EUROPEAN CRISIS AND CENTRAL ASIA
BISHKEK, Dec 15 (By Giorgio Fiacconi-TCA publisher). What is going on in Europe and the economic crisis that is unfolding there can not go unnoticed here in Central Asia.What is happening in Europe is not only a financial and economic crisis but above all a political one, with confronting political interests. If for the time being only the United Kingdom has voted against what was proposed, in the medium and long term it is possible that other countries may dissociate themselves from the present situation.
What is difficult to digest for political leaders of different European countries is the need for the common good to give up an overall sovereignty and decision making process in a coordinated effort where final decisions will be made by somebody else.
The crisis and the pressure created on various countries’ budgets will certainly force the EU, as well as the USA and other nations, to review their public spending and development projects with a consequent severe cutting. This will force Europe and donors to reconsider their cooperation and humanitarian policy in support of various projects, and although grants and credits will not completely stop, they will certainly be subject to a sustainability demand that at present does not seem to be the priority.
There is no doubt that in addition to the financial crisis of Europe, another political crisis is developing in the relations between Russia and the US that again may affect Central Asia (we refer to the supply route to Afghanistan that is very much connected with Russia and Kyrgyzstan). It is clear that Russia has no interest in disrupting the Northern Distribution Network (NDN), but the fact remains that Russia is using the situation around it to leverage its own interest concerning other issues, such as the ballistic missile defence (BMD) in Poland and Romania, designed to counter any threats from Iran. Russia is using various crises for its own benefit; and all this, added to the financial crisis and lack of growth in the US and Europe, will certainly affect development programs in Central Asia.
There is no doubt that financial markets in Europe and the US are growing nervous every day and this is forcing countries to cut their spending and adopt restrictive fiscal policies. In this situation Central Asia should do its best to attract productive and profitable investments as an alternative to the lack of growth that western countries are suffering.
During the present crisis many potential investors may be interested to look to new markets and even to relocate their plants, but this demands transparency and foresight vision that at present seem not to exist in Central Asian countries.
The situation demands that the poor countries of this region should seek inside their own system a better approach to development, centered on using their own resources and proper governance and less dependent on external aid.
Direct foreign investment remains an important component of future development and this should be supported and encouraged with transparent policies, incentives and long term guarantees.
All this does not mean that donor support will dry up, but uncertainty in Europe and the USA should not be completely disregarded and in the current circumstances, an improved governance and better use of existing resources must be considered with an open support to foreign investment, present and future.
As far as it concerns Kyrgyzstan, the new President Almazbek Atambayev is certainly facing new and old challenges in trying to transform the country from a foreign aid dependent structure with a corrupt elite into a more sustainable nation no longer dependent on the remittances of Kyrgyz labor migrants abroad and foreign aid, and relying on the use of its own resources and direct productive foreign investments that in the medium and long term will remain the only solution to the creation of employment and internal stability.
During the financial, economic and political crisis unfolding all over the world, and in Europe in particular, with restrictive fiscal policies needed, it is the time when Central Asia and Kyrgyzstan in particular should go all out to attract investment and lay the foundation for a new development.
At this stage any solution that does not consider the possibility to open to foreign investment and keep it with a new guaranteed approach will never provide the adequate answer to future development and the crisis of others will certainly extend to the internal market and reach a moment when no aid and no growth will be able to support the domestic market and, consequently, no stability will be achieved.