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caspian policy center perspective: the pandemic crisis in the greater caspian region

Caspian Policy Center Perspective: The Pandemic Crisis In The Greater Caspian Region

Author:Caspian Policy Center

Apr 9, 2020

Like the rest of the world, the Greater Caspian Region is caught up in the COVID-19 pandemic.  Just as World War I truly ended the 19th century, the current pandemic is now truly ending the 20th century.  No one yet knows how – or even when – this will end.  But we can be certain that the world will be a different place.  One natural human response in such a global health crisis is self-preservation behind locked doors.  But that’s the last thing leaders should be doing in our inter-connected world where people are dependent on a constant flow of accurate information and international supply chains.  It’s important for leaders to consult closely among themselves and, with appropriate coordination, cooperation, and caution, do everything possible to ensure the maintenance of connectivity and responsible trade among themselves and with the rest of the world.

COVID-19 cases and fatalities have been reported in nearly every country in the Greater Caspian Region, which is not surprising considering that Iran and China, two of the early hardest-hit nations, border the region.  Armenia has reported the most fatalities so far in the region, perhaps because it relies heavily on movement and trade through Iran to its south.  As of the first week of April, neither Tajikistan nor Turkmenistan had yet reported any COVID-19 cases and fatalities.  Flouting rapidly-emerging international practices, the government of Tajikistan allowed mass gatherings to celebrate the Novruz holiday and permitted Dushanbe and Khojand to play the opening game of the 2020 soccer season, albeit to an empty stadium.  Turkmenistan celebrated Health Day April 7 with a mass bike-a-thon involving 7,000 bicyclists.  Most countries throughout the region are beginning to fast-track the construction of new hospitals and quarantine facilities that they fear will be needed.

A majority of the Greater Caspian Region countries have welcomed international assistance and are beginning to provide it to others as well.  For example, Azerbaijan donated $5 million to the World Health Organization to help in the global fight against COVID-19.  The World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, and the Asian Development Bank, prominent among others, are stepping in to assist the more economically vulnerable countries in the region.  And some individual donor nations are major players in this effort.  The government in Beijing, as well as the Jack Ma Foundation and the Alibaba Foundation, are delivering medical and other humanitarian assistance to the region.  On March 26, U.S. Secretary of State Mike Pompeo announced $274 million in emergency health and humanitarian assistance for 64 at-risk countries around the world, including those in the Greater Caspian Region.  For example, the U.S. Agency for International Development has pledged $1.1 million to Armenia, $1.7 million to Azerbaijan, and $920 thousand to Turkmenistan.  Likewise, the Eastern Partnership of the European Union has announced its intent to step up crisis assistance for the region.  South Korea is providing special pandemic assistance to Kyrgyzstan.

But even with international assistance, national economies in the region are hard-hit.  The hydrocarbon-exporting nations – Azerbaijan, Kazakhstan, and Turkmenistan – are especially hard hit because of the low hydrocarbon prices and plunging demand.  Baku and Nur-Sultan are tightening their belts on what were relatively healthy and reasonably well-managed economies, and they both have large sovereign wealth funds and foreign exchange reserves to fall back on in this time of crisis.  But Turkmenistan had already been in an increasing financial crisis because of chronic mismanagement and misspending.   Now, in addition to existing limits on foreign currency conversion, President Berdimuhamedov has decreed that any Turkmen paid in dollars can only withdraw funds from dollar bank accounts in Turkmen manat at the official exchange rate, which is worth only 1/5 the black-market rate.  He has also, significantly, ordered a review of vanity construction projects, with lower priorities to be put on hold.

Poorer countries in the region like Kyrgyzstan and, especially, Tajikistan, will not be able to rely this year on the significant incomes their seasonal migrant workers – especially to Russia – always send back home.  Tajikistan will likely be the hardest hit because of its immense reliance on migrant-labor remittances.  On a smaller, but still significant scale, especially in Central Asia, small, hand-to-mouth shuttle-traders who depend on personal trips, especially to China, for inexpensive goods to sell in local bazaars, have been stopped dead in their tracks.  As in any financial crisis, the poorer sectors of the population will likely suffer the most. 

The silver lining in all of these dark clouds is the opportunity for positive political action.  This is perhaps currently most apparent to the east of the Caspian Sea in Central Asia.  President Shavkat Mirziyoyev, elected in December 2016, had already broken with the past in which his predecessor, Islom Karimov, had kept Uzbekistan isolated from its immediate neighbors and its economy mired in the Soviet past.  Almost immediately after his election as president in December 2016, Mirziyoyev began to reach out to his counterpart leaders, and together they started quietly to explore the possibility of forming some sort of official structure for the region akin to the Association of Southeast Asian Nations or the Nordic Council.  That initiative slowed when the government changed in Kazakhstan after the partial retirement of President Nursultan Nazarbayev in March 2019, but it never truly died. 

During the current global crisis, Uzbekistan has announced that in partnership with Slovakia it is setting up new factories to manufacture ventilators and other respiratory devices for its own use and to export to its immediate neighbors – Afghanistan, Kyrgyzstan, Tajikistan, and Turkmenistan.  This positive gesture could well set the stage for greater Central Asian cooperation and, eventually, for a resumption of moving toward the establishment of a regional politico-economic structure.  The significance of such a structure would lie in more political clout for the region and, eventually, in better economic conditions for its people.  Meanwhile, Azerbaijan is seeking greater cooperation and collaboration with Central Asia.  In the current pandemic, such Greater Caspian Region cooperation is more necessary than ever before.

AUTHORS:

Ambassador (ret.) Richard Hoagland, CPC Board Member 

Efgan Nifti, Executive Director, Caspian Policy Center

Ambassador (ret.) Robert Cekuta, CPC Board Member

Ambassador (ret.) Allan Mustard, CPC Board Member

 
 

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