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Jaspreet Sehmi

Death of Uzbek Leader Stokes Concerns in Central Asia

by Jaspreet Sehmi | Dun & Bradstreet Editor

September 13, 2016 | No Comments »

The recent death of Uzbekistan President Islam Karimov, who ruled Central Asia’s most populous country with an iron fist for more than a quarter of a century, has sent ripples of fear throughout a region dominated by aging autocrats with no apparent successors.

Shavkat Mirziyoyev, who has been Uzbekistan’s prime minister since 2003, is the acting president. As per the constitution, a presidential election must now be held within three months. Mirziyoyev is widely expected to be elected.

The leaders of the four other Central Asian nations — Kazakhstan, the Kyrgyz Republic, Tajikistan, and Turkmenistan — are looking nervously over their shoulders as fears grow about the stability of their own regimes. Indeed, any civil unrest sparked by a less-than-smooth transition of power in Uzbekistan (which shares a border with all the other Central Asian countries) could spill over into the rest of the region (particularly given the blurring of ethnicities and nationalities across state borders).

The risk of instability in the region is elevated by a sputtering economy in all five countries brought on by the recession in Russia, cooling growth in China, and (either directly or indirectly) by the oil price slump.

Unrest has already been simmering in the region of late, fueling fears of potential destabilization. Kazakhstan, Central Asia’s wealthiest nation, has been hit by two forms of security challenges in recent months: civil unrest and terrorism. Protests broke out in cities across Kazakhstan in late April and continued into May, prompting forcible dispersals and the arrests of more than 500 people. While the protests were ostensibly over planned land reforms, they were likely sparked in large part by growing discontent over rising inflation and job insecurity amid the economic downturn.

Meanwhile, following a spate of shootouts in June between police and gunmen in the western Kazakh city of Aktobe that left 19 people dead, a gunman shot dead five people in Almaty (Kazakhstan’s commercial capital) in mid-July. The motivation for these attacks remains unclear, but authorities have stated that both were carried out by Islamic extremists. While radical Islamism is not widespread in Central Asia, recent years have seen extremist variants gain traction in certain parts of the region, particularly those with higher levels of socioeconomic deprivation.

With Uzbekistan at a political crossroads, a struggle for power in the country may now ensue, with different interest groups ranging from democratic reformers to Islamic extremists vying for influence. The country has no precedent for a transfer of power — Karimov’s rule began before Uzbekistan’s independence from the Soviet Union.

Moreover, Central Asia as a whole is a region of great strategic importance. It boasts vast natural resource wealth and has a geostrategic location — the competing powers of Russia and China are nearby, as are Iran and Afghanistan. Major global players are watching developments anxiously.

The West wants stability maintained in the region, which is not only a vital supply route for the war in Afghanistan, but also an important potential source of gas for Europe (which is endeavoring to reduce its energy dependence on Russia). China seeks to maintain access to the region to advance its “One Belt, One Road” initiative. Russia, meanwhile, wants to preserve — and perhaps seek to extend — its influence in the region.

Overall, as Uzbekistan enters a period of increased political uncertainty with potentially destabilizing implications for the rest of Central Asia, Dun & Bradstreet recommends that  firms and investors with strategic interests in the region:

  • Be aware that governments across the region are increasingly engaging in efforts to tighten security and crackdown on civil society as they try to maintain stability. As a result, foreign firms and international groups may encounter greater monitoring and interference by the authorities.
  • Note that, to the detriment of the business climate, Central Asian governments are likely to continue to prioritize social stability over potentially disruptive structural reforms.
  • Consider taking out political risk insurance, if possible.

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Jaspreet Sehmi is a Senior Economist in Dun & Bradstreet’s Macro Market Insight team. Based in Marlow/United Kingdom, she covers Eastern Europe and Central Asia. She has an MSc in Economics from University College London.

Photo courtesy of Saeima, used under a Creative Commons license.

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