The 'Stans are still something of an unknown quantity, but Mark Frary finds out why they have a bright future
If you have seen the film Team America: World Police, you will know of the Central Asian republic of 'Derkaderkastan'. Yet that vicious portrayal is as far removed from the 'Stans - the republics that emerged from the crumbling Soviet Union in 1991- as you could imagine.
The five countries - Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan - have a fine heritage and, as they gradually shake off the yoke of the Soviet Union, a promising future. The 'Stans cover a huge area to the east of the Caspian Sea and south of the rapidly dwindling Aral Sea.
The area includes lofty mountains, such as the 7,439m Jengish Chokusu on the Kyrgyz/Chinese border, and vast deserts such as the Karakum and Kyzyl Kum.
It was the conquest of this area, when it was part of the Persian Empire, which led the Macedonian king Alexander to be labelled 'the Great', and it has also been ruled over by two of history's greatest warlords, Genghis Khan and Tamerlane. The Silk Road - the famous route taken by merchants trading between China and Europe - bisects the region, passing through exotic rock city of Samarkand.
Thanks to vast oil, gas and mineral resources, the 'Stans are hopeful for their future prosperity. The countries have some of the biggest unexploited oil and gas reserves on the planet and foreign investors are helping the 'Stans extract and sell them.
WHAT SHOULD BUSINESS TRAVELLERS TO THE REGION EXPECT?
It is an over-simplification to lump the 'Stans together, something which business travellers should be aware of. Neil Payne of cross-cultural training consultancy Kwintessential says: "The 'Stans are ethnically, politically, socially, linguistically and historically different. Business people should take the time to understand which country they are going to and what that could entail. How people like to do business, what levels of bureaucracy exist, which languages are spoken and how much international exposure people have had will differ from state to state."
Payne adds: "When visiting the 'Stans it is crucial to understand their recent history with the Soviet Union and how this has tainted the psychology of the state and the people. The 'Stans are a place of contradictions and puzzles. Muslims who like to share a vodka with guests are the norm.
Get to know the current political context, the ethnicity of the people, expectations on foreign business people, how to build relationships, how to communicate effectively and how to impress your local hosts."
KAZAKHSTAN
The oil and gas industries are central to the economic success of Kazakhstan. Bernie Wilson, head of the trade and investment section at the British Embassy in Astana says: "Oil and gas extraction is the foundation of Kazakhstan's economy and increasing wealth. Recoverable oil reserves are estimated at 40 billion barrels. From 2000 to 2007 the oil sector regularly generated near double digit annual growth and GDP growth for 2010 is expected to turn out at around 4 per cent.
Once the giant Kashagan project in the Caspian comes on stream in three or four years' time, Kazakh revenues should skyrocket. It is possible that the country will be able to produce as much as 3 million barrels a day by 2015, lifting it into the ranks of the world's top oil producers and making it even more important as a customer of UK goods and services."
The UK is one of the biggest investors in the country, providing some 14 per cent of total foreign direct investment since the country's independence in 1991. Bilateral trade volumes peaked in 2007 when the two-way trade in goods and services stood at $3.5bn.
"Shell and BG Group have invested billions of pounds in major oil and gas projects," says Wilson. "Other large companies such as AMEC also have a strong investment interest. Many smaller oilfield operators, contractors and supply companies have established themselves in the Kazakh market, usually with local partners."
Oil and gas account for a large (39 per cent) share of Kazakhstan's GDP but the mining of minerals - uranium, chromium, lead and zinc in particular - makes up another large part of the country's economy. It's not just riches under the ground either - it makes a lot from what is grown on it. Wheat is big in Kazakhstan. The country is one of the world's biggest producers of the crop and it is estimated that the country produced 14m tons in 2009/10, mostly in the northern part of the country.
Kazakhstan's other big 'export' is vehicles - into space. In the centre of the country sits the Baikonur Cosmodrome, the heart of the former Soviet space programme. It was from here that Sputnik was launched and that Yuri Gagarin and Valentina Tereshkova took humanity's first small steps into space. Russia currently has a lease on the cosmodrome from Kazakhstan lasting until 2050.
KYRGYZSTAN
Kyrgyzstan (officially the Kyrgyz Republic) has followed a rocky road since independence in 1991, largely because of its dependence on trade with the former Soviet Union. Gold mining has been its saviour.
The Kumtor mine - one of the world's largest - opened in 1997 and in the next decade more than 5.8m ounces of gold were extracted. However, the closure of the mine in 2010 after its reserves were exhausted is a worrying development for the country, although other deposits are being exploited.
Cotton has long been grown in the country but recent falls in the price for cotton have seen the country's farmers diversify into other crops, such as tobacco, corn and rice, although the last of these is heavily water-intensive, a resource which is in short supply in the country.
TAJIKISTAN
Tajikistan's economy also depends on riches from beneath the soil and has reasonable resources of gold, silver, uranium and tungsten.
The country also has several hydroelectric facilities, allowing the country to export electricity. The unfinished Rogun dam, across the Vakhsh River, would be one of the world's tallest if and when it is ever completed -plans were first drawn up for the scheme more than 50 years ago and work began in 1976.
Cotton is the country's biggest crop, accounting for 90 per cent of agricultural exports, although apricots, apples, grapes, pears, nuts and potatoes are other important crops.
TURKMENISTAN
Turkmenistan has considerable oil and gas reserves, although has not been able to exploit them to the same extent as its neighbour Kazakhstan because of poor infrastructure and inhospitable desert terrain. However, new pipelines may change that to some extent. The country has more than half a billion barrels of oil in proven reserves and it claims to have the fourth largest reserves of natural gas in the world. The South Yolotan field is believed to hold some 14 trillion cubic metres of natural gas.
Like Tajikistan, cotton has been an important export for the country, and is planted in many of the irrigated regions of the country. However, the falling price of cotton on international markets has seen this sector of the economy decline in importance.
UZBEKISTAN
Uzbekistan is the second wealthiest country among the 'Stans after Kazakhstan. There are around 200 oil and gas fields that have already been discovered and Uzbekistan has proven reserves of 600m barrels of oil and around 2trn cubic metres of natural gas.
Russia's Lukoil and Gazprom, and China's CNPC are heavily involved in the sector in the country.
Cotton, as elsewhere in the 'Stans, is vital to the economy. It is the world's fifth largest producer of the crop and second largest exporter - most of the annual 800,000 tonnes produced goes to Europe.
GETTING THERE
Bmi (www.flybmi.com) operates three non-stop flights a week in each direction from London Heathrow to Almaty, Kazakhstan using two-class Boeing 757s. These services continue on to Bishkek in Kyrgyzstan. British Airways has no services to the region.
Lufthansa (www.lufthansa.com) has four direct services a week from Frankfurt to Almaty, three a week from Frankfurt to Astana and three a week from Munich to Tashkent. There are also four flights a week to Ashgabat via Baku in Azerbaijan.
Austrian Airlines (www.austrian.com) has three flights a week from Vienna to Astana.
KLM (www.klm.com) has four flights a day from Schiphol to Almaty.
Air Astana (www.airastana.com), which is 49 per cent owned by the UK's BAE Systems plc, launched in 2002 and runs two direct flights a week between Heathrow and Almaty. BAE took the stake in the airline, which is majority owned by the Kazakh government, when it was trying to sell a radar defence system to the country.
Uzbekistan Airways (www.uzairways.com) has two direct flights a week between Tashkent and Heathrow as well as services to other European airports.
PLACES TO STAY
The Western hotel chains are well represented in the 'Stans. Almaty has an Intercontinental, Holiday Inn and Hyatt Regency; Bishkek and Dushanbe both have Hyatt Regencys; and Radisson Blu has recently built properties in Astana and Tashkent.
In Ashgabat, the leading properties are the 2004-built Hotel President and the Grand Turkmen. The latter used to be part of the Sheraton chain.
Beyond the top Western properties, hotel ratings are optimistically high - some five star properties are more like three- and low four-star properties in Western capitals.
VISA REQUIREMENTS
Since 2004, business visitors to Kazakhstan from EU countries, including the UK, wanting to visit the country for up to 30 days have not needed an official invitation from a Kazakh ministry, unlike before. Travellers intending to visit several times within a year or for a longer duration require a letter from a host organisation in Kazakhstan. Business visas currently cost between £40 and £134.
Business visitors to the Kyrgyz Republic from the EU require a visa but not a letter of support. Visas cost between £60 (one month) and £140 (one year).
For Tajikistan, business visas cost from £60 to £200, depending on whether it is for a single or multiple trip and on the duration of each trip. There is no need for an invitation letter.
Visas for Turkmenistan cost from €35 to €505, plus a €15 service fee. The service takes seven to 10 days but a quicker service is available at double the fee (two to three days).
Business visitors to Uzbekistan from the UK (although not the US and some EU countries) require a visa support letter from the inviting organisation, arranged through the Ministry of Foreign Affairs in Uzbekistan. Fees range from US$40 to US$250, plus a service fee of US$20.
SECURITY AND SAFETY
Central Asia in general provides a relatively stable operating environment for overseas business travellers, according to Lee Niblett, head of corporate intelligence at global security company Red24.
The exception is Kyrgyzstan, he says, which has recently undergone significant political instability and ethnic unrest.
Niblett puts the stability down to the autocratic nature of many of the area's governments which has reduced the potential for outbreaks of unrest and produced relatively low crime environments, particularly in comparison to russia, europe and North America.
However, there are some challenges. corruption is "endemic" in the region, says Niblett, and "permeates all levels of public and private sector activity".
In Kazakhstan, power is highly concentrated in the hands of President Nursultan Nazarbayev and business and political groups can only exert influence to the extent that the closeness of their relationship to Nazarbayev allows.
"The primary threat to business personnel operating in, or visiting, Kazakhstan is crime," says Niblett. "Although levels of petty criminality are lower than in most european and North American countries, they are on the rise, particularly in Almaty and Atyrau. Growing socio-economic disparities are fuelling this growth and foreign nationals, who are perceived to be wealthy, are a high profile target."
Kidnappings occur among local communities in the southern part of the country, but foreign nationals are rarely targeted. business visitors and expatriate staff should remain aware of the high levels of corruption in Kazakhstan and the large number of restricted border and militarised areas.
The ousting of Kyrgyzstan's former president, Kurmanbek Bakiyev, in April has led to heightened tensions in the country. At the time of writing, the Foreign Office is advising against all but essential travel to the oblasts (provinces) of osh and Jalal-Abad. Red24 rates the country as a high-risk destination and advises against all non-essential travel to the country.
"The ousting of bakiyev left dozens dead and hundreds more injured and has revived latent social tensions, including long-standing mistrust between the Kyrgyz majority and turkish and Uzbek ethnic minorities," says Niblett.
The security environment in Tajikistan has improved significantly after a peace agreement signed in 1997 ended a five-year civil war. Emomalii Rahmon has been in power since 1992 and, despite some concerns of a possible power struggle among the tajik political elite, could well serve as president until 2020 should he win the next presidential poll in 2013.
"The primary threat for foreign business personnel [in tajikistan] emanates from criminality. Crime levels in the capital Dushanbe and in the districts of Garm, tavildara, Tojikobod and Jirgatol, situated on the border with Kyrgyzstan, are high and foreign nationals are frequently targeted due to their perceived wealth," says Niblett.
Turkmenistan provides a relatively low-risk operating environment and is undergoing a period of gradual political reformation after a period of autocratic rule under president-for-life saparmurat Niyazov, who died in 2006.
Business visitors should also be aware that a curfew is imposed on all foreign nationals in Ashgabat between 11pm and 6am (local time). Any foreign nationals discovered walking the streets during this period are liable to be asked by the police to produce identification. outcome of any such interaction with the police can vary from being escorted back to your accommodation or to being detained overnight.
Uzbeikstan, meanwhile, is currently politically stable under the leadership of long-standing president, Islam Karimov, who has been in power since 1990, although there are signs of potential instability. Although opposition parties have been banned and the leaders of the outlawed opposition parties have fled the country, considerably reducing the potential for organised political opposition, socio-economic disparities, starkly entrenched by the actions of the political elite, are fuelling discontent and a lack of political and economic reform, coupled with increasing restrictions on political, religious and personal freedoms, could fuel widespread unrest.
Corruption is widespread in Uzbekistan's police force and visiting business travellers are advised to carry a copy of their identification at all times. "visitors should be particularly wary of security force roadblocks situated outside of the major urban areas - extortion and bribery attempts at these junctures are frequent," says red24's Lee Niblett. "personnel should also be aware that they may be subject to surveillance or telephone-tapping by the Uzbekistan's security services."
THE 'STANS AT A GLANCE
COUNTRY |
KAZAKHSTAN |
KYRGYZSTAN |
TAJIKISTAN |
TURKMENISTAN |
UZBEKISTAN |
CURRENCY |
£1 = 236 Kazakhstan tenge |
£1 = 74 Kyrgyz som |
£1 = 7 Tajikistani somoni |
£1 = 4.5 Turkmenistani new manat |
£1 = 2,544 Uzbekistani som |
CAPITAL |
Astana |
Bishkek |
Dushanbe |
Ashgabat |
Tashkent |
POPULATION |
16,196,800 |
5,508,626 |
7,487,489 |
5,110,000 |
27,865,738 |
LANGUAGE |
Kazakh |
Kyrgyz |
Tajik |
Turkmen |
Uzbek |
PRESIDENT |
Nursultan Nazarbayev |
Roza Otunbayeva |
Emomalii Rahmon |
Gurbanguly Berdimuhamedow |
Islam Karimov |
2009 GDP ($m) |
109,155 |
4,578 |
4,978 |
19,947 |
32,817 |
TIME ZONE |
GMT+5 (west) GMT+6 (east) |
GMT+5 |
GMT+5 |
GMT+5 |
GMT+5 |
ELECTRICITY |
220V European round-pin plugs |
Exchange rates correct at 3 August 2010. Populations: CIA World Factbook estimates for July 2010.
GDP figures: World Bank |
WHEN IN KAZAKHSTAN...
Neil Payne of cultural training consultancy Kwintessential says: "In rural settings in Kazakhstan, it is a sign of respect to offer the most honoured guest a boiled sheep's head on a beautiful plate." The host then divides the food among the guests in the following fashion:
- the ear is given to the smallest child so that he or she will listen to and obey the elders;
- the eyes are given to the two closest friends so that they will take care of the guest;
- the upper palate is given to the daughter-in-law and the tongue to the host's daughter so both women will hold their tongues;
- the pelvic bones go to the second most respected guest; and
- the brisket is given to the son-in-law.