Central Asian countries affected by global economic crisis

Three countries that lie to the north of Afghanistan are suffering increasing economic difficulties, according to a report by the International Crisis Group. Uzbekistan and Tajikistan share borders with Afghanistan, while Kyrgyzstan is just north of Tajikistan. These countries are important to the US/NATO occupation of Afghanistan because they have allowed NATO and the US to have "crucial military supply lines to Afghanistan." All of the countries are led by authoritarian governments with large impoverished populations.

Currently, the economic and political stability of these countries are in question because of the global recession. There are complex connections in this story.

Before the global recession, young men from the countries of Central Asia were able to find low-wage employment in Russia and Kazakhstan and earn enough to send remittances back to their families. This brought some increased economic, and also political, stability to their home countries. Economic assistance through remittances. Employment abroad for otherwise idle and alienated young men.

However, as a result of the global economic crisis, employment opportunities in Russia and Kazakhstan have declined. There are two consequences of the loss of employment in Russia and Kazakhstan for the Central Asian countries. One, an important source of income, the remittances, has declined. Two, young men who went abroad to find work will return to their home countries, where there are few economic opportunities for them.

Some anticipate that the heightened economic crisis may well, in turn, generate political instability. For example, unemployed young men are prime candidates for armed rebellion against oppressive governments. Increased political instability could, in time, lead to difficult logistical problems for the US and NATO forces in Afghanistan.

Whether any of this transpires only the future will tell. However, the article below by the International Crisis Group reminds us that the occupation of Afghanistan is affected by, and is affecting, the conditions in surrounding countries. This makes the issue of occupation a regional and not only a national issue. We have been aware of how Pakistan has been a source of worry of the US military. But Pakistan is not the only worry for our generals.

Bob
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Central Asia: Migrants and the Economic Crisis
Asia Report N°183 5 January 2010
EXECUTIVE SUMMARY

http://www.crisisgroup.org/home/index.cfm?id=6456&l=1

The economic crisis has caused millions of migrant labourers from Tajikistan, Kyrgyzstan and Uzbekistan to lose their jobs in the boom economies of Russia and Kazakhstan. Remittances that kept their relatives afloat have plummeted and many migrants have returned home to certain destitution, putting weak Central Asian governments under severe strain. In Tajikistan half the labour force is without work, while Kyrgyzstan suffers from massive rural unemployment.

Before the crisis hit, up to five million people from these countries left home for Russia and Kazakhstan to take on poorly paid and unskilled jobs, often the unpleasant tasks that local people no longer wished to do. Yet at home they were viewed with respect: the most daring members of their society, who were willing to take a jump into the unknown to pull themselves and their families out of poverty. Remittances also boosted their home countries’ economic data, allowing governments with little ability or interest in creating jobs to claim a modest degree of success. By 2008 remittances were providing the equivalent of half Tajikistan’s gross domestic product (GDP), a quarter of Kyrgyzstan’s GDP, and an eighth of Uzbekistan’s.

The economic crisis of 2008-2009 destroyed this semblance of prosperity. First oil prices plummeted, then the crisis rolled through the highly leveraged banking sectors of Russia and Kazakhstan, finally bringing construction – the single largest source of migrant employment – to a near standstill. Migrant labourer quotas were cut, xenophobia increased in Russia, companies laid off migrants or in some cases simply stopped paying them. In the migrants’ home countries, governments first refused to believe the crisis would affect them, then slowly began to assemble a package of largely symbolic and ultimately unsuccessful palliatives. At least several hundred thousand and possibly as many as one million migrant labourers were believed to have returned home by the end of 2009.

The crisis has focused attention on one of the crucial weaknesses of Central Asian governments: the ability of states like Tajikistan and Kyrgyzstan to survive a crisis depends on good external conditions, not good policy. They handled unemployment, for example, by exporting it, did little to create jobs at home, and are now floundering in the face of the crisis. In the past they would have just muddled through. Now problems are building up, and muddling through is becoming less of an option. Migrant labourers also unwittingly performed a valuable political service for Central Asia’s leaders. The export of surplus labour allowed governments to rid themselves for part of the year of the segment of society – especially young men – that is the most likely source of unrest.

The financial crisis and the return of labour migrants sparked predictions of unrest, intensifying the concern that radical Islamists had been making inroads into the labour diaspora. Though there are strong indications of attempts by radical Islamists to recruit among migrant labourers, particularly in Russia, there is not enough data to ascertain the breadth of their success. And while many labourers have returned home, many more are waiting it out in Russia and Kazakhstan, taking even more menial and lower paying work, or surviving on family handouts in the hope that the situation will improve. Many work illegally, at the mercy of corrupt police, officials and dishonest employers; in Russia they are also subject to considerable discrimination and even violence. Opposition leaders in the region have long believed that migrant labourers would one day form the spearhead of an attack on the entrenched and incompetent regimes. This shows no sign of happening yet.

All groups affected by the crisis hope that one day the boom years will come back. The hiring nations look forward to a time when they will again be serious players on the world economic stage. The labourers need the work, because their own countries cannot provide it. The labour exporting governments need, as usual, outside assistance to solve their problems: none of them under their present dispensations are likely to come up with a successful strategy either to reintegrate migrant labourers or find an alternative source of income. The chances are, however, that the story will not end so neatly. Russia and Kazakhstan are likely at best to achieve a sort of sub-optimal recovery – assuming that a second round of economic crisis does not, as many economists predict, hit in Russia.

In all three countries covered in this report, society has been politically inactive or silent for many years. In Tajikistan this is attributed to the still-fresh memories of a brutal civil war; in Kyrgyzstan to disillusion and cynicism that followed the so-called Tulip Revolution of 2005; in Uzbekistan because of a ruthless and often brutal system of top-to-bottom social control. Western pressure has done little to mitigate this behaviour in the past, and pressure is likely to diminish even further as NATO and the U.S. look to Central Asia to host crucial military supply lines to Afghanistan. Past performance in the region is, however, no guarantee of future behaviour. Insecurity is growing, in part domestically generated, in part because of proximity to Afghanistan; infrastructure is collapsing, weak economies are slipping still further. The governments of the region need to take energetic measures to carry out sweeping reforms. The international community needs to pressure them to do so. At the moment, neither seems likely.

Bishkek/Brussels, 5 January 2010