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Sanctions on Russia to have trickle down effect on Central Asia: expert

12 April 2014 [10:45] - TODAY.AZ
By AzerNews

If the West imposes sanctions against Russia due to invasion and subsequent annexation of Ukraine's Crimea region and the economic situation in the country worsens there will be a trickle down effect on Central Asia, Bruce Pannier believes.

"Firstly, Russia is certainly one of the leading, if not the leading trade partner with the five Central Asian states. Less money in Russia means less Russian money to spend on Central Asia. That of course also means Russia will be purchasing reduced quantities of goods from Central Asia," the expert on Central Asia and Senior Correspondent at Radio Free Europe/Radio Liberty told Azernews on April 10.

The expert believes that if the economic situation in Russia becomes bad it could have an effect on the ability of Russian businesses to employ Central Asian migrant laborers.

Last year the World Bank compiled a list of the countries most dependent on remittances. Tajikistan was the most dependent; Kyrgyzstan stood at the third place. Currently, over 1.8 million Tajik and almost a million Kyrgyz migrants live and work in Russian territory.

"Tajikistan migrant laborers sent home between $3.5 billion to $4.2 billion in 2013, most of it from Russia," Pannier noted. "If there is less work in Russia, more citizens of Kyrgyzstan, Tajikistan and Uzbekistan will be staying at home and joining the ranks of the unemployed. That could create social unrest in Central Asia."

The sanctions on Russia could have serious consequences for Kazakhstan, Pannier added.

"Kazakhstan produced some 82 million tons of oil in 2013 and one-third of it was exported through Russian pipelines. If Europe reduces the amount of Russian oil it buys, Russia will start accumulating oil. Kazakhstan will then start to accumulate oil. Kazakh Oil and Gas Minister Uzakbai Karabalin said at the start of this week Kazakhstan needs to start looking for "new possibilities" for exporting oil, but the truth is, for the near term, Kazakhstan does not have many options," he noted.

"Turkmenistan ships less gas to Russia than it used to but the amount is still more than 10 billion cubic meters per year and it is unclear how much Turkmen gas Gazprom will want if Europe reduces imports of Russian gas. At least half of Uzbekistan's gas exports go to Russia also," he said.

Meanwhile, the expert believes there is one advantage of the sanctions for the Central Asian states. They would be forced to better develop regional ties, trade more with neighbors such as Azerbaijan, Iran, Afghanistan, Pakistan and India.

"For the gas and oil exporters it could mean renewed efforts to diversify their energy export routes, particularly through the EU's Southern Corridor energy export plan," Pannier concluded.

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