A political and economic review
Overview:
Central Asian countries remain characterised by autocratic regimes. There is no real opposition to the incumbent presidents and oppositions live in exile. Centralisation of power and succession issues may hinder political stability in the medium to longer term. This is a particular concern in Uzbekistan where social unrest has been an ongoing problem although the authorities have been able to maintain control. Although some marginal improvements have been made in the past two years, Central Asian countries, in particular Turkmenistan and Uzbekistan continue to be criticised heavily by the international community for severe violation of human rights, lack of civil liberties and democracy. However, their geo-political importance undercuts diplomatic efforts to urge them to democratise.
The idea of Central Asian integration “European-Union style” has been entertained by Kazakhstan. Landlocked Central Asian counties would benefit from closer cooperation and from jointly tackling such issues as electricity shortages, water distribution and drug trafficking from Afghanistan. However, Uzbekistan is expected to remain the stumbling block here. The USA and Russia continue to compete for influence in the region given its key role as key energy supplier and importance as a location for military bases. 2008 saw broadly favourable economic developments across Central Asian, with remittances from and growth in key trade partners strong and prices of key exports high until Q4. Prospects for 2009 are sound but certainly less favourable as these positive factors weaken.
Tajikistan is in notably the weakest economic position of the three countries. Its economy is fragile, it lacks natural resources and its economic growth has become largely dependent on a massive inflow of remittances, which are expected to wane due to adverse economic conditions in Russia and Kazakhstan. Turkmenistan’s strong position in hydrocarbon exports given rising production and exports will continue to underpin strong economic performance in 2009 and beyond despite lower oil and gas prices. Uzbekistan enjoys abundant natural resources and a relatively diversified economy. It should, then, continue to record strong growth and a large current account surplus despite less favourable global economic conditions. Massive balance of payments surpluses in the last two countries will complicate the disinflation process.
1 We refer in this piece to Tajikistan, Turkmenistan and Uzbekistan