Valdai Club

Experts from Russia and Central Asia discussed the prospects for cooperation at the Second Central Asian conference of the Valdai Discussion Club.

Russia and Central Asia, due to their political, economic and infrastructural proximity, in many ways comprise a common political, economic and defence space. This is facilitated by their lengthy shared history, including being part of the same state. Their shared heritage is largely determined by geography. Central Asia is a strategically important southern flank for Russia. For the countries of the region, sandwiched in the centre of Eurasia, the territory of Russia is the most important transit space.

The common economic space dictates the need to coordinate efforts to create the most favourable conditions for economic development through integration projects and the formation of the necessary regulatory and legal framework. The flagship of integration in the region is the Eurasian Economic Union (Kazakhstan and Kyrgyzstan are full members on an equal basis with Russia, Uzbekistan became an observer in December 2020). For almost every nation in the region, Russia is a key trading partner and investor. These countries, in turn, represent an important sales market for Russian companies, as well as key strategic suppliers of certain types of natural resources; it is also the most important external labour base for the Russian economy.

The link between Russia and Central Asia is also in many ways a common security space, taking into account the existing multilateral and bilateral formats for interaction. This past year has revealed much about external and internal challenges to stability and security in the region. The Taliban (banned in the Russian Federation) rose to power following the hasty withdrawal of American troops from Afghanistan, while unrest in Kazakhstan in early 2022 was dealt with successfully through the joint action of Russia and its defence partners in Central Asia. In response to the events in Afghanistan, the CSTO intensified its cooperation in the defence sphere; the region’s main defence association conducted joint exercises together with Uzbekistan, which made it possible to work out what form military cooperation would take in the event that the Afghan conflict moved beyond the country's borders. The prompt deployment of the CSTO peacekeeping contingent during the massive January protests in Kazakhstan made it possible to stabilise the country in a very short period of time.

Such a deep level of interdependence, ideally, should ensure the strategic nature of relations between the countries of the region and Russia and guarantee the good-neighbourly nature of relations. At the same time, the request for a multi-vector nature of the Central Asian republics, as well as sometimes domestic processes, have compelled the authorities of the countries in the region to look for ways to diversify their foreign policy, economic contacts, investments and technological packages. The Ukrainian crisis has served as a serious catalyst for this process, prompting regional players to at least rethink the status quo.
Against the backdrop of high geopolitical turbulence, the Western countries have become noticeably more active in the region. American emissaries have frequented the Central Asian capitals. In the rhetoric of US and Western officials, there are signals about the inadmissibility of supporting Russia and helping it bypass numerous Western sanctions. At the same time, vague proposals have been offered envisioning a new level of economic cooperation as a carrot, but only in the form of promises of new investment projects that would make it possible to create at least the appearance of an alternative to cooperation with Russia. The maximum that the United States and its allies are ready to offer is to try to minimise the impact of sanctions against Russia on the countries of Central Asia.

On the one hand, this tactic has proven to be quite effective. The Central Asian republics are distancing themselves as much as possible from the Ukrainian crisis at the level of political statements, trying to maintain the most neutral position. In economic terms, they are also trying to act in line with the framework outlined by the West. Processes in the financial sphere, the most vulnerable to sanctions, are indicative. Thus, the severe restrictions imposed on Russian banks have created serious problems for Russian financial institutions in Kazakhstan. Some of the assets were frozen, and branch offices had to be sold to local players. Russian citizens attempted to use Central Asian banks to receive bankcards that are compatible with Western payment systems to side-step sanctions; however, this sharp increase in "card tourism" immediately came to naught after signals from the West. Today, in economic relations between Russia and the countries of the region, the problem of banking and financial transactions is becoming one of the most acute, especially at the household level. This, in turn, is a serious deterrent, for example, to growth in the flow of Russian tourists to the region. Russian guests in the countries of the region cannot use cards formerly compatible with Western payment systems (predominantly Visa/Mastercard) abroad, and the Russian Mir system is not in use in all of Central Asia; it remains limited in scope in those nations that have adapted it.

The situation is similar in the commercial air transport sector. Due to the risk that leased aircraft will be seized, Russian airlines use the Russian Sukhoi Superjet on routes with Central Asia. However, due to their limited fleet, the number of flights has noticeably decreased. Against this background, a number of local airlines have completely suspended flights to Russia, reducing already-weak air traffic.

Thus, in implementing a framework designated by the West, the countries of the region have not only limit their opportunities to reap additional profits; they have also suffered losses.
At the same time, due to the marked deep dependence of the countries of the region on Russia, in addition to the direct influence of sanctions, they face economic difficulties. One of the most sensitive issues for the countries of the region related to the new geopolitical reality, is the position of numerous Central Asian diasporas in Russia. The slowdown in the Russian economy has most significantly affects their incomes and, as a result, the value of their remittances to their homeland. Meanwhile, this money plays a very important positive role in ensuring socio-economic stability, primarily for Tajikistan, for which transfers from Russia account for 30% of the country's GDP. These funds are important for Kyrgyzstan and Uzbekistan. Accordingly, any reduction in their size, and in the worst case, a massive return of migrants home due to the loss of work in Russia can cause serious social tensions in the region.

Central Asia is a central priority for Russia

Against the backdrop of serious geopolitical turbulence, any consultations or meetings with officials and experts makes it possible to ‘synchronise watches’ and jointly look for options for cooperation amid new, difficult conditions. These issues were the subject of the Second Central Asian conference of the Valdai Discussion Club, which took place in Nizhny Novgorod in mid-May. This year, the theme of the event was “Russia — Central Asia: Cooperation and Development Amid Instability”, which became another proof that even during a crisis, Russia, with its closest partners and allies, has both the political will and the necessary format to discuss the most difficult, but vital issues.

As the conference showed, Russia's relations with its neighbours in Central Asia have their own very rich agenda and go far beyond a purely regional story. The turn of Russian foreign policy to the East, announced earlier, is today becoming more and more relevant; it is impossible without a reset of relations with strategic partners in Central Asia, which should become a key transit space, a link between Russia and the countries of South Asia. That is why, in addition to the issues of interaction with the countries of the region, one of the key issues on the agenda centred  around a joint discussion of embedding the Central Asian focus of Russia's foreign policy into a more global eastern vector.