More than two years into the Kremlin’s invasion of Ukraine, Central Asian labor migrants remain a major source of low-cost labor in Russia.  Even while some of these workers are exploring new destinations for work abroad, there are close to 5 million Central Asian nationals residing in Russia, 1.2 million of which are believed to be Kyrgyz citizens.  Remittances from this community are a major source of income in Kyrgyzstan, the second poorest post-Soviet state.  Now, Kyrgyz banks are starting to cancel transactions with Russian banks out of fear of secondary sanctions –  deployed against third parties for violating U.S.  sanctions against Russia.  Given the serious threat inherent in Western sanctions to Kyrgyzstan banks, adherence could spell economic trouble for much of the small Central Asian country’s population.  

On August 22, Aiyl Bank, the largest in Kyrgyzstan, announced it would no longer process transactions involving Russian cards and Sberbank accounts and cards, the Russian bank popular with labor migrants.  The move is the latest instance of a major Kyrgyz institution cutting ties with Russia, following a June 12 announcement by U.S.  President Joe Biden naming more than 300 new sanctions against Russia that target financial firms and tech products with military applications.  The day following this announcement, many of Kyrgyzstan’s largest banks, including RSK-Bank, Companion Bank, and Mbank, halted transfers with Russia.  Kazakhstan and Armenia, both with historically strong economic ties to Russia, have also worked to block Russia from their own financial institutions.  For now, there are still some ways to transfer money between Russia and Kyrgyzstan, using money transfer services like Zolotaya Korona and AstraSend, but even these are increasingly difficult to employ.

With likely over a million Kyrgyz nationals working in Russia, the suspension of financial ties between Kyrgyz and Russian banks could have potentially serious consequences for Kyrgyzstan.  The Central Asian country is one of the most remittance-reliant in the world, with roughly a third of Kyrgyzstan’s GDP coming from Russia in recent years, although remittances to Central Asia from Russia declined in 2023 by 3.7%.  Kyrgyz workers are exploring new options for foreign work in Europe and the Middle East – but the numbers of workers there remain in the thousands, not the millions.  Russia, a country in a demographic crisis and now sending a generation of young men to the front in Ukraine, remains an important destination for those from economically struggling Central Asian countries.

In the past, sanctions busting – actions by third parties to help ship goods to a sanctioned country – has been a contentious issue between Washington and Bishkek.  In 2023, U.S.  Senate Foreign Relations Committee Chairman Bob Menendez issued a letter alleging that Kyrgyzstan was “complicit [in the] facilitation of trade with Russia in products that implicate sanctions, such as drones, aircraft parts, weapon accessories, and circuitry.” Kyrgyzstan-Russia trade has spiked dramatically since February 2022, a phenomenon common across Central Asia and the South Caucasus.  Kyrgyzstan President Sadyr Japarov responded to Menendez with a statement of his own, arguing that goods sent to Russia from Kyrgyzstan were only intended for civilian use, stating, “We adhere to a neutral position [in the Russia-Ukraine war]," although he also hinted at a willingness to crack-down on any possible sanctions busting.  Relations with Washington have also been tarnished by Bishkek’s passage of a Russian-style foreign agents law targeting civil society.                  

However, Kyrgyzstan institutions complying with U.S.  sanctions against Russia could be a sign that relations with Washington have the potential to improve.  Given his mixed statement, it is possible that Japarov’s administration is exerting behind-the-scenes pressure to adhere to sanctions.

Regardless of political intention, the collateral costs of sanctions seem likely to fall on ordinary Kyrgyzstan citizens, which, in turn, could possibly drive anti-Western sentiments.  Public polling demonstrates that pro-Russian attitudes are already high in Kyrgyzstan.  A Spring 2022 poll – the last time available data was gathered – found that a combined 56% of respondents listed either Ukraine, the United States, or the European Union as having caused the Russo-Ukrainian war, compared to only 14% who blamed Russia.  More recent anecdotal data seems to indicate a continuation of this trend, something analysts attribute in part to Moscow’s soft-power efforts within Kyrgyzstan.

During former UK Foreign Minister David Cameron’s Spring 2024 trip to Kyrgyzstan, Cameron felt the need to make the case for anti-Russian policies to local media.  If Kyrgyzstan citizens, for whom the average per-capita yearly salary is about $650, are negatively impacted by not being able to receive or send funds to relatives in Russia, it could spike anti-American or anti-Western attitudes.  

Sanctions adherence might prompt further efforts to expand working options in countries other than Russia.  There is already ample reason for Central Asians to be wary of Russian jobs.  Since 2022, officials in Russia have used migrants as a source of man-power for the war in Ukraine, coercing thousands into signing military contracts.  Another disincentive is an increasingly racist atmosphere directed toward Central Asians, made worse by the Crocus City Hall terror attack earlier this year, supposedly conducted by Tajik migrants.  

Many Central Asians seem eager to seek opportunities elsewhere, but re-adjusting will take time.  The UK, for instance, allowed only 8,000 working visas for Kyrgyz nationals – an increase, but a far cry from the over one million thought to be working in Russia.  The impact of sanctions will likely hit Kyrgyz citizens long before migration patterns adjust at a mass level.

Kyrgyz financial institutions appear ready to take on sanction's compliance in a serious way.  Doing so will be part of an ongoing trend across the former Soviet Union in which Russian firms are increasingly shut out.  Yet for those countries reliant on remittances from Russia, these sanctions would appear to have potentially serious fall-out.  The impacts of this will be evident in the short term, with Kyrgyzstan citizens finding it more difficult to receive remittances, but also long term, likely driving Central Asians to seek opportunities elsewhere.