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Qishloq Ovozi

People wearing protective face masks line up at safe social distances outside a grocery store in Tashkent.

Charities are springing up everywhere around the world to help those suffering from the coronavirus and the lockdown measures taken to stop it from spreading.

Untold millions need such aid and many who are more fortunate really want to help.

The situations in Kazakhstan and Uzbekistan are no exception and there are charities in those countries that were quickly established to help funnel donations to those needing them.

But questions have emerged in Kazakhstan about the people running one particular fund, and in Uzbekistan there are questions about how much of a charity is voluntary and who, exactly, is receiving the aid.

The stories from Kazakhstan and Uzbekistan are sadly not unique in the world these days.

The number of coronavirus infections continues to rise, medical staff in many hospitals do not have the proper personal protective equipment, and government orders for quarantines and lockdowns have left large numbers of people out of work and without the means to provide for themselves or their families.

Friends And Relatives

On March 13, Kazakhstan reported its first cases of the coronavirus and on March 20, the country’s first president, Nursultan Nazarbaev, called on "those who want and are able, to help the country."

Nazarbaev’s call was seen as directed at those who had become wealthy during the nearly three decades that Nazarbaev was president of Kazakhstan.

It was reported that on the same day Nazarbaev made his appeal, the Birgemiz (We Are Together) social fund was registered.

The managers of the fund were chosen at a March 24 session of the ruling Nur-Otan party, the political party formed and controlled by Nazarbaev.

Soldiers and a doctor man a checkpoint at the entrance to Shymkent, Kazakhstan, on April 30.
Soldiers and a doctor man a checkpoint at the entrance to Shymkent, Kazakhstan, on April 30.

The Peace Through Spirituality social fund and the Veterans Organization were chosen to lead the Birgemiz charity.

Deputy Prime Minister Eraly Tugzhanov, who assumed that post in February, was named to head Birgemiz and Ruslan Sakeev was named the fund's chairman of the board.

Tugzhanov was the governor of Kazakhstan’s western Mangistau Province from March 2017 until September 2019, and in August 2017 he named Sakeev to be his deputy.

The Peace Through Spirituality fund was founded in 2017. The head of the fund is Saule Mukhashova.

According to RFE/RL’s Kazakh Service, known locally as Azattyq, Mukhashova is also the founder of Kazakhstan’s Mineral Resource Investment mining company and the Sayram-Merey and Sat-Astana social funds. None of those organizations pays taxes.

The current head of the State Control Department in Kazakhstan’s presidential administration is Nurlan Sauranbaev. He previously served as governor of Shymkent Province and before that as head of the organizing committee for EXPO-2017 that the Kazakh capital, then called Astana, hosted.

Sauranbaev is Mukhashova’s son-in-law, though Mukhashova told Azattyq that fact had no influence on her organization being chosen to co-manage the Birgemiz fund.

Mukhashova noted that she had been involved in charity work for 15 years and, as this is the Year of the Volunteer in Kazakhstan, she had already in February been in contact with the president’s office about helping with charities.

The other co-manager of Birgemiz is the Veterans Organization, headed by Baktykozha Izmukhambetov.

A former governor of the West Kazakhstan and Atyrau provinces, Izmukhambetov served from March to June 2016 as chairman of the Mazhilis (Kazakh parliament) and, when he stepped down, was named head of the Veterans Organization.

As one would expect, the Veterans Organization provides assistance to war veterans. It was established in 1987 when Kazakhstan was a Soviet republic.

One interesting fact that Azattyq discovered about the Veterans Organization is that it has received 157.5 million tenge (some $369,250) from the state budget in the last four years and paid 48.43 million tenge in taxes during that same period.

Azattyq tried to contact Izmukhambetov to find out why nearly one-third of the money the Veterans Organization received from the state was paid back in taxes and to ask if the organization had other sources of income. But Izmukhambetov declined to comment.

Please Contribute, Or Else

In Uzbekistan, some business owners and state employees say authorities are forcing them to contribute to charity funds aimed at helping those who are facing hardships from the coronavirus crisis.

RFE/RL’s Uzbek Service, known locally as Ozodlik, reported that teachers, bankers, state employees, and others are being forced to donate to the Generosity and Assistance (Sahovat va Komak) Fund that was established on April 22 under orders of President Shavkat Mirziyoev.

These workers are instructed to contribute part of their monthly salaries, anywhere from one day's to one week's worth of wages.

It is illegal to garnish wages or force someone to hand over part of their salary in Uzbekistan, but the people who contacted Ozodlik said authorities are giving them a form to sign saying the money is a voluntary contribution to the fund, donated without any pressure from anyone.

This practice is similar to methods used by authorities in Turkmenistan in 2017 when the government needed money to host the Asian Indoor and Martial Arts Games.

But even before the creation of the Generosity And Assistance Fund, Ozodlik was in contact with people in Uzbekistan who, speaking on the condition of anonymity, explained how they have been conscripted into charity.

A store owner in the Bukhara area said employees of the city administration came to see him in the middle of April and said they needed the owner to donate to charity.

“When I refused to help, they hinted they could cause problems for me. No businessman wants his store closed,” the store owner said.

He said he gave nearly two dozen sacks of flour, several sacks of rice and sugar, and a box of cooking oil to a charity distribution center.

A few days after that, the administration employees returned.

“I am not against helping, but the authorities need to understand our situation,” the owner said. “It’s hard for us, too. There is no business. The export of goods across borders has halted [under the coronavirus lockdowns].”

A state employee in Jizzakh Province told Ozodlik that authorities are strongly urging state workers to contribute to charities.

"They’re insisting we hand over seven days of our salary to needy citizens," the state employee said, adding: “Most [government] workers are the sole breadwinner in the family.”

But the state employee conceded, “They are afraid to say anything to the leadership, worrying they would be fired.”

In Uzbekistan’s eastern city of Andijon, a merchant said the mahalla, or neighborhood, chairman and several other people came to his house to ask him to contribute some money for the needy.

“I have been giving to needy families for a long time,” the merchant said. “I explained to the mahalla chairman that I know who in our mahalla needs help and I deliver it to them with my own hands.”

The chairman said during this time of quarantine that all aid and donations must be delivered to the distribution center, not in person, in order to help prevent the spread of the coronavirus.

The merchant told Ozodlik he doubts that all the aid being delivered to the distribution center is reaching those who need it.

Ozodlik contacted the Mahallas and Families Support Ministry. An official who also asked not to be named said all aid needs to be brought to the distribution center so it can be disinfected before being given to needy families.

He also insisted that all goods being brought to the centers is being donated voluntarily.

Rasul Jonuzakov, a blogger from the Samarkand area, questioned the charity distribution system.

Jonuzakov said, “In a week, they gave help to some 20,000 families in Tashkent, [but] I did not hear that any of those in need in our mahalla received such help.”

Many people would like to help during the difficult times caused by the coronavirus, but everyone wants to know that the money or goods they give to charity actually ends up in the hands of those for whom it was intended.

RFE/RL's Kazakh and Uzbek services contributed to this report
An oil worker carries out maintenance at a well in Kazakhstan's southern Kyzylorda region. (file photo)

When the crucial OPEC+ meeting broke up on March 8 after major disagreement between Saudi Arabia and Russia, it sent the price of oil plunging.

Other countries dependent on oil exports for revenue could only watch with trepidation during the succeeding days as oil prices continued to sink.

Prices did finally stabilize in late March, though at levels significantly lower than they were just weeks earlier.

But the lockdowns around the world caused by the spread of the coronavirus and the accompanying reduction in economic activity resulted in a drastic reduction in the need for oil, leaving a massive glut in supplies.

There was plenty of oil but fewer customers, and storage space for the extra oil quickly reached capacity, leading to a second crash in oil prices on April 20 with West Texas Intermediate (WTI) falling briefly below $0 per barrel.

WTI's nadir dragged the price of other oils like Brent Crude and Urals down with it and some people in the oil business are saying the glut, and historically low prices, could remain for months.

On the eastern side of the Caspian Sea, the governments in Kazakhstan and Turkmenistan must surely be wringing their hands in despair -- in Ashgabat more than in Nur-Sultan.

Comparisons are being made to oil prices in 1998, when the average cost of a barrel of oil was less than $20.

What do 1998 prices mean for Kazakhstan and Turkmenistan?

Latest Economic Disaster

Starting with Turkmenistan, this is just the latest in a series of economic disasters the country has been facing for nearly five years.

Turkmenistan's major export is natural gas and, by most estimates, since the Turkmen government is reluctant to release economic figures, gas exports account for somewhere between 70 and 80 percent of the country's revenue.

And, unfortunately for Ashgabat, the price of gas follows the price of oil.

In 1998, Turkmenistan was locked in tense negotiations with Russia over the price of Turkmen gas.

In those days, all Turkmen gas was still exported (to Ukraine, Georgia, and Armenia) through Russian pipelines, a legacy of the old Soviet infrastructure.

A new gas pipeline to Iran had opened at the end of 1997, but the initial volume being shipped was low, making Russian pipelines really the only option for Turkmen gas exports.

Muslim clergy Turkmen President Saparmurat Niyazov (right) pray at the opening of a gas compressor station at the Korpeje oil and gas field in 2006.
Muslim clergy Turkmen President Saparmurat Niyazov (right) pray at the opening of a gas compressor station at the Korpeje oil and gas field in 2006.

Turkmen President Saparmurat Niyazov wanted $40 per 1,000 cubic meters and Russia was standing by an offer of $32.

Fast forwarding almost 20 years, a dispute over gas prices led to Russia suspending gas imports from Turkmenistan altogether at the start of 2016.

Gazprom finally reached a deal with Turkmenistan in 2019 to purchase a modest 5.5 billion cubic meters (bcm) of Turkmen gas at a price that one report said was "a very low price -- no more than $110 per 1,000 cubic meters."

China is purchasing more Turkmen gas than Russia, some 35 bcm in 2019.

China was reportedly paying Turkmenistan $185 per 1,000 bcm as of 2016. However, there were reports in 2017 that China was seeking -- and as Turkmenistan's sole gas customer at the time probably obtained -- an agreement for a lower price.

No Leverage

Turkmenistan has no real leverage in talks on gas prices with either Russia or China and it is almost certain both will soon be contacting Ashgabat with new proposals for a lower price for Turkmen gas.

Those are Turkmenistan's only two gas customers.

Russia actually does not even need Turkmen gas and China said in early March that it would be reducing gas imports via pipelines and focusing on liquefied natural gas (LNG) imports.

If $110 per 1,000 bcm was considered "a very low price," then $32-$40/1,000 bcm is practically pocket change. But that is probably close to what the price of Turkmen gas will be for much of this year.

As mentioned many times previously, an unknown portion of Turkmen gas exports to China go toward paying off Turkmenistan's debt to Beijing for loans to develop the gas fields and for the construction of the pipeline carrying gas to China.

If the price was $185 per 1,000 cubic meters in 2016, Turkmenistan is currently looking at four times the amount of time needed to repay the remainder of those loans to China while earning about 25 percent of the revenue it received from natural gas sales to China four years ago.

A recent Eurasianet report said of oil-exporter Russia: "[As] the oil price has fallen, the ruble has weakened against the dollar, offsetting some of the decline in the ruble value of exports and reducing the operating cost of Russian oil producers against their international competitors."

An oil- and gas-processing plant in Kyzylorda, Kazakhstan. (file photo)
An oil- and gas-processing plant in Kyzylorda, Kazakhstan. (file photo)

The report noted a "similar adjustment has taken place in Kazakhstan," and contrasted that with Azerbaijan where "the authorities appear determined to avoid any adjustment to the exchange rate."

The report said Azerbaijan was "spending billions [of dollars] to defend its currency."

Turkmenistan is in a similar situation.

The government has not lowered the exchange rate of the national currency, the manat, to the U.S. dollar since early 2015.

Extremely Hard Times

Turkmenistan does not have billions of dollars to spend defending its currency and the government has rejected advice for years that it should devalue the manat.

There have been rumblings that Turkmen authorities are considering lowering the value of the manat, though that would mean further hardship for Turkmen, who have fallen on extremely hard times in recent years due to questionable decisions by the all-controlling government.

As noted, Kazakhstan has allowed its currency, the tenge, to depreciate by some 15 percent since oil prices started dropping in early March.

Meanwhile, Turkmenistan continues to claim there are no cases of the coronavirus in the country and -- though there are restrictions to traveling between provinces -- within cities the population is able to move around as freely as it did before the global pandemic.

As of April 23, Kazakhstan has reported more than 2,250 cases of COVID-19 and 20 deaths from the coronavirus.

Most of Kazakhstan's big cities are under quarantine and the people in them under lockdown.

Such measures are delivering a huge blow to Kazakhstan's economy.

The government is currently giving 42,500 tenge (about $95) to the most needy people in Kazakhstan to help them through the current tough economic times.

The deputy chairman of Kazakhstan's National Bank, Aliya Moldabekova, said on April 8 that the reserve National Fund had $57.5 billion in it, so the country's rainy day fund can continue to alleviate the pressure on the economy and Kazakh citizens for some time to come, though a further depreciation of the tenge, which seems unavoidable, will likely create new social tensions.

But, if oil is destined to remain at $20 to $30 per barrel this year even after the lockdown is lifted and large industries restarted, the country will still face major economic challenges.

Kazakh Energy Minister Nurlan Nogaev said on March 7, "We have budgeted the oil price at $50-$55 [per barrel]. If it falls to $40 and below, the government has a plan to optimize the costs and we are already working on it.

The amount for this year might currently be half of that low figure.

Kazakhstan does have other exports and the reduction in oil prices will put a new focus on the country's grain harvest to offset oil-revenue losses.

But even so, the rest of 2020 will be really tough for Kazakhstan and even harder on Turkmenistan.

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About This Blog

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.

Bruce Pannier
Bruce Pannier

Content draws 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.

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