Home Interdisciplinary Studies Economy The economic security of central asian countries in the context of globalization

The economic security of central asian countries in the context of globalization

27 August 2013
105
0

A. Zh. Panzabekova, PhD, Associate Professor

Institute of Economics of the Republic of Kazakhstan, Almaty

 Due to progressive integration into the modern global economic system, coupled with growing economic openness, many countries are increasingly experiencing the impact of the global economic crisis, and facing the new challenges and threats that have accompanied it. One of the maintrends of world development directly related to these challengesis the globalization of the economy.

Currently, specialists who study the challenges of globalization have not agreed upon a single accepted understanding of this process and its scope, as well as the problems and prospects that it implies for development. There is an extremely broad range of interpretations. Some experts see it as the world’s main driving force for progress, while others consider it to be a threat to vital interests, national identity and global.

Certainly, globalization has many positive aspects, since it opens up new opportunities for development. It contributes to the spread of information, knowledge and new technology, more than ever allowing countries to take advantage of various benefits. These include, but are not limited to, an international division of labor, of industrial cooperation and of more efficient use of resources. On the other hand, however, globalization also sharpens the contradictions that exist in the world, giving rise to new challenges and provoking new threats.

In recent decades, the process of globalization has become more dynamic in all spheres of international relations. With taking globalization into account, it would be impossible to analyze or predict the development of the state, or to design political and economic measures to maintain and strengthen the country's position in the world community.

Three contradictory processes of globalization directly affect the national security of states, and must receive attention in confronting this problem: democratization, economization and informatization [1] (Figure 1).

The democratization of the modern world is irreversibly changing the hierarchy of national security objectives. At the top of this hierarchy is identity, followed by society, with the state as such in third place. Under this schema, the state thus becomes primarily an instrument to protect the interests of the individual and of society.

Therefore, any country that claims to play a significant role in world affairs today must abide strictly by this hierarchy. As democratization increasingly becomes the norm, even if it in practice can be inconsistent and contradictory, means that democratic norms and human rights cannot be ignored. No modern state can afford policies that are fundamentally different from these norms.

National Security

Informatization

Economization

Globalization

Democratization

Figure 1 - Contradictions in globalization and national security

Economization is steadily leading to the formation of a single global economic space. A viable model of national security that takes this integration into accout is the only effective way of defending national interests. Limiting integration is in essence refusing full development, but it can be perceived as a key element of national security. No society can be competitive without becoming part of the global economic space.

Computerization has formed a single global information space, creating a global network and a global society, open to citizens of countries. It provides access to material and spiritual goods, multiplies intellectual resources and, therefore, all other resources. It promotes sustainable development, and well-being and security for individuals and for society at large. On the other hand, information technology is not an absolute good: it creates new possibilities for the control and manipulation of public consciousness in internal politics and new effective tools for interstate confrontation. Consequently, it leads to new threats to national security.
In recent years,it has beenassociatedwith the globalization ofnegativephenomena, such as thevulnerability ofnational economies to unfavorable internation trends, adecline in living standards, rising unemployment and worsening social problems.Theylargelydetermine theurgency of developingproblemsof economic security

In many countries,intensiveresearch has been carried out to assess theextent of the problem, to analyze risksandthreats to economicsecurity, to identify of indicators of economic security and set a level for their thresholds and to formulate andimplement measuresto ensure economicsecurity.

For the Central Asian countries, which are undergoing socio-economic transformation, while at the same time preserving the continuity of their regional interests, these provisions are particularly important and relevant. The Central Asian region is currently experiencing a phase of development as an independent area in geopolitics. Through trial and error, it will form its internal architecture and find its place in overall global architectonics. It should be noted, however, that the current stability and security situation in the region is far from ideal. A "parade of sovereignties" brought the countries of Central Asia (CA) independence, but along also a concern for their viability. [2]

Recently, the process of establishing a new security framework among the independent states of Central Asia has taken on a new relevance. Potential sources of conflict are found not only within the region, but also emanate from beyond its borders. A main task there is to identify the main risks and craft urgently-needed solutions.  According to Kazakh political scientists, "the major security threats in Central Asia are the problem of the use of water resources, environmental degradation, ethnic conflicts, drug trafficking, organized crime, international terrorism, religious extremism and population growth. However, today there are more acute potential causes of the internal problems of regional order that could lead to future conflict between the Central Asian states…"[3].

The states of Central Asia have different levels of socio-economic development. According to “The Rise of the South: Human Progress in a Diverse World”, the 2013 Human Development Report produced by UNDP (United Nations Development Programme), which provides data about living standards, social protection, health indicators, education and cultural development, crime, environmental issues and popular participation in decision-making processes, the only country in the region with a high level of human developmentis Kazakhstan, while Kyrgyzstan and Tajikistan ranked relatively low in the UN’s definition of human development (Table 1).


Table 1 - Ranking of Central Asia Human Development Index in 2012

Country

Ranking

The level ofhuman development

Kazakhstan

69

High

Turkmenistan

102

Average

Uzbekistan

114

Average

Kyrgyzstan

125

Average

Tajikistan

126

Average

Note: according to the site http://hdr.undp.org

Security issues in the Central Asian region have a complex and unique character. This is primarily due to the difficulties faced by the countries of Central Asia since independence: economic decline and instability in society and political weakness. The Central Asian region is strategically important from a geopolitical point of view. Being at the crossroads of several civilizations, the region is influenced by many countries: Russia, the United States of America, China, Iran and Turkey, as well as by the European Union. The emerging system of regional security, the lack of a unified approach to some regional issues and the existence of various interests in the economic and political development of the region all provide a basis for the emergence of differences between the countries of Central Asia. [4]

Without claiming to be exhaustive, this paper will focus on the key economic threats to Central Asian countries, both external and internal. External threats in the context of globalization are of particular importance. This is due to the fact that modern development is fundamentally differs from that of previous stages. Faced with external threats, misguided responses to emerging threats have serious implications for national security. On this basis, in our opinion, at the moment the main external threats to the economies of the Central Asian countries are as follows:

-  Becoming significant exporters of natural resources (for Kazakhstan, Turkmenistan and Uzbekistan);

-  Growing technological dependence on industrialized countries;

-  Rising foreign debt;

-  Brain drain;

-  Capital flight.

Internal threats include an inability to ensure self-preservation and self-development, difficulty in taking advantage of innovation and inefficient state economic regulations.  They are compounded by a more general inability to strike the reasonable balance of interests needed to overcome the contradictions and social conflicts that impede the development of society. In our opinion, the greatest internal threats to Central Asian countries include:

-  Growth of structural deformities in the countries’ economies;

-  Increasing dependence on imported food and consumer goods;

-  Destruction of scientific and technical potential;

-  Criminal activity in the economy and society;

-  Widening economic stratefication;

-  Environmental degradation.

Currently, there has been a pronounced rise in external threats. An acute problem is that of raw materials. Large reserves of natural resources of global significance are concentrated in Central Asia, primarily hydrocarbons. This has attracted the attention of developed countries to the region. Central Asian countries thus pursue geopolitical policies designed to maximize, as much as possible, their control and influence over the export and transport to world markets of their hydrocarbon resources.

Kazakhstan, for example, ranks sixth amongthe most resource-rich countries in the world, and seeks to become leader in export of natural resources. It is endowed with 99 of the 110 elements of the periodic table, of which 70 have been explored and 60 extracted and used.

Currently, more than 80% of strategic enterprises in Kazakhstan are under the control of foreign investors. The critical threshold for control by foreign investors is in the range of 30-50%, a figure above which constitutes a threat to economic sovereignty. The state of property relations of property and the actual, real right of exploitation of natural resources in the country can be clearly seen from the distribution of assets in the hydrocarbon industry (Table 2). The state owns only 18% of the hydrocarbons, while the remainder belongs to multinational companies and investors.


Table 2 - Information on Kazakhstan’s major oil fields of Kazakhstan (in billions)

Name offield

Recoverable reserves

Ownersof shares

Tengiz

6-9 billion

Tengizchevroil (TCO) Chevron (UWB) 50%, ExxonMobil (U.S.) 25%, KazMunaiGas 20%, BowArco (Russia) 5%

Karachaganak

2.5 billion

Karachaganak Intertrade Organization (KIO): Agip (Italy) 32.5%%; BritishThermalPowerPlant (UK) 32.5%, Chevron (USA) 20%, Lukoil (Russia) 15%

Kashagan

13 billion

AgipKazakhstanNorthCaspian'sOperatingCompany (formerOKIOK): Eni, Total, ExxonMobil, ShellandKazMunaiGas (by 16.5%), KONEKPhillips (9.26%), Inpex (8.33%)

Kurmangazi

6-7 billion

KazMunaiGas (50%), Rosneft, Zarubezhneft (50%). “Тоталь” as a shareholder is under the share of KMG

Darkhan

9.5 billion

KazMunaiGas. Other potential owners are a consortium of Chinese companies, including the SPRS and Rexona

Janajol

3 billion

SPRS - AktobeMunaiGas (88%). Remainder under other investors including IG International and Werth

Zhetibay

2.1 billion

MangistauMunaiGaz

Nursultan

4.5 billion

Potential owners include Conoco Phillips, Shell and KazMunaiGas

Note: data from http://inosvkz.com

Threats in Central Asia are also caused by internal factors in the development of the region. These include, primarily, socio-economic backwardness and the continuation of detrimental trends in economic development. The result has been significant socio-economic stratification and a rise in unemployment and poverty. A labor surplus in the countryside has to movement to urban areas, but in many cases the migrants cannot find stable employment. This problem is especially acute for rural youth, who lack the necessary knowledge and skills to thrive in a city and are often doomed to a very low standard of living.

Increasing poverty has forced a significant portion of the population of the region to seek work in other countries. It is estimated that about 2 million low-skilled workers and small traders from Kyrgyzstan, Tajikistan and Uzbekistan have left to earn a living in Russia or Kazakhstan. Remittances from migrant workers and traders form an important segment in the informal economy in Central Asia.

In turn, migration, especially illegal, creates internal threats to both destination and souce countries. Source countries lose tax revenue, and also face demographic changes in the social, educational and ethnic spheres.

The countries of Central Asia face sever environmental problems. The most relevant of these are the rise in the Caspian Sea level, which threatens to flood vast areas, and the drying of the Aral Sea, which entails a number of negative impacts (environmental, social and medical). There is dangerous radioactive waste on the territory of Kyrgyzstan. According to experts, this waste is not only a threat to the country's own population. Flooding could carry it across international borders, which makes cross-border nature of this problem. Remedies for these complex environmental threats would require huge financial resources that most countries in the region, unfortunately, do not have.

Thus, the threat to the economic security of the Central Asian countries is obvious. Each of the factors described above, as of today, can cause or contribute to negative scenarios for the region. New challenges wrought by global economy has led to new trends that threaten national interests. All Central Asian states must develop effective and practical solutions to the problems of economic security in the region. In the face of global instability and fierce competition, states must seek a stable economic situation to provide for the welfare of the nation and its future economic growth. To achieve this goal, the state must create the foundations of national competitiveness, and seek out all possible benefits and advantages.Economic security in Central Asia requires strong international cooperation in areas such as banking regulations and the fight against corruption, money laundering and transnational crime. Much will depend primarily on the joint efforts of the Central Asian states themselves. In particular, interactions among the Foreign and Economic Ministries of the region’s countries, as well as among their security forces, will have a mahor effect as they pursue objectives on local, national, regional and international levels. Understanding these strategies is exactly what allows one to understand coordination among various branches of power and their consistency in the implementation of international treaties and documents, projects and programs. Crucial factors here include trust among countries and contiunity in previously implemented policies and decisions.

The most importantfactor in ensuring thesecurity of the statesof CentralAsia, according to the experienceof the international community, is the deepeningof integration processesin the region.

The President ofthe Republic of Kazakhstan N. A. Nazarbayev said the following in hisspeech at the InternationalMeetingof CultureandScience, which brought together Kazakhstan, Kyrgyzstan,Tajikistanand Uzbekistan:"Ifwe do not havethe politicalwill tocreate a systemof national interests, conflictswill arisebetween the national interestsof our states. We cannot allow this to happen.The leaders ofthe countries of CentralAsia already have the will harmonize their mutual interests."[5]

Therefore, only by unitingthe effortsof everyone,respecting international law, freedom and democracy, preserving human values​​, traditions and the identity ofnations,effectivelyinteractingon the basis ofcooperation,harmony andjustice, can asingle marketand createa newsecurity architecture be created.

List of sources used:

1.  KortunovSVThe conceptualfoundations of nationaland international security.Moscow, StateUniversity - HigherSchool of Economics, 2007. -308.

2.  EshamanovaE.Zh.Realities andprospects forintegration of the countriesof CentralAsia/ / http://www.ia-entr.ru

3.  SaidalievW., A.Khokhlov,Problemsof regional securityin CentralAsia in theXXIcentury// Security, Diplomacy andInternational Law:Proceedings of the InternationalRegional Conference.Astana,January 18-19,2001.The DiplomaticAcademyof the EurasianNationalUniversitynamed after LNENU. Ed.M.Zholdasbekov. -AstanaFINEK, 2001. -P.28-30

4.  VafoNiyatbekov. Kazakhstan's rolein regional security/ http://easttime.ru

5.  NazarbayevN.A.The strategy ofsocial transformationand rebirthof the Eurasian civilization. -Moscow: Economics, 2000. -S.423.


Comments

To leave comment you must enter or register