CENTRAL ASIA Political and Economic Challenges in the Post-Soviet Era Edited by Alexei Vassiliev Saqi Books Contents Russia and Central Asia A.M Vassiliev PART ONE: KAZAKHSTAN The Course Towards Political Stability N.I Petrov & M.S Gafarly The Economy of Kazakhstan L.N Kalinichenko & N.N Semenova PART TWO: UZBEKISTAN Political Stability in the Conditions of the Command-Administrative Regime N.I Petrov The Preservation of The State’s Dominant Positions in the Economy M.S Gafarly & V.F Rass PART THREE: TURKMENISTAN A Post-Communist Authoritarian Regime K.P Dudarev The Development of the Economy in the 1990s L.N Kalinichenko & N.N Semenova PART FOUR: TAJIKISTAN The Causes and Lessons of the Civil War A.I Kuzmin The Economic Crisis M.S Gafarly, V.D Chernikov & N.N Semenova PART FIVE: KYRGHYZSTAN Democratic Declarations and Political Realities V.F Kovalskii The Transition to a Modern Market Economy N.A Volgina, M.S Gafarly & N.N Semenova Conclusion A.M Vassiliev Main Sources of Statistical Information Index The monograph has been produced by the Centre for Civilizational and Regional Studies, Russian Academy of Sciences Head of the research team: I.V Sledzevski List of Contributors A.M Vassiliev N.A Volgina M.S Gafarly K.P Dudarov L.N Kalinichenko V.F Kovalski A.I Kuzmin N.I Petrov V.F Rass N.N Semenova V.D Chernikov Russia and Central Asia Conclusion Kyrghyzstan (economy) Kazakhstan (politics) Uzbekistan (economy) Tajikistan (economy) Kyrghyzstan (economy) Turkmenistan (politics) Kazakhstan (economy) Turkmenistan (economy) Kyrghyzstan (politics) Tajikistan (politics) Kazakhstan (politics) Uzbekistan (politics) Uzbekistan (economy) Kazakhstan (economy) Turkmenistan (economy) Tajikistan (economy) Kyrghyzstan (economy) Tajikistan (economy) Russia and Central Asia A.M Vassiliev ‘The Soviet empire collapsed.’ This expression has become a cliché in scholarly studies, in the media and in political slang Any empire implies the presence of a parent state and colonies In the case of the Soviet Union, the role of the parent state may be allocated to Russia: the Central Asian countries should be viewed as colonies The dominant and exploiting nature of the parent state contrasts with the oppression and exploitation of the colonies This generally gives rise to national liberation movements, which can be manifested either in peaceful or violent forms The goal of such struggles is the achievement of political independence Leadership of and participation in such movements legitimizes the advent of new political elites with the power and ability to lead the liberated countries Why, then, with the exception of minor displays of nationalism, was there virtually no national liberation movement in the Central Asian ‘colonies’? Fear of reprisals? Perhaps, but reprisals did not prevent very different anti-colonial struggle in countries such as Algeria, Vietnam, India, Indonesia, Kenya or Mozambique Why did the leadership of the Central Asian republics resist the disintegration of the Soviet Union to the bitter end? Why were they last to leave the USSR, having to be practically pushed out of it, and why they still preserve so many of the traditional ‘intra-imperial’ links? Why did the sociopolitical crisis occur first in the centre of the ‘empire’ – Russia (except for the Baltic region and Western Ukraine), and only then, with such grave consequences, in the ‘colonies’? Some of these questions can be answered if one avoids taking a preconceived approach and being blinded by Russophobia, which is present in an overt or covert form in many discussions about the ‘Soviet empire’ The truth and tragedy of history lies in the fact that the Russian people (together with the Ukrainians and Belorussians) were as much victims of the totalitarian Communist system as were the other Soviet peoples Moreover, Russia suffered more losses and greater economic difficulties; its national culture was destroyed to a greater extent, and it lost more genetic stock compared with the other ethnic groups in the ‘empire’ Any imperial structure implies the presence of dominant and privileged ethnos(es) In the Soviet Union the Russians, with their demographic weight and level of socio-political development, were the dominant ethnos The question is, did they enjoy privileged positions in the republics of Central Asia to the same extent as the British and French did in their colonies? Two social groups occupied the uppermost levels of the social ‘pyramid’ of the ‘proletarian state’ and the ‘state of the whole people’, namely, the party and state nomenklatura (officialdom), and trade employees The former enjoyed privileges of power, status, influence, legal nomenklatura benefits (apartments, country cottages, health care, better food, holiday resorts and sanatoriums) and opportunities for illegally acquiring wealth The latter also enriched themselves by illegal and criminal methods on a large scale The Russians formed an absolute and sometimes even relative minority in both groups Appointment of Russians (Ukrainians, Belorussians) as the second secretaries of the republican Central Committees of the CPSU or heads of the local KGB in each republic did not change the general picture The situation differed somewhat in Kazakhstan, where many first secretaries of the Central Committee were Russians But even there, in spite of the demographic preponderance of Russians in the republic, they did not form the majority of either the party-state nomenklatura or trade employees The majority of the Russian and Russian-speaking population in the republics were workers, and included those employed in the more dangerous and often less prestigious industries, such as coaland ore-mining They were over-represented among the local technical intelligentsia, scientists and teachers There were almost no Russians among the nomads or cotton growers, the most deprived part of the local population Yet they were also under-represented in the socially most privileged strata of the population The local political elite found itself incorporated into the multinational Soviet nomenklatura to a much greater degree than was the case of, for example, the Georgian nobility during the all-Russian aristocracy period of Tsarism However, though adhering to the traditional clan, ethnic, tribal or regional bias in the Central Asian republics, the local political elite nevertheless had to espouse the ideals of Communism in order to have any chance of progressing up the hierarchical ladder: this encompassed an open allegiance to Communist ideology, atheism, internationalism, and declarations of friendship with ‘big brother’, i.e Russia In the post-Stalin period the centre interfered only rarely with the internal power struggles going on between the local ruling elites The Central Asian political elites have not changed: they preserve the generic features of the Soviet nomenklatura, but it should be emphasized that their roots were and are in the local clans They assumed the leading roles in the newly independent states not because they had fought for freedom, but because they were rejected by the victorious Russian anti-Communists who precipitated the break-up of the Soviet Union In their efforts to legitimize themselves under the new political conditions, these leaders have turned to nationalism and, to an extent, to Islam Once Russifiers, leaders in these states now express anti-Russian attitudes and appeal for the revival of national, historical and cultural values; once preachers of atheism, the elites now demonstrate their religious devotion, takes oaths on the Qur’an and worship frequently at mosques All of them are aware that Russia, immersed in its own crisis, poses no threat to them They have powerful positions in their local clans, and therefore are not challenged by their own people, either the professional classes or the downtrodden and silenced lower strata of the population These authoritarian regimes, which have only changed their political colours, are in control of the security forces and the mass media, and therefore are in possession of sufficient power to manage the situation Any challenges to their positions emanate only from rival clans, who aspire to the same levels of influence and wealth They can turn to Islamic fundamentalism The long civil war in Tajikistan was a struggle between clans, despite claims to the contrary But the Islamists may form a ‘counter-elite’, and be able to resist the ruling clans Therefore, while supporting the Islamic revival, it has begun to dawn on those in power that the slogans of Islam are a double-edged sword Threats may also emanate from the outside Feudal-tribal conflicts could spread from Afghanistan to Tajikistan and then to Uzbekistan leading to the ‘Afghanization’ of the whole of Central Asia Therefore, despite the anti-Russian nationalism within their countries, the local elites invariably turn to Russia for help in the protection of the former outer frontiers of the USSR, thus eliminating at least this threat to domestic stability The Commonwealth of Independent States (CIS) was formed on the basis of the Belaya Vezha agreement between the three Slav republics of the former USSR, and signed on December 1991 Dissolution of the USSR at the behest of the three leaders came as a total surprise to the Central Asian republics, and they hastened to join the alliance At the meeting in Ashgabat (Ashkhabad) on 12 December the presidents of Kazakhstan, Kyrghyzstan, Tajikistan, Turkmenistan and Uzbekistan expressed their willingness to become equal co-founders of the CIS, but stressed the necessity to allow for the historical and socio-economic realities of Central Asia After additional consultations, the heads of 11 former republics of the USSR (all except the Baltic republics and Georgia) adopted the Declaration in Almaty on 21 December 1991, proclaiming themselves members of the Commonwealth of Independent States (CIS) The beginning of the next stage of the formation of the CIS took place at the Minsk summit held on 31 December 1991; among other things, agreements were adopted on the military forces and frontier troops After a working meeting in Moscow on 16 January, the Minsk summit of 14 February 1992 adopted an agreement on the status of the strategic forces and appointed the commander-in-chief of the Commonwealth’s united armed forces (Turkmenistan and Moldova did not sign the document) Yet it should be stressed that all these decisions and agreements of cooperation remained mere declarations: although the CIS existed, it had no real substance Its Central Asian participants pushed Moscow towards closer cooperation The Kiev summit of 20 March 1992 adopted the Declaration on the following: the non-use of force or threat of force within the CIS; agreement on the division of the assets of the State Bank of the USSR among the central banks of the CIS countries; protocol on approval of the rules on the Council for Railway Transport; Decisions on the principles of price agreements for raw materials, fuel and food; and agreement on the status of all CIS countries as the legal successors of the USSR Turkmenistan did not sign two documents on the defence powers of the CIS bodies On 15 May 1992 Russia, Kazakhstan, Uzbekistan, Turkmenistan, Armenia and Tajikistan initialled the Collective Security Treaty in Tashkent, which was, however, liable to ratification by the respective parliaments They also signed a statement on the reduction of the ex-USSR armed forces and agreements on chemical weapons (except Belorussia and Ukraine) and use of air space (without Moldova) At this stage of the establishment of the CIS, problems began to emerge On the one hand there were the questions arising out of the division of the Soviet heritage; on the other, there were the new principles of coexistence of the former republics to consider, encompassing various spheres such as economic, cultural, humanitarian, scientific, and communications By the second half of 1992 it was apparent that the lack of a clear mechanism to implement the adopted decisions was leading to various problems Therefore, in the second half of 1992 and in 1993 the CIS summits addressed themselves not only to pressing global, political and economic questions, but also to clearly defined methods of ratification More than three hundred documents were signed as the first steps towards the construction of such mechanisms The CIS Charter was signed by seven CIS states in Minsk in January 1993 Ukraine, Moldova and Turkmenistan did not sign it, opposing any moves which they saw as paving the way towards a confederation The most important result of the Moscow summit held on 29 September 1993 was the signing of the treaty on economic alliance, which presupposed the creation of a united economic space, free movement of goods, and standardized customs regimes Ukraine and Turkmenistan joined as associate members, and Georgia expressed a similar intention A step had thus been taken towards the materialization of the idea of a CIS common market As well as initialling a series of economic documents, the participants at the summit also took an important decision on the creation of Commonwealth coalition peace-keeping forces The Ashgabat summit of 24 December 1993 completed the formation of an open, united economic space in the CIS At the same time, questions relating to the realization of the collective security treaty were deleted from the agenda However, one innovation was the establishment of a functional leading body of the Collective Security Council, elected for six months The obvious question which arises here is: if the Central Asian countries were unwilling ‘colonies’ during the Soviet period, why were they so insistent on the preservation of cooperation with Russia after the demise of the Soviet Union? In the USSR the economic relationships between the centre and periphery, including those between Russia and Central Asia, did not meet the standard definition of ‘parent-state-colony’ Over about six decades the national economy of the USSR developed as a single economic mechanism, or as a single giant ‘super-plant’ in which the economies of the regions and republics played the role of ‘workshops’: they could not exist in isolation, but were an integral part of the whole Although in the final analysis this national economic structure proved to be doomed, it is clear that, at a certain historical stage, it paved the way for an economic upsurge in the Central Asian republics In the 1920s and 1930s these republics were way behind the centre (and some other Soviet republics) in technical and cultural areas However, according to Communist ideology, and in the name of universal equality, it is the duty of those who have forged ahead to help those who are lagging behind The means for drawing the Soviet republics together in terms of levels of development were taken only from Russia, and the union budget was formed at the expense of this country Huge funds were directed towards the development of the Central Asian republics, accounting for three-quarters of their total budgets in some years Russian workers and specialists, engineers and technicians were sent there, forming the backbone of the skilled manpower As well as ordinary schools, cultural education colleges, technical colleges and higher education institutions were created, staffed chiefly by professors and teachers from outside the republics Tens of thousands of young Kazakhs, Uzbeks, Turkmens, Tajiks, Kyrghyz were admitted to higher education institutions in Moscow, Leningrad and other Russian cities on favourable terms Yet the socio-economic upsurge of the republics met more than the requirements of Communist mythology and propaganda The multinational ruling elite of the USSR considered their state to be a single country: the federal setup was merely the political garment of the strictly centralized economic system Therefore, when the all-state problems were ‘solved’, the questions of ‘who exploits whom’ or ‘at whose expense is industrialization carried out’ were not even raised, though the debates surrounding such issues have become especially important in the post-Soviet period The metallurgical and chemical industries, for example, were developed in Kazakhstan not simply as a means by which to raise the level of industrialization in the republic: it was advantageous to build metallurgical plants for the supply of products throughout the USSR close to the coal and phosphoritic ore deposits, and mineral fertilizer plants close to the phosphoric ore deposits In this sense Kazakhstan did not differ from Texas in the USA, for example The accelerated industrialization of remote regions required huge material investment and led, in the opinion of some people, to a reduction in the rate of development in Central Russia: others saw it as bleeding Russia dry A considerable number of Russians were forced from their homes and joined, as a result of compulsory or ‘voluntary’ enrolment, the ranks of ‘national minorities’ in the union republics, often suffering a great deal of hardship It is impossible to mention all the major enterprises, cities, or engineering works built in Central Asia with the active participation of Russia and other union republics, but an overview can be offered In 1985, when reforms were started in the Soviet industry, there were about 25,000 industrial enterprises in Kazakhstan, of which 2,000 were particularly important The following, with the largest production capacities, might be mentioned: The Karaganda metallurgical plant (now JSC Ispat-Karmet) Balkhash and Zhezkazgan mining-metallurgical and Uskemen (Ust-Kamenogorsk) polymetallic plants The large complex of coal producing enterprises in the region of Ekibastuz and oil producing enterprises near the Emba River and the peninsula of Mangystau (Mangyshlak) The large chemical enterprises in Karatau, Shymkent (Chimkent), Aulie-Ata (Jambul), Atyrau (Guryev), Temirtau, and Aktyubinsk Machine-building plants in Almaty (heavy engineering and electrical equipment), Aktyubinsk, Kokshetau (Kokchetav), and Uskemen (instrument building) In Uzbekistan a series of high-capacity heat-power plants has been built in Angren, Navoi, Takhiatash and in the Syrdarya region Large gasfields are functioning in the Bukhara and Kashkadarya regions, including the renowned Gazli gasfield A ferrous metallurgical plant has been built in Bekabad; non-ferrous metallurgy is represented by the Almalyk mining and metallurgical plant In addition there are the Chirchik plant for production of high-melting and heat-resistant metals and the Uzbekzoloto goldmines There is a series of large chemical plants, such as the Samarkand superphosphate plant, Ferghana nitrogenous fertilizers plant, Almalyk ammophos plant and Navoi chemical plant There are about 250 large- and medium-scale machine-building enterprises in the republic, including Tashselmash (agricultural equipment), Tashelektromash (electrical equipment), Uzbekkhlopkomash (cotton growing equipment), machine tool plants, refrigerator plants and a large aircraft-building plant More than 500 large industrial complexes have been built in Kyrghyzstan They include a series of very large power-stations, such as the Toktogul plant on the Naryn River, with a capacity of 1.2 mln kW The machine-building industries include an agricultural equipment plant, Tyazhelektromash (heavy engineering and electric equipment), vehicle-assembling plant, electric equipment plants in Przhevalsk, Maili-Sai and Kaji-Sai Other newly built enterprises are a weaving factory, woollencloth, silk and knitting factories Coal is produced in the south-west of the country Oil and gas are the leading industries in Turkmenistan A series of high-capacity pipelines was built to transport hydrocarbons Various chemicals and oil products are manufactured at plants in Turkmenbashi (Krasnovodsk), Neftezavodsk, Charjou and Gaurdak The machine-building plants of the republic produce oil pumps, industrial fans, dough mixers, gas stoves and lighting equipment The textile industry manufactures a variety of products In Tajikistan power production developed faster than other industries The Nurek (capacity 2.7 mln kW), Golovnaya (210,000 kW) and Kara Kum (126,000 kW) power plants were built there Nonferrous metallurgy is well-developed Lead, zinc, bismuth, antimony, mercury and molybdenum are extracted from ores at the Altyn-Topkan, Kansai, Azob and Sorukh-Dairon plants One of the largest aluminium plants of the ex-USSR was built in Regar The machine-building plants include Tajiktekstilmash (textile industry equipment), the Tajikkabel corporation (cables), refrigerator plants, the Kurgan-Tyube transformer plant, and the Isfara lighting equipment plant Prices of oil, gas, coal and non-ferrous metals supplied to other republics are known from the formal statistics But all price proportions were so distorted under the administrative command system and prices had so little to with the real value of the commodities that it is absolutely impossible to find out whether Central Asia gained or lost by supplying raw materials to Russia On the whole, it is recognized that the subsidization of the Central Asian republics at Russia’s expense continued throughout the period of Soviet power and persists even today Another legacy of the single state is that the Central Asian republics are now closely interconnected through various transport and telecommunications networks At the beginning of the century, Kazakhstan had just 2,100 km of railways: they are now 15,000 km long The most economically important of them are the Kzyl Zhar (Petropavlovsk)-KaragandaBalkhash, Astana (Akmola)-Kartaly, Atyrau (Guryev)-Orsk and Makat-Aktau (Shevchenko)-Novy Uzen routes The Ferghana-Kyzyl-Kiya-Charjou-Kungrad-Beineu, a line of major importance to European Russia and Caucasia, was built in Uzbekistan Virtually the whole of the southern part of Turkmenistan is crossed by the Turkmenbashi (Krasnovodsk)-Tashkent line, with branches towards Kushka and Vyshka 500 km long narrow gauge railways penetrate into the depths of the mountain regions of Tajikistan In the mountainous regions of the Central Asian countries, roads are the most important transportation links In Kyrghyzstan, the most important route is the 592 km long Bishkek-Osh highway, which crosses a series of high mountain ranges – Kyrghyz, Ferghana and Talas Alatau The Turkmenbashi-Mary-Charjou road played a major role in the economic development of Turkmenistan The relatively developed network of mountain roads ensured that normal economic life was maintained in most of the Tajik regions: the most important are the Dushanbe-Ura-Tyube and Dushanbe-Khorog-Osh routes Until recently, most of the cities and many villages in the Central Asian republics were linked by plane or helicopter services The crisis in the aviation transport industry of the CIS has limited the services considerably: flights on many routes, especially local ones, have been drastically reduced or cancelled altogether However, flights outside the CIS have been expanded: Tashkent has become a Table Dynamics of Production of Some Industrial and Agricultural Goods in 1991-1996 However, the positive shifts of 1996 and 1997 were comparatively unstable, due to the persistent crisis in the Kyrghyz economy, and lack of efficient stimuli for savings and investment The financial and then general economic crisis that seized Russia in 1998 affected the economy of Kyrghyztan severely, since Russia was its main economic partner The exchange rate of the som to the US dollar went down by 67.8% in 1998 Naturally, the devaluation of the som was followed by crisis throughout the entire national economy As a result, negative economic indices prevailed in the republic in 1998 For instance, according to the Statistical Committeee of the republic, the growth of the physical volume of industrial production decelerated to 4.6% against 39.7% in 1997 The GDP increased by 1.8% instead of the target of 7-8% Even this moderate growth was due to the successes achieved before August 17 However, not including the industrial activities of the Kumtor goldfield (gold forms 75% of the products supplied to foreign markets, and the resulting profit is used to repay debts to Western creditors), the GDP increased by just 0.3% The population’s social condition is also unstable against this background of economic crisis The average salary did not change in 1998, while the prices of the main food articles rose by 17% and of other goods by 15% Many of Kyrghyzstan’s economic problems have centred around its foreign connections The foreign trade deficit was $290 mln in 1998 Import increased by more than 20% in January to November 1998 compared to the same period of 1997, amounting to $756.9 mln, and export went down by 13.3%, dropping to $469.7 mln Zaralbek Kudabaev, head of the National Statistical Committee of the republic, considered that the volume of the Kyrghyz export was influenced adversely by the Russian financial crisis to a great extent The share of CIS countries in the export earnings decreased from 55% in 1997 to 45.4% in 1998, and the deficit in the trade with Russia reached $108.8 mln Traditionally, the republic supplies agricultural products to Russia, such as tobacco, wool, cotton, textile, etc However, the Russian demand for these goods dropped drastically after August 17, 1998 At the same time, import from other CIS countries increased by 41.2% and from abroad by 20.2% compared to 1997 The main imported goods are fuel and lubricants (more than $35 mln in 1998) In the setting of the economic crisis that affected the CIS, Kyrghyzstan became more active in markets abroad As early as November 1998, export outside the CIS increased by 32.2% compared to October Thus, it was not by chance that Germany became the main consumer of Kyrghyz products, accounting for 38% of the total export, with Russia accounting for a mere 16% The experience of Kyrghyzstan’s economic development demonstrates that the financial crisis that swept the markets of many CIS republics became a new reason for the further mutual alienation of the post-Soviet republics Earlier, their rapprochement was hampered by political differences, but now the main obstacle lies in the field of economy Summing up the results of the first decade of reforms in Kyrghyzstan, one may note that they were affected against the background of a very unfavourable economic situation The wave of structural crises that seized the post-Soviet space in 1991-1999 caused the development of a number of negative processes in the republic’s economy A substantial role belonged also to errors and miscalculations made in liberalizing the economy, especially at the initial stage of the reforms They were carried out in a contradictory and inconsistent manner and combined with the application of the old command-administrative methods of economic management It was this duality in carrying out the reforms which characterized this period and caused the ongoing deep recession during the first half of the 1990s One example is enough As a result of the economic crisis more than 700 enterprises of the republic ended up as insolvent: in September 1993 alone outstanding indebtedness for short-term loans granted by banks, mutual payments among enterprises and other payments increased by 171.6 mln soms, which was six times the total arrears as at January 1993 The insolvent units included not only shops, stores, state and collective farms, but such giants of the national industry as the agricultural equipment plant, the machine-tool-building plant, instrument-building plant, etc The Kyrghyzstan, Maskat, Kurulush and other banks, getting no payments against debt obligations, required loss indemnity As during the Soviet period, the state came to the help of the debtors, allocating sums from the budget for debt repayment The Ministry of Economy and Finance saved the insolvent units through advancing loans, making arrangements with the commercial banks on the transfers of debts, thus warding off the menace of bankruptcy from many industries Only 40% of enterprises reacted to the demand to repay their debts: the rest paid nothing Meanwhile, under the loan contract conditions, ‘the loan debtor guarantees loan repayment by all its assets’, and should non-payment occur, the Ministry was ‘entitled to initiate a bankruptcy action’ Following threats from the Ministry of Economy and Finances, writs (the seizure of taxes and other payments directly from the enterprise’s accounts) were issued This made 90% of them open their purses Thus, the law on bankruptcy, an element of institutional transformation of the economy and an instrument of selection of efficient enterprises from among inefficient ones, did not work Since 1997 the loss-making enterprises have been either liquidated or sold off at auctions However, this has not yet happened on a mass scale, because the leadership of the republic is afraid of closing all loss-making enterprises for fear of public resentment Closure of large loss-making enterprises will increase the number of unemployed The condition of the labour market is determined now by a combination of a high level of latent unemployment and relatively low one of officially registered unemployment The total number of unemployed registered by the employment service was 3,193 on November 1993, a growth of 16% compared with the previous September This was 0.2% of the able-bodied population In early August 1996 the number had reached 70,400, or 4.7% of the able-bodied population, which was 23 times the level of 1993 This situation is typical in industries operating in a free market under such conditions: on the one hand, the number of jobs is limited, on the other, the professions and skills required by the employers differ from those possessed by the potential employees Another problem is territorial disproportion between the demand for manpower and its supply at the labour market Most of the job seekers are women, about 40% are 16-29 years old, 20% of whom are seeking their first jobs The recession in production and the insolvency of enterprises are directly connected with inflation Steep price-rises hampered stable growth and efficient investment, leading to capital being taken out of the country, and upsetting the efforts put into the reforms In the view of many specialists, inflation in countries undergoing transformation to a market economy is a direct result of excessive subsidizing of state enterprises, and economic measures aimed at covering up the budget deficit On the one hand, an increase in the issue of credits accelerates inflation; on the other, its limitation leads to non-payment Non-payment in turn leads to stagnation and raises the spectre of bankruptcy Since the law on bankruptcy does not work in practice, any rigid financial policy becomes senseless, for the state continues paying the debts of the troubled enterprises, keeping them afloat through credit, mutual offset and other ‘tricks’- resulting in inflation Experts believe that there is only one way out of this vicious circle: it is necessary to call a halt to the ‘blood-letting’ in the economy, the cheap credits given to inefficient enterprises; and the profitability of enterprises must increase Prudent economic management will permit a reduction in the rate of inflation and in the budget deficit Failure of macroeconomic stabilization prevented the government of the republic from taking decisive steps towards the implementation of the programmes of privatization of the state sector Privatization has encompassed only small- and medium-scale enterprises, and the process of transferring ownership of enterprises with 10,000 or more employees has developed very slowly Privatization of large enterprises is complicated by a series of factors Firstly, many of them once played the key role in social development of the region in question, and a cardinal change in their activities would entail abrupt alterations in the lives of many people Secondly, many enterprises are connected with the MIC However, the slow pace of change is a feature of the majority of post-Soviet republics Kyrghyzstan is by no means unique in this respect Today, the successful economic development of the republic is dependent on immediate radical transformation First of all, the persistent distortion of prices must be dealt with In addition, there should be a marked reduction in all kinds of state subsidies, and a more consistent implementation of the privatization programme It is also necessary for the government to assume at least some of the social functions carried out at present by large state enterprises Kyrghyzstan, as well as other CIS countries, has to solve the key problems of inter-republican trade and mutual payments as soon as possible The appearance of the country in foreign markets is of vital importance for the success of the reforms Technical and financial aid from other states and international financial organizations are also essential: these should be oriented towards the establishment of efficient institutions of economic management, reform of industrial and agricultural production, and conversion of the MIC enterprises At the same time, the market mechanisms are just the engine of the economic machine: the market system does not yet encompass the whole economy People all have their own historical traditions, national peculiarities and specific features Kyrghyzstan is not an exception The Kyrghyz preserved the communal and kin way of life for centuries This is not without problems in an economic environment in which competition, rivalry, personal initiative and responsibility are basic requirements The republic needs a specific version of marketization which is fitted to the system of national values and is compatible with it, a version that may be or not be as efficient as that in the western countries, but will be more in keeping with the people’s historical traditions Otherwise economic reforms aimed at marketization may be doomed to failure Conclusion A.M Vassiliev The first years of independent existence of the Central Asian states have led to a considerable weakening in their links with Russia Recession of production, drastic falls in living standards of the overwhelming majority of the population, a scandalous gap between the incomes of the minority and majority and growing socio-political and inter-ethnic tension – all these common symptoms of the transitional period disease of Russia and its CIS partners were not conducive to their rapprochement and cooperation All of them saw a solution to their problems in strengthening their links with the west, rather than among themselves They have all failed in their attempts The cousins of the Central Asian peoples in Turkey and Iran proved too weak economically to serve as locomotives of development; the brethren-in-faith in the rich Arab countries are in no hurry to share their wealth with remote northern relatives; the west and the ‘Asian Tigers’ prefer to invest only in lucrative enterprises such as mining, metallurgy, telecommunications and car assembly plants The foreign corporations and governments of the western and far eastern countries have demonstrated keen interest in the Caspian oil and gasfields, including those in Central Asia Although estimates of their deposits fluctuate from to 30 bln tons, it is already clear that this region might become a source of fuel second only to the Gulf in importance to the world economy In the last few years international corporations have been involved in feverish rivalry for a share in the oil and gas ‘cake’ Promises of riches beyond dreams give rise in the littoral states to the illusion that their socioeconomic problems can be solved using the Kuwaiti or Saudi states as role models: the disappointment will be bitter The possible routes for the transportation of oil and gas have also become subjects of geopolitical struggle Both the USA and the western European countries would obviously prefer pipelines that bypass the territory of Russia and Iran via Azerbaijan, Georgia and Turkey Consideration is given to supplying Turkmen gas by the same route or via Afghanistan In any case, the efforts of the western countries and their powerful corporations are aimed at a substantial weakening of Russia’s position in Central Asia and its cooperation with the southern CIS countries, if not at its total ousting from the Central Asian and Transcaucasian regions Russia’s reluctance and inability to be a donor to the former union republics makes them continue the search for a substitute to their former benefactor As this takes place, both the state and nongovernment organizations of the west and the corporations are unsparing in their efforts to reorient the local elites towards links with the west, to the detriment of Russia The future of Russia’s relations with the Central Asian countries depends first of all on Russia itself If the country manages to overcome its socio-economic and political crises, acquire stability and start sustainable economic growth, it will gain the upper hand in Central Asia, and cooperation will be restored However, if the present situation in Russia carries on for some years, if the crisis is not overcome and the self-destruction of the society and the country persists, it will be much more logical for the Central Asian states to continue to keep their distance from their northern neighbour, and work towards strengthening their relationships with the western powers Claimants on Russia’s place in the region are by no means lacking The condition of the Russian and Russian-speaking Diaspora in Central Asia remains unstable In 1996-97, the en masse emigration of the Russians and Russian-speakers to Russia came to a halt Yet the decrease in the numbers migrating was caused by a lack of jobs and housing in their proposed destination, rather than in the possibility of finding a niche of their own as part of a national minority in the newly independent republics The difficulties experienced by the Russians and most of the Russian-speakers were further exacerbated by the ethnic policies pursued by the local political elites Preference for clan and ethnic connections as opposed to knowledge and skills, and a general deterioration in the level of education, which affects the Russians more than the indigenous peoples – all these factors continue to act as stimuli for emigration, especially for the young people There is no understanding as yet in Russia that the Russian Diaspora in Central Asia is a centre of future cooperation – not that it has the means to preserve it even if the realization does dawn Most of the Central Asians who are older than 30 and fluent in Russian are intuitively or consciously oriented towards Russia This situation will change within 20 years, unless Russia takes adequate measures A substantial basis of cooperation between Russia and Central Asia remains the mutual interest in maintaining peace and security Both Moscow and the Central Asian capitals fear destabilization in the region, along the lines of Afghanistan If such a thing should happen, no country but Russia would be both able and willing to help the young states; however, the country’s resources are limited, and it would not be able to afford direct military intervention Main Sources of Statistical Information Narodnoe Khozyaistvo SSSR 1990 (National Economy of the USSR, 1990), Moscow, 1991 Sodruzhestvo Nezavisimykh Gosudarstv Statisticheskii Ezhegodnik (The Commonwealth of Independent States Statistical Yearbook), Moscow, 1997 + 1998 Statisticheskii Komitet SN9 Statistichesrii Bulletin, Moscow, 1995-1998 Strany-Chley SN9 Statistichersii Ezhegodnikz FSI (CIS Member Countries Statistical Yearbook of the FSI), Moscow, 1993 Vneshnyaya Torgovlya (Foreign Trade), Moscow Index Abaza, General 205 Abdildin, Serikbolsyn 32, 34, 37–8 Abdujabbar, Tahir 182 Abdulatipov, Ramazan 209 Abdullaev, Juri 87 Abdullajanov, Abdumalik 185–7, 190, 195–202, 212–13, 217 Abdumanapov, Emil 258 Abdumavlonov, Abdulhai 86 Afzali, Azam 183 Agha Khan 181, 204 Ahmedov, Rustam 82 Aitikeev, Akbaraly 240 Akaev, Askar 25, 83, 235–43, 248, 255–6 Akhunov, Pulat 86 Albright, Madeleine 194 Ali, Ahmed Muhammed 231 Amirbek, Atobek 177 Andreeva, Nina 36 Andropov, Yuri 33 Asanbaev, Erik 32 Ashurov, Erkin 86 Atatürk, Kemal 136, 152 Atovullo, Dodojoni 188 Azimov, Yahyo 174, 217, 231 Babaev, Mukhtor 186 Baker, James 153 Balgimbaev, Nurlan 35 Bazarbaev, Chapyrashty 240–1 Bazarkulov, A 256 Bekmuhamedov, Uktam 82 Bhutto, Benazir 49, 93 Birshtein, Boris 239 Bisembaev, Asylbek 40 Bismarck, Otto von 136 Bolshakov, Aleksei 54 Bonner, Elena 208 Boutros Ghali, Boutros 154 Brudnyi, A 243 Bush, George 22 Chernomyrdin, Viktor 47, 89–91, 210 Chernyshev, Vladimir 44, 205 Christopher, Warren 51–2, 74 Ciller, Tansu 49, 92–3 Clinton, Bill 51, 140–1, 154 Colbie, William 214 Demirel, Suleyman 93, 152, 171 Dokuchaev, Aleksandr 44 Dostiev, Abdumajid 186, 192, 197 Dustum, Rashid 83 Eleusizov, Mels 40 Erkibaev, Abdygani 238 Esenov, Murad 139–40 Gabbasov, Engels 34 de Gaulle, Charles 136 Goibnazarov, Khaknazar 216 Gorbachev, Mikhail 133–4, 208 Gorbaty, Lesha 193 Grachev, Pavel 146, 209 Haig, Alexander 154 Harkin, Ruth 124 Hatami, Said Mohammad 152 Himmatzoda, Muhammed Sharif 183, 204, 217 Hulding, General 211 Ibadullaev, Nasrulla 141 Imomov, Sharafiddin 182 Inoyatova, Vasila 86 Isingarin, Nigmatzhan 54 Jandosov, Uraz 62–3 Jumagulov, Apas 255 Juraev, Murad 86 Kalandarov, Hakim 216 Kamilov, Abdulaziz 82, 87 Kaptagaev, Emil 249 Karamanov, Uzbakai 32 Karibzhanov, Zhanybek 64 Karimov, Islam 25–6, 79–98, 115, 122–3, 126–7, 129, 237, 248 Karimov, Jamshed 186–7, 196, 204, 215 Karimov, Rahmon 83 Kasymov, Gani 34 Kazhegeldin, Akezhan 34–6, 44, 46–7 Kenenbaeva, Kamila 241–2 Khairulloev, Sherali 196 Khanom, Hezretkuli 142 Khomeini, Ayatollah 27 Khozha-Akhmet, Khasen 40 Khrushchev, Nikita 31 Khudonazarov, Davlat 177, 182–3, 188 Khudoyberdyev, Mahmud 215 Kim, Yuri 45 Koehler, Horst 264 Koichuev, T 243 Konovalov, Vladimir 145–6 Kopekov, Donatar 135, 145 Kostin, Andrei 228 Kovalev, Sergei 208 Kozyrev, Andrei 98, 190, 209 Kuchma, Leonid 92 Kuliev, Abdy 139–40 Kunaev, Dinmukhammed 33 Kuttykadam, Seidakhmet 44 Latifi, Amirkhon 215 Latifi, Otakhon 184 Li Peng 49 Lieu, Bernard 207 Ligachev, Egor 33 Lipskii, Lieutenant-General 210 Malashenko, A 193 Mansurov, Tair 45, 179 Mansurov-Kovrigenko, Stanislav 92 Marx, Karl 136 Masaliev, Absamat 238, 245 Masanov, Nurbulat 44 Matubraimov, Almanbek 238 Merrem, Hans Dietrich 211 Migranyan, Aleksandr 194, 208 Mirsaidov, Shukrulla 82 Mirzokhodiev, Mirzomuhammadi 215 Mitterrand, Franỗois 153 Murad, Samad 86 Muradov, Sahat 134 Nabiev, Rahmon 177, 188, 190, 217 Najmiddinov, Sherali 216 Narziqulov, Madamin 86 Nazarbaev, Nursultan 18, 21–2, 25–6, 32–53, 68, 70–2, 83, 85, 237 Nazarov, Muhammad 148, 154–5 Nazarov, Talbak 211, 217 Nematzoda, Amanullokhon 180 Niyazi, A 193 Niyazov, Jumaboy 162–4, 167–71, 183 Niyazov, Saparmurad 33, 131–8, 140–2, 144–54 Nizamov, Mirzokhuja 216 Norbutaev, Erkin 88 Nuri, Said Abdullo 184, 192, 202–8, 215–17 Okhunov, Ravshan 83 Oripov, Otanazar 86 Ormantaev, Kamal 38 Ormushev, Aasan 240 Pachin, Savelii 47 Piris-Ballond, R 200, 205 Popov, Gavriil 208 Primakov, Evgeni 207, 209 Prudnikov, Viktor 146 Pulatov, Abdumannob 86 Pulatov, Abdurahim 86 Qadhafi’, Muammar 204 Rabbani, Burhaniddin 192, 206 Rafsanjani, Hashemi 52, 74, 152 Rahmonov, Emomali 90, 96, 174–218, 228 Rajabov, Safarali 174, 201, 203, 218 Rexrodt, Gunter 260 Rothschild, Evelyn 95 Ruiz, Mustafa 232 Ryabtsev, General 21 Ryskuliva, Aigul 249 Ryspaev, Barny 244–5 Sadiq, Mufti Muhammad 80 Saduddinov, Haiduddin 216 Safarov, Sangak 184–5, 190 Saidov, Zandro 216 Salamatov, Murat 140 Samadov, Abdujalil 187, 196 Samarin, Aleksandr 44 Sanginov, Habib 184, 216 Sarjaev, Batyr 135, 152 Sarsenbaev, Altynbek 39 Sergeev, Igor 51 Serov, Valerii 255 Shabdolov, Shadi 185 Shakhanov, Mukhtar 37 Sharifov, Fathullo 180 Sharifzoda, Haidar 180 Sharipov, Homidon 197 Sheremkulov, Medetkan 238 Shershenaliev, Janibek 243 Shevardnadze, Eduard 208 Shihmuradov, Boris 134–5, 150 Silaev, Boris 260 Smith, Edward 171 Sobchak, Anatoli 188 Sodirov, Rezvonshah 202 Sohibnazarov, Asliddin 215–16 Solih, Muhammad 81, 86–7 Solzhenitsyn, Aleksandr 208 Soyunov, Khalmurad 139–40 Suleimenov, Olzhas 37 Sultanov, Kuanysh 39 Sultanov, Utkir 82, 91 Suslov, Mikhail 33 Tazhin, Marat 39 Tereshchenko, Sergei 32, 36 Turajonzoda, Qazii Kalon 180, 184, 189, 204–5, 208, 218 Turgunaliev, Tonchubek 241 Turkushev, Beksultan 43 Tursunbaev, Baltash 47 Tursunov, Hikmatulla 82 Udovenko, Gennadi 92 Uglas, Margaret af 86 Usmon, Davlat 180, 183–4, 218 Velikhov, Evgeni 188 Vyakhirev, Rem 144 Yanov, Alexander 188 Yeltsin, Boris 22–3, 34, 85, 98, 144, 150, 190, 200, 207–10 Yusuf, Muhammad Sadiq 180 Yusuf, Shodmon 182–4, 189–90, 218 Zemlyanov, Valerian 40 Zhumaliev, Kubanychbek 239 Ziyoev, Mirzo 216 Zkehsheev, Zhapar 242 Zuhurov, Saidamir 196 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library eISBN: 978-0-86356-774-2 © Alexei Vassiliev, 2001 This edition first published 2001 Saqi Books 26 Westbourne Grove London W2 5RH www.saqibooks.co.uk .. .CENTRAL ASIA Political and Economic Challenges in the Post-Soviet Era Edited by Alexei Vassiliev Saqi Books Contents Russia and Central Asia A.M Vassiliev PART ONE:... disadvantageous economic links with Central Asia, rather than to the contrary Yet it is absolutely obvious that the future successful development of the Central Asian states is dependent on close economic. .. services are also in operation from other Central Asian capitals Pipeline transport is well-developed in all Central Asian states Oil and gas are transported to the central regions of the ex-USSR and