chapter  9
16 Pages

Economic development and trade

ByRICHARD POMFRET

The EU’s 2007 Strategy for a New Partnership with Central Asia aims to strengthen human rights, rule of law, good governance and democratization, and success is linked to the economic goals of promoting economic development, trade and investment, and alleviating poverty. This chapter analyses the economic development and trade of the Central Asian countries in order to assess the Strategy’s approach in these areas. It will not deal with the evolution of EU economic assistance to Central Asia or with energy issues, both of which are covered elsewhere in this volume. The five Central Asian countries pursued different economic strategies after becoming independent in 1991. Despite similarities in culture, history and economic structure (see Table 9.1), their transitions from Soviet central planning ranged from the most rapidly liberalizing (the Kyrgyz Republic) to the most non-reforming (Turkmenistan) of all former Soviet republics. By the turn of the century, when the transition from central planning was essentially completed, the Central Asian countries had created vastly different economic systems. These differences, analysed in the first section of this chapter, have implications for economic stability during the 1990s, for long-term growth prospects in the 2000s and for EU strategy towards the region. The Central Asian countries are open economies in the sense that international trade is important, but they have embraced globalization to varying degrees. In general terms, more globally-integrated economies experienced better economic performance over the last two decades, but were more exposed to crises.2 In Central Asia this generalization needs to be more nuanced, and section two relates the impact of globalization to country-specific resource endowments and economic strategies. The third section examines the implications for EU economic relations with Central Asia. The post-2007 economic crisis does not alter the priorities of the EU Strategy, but it does require the EU to stick to existing obligations and also provides an opportunity for fresh initiatives to better achieve the

Strategy’s fundamental goals. The Strategy’s goal of strengthening energy and transport links may be easier in a period of low energy prices as long as the EU can turn the economic downturn into an opportunity rather than a threat. The final section draws conclusions.