MOSCOW: Russia-Ukraine crisis is gripping the economies of Central Asian states as the Russian currency had crashed 8 percent against the US dollar.
Millions of people from Uzbekistan, Tajikistan, and the Kyrgyz Republic entre Russia for work and their families started to suffer, it is learnt.
Moscow based Faridum Abdulloev, a mid-level manager at a construction firm usually able to send across $500 per month to his wife in Dushanbe, Tajikistan, which was enough to cover his family’s household expenses, his son’s private school fee, and a monthly installment on a home loan.
But in late January, the 34-year-old worriedly called his wife before transferring money. The Russian rouble had crashed 8 percent against the United States dollar since December and 15 percent since October — all even as prices in Moscow have climbed steeply in recent months. He would be able to send home only $450, he told her. Then, he shared a deeper fear with her. “I told her things might get so bad that I might have to come back,” he recalled in a phone interview with Arab media.
Abdulloev is among millions of Central Asian migrant workers in Russia who risk becoming collateral victims of the ongoing tensions between Moscow and the West over Ukraine. The Kremlin has positioned more than 100,000 soldiers and heavy weaponry along its neighbor’s borders, sparking fears of an imminent war. The US has responded by preparing a set of sledgehammer sanctions aimed at deterring Russian President Vladimir Putin from any invasion of Ukraine.
Yet while the measures Washington is proposing are targeted at Moscow, they could also end up crippling the economies of Tajikistan and the Kyrgyz Republic while also significantly hurting Uzbekistan, because these nations depend on money sent home by citizens working in Russia.
More than 3 million migrant workers from Uzbekistan, nearly 1.6 million from Tajikistan, and 620,000 from the Kyrgyz Republic entered Russia between January and September 2021, according to data from the ministry of internal affairs in Moscow. Put simply, one in 10 citizens from those three countries works in Russia. Remittances — mainly from Russia — constitute 30 percent of the gross domestic product of Tajikistan, 28 percent for the Kyrgyz Republic, and almost 12 percent for Uzbekistan, according to the latest World Bank data.
But the mere threat of sanctions has already sent the rouble tumbling, cutting the value of the earnings and savings of migrant workers.
In the past, experts have found that remittances to Central Asia take big hits when the Russian economy faces crises, including after 2014 when Washington imposed economic curbs following Moscow’s annexation of Crimea. And this time, the US and its allies in Europe are warning of unprecedented measures if Putin proceeds with military aggression. Some of the proposed sanctions could effectively block the pipeline of remittances that keep Central Asian economies humming.
“A decline in remittances is likely to lead to economic, fiscal, and social pressures in Central Asian countries particularly dependent on remittances,” Tigran Poghosyan, the International Monetary Fund’s resident representative to the Kyrgyz Republic, told Arab media.