Sizing up the Central Asian economies.

• Author: Aslund, Anders
• Position: Pressing Issues

As the countries achieve international prominence, and the focus on post-Communist transition fades away, labeling them the "stans" fails to capture the vital economic and political differences that each nation faces. How each country deals with their individual challenges will determine their course of development.

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In the late 1990s, the West did little but complain about the five former Soviet republics in Central Asia. Often lumped together as the "stans," Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan were known for their human rights violations and high levels of corruption. The agenda of post-Communist transformation seemed to have faded away in these countries.

On 11 September 2001, everything changed, and the strategic importance of Central Asia became evident. Contrary to popular perception, Central Asia is currently the most dynamic part of the world, with an average growth rate of no less than 10 percent in 2001. As the West became serious about the region, the vital differences between each country became apparent. Economically, the five countries differ in structure, level of development and indebtedness; politically, although all five countries are considered authoritarian, the differences in pluralism are great. Turkmenistan and Uzbekistan are full-fledged dictatorships, while Kazakhstan, Kyrgyzstan and Tajikistan can be described as mildly authoritarian. This article aims to bring forth the major features of Central Asian economies, providing insights into the current economic problems facing each nation. Differences in political pluralism have influenced these countries' economic systems and their operation. Central Asia is replete with oil and other natural resources, which has attracted foreign interest and represents great economic opportunity. However, all five countries suffer from pernicious corruption, and all but Kazakhstan have a high level of foreign debt that accumulated quickly after independence. Problems of trade have emerged as the most pressing concern for the region and should become more urgent in the future.

DIFFERENCES IN POLITICAL PLURALISM MATTER

Politics plays an important role in economic reform, and in post-Communist countries, the correlation between economic reform and political pluralism is uniquely strong. Although political pluralism encourages checks on power that help control governments, allowing the economy to thrive, these states stifled economic growth through excessive state ownership, regulation and taxation. All five countries are still authoritarian--the current Central Asian presidents, with the exception of Kyrgyzstan's president Askar Akayev, were first party secretaries in Soviet times--though their differences are striking.

Turkmenistan has a truly frightening dictator, President Saparmurat Niyazov, who was appointed First Party Secretary of the republic's Communist Party in 1985 to strengthen Moscow's control over the area. When the Soviet Union collapsed, he severed his ties with the Communist Party but maintained dictatorial powers, naming himself Turkmenbashi, leader of all Turkmen. He has since declared himself president-for-life and indulges in a Stalinist personality cult, littering the country with golden statues of himself and building palaces in his honor. Turkmenistan has almost no civil society, and the opposition has fled abroad. An alleged attempt on Turkmenbashi's life in late November 2002 led to the sentencing of 56 people in televised show trials.

The current situation in Uzbekistan is only mildly better. Oddly enough, Uzbekistan's dictator, Islam Karimov, was appointed First Party Secretary in 1989 as part of Mikhail Gorbachev's reform plan. Karimov, like Niyazov, retained power as a dictator even after retiring from the Communist Party. He struggled to control Uzbekistan's strong liberal and Islamist oppositions by imprisoning thousands. In January 2002 he asked, for the second time, to prolong his current term of office to seven years. Uzbeks had little choice; 91 percent voted for him. (1) The primary security threat to Uzbekistan, as well as to Kyrgyzstan and Tajikistan, from 1999 to 2001 was armed incursions by the Afghanistan-based Islamic Movement of Uzbekistan (IMU), now blacklisted by the U.S. government. Juma Namangani, an IMU leader and one of Al Qaeda's leaders, was reportedly killed in early fighting in Afghanistan.

Kazakhstan, Kyrgyzstan and Tajikistan are not as repressive as Turkmenistan and Uzbekistan. They each have mildly authoritarian governments, but the origins of their regimes are somewhat different. In fact, all three call themselves democratic and have purportedly democratic elections. Kyrgyzstan went through considerable democratization at the end of the Soviet period, leading to the presidential election of Askar Akayev, a physicist who ran in opposition to the Communist establishment. Kyrgystan remained a liberal and formal democracy until the past few years, when repression of both opposition politicians and the media began to increase. The primary justification was the security threat posed by the IMU's bloody incursions. Regional tensions, business interests and lust for power have also played significant roles.

Kazakhstan's president, Nursultan Nazarbayev, came to power in 1989 as arguably the most respected republican first party secretary under Gorbachev; he consistently faced substantial and open opposition. Kazakhstan's recent economic success has bred new opposition among members of the wealthy middle class who have greatly benefited from Nazarbayev's policies but increasingly feel the country is too economically developed to remain a family fiefdom. While never a full-fledged dictator, Nazarbayev appears to have become more authoritarian and has sentenced several political opponents to long prison sentences for nonpolitical crimes.

After a protracted civil war between the old elite and an unlikely coalition of Islamists and democrats, Tajikistan is still too unstable to maintain elementary law and order. However, the regime has not become repressive as a result of this instability. Its national security has greatly benefited from the demise of the Taliban in Afghanistan and the stabilizing presence of U.S. troops in the region.

STARKLY DIFFERENT ECONOMIC SYSTEMS

The means of the dynamic growth of Central Asia's economies have differed greatly, depending on two factors: their economic reform processes and the fortunes of their raw material exports.

Economic reform has facilitated growth in Kyrgyzstan and Tajikistan and compounds Kazakhstan's achievements. Turkmenistan and Uzbekistan remain state-controlled, having enacted little reform. As a result, the two economies are in stagnation, and market reforms, with all their structural costs, must be undertaken before growth can emerge.

For years, the state-controlled Uzbek economy attracted attention because of its limited output decline. Uzbekistan has not experienced much output contraction, but its official growth lingers around 4 percent a year. This rate is probably exaggerated, however, since the Uzbek economy is still strictly regulated by the state. Turkmenistan's economy is erratic: In 1999 and 2000 it enjoyed record growth of 17 percent per year and official growth rates continue to be more than 10 percent a year. This increase was caused by Russia's repeal of its previous commercial embargo against Turkmenistan's exports, which allowed the country to export its abundant natural gas to Russia through its pipeline system, as Russia's own gas production has proven insufficient.

By contrast, Kazakhstan and...