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Central Asia: Concern Grows Over Possibility Of Trade War

Prague, 16 February 1999 (RFE/RL) - A recent announcement (Feb. 11) by Kazakhstan's Ministry of Energy, Industry and Trade of a 200 percent increase on tariffs for some foodstuffs and other products from neighboring Kyrgyzstan and Uzbekistan has sparked fears of a trade war in Central Asia.

The tariff increase is due to go into effect on March 11.

Kazakhstan has justified its increased tariffs by citing the need to protect domestic producers from less expensive imports. Prime Minister Nurlan Balgimbayev has claimed that the governments in Kyrgyzstan and Uzbekistan continue to subsidize their producers who he accuses of selling outside their own countries at below cost.

Balgimbayev and other Kazakh officials also point to the Russian financial crisis as sparking these measures. Indeed, Kazakhstan slapped Russia with import restrictions in January.

Russia's crisis affects the other CIS countries as well so it is not surprising that Kyrgyz President Askar Akayev reacted angrily to Astana's latest decision. Akayev said it was the latest example that "the countries of the CIS are sparing no effort to organize an economic blockade against us." Akayev connects it all to Kyrgyzstan's entry into the World Trade Organization late last year and calls Kazakhstan's import restrictions "the traditional habit of punishing anybody who moves forward."

Since the beginning of the year, Uzbek customs officials also have been raising tariff rates along the Kyrgyz-Uzbek border. Reports indicate that goods valued at $100 are subjected to a $16 duty. Such measures have been in effect along the Tajik-Uzbek border since last November and reportedly traffic along the northern part of this border on occasion has nearly ceased all together.

Tashkent has not made any official comment on the announcement from Kazakhstan but, curiously, Balgimbayev said on Tuesday his Uzbek counterpart, Utkir Sultanov, had requested the restrictions. In the last two weeks Uzbek customs officials along the border with Kazakhstan have been checking Uzbek citizens bound for Kazakhstan and turning them back if they have foodstuffs.

Since independence, all the presidents in Central Asia have said that the basis of their relationships should first and foremost be economic cooperation. And that notion was the basis of founding the Central Asian Union (originally called the Central Asian Economic Union) by Kazakhstan, Kyrgyzstan and Uzbekistan in 1994. It was also the basis for the CIS Customs Union of Russia, Belarus and Kazakhstan which was founded in 1995 and joined by Kyrgyzstan the next year.

Kazakhstan's decisions appear to have damaged, perhaps seriously, both these unions. In January there were announcements that a Central Asian Union summit would be held in Bishkek on February 12, but it did not take place, a clear indication of problems.

The situation could easily deteriorate. Kazakhstan can cut imports of food products from these two countries but only at a potential price: southeastern Kazakhstan, where the former capital, Almaty, is located, receives water from Kyrgyz reservoirs, and that water crosses Uzbek territory before reaching Kazakhstan. If Kazakhstan doesn't need Kyrgyz and Uzbek food, Bishkek and Tashkent could well decide southeastern Kazakhstan doesn't need much water either.

Uzbekistan also supplies energy to large parts of southern Kazakhstan and in the past Tashkent has never hesitated to express its displeasure by shutting off energy. When Akayev said his country had been punished in the past for moving forward he likely meant Tashkent's decision to cut off gas supplies to Kyrgyzstan after Bishkek became the first country in the region to introduce its national currency in May 1993.

Economic disputes could have larger geopolitical consequences. One of the reasons Central Asian countries have cooperated up until now is to prevent the region from being dominated by an outside power. If they begin to disagree among themselves, the possibility that an outside power will try to exploit such divisions may grow.