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Qishloq Ovozi

The exchange rates of all the Central Asian national currencies have been devalued, in Kazakhstan's case from about 180 tenges to the dollar, to more than 360 tenges to one dollar in barely six months.

The writing has been on the wall for Central Asia for months now -- an economic crisis was coming to Central Asia and there was no way of avoiding it. There were unfortunately all too few ideas about how to mitigate it.

One month into 2016 it is clear Central Asia has entered a difficult period, but it is unclear when and how the region might recover and what effect these particularly hard times might have on the people of the region.

To discuss this new reality of Central Asia, today and for the foreseeable future, RFE/RL's Turkmen Service, known locally as Azatlyk, assembled a "majlis," or panel discussion.

Azatlyk director Muhammad Tahir moderated the talk. Participating from London was Alex Nice, who covers Russia, the Caucasus, and Central Asia for the Economist Intelligence Unit, and Nate Schenkkan, the project director for Nations in Transit, Freedom House's annual survey of democratic governance from Central Europe to Eurasia and also author of a recent article in Foreign Policy, A Perfect Storm In Central Asia. And I...well, you know.

Most of Central Asia's current problems originate with the falling price of oil and natural gas. This had a direct effect on Kazakhstan, where the economy is dependent on oil sales, as Nice said. "[In] Kazakhstan, the government estimates [the economy] grew by I think by 1.5 percent last year. We at the Economist Intelligence Unit think now that it will move into recession this year and contract for the first time since 1998," Nice said.

Falling commodity prices have had an effect on Turkmenistan, where the economy is based on gas sales. However, as the panelists noted, Turkmenistan is so opaque that it is virtually impossible to know what is really happening inside the country.

Falling commodity prices also directly affected Russia, where for years, millions of migrant laborers from Central Asia have found work. Remittances from these workers fell sharply in 2015 and Tajikistan and Kyrgyzstan are the two most remittance-dependent countries in the world, with money sent home being equivalent to more than 40 percent of Tajikistan's GDP and nearly 40 percent of Kyrgyzstan's GDP. Until the crisis hit Russia, citizens of Uzbekistan had been sending back more than $6 billion annually.

Schenkkan pointed out that beyond the reduction in money these workers send back home, another "area of uncertainty, big uncertainty, is who comes home in terms of migrants."

There are not many jobs waiting back in their homelands. Reports show some of these migrant laborers are migrating to other places within Russia. Some have suggested some of these Central Asian migrant laborers might simply go to another country to try to find work.

But Nice suggested the options are fewer than some people believe. "Russia is obviously more attractive because of historic ties and the visa situation. However complicated it is for migrants to live in Russia, it's probably nevertheless easier than going to the Middle East, let alone Europe or other parts of Asia," Nice explained.

Faced with a deteriorating economic situation, the response of the Kazakh and Tajik governments so far has been to crack down on potential dissent. Schenkkan drew attention to Tajikistan, where the government last year eliminated Central Asia's only registered Islamic party, the Islamic Renaissance Party of Tajikistan (IRPT), the second-largest party in Tajikistan. Schenkkan recalled that "the banning of the IRPT happened after the IRPT was essentially pushed out of parliament entirely after fraudulent elections, even more fraudulent than usual, and the IRPT has now been declared an extremist organization."

Schenkkan also noted that while eliminating these potential political opponents, Tajik President Emomali Rahmon has been moving family members into high-level government posts, Rahmon's son Rustam Emomali, 28, is the head of the State Agency for Financial Control and Fight on Corruption (after serving as deputy Customs Agency chief and prior to that member of the Dushanbe parliament) and Rahmon just named daughter Ozoda, 38, head of the presidential administration on January 27.

Kazakh President Nursultan Nazarbaev has been moving family members into prominent state positions for many years but last September eldest daughter Darigha became deputy prime minister, and just before the year ended Nazarbaev appointed his nephew Samat Abish, 37, to be deputy chief of the Committee for National Security.

Squashing potential opposition and critics and consolidating the inner circles of power might provide a modicum of security for the ruling elites but the authorities nonetheless must implement austerity measures that in some cases are already proving unpopular with the people.

The exchange rates of all the Central Asian national currencies have been devalued, in Kazakhstan's case from about 180 tenges to the dollar, to more than 360 tenges to one dollar in barely six months.

A group of people in Kazakhstan, where demonstrations are rare, who took out home loans based on dollars conducted a "gray mass" protest outside major banks in Almaty on January 16, demanding their loans be recalculated to the tenge rate when they acquired their loans.

Some homeowners in Kyrgyzstan are demanding the same from their government.

Even in Turkmenistan and Uzbekistan, where protests are unheard of, there are signs the people's patience is nearing an end. Some 200 unpaid workers in Turkmenistan's gas industry staged a protest over unpaid wages in the eastern city of Lebap in April 2015, the first reported protest in authoritarian Turkmenistan in 20 years. There are reports from Turkmen opposition websites that around half the workers in Turkmenistan's gas industry will need to be cut due to falling revenues.

Reports from Uzbekistan indicate a growing number of workers, including state employees, are not receiving regular wages and banks are running short of money. Frustrations appear to be boiling over in, for now, isolated cases.

Citizens of Uzbekistan have been unhappy but tolerant of frequent shortages of gas in their homes or gasoline for their cars for several years now. But on the evening of December 18 some 200 residents of a district in the city of Ferghana blocked the road leading to the nearby town of Margilan to protest a halt in gas to their homes.* Police and officials were able to disperse the crowd only after promising to deliver gas canisters to the district.

The Central Asian governments have no solution to these problems; they cannot because the situation is out of their control for the most part.

Schenkkan pointed out this puts Central Asian governments in a difficult situation since for years the leadership has said, "We can't have policies that present a picture of uncertainty to the population, we need to show everybody that this situation is stable." It will be a challenge to maintain this facade as social programs are cut, wages are reduced, arrears build up, and real unemployment rises.

As Nice said, "It's hard to see really what the response is except unfortunately they will experience a couple of years of misery and a sharp fall in purchasing power and household wealth. It's difficult to see how that will be resolved."

The group looked at these issues in greater detail and addressed other topics concerning Central Asia's bad times. An audio recording of the discussion can be heard here:

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* During the discussion I erroneously said this event happened in Namangan. RFE/RL's Uzbek Service has a report on this incident here.

Russian Foreign Minister Sergei Lavrov (left) and Turkmen Foreign Minister Rasit Meredow cut a ribbon during the opening ceremony for new Russian Embassy buildings in Ashgabat on January 27. Lavrov just happened to be in town at the same time as a high-level meeting of Caspian Sea states.

Representatives of the five Caspian Sea littoral states -- Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan -- finished up their most recent meeting on January 29.

The gathering appeared to be the typical "going nowhere" event, but this time Russian Foreign Minister Sergei Lavrov visited Turkmenistan at the same time the special working group was conducting a meeting at the deputy foreign ministers' level. Adding to such suspense as there was, Iran is about to reemerge on world markets and this fact must have altered the routine discussions of the special working group to some extent.

Reports about the January 28 portion of the deputy foreign ministers' meeting seemed to indicate it was business as usual.

My favorite part was the line in nearly every report that the "heads of the delegations expressed the positions of their states regarding the legal status of the Caspian Sea."

Representatives of the five countries have been meeting on the topic for some 20 years. This was the 43rd session of the special working group. It is difficult to believe the positions of the countries are not well-known by this point.

The big issue, as the case has been for more than two decades, is: What is the legal status of the Caspian? If it is a sea, then all five countries map out their territorial waters and exploit the resources as they see fit. If the Caspian is designated as a lake, the so-called condominium approach would be in effect, meaning all the resources of the Caspian, and profits from those resources, would be split equally among the five countries.

In fact, all five have already been developing sites in what would be their territorial waters. The real point of disagreement is over major bilateral projects such as the proposed Trans-Caspian Pipeline (TCP) that would involve shipping Turkmen gas across the bottom of the Caspian to Azerbaijan and then to points farther west.

Turkmen state media (essentially the only kind of media Turkmenistan has) reported the positions of the five countries grew closer during this latest working group session, but that is pretty much what they say every time they meet.

Absent from reports was any mention of whether Iran's position on the Caspian has changed. With some sanctions being lifted on the Islamic republic in connection with Tehran's agreement with world powers on a landmark nuclear deal, Iran is preparing to resume sales of oil and gas on world markets. It is not yet clear what influence that might have on Tehran's position regarding the status of the Caspian Sea, though it is likely Iran will continue to oppose the construction of the TCP, which now more than ever is a competitor project to Iran's own sales of gas.

Russian-Turkmen Tensions

Still, Iran might alter its position on the Caspian if there is any chance that would help draw investors to help develop the Iranian sector. It is also possible that, if Iran successfully reenters the global oil and gas market using other export routes, Tehran might not care so much about affairs in the Caspian Sea.

The presence of Lavrov in Ashgabat while the special working group was meeting there as well seems more than a coincidence, though officially Lavrov was in Turkmenistan to open the new Russian Embassy building.

Russian-Turkmen ties, rarely good, are currently worse than usual due to several issues, the status of the Caspian Sea and Turkmen gas exports among them.

Turkmen and Russian media noted that the status of the Caspian was a topic of discussion when Lavrov met with Turkmen President Gurbanguly Berdymukhammedov.

While Lavrov said the approaches of Russia and Turkmenistan to the status of the Caspian were "close," he offered no details; and it is difficult to see how that is possible. Berdymukhammedov mentioned, as he almost always does during visits by foreign officials, the need for the diversification of energy export routes, particularly from the Caspian region as a means of ensuring global energy security.

Lavrov did not comment directly on that statement, but the Russian foreign minister did mention the possibility of Turkmenistan opening up a transport route with Russia. Berdymukhammedov said the idea had "potential," neglecting to point out there already was a transport route between the two countries that has almost completely closed as ties between Moscow and Ashgabat worsened.

Lavrov also met with Turkmen Foreign Minister Rashid Meredov, but reports of that meeting -- and of Lavrov's meeting with Berdymukhammedov -- made no mention of Russia's decision to drastically cut imports of Turkmen gas last year and totally cut those imports this year. Turkmenistan's Foreign Ministry has released a series of angry statements about Russia's decision to decrease, then cut, Turkmen gas imports, but the issue seems to have been strategically omitted during Lavrov's visit.

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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. Content will draw 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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