20 notes from 2020 (part 1)

Half-sitting at the confetti-covered table, we scavenge over the remains of Olivier salad, while trying to sober up and recover the memory of what just happened, and prepare for what’s going to come next? In this two-part issue, we share our 20 notes from 2020, and try to extrapolate what is in store in 2021.

It was all very promising at first - 2020 started with a race, where Uzbekistan put emphasis on energy and Kazakhstan accented infrastructure and tech, leading to high-ticket project announcements, like Uzbekistan GTL’s construction finalisation, EuroChem’s $1bn fertilizer plant in Zhambyl in Kazakhstan and more. Turkmenistan was set on completing TAPI, Kyrgyzstan was trying to make ends meet, and Tajikistan… well, it was trying.

Then everything became dark. Looking at the numbers, COVID-19 hit Kazakhstan and Kyrgyzstan the worst in Central Asia, with Uzbekistan taking third place by number of cases. Altogether the numbers came up to over 500,000, officially. The WHO pressured Tajikistan to start counting, but much later than the rest, although Turkmenistan did not budge. Perhaps, they all stopped counting at some point.

The healthcare crisis led to economic hardships in Central Asia, with interruptions in exports, remittances and the drop in demand for gas due to the suspension of all industrial and mining activities in China. According to the ADB, as of September 2020 GDP rates were contracting by 3.2% in Kazakhstan, by 10% in Kyrgyzstan, by 0.5% in Tajikistan, with Uzbekistan showing growth of 0.5%.

To alleviate the hardships, the Stans benefitted from a series of relief packages of long-term loans from IFIs and partner countries. In addition, Turkmenistan received $10m of credit packages for COVID-19 recovery-related projects, Kyrgyzstan and Tajikistan secured nearly $250m and $370m, respectively, and Uzbekistan - $1.75bn and Kazakhstan - almost $2bn. Over $1bn was dispersed in grants.

In the face of COVID-19, Tajikistan found itself in a dire economic crisis, raising concerns over issues of poverty, social justice, radicalisation and terrorist sentiment. The need to retain a strong grip over things, seemed to have led Rahmon to reconsider the transition of power, but otherwise doing little in terms of reforms, instead relying heavily on financial aid from the international community.

Turkmenistan focused on infrastructure projects. Deals were sealed with Russia and Turkey, like the $2bn Lapis Lazuli corridor, opening new logistical routes across the Caspian Sea. The government also allocated $1,25bn to resume the construction of trans-regional railroads and finalise the Turkmen sector of the TAPI pipeline by the end of the year, which did not seem to take place.

Laying out more plans for 2021, Turkmenistan agreed with the Hong Kong company INVEST Enterprises Limited for it to finance and conduct maintenance works of two main power plants at the Turkmenbashi Complex of Oil Refineries within 18 months to increase the country’s energy self-sufficiency, as part of the state program for socio-economic development by 2025.

Kyrgyzstan was even more shaken by the economic impact of COVID-19, which grew into a social and political crisis, revealing corruption and government failings, leading to the October revolution. As a result, the resignation of President Jeenbekov created the opportunity for the rise of Sadyr Japarov, who consolidated power, proposed new parliamentary elections and extensive parliamentary reforms in 2021.

However, the country may be trapped in a vicious circle, as given the burden of the country’s foreign debt and financial needs, growth will depend on relations with the biggest lenders - China and Russia. Yet China refuses to make concessions regarding the outstanding debt owed by Kyrgyzstan, only agreeing to extend the repayment period for additional penalties. In turn, Russia is waiting out its turn, to see where power will shift in the near future.

Speaking of stability, Afghanistan remains an unresolved matter of regional significance, in terms of security and potential for foreign investment. Uzbekistan played an active role in those respects, joining efforts with the Afghan government to apply for funding of new railway roads and power transmission lines, as well as support in the intra-Afghan dialogue, where no consensus was reached to date.

To be continued......