The EU, the EEU, and the War in Ukraine: Political Risks and Management Options

Oxana Karnaukhova
In 2022, among the CA5, only Kazakhstan sufficiently demonstrates its leadership capabilities
and willingness to compete with established regional leaders – Russia, Turkey, etc. – in the
struggle for a favourable investment climate. In 2022 Kazakhstan took the 43rd place of 63
national economies presented in the Global Competitiveness Index (GCI 2022) with 35th for
the previous year. Among five Central Asian republics, only Kazakhstan is represented in the
World Economic Forum’s annual assessment. Among the challenges for 2022 presented by
the Economic Research Institute (JSC of the Ministry of National Economy of the Republic of
Kazakhstan) there are political transformation, increase in household incomes and reduction
of inequality, strengthening human rights institutions, providing food security, and decentralization
of local self-government (ibd). Curiously, the economic landscape looks as follows: government
efficiency as well as business efficiency sound sustainable for the period of 2018-2022
and is on the 25th and 32nd place respectively. A significant drop in the index of economic
performance from the 49th to the 58th position is a cause for concern. Comparably, Tajikistan
took the 104th place in 2019, and Kyrgyz Republic the 96th. Uzbekistan and Turkmenistan have
evaded assessment (GCR, 2019). Report 2019 hints at the need for structural change in the face
of projected geopolitical risks, thus linking the geopolitical context with economic sustainability.
Kazakhstan’s trade turnover with countries outside the Eurasian Economic Union (EAEU), as
reported by the State Revenue Committee on July 19, 2022, increased by 51.6 percent (The
Astana Times, 2022a). Despite an economic slowdown caused by the global pandemic and
the recent geopolitical events in Central Asia and Russia, Kazakhstan remains firm in its goal
to provide a favorable investment climate and attract more investors. The role of the Foreign
Investors’ Council (FIC), a Kazakh advisory and consultative body for investment, remains as
important as ever (The Astana Times, 2022b).
In addition to the demonstration of individual leadership from 2020, a unique format of regional
integration has resurged on the grounds of mutually beneficial economic cooperation, the C5+1.
The C5+1 economic cooperation format was created on the margins of the UN Assembly in 2015
at the initiative of the United States. It envisages a multilateral dialogue platform for cooperation
between five Central Asian states – Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and
Kyrgyzstan – and their vis-à-vis worldwide.
On October 15, 2020, the Foreign Ministers of the five Central Asian states and Russia met online
to adopt a “Statement of the Foreign Ministers of the Central Asian states and the Russian
Federation on Strategic Directions for Cooperation” (Statement 2020). The third meeting of this
kind signals the emergence of a diplomatic format similar to the American ‘C5+1’ that was established
a few years ago. It should be noted that China, for its part, is also trying to secure a similar
“C5+1” approach to the region.
The Kommersant newspaper writes: “From now on, Moscow will not only develop bilateral
ties, but will consider Central Asia as a whole... This is a kind of new strategy of Russian foreign
policy in Central Asia”. However, it turns out that this is not a new strategy at all but the old
one, as, “ according to Moscow’s plan, the result of this process should be a joint vision for the
46 Wirtschaft und Management · Band 33 · März 2023