Rentierism, Dependency and Sovereignty in Central Asia

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gave the regime leverage in its relationships with the foreign oil and gas companies (Nurmakov 2010; Ostrowski 2010). At the same time, Kazakhstan’s growing dependency on oil and gas exports meant that the country will have to heavily rely on Russian controlled infrastructure for some time to come. According, to one assessment, around 84 per cent of Kazakhstan’s oil export still passes through Russia to the international markets (ICG 2007: 9; see also Ipek 2007). Today’s Kazakhstan strongly resembles a classical rentier state 2 . Its full dependency on commodity markets became all too visible during the financial crises in the late 2000s which in Kazakhstan manifested themselves in an almost instantaneous collapse of country’s banking and building sectors. The Kazakh political system largely follows a regional pattern of neopatrimonialism while its economy is shaped and dominated by few oligarchs and their cliques (Kjærnet et al. 2008). However, there are two important differences with Uzbekistan and Turkmenistan. Firstly, the Kazakh regime is much more liberal and less oppressive than its regional counterparts,(Olcott 2005) and secondly, it recognizes the limits of the politics based on informal networks. It has been argued that the regime’s long term ambition is to create a political and economical system in which formal institutions would play a much bigger role (Ostrowski 2009). This should facilitate the rise of much more stable political structures which, however, will not be democratic in outlook. Kyrgyzstan and Tajikistan Kyrgyzstan’s economy, similarly to that of Kazakhstan was badly affected by the collapse of the Soviet Union, but is not rich in exploitable and exportable natural resources. Hence, in the beginning of the 1990s it decided to liberalise its economy and, at least partly, the political system. This manoeuvre allowed the post-Soviet regime to obtain sufficient foreign aid/rent, from various Western governments and agencies, which helped to smooth the transition from the USSR. However, this source of rent inevitably dried up and in the second decade of independence the Kyrgyz state began relying on the inflow of remittances and leasing access to territory. The economy of Tajikistan, the poorest republic in the Soviet Union, was almost completely devastated and looted during the civil war in the beginning of 1990s. Today, Tajikistan is held together by remittances sent by labour workers that have been migrating predominantly to Russia, as well as foreign aid. Having said that, it was also estimated that as much as third of the population depends on drugs and weapons trade. Kyrgyzstan and Tajikistan on the eve of the independence found themselves in a much more difficult economic situation than any of the other three Central Asian republics discussed so far. This was due to two factors a) both are resources-poor, thus they could not benefit from the price liberalisation in the beginning of the 1990s in the same way as Turkmenistan and Uzbekistan did, and b) neither of the two had a developed and well functioning economic base. In the Soviet Union the Kyrgyz economy was not highly industrialized and ‘much of the industry that the republic did have was tightly integrated into the Soviet military-industrial complex, which left the republic especially vulnerable after the dissolution of the USSR’ (Pomfret 2006: 71). Tajikistan was the poorest of the Soviet republics, with 40 per cent of its budget coming from subsidies (ICG 2009: 1). The response of the Kyrgyz elites to the disintegration of the Soviet Union, which had far reaching social and economical effects, was to fully embrace the discourse of democracy and free market economy as advocated by IMF and World Bank at that time. This in turn won the country the support of ideologically driven major international donors and some Western governments (Gleason 2001: 173-174). Both parties between 1992 and 2000 poured $1.7 billion into Kyrgyzstan, a substantial amount of money which greatly aided the Kyrgyz government in smoothing out the transition from the Soviet Union (Pomfret 2006: 82-83). Yet, the outside aid/rent slowly came to an end by early 2000s as donors became increasingly disillusioned with 2 Kazakhstan anticipates a total investment of $52 billion in its oil and gas sector by the second decade of 2000s (Olcott 2005: 88). Copyright PSA 2011 10
Kyrgyzstan’s ever more authoritarian political regime and the lack of liberal economic reforms (Lewis 2008: 123-124; Hiro 2009: 296-298). Tajikistan did not go through the process which is normally understood as a ‘transition’ from Soviet to post-Soviet system. On the eve of independence, the country collapsed into a civil war which formally lasted from 1992 to 1997, however, significant political violence continued until 2001 (Heathershaw 2009). According to some accounts, the civil war came about as a result of the collapsing Soviet economy in the late 1980s which was unable to subside Tajikistan any longer to the same levels as it did in the past. Thus, in the early 1990s poverty, youth unemployment, corruption and competition for the resources between regionally-defined groups were seen as the key reasons for the outbreak of hostilities (Lynch 2001; Akiner 2006). The war took the lives of 50,000-100,000 people and had a devastating impact on the country’s economy (Nakaya 2009: 260). By the mid-1990s the industrial sector, state property and bank assets were looted and much of what had any productive value left the country. The physical infrastructure was also largely destroyed. On the eve of the new millennium Tajikistan was ranked among the poorest countries in the world (Pomfret 2006: 65-69). Since the early 2000s Kyrgyzstan’s and Tajikistan’s economies have followed very similar trajectories. Firstly, both countries overwhelmingly rely overly on labour remittances which Kyrgyz and Tajik workers send home from Russia and Kazakhstan. According to some recent studies ‘Tajikistan has the world’s highest promotion of remittances to GDP. In 2007 remittances comprised 36% of its GDP, or $1.8 billion, while Kyrgyzstan ranked fourth in the world, with 27% of GDP or $322 million’ (Marat 2009: 7). Secondly, Kyrgyzstan and Tajikistan – or rather country’s ruling elites – greatly rely on income obtained from leasing land to foreign powers. Kyrgyzstan is home to both Russian and the US military base. The Manas US air base since its creation in the early 2000s has become increasingly important to the Afghanistan war effort, something that the Kyrgyz elite tried to use to extract more rent through – rather unskilfully – playing Russian and Americans against one another (ICG 2010b). Tajikistan in 2004 agreed to become host to a Russian base after the Russian government agreed to write off a large part of the bilateral debt. Thirdly, both countries are slowly falling prey to organised crime, which is playing a growing role in their economical and political life (Marat 2006; Kupatadze 2008). Today, Kyrgyzstan and Tajikistan are semi-rentier states. In essence their internal stability is indirectly linked to the oil and gas prices which shape the economic fate of Russia and Kazakhstan and in turn determine the levels of remittances that Kyrgyz and Taijk workers will be able to send home. The place that Kyrgyzstan and Tajikistan have in a regional economy is largely the outcome of an insignificant role that both countries played in the Soviet economy which collapsed and left them with a reservoir of cheap, young labour but little more. The Foreign Policy of Central Asian (Rentier and Semi-Rentier) States The Kazakh and Turkmen autocratic regimes from the first years of independence attempted to translate the advantage of having substantial natural resources on their territory into consolidating their rule and their countries sovereignty. The pursuit of greater independence resulted in diametrically opposed foreign policies with Kazakhstan coining the term of the so-called “multivector” foreign policy (Cummings 2003; Bukkvoll 2004), whereas Turkmenistan opted, uniquely in the post-communist space, for a policy of “Positive Neutrality” (Anceschi 2009). In both cases post-independence foreign policy became an important part of the state ideology and aided rulers in strengthening their grip on power. However, in neither of the cases have they led to limiting the countries’ dependency on Russia, quite to the contrary. The growing reliance of both states on oil and gas resources, reinforced by a lack of economic diversification, strengthens Kazakh and Turkmen dependency on the Russian controlled pipeline system, a dependency which both ruling regimes found extremely complicated to overcome for various internal and external reasons. Yet, it has to be said, that this relationship of dependency in the case of Turkmenistan has been partly balanced by growing Russian reliance on Turkmen gas (Kandiyoti 2008). Copyright PSA 2011 11
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Rentierism, Dependency and Sovereignty in Central Asia

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