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Central Asia: Poverty Could Trigger Instability

London, 26 May 1998 (RFE/RL) -- One of the world's leading authorities on Central Asia, Shed to address the worrying problem of poverty because this is a potential cause of future political instability.

Akiner spoke to a business conference in London which focused on the investment climate in the five Central Asian nations: Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Tajikistan.

Akiner, who teaches at the School of Oriental and African Studies, London University, said there is "a poverty gap" in all five newly independent countries. According to official estimates, 73 percent of the population of Kazakhstan and 60 percent of Kyrgyzstan live below the poverty line, and "the picture is the same elsewhere."

But Akiner said these statistics do not give an entirely accurate picture because their black economies are very buoyant.

"So whereas the official statistics may show a high level of poverty, the actual level may be somewhat lower. Nevertheless, this is an extremely worrying phenomenon and unless this is addressed soon, it's a possible potential cause of political instability in future."

Akiner spelled out both the opportunities and problems likely to face western firms wanting to invest in the Central Asian region.

On the positive side, she said the region is extremely rich in natural resources, particularly oil and gas, while it has impressive agricultural potential; it has a young, virtually 100 percent literate population; and its bureaucracy, compared with much of the developing world, is modern and well-organized. Furthermore, she said, in all the Central Asian states, there is a clear commitment to economic reform, accompanied by "remarkable political stability" across the region, except for Tajikistan.

The Central Asian states have shown a real desire to cooperate among themselves. She noted that a Central Asian Union has been formed, of Kazakhstan, Uzbekistan and Kyrgyzstan, and it's possible Tajikistan and Turkmenistan will join in future. The Central Asians have also stated their intention to remain outside "ideological blocs", while they are committed to investment promotion policies.

What about the downside? She listed the problems for investors under three headings: geographical, structural and cultural.

As far as geography is concerned, the Central Asian countries, at the heart of the "Eurasian landmass," are thousands of kilometers in any direction from an open sea. In addition, distances are enormous, and the mountainous terrain is extremely difficult.

The structural problems are typical (albeit more acute) of those found throughout the CEEC and former Soviet Union. In particular, a stable legal structure, vital for business confidence, is lacking; tax regimes are irrational; and there is a lack of reliable information.

She also said the political stability of the Central Asian nations may have been bought at the price of possible instability later.

"The incumbent leaders in four of the five republics, leaving Tajikistan aside, are those who were in power before the collapse of the Soviet Union. They have done a tremendous amount to preserve stability in these early years, far more than anyone thought possible. They have remained in power for one term, arguably for two, there is some discussion in each state as to exactly when the second period began, and it's seems likely that most of them will seek a third period of office. Whatever your views on the legitimacy of remaining in power, we must all agree that sooner or later, the incumbent leaders must leave the stage, voluntarily or involuntarily. It is likely there will be a period of instability when this happens."

As far as cultural problems are concerned, Akiner said there is a high level of corruption in the Central Asian nations, while there is often a lack of transparency and openness. But, in general, her message to potential investors was a positive one:

"In all the Central Asian states, there is a clear commitment to economic reform. The pace of reform varies, but in all these states, measures have been in place to liberalize prices, to introduce privatization programs, and to take the other necessary steps to move towards a market economy."