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Asian echo of Crimea. Why fight Russia and the West could lead to explosion in Middle Asia
Material posted: Publication date: 20-11-2014

Imposed against Russia economic sanctions and the fall in oil prices not only put the Russian economy on the brink of a recession hitting the wallets of ordinary citizens, but also impact on the nearby partners of the Kremlin — first of all post-Soviet countries. And this resulted not only in reduction of turnover and the depletion of financial flows, has become including the most socially vulnerable and low-paid cogs in the machine of the Russian economy. We are talking about migrant workers from Central Asian republics – Kyrgyzstan, Uzbekistan and Tajikistan, already fully experienced the consequences of confrontation with the West.

Money transfers of labor migrants in Central Asia from Russia account for the lion's share of the GDP of the countries of the region. In Kyrgyzstan it is about one-third of the gross domestic product in Uzbekistan — a quarter of Tajikistan is earned by guest workers in Russia money make up almost half of Tajikistan's GDP. In the spring of this year it became clear that the Ukrainian crisis and the ensuing sanctions have significantly reduced the amount of funds transferred by migrants. Thus, Tajik citizens were sent home in the first quarter of 2014 648 million, which is 5.3 percent less than the same period last year (683,1 million). In turn, the Uzbek migrant workers have listed to 924 million dollars, which is almost 30 percent less than last year (1.35 billion).

In the second quarter, the situation seems to be leveled (total of funds transferred by individuals to CIS countries amounted to 5,07 billion dollars, in 2013 — 5.03 billion), but in the future, the amount of remittances continued to fall. So, in August in the CIS countries was listed for $ 130 million less than last year (against 2,171 2,042 billion), although the ruble was still feeling more or less fine. Meanwhile, the volume of one transfer to the CIS countries in the first half decreased from 458 to 422 dollars, and judging by the situation on the currency market, by the end of the year this figure will be much lower. The fact that migrant workers in Russia receive their salaries in rubles, then to buy on them dollars (less and less), which in Uzbekistan does calculations in the field of trade and import-export transactions.

The weakening of the ruble not only led to the decrease of remittances and impact on reduction of inflow of currency to the Central Asian republics, which supplies to Russia cheap labor. This had an impact on the depreciation of local currencies. For example, in Uzbekistan, the dollar exchange rate set by the Central Bank of the Republic at the level of 2396 soums (in the beginning of the year scrip 2202), although on the black market the us currency is already trading at 3300 soums. However the ruble over the past 11 months decreased from 67 to 50 soums.

In Tajikistan the local currency is the Tajik somoni has depreciated against the dollar by five percent (up to 5.19 somoni per dollar), but strengthened against the ruble, which depreciates even faster. In Kyrgyzstan, where the value of the dollar on January 1 amounted to 49,1 soma, today the official rate of the American currency is to 57.6 soms. Thus for ten and a half months of the som has depreciated by almost 15 percent.

What is happening in Russia, including the reduction of its export potential, its impact on other macroeconomic indicators of countries of Central Asia. In Tajikistan, the inflation rate from January to October was 5.7 percent, whereas last year the figure was two percent lower. According to the world Bank, GDP growth in 2014 will slow to 6.5 percent compared to 7.4 percent in 2013. However earlier in Dushanbe was calculated at the end of the year to achieve growth of 7.6 per cent.

In Kyrgyzstan, inflation for 2014 is expected to reach 10.6 per cent. Although last year in Bishkek predicted that it will not exceed 8 percent. The growth of GDP by the end of the year, according to adjusted data, has been planned for 4.5, and not 6.9% as before. In Uzbekistan the situation is better, but there is, as the experts of the Asian development Bank, the authorities will not achieve the GDP growth for the year at 8 percent, as it was the last 10 years. Real growth, experts say, will amount to 7.6 percent versus 8.1 planned in Tashkent. And the inflation rate could reach 11 percent vs. 7-8 previously scheduled.

According to the International monetary Fund, because "the negative spillovers from Russia and weakened domestic demand" to Asian republics of the former USSR, in particular, Kyrgyzstan and Tajikistan, which "more than all other countries of the CIS depend on the instability of the Russian economy" we should expect the economic slowdown in the next five years. "Further deepening of geopolitical disputes between Russia and Ukraine could have a significant impact on the economy of the Caucasus and Central Asia — both in the short and in the medium term", - stated in the report of the Fund.

However, it's not just the rising prices and slowing production. The main difficulties the Central Asian republics will face if Russia finally will get stuck in its economic turmoil, and millions of workers — construction workers, janitors, and sales will be out of work. After returning home, they may become a potential catalyst for social tensions. After all, their name is Legion.

According to the FMS of Russia, now the country has 11 million foreign nationals, and only for the first ten months of this year it had issued more than a million work permits. Accurate figures for the number of, for example, citizens of Uzbekistan, working in Russia, nobody speaks — the media have to operate as much as the official data for 2012, according to which in Russia labored 2.3 million Uzbeks, 1.1 million Tajiks and Kyrgyz 540 thousand. In fact, these figures, and considering the number of illegals, the number of which is itself the FMS is estimated at 3.7 million people, can be doubled.

Now the number of migrants increased even more at the expense of immigrants from Ukraine, which employers prefer before the Uzbeks and Tajiks, because guests with Independent better speak Russian and have more qualifications. According to "Radio Azattyk", many newcomers from Central Asia complained that in the Central Federal district in view of the circumstances of them virtually ceased to issue work permits.

If we allow the mass return of migrants to their home countries (although some are unemployed, most likely, will prefer to stay in Russia, and, most likely, some fall into criminal Chronicles), it is clear that to employ and to feed all of the returnees to the authorities of the Central Asian republics in the conditions of an acute shortage of jobs will not be able. If we add to this the loss of the amounts that are contributed by the workers in local budgets, Tajikistan, Uzbekistan and Kyrgyzstan to avoid shocks, similar to the Kyrgyz revolutions in 2005 and 2010.

Alexander Mednikov


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