EBRD says Ukraine crisis will restrict growth in Russia, Central Asia

The European Bank for Reconstruction and Development (EBRD) released a statement this morning on the impact of Ukraine’s crisis on economies of Ukraine, Russia, Central Asia, and the Caucasus. EBRD economists forecasted that Ukraine will predictably slump into a deep recession and sanctions for Russia will serve to accelerate its own economic stagnation. However, projections for Belarus, Moldova, Armenia, Azerbaijan, and Kazakhstan were also down. With a preponderance of economic cooperation with larger countries like Ukraine and Russia, the news could hinder Western powers that are trying to establish a foothold in negotiations with gas-rich countries like Azerbaijan and Turkmenistan. French Prime Minister Francois Hollande just concluded a 3 day visit to the Caucasus region to hammer out potential agreements.

This directly contradicts earlier reports from the EBRD that economic growth in Central Asia is likely to remain strong due to the large number of natural resources that are currently under development. To break it down, growth is expected to increase in Kazakhstan and Turkmenistan due to the development of their prodigious oil and gas resources, while growth in Tajikistan and Kyrgyzstan is expected to decrease this year due to political problems, reduced demand, and high remittances flowing through Russia due to the vast majority of its employed population working in Russia.

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News Briefs:

  • A NATO Liaison office will be opening in Tashkent on May 14. The office will serve as the diplomatic mission of NATO and attempt to promote practical cooperation with partners in Central Asia, especially in defense. The move is probably to stem the expansion of the Customs Union south, and with Kyrgyzstan joining in the near future, Western policy planners are hoping to contain the nascent Eurasian Economic Union. Special Representative of NATO Secretary General for Central Asia James Appathurai will be attending the ceremony.
  • Tajik and Kyrgyz border talks concluded yesterday once again after another major dispute earlier this month. The topics included the construction of highways along the Isfara Vorukh and Koktash-Aksai-Tamdyk-Kishemish road, as well as grazing rights for border towns’ respective livestock herds. The transportation ministries agreed to work closely on the construction of the roads, which apparently triggered the disputes between the border villages.
  • Afghanistan’s runoff presidential election has been confirmed for June 14. The two contenders are Abdullah Abdullah, a half-Pashtun, half-Tajik candidate who came in second in the 2009 elections after accusations of fraud. Ashraf Ghani, himself former Minister of Finance under Karzai, is a full Pashtun allied with Abdul Rashid Dostum, an Uzbek potentate. The IEC reported that Abdullah Abdullah scored about 45% of the vote, with Ghani at 31.6%. Both agreed to sign the Bilateral Security Agreement with the United States if elected.
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