Trends in Central Asia in 2020
Dr Pravesh Kumar Gupta, Research Associate , VIF
Introduction

The past 2020 is marked by Central Asia’s struggle with the COVID-19 pandemic and the subsequent socio-economic impacts. The pandemic turned out to be a litmus test for the already troubled economies of Central Asia. The year was also marked by significant integration activities and domestic political developments in these five post-Soviet republics. A major highlight of political trends in Central Asia was Uzbekistan and Kazakhstan’s regional leadership in helping other Central Asian countries combat the challenges arising from the COVID-19 pandemic. There were several other socio-economic and political developments in Central Asian Republics (CARs). Some of the most important developments were the discrepancies in the elections leading to Kyrgyzstan’s power transition, failing health infrastructure, and social protection. Due to measures adopted by the CARs to contain the virus’s spread, issues such as a sharp reduction in remittances, stranded labour migrants, and deterioration in trade and investments were also witnessed. While the pandemic decelerated the pace of Uzbekistan’s reforms, Tajikistan struggled to curb the pandemic’s impact and curtail anti-Chinese sentiments. Turkmenistan remained politically isolated and economically distressed amidst the continuing excessive state control.

COVID-19 in Central Asia: Health and Socio-economic crisis

The novel coronavirus that appeared in the Chinese city of Wuhan in late December 2019 has spread throughout the world. It has resulted in millions of deaths worldwide. However, in Central Asia, COVID-19 positive cases came into light in the mid of March 2020; it compelled the governments of these republics to undertake preventive actions against its spread. Kazakhstan, Kyrgyzstan and Uzbekistan took strict measures such as suspension of international flights, closing borders, quarantine and lockdown etc. Tajikistan denied the existence of positive cases till April 30, 2020, while Turkmenistan claimed to be a virus-free country.

The COVID-19 pandemic hit the already fragile health care systems of CARs and became a pressure test for the respective governments. Multiple sectors have been seriously affected by the coronavirus pandemic. Owing to the interconnectedness of global supply chains and foreign trade, the economies of the Central Asian republics have been adversely affected. The World Bank’s ‘Europe and Central Asia Economic Updates’ suggested various negative developments for the region. It includes a significant recession in 2020, with growth contracting between -4.4 and -2.8 percent. The specific sectors that have been disproportionately affected include tourism, hospitality, personal services, construction and small-scale manufacturing.

Tajikistan and Kyrgyzstan are dependent on remittances from Russia and Kazakhstan. Due to the pandemic, remittances to Central Asia plummeted to USD 3.4 billion, or about 24 percent. Tajikistan’s economy has witnessed a reduction in remittances and a plunge in investments and deterioration in its foreign direct investments. Central Asian countries reacted by closing their borders and adopting measures to protect themselves from the spread of the virus. This has caused foreign trade to fall and exports of Beijing’s most-wanted product, natural gas have slumped along with the terminating the other commodity exports to China.

In order to assuage the negative impact of the coronavirus, countries like Uzbekistan and Kazakhstan came out with many relief packages for ensuring social protection of the population. Uzbekistan paid special emphasis to support the businesses and enterprises that were highly significant to the country’s economic development. Uzbekistan has also taken measures to stem the drop in income levels, create employment opportunities, and reduce unemployment.1

Political Turmoil and Regime Change in Kyrgyzstan

On October 4, 2020, Kyrgyzstan held its legislative elections. In the unicameral legislature, 16 parties competed for 120 seats. Only four parties could exceed the seven percent threshold, as per the manual counting of all voting ballets. On October 5, claiming the elections to be rigged, a few thousand people gathered around Bishkek’s main square and demanded the annulment of the election results. Demonstrators argued that politicians actively used massive vote-buying and abused administrative resources during the election campaign.2

The parliamentary elections plunged Kyrgyzstan into a political crisis. However, the deposition of President Jeenbekov ended the unrest. The new government under Sadyr Japarov has taken crucial measures to maintain peace in the region. Japarov’s government concentrated on the effective management of the pandemic and addressing socio-economic issues. It would be a challenge for the new government to reinforce its foreign policy.3 Russia is a close ally of Kyrgyzstan, and its status is untouched by the coming of a new system. Soon after his appointment, Japarov stated that Russia would remain the country’s strategic ally. This political crisis complicates China-Kyrgyzstan ties. The demonstrators have targeted Chinese citizens and companies in Kyrgyzstan.4 Kyrgyzstan also owes half of its GDP as debt to Chinese Exim Bank and due to its inability to repay debts; Bishkek had requested Beijing for suspension of repayments. It seems unlikely that without gaining any leverage from Kyrgyzstan, China would agree to suspend debt repayments.5

Uzbekistan’s joins Eurasian Economic Union (EAEU) as Observer

Uzbekistan became an observer of the EAEU on December 11, 2020. This will further add significance to President Mirziyoyev’s initiative of regional integration in Central Asia. Signing up as an observer of the EAEU signifies President Mirziyoyev’s continued dependence on Russia as the country’s primary economic partner. The EEU has a single market of over 180 million people with a GDP of over 5 trillion USD. It provides for common policies in the macroeconomic field, transport, industry and agriculture, energy, international trade and investment, customs, technological regulation, competition and antitrust regulation. One currency and greater convergence are envisioned for the future. EAEU is also in the process of continuing talks to sign Free Trade Agreements (FTA) with many countries in ASEAN, in addition to India and Turkey.6 As Uzbekistan had joined EAEU before it joined the WTO, this might complicate its accession process to WTO. It is quite likely that Uzbekistan would have negotiated numerous exemptions with all EAEU members before becoming a WTO member, as in the case of Kazakhstan, which negotiated some 2,400 exemptions.7

Re-election of President Rahmon and Deteriorating Economy

The President of Tajikistan Emomali Rahmon was re-elected with 90 percent of the votes cast in the country’s national election. The victory has made Rahmon the longest-serving head of state in Central Asia. More than 85 percent of the electorate in the country have turned in their ballots. Four other contestants joined the election, although it was generally believed that Rahmon would hold on. However, prior to his announcement of contending elections, it was speculated that his son and Mayor of Dushanbe, Rustom Emomali would become the next President of Tajikistan. But due to the deteriorating socio-economic conditions, plus COVID pandemic, the idea of regime transition was dropped.

Tajikistan is a relatively developing nation, with population heavily relying on remittances sent from relatives abroad. The country’s health infrastructure has been seriously affected as a consequence of the worldwide coronavirus pandemic. Due to the pandemic, there was a food shortage and skyrocketing of prices of food products in the country. Chinese debts repayments were another serious concern for the county in the previous year. Now, economic reconstruction would be the key priority for the re-elected President.

China in Central Asia: Belligerence and Damage Control

China has been blamed internationally for the mishandling of COVID-19 virus. At the same time, Chinese aggression was observed with its neighbours. CARs have also suffered a hostile attitude of China during the pandemic. Concerns over illegitimate territorial claims in Central Asia (Kazakhstan, Kyrgyzstan and Tajikistan) have been a serious cause of uneasiness for the respective Central Asian regimes. China’s Belt and Road schemes have stirred many problems and complaints from Central Asian local communities.

Consequently, in July 2020, Beijing started a new dialogue process with Central Asia; China+C5. Wang Yi, the Chinese Foreign Minister, had a virtual meeting with Foreign Ministers of Central Asian states regarding post-pandemic economic cooperation. This move is regarded as critical as it gives coherence to China’s other initiatives such as SCO to pursue its objectives in Central Asia without harming its reputation. Other regional forces such as Russia, US, and India might face another challenge through this new proposed format.8

India-Central Asia Engagement in 2020

India’s outreach to Central Asia witnessed a boost up in 2020. While fighting the consequences of COVID-19 pandemic at home, India, extended medical and humanitarian supports to many countries. CARs also received medical and humanitarian assistance from India. High-level interaction between New Delhi and Central Asia continued despite the pandemic. However, most of these high-level interactions were held following the virtual format.

As an outcome of the First India-Central Asia Dialogue held in 2019, India-Central Asia Business Council was launched in New Delhi on February 6, 2020. India-Central Asia relations remain below its true potential. In this regard, the council will serve as an institutional platform to strengthen trade and investment initiatives between the two regions. It will also facilitate deeper cooperation between the small, medium and big enterprises of India and Central Asia. It would also improve inter-regional trade and economic exchanges.9

External Affairs Minister (EAM) of India, S. Jaishankar visited Moscow in September 2020 to participate in the Foreign Minister Summit of Shanghai Cooperation Organization (SCO). During his visit, he met with his Central Asian counterparts and discussed bilateral and regional issues. On November 11, SCO held its 20th Council of Heads of State Summit under Russian Federation’s Chairmanship in a video conference format. In his speech, PM Modi reaffirmed India’s stand on regional security, terrorism extremism and multilateralism among many other things. He also emphasised on SCO’s shared Buddhist Heritage and ‘Atmanirbhar Bharat’.10 India also chaired the 19th meeting of the SCO Council of Heads of Government in a virtual format on November 30 2020.11 Within three years of joining SCO, India has consolidated its position in this China-dominated regional groping. However, it needs more concrete steps to further leverage its objectives at the SCO platform.

On October 28, 2020, Second India-Central Asia dialogue was held. This Summit emphasised on India’s developmental partnership with Central Asia. Cooperation during the pandemic was the key point for discussion at the Summit. Both India and Central Asia reaffirmed their cooperation for elevating their bilateral ties by eradicating trade and connectivity barriers. In this regard, Chabahar port, International North-South Transport Corridor (INSTC) and Ashgabat Agreement can play a significant role.

India-Uzbekistan relations gained momentum in 2020. Both countries held a first-ever bilateral virtual Summit on December 11, 2020. India’s developmental assistance to Central Asia and Uzbekistan has been an important aspect of discussion at the Summit. Eradicating barriers in Trade and Connectivity was another important agenda which was discussed in the Summit. India welcomed Uzbekistan’s idea of having a trilateral dialogue between India-Uzbekistan and Iran to discuss the joint use of the Chabahar port. Accordingly, a trilateral dialogue was held on December 14, 2020, which can be seen as a positive result of ‘Quick Diplomacy’.12 In order to enhance trade and investment between the two countries, the two leaders agreed to fast-track winding up of joint feasibility study that will pave the way for negotiations on a Preferential Trade Agreement (PTA). India and Tashkent also agreed to work towards an early conclusion of a bilateral investment treaty to facilitate investment promotion and protection to further improve trade and economic cooperation.13

Outlook for 2021

Upcoming elections in Kazakhstan (legislative) and Kyrgyzstan (Presidential) will set the tone for political developments in 2021. Some serious reforms are required for the post-pandemic economic recovery of the Central Asian region. Nonetheless, the approaches will be at variance based on each republic’s internal socio-economic condition. Economic diversification is a must as countries like Turkmenistan are solely dependent on China for its exports. Creation of jobs for migrants’ workers will be another crucial step for the region’s economic development. Intensifying regional cooperation will give impetus to the regional trade and investment, and it will also help the region becoming a transit hub. Reviving domestic tourism, avoiding repetitive lockdown measures, epidemiological cooperation, and health infrastructure strengthening can lead to the socio-economic revival. The Central Asian republics need to make serious efforts to revive their economies which are the backbone for the regional development. India’s relations with the region will further develop with the Central Asian countries extending cooperation to India’s connectivity initiatives. However, consistency in high-level interaction from both sides is a prerequisite.

Endnotes
  1. Eldor Tulyakov, “COVID-19: Actions taken in Uzbekistan”, Article, Foreign Policy Centre, July 14, 2020. https://fpc.org.uk/covid-19-actions-taken-in-uzbekistan/
  2. Arsen Omuraliev, “Month in Review: Central Asia in October 2020”, CABAR Central Asia, 2 November 2020. https://cabar.asia/en/month-in-review-central-asia-in-october-2020
  3. Ilgiz Kambarov, “Japarov’s Many Promises: Can Stability Emerge From Chaos in Kyrgyzstan?”, The Diplomat, October 22, 2020. https://thediplomat.com/2020/10/japarovs-many-promises-can-stability-emerge-from-chaos-in-kyrgyzstan/
  4. Keegan Elmer, “Kyrgyzstan unrest may scare off future Chinese and other foreign investors, analysts say”, South China Monitoring Post (SCMP), October 12, 2020. https://www.scmp.com/news/china/diplomacy/article/3105145/kyrgyzstan-unrest-may-scare-future-chinese-and-other-foreign
  5. Chris Rickleton, “Kyrgyzstan's China debt: Between crowdfunding and austerity”, The Eurasia net, November 17, 2020. https://eurasianet.org/kyrgyzstans-china-debt-between-crowdfunding-and-austerity
  6. “Uzbekistan and Cuba Become Observer States Of The Eurasian Economic Union” Russia Briefing, December 14, 2020. https://www.russia-briefing.com/news/uzbekistan-and-cuba-become-observer-states-of-the-eurasian-economic-union.html/
  7. Nishanbay Sirajiddinov et. al., “Uzbekistan’s Accession To The Eurasian Economic Union: Advantages and Risks”, Center for International Private Enterprise (CIPE), July 12, 2020. https://www.cipe.org/resources/uzbekistans-accession-to-the-eurasian-economic-union-advantages-and-risks/
  8. P K Gupta, “Second India-Central Asia Dialogue: Major Takeaways”, Article, VIF, November 5 , 2020. https://www.vifindia.org/article/2020/november/05/second-india-central-asia-dialogue-major-takeaways
  9. P K Gupta, “India-Central Asia Business Council: Reinvigorating India-Central Asia Economic Engagement”, Article, VIF, February 10, 2020. https://www.vifindia.org/2020/february/10/india-central-asia-business-council
  10. “20th Summit of SCO Council of Heads of State”, PIB, 10 November 2020. https://pib.gov.in/PressReleasePage.aspx?PRID=1671756
  11. “Address by Shri M. Venkaiah Naidu, Honourable Vice President, virtually at the 19th session of the SCO Council of Heads of Government”, 30 November, 2020. https://vicepresidentofindia.nic.in/speechesinterviews/address-shri-m-venkaiah-naidu-honourable-vice-president-virtually-19th-session
  12. Rajeswari Pillai Rajagopalan, “India-Iran-Uzbekistan Pursue Central Asian Connectivity”, The Diplomat, December 18, 2020. https://thediplomat.com/2020/12/india-iran-uzbekistan-pursue-central-asian-connectivity/
  13. “Joint Statement on India-Uzbekistan Virtual Summit: Close Friendship, Strong Partnership” MEA, December 11, 2020. https://mea.gov.in/bilateral-documents.htm?dtl/33281/Joint_Statement_on_IndiaUzbekistan_Virtual_Summit_Close_Friendship_Strong_Partnership

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