Introduction

Dealing with the coronavirus pandemic has become a serious challenge for countries across the globe. The virus has stressed public health systems worldwide and disrupted the global economy. The novel Coronavirus that emerged in the Chinese city of Wuhan in late December 2019 has spread globally and is being reported daily around the world. Three out of five Central Asian Republics (CARs); Kazakhstan, Kyrgyzstan and Tajikistan share direct border with China, and one could expect that these republics would very much be affected by the outbreak of this deadly disease. However, in Central Asia, when COVID-19 positive cases came into light in the mid of March, it compelled the governments of these republics to undertake preventive actions against its spread.¹ Against this backdrop, it is pertinent to analyse the current crisis situation in Central Asia and government’s response to it along with their future outlook.

COVID-19: Responses of Central Asian Countries

In Central Asia, first official registered case of COVID-19 came into light in Kazakhstan. On March 15, Uzbekistan registered its first official case of COVID-19 infection, while Kyrgyzstan officially registered its first case on March 18.² Turkmenistan and Tajikistan have not witnessed any positive cases till now. Up till now, more than 1500 active cases have been registered in these countries.

These republics suspended air links with China and closed the land borders. Following the declaration of COVID-19 as a global pandemic by WHO, all educational institutions were closed and all public events were suspended. Following the confirmed cases of the disease, affected states declared a state of emergency for the period from 16 March to 15 April. ³

Economic implications of the Coronavirus Pandemic

COVID-19 pandemic has severely affected the political and economic developments of the CARs. Kazakhstan being the major economy in the region had already been facing economic difficulties due to Saudi-Russian conflict over oil prices and production, which had led to reduced revenues. The economic repercussions of COVID-19 have further depressed the Kazakh economy. Other CARs affected from the crisis are also facing economic slowdown.

Declining GDP Growth Rate

According to the ADB report, Kazakhstan’s gross domestic product (GDP) growth is bound to plunge to 1.8 per cent in 2020 following the economic repercussions of COVID-19.⁴ Kazakhstan is one of the main gas exporters to China, and reduction in Chinese demand for natural gas will impact Kazakh economy. Tajik economy may witness plunge in investments, reduction in remittances, and deterioration in foreign direct investments due to the COVID-19 outbreak. Uzbekistan’s economic reforms and developmental goals are also unable to meet with the current challenges. GDP growth will slow down in 2020 due to a lower price for natural gas and copper. ADB has projected that gross domestic product (GDP) growth for Uzbekistan to be 4.7% in 2020, slower than last year’s 5.6% growth.⁵

Reduced Remittances

Kyrgyzstan and Tajikistan being the poorest and remittance-based economies are suffering since the outbreak of the pandemic. There is an economic slowdown in Kyrgyzstan’s main trade partners; Kazakhstan, Russia, China, and Uzbekistan. Tajikistan is heavily reliant on remittances from Russia and Kazakhstan. Annual volume of remittances is estimated to be more than 30 per cent of the GDP. Declining remittances will not only affect the economy, but will also have its impact on the families of the migrant workers.

Big Hit to Tourism Sector

In 2019, tourism contributed more than 400 USD million to the Kyrgyz economy. It is estimated to be equivalent to 5.3 per cent of its GDP in 2019. In Uzbekistan, spring season lures high number of tourists. Due to the pandemic, Uzbek tourism sector has lost over 30 million USD due to cancelation of spring bookings. Uzbekistan has approved a package of measures worth about 1.3 billion USD and various benefits and deferrals to businesses in the amount of 2 billion USD. Uzbekistan requested 1 billion USD in budget support from the Asian Development Bank on April 1.⁶

Loss of Employment

State of emergency has led to massive job losses in Central Asia. People working in the small and medium sector have lost their jobs due to the shut down by the government. In Kazakhstan, almost two million people have been rendered jobless due to the current crisis situation. People are out of money, and are borrowing money to manage their families.

Distressed Manufacturing and Industrial Sector

Due to the low volume of trade, taxes and custom payments are damaged. Small and medium sized enterprises are affected the most. In Kazakhstan, this has garnered resentment amongst the entrepreneurs and they are on strike demanding to lower taxes or to close the big stores in the markets. In order to support the various sectors of the economy, Kazakhstan’s government has announced an anti-crisis plan worth 10 billion USD. ⁷ This plan is primarily targeted to provide improved medical facilities. Some tax related relief is also expected to be announced to ease the tension among the business communities.

Lack of well Coordinated Policies

The present crisis is a readiness test of Central Asian countries to demonstrate regional political integration, waiving of trade barriers, increased economic cooperation and above all humanitarian cooperation. But what has been witnessed so far is totally opposite of this. Kazakhstan and Kyrgyzstan have not only closed their borders (which was logical to prevent the spread of Coronavirus) but have also blocked necessary delivery of the food items such as wheat, cooking oil, eggs, vegetables etc., allowing transit only for their domestic usage. ⁸ On the other hand, Tajikistan, playing down the severity of the pandemic organized a gathering of thousands to celebrate the festival of Nowruz. The lack of coordination among the post Soviet states of Central Asia is the main reason for asymmetrical managing of the crisis situation.

Uzbekistan stands out in its way of handling the crisis situation arising from the outbreak of Coronavirus. President Mirziyoyev, being the flag bearer of the regional cooperation in Central Asia has once again proved that he is a man of his words. He had telephonic conversations with the Heads of all the Central Asian countries and Afghanistan and committed to provide possible help in their fight against pandemic. On April 8, Kazakh President has also announced to provide humanitarian assistance, if requested to do so, to the Central Asian countries fighting Coronavirus pandemic.

Impact on Foreign Policy

Role of two dominant regional players in Central Asia; Russia and China is crucial at this point of time. Being the source of the pandemic, China has faced serious global criticism. However, China began to actively pursue medical diplomacy to build a positive image of the country worldwide. China transferred, 1000 Personal Protective Equipment (PPE), 100 thousand disposable masks and 10 thousand respiratory masks at the Torugart checkpoint of Kyrgyz-China border to assist Kyrgyz medical workers. 10 thousand respiratory masks were also handed over to the Chinese Embassy in Kyrgyzstan.⁹

On the other hand, there are no reports of Russia providing any humanitarian assistance to the Central Asian countries, although it has sent medical aid to the Italy and USA. This will have its implications in the post pandemic period. Russia leads the Eurasian Economic Union (EAEU) and Kazakhstan and Kyrgyzstan are the members of the grouping while Uzbekistan is to apply for an observer status. The current Russia- Central Asia dynamics will impact the future course of EAEU. Central Asian migrant workers stranded in four Russian airports are waiting to return to their homes. They are vulnerable to the virus infection, but Russian authorities do not seem to be taking this seriously.

Turkmenistan handed over humanitarian aid to Iran consisted of essential goods, including medical instruments to fight against Coronavirus but none of the Central Asian states have received aid from Turkmenistan. Closure of borders amid the pandemic demonstrates the lack of cooperation and efficiency of these states.

The International Monetary Fund (IMF) allocated 120.9 USD million to Kyrgyzstan to meet the challenges arising with the COVID-19 epidemic. ¹⁰ This is the first emergency loan allocated by IMF since the pandemic. The United States Agency for International Development (USAID) has allocated 66 million Soms (905.6 thousand USD) to enhance Kyrgyzstan’s capability to fight against the novel Coronavirus, along with providing PPE kits. USAID has also provided monetary assistance to Turkmenistan. The World Bank approved 11.3 million USD in grant financing to the Tajikistan Emergency COVID-19 Project, from the International Development Association (IDA). This money will be spent on building fully equipped Intensive Care Units (ICU), PPE and procuring testing kits etc.¹¹ Uzbekistan and Kazakhstan have also requested for economic assistance from IMF and World Bank.

Opportunities for India

India is actively pursuing its strategic neighbourhood policy amid this global pandemic. The South Asian Association for Regional Cooperation (SAARC) became alive when PM Modi held video conferencing with the member nations to formulate a joint strategy to fight this crisis. Central Asia is part of India’s extended neighbourhood. India’s influence in Central Asia has increased in recent years and this pandemic has provided another opportunity for India to give fillip to its soft power diplomacy in the region. However, India is yet to adopt a strategy to help its Central Asian neighbours. India should extend all possible support to the affected Central Asian countries which will have long term strategic benefits.

Conclusion

In spite of the current challenges, Central Asian economies are projected to be rejuvenated in the post-pandemic period. The ADB report projects that the Kazakhstan’s GDP growth will rebound to 3.6 per cent in 2021. This will be achieved through growing hydrocarbon and manufacturing outputs, and higher investments in various sectors. Also, as gold exports are expected to rise, the Kyrgyz economy will recover to some extent. Kyrgyz Republic needs to continue to encourage the social development and alleviation of poverty of its least developed areas to foster more inclusive economic growth, as noted by ADB. In order to improve the investment climate, Tajikistan needs to make its tax policy more business friendly along with looking for other ways to increase revenue. Uzbekistan’s GDP growth is expected to bounce back to 5.8% in 2021, with reforms boosting growth in agriculture, industry, and services.

In Central Asia, the number of Coronavirus cases is likely to grow gradually. It will also be a test case for Regional cooperation in central Asia with borders being closed and trade and transport coming to a halt. It’s yet to be seen how well Central Asia’s states are communicating with each other about this crisis and what are the options to provide assistance and advice across borders. But in this crisis, there is an opportunity for improved relations and communication across the region for the betterment of the regional community. Role of major powers; Russia, China and USA in this time of pandemic will directly impact the foreign policy objectives of the former Soviet republics in the post COVID-19 scenario.

Endnotes

1. Catherine Putz, COVID-19 Arrives in Central Asia, It was only a matter of time. The Diplomat, March 16, 2020. https://thediplomat.com/2020/03/covid-19-arrives-in-central-asia/.
2. Number of cases of Coronavirus increasing in Central Asia, Asia-Plus, 6 April 2020. https://asiaplustj.info/en/news/centralasia/20200406/number-of-cases-of-Coronavirus-increasing-in-central-asia.
3. Kazakhstan Declares State of Emergency for COVID-19, bakermckenzie, 17 March 2020. https://www.bakermckenzie.com/en/insight/publications/2020/03/kazakhstan-state-of-emergency-covid19.
4. Kazakhstan's Economic Growth to Remain Positive Despite COVID-19, ADB News Release, 3 April 2020 https://www.adb.org/news/kazakhstans-economic-growth-remain-positive-despite-covid-19-adb.
5. Uzbekistan Growth to slow in 2020 Amid Pandemic and Lower Energy Price, News Release, 3 April 2020, https://www.adb.org/news/uzbekistan-growth-slow-2020-amid-pandemic-and-lower-energy-price-adb
6. Uzbekistan in talks with ADB on $1 bln loan, Reuterrs, 1 April 2020. https://www.reuters.com/article/uzbekistan-adb-loan/uzbekistan-in-talks-with-adb-on-1-bln-loan-idUSL8N2BP471
7. Almaz Kumenov, Kazakhstan outlines plan to shelter economy from COVID-19, Eurasianet, 18 March 2020. https://eurasianet.org/kazakhstan-outlines-plan-to-shelter-economy-from-covid-19
8. Though no confirmed cases of COVID-19 reported in Tajikistan, Coronavirus on everyone's mind In Tajikistan, RFE/RL, 6 April 2020. https://asiaplustj.info/en/news/tajikistan/society/20200406/though-no-confirmed-cases-of-covid-19-reported-in-tajikistan-Coronavirus-on-everyones-mind-in-tajikistan.
9. Ermabek Baisalov, Month in review: Central Asia in March 2020, Cabar Cebtral Asia. https://cabar.asia/en/month-in-review-central-asia-in-march-2020/.
10. IMF approves $120.9 million disbursement for Kyrgyzstan to fight coronavirus, Reuters, 27 March 2020.https://www.reuters.com/article/us-health-coronavirus-imf-kyrgyzstan/imf-approves-1209-million-disbursement-for-kyrgyzstan-to-fight-coronavirus-idUSKBN21E0DN.
11. https://www.worldbank.org/en/news/press-release/2020/04/02/tajikistan-gets-world-bank-financing-to-respond-to-covid-19-pandemic.

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