With its energy provision and jobs market support, Russia holds a huge trump card in Central Asia. China’s economic power has become a factor in the decisions of many Central Asian governments. In the plight of Western sanctions and diplomatic disputes, Central Asia is stuck between a rock and a hard place.
Meanwhile, analysts see that Central Asian leaders do not want to be dominated or tied too closely to Russia or China.
Many leaders have showed a lack of support for Moscow’s attempt to tie Central Asian allies to itself through the Eurasian Economic Union. Russia’s economic troubles, forcing it to increase the interest rate to save the dying Rouble, is an indicator for Central Asian governments that Russia is not capable of supporting them for the long term.
Central Asian had also pushed away Russia diplomatically, disallowing their military and security services from using staging grounds in their countries since 2004.
Kazakhstan President Nursultan Nazarbayev said “Our independence is our dearest treasure . . . First of all, we will never surrender it to someone, and secondly, we will do our best to protect it.”
Meanwhile, China’s economic powers had also seen lacklustre support. Turkmenistan’s growing reliance in China has alarmed its leaders. China is its biggest supplier of energy, and its losing battle against Iran for sales has put it and other gas-producing Central Asian country in trouble.
The Russian Ruble’s fall of 20% against the dollar is a sign of economic troubles for many countries in Central Asia. With western countries sanctioning Russia for its behaviour in the Ukraine Crisis, Kyrgyzstan, Tajikistan and Uzbekistan workers are struggling to keep up with inflation.
About 30% of Kyrgzstan’s economy depends heavily on their foreign worker’s remittances, while Tajikistan has 50% of its economy dependent on remittances. As the ruble continues to depreciate, only Turkmenistan, who sells fixed-price oil to China, remains unaffected with the current ruse.
According to Russia and CIS Economist at Renaissance Capital in Moscow Oleg Kouzmin “a weaker ruble weighs on workers’ salaries, which brings some pain to these countries.”
The IMF expects Kyrgyzstan consumer prices to grow 8% in 2014 and 8.9% in 2015. Both Kazakhstan and Tajikistan could see similar inflation.
The Russian Central Bank’s policy shift and the oil price drops puts Kazakhstan into slower economic growths. This convinced its government to recalculate its budget.
Investors also fear that panic selling may further affect economies. They are more vigilant with their expectations.
Both Kyrgyzstan and Tajikistan are using their reserves to cushion the currency fall. Kyrgyz’ Som has fallen 12% against the dollar and the Tajik Somoni by about 5%. Both currencies are expected to fall further this month.
Russia’s weakening petroleum-refinery network and the continuing EU sanctions against the country will play a huge role in inflating fuel prices for Central Asia. Importers complain about expensive alternatives and limited regional refining, Moscow’s stiff stand will put their Central Asian market at risk.
Siberian refineries are also having major structural deficiencies due to poor funding and maintenance. A major fuel accident in June had doubled petrol prices in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The four countries heavily depend on the Russian fuel economy.
The Ukraine crisis had increased fuel exports from Russia to Ukraine by 150% during the first half of 2014. Russia’s invasion of Crimea, which had taken a major chunk off of Russia’s supplies, including oil to be exported for Central Asia, also has a role for fuel shortages in Central Asia.
Experts also blame failing Russian oil infrastructure failing to address international and domestic refinery demands. According to HIS Global Insight Senior Energy Analyst Andrew Neff, “Russian refineries are in need of renovation in the freezing winter.”
Explosions and increasing risks are also pushing away investors. The June accident at the Achinsk refinery in eastern Siberia had killed seven workers and seven million tons of refined fuel lost yearly.
As Tajikistan militants and an Islamic State (IS) Tajik Emir could spread influence in Turkmenistan, Islamic State could increase its presence and throw seeds of discord among nationals in Central Asia.
According to the Russian Institute for Middle East Studies Yevgeny Satanovsky, within ISIS, there are about 2,000 militants from Russian Chechnya and Dagestan.
Journalists and media from Central Asia believe that some nationals have joined the Islamic State to make a career of themselves and the network of the terrorist group. Most finance-related crimes including bank robberies and the black market sale of historical artefacts had helped propel the finances of the Islamic State.
Among the ranks of IS are doctors and engineers from different countries, including Europe and the United States.
Satanovsky’s findings had revealed that there are 250 Kazakh citizens, 100 Kyrgyz, 190 Tajiks, 500 Uzbeks and about 360 Turkmens fighting with the IS. Satanovsky said that the belief in the Islamic State’s Caliphate as the future of the Islamic world shows the desires of many for a total absence of authority and good sustenance. Some also romanticise the idea of Jihad.
Satanovsky said that Kyrgystan is the biggest possible recruitment areas for IS because of its drug mafia and criminal clans, who are thriving against a weak government. Meanwhile, Turkmenistan is highly the lowest recruitment area for the IS.
The personal appointment of the Islamic State’s self-declared Caliphate Abu Bakr al-Baghdadi of a Tajik to become an ‘emir’ of the Syrian City of al-Raqqa had brought on great condemnation from the Tajikistan public and government.
The Islamic Renaissance Party of Tajikistan’s leader Hikmatullo Saifullozoda said that he had very negative feelings regarding the news. He said that it worsens the position of the Islamic Party in the Middle East because of the involvement of Tajiks with the IS. His party had called the unnamed Tajik as a ‘terrorist emir.’
The Tajik Government said in an official statement: “We’re trying to find information about this man through our own channels, but for reasons unknown to us, all information about him is shut off.” The statement of the Tajikistan Interior Ministry Chief of Staff Anvar Alizoda added “the ministry condemns Tajik participation in the armed conflict.”
According to Tajik Political Scientist Abdugani Mamadazimov, the Tajik won his position after conquering the Syrian Tabqa Air Base in four days. The Tajik had won the IS’ idea of meritorious service in battle.
He said “we have heard more than 200 Tajiks are fighting as ISIL members. The Tajik militant’s rise means that the Tajiks have distinguished themselves in battle.”
“If their ‘state’ gains strength, they’ll be influencing Tajikistan, which is very troubling. Tajik military units have to be ready for trouble because unrepentant jihadists could return. They’ll be completely infected with radical ideas.”
A renewed vigor in improving Turkmenistan’s agricultural sector aims to create an abundance of food supplies and lower domestic prices. The agricultural developments in infrastructure and technology will improve production and food processing of animal products.
The new focus of the Turkmenistan government had delighted the public, who can benefit from a better jobs market and improve the quality and quantity of food in the country.
According to Former Commodities Scientist at the Turkmenistan Ministry of Trade Palvan Khezretov, “the consumer market is gradually changing to benefit our own producers. At the beginning of the millennium, 95% of food products were imported. The figure has shrunk to about 65-70%.”
According to Turkmengallaonumeri (Turkmen Bread Products), a state-owned producer and processor, consumers have a strong preference for domestic flour because of its iron and folic acid content. The increase in local consumption had prompted the company to increase the number of grain farmers and equipping their flour-milling complexes with the latest agricultural technology and elevators that could lift more weight.
Analysts said that other products are gaining speed in the local market. With the exemplary growth in farm production in the first six months of 2014, Turkmenistan focuses on its private producers to ensure agricultural diversification in terms of produce to understand the local market’s needs for the present and the future.
UK Foreign Secretary Philip Hammond called the Gaza Crisis ‘intolerable’ in response to British Prime Minister David Cameron’s support of Israel’s attacks. He said it can become “an endless loop of violence. He said that Britain’s public is monitoring the situation in Gaza and that there must be humanitarian ceasefire.
Meanwhile, Israel and Gaza’s Tuesday ceasefire, brokered by US Secretary of State John Kerry and UN Secretary-General Ban Ki-moon, had been broken a few minutes after it was signed. Due to Hamas’ actions, Israel had pushed through with a new bombing run, killing an additional 30 Gaza casualties to the already-growing 1790 casualties in the region.
Ed Milliband said that Cameron is right to say that the Hamas is an “appalling terrorist organisation because of its unjustified rocket attacks against Israeli citizens and their tunnel network for organised covert attacks against Israel.
Israel’s missing Lieutenant had been found dead in the Rafah area in Gaza, possibly killed by militants. Israeli Prime Minister Benjamin Netanyahu had said that the fighting in Gaza will not stop until the threat of the Hamas are extinguished from the region.
Meanwhile, world condemnation against Gaza attacks continue with the increasing number of civilian deaths and the use of heavy arms by Israel against the almost defenceless organisation.
Egypt’s brokered peace talks may need adjustments as Israel and Hamas push their own conditions. Hamas had consecutively rejected truce talks. According to an Egyptian Senior Official, Egypt will not mind amending its truce terms and including Hamas’ demands. He said that should all parties approve, the truce is successful.
Hamas is demanding that Israel and Egypt lift the blockade on Gaza and release several hundred Palestinians Israel military had arrested while it was searching for the three teenagers who were killed. Meanwhile, Israel’s Defence Minister said that it would “keep fighting” until the Hamas finally admit to surrendering.
Israel-Hamas fighting had caused the deaths of 530 Palestinians, mostly civilians, and had displaced thousands of Gazans in the past two weeks as bombing runs and humanitarian problems in water and electricity had driven them out of their homes.
The United States had sent $47 million in humanitarian aid to help the displaced Palestinians two weeks ago. Around $15 million of the budget will be sent to the UN Refugee Mission in Gaza.
The total Israeli Army death toll is around 25 in its recent ground war against the Hamas. According to Israel’s Defence Minister, the ground invasion is necessary to finally put an end to the Hamas rocket fire that hits Israel on a consistent basis.
China’s increasing claims of territorial waters is driving other Asian countries such as Vietnam and the Philippines towards closer ties with the United States. As increasing tension develops, China’s influence in the region is slowly dwindling.
The Australian Cabinet Minister Malcom Turnbull, the recent political skirmishes between China and its neighbours show that China only has North Korea as its strongest ally in Asia. US support in terms of military exercises, intervention and enhancement of defences for other Asian countries continue to increase.
He said Australia is in a troubled position as China is its biggest trading partner, with $133 billion in trades between two countries as China purchases 36% of the country’s exports while it continues to complete its negotiations with Beijing on a free-trade agreement to improve its trading ties.
The US Pacific Deputy Commander had asked Australian to assume an assertive “police role” in the South and East China seas to help calm down the situation. However, it may appear to China that Australia is supporting the US by providing warships and destroyers to patrol the waters in the area.
Turnbull said that China’s foreign policy is greatly counterproductive. He also stressed that if China continues to push its neighbours away from it, it can lose so much in terms of economic growth.
According to economic experts, it is becoming common that many Asian investors are turning to start-up technology companies. They said that Asia will become a region that is crucial for the funding of the technology sector. Most investors from Singapore and Hong Kong are establishing new online companies, such as Alibaba and Lazada, which are online retail shops for technology products and services.
According to Morgan Stanley Asia TMT Banker Daniel Wetstein, Asian investors from corporate and financial sectors are making tech investments more sophisticated, growing venture capital deals worth billions of dollars.
One example is Alibaba, which had gained $2.4billion in private equity and venture capital deals. Even if the numbers could not overshadow the investments made in the west’s Silicon Valley, the numbers of deals outside tech-immersed Japan have reached 678 deals just in 2012. The growth continues to progress as Chinese and Singaporean investors continue to find the next rivals to the tech giants at present, such as Google and social network giant Facebook.
Sina Weibo, the equivalent of Facebook in China, had also become a household name due to investors interested in presenting a platform for social media apt to the requirements of the Chinese government. Japan also has several social networks that substitute and have more popularity than the western world’s Facebook.