty of up to 15 days in jail. Turkmen government has been forced to tighten controls as poverty and economic hardship grow across the country despite its wealth of energy resources. Despite being home to the world's fourth-largest proven natural-gas reserves, corruption and chronic mismanagement of resources have led Turkmenistan into an economic tailspin. The situation has been exacerbated by the coronavirus pandemic, which the Turkmen government officially denies.

A pipeline that Kazakhstan uses to export most of its oil began operating at full capacity over the weekend, one month after key offloading infrastructure was allegedly damaged in a storm. This is welcome news for Kazakhstan, which sends more than two-thirds of its oil to Europe via the CPC pipeline. After Russia announced the accident at Novorossiysk on March 22, Kazakhstan was forced to reduce oil production and incur considerable losses. On April 19, Finance Minister Yerulan Zhamaubayev told reporters that a preliminary assessment put those losses at up to 150 billion tenge ($337 million).

The Russia-Ukraine war has brought a new evolution in the geopolitics of energy. As a result of sanctions imposed by the European Union and other western countries on Russia, they are looking towards Central Asian countries as an alternative for supply of gas. Turkmenistan seems the right option but China will become a major competition for Europe as China is the largest buyer of Turkmen gas accounting for over 60 per cent of pipeline imports in 2019.

India-Central Asia Relations

Ambassador Kairat Sarybay, Executive Director, CICA visited India to participate in the Raisina Dialogue and met Minister of State for External Affairs Meenakshi Lekhi, Secretary (West) Sanjay Verma and Additional Secretary (DISA) Arya Sandeep. During his visit Sarybay said that CICA believes in consensus and coordination. All decisions within this organization of 27 countries are taken by consensus. This is the reason why even the most hostile countries like Iran and Israel can express their views on this forum in a democratic way. Both these countries are members of this forum. India has an important role in the emerging scenario of the world. There is a need to learn from India’s policies. The dispute between Russia and Ukraine can also be resolved by the same policy that India has adopted. The biggest feature of this policy is to respect the borders of other countries and not to play with the sovereignty of anyone. Ambassador Sarybay said that India’s policy has moved from non-alignment to multi-alignment. It is good for dialogue and democracy. Referring to Sri Lanka, he spoke of CICA’s outreach program and specifically mentioned its successes. He appreciated India’s very active role in CICA. According to him, the purpose of CICA was to achieve peace, security and stability in Asia. Ambassador Sarybay also mentioned the situation in Afghanistan and stressed the need for stability and peace there.

Dr Eldor Aripov, Director of Institute for Strategic and Interregional Studies under President of Uzbekistan visited India to participate in the Raisina Dialogue. He took the opportunity to meet and exchange views with the Indian Council for World Affairs and Vivekananda International Foundation. He briefed the participants on the main goals and objectives of the New Uzbekistan Development Strategy for 2022-2026, projects in Central Asia and South Asia, regional security, trade, economic, transport and logistics. He also exchanged views on the current state of cooperation in the cultural and humanitarian spheres and their development. Discussions focused on the important initiatives of Uzbekistan's chairmanship of Shanghai Cooperation Organization this year and further use of the organization's potential. During the talks, views of Indian participants on the prospects of bilateral cooperation between Uzbekistan and India were discussed. Further strengthening the activity of "think tanks" to promote relations were also considered.

After a two-year break caused by the coronavirus pandemic, Tajikistan has resumed regular flights inter alia on the Dushanbe-New Delhi-Dushanbe sector. This flight will operate twice-weekly.

 

The previous issues of Central Asia Digest are available here: LINK

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(The views expressed are personal)
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About the Author

Ambassador Ashok Sajjanhar

Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of Global Studies and Distinguished Fellow, Ananta Centre

Ambassador Ashok Sajjanhar belongs to the Indian Foreign Service and has acquitted his responsibilities in the diplomatic service for 34 years. He was Ambassador of India to Kazakhstan, Sweden and Latvia and has worked in senior diplomatic positions in Indian Embassies/Missions in Washington DC, Brussels, Moscow, Geneva, Tehran, Dhaka and Bangkok and also at Headquarters in India. He negotiated for India in the Uruguay Round of Multilateral Trade Negotiations and in negotiations for India-EU, India-ASEAN and India-Thailand Free Trade Agreements.

He contributed significantly to strengthening strategic ties and promoting cultural cooperation between India and USA, EU, Russia and other countries.Ambassador Sajjanhar worked as head of National Foundation for Communal Harmony to promote amity and understanding between different religions, faiths and beliefs. Ambassador Sajjanhar has been decorated by Governments of Kazakhstan and Latvia with their National Awards and by Universal Peace Federation with Title of ''Ambassador of Peace.'' Currently Ambassador Sajjanhar is President of Institute of Global Studies, New Delhi. He writes, travels and speaks extensively on issues relating to international relations, foreign policy and themes of contemporary relevance and significance. He appears widely on TV panel discussions. Ambassador Sajjanhar is interested in reading, music and travelling. His wife Madhu is an economist and an educationist. They have a son and a daughter both of who are accomplished singers. Their son passed out of Yale University and their daughter is pursuing her PhD at University of Minnesota.