The War in Ukraine: Risks and Opportunities for the ‘Post-Soviet South’

  • Emil A. Souleimanov

    Dr. Souleimanov is a professor in the Institute of Political Studies, Faculty of Social Sciences, Charles University in Prague, Czech Republic.

  • Yury Fedorov

    Dr. Fedorov is an independent researcher.

 

Abstract

The invasion of Ukraine sent shock waves through the South Caucasus and Central Asia, subjecting the eight countries of the post-Soviet area to economic, political, and social challenges. Refusing to support Russia in circumventing sanctions or taking a stand against the invasion could expose these countries to retaliatory measures. But aligning with Moscow could lead to international isolation and the imposition of secondary sanctions. This article explores the ways these countries are navigating the new geopolitics, with Azerbaijan gaining but Armenia seeking new allies. It then examines the economic benefits to these countries of Russia’s desperation, though this leaves them vulnerable to US and European penalties. It concludes with an analysis of how these states are dealing with the tensions caused by migration out of Russia. In all of these areas, the post-Soviet South must weigh the risks of aligning with the weakening great power or the West.


The war in Ukraine has set in motion a number of global and regional developments, including in the South Caucasus and Central Asia. While in their early stages, these changes reveal only general contours of new political and economic realities emerging in an expanse stretching from the eastern coast of the Black Sea to the western borders of China. With its resources diverted to the war effort, Russia’s capacity to achieve its aims in the two regions, known as the “post-Soviet South,” is dwindling. However, Moscow’s isolation has increased its desire to maintain influence over states in this vast area. In response, Western nations have been intensifying their efforts to close the regional channels through which Moscow receives goods subject to sanctions, while also trying to reduce the reliance of these states on Russia and China more broadly.

This article analyzes three key factors that influence the political and economic climate in the post-Soviet South. The first section outlines how the space for multi-vectoral policy has been narrowing as Moscow and Western capitals push these states to take sides. The second part examines the impact of the Ukraine war on the Karabakh conflict, with Azerbaijan being given room to advance its objectives against Armenia, which has been let down by a passive Russian peacekeeping force. The third deals with the impact of the war on the Shanghai Cooperation Organization (SCO), a transregional group that has just accepted Iran and is looking to expand further into the Middle East.

The sections that follow focus on how the increasingly harsh Western sanctions against Russia have yielded both economic benefits and political risks for the nations of the post-Soviet South. They also explore the emergence of “parallel importation,” which some countries use to help Russia evade trade bans, and it discusses how “secondary sanctions” could reverse this trend. Additionally, the article examines the impact on local economies of recent waves of immigration to and from Russia and the potential negative fallout of this mass movement.

NARROWING SCOPE FOR A MULTI-VECTORAL POLICY

The strategic and political environment of the post-Soviet South is shifting as a result of Russia’s invasion of Ukraine. The most obvious—and possibly the only—effect of these changes today is a reduction in the ability of these nations to pursue a multi-vectoral policy, which involves maneuvering among the United States, the European Union, China, and Russia.

Due to the risk of falling under Western sanctions, the states of the Caucasus and Central Asia have been compelled to distance themselves from Moscow. None explicitly support the intervention, and they have not recognized occupied Ukraine as Russian territory. These countries, primarily Kazakhstan and Uzbekistan, have discussed sanctions policy with the United States and the EU as they seek logistics routes that bypass Russia. More generally, they want to intensify political and economic relations with the West. In April 2023, Armenia, Georgia, and Kazakhstan supported a UN General Assembly resolution on cooperation with the Council of Europe; the measure refers to the “unprecedented challenges” facing the continent after “Russian aggression against Ukraine, and before that against Georgia.” Kyrgyzstan and Uzbekistan abstained, while Azerbaijan and Turkmenistan did not participate in the voting.1 This could be interpreted as a signal of changing approaches of these states toward the war.

The negative, albeit not openly demonstrated, attitudes toward Moscow’s actions result from several factors. These states may fall under Western sanctions if they openly support or approve of Russian aggression. At the same time, the top circles in the South Caucasus and Central Asia cannot ignore the degradation of Russia’s military and economic potential, and they understand that Russia cannot win and will emerge greatly weakened, casting doubt on its future political and economic power. They must reconsider their strategies accordingly.

On the other hand, backing Western policy risks aggravating tensions with Moscow, which these capitals want to avoid. Because of this, the ruling elites have generally taken neutral positions and strive to maintain a balance among Russia, the West, and China. In Central Asia, they are particularly sensitive to the position of Beijing. These states prefer to see an end to the war, but they are not ready or able to openly support Ukraine.

More important, the socioeconomic and political problems that threaten stability, and their own positions, are of greater concern to these ruling elites than are Russia’s foreign adventures. And despite the weakening of its military and economic capabilities, Russia retains, and seeks to strengthen, its leverage over these states. This includes their dependence on transport and communications passing through Russian territory, connecting landlocked areas with the outside world; extensive trade relations; and the presence in Russia of millions of immigrant workers from these countries. Moscow has increased contacts with these states, using the traditional links to post-Soviet ruling circles. According to Temur Umarov, a fellow at Carnegie Russia Eurasia Center:

The mainstay of Russian influence in Central Asia remains the relationship of trust between the countries’ political elites. All of the regimes are headed by aging men who grew up in Soviet times and who communicate with one another in Russian. They have known each other for decades, and any newcomers face an obligatory trip to Moscow to be looked over and approved. For now, these regimes don’t want to risk falling out with the Kremlin, and their response to growing public calls for their countries to distance themselves from Russia has been very restrained.2

WAR IN UKRAINE AND THE KARABAKH CONFLICT

The decline in Russian military capabilities in the post-Soviet South had little discernible impact on Central Asian security conditions, but it significantly altered the Armenia-Azerbaijan conflict. Moscow had controlled this situation for nearly 30 years, leveraging the struggle to enhance its power in both nations and throughout the South Caucasus. The military might of the Russian forces stationed in Armenia and potential for their reinforcement was an important resource for influence. After the collapse of the USSR, Armenia remained the most devoted to Russia because of its perceived ability to guarantee security and balance against Azerbaijan and Turkey.3

The outcome of the Armenian-Azerbaijani war in 2020 showed that Russia is not willing to employ force or the threat of force to effectively aid Armenia. Azerbaijan won that second war but was unable to fully control the entire territory of the predominantly Armenian-inhabited, mountainous Karabakh and create a transport corridor to the Azerbaijani exclave of Nakhichevan. However, with Russian troops stuck in Ukraine, Moscow’s military and political weaknesses have become increasingly obvious. As a result, Azerbaijan has been taking steps toward resolving the conflict in its favor. “The whole concentration of attention on Ukraine makes the situation more fragile and gives Azerbaijan a new opportunity to use force and be more aggressive,” lamented Vahan Kostanyan, an adviser to Armenia’s foreign minister.4

Moscow’s inability and unwillingness to support Armenia has sparked dissatisfaction within Armenian society and in Yerevan. The Armenian leadership is even considering normalization with Turkey and the West. Thus, as it focuses on Ukraine, Russia’s ability to project influence is declining. However, it retains economic leverage over the post-Soviet South, which, as we will see, ironically benefits from the rising growth brought about in part by Western moves against the war in Ukraine.

THE SHANGHAI COOPERATION ORGANIZATION’S SUPPORT

Moscow’s increasing isolation and the resistance it faces in international forums have spurred its interest in multilateral groups of countries it considers to be on its side. “Russia needs friends,” says Michael Kugelman, director of the South Asia Institute at the Wilson Center. “And in the SCO, it finds no enemies and quite a few friends.”5

The SCO is a strong regional organization that is expanding its membership. Iran formally joined the group in July 2023; Saudi Arabia, the United Arab Emirates, Turkey, and other major Middle Eastern countries are designated “dialogue partners.” The strength of the organization stands in stark contrast to the Collective Security Treaty Organization (CSTO), which weakened due to its inability to help Armenia in its war with Azerbaijan. The SCO includes countries that are very important to Moscow, like China, India, and Pakistan, as well as Kazakhstan, Kyrgyzstan, and Tajikistan—three Central Asian nations still heavily dependent on Russia. Moscow likely intends to capitalize on its leverage, strengthen its influence over the SCO, and secure backing for the Ukraine war.

However, the Kremlin is likely disappointed by the members’ stances on the conflict. None of the officials who attended the 2022 SCO summit explicitly supported Russian actions, and the leaders of China, India, and Turkey openly advocated for a diplomatic resolution. In the main political document adopted by the summit, there is not a single explicit reference to the war, though there appears to be a veiled request to conclude it on Ukraine’s terms: “The member states proceed from the assertion that there is no alternative to a political and diplomatic settlement of conflicts in various regions of the world, based on strict compliance with the generally acknowledged norms and principles of international law.”6 In no way can Russia’s 2014 annexation of Crimea, invasion last year, or incorporation of Ukrainian provinces into its territory comply with “generally recognized norms and principles of international law.”

After the summit, most members of the SCO were ready to mediate between Kyiv and Moscow. According to Secretary-General Zhang Ming, “We noted that many SCO member states are ready to create favorable conditions for strengthening contacts between the respective countries, proper settlement and solution of the problem, and they also continue to make their own efforts to overcome the humanitarian crisis in Ukraine.”7 However, the SCO cannot play such a role without authorization from Russia.

This underscores the challenges facing the SCO. Its members want hostilities to end so the organization can attend to Central Asia’s many other security issues: conflict between Kyrgyzstan and Tajikistan, Afghanistan’s weakness after the US withdrawal, and the threat of terrorism from groups seeking to use that country as a launchpad. A resolution would also allow Russia to return its attention and military resources to the region. As for India, it is concerned that exhaustion will prevent Russia from helping it maneuver between China and the United States. Still, there is some divergence among SCO members about the precise terms of a political settlement. “Unlike Russia and China, India and Central Asian states do not want SCO to become an anti-West organization,” argues Rajan Kumar, an Indian researcher. “The grouping can overcome this contradiction if it remains committed to issues specific to Eurasia.”8

ECONOMIC IMPACT OF THE RUSSIA WAR

Economic sanctions have forced Moscow to compensate for the loss of Western markets, particularly those of the EU, in high-tech products, technologies, equipment, and consumer goods. The Russian leadership refocused on economic ties and trade flows with “friendly countries.” This has increased the economic and political significance of countries in Central Asia and the South Caucasus. Before the invasion, Moscow sought to dominate these states through economic integration. However, “if earlier participation in its integration projects was an important condition for receiving preferences from Russia, now this is not necessary,” Umarov writes. “It was not easy for Russia before to push its integration projects in Central Asia, and the war made them completely unattractive.”9

The invasion has instead forced Russia to seek sanctioned products and neutralize the effects of isolation from the West. These countries of the post-Soviet South have benefited from Moscow’s inability to impose terms and its willingness to reduce export prices. As a result, the region enjoyed impressive growth in 2022. “Gross domestic product (GDP) grew by 5.1% in the region, much higher than the 3.6% growth forecast in April—shortly after the Russian invasion of Ukraine—and even higher than the 4.2% growth projected in September 2021 before the invasion,” the Asia Development Bank (ADB) reports. “Within the region, growth was highest for oil and gas importing economies, reaching 12.6% in Armenia and 10.2% in Georgia.”10 Further, thousands of skilled Russians moved to the area out of fear of being mobilized into the war effort. This brought billions of dollars in cash into these states.

The ADB report highlights other factors contributing to growth, such as increased trade with Russia, businesses relocating from the country, boosts in consumption and business activity from Russian migrants, and steady remittances from expatriate laborers in Russia. This impacted countries with relatively small economies, such as Armenia, Georgia, Kyrgyzstan, and Tajikistan, whose GDP in 2021 was in the range of $35–65 billion (see Table 1).

TABLE 1. Real GDP and GDP Growth in the Post-Soviet South.a
GDP ($ billion) GDP Growth (%)
Country 2021 2022 2018 2019 2020 2021 2022
Armenia 43.7 52.7 5.2 7.6 −7.2 5.7 12.6
Azerbaijan 161.6 180.9 1.5 2.5 −4.2 5.6 4.6
Georgia 63.4 74.7 4.8 5 −6.8 10.5 10.1
Kazakhstan 545.8 602.8 4.1 4.5 −2.6 4.1 3.2
Kyrgyzstan 35.4 40.3 3.5 4.6 −8.6 3.7 7
Tajikistan 42.1 48.6 7.6 7.4 4.4 9.4 8
Turkmenistan 109.2 118.9 0.9 −3.4 −2.9 4.6 1.8
Uzbekistan 300.5 339.8 5.9 6 2 7.4 5.7

However, experts have warned of short-term uncertainty in the South Caucasus. According to a report from the European Bank for Reconstruction and Development (EBRD), “Extraordinary growth factors present in the Caucasus in 2022 are likely to dissipate in 2023, bringing down the growth rates in these countries close to their medium-term potential. Inflation will continue to decelerate but stay at elevated levels in the whole region.”11

By contrast, Central Asian economic performance was not as impressive in 2022, with GDP growing by less than 5 percent. However, the EBRD report notes that the region,

on average, has seen a rather modest impact from Russia’s war on Ukraine. Kazakhstan and Turkmenistan are enjoying windfall oil and gas revenues on the back of elevated prices, while the Kyrgyz Republic, Tajikistan and Uzbekistan have seen significant increases in inflows of labor, capital and remittances. With many Western companies exiting the Russian market and Russian ports being sanctioned, Central Asian economies are also seeing significant gains in trade with Russia and China, both by exporting their own products (for instance, textiles and consumer electronics) and by providing transportation and re-exporting services.12

The ADB report also highlights several risks and challenges.13 The inflow of skilled labor from Russia may be temporary, while the re-exportation of goods on the banned list could expose some economies to secondary sanctions. In addition, Russia’s ability to supply machinery and equipment to the region is at risk, and the heavy labor migration into Russia needs to be mitigated by policies to diversify the destinations of migrant workers, particularly those from the Kyrgyz Republic and Tajikistan. Russia’s isolation will also hamper its ability to serve as a regional hub for knowledge, access to technologies, and modern business practices.

THE REGION’S SHIFTING TRADE PATTERNS

The states of the post-Soviet South have used the new economic environment to pursue their interests.14 In 2022, Russia’s trade with the South Caucasus increased nearly 1.5 times, from $7.4 billion to $11.3 billion, and with Central Asia by about 10 percent, from $37.3 billion to $41.0 billion.15 At the same time, it is important to be realistic about how much this helped Moscow. Trade with the states of the South Caucasus in 2022 amounted to a mere 1.3 percent of Russia’s foreign-trade turnover, about $850 billion. The countries of Central Asia contributed to only 4.8 percent of the foreign-trade turnover. Even if Moscow fully achieves its goals in the region, this will not alleviate the economic burden in any significant way.

For the states of the post-Soviet South, the new reality is a double-edged sword. Increased trade with Russia stimulates economic growth and helps solve socioeconomic issues. But it makes them more economically and politically dependent on a Russia whose international standing and internal order are deteriorating. The higher the share of trade with Russia in the total foreign-trade turnover of these states, the stronger their economic and political dependence on Moscow.

Russia’s share in the trade turnover of the South Caucasus countries last year was very high, 13.3 percent, while it reached 18.3 percent for the countries of Central Asia. Among the most dependent were Armenia and Kyrgyzstan, with trade shares of 35 percent and 29 percent, respectively.16 They were followed by Kazakhstan, Uzbekistan, and Tajikistan, which each had between 18 and 19 percent.17 Georgia’s trade with Russia represented 13 percent of its foreign-trade turnover, while Azerbaijan and Turkmenistan had trade shares of 7 percent and 5 percent, respectively, compared to their overall foreign-trade turnover.18

‘PARALLEL IMPORTATION’ AND SECONDARY SANCTIONS

It was essential for Moscow to find ways around the sanctions, and the post-Soviet South played a significant role. Indeed, total exports from the South Caucasus and Central Asia to Russia jumped in 2022 by nearly $5.4 billion, a growth of 50 percent compared to the previous year. International observers suspect Armenia, Kazakhstan, Uzbekistan, and Kyrgyzstan are assisting President Vladimir Putin, and the boosts of their exports amounted to about $5.2 billion, approximately 95 percent of the total increase (see Table 2). This remarkable surge raises valid, though unproven, concerns that roughly half of this growth could be attributed to “parallel exportation,” the re-export of sanctioned goods.19

TABLE 2. The Growth of Exports to Russia, 2022.a
Export ($ billion)
Country 2021 2022 Growth ($ billion) Growth (percent)
Kazakhstan 6.6 8.8 +2.2 +25
Uzbekistan 1.7 2.6 +0.9 +52
Armenia 0.8 2.4 +1.6 +300
Azerbaijan 0.85 0.95 +0.1 +12
Kyrgyzstan 0.4 0.95 +0.51 +237
Georgia 0.62 0.65 +0.03 +4
Total 10.97 16.35 +5.38 +49

Officials and specialists from the post-Soviet South deny that their nations have supplied Russia with sanctioned products, though they acknowledge that certain enterprises may occasionally face secondary sanctions. Vahan Kerobyan, Armenia’s economy minister, defends his country’s actions:

All companies, banks, and departments are attempting to work more carefully in those sectors where there is an exceptionally significant chance of falling under secondary limitations. Authorities in the financial system and customs are taking every precaution to prevent this. Armenia’s most significant trading partner is Russia. Furthermore, it will be very challenging for us to hold out for better things without open commerce with Russia. Furthermore, Armenia is a member of the EAEU [Eurasian Economic Union], therefore, in principle, we cannot support sanctions.20

However, it is widely acknowledged that the significant growth in Armenian exports to Russia can be attributed to an upsurge in the supply of automobiles, diamonds, and mechanical and electronic equipment. The volume of re-exports now entering Russia is estimated by Armenian experts to be 6–7 percent of the total export volume.21 But US and European sanctions make this risky. In fact, Armenia is listed by the United States as a “transit point” for the illicit shipping of “prohibited goods” to Russia.22

The sudden rise in the supply of computers and other products with microelectronic components was the defining feature of Kazakh exports to Russia. This sort of product’s delivery to Russia cost $850 million.23 Reuters reported that entrepreneurs in Kazakhstan have been bombarded by pleas from Russian companies for help getting around sanctions.24 This includes requests for rare earth metals, aviation parts, phones, bearings, industrial equipment, advanced electronics, radio equipment, turbines, airplane parts, raw materials, and even ingredients for bank cards. There are indications that microelectronic components obtained from high-tech civilian products delivered to Russia were extracted and used in the production of missiles and other military equipment.25

Naturally, these efforts have not gone unnoticed by the United States and the EU, which have cautioned the Kazakh government about the potential for secondary sanctions. Kazakhstan maintains that it will not allow trade in banned items. Moreover, it will reportedly implement a system for tracking imported and exported goods that will aim to “allow real-time tracking of the entire chain of movement of goods from border to border.”26

Russian analyst Nikita Mendkovich, head of the Eurasian Economic Club, points out the significant involvement of Central Asian countries in the practice of parallel imports.27 Mendkovich singles out Kazakhstan, which denies aiding Russia, though the political elite benefit from sanctioned goods. The EBRD has similar suspicions, though it sees the scale of parallel exportation from the region as a drop in the bucket compared to Russia’s losses:

The EU, UK and US exports to Russia dropped sharply following the introduction of economic sanctions in March 2022. At the same time, the EU/UK exports to Armenia, Kazakhstan and the Kyrgyz Republic (CCA3)…increased markedly….The increase in exports of sanctioned goods to CCA3 represents a small fraction of the reduction in direct exports of sanctioned goods to Russia (around 5 percent) but can be large for specific product groups. New supply chains (routes) took around 2–4 months to set up. The evidence suggests that intermediated trade via neighboring economies may be used to circumvent economic sanctions, on a limited scale.28

Still, Western nations are committed to halting parallel importation. An 11th anti-Russia package, which would be implemented against third countries providing sanctioned products, has been announced by the European Commission. While the exact details and timeline have not been disclosed, the commission wants to send a clear message. The EU “should give a strong signal to persons and entities in third states,” a confidential memo stated. “The provision of material support to Russia’s military and defense industrial base will have severe consequences regarding their access to the EU market.”29 Penalties could involve bans on exports to these countries of commodities, capital, and financial services—and they could be barred from the European market altogether.

However, US and EU authorities appear to prefer persuasion, as the states in the South Caucasus and Central Asia are bearing substantial losses from declining trade with Russia. As well, such moves can be counterproductive, pushing these countries closer to Russia. Experts in the region have warned that secondary sanctions could lead to nationalization of Western assets, the closure of transit routes between Europe and China, and the termination of energy and raw-material exports to Europe. However, if alternative approaches prove ineffective, the West may be left with no choice.

MIGRATION BETWEEN RUSSIA AND THE POST-SOVIET SOUTH

Since the mid-1990s, the movement of labor from Central Asia and the South Caucasus to Russia has been a significant factor shaping regional relations. However, the conflict in Ukraine disrupted the upward trend in the number of labor migrants. Moreover, the announcement of “partial mobilization” on September 21, 2022, led to an outflow from Russia.

In 2019, there were more than 5.6 million citizens of Central Asian and South Caucasian countries residing in Russian Federation territory (see Table 3). However, this number significantly diminished following the Covid outbreak and the border closures that followed. In 2021, with travel restrictions still in place, the population of migrants from these countries was estimated to be 3.5 million. The following year, the number had risen to 4.3 million. Compared to 2019, tourism decreased by 80 percent, private trips by 60 percent, and commercial travel by 50 percent. Since mid-2022, migrant growth has stopped. Many labor migrants, 41 percent, intend to continue working in Russia, while 30 percent say they will become permanent residents, and 20 percent would like to return to their homeland after a few months of work.30

TABLE 3. Citizens of the Post-Soviet South in Russia (thousands).a
Country May 2019 May 2021 May 2022
Azerbaijan 637 299 215
Armenia 488 347 280
Kazakhstan 480 263 228
Kyrgyzstan 713 623 681
Tajikistan 1,255 809 1,262
Uzbekistan 2,099 1,190 1,626
Total 5,672 3,531 4,298
  • a Мониторинг экономической ситуации в России. Тенденции и вызовы социально-экономического развития. Институт экономической политики им. Е.Т.Гайдара. № 7(160). Июнь 2022 г.Стр. 26–27.

Before the invasion, remittances from migrant workers in Russia accounted for approximately 10 percent of GDP in Armenia and Uzbekistan, and 30 percent in Kyrgyzstan and Tajikistan. Remittances remained steady or even increased in 2022, except for Kyrgyzstan, where net transfers decreased by 14 percent.31

Crucially, the Russian incursion and the announcement of the partial mobilization in fall 2022 caused two large waves of emigration from Russia. In March and April, hundreds of thousands hurriedly left the country due to rumors that the borders would close. But they remained open, and many who left eventually returned. However, in October and November, an estimated 500,000 to 700,000 left again, mostly for Georgia, Armenia, Kazakhstan, Kyrgyzstan, Uzbekistan, Serbia, and Turkey.

It is important to note that most countries provide information on the number of arriving Russians but not necessarily on how many stayed for extended periods. Unfortunately, not all countries provide data on how many remained after February 24, 2022, the day of the invasion. For example, data are not available in Azerbaijan and Tajikistan, and Uzbekistan discloses only the number of Russians who arrived; there is no information on how many left. Nevertheless, various sources suggest these estimates:

  • Approximately 230,000 to 300,000 people relocated to Kazakhstan, Georgia, Armenia, and Kyrgyzstan, either on a temporary or permanent basis.
  • More than half—between 100,000 and 146,000—moved to Kazakhstan.32
  • About 60,000 to 112,000 went to Georgia.33
  • Some 40,000 to 100,000 left for Armenia.34
  • Approximately 34,000 resettled in Kyrgyzstan.35

The initial concerns about the social and political repercussions of the influx of Russians into Central Asia and the Caucasus were understandable. The entry of hundreds of thousands of people with distinct cultural backgrounds and varying political opinions risked creating mistrust and uncertainty. In Kazakhstan, for instance, the prospect of resettling Russians in areas with existing tensions between Slavic and Kazakh populations raised alarm. Some also feared that individuals with Russian passports in border areas might be used by Moscow as a tool to exert pressure on neighboring countries.36 However, as time passed and Russian expats settled into urban areas, these concerns began to diminish. Instead, the focus shifted to the benefits brought by the final wave of Russian emigration, which included an influx of money and skilled labor.

The migration of Russians is believed to have had a significant impact on trade in services, including air travel, accommodation, catering, and banking. However, the available data are not sufficient to provide a comprehensive outline of the influence of the “relocation” from Russia on the economies of the receiving countries. Armenia stands as an exception. The additional influx of money into Armenian banks as a result of Russian migration is estimated at $3 billion.37 Moreover, the cumulative effect of Russian migration contributed to a quarter of Armenia’s GDP growth.

CONCLUSION

The invasion of Ukraine subjected the South Caucasus and Central Asia to economic, political, and social challenges. Taking advantage of Russia’s diminished capacity to control the areas assigned to its peacekeeping mission in Karabakh, Azerbaijani authorities have stepped up pressure to gain control over those parts of the still-disputed region. This has left Russia’s only remaining ally in the area, Armenia, in a vulnerable position, leading it to try to stabilize relations with Turkey.

Western-imposed sanctions have created complications for countries like Armenia and some Central Asian nations. Refusing to support Russia in circumventing sanctions or taking a stand against the invasion could expose them to retaliatory measures from Moscow, which still holds significant economic and political leverage. But aligning with Putin could lead to and the imposition of secondary sanctions. Given Russia’s weakening position and aggressive policies toward its neighbors, these nations face a dilemma.

Finding themselves between a rock and a hard place, post-Soviet countries have sought to maneuver between Western demands and Russian pressure. On the one hand, Russia’s increasing isolation has brought post-Soviet republics unprecedented opportunities in the form of reduced import taxation, as well as an influx of highly skilled immigrants and billions of dollars entering national banks. While concerns persist about these Russian citizens and Moscow’s potential exploitation of their presence in post-Soviet republics, their positive economic impact appears to outweigh the potential risks.

 

 

 

1 Novaya Gazeta, “China, Armenia and Kazakhstan supported the UN resolution on cooperation with the Council of Europe,” May 1, 2023, https://novayagazeta.eu/articles/2023/05/01/kitai-armeniia-i-kazakhstan-podderzhali-rezoliutsiiu-oon-o-sotrudnichestve-s-sovetom-evropy-v-nei-upominaetsia-agressiia-rf-protiv-ukrainy-news.

2 Temur Umarov, “Russia and Central Asia: Never Closer, or Drifting Apart?” Carnegie Endowment for International Peace, December 23, 2022, https://carnegieendowment.org/politika/88698.

3 Emil A. Souleimanov, “The South Caucasus: Turmoil in the Shadow of Russo-American Relations,” Middle East Policy 24, no. 2 (2017): 70-77.

4 Anton Troianovski, “Renewed Armenia-Azerbaijan Conflict Underlines Russia’s Waning Influence,” The New York Times, January 17, 2023, https://www.nytimes.com/2023/01/17/world/europe/armenia-azerbaijan-russia-nagorno.html.

5 Pathi Krutika, “Russia unlikely to face criticism at Central Asian meeting,” AP News, May 4, 2023, https://apnews.com/article/russia-china-india-shanghai-cooperation-organization-ba48f5058e9479557cad44179436067a.

6 The Shanghai Cooperation Organisation, “The Samarkand Declaration of the Heads of State Council of the Shanghai Cooperation Organisation,” September 16, 2022, https://indiainsco.in/docpdf/51.

7 Regional Anti-Terrorist Structure of Shanghai Cooperation Organisation, “The SCO declared its readiness to create conditions for resolving the crisis in Ukraine,” January 5, 2023, https://ecrats.org/en/security_situation/situation/1747.

8 Rajan Kumar, “SCO meeting in Goa: The West is wrong – the grouping isn’t blindly pro-Russia,” The Indian Express, May 5, 2023, https://indianexpress.com/article/opinion/sco-meeting-goa-west-wrong-grouping-blindly-pro-russia-8591637.

9 Temur Umarov, “Rupture or rapprochement. How the war affected Russia’s influence in Central Asia,” Carnegie Endowment for International Peace, December 20, 2022, https://carnegieendowment.org/politika/88671.

10 Asian Development Bank, “The Economic Impact of the Russian Invasion of Ukraine on the Caucasus and Central Asia: Short-Term Benefits and Long-Term Challenges,” April 2023.

11 European Bank for Reconstruction and Development, “Not out of the woods yet. Regional Economic Prospects in the EBRD Regions. February 2023 Update,” February 2023.

12 Ibid.

13 Asian Development Bank, “The Economic Impact of the Russian Invasion of Ukraine on the Caucasus and Central Asia: Short-Term Benefits and Long-Term Challenges,” April 2023.

14 The Russian Government, “Russian-Turkmen Business Forum,” January 19, 2023, http://government.ru/news/47571.

15 Trading Economics, 2023, https://tradingeconomics.com; TADVISER, 2023, https://tadviser.com.

16 RITMEURASIA, “Armenia’s Foreign Trade and Anti-Russian Sanctions: Eurasian Reversal,” March 26, 2023, https://www.ritmeurasia.org/news–2023-03-26–vneshnjaja-torgovlja-armenii-i-antirossijskie-sankcii-evrazijskij-razvorot-65407; Sergey Batishchev, “Kyrgyzstan increased imports by 72.6% over the year,” CentralAsianLight, February 14, 2023, http://centralasianlight.org/news/import-of-kyrgyzstan-increased-by-72.6-over-the-year.

17 Kapital.kz, “Trade turnover between Kazakhstan and Russia increased by 5%,” December 6, 2022, https://kapital.kz/economic/111033/tovarooborot-kazakhstana-s-rossiyey-vyros-na-5.html; TASS, “Russia becomes largest trading partner of Uzbekistan in 2022,” January 23, 2023, https://tass.com/economy/1565969; Interfax, “Russia, Tajikistan boosted trade 18% to $1.5 bln in 2022,” March 2, 2023, https://interfax.com/newsroom/top-stories/88407.

18 TASS, “Trade turnover between Georgia and Russia increased by more than 50% in 2022,” January 20, 2023, https://tass.com/economy/1565199; Rambler, “Trade turnover between Azerbaijan and Russia increased by almost a quarter in 2022,” January 25, 2023, https://news.rambler.ru/politics/50092506-tovarooborot-azerbaydzhana-i-rossii-vyros-v-2022-godu-pochti-na-chetvert; Oreanda News, “Azerbaijan reported an increase in trade turnover with Russia by 88%,” March 17, 2023, https://www.oreanda-news.com/en/torgovlya_i_uslugi/azerbaijan-reported-an-increase-in-trade-turnover-with-russia-by-88/article1469178; Business Turkmenistan, “2022: Turkmenistan’s foreign trade turnover amounted to $20 billion,” April 11, 2023, https://business.com.tm/post/10088/2022-turkmenistans-foreign-trade-turnover-reaches-20-billion.

19 Asian Development Bank, “The Economic Impact of the Russian Invasion of Ukraine on the Caucasus and Central Asia: Short-Term Benefits and Long-Term Challenges,” April 2023.

20 Anton Kozlov and Dmitry Grinkevich, ‘‘Russia and Armenia refused to settle in dollars and euros,” Vedomost.ru, March 16, 2023, https://www.vedomosti.ru/economics/characters/2023/03/16/966716-rossiya-i-armeniya-otkazalis-ot-raschetov-v-dollarah-i-evro.

21 RITMEURASIA, “Armenia’s Foreign Trade and Anti-Russian Sanctions: Eurasian Reversal,” March 26, 2023, https://www.ritmeurasia.org/news–2023-03-26–vneshnjaja-torgovlja-armenii-i-antirossijskie-sankcii-evrazijskij-razvorot-65407.

22 Naira Badalyan, “Armenia and a number of other countries have been used to illegally divert prohibited goods to Russia or Belarus – U.S. Government,” Arminfo, March 4, 2023, https://arminfo.info/full_news.php?id=74915&lang=2.

23 LS, “How trade between Kazakhstan and Russia has changed in 2022. Infographics,” February 21, 2023, https://lsm.kz/tovarooborot-kazahstana-i-rossii.

24 Olzhas Auyezov and Mariya Gordeyeva, “Exclusive: Russians flood Kazakhstan with sanction-busting requests,” Reuters, March 17, 2023, https://www.reuters.com/business/russians-flood-kazakhstan-with-sanction-busting-requests-sources-2023-03-17.

25 Ibid.

26 Anastasia Stognei and Polina Ivanova, “Kazakhstan to step up monitoring of goods re-exported to Russia,” Financial Times, March 23, 2023, https://www.ft.com/content/b4e8c02a-adb5-4148-9b15-c0cf2845fa0f.

27 Irina Osipova, “Imposing Secondary Hard-Hitting Sanctions by the West against Central Asia is Unlikely – experts,” Central Asian Bureau for Analytical Reporting, April 14, 2023, https://cabar.asia/en/imposing-secondary-hard-hitting-sanctions-by-the-west-against-central-asia-is-unlikely-experts.

28 Maxim Chupilkin, Beata Javorcik, and Alexander Plekhanov, “The Eurasian Roundabout: Trade Flows Into Russia Through the Caucasus and Central Asia,” EBRD Working Paper no. 276, February 23, 2023.

29 Joe Barnes, “EU could threaten to sanction washing machine trade helping Russia fix its army,” The Telegraph, March 24, 2023, https://www.telegraph.co.uk/world-news/2023/03/24/eu-could-threaten-sanction-washing-machine-trade-helping-russia.

30 Ibid.

31 Asian Development Bank, “The Economic Impact of the Russian Invasion of Ukraine on the Caucasus and Central Asia: Short-Term Benefits and Long-Term Challenges,” April 2023.

32 Tengri News, “Almost 3 million Russians have entered Kazakhstan since the beginning of the year,” December 21, 2022, https://tengrinews.kz/kazakhstan_news/3-milliona-rossiyan-vyehalo-kazahstan-nachala-goda-486633.

33 Svoboda.org, “‘It’s good where we are.’ Migrants about their life in Georgia,” January 22, 2023, https://www.svoboda.org/a/horosho-tam-gde-my-estj-migranty-o-svoey-zhizni-v-gruzii/32224418.html; Denis Kasyanchuk, “How many Russians left the country in 2022 and did not return,” The Bell, December 30, 2022, https://thebell.io/skolko-rossiyan-v-2022-godu-uekhalo-iz-strany-i-ne-vernulos.

34 Denis Kasyanchuk, “How many Russians left the country in 2022 and did not return,” The Bell, December 30, 2022, https://thebell.io/skolko-rossiyan-v-2022-godu-uekhalo-iz-strany-i-ne-vernulos; Kozlov and Grinkevich, “Russia and Armenia refused to settle.”

35 Tengri News, “Almost 3 million Russians have entered Kazakhstan since the beginning of the year,” December 21, 2022, https://tengrinews.kz/kazakhstan_news/3-milliona-rossiyan-vyehalo-kazahstan-nachala-goda-486633.

36 Emil A. Souleimanov, Eduard Abrahamyan, and Huseyn Aliyev, “Unrecognized states as a means of coercive diplomacy? Assessing the role of Abkhazia and South Ossetia in Russia’s foreign policy in the South Caucasus,” Southeast European and Black Sea Studies 18, no. 1 (2018): 73-86.

37 Kozlov and Grinkevich, “Russia and Armenia refused to settle.”

 

 

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Souleimanov, E, Fedorov, Y. The War in Ukraine: Risks and Opportunities For the ‘Post-Soviet South’. Middle East Policy XXX. no. 3 (2023). https://doi.org/10.1111/mepo.12709

©2023, The Authors. Middle East Policy published by Wiley Periodicals LLC on behalf of Middle East Policy Council.

  • Emil A. Souleimanov

    Dr. Souleimanov is a professor in the Institute of Political Studies, Faculty of Social Sciences, Charles University in Prague, Czech Republic.

  • Yury Fedorov

    Dr. Fedorov is an independent researcher.

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