When Russia banned many Western agricultural products last week in response to Western sanctions, it created a $9.5 billion hole for other countries to fill. Immediately, officials across Central Asia optimistically announced plans to help plug the gap.
But sudden shortages created by the ban have all but guaranteed to increase inflation in Russia, a major food importer. And Central Asians will suffer likewise because their expected jump in exports will leave fewer products available to local consumers, thus driving up prices at home.
All this highlights a paradoxical mix of opportunities and risks for Kazakhstan, a member of the Moscow-led Customs Union whose economy often feels ripple effects from Russia. Aside from the immediate pros and cons of the food ban, Kazakhstan is clearly spooked by Russia’s deepening confrontation with the West over its support for rebels in Ukraine, concerned about the fallout from a slowing Russian economy.
Kazakhstan’s response to the food ban paints a picture of a junior partner struggling to navigate the shoals between an increasingly isolationist Kremlin and its own ambitions of greater global integration.
Russia has settled on a location for its planned air base in Belarus scheduled to start operating next year, the head of the air force has said.
The base will be located in Baranovichi, in western Belarus, said Lieutenant General Viktor Bondarev. “We will set up a base in Baranovichi. We are only waiting for an intergovernmental agreement to be signed,” he said.
The base will host Russian Su-27 aircraft, four of which were deployed to Baranovichi in December. But it hadn't been clear where the base would ultimately be located. When Russian officials announced plans for the base last summer they said it would be at a base in Lida; by November they were saying that "several potential locations have been identified in Belarus, but that further consultations were needed with the neighboring former Soviet nation's authorities."
"We never planned this in Lida, everything will be in Baranovichi," Bondarev said Monday, despite the fact that it was Bondarev himself who had originally identified Lida as the site.
Russia has promised Kyrgyzstan $500 million in assistance to help the reluctant country’s preparations to join the Moscow-led Customs Union, an economic bloc that currently includes Belarus and Kazakhstan. As usual when numbers fly between Russian and Kyrgyz officials, details are scarce.
Russian Foreign Minister Sergei Lavrov said on August 11 that the funds (“details to be agreed upon”) will ensure “maximum comfort” for Bishkek during its journey into the common economic space. Few believe that Kyrgyzstan, which has long served as a conduit for cheap Chinese goods through Central Asia into Russia, has much to offer the protectionist trade bloc. But always eager to please Moscow, Kyrgyz President Almazbek Atambayev has been talking about membership since his inauguration in December 2011.
Lavrov’s announcement came while Atambayev was visiting Russia for a meeting with President Vladimir Putin.
Atambayev told Putin that Kyrgyzstan would enter the Customs Union by the end of the year (and the Eurasian Economic Union, when it is born in January), but noted the “difficulties” the country will face integrating with the more industrialized economies already in the bloc.
For almost a year now, Kyrgyz policymakers, notably Economics Minister Temir Sariev, have been putting figures on those “difficulties”—expected inflation and a rise in unemployment stemming from the decline in lucrative re-export trade from China. Last November, Sariev said Kyrgyzstan would require $200 million a year over six or seven years in the form of a “fund” to help readjust its re-export-dependent economy to the demands of the Customs Union.
The joint military exercises of the Shanghai Cooperation Organization will involve about 7,000 troops, the largest number in an SCO exercise in many years, as the organization seems to be taking on a new prominence in the wake of collapsing Russia-West relations.
The bulk of the troops exercising, as in past years, appear to be from China. Russia announced that it is sending about 900 troops, as well as hardware including four Su-25 jets and eight Mi-8MT helicopters. Kazakhstan said it is participating with about 300 troops from an air-mobile unit. From Tajikistan, more than 200 soldiers are participating, including members of an unnamed "rapid reaction unit." (An aside: one wonders if it is one of the special forces units that the U.S. has trained.) Uzbekistan, as usual, does not seem to be participating at all. Kyrgyzstan is sending about 500 soldiers. So if it's 7,000 total, that's about 5,000 from China.
The exercises, Peace Mission 2014, will be held August 24 to 29 in China's Inner Mongolia region. But participating countries have already started moving their troops toward China. "Loading up -- that's already a stage of the exercise. We're trying to improve, getting used to loading up our equipment," said Ruslan Muzdybayev, the deputy commander of Kazakhstan's air mobile forces for military readiness.
Uzbekistan has taken the rare step of commenting publicly to deny reports that it plans to allow the United States to set up a military base in the country.
The rumors arose after the recent visit to Uzbekistan by the head of U.S. Central Command, General Lloyd Austin, and the report on a website with good sources in Uzbekistan's government saying that the Austin was discussing setting up a base in Termez, on the Afghanistan border.
The report was implausible in many ways -- it said the U.S. was going to pay $1 billion a year in rent -- but Uzbekistan's government nevertheless saw fit to deny it. "Uzbekistan's laws do not allow to host any foreign military bases on its territory," Adilbek Kaipbergenov, spokesman for Uzbekistan's foreign ministry, told AFP.
The U.S. also denied it: “Gen. Austin has no knowledge of any plans for a possible U.S. base in Uzbekistan,” a CENTCOM spokesman told the Army Times. “He did not discuss any such options with the Uzbeks during his trip.”
The Uzbekistan opposition website uznews suggests that it was Russia's negative reaction to the rumors that may have spooked Tashkent.
Speaking on Russian radio station Govorit Moskva, Ilya Drozdov, a member of the Russian parliament and a CIS and Eurasian integration committee member, stated that if Uzbekistan really did allow the U.S. to re-open a military base, then Russia should throw out all Uzbek migrant workers from Russia. “I think then we need to take strong action at the highest level of government.” says Drozdov,
As international sanctions pile up against Russia, Armenia, a country literally powered by the Russian economy, expects to get hit, too.
Armenian officials and economy-wonks are not certain about the size and scope of the impact, but they are positive there is going to be one. Russia is Armenia’s single largest investor, export-outlet and energy supplier, so the lateral effects of the sanctions could be potentially felt in all those directions. “At this stage it is hard to make expert conclusions. Even the Russian experts do not yet have precise calculations,” Economy Minister Karen Chshmatirian was quoted as saying by Regnum news agency.
The latest round of US sanctions targeted, among others, Russia’s VTB Bank, which happens to be the largest private lender in Armenia. “The measures taken by the US Government to restrict VTB’s access to the capital market do not impact the bank’s operational performance and creditworthiness,” asserted VTB, which is majority-owned by the Russian government. Bloomberg, however, reported that major international lenders to the VTB Group already have put on hold a $1.5-billion loan to the bank.
Another target of the sanctions, Gazprombank, also has a presence in Armenia. It is owned by Russia’s state energy giant Gazprom, which essentially is the sole supplier of natural gas to Armenia.
Russian President Vladimir Putin addresses his security council, July 22. (photo: kremlin.ru)
When Russian President Vladimir Putin addressed his security council on July 22, one statement in particular piqued the interest of Russia's allies -- er, friends: "Russia is fortunately not a member of any alliance. This is also a guarantee of our sovereignty," Putin said. "Any nation that is part of an alliance gives up part of its sovereignty."
That line was greeted with confusion and curiosity by many in the member countries of the Collective Security Treaty Organization: Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan. This is the political-military bloc that Russia created to, as the name implies, provide collective security in the post-Soviet space. But doesn't collective security require giving up some sovereignty? Several experts quoted in a piece on the Kazakhstani website kursiv.kz suggested that Putin's statement suggest that it sees its fellow-members of the CSTO (and, for that matter, the Eurasian Union) as unequal partners to whom Russia has no obligations.
"Moscow's interests, expressed in the efforts to define the borders to which it can expand its territory, striving to defend the 'Russian world,' by definition can not coincide with the interests of its CSTO partners," said Russian expert on Central Asia Arkady Dubnov. "So, acting exclusively in its own interests, Russia demonstrates that the CSTO isn't an alliance but a mesalliance -- that is, an unequal marriage."
Sign reading "Don't Say Everything You Know, But Know Everything You Say," at a submarine base in Balaclava, just outside Sevastopol. (photo: The Bug Pit)
The city government of Sevastopol has proposed that Russia make it a Soviet-style "closed" city, which foreigners and even Russians living even in other parts of the country would not be able to visit.
On July 22, members of the Sevastopol legislative assembly formally appealed to Russian President Vladimir Putin and other Russian officials asking them to impose "restrictions on the stay of people not permanently residing in and not registered in Sevastopol." The annexation of Crimea to Russia earlier this year was accompanied by a remarkable degree of Soviet nostalgia, but the return of closed cities takes that nostalgia to an unexpected extreme.
According to the website sevastopol.su (yes, ".su" as in "Soviet Union"): "The initiators of the appeal are motivated by the fact that Sevastopol is the main base of the Black Sea Fleet of Russia and a factor of stability in the entire region, and so requires a special regime of secrecy and ensuring its security. The deputies believe that the unstable circumstances in the world and the fundamentally aggressive attitude of the Western community towards Russia can attract a host of provocative acts in Crimea and Sevastopol."
Naval vessels participate in the 2011 BlackSeaFor exercises. (photo: Russian MoD)
A Black Sea-wide naval cooperation program in operation since 2001 is "frozen" due to the war in Ukraine, Russian media has reported. Given that the participants in the program, BlackSeaFor, include Russia, its post-Soviet foes Ukraine and Georgia, and NATO members Turkey, Bulgaria, and Romania, it's probably more noteworthy that the program hasn't been canceled altogether. But anyway, Russian military sources have told ITAR-TASS that they managed to thwart Ukraine's efforts to kick Russia out of the organization:
"The Kiev authorities' attempts to garner the BlackSeaFor member-countries' support for its anti-Russian initiative failed. No BlackSeaFor state has upheld this initiative," the source told ITAR-TASS on Friday.
“From May to June the Ukrainian authorities were sending their envoys to Bulgaria, Romania, Turkey and Georgia for holding talks with their military and political leaders. Ukraine’s staff in Sofia, Bucharest, Ankara and Tbilisi were running around government offices. However, the attempts were vain,” it said. “The BlackSeaFor countries’ position was to preserve status quo, i.e. the existing format with Russia’s participation.
Ukraine was informed about the BlackSeaFor member-states’ view to freeze the organisation’s activity until the situation in Ukraine normalises,” the source said.
An American sailor monitors the Breeze 2014 exercises from the USS Vella Gulf. (photo: U.S. Navy)
Competing Black Sea naval exercises by NATO and Russia have again raised tensions in the region as the once sleepy sea has become a venue for geopolitical competition.
Russia's exercise started July 4 and involves 20 ships and 20 aircraft. Its scenario was the "destruction of enemy ships in the sea and organization of air defense of naval groups and coastal infrastructure."
NATO's exercises, called "Breeze" and formally hosted by Bulgaria, also started July 4 and continue until July 13, with ships from Greece, Italy, Romania, Turkey, the U.K. and the U.S. also taking part, along with naval patrol planes from Turkey and the U.S. The exercises are "aimed at improving the tactical compatibility and collaboration among naval forces of the alliance's member states."
And the U.S. participation, with the guided missile cruiser USS Vella Gulf is intended to "reassure" allies in the region, a thinly veiled reference to Russia: "It is important to support and reassure our partners, we hope our presence in the Black Sea continues to strengthen those bonds," the USS Vella Gulf's commander said.