Uzbekistan — Buyuk kelajak bo'lgan Davlat!

This blog is dedicated to providing rigorous analysis of current events in Uzbekistan. Debate and criticism are welcome, please inform me if you would like to offer a correction.

Remittances from Russia Continue to Decline

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The effects of the current economic crisis in Russia have been felt throughout the region, often reaching Central Asian nations through the sudden crunch in the value of remittances being sent from migrant workers in Russia. The original shocking numbers were released in June of 2016, when the Central Bank of Russia announced that the value of remittances for the first quarter of 2016 were a paltry $27 million, less that 20% of the remittance value for the previous year’s quarter. This precipitous decline continued in the spring of 2016, with remittances for the second quarter further declining to $21 million. The values of individual measured money transfers have only declined slightly in the past year, meaning that the decline in remittances reflects not only decreases in earned wages, but major job cuts and a rapid exit of Uzbekistani migrant workers from the Russian labour market. This Central Asian exodus from Russia is driven by a combination of economic and social factors which make young men less likely to seek out work in Russia and existing migrant workers less likely to stay there.

Since the recovery of Russian industry in the later half of the 1990s, millions of young Uzbeks have traveled to Russia to satisfy that economy’s insatiable demand for labour. Originally this provided a magical opportunity for youth from the poorer, rural areas of Uzbekistan to experience the gritty wonder of cosmopolitan cities like Moscow or St. Petersburg while making well above the average wage in Uzbekistan. Traditionally, Central Asians have been extremely reluctant to move to the rough and tumble cities of Russia, Ukraine, and the Baltic for work, despite the massive labour shortages experienced throughout the late Soviet era, instead choosing to stay in the overpopulated Uzbekistani countryside. With the collapse of Soviet communism in 1991, staying in the country was removed as an option, as the social security schemes and bloated administrations which had allowed collectivized farms to absorb the population boom of the 1970s and 1980s became insolvent. The new pressures of capitalism forced the rural masses of Uzbekistan to do something that the Soviet state had never managed to, migrate to the labour-poor cities of Siberia and the Russian West.

Increasingly, however, the economic crisis that has engulfed Russia since the imposition of sanctions by the USA and EU in response to the incorporation of Crimea has battered the prospects for migrant workers, leading to the most substantial decline in remittances from Russia since the devastating collapse of Russian exports during the 2008 financial crisis. As economic prospects decline in Russia, during a time when the Uzbekistani economy is booming, more young Uzbekistanis are choosing to stay in-country or seeking employment outside the traditionally industrialized areas of the former Soviet Union. At the same time as diminishing numbers of Central Asians are heading to Russia for work, a spike in xenophobic violence against immigrant communities has caused many veteran migrant workers to return home, fearing attack by racist gangs or that their employers may take advantage of the increasingly intolerant environment to withhold wages. These factors combined to spark an exodus of Uzbekistani migrant workers in late 2015, resulting a sharp decline in remittances received from Russia. The largest crunch seems to have occurred in the spring and summer of 2015, when the number of remittances halved in a period of months, but the negative spiral was continued since then and will continue until Russia solves the fundamental issues which plague its economy and labour markets.

The return en masse of Uzbekistani citizens to the motherland in the past two years — most of whom are young men, statistically the most reactive and dangerous demographic if left unemployed and unfulfilled — has placed significant pressure on Uzbekistani social systems. Contrary to fears of the returning mob of unemployed young men upsetting the social order, possibly influenced by radical Islam spread by Moscow imams or godless epicureanism spread by Russian sweethearts picked up in Omsk or Voronezh, Uzbekistan has considerable experience in dealing with the return of its émigré communities and its current systems are more resilient than portrayed. Uzbekistan did not collapse under the weight of returnees in 1998 nor in 2008 — even though both crises had a far larger impact on the Russian economy — and there is no reason to believe that Uzbekistan will be unable to handle the current wave. With any luck, Uzbekistan’s ambitious industrial plans will allow for the meaningful reemployment of returnees, with strong extended family networks and the decentralized mahalla system of social security providing for those who cannot immediately return to work in Uzbekistan or elsewhere.

Sources:

UzDaily. “Volume of remittance between Russia and Uzbekistan falls by 54% in 1Q”. UzDaily.com, 14 Jun. 2016.

Aron, Leon. “The Coming of the Russian Jihad: Part I”. War on the Rocks, 23 September 2016.

Eurasianet. “Uzbekistan: Labor Migrants Looking Beyond Russia”. Eurasianet.org, 10 May 2016.

UzDaily. “Uzbekistan receives remittances for US$474m in 2Q”. UzDaily.com, 3 Oct. 2016.

Spechler, Dina Rome & Martin C. Spechler. “The foreign policy of Uzbekistan: sources, objectives and outcomes: 1991–2009”. Central Asian Survey, vol.29, no.2 (2010): 159-170.

Shtaltovna, Anastasiya & Anna-Kathrina Hornidge. ‘A Comparative Study on Cotton Production in Kazakhstan and Uzbekistan’. Bonn: Center for Development Research University of Bonn, 2014.

Keller, Shoshana. “The puzzle of manual harvest in Uzbekistan: economics, status and labour in the Khrushchev era”. Central Asia Survey, vol.34, no.3 (2015): 296-309.

March, Luke. “Nationalism for Export? The Domestic and Foreign-Policy Implications of the New ‘Russian Idea’”. Europe-Asia Studies, vol.64, no.3 (2012): 401-425.

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Author: Sam

I study international relations and public policy at the University of Edinburgh. My research is focused on political systems and economic development in Post-Soviet states.

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