Indian Council of World Affairs

Russia's military action in Ukraine and putting nuclear deterrent forces on high alert by Russian President Vladimir Putin led the Ukrainian situation to an inflection point poised to affect European security and stability.[i] On 22 February 2022, President Putin signed an Executive order and recognised the two breakaway regions in eastern Ukraine, Donetsk People's Republic and Luhansk People's Republic, as independent Republics.[ii] Putin also emphasised that Ukraine is an "integral part of our history, culture, and spiritual space".[iii] In response to Russia's military action, the US, UK, EU, Canada and several other countries have imposed sanctions on Russia's central bank and sovereign wealth fund, targeting the country's already depreciating ruble.[iv] In his first State of the Union address, US President Joe Biden called for solidarity against Russia's invasion of Ukraine and declared financial assistance of USD 1 billion for the country. However, he also stated that the US forces are not and will not be engaged in the conflict with Russia in Ukraine.[v]

The developments between Russia and Ukraine and its fallout also create concerns in many former Soviet republics, including Central Asian countries. It is important to observe their responses and analyse the impact of these developments in the region.

Central Asian Countries' Responses

Central Asian countries have largely remained neutral on the Russian military action in Ukraine. Kazakhstan's Foreign Minister stated that "the issue of recognition for the Donetsk and Luhansk people's republics by Kazakhstan is not on the agenda. We operate based on international law and the founding principles of the UN Charter."[vi] Uzbekistan has made a similar statement that the country "takes a balanced, neutral position on this matter. All disputes and disagreements that arise must be addressed solely based on the international law norms."[vii] Against the Russian media's claim that Kyrgyzstan supports military action in Ukraine, the Kyrgyz government has clarified that "We welcome the settlement of the current situation, including through negotiations to prevent further casualties and destruction."[viii] On 02 March 2022, in a special emergency session of the United Nations General Assembly (UNGA) on a resolution against Russia’s military action in Ukraine, Kyrgyzstan with Kazakhstan, and Tajikistan abstained from voting while Turkmenistan and Uzbekistan were absent.[ix] Although Central Asian countries have been cautious and balanced in their responses, they are preparing to deal with its adverse consequences, particularly in the economic field.

Central Asia-Ukraine Relations: An Overview

Geopolitics of the region plays a crucial role in the relationship between Central Asia and Ukraine. Since their independence from USSR, the former Soviet republics, including Central Asia and Ukraine, have made efforts to formulate and implement an active foreign policy focusing on their energy and commercial linkages. As the former Soviet Republic, Ukraine has social and cultural connections with Central Asian countries. As in the Central Asian region, the Russian language is commonly used in Ukraine.[x]

Among Central Asian countries in trade with Ukraine, Kazakhstan takes first place in total volume (goods and services) with USD 813.4 million in 2019. Uzbekistan is in second place with USD 328 million total trade volume, followed by Turkmenistan of USD 168 million. It is relatively moderate with Kyrgyzstan, 32 million USD (2019), and Tajikistan, 24.1 million US dollars (2020).[xi]

Apart from goods, Ukraine is also known to provide services to the Central Asian region, especially in IT, oil and mineral deposits. For modification of various industrial plants, the Ukrainian experts and know-how are in high demand, primarily in Turkmenistan.[xii] Reportedly, more than ten thousand citizens live in Ukraine from Central Asian countries, mainly migrant workers, who send remittances to their respective countries.[xiii]

Ukraine claims that engagement with Central Asian countries is hampered due to the obstacles created by Russia through restrictions on the transit route, which affect the flow of goods between both sides. Consequently, they find it difficult to diversify their trade, including energy supply. Ukraine also appealed to WTO against the Russian transit ban, but WTO ruled out this claim in April 2019 by saying that the transit bans were not recognised as a violation of international law.[xiv]

Russia-Ukraine Crisis: Implications for Central Asia

Escalation of Ukraine tension has led to additional sanctions on Russia, directly affecting Central Asian countries. Due to the sanctions on Russia and Russia's counter-sanctions, which prevents access to European goods from reaching Central Asia via Russia, the economic prospects have been affected throughout the region. The Central Asian countries, especially Kazakhstan, Kyrgyzstan and Tajikistan, whose economy is strongly associated with the Russian economy, have already started facing challenges in their currency markets.[xv] Russian ruble tumbled against dollar by nearly 30% to a record low.[xvi] The national currency of Kazakhstan tenge plunged alongside the Russian ruble. Kazakh stock Exchanges also ended with the weighted average of 492.21 tenge per dollar, up from 432 just a week ago.[xvii] The Tajik Somani has also fallen by nearly 35 percent of its value against the ruble since Russia's decision to recognise two breakaway regions in eastern Ukraine.[xviii] Kyrgyzstan's som also plunged along with the ruble.[xix]   

Russia is already reaching out to its Central Asian partners in Eurasian Economic Union (EAEU) to consolidate solidarity and discuss the emergency remedies for the economic fallout of the sanctions.[xx] On 25 February 2022, President of Kazakhstan Kassym-Jomart Tokayev, who hosted the discussion of EAEU, addressed the Prime Ministers of Armenia, Belarus, Kyrgyzstan, and Russia and said that "Considering the close interconnection between our economic, financial and industrial systems, I believe that a working group should be created within the Union to assess risks and develop economic measures aimed at mitigating negative consequences".[xxi]

Out of five Central Asian republics, three countries, Tajikistan, Kyrgyzstan, and Uzbekistan, heavily depend on migrant remittances from Russia. The latest data from the World Bank shows that remittances generate 30 percent of the gross domestic product of Tajikistan, 28 percent for Kyrgyzstan and nearly 12 percent for Uzbekistan.[xxii] Almost one-third of Tajikistan's economy depends on remittances sent to their homeland by migrants earning rubles.[xxiii] Due to the current crisis, the Russian ruble has fallen to a record low against the United States dollar resulting in inflation in Russia and affecting remittances flow to send Central Asian countries.[xxiv] Millions of migrant workers and their families from Central Asian countries in Russia could be effected by any further escalation in the Russia-Ukraine crisis.[xxv]

Central Asian countries are observing the current Russia-Ukraine crisis with concern. They are cautious in their responses, urging both sides to take all the necessary steps to de-escalate the tension. Central Asian countries have already faced challenges due to the pandemic fallout, Afghanistan situation and turmoil in Kazakhstan. Russia-Ukraine uncertainty will also have consequences for the region.

*****

*Dr. Punit Gaur is a Research Fellow at the Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal.

End Notes

[i] The Times of India, “Ukraine crisis: Putin raises nuclear alert status”, 28 February 2022,
http://timesofindia.indiatimes.com/articleshow/89879480.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst, Accessed on 28 February, 2022

[ii] The Kremlin Moscow, “Signing of documents recognising Donetsk and Luhansk People’s Republics”, 21 February 2022, http://en.kremlin.ru/events/president/news/67829, Accessed on 22 February, 2022

[iii] The Kremlin Moscow, “Address by the President of Russian Federation”, 21 February 2022, http://en.kremlin.ru/events/president/news/67828,  Accessed on 22 February, 2022

[iv] Aljazeera, “Russia-Ukraine: US, UK, EU, Canada sanction Russia’s central bank”, 28 February 2022, https://www.aljazeera.com/news/2022/2/28/russia-ukraine-us-uk-eu-canada-sanction-russias-central-bank, Accessed on 02 March, 2022

[v] The White House, “Remarks by President Biden in State of the Union Address”, 02 March 2022, https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/03/02/remarks-by-president-biden-in-state-of-the-union-address/, Accessed on 03 March, 2022

[vi] Eurasianet, “Russia attempts to contrive appearance of support from Central Asian allies”, 27 February 2022, https://eurasianet.org/central-asian-leaders-mute-on-ukraine-but-markets-and-public-reel, Accessed on 28 February, 2022

[vii] Ibid

[viii] Ibid

[ix] The Diplomat, “How Did Asian Countries Vote on the UN’s Ukraine Resolution?”, 03 March 2022, https://thediplomat.com/2022/03/how-did-asian-countries-vote-on-the-uns-ukraine-resolution/, Accessed on 07 March, 2022

[x] Oleksandr HALONA (2019), Potential of Cooperation of Ukraine with Central Asia States and Its Key Concerns, Historia i Polityka, No. 30(37), pp. 107–117

[xi] Maksim Yakovlev, Central Asian Bureau for Analytical Reporting, “Central Asia and Ukraine Can Cooperate in Circumvention of Russia”, 13 December 2022, https://cabar.asia/en/maksim-yakovlev-central-asia-and-ukraine-can-cooperate-in-circumvention-of-russia#:~:text=Kazakhstan%20takes%20the%20first%20place,with%20168%20million%20(2019), Accessed on February 14, 2022

[xii] Morgatskyi, V. (2017), “Ukraine And Central Asia In New Geopolitical Realities: Geoeconomic and Geostrategic Aspects”, Bulletin of Taras Shevchenko National University of Kyiv, Geography. 180-187. 10.17721/1728-2721.2017.68.36

[xiii] The Diplomat, “Ukraine: The View From Central Asia”, 01 March 2022, https://thediplomat.com/2022/03/ukraine-the-view-from-central-asia/, Accessed on March 04, 2022

[xiv] Maksim Yakovlev, Central Asian Bureau for Analytical Reporting, “Central Asia and Ukraine Can Cooperate in Circumvention of Russia”, 13 December 2022, https://cabar.asia/en/maksim-yakovlev-central-asia-and-ukraine-can-cooperate-in-circumvention-of-russia#:~:text=Kazakhstan%20takes%20the%20first%20place,with%20168%20million%20(2019), Accessed on February 14, 2022

[xv] Eurasianet, “Central Asia currencies feeling heavy pressure from ruble’s tumble”, 28 February 2022, https://eurasianet.org/central-asia-currencies-feeling-heavy-pressure-from-rubles-tumble, Accessed on 3 March, 2022

[xvi] The Economic Times, “Russian Rouble tumbles nearly 30% to record low as West steps up sanctions”, 28 February 2022, https://economictimes.indiatimes.com/markets/forex/rouble-tumbles-nearly-30-to-record-low-as-west-steps-up-russian-sanctions/articleshow/89886245.cms, Accessed on 3 March, 2022

[xvii] The Astana Times, “Kazakh Government Prepares for Adverse Consequences For Its Economy From Anti-Russian Sanctions”, 02 March 2022, https://astanatimes.com/2022/03/kazakh-government-prepares-for-adverse-consequences-for-ts-economy-from-anti-russian-sanctions/, Accessed on 3 March, 2022

[xviii] Oilprice.com, “Central Asia Braces For Economic Fallout As Russia’s Ruble Tumbles” 28 February 2022, https://oilprice.com/Latest-Energy-News/World-News/Central-Asia-Braces-For-Economic-Fallout-As-Russias-Ruble-Tumbles.html, Accessed on 3 March, 2022

[xix] RadioFreeEuropeRedioLibrary, “Central Asia Takes Economic Hit From Russian War In Ukraine Sooner Than Expected”, 1 March 2022, https://www.rferl.org/a/central-asia-migrants-ruble-impact/31730968.html, Accessed on 3 March, 2022

[xx] Eurasianet, “Russia seeks solidarity against sanctions from Eurasian trading bloc”, 25 February 2022, https://eurasianet.org/russia-seeks-solidarity-against-sanctions-from-eurasian-trading-bloc, Accessed on March 03, 2022

[xxi] Ibid

[xxii] Charu Sudan Kasturi, Aljazeera, “The Russia-Ukraine crisis is squeezing Central Asian economies” 16 February 2022, https://www.aljazeera.com/economy/2022/2/16/the-russia-ukraine-crisis-is-squeezing-central-asian-economies, Accessed on February 17, 2022

[xxiii] Eurasianet, Russia attempts to contrive appearance of support from Central Asian allies, 27 February 2022, https://eurasianet.org/central-asian-leaders-mute-on-ukraine-but-markets-and-public-reel, Accessed on February 28, 2022

[xxiv] Charu Sudan Kasturi, Aljazeera, “The Russia-Ukraine crisis is squeezing Central Asian economies” 16 February 2022, https://www.aljazeera.com/economy/2022/2/16/the-russia-ukraine-crisis-is-squeezing-central-asian-economies, Accessed on February 17, 2022

[xxv] Ibid