Ruble Collapse a Problem for Central Asia | The Diplomat

Since October 9, the first day in post-Soviet history that the ruble-to-dollar exchange rate climbed above 40, the Russian currency was consistently hammered, until it managed to end last week’s rollercoaster below 60. Post-Soviet economies to the South of Russia have been hit by the financial crisis in Moscow. Although Central Asian trade with Russia is declining, in favor of a surge in business with China, all countries in Central Asia still maintain strong economic relations with Russia. This means that any crisis in Russia is immediately felt in Central Asia.

The two poorest economies in Central Asia, Tajikistan and Kyrgyzstan, are also among the most Russia-dependent in the entire post-Soviet space. Dushanbe and Bishkek’s budgets depend heavily on remittances from migrant workers living in Russia. The ruble, together with the dollar, is widely available in both countries and exchange rates are a significant indicator of the stability of their economies. With the ruble crumbling, Tajikistan’s somoni has reacted very slowly on the official market: The increase against the dollar since October 9 has been just below 3 percent. However, it is worth noting that for four consecutive days last week the official rate hiked almost 4 percent each day before rebounding back to 5.13 somoni per dollar. In the same period, the Kyrgyz som gradually weakened against the dollar, declining 4.5 percent. Notably, for the first time, the som became more valuable than the ruble.

In the past two months alone, the ruble has lost between 55 and 40 percent of its value against the dollar, and has also lost ground against the somoni and som. This could have dangerous consequences for worker remittances from expat Central Asian workers. The Kyrgyz government is preparing for windfalls from abroad to fall by at least $1 billion. The drought in remittances, accompanied by government spending to keep their currencies closer to the dollar, poses a direct threat to the budgets of Tajikistan and Kyrgyzstan.

 

Ruble Collapse a Problem for Central Asia | The Diplomat.

Henry Rollins: How the Soviets Nearly Ruined Central Asia – Los Angeles | Los Angeles News and Events | LA Weekly

I am a week into my visit to Central Asia. Besides a two-day excursion into Tajikistan, I’ve been here in Uzbekistan.

The border crossing from Uzbekistan to Tajikistan was one of the coolest and strangest I have made.

I often have a déjà vu sensation when going from one country to another, especially in cold weather. It started when I would pass through East Germany to get to West Germany. The East Germans would always regard us and our van with suspicion and barely concealed hostility. They had a way of leaning into the front windows so the barrels of their rifles would point at your eyes.

It is at the crossing point where either country can decide it doesn’t want you, and you could be in for quite an ordeal. That happened to me once on tour, trying to get out of Hungary and into Austria. The Hungarians were done with us but the Austrians were not a bit pleased with the idea of us in their country. We sat in a no man’s land for a long time, our dreams of soundcheck disappearing before we were finally allowed to enter.

On the day I was to cross into Tajikistan, I was warned by my Uzbek guide that the questioning and searches could be extreme. I went in and gave the Uzbek border officer my passport. She asked me why I was in Uzbekistan and wanted to go to Tajikistan. I gave her my whole rap about the only way to know about any place is to go, so here I was.

She and all the other heavily uniformed officers simultaneously lit up. They enthusiastically thanked me for coming all the way out to visit and fairly tossed me through the back of the building.

Suddenly, I was alone on a road. It’s a fair walk to the Tajik border.

Finally I arrived at a gate. A Tajik guard looked at my passport and pointed me onward. About a city block later, I was at a window. I gave the man my passport. He looked at me, pointed and said, “Beckpeck hevee!” He gave me the stamp and I was in Tajikistan.

My guide, conveniently named Chris, walked up and introduced himself. We got in his car and off we went to Khujand city centre.

Henry Rollins: How the Soviets Nearly Ruined Central Asia – Los Angeles | Los Angeles News and Events | LA Weekly.

Russia’s ruble collapse shakes Central Asian neighbours

While people in Moscow are already queueing outside foreign exchange shops to get rid of the ruble, eyeing the current 9.1% price inflation rate, neighbours of the “Russian bear” are likely trembling in fear.

Until a year ago, the Russian economy was flying high on the wings of a seemingly endless oil-fuelled boom, which showered economic migrants with hard cash to send back to their origin country. With the economic depression on the horizon and investors pulling their money out of the country by the billion each month, Russian companies have already started cutting wages and making redundancies.

Poor former Soviet republics with a troubled recent past like Tajikistan and Kyrgyzstan are suffering the most. Millions of Tajik migrants live in Russia and send much of their salary back home. According to World Bank data, remittances in Tajikistan make up 42.1 % of the Central Asian republic’s GDP, making it the world’s biggest recipient.

A staggering 60% of those remittances come from Russia. If we consider that over a million Tajiks – half of the country’s workforce – work in the giant neighbouring country, we see why Russia’s incoming economic depression may potentially wreck those countries.

Neighbouring Kyrgyzstan is in a similarly desperate situation. The small mountainous state has a 32% share of GDP of remittances.

It has been calculated that Tajik growth will slow to 6.5% this year from 7.4% in 2013 as a result of the drop in worker remittances in the January-September period. Both Tajikistan, a state of 8 million, and Kyrgyzstan have a troubled post-soviet past. From 1992 to 1997, a civil war marred the prospect of economic growth in Tajikistan, which borders with Afghanistan and China.

Russia's ruble collapse shakes Central Asian neighbours.

Kyrgyzstan and Tajikistan improve border co-operation – Central Asia Online

BISHKEK – Kyrgyzstan and Tajikistan are working to reduce periodic disputes over scarce resources on their shared border.

Territorial claims, pastureland and water figure in many disputes, the Kyrgyz State Border Service (GPS) says, adding that it battles cross-border smuggling too. Aware of the potential for trouble, Kyrgyz and Tajik border forces confer regularly.

“In 2014, [they] met more than 80 times,” Gulmira Borubayeva, GPS spokeswoman, said. “They worked to resolve conflicts and clashes that occur in the border regions between Kyrgyzstan and Tajikistan.”

Kyrgyzstan and Tajikistan improve border co-operation – Central Asia Online.

Tajikistan Convicts IMU Members Who Planned To Fight In Syria

Tajiks in Syria

The State Committee for the National Security of Tajikistan said in November that there are around 300 Tajik citizens fighting in Syria.

However, the Tajik Interior Ministry has said that around 200 Tajiks are fighting in Syria and that around 50 had died. 

Edward Lemon of the University of Exeter, who tracks Tajik fighters in Syria, told RFE/RL that he has found online evidence of 52 Tajik fighters in Syria.  

The President of Tajikistan, Emomali Rahmon, recently referred to Islamic State as “the plague of the new century and a global threat.” 

Rahmon warned that Tajiks should “not underestimate the negative role of Islamic State in Tajikistan” and called on citizens to “not be indifferent, and to counter this global threat.”

Concerns over the threat posed by the Islamic State group in Central Asia were heightened after the regional militant Islamist IMU expressed its sympathy for Islamic State in September.

On September 26, IMU leader Usman Gazi published an online statement declaring the group was in “the same ranks with Islamic State in this continued war between Islam and [non-Muslims]. The Islamic State [group] is free from a patriotic or nationalist agenda…you can see Arabs, Chechens, Uzbeks, Tajiks, Kyrgyz, Russians, and many English-speaking Muslim [foreign fighters] in its ranks.” 

RFE/RL’s Uzbek Service reported on October 2 that it had received a statement and earlier audio recording from IMU leader Usmon Ghazi, in which the group commented on Syria.

In the wake of that report, RIA Novosti cited an Uzbek security source as saying that Tashkent authorities had “operational video and audio information about the IMU’s support and participation in joint military actions on the side of IS units.” The source said that the IMU had stepped up its recruitment and training in the Afghanistan and Pakistan regions.

— Joanna Paraszczuk

Tajikistan Convicts IMU Members Who Planned To Fight In Syria.

WHO/Europe | Photo story: Rehabilitating children with polio in Tajikistan

A WHO disability rehabilitation team in Tajikistan has been working with representatives of the International Society of Prosthetics and Orthotics (ISPO) to support the rehabilitation of people who contracted polio during a large outbreak of the disease in 2010

WHO/Europe | Photo story: Rehabilitating children with polio in Tajikistan.

Central Asia’s Hydropower Spat | The Diplomat

Uzbekistan continues its quest to choke its two poorer neighbors’ plans to attain and secure energy independence. During an official visit to Kazakhstan late November, Uzbek President Islam Karimov made sure to bring up the “dangers” the hydropower plants Kyrgyzstan and Tajikistan want to build could pose. According to Karimov, the plans are “not coordinated with countries downstream,” i.e. Uzbekistan and Kazakhstan. Flanked by Kazakh President Nursultan Nazarbayev, Karimov said, “We have affirmed our common position regarding the construction of new hydro technical facilities upstream of the Syr Darya and Amu Darya Rivers, which must strictly conform to recognized norms of international law and UN conventions as well as mandatory coordination with all countries located in the lower reaches of these rivers.”

Karimov conveniently forgets his administration bills Kyrgyzstan and Tajikistan for natural gas exports. Moreover, said gas is frequently shut off as a means of coercing the two countries, which are planning to build power-generating facilities on Central Asia’s two largest rivers. For instance, Kyrgyzstan has been struggling with not just a shortage but an absence of Uzbek gas, for most of 2014. Because mountainous Kyrgyzstan and Tajikistan sit high above sea level, harsh winters create shortages of already scarce electricity, and any insufficiency of Uzbek gas only makes the two countries more anxious to secure energy independence.

From Russia With Love?

Despite Tashkent’s tactics, Kyrgyzstan and Tajikistan, which together own nearly 70 percent of the waters that flow into the dwindling Aral Sea, remain deaf to Uzbekistan’s demands and warnings of “water wars.” This is thanks in part to Russia. The Kremlin has not only been voicing its support for plans to revive the Soviet-era projects, it has actually invested millions of dollars in the idea. Russian President Vladimir Putin personally travelled to Bishkek and Dushanbe, the two regional hosts of Russian military bases, to sign bilateral agreements to that effect. On top of Russia’s support, Tajikistan secured the World Bank’s “green light” for what is expected to be the tallest dam in the world: Rogun at 335 meters. Meanwhile, Kyrgyzstan was actually able to launch parts of a cascade of Russia-funded hydropower stations.

If giving money and throwing political support behind Kyrgyz and Tajik energy initiatives is the Kremlin’s carrot, the stick it may wish to use can hit both sides of the conflict. Toughening conditions for millions of Kyrgyz, Tajik and Uzbek migrant laborers in Russia, thereby indirectly forcing them to return to their homelands, is a tool Moscow has used frequently in the past. And this time around these migrants could thwart Uzbekistan’s attempts to prevent Kyrgyzstan and Tajikistan from building dams. The sanctions the West slapped on Russia for Crimea and Ukraine have obvious implications for millions of Central Asians seeking work in Russia. On top of this, a report the International Monetary Fund (IMF) released in November suggests that falling prices of oil coupled with sanctions will negatively impact the Russian economy next year, sending shockwaves across Central Asia. These factors could lead some migrants to return from Russia, permanently.

The return of even a portion of the migrants to join the growing local populations would put Kyrgyzstan and Tajikistan under pressure. Ironically, therefore, both sides of the water conflict equally need it: Uzbekistan needs water to keep tens of thousands of returnees busy on agriculture fields, lest they voice discontent with the government’s inability to employ them, while Tajikistan and Kyrgyzstan need water to generate electricity to keep their own returning migrants from taking to the streets in protest. No sane Tajik or Kyrgyz politician would back down in the face of such challenges.

Central Asia’s Hydropower Spat | The Diplomat.

Tajikistan – Katharina Schachtner, General Manager of AccessBank

Kahtarina Schachtner, General Manager of Access Bank Tajikistan, discusses the role of the bank in supporting micro enterprises and SME growth.

 

Where do the activities of AccessBank fit into the microfinance sector of Tajikistan?

AccessBank Tajikistan is a Microfinance Bank set up by four financial institutions, the biggest being Access Microfinance Holding, and the others being the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and to a smaller extent the Kreditanstalt für Wiederaufbau (KfW). In 2015, the Asian Development Bank (ADB) will join the group of shareholders with its first ever equity investments into a Tajik Financial Institution. AccessBank will celebrate its five-year anniversary in April, 2015.

Our focus is to provide banking services to micro, small, and medium enterprises and to offer access to good quality services for the lower income strata of the population. We pay special attention to the speed of our service delivery, the fair and equal treatment of our costumers, the long-lasting partnerships with our clients, and the provision of financial services adjusted to their needs.

 

Tajikistan – Katharina Schachtner, General Manager of AccessBank.

Russia’s Meltdown Will Shake The World, From Tajikistan To Tokyo – BuzzFeed News

The meltdown of Russia’s currency, brought on by falling oil prices, collapsing confidence in the central government, and international financial sanctions, is now manifesting itself as a panic. It’s “the most incredible currency collapse I think I have ever seen in the 17 years in the market, and 26 years covering Russia,” wrote Timothy Ash, Standard Bank’s head of emerging market research, in a note this morning. “No one expected the ruble to hit 60 this year against the dollar, let alone 70 or 80 even. And no one is positioned for this. This will impart huge short term damage to Russia.”

And the reverberations will be felt beyond the country’s borders, globally, but most acutely by its neighbors, where the oil-fueled Russian boom of the last decade has rained cash upon exporters and economic migrants alike. 

Consider Tajikistan. Remittances — cash sent home from citizens working abroad — make up 42% of the Central Asian republic’s GDP, according to World Bank data, with almost 60% of those remittances coming from Russia. In the course of just a few months, the value of those remittances has been chopped in half. The results will be devastating.

Russia’s Meltdown Will Shake The World, From Tajikistan To Tokyo – BuzzFeed News.

Russia’s Neighbors Scramble To Cope With Ruble’s Tribulations

Despite more than two decades of separation, the economies of the region remain deeply interconnected. Currencies throughout the region — from the Moldovan leu to the Kazakh tenge have seen drops in value of between 10 and 20 percent this year. Governments are watching with concern as their exports become increasingly expensive for customers in their giant neighbor.

Here’s how some of Russia’s neighbors are reacting to the ruble’s turbulence.

Russia's Neighbors Scramble To Cope With Ruble's Tribulations.