This week, the media in the region focused on the CIS Heads of Government Council meeting in Moscow, where the various heads of state agreed to establish a unified air defense system. They also reported that the ADB is revising its 2025 economic outlook for Central Asia upward. Several outlets reported on new renewable energy projects in Kazakhstan, Turkmenistan agreeing to export more gas to Uzbekistan, and Kazakhstan announcing the discovery of up to 60 new mineral deposits. Multiple sources highlighted Kazakhstani Railways closing the Altynkol and Dostyk rail crossings with China until January and Kazakhstan’s efforts to boost its exports by constructing new logistics hubs. Lastly, other outlets focused on Russia’s ongoing efforts to clamp down on illegal immigration. This week, the Russian Duma voted to ban children who cannot demonstrate the necessary proficiency in Russian from attending school.

Defense

At the recent CIS Heads of Government Council in Moscow, the CIS member states agreed to establish a unified air defense system (Kun). The agreement will provide funding for strengthening the collective air defense of all CIS countries and will be implemented in stages. The deal represents a significant leap in defense cooperation among CIS countries. The initiative will begin in 2025.

Economics

Last week, the Asian Development Bank (ADB) revised its economic outlook for Central Asia and the Caucasus for 2025 (Daryo). For 2024, they elevated their growth projection from 4.7% to 4.9%; for 2025, they raised it from 5.2% to 5.3%. The ADB cited strong remittance flows, public investment, and diversification efforts as key factors underpinning the region’s economic growth in its report. Nevertheless, they noted ongoing inflationary pressures and geopolitical concerns could negatively impact economic growth in the future. Uzbekistan recorded a growth rate of 6.6% for the first nine months of 2024 due to increased investments in manufacturing, energy, transport, and urban development. Inflation was also down to 9.5% due to tighter monetary policies and stabilizing global prices. Kazakhstan achieved economic growth of 4% so far this year, driven by the expansion of agriculture, construction, manufacturing, and trade. They also successfully reduced inflation to 11.3%. In 2025, the ADB anticipates Kazakhstani inflation will decline further to 9.8% due to lower food and energy prices. Tajikistan posted the highest economic growth in the region, 8.4%, due to labor remittances from Russia and rising gold exports. Inflation in the country was also low at 3.5%. Kyrgyzstan recorded economic growth of 5.7%, supported by a rebound in tourism and increased trade with China. Over 2024, inflation also declined to 8.3%. Turkmenistan noted growth of 6.6% as gas exports to China rose, while inflation remained steady at 8.9% due to currency fluctuations and uncertainty over energy prices. Afghanistan experienced economic growth of 2.7%, mainly from international aid and a slight expansion of agricultural trade. However, inflation decreased to 6.1%. Overall, the ADB forecasts regional inflation for 2024 to be 6.8% but declining to 6.2% in 2025. Nevertheless, there are potential indicators of trouble ahead. According to Freedom Finance Global, consumer sentiment has remained steady or declined across the region (Kursiv). More worryingly, inflation and devaluation expectations have deteriorated. Nonetheless, Central Asia’s economic outlook remains positive for 2025. 

The National Bank of Kyrgyzstan reported that money transfers to Kyrgyzstan in October 2024 totaled $272 million (Kabar). $256.7 million came from CIS countries, while $15.3 million was transferred from non-CIS countries. Overall, the net inflow of remittances grew by 3.5% in October. Remittances from Russia dropped by 3% (AKIpress), while transfers from the U.S. more than doubled (AKIpress).

According to the Development Bank of Kazakhstan, a new wind power plant will soon be launched in Khromtau for $178 million (Kursiv). The plant is expected to begin production in December. In other news related to renewable energy, multiple Chinese companies, including China Power International Holding Limited, plan to construct three wind power plants with a combined capacity of 1.5 GW in the Pavlodar and Turkestan regions. China Energy Overseas Investment Co. Ltd also plans to build a solar plant with a capacity of 300 MW in the Turkestan region (Kursiv). Earlier this year, we reported on Masdar and ACWA Power’s plans to build wind power plants in Kazakhstan as part of the government’s efforts to make renewable energy 15% of the country’s total energy mix by 2030.  

Energy

During a phone conversation, Uzbekistani President Shavkat Mirziyoyev and chairperson of Turkmenistan’s Halk Maslahaty Gurbanguly Berdimuhamedov agreed Turkmenistan would increase its gas exports to Uzbekistan (Gazeta.uz). Both countries are experiencing dramatic growth in trade, with trade turnover exceeding $1 billion this year. This announcement comes after Russia did not renew its gas supply contract with Turkmenistan earlier this year because of disagreements over price. In 2022, Turkmenistan and Uzbekistan agreed on a short-term contract for the annual delivery of 1.5 billion cubic meters of gas to Uzbekistan. In 2023, another agreement for the supply of 2 billion cubic meters was concluded, and both sides have begun negotiating a longer-term contract. Overall, Uzbekistan’s gas imports have surged 2.4 times in 2024 to $1.36 billion. Since October 2023, Uzbekistan has been importing gas from Russia through Kazakhstan, with $500 million allocated to modernize the country’s gas infrastructure to handle the increase in supply.

Last week, Uzatom signed a memorandum of understanding with the National Nuclear Corporation Overseas (CNOS), a subsidiary of CNNC, at an international conference in Samarkand (Daryo). They also concluded another memorandum of understanding with Assystem Engineering and Operation Services, a subsidiary of the French company Assystem. MoUs were also signed with the International Atomic Energy Agency (IAEA). MoUs were also established between the World Nuclear Association (WNA) and the Institute of Nuclear Physics of the Academy of Sciences of Uzbekistan, the Tashkent branch of MEPhI (Moscow Engineering Physics Institute), and the Research Institute for the Development of Digital Technologies and Artificial Intelligence. Last month, Uzatom and CNNC discussed how Uzbekistan could employ China’s expertise in constructing small modular nuclear reactors. They also discussed uranium mining, processing, and producing high-quality nuclear fuel. Earlier this year, we reported that Uzatom and Rosatom agreed to construct a nuclear power plant consisting of six small modular reactors in Uzbekistan.

Kazakhstani AST Petroleum and American BlueSky Energy agreed to build and operate several diesel production facilities in Kazakhstan (Kursiv). Each facility will produce 20000 tons of diesel fuel from coal. Coal-chemical synthesis converts roughly one ton of coal into 240 liters of liquid fuel. The Chinese Shenhua Group is the world leader in the field and continues developing global projects despite environmental criticisms.

Trade

Kazakhstan seeks to expand its trade and boost export potential by constructing new transport and logistics hubs (The Astana Times). At a meeting on December 10, the Kazakhstani Minister of Trade and Integration, Arman Shakkaliyev, detailed the progress on five major cross-border logistics hubs. These new hubs will be located on the Caspian coast and the borders with Russia, Kyrgyzstan, Uzbekistan, and China. According to the minister, they will help increase non-commodity exports by up to 30%. He noted the success of the Caspian and Khorgos hubs in boosting trade. The Central Asia International Industrial Cooperation Centre (CAIICC) will be located near the border with Uzbekistan. It will help increase bilateral trade beyond $10 billion annually and boost freight capacity to Central Asia by 20 million tons annually. The Industrial Trade and Logistics Complex (ITLC) will be constructed near the Karasu crossing with Kyrgyzstan and will be situated along the Western Europe – Western China International Automobile Corridor. They also plan to erect a new bridge at the crossing to alleviate congestion. The Eurasia Cross-Border Trade Center will be developed at the Russian border. The Minister of Transport, Maksat Kaliakparov, noted the need to complete the reconstruction of the Podstepnoe-Fedorovka highway to enable access to the center. He also pointed out the necessity of completing the Darbaza-Maktaral railway line to enhance the operation of the CAIIC center. The minister also announced the expansion of container hubs at Kuryk and Aktau ports and new multimodal air hubs in Almaty, Astana, Shymkent, and Aktobe. At Khorgos, a Kazakhstani-German venture will build a new airport. The nearby Altynkol rail depot will also be modernized. Overall, these efforts seek to improve Kazakhstan’s logistics network and drive trade growth.

Kazakhstan Railways (KTZ) has ceased accepting new cargo and processing the transfer of empty wagons at the Dostyk and Altynkol railway crossings on the Chinese border (RailFreight.com). The ban has been in place since the beginning of December and will last until January. KTZ cited the backlog of trains already at the crossings that need to be processed for the temporary ban. Congestion at these crossings, key hubs along the Middle Corridor, has been worsening throughout the year. In September and October of this year, we reported that Kazakhstan stopped all grain exports to China by rail and halted the acceptance of container trains at the Dostyk crossing for several weeks.

Kazakhstan and China introduced digital foreign permit forms to facilitate cargo transport and trade (The Astana Times). The Kazakhstani Ministry of Transport reported on December 2 that the system commenced operation after being successfully tested on November 27. In the last two years, the number of paper permits exchanged with China rose from 50000 to 230000 as international trade by road with China grew. Thus, the new digital form will expedite and simplify trade between both countries.

Migration

The Russian State Duma passed a law banning children who failed the Russian language proficiency exam from enrolling in schools (Kun). The Speaker of the Duma, Vyacheslav Volodin, stated, “Those who come to our country must know the Russian language, respect Russian culture and history, and strictly follow Russian laws.” He also argued that 41% of migrant children struggle with Russian. The law also contains a provision enabling the authorities to check a child’s legal status in Russia during admissions. A law abolishing the procedure whereby foreigners could gain recognition as native Russian speakers as grounds for attaining a residence permit also passed the Duma (Asia Plus). Russia has imposed increasing restrictions on migrants since the Crocus City Hall attack in March 2024. In October alone, the Duma passed five new laws introducing new penalties for illegal migration, and deportations were stepped up (Kun).  

Mining

Chairman of the Committee of Geology of the Kazakhstani Ministry of Industry and Construction Erlan Akbarov announced that several geological studies conducted throughout 2024 discovered 60 potential mineral and hydrocarbon deposits (Kazakhstan Newsline). In total, 27 solid mineral deposits, 10 hydrocarbon deposits, and 23 groundwater deposits were found. The government plans to map 2.2 million square kilometers of Kazakhstan’s territory by the end of 2026 and has allocated $38 million to the task.