This brief is a part of The Ukraine Crisis: Cause and Course of the Conflict
Even as the world was limping back on the road to recovery after the devastating economic impact of the COVID-19 pandemic, Russia’s brazen military invasion of Ukraine and the West-led response through unprecedented sanctions on the aggressor has triggered a new wave of tremors. The Central Asian Republics (CARs), which abut the war zone, are the victims of the ongoing war’s immediate collateral damage. India is well-placed to use the situation to increase its engagement with Central Asia.
Russia and its Central Asian backyard
Ever since the disintegration of the erstwhile Soviet Union, Russia has focused its energies on not letting the CARs—former constituents of the Soviet landmass, draw close to Europe and the US. Considering the five CARs—Tajikistan, Kyrgyzstan, Uzbekistan, Kazakhstan, and Turkmenistan—to be its backyard in Central Asia, Russia has been wary of its “backyard” being used by the West to pose a direct challenge to its individual and regional security interests. The landlocked CARs, on the other hand, are heavily dependent on Russia for export routes, labour market, and many infrastructure projects. Given such political and economic dependence, the prolonged Russia–Ukraine conflict and the global isolation of Russia have caught the CARs between a rock and a hard place.
The landlocked CARs, on the other hand, are heavily dependent on Russia for export routes, labour market, and many infrastructure projects.
Sanctions on Russia have prevented European goods
from reaching CARs via Russia and the resource-rich CARs have lost access to their export markets in the West arresting their progress towards post-pandemic recovery. Though the US has exempted the Chevron-led Caspian Pipeline Consortium from
sanctions, these hydrocarbon-rich Central Asian countries are finding it difficult to channelise their oil and gas exports through Russia. While Russia has renewed gas purchases from Turkmenistan
after 2019; cutting off gas supplies from Moscow by western economies will have an immediate impact on Ashgabat.
Since the start of the war in February 2022, the Russian ruble has plunged around 50 percent
against the dollar, triggering a cascading effect amongst the CARs, whose economies remain closely knit with Russia’s. For example, the Kazak currency, the tenge, has lost 20
percent against the dollar since the war began in February 2022. Similarly, the Tajik somoni has seen a fall of nearly 35 percent of its value against the ruble. Kyrgyzstan's som has also plunged along with the ruble. The value erosion of domestic currencies has forced the National Banks of some CARs to increase the benchmark interest rate and inject money from their currency reserves into the domestic market to support the currency and maintain price stability.
Several under-developed economies of Central Asia, especially Tajikistan, Kyrgyzstan, and Uzbekistan, are heavily dependent on remittances from their migrant labour force who work in Russia. Even during the severe COVID-19 pandemic last year, more than 2.5 million
labourer migrants from CARs were working in Russia. Remittances from migrant workers contribute 26.7 and 31.3 percent to the GDPs of Tajikistan and Kyrgyzstan respectively. Remittances account for 11 percent of the Uzbek GDP. According to recent estimates by the World Bank, remittances will fall by 33 percent in Kyrgyzstan and 22 percent in Tajikistan over the next twelve months or so because of the negative impact of the sanctions on the Russian economy.
The value erosion of domestic currencies has forced the National Banks of some CARs to increase the benchmark interest rate and inject money from their currency reserves into the domestic market to support the currency and maintain price stability.
Since 10 March 2022, Russia banned the export of grain and white sugar to the Eurasian Economic Union (EAEU), the CARs are also staring at the grim prospect of food insecurity. For example, in 2021, Kazakhstan imported 2.3 million tons of grain out of which 77 percent was purchased from Russia. Post-Russia’s ban, Kazak authorities have also decided to suspend wheat exports, leading to a similar crisis in Kyrgyzstan and other countries. Kyrgyzstan, the poorest country in the region is mainly dependent on Russia and Kazakhstan for its wheat imports which are 90 percent.
The poorest of the CARSs, especially Tajikistan and Kyrgyzstan, are also likely to witness growing civil unrest and large-scale instability as the ongoing Ukraine crisis will increase frustration amongst its unemployed youth. The war will also widen the border and ethnic faultlines in the Central Asian region.
Previously, Russia was seen as a source of stability, security, and territorial integrity in the Central Asian region, however, after the Russian aggression in Ukraine, the CARs started to fear for their sovereignty. The CARs have tried to remain neutral on the issue of the Russian–Ukraine war. In the March 2022 United Nations General Assembly (UNGA) special emergency session on the conflict, Turkmenistan and Uzbekistan remained absent, while Kyrgyzstan, Kazakhstan and Tajikistan abstained from voting. The overt dependence of Central Asia on the Collective Security Treaty Organisation (CSTO) came to the forefront recently when troops from this organisation were sent to Kazakhstan to control the situation in January 2022, after protests erupted all across the country against the government on the price hike.
As a security patron, Russia sent military equipment to the Tajik–Afghan border under the CSTO and held military exercises with Tajikistan and Uzbekistan to deter any Taliban misadventure.
The Taliban capture of Afghanistan has also once again created security dilemmas and economic implications in CARs, particularly in the states that share a 2,387-kilometre-long porous border with Kabul. As a security patron, Russia sen
t military equipment to the Tajik–Afghan border under the CSTO and held military exercises with Tajikistan and Uzbekistan to deter any Taliban misadventure. However, Russia’s invasion of Ukraine with its all military might has left the CARs in doubt about receiving similar assistance from Russia in the foreseeable future. Russian pre-occupation in Ukraine has also increased the anxiety amongst the CARs about the revival of the terror sleeping cells that are omnipresent in the region and even the new ones like ISIS. Given the uncertainty of Russian help, the rise of the Taliban and the presence of other militant groups will force the CARs to seek a new security arrangement.
Challenges and opportunities for India
Though Central Asia had economic and security dependence on Russia, the region will try to renew and pursue a multi-vector foreign policy outlook to minimise Moscow’s influence. Given the economic and security fallouts of the Russia–Ukraine conflict, China will try to intensify its strategic and economic engagements with the region. Beijing’s growing stature in CARs will go against India’s regional interests. However, China is still hesitant to play a larger role in Central Asia’s security matters to avoid clash a with Moscow’s interests. After the setback in Afghanistan, the tilt of Central Asia towards China will create more strategic concerns for New Delhi. India needs to use this situation and urgently start a renewed engagement with the CARs before China encashes on this opportunity. India has accelerated its engagement with Central Asia in the past two years, especially after the rise of the Taliban, for its geostrategic and geoeconomic vectors. New Delhi needs to prioritise investments in strategic infrastructural projects and also extract regional leverage by connecting the Chabahar Port in Iran with Ashgabat to have unhindered access to Central Asia.
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