Between a rock and a hard place: Central Asia’s economic and security dilemmas after Russia’s invasion of Ukraine

Strategic Insight 016/2023

Mariya Y. Omelicheva

8 June 2023

Russia’s Invasion of Ukraine

Walking a tightrope between irritating Moscow and upsetting the Western capitals, Central Asian governments have tried to find a new balance in their relations with Russia. Russia’s war in Ukraine has created serous dilemmas for the leaders of Central Asia, a region where Moscow has traditionally enjoyed considerable economic, security, and soft-power clout. The unprecedented sanctions on Russia’s financial institutions and export control measures threatened to cripple the Central Asian economies. Russia’s military fiasco in Ukraine strained the regional security architecture and diminished Moscow’s role as the Central Asian security guarantor.

Although, the dire economic forecasts did not materialise in the Central Asian republics of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, their dependence on Russia for export routes, labour markets, and trade make them susceptible to the ebbs and flows of Russia’s economy. Weary of reputational costs and risks of secondary sanctions, all Central Asian governments chose to distance themselves from Moscow. While the future of Central Asia’s development remains uncertain, the current choices and policies of the Central Asian governments suggest three possible trajectories – adjusted interdependence with Russia, geoeconomic and geopolitical rebalancing, and regional integration.

Economic and Security Risks for Central Asia

Western sanctions on Russia spelled economic disaster for Central Asia linked to Moscow through various economic and security channels. Russia has been a major trade partner for Kazakhstan and Kyrgyzstan, the two Central Asian members of the Eurasian Economic Union (EEU). The Russian ruble’s devaluation contributed to high inflationary processes in these republics aggravated by interruptions in imports of food staples, such as sugar, grains, and cooking oil. Tajikistan, Kyrgyzstan, and Uzbekistan have remittances-dependent economies. The remittances from Russia to Central Asia took a nosedive during the early months of the war, prompting worries of the mass exodus of Central Asian labour migrants from Russia back to their home countries.

Russia’s capital control measures softened the impact of Western sanctions and its gross national product contracted less than expected in 2022. The Central Asian economies also proved to be more resilient to the geopolitical shocks than many expected. The war and sanctions set in motion certain trends benefitting Central Asian growth. The two Central Asian republics endowed with energy resources – Kazakhstan and Turkmenistan – had a windfall of the oil and gas revenues due to sky-rocketing prices on hydrocarbon resources. Kyrgyzstan, Tajikistan, and Uzbekistan saw remittances soaring due to acute war-related labour shortages in Russia. Kyrgyzstan, Kazakhstan, and Uzbekistan are homes to the region’s major startup hubs, all of which have doubled the number of registered companies. Adding to the Central Asian growth were the new Western businesses and IT companies relocating from Russia, and ordinary Russians moving their assets abroad. As a consequence of these developments, Central Asian economies expanded between 3.2 percent in Kazakhstan and 7.8 percent in Tajikistan in 2022 (Figure 1).

The situation in Central Asia is far from stable. Inflation hovered above 15 percent in 2022 driving prices on food, energy, and other basic commodities and threatening to push greater number of vulnerable people into poverty (Figure 2). An exodus of Russian youth fleeing military conscription has threatened to destabilise the social fabric of the Central Asian societies. Russia’s war in Ukraine has heightened protest activity in parts of Central Asia, where Moscow’s aggression has both ardent supporters and opponents.

Before the war, Russia has relied on multilateral and bilateral mechanisms to reinforce Central Asian counterterrorism capabilities and defence of the regional borders. Russia’s passivity in response to violent border clashes between Tajikistan and Kyrgyzstan in 2022 sent a worrisome message to regional leaders that Moscow’s attention and primary interests lie elsewhere. The subpar military performance by the Russian military and high personnel losses further eroded Moscow’s military posture in the region.

Figure 1: Central Asia – Annual GDP Growth 

Source: International Monetary Fund, International Financial Statistics. (accessed 3 June 2023)

Figure 2: Central Asia – Inflation, Consumer Prices (Annual%)

Source: World Bank national accounts data, and OECD National Accounts data. (accessed 3 June 2023)

Three Trajectories for Central Asian Development 

The longer-term outlook for the Central Asian republics will be affected by the outcomes of war, the resilience of Russia’s economy to sanctions, and politics in the Kremlin. Despite the significant uncertainties about the region’s future, the current efforts of Central Asian governments to navigate the complex economic, security, and geopolitical fallout of the war suggest three possible trajectories for Central Asia.

The first trajectory can be termed “Adjusted Interdependence” with Russia. In this scenario, Central Asian and Russian economies remain intertwined, and Moscow retains a leading, if diminished, economic and security position in the region. Several processes have been steering the Central Asian governments toward this scenario. Historically, the countries of the region have eschewed meaningful and wide-ranging reforms favouring, instead, adjustments to the changing circumstances. They have also displayed a tendency toward repurposing the existing mechanisms rather than creating new institutions.

Kazakhstan offers an illustrative example of the adjusted interdependence with Russia. It has distanced itself economically and politically from Moscow in response to the Kremlin’s pressure to take its side in the war in Ukraine. But Astana’s ability to decouple from Russia’s energy networks and shift to alternative energy transportation routes for exporting its oil to the international markets is limited by its geography and the availability of cheaper Russian crude oil. The visa-free regime and unified customs within the EEU have also been repurposed for a broad range of commercial and economic activities, some of which serve as conduits of shadow trade with Russia. In short, the balance of Russian influence vis-à-vis Central Asian governments has changed with Russia becoming more dependent on these republics for accessing technologies critical for sustaining its military needs. However, these countries remain connected to Moscow through energy infrastructure, labour migration, trade, and multilateral security frameworks.

The second possible trajectory involves “Geoeconomic and Geopolitical Rebalancing”, whereby Central Asian republics gradually decouple their economies from Russia in favour of another global actor. China, which has already supplanted Russia as an investor and a destination of Central Asian exports, is a likely candidate for a dominant position. Beijing has stepped in to fill the security needs of Central Asian governments created by the partial withdrawal of Russian troops from the region.

Yet, there are limits to Beijing’s role in Central Asia. China has its own geostrategic interests, which does not always comport with those of the Central Asian states. Beijing’s investments in extractive economies coupled with environmental callousness and reluctance to open its borders and enterprises to the Central Asia laborers have already triggered public discontent. The Central Asian governments are increasingly weary of losing control of critical infrastructure to repay their growing debt to Beijing.

Besides China, Turkey’s economic and military footprint is growing in Central Asia but limited by the available resources and differences in approaches to Islam. While the EU and US acknowledge Central Asia’s strategic importance, both actors have showed little political will to meaningfully engage with these republics due to a combination of ideological, economic, and geographic reasons. The region has decreased in importance for the US since Washington’s military drawdown from Afghanistan.

The third scenario for Central Asia involves a shift from reliance on external actors to greater “Regional Integration” accompanied by profound economic reforms. The two countries eyeing for regional leadership – Kazakhstan and Uzbekistan – have become the drivers of this process. The largest economy of Central Asia (Kazakhstan) and the most populous country (Uzbekistan) inked multiple cooperative agreements and a border delimitation treaty during their meeting in December 2022. Yet, the lack of a shared vision and resources, lingering distrust toward neighbours, and insufficient political will to diversify their national economies away from dependence on remittances and extractive industries’ exports are still major obstacles to overcome.


The first scenario of ‘adjusted interdependence’ with Russia is likely to slow economic progress in Central Asia, making the regional economies susceptible to economic and security aftershocks from Russia. The main outcome of the ‘geoeconomic and geopolitical rebalancing’ scenario will be the perpetuation of the extractive resource-based economies in the Central Asian countries. The best trajectory for Central Asia is the third scenario of growing intra-regional cooperation, but it is also most demanding in terms of resources as well as political will to overcome mistrust and obstacles to economic modernisation. The war has certainly presented the Central Asian leaders with an opportunity to strengthen their authority over domestic politics and foreign policy. However, concerns with regime stability that is essential for autocratic governments may prove to be self-limiting, prompting the Central Asian governments to seek security guarantees from external actors, as they did before the war.

Dr. Mariya Y. Omelicheva is a Professor of Strategy at the National War College, National Defense University. She is a prolific writer and researcher on a range of issues of Eurasian security. All opinions expressed herein are those of the author and do not represent an official position of the US Government, Department of Defense, or NDU.  

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