CENTRAL ASIA – April 2020


 

The pandemic in Central Asia

The spread of COVID-19 virus has also affected Central Asia: even if the region has registered a limited number of cases, the quarantine measures could have a serious impact in social and economic terms, further exacerbating existing distortions.

We can observe a different reaction of the Central Asian republics against the COVID-19 threat: while Kazakhstan, Kyrgyzstan and Uzbekistan have introduced quarantine measures trying to contain the spread of the contagious, Tajikistan and Turkmenistan (the most authoritarian states in the region) have defined themselves “COVID-19 free”, declaring no confirmed cases.

Food security, tourism industry, trade and energy relations (mainly with the main economic partners China and Russia, but also with other Central Asian states) will be severely affected by the forthcoming global economic recession. Following the spread of the Coronavirus, the Eurasian Economic Commission has imposed a ban on the export of food until the 30th of June, threatening regional food security: after an initial restriction of wheat and flour’s exports, Kazakhstan (the breadbasket of Central Asia) has elaborated a monthly quota for the sale of wheat to the other Central Asian republics. (Kazakhstan imposes restrictions on wheat exports. Tajikistan will now receive flour under the quota, Radio Ozodi, April 1, 2020, https://rus.ozodi.org/a/30521468.html).

The vulnerability of the Central Asian migrant workers in Russia is another issue to address, because it will produce social and economic repercussions in countries highly dependent on remittances from labour migrants such as Kyrgyzstan and Tajikistan, where remittances account for 30% of national GDP, fuelling consumption and supporting local economy. On the 17th of April President Putin decided to provide financial support for the foreign migrant workers in Russia. This measure will improve conditions especially for nearly 2 million migrants from Uzbekistan and 700.000 from Tajikistan (non-member states of the EurAsian Economic Union) reliving them from buying monthly buy the so-called patents (work permits) until June, while around 600.000 migrants from Kyrgyzstan (which joined EAEU in 2015) were already exempted. (F. Mashrab, Kremlin Provides Financial Support to Stranded and Abandoned Central Asian Migrants, Eurasia Daily Monitor, Vol. 17 Issue: 56, April 23, 2020).

Central Asian states need to receive loans and economic aid from the international financial organisations (IMF, WB, EBRD, ADB) in order to protect their weak economies. Thanks to its National Fund ($60 billion worth), mainly financed by oil revenues, Kazakhstan can mitigate the negative effects on the population and economy: national authorities have recently started to pay compensation for lost incomes.

However, the ongoing collapse of the oil price is a serious concern for Kazakhstan, that estimates a financial break-even point at $55 per barrel, while now it is $20 or less thus depriving the national budget of fundamental resources as well as denting its fund. What is happening is Kazakhstan rings alarm bells in Moscow, where the break-even point for Ural barrel is $42,4 and consequences could be much more difficult.

 

Fabio Indeo PhD holder in Geopolitics at University of Trieste and non-resident fellow research at Center for Energy Governance and Security (EGS South Korea).