Mini Marshall Plan for Central Asia?

V.Ivanov (Photo by
A.Koryakov/Kommersant)

A leading Russian business daily Kommersant and Rossiyskaya Gazeta report here (in Russian) and here  on a curious document submitted by Russian drug control czar Viktor Ivanov to the Government. The paper calls for the creation of what seems to be a Russian CA development agency. The document was floated by Ivanov's agency probably because Russians want to frame it as part of their comprehensive approach to drug control in Central Asia and new drug policy.

Claiming that 40% of GDP in some Central Asian states comes from drug trade (never clarified which one, hugely improbably number anyways), Ivanov proposed to kill illicit economy by encouraging legal economy. Apparently the way Russians see it is not through micro-credit and encouragement of small entrepreneurship, but through huge Russian state corporations taking over largest projects in the region and creating new ones.

Russian Corporation for Cooperation with Central Asian Countries, as the proposed agency is officially called, will be founded as a joint stock company with 51% of shares going to the Russian Government and 49 to Russian companies, mostly Russian state corps like RosNeft, VTB, GazProm, VEB, RosAtom, RJD and Inter RAO EES, Rostehnologii and Sberbank. From the private sector only Sistema and Alfa Group are mentioned.

List of proposed projects is very entertaining. Russians are proposing to take over hydroenergy constructions at Kambarata and Rogun, re-create Soviet energy distribution systems and add a new water pipe from Siberia to Fergana Valley. Also envisioned is construction of atomic energy plant in the region and of a big poultry production plant. Beside such big projects, creation of a university specializing in development education does not seem that fantastic (no one seems to have been interested whether development oriented schools already exist in the region).

The whole initiative is based on a number of very shaky assumptions.
First, it is somehow assumed that Central Asians will meet the alarmingly ambitious development initiative with joy and open embrace. This is not going to happen, regional elites are very wary of Russians' real motives.

Second, it is assumed that drug trafficking in Central Asia is done by impoverished individuals, much like the image of a poor and desperate Afghan farmer who plants poppy because there is nothing else to plant. To me at least it seems that a typical Central Asian drug trafficker is not that destitute and has ample income opportunities were he/she willing to take them up.

Moreover, it is assumed that the way to lure traffickers out of the drug game is not by giving 'em cheap credit to open up firms, but by building huge plants where they most probably be employed.

Third, Russians pretend they have extra cash to spend. The initial project cost is Rbl 2 billion (about USD 64 mln) and annual salary expenses will amount to USD 6 mln, and all expenses will surely be higher than that. Where is the money coming from, is the question to the Government of D.Medvedev that has yet to pay off the promised pension increases.

Russian drug agency planners also have very curious notions of public-private partnership. Given the list of proposed participants, public-private for Russian drug people means partnership of the state and state-run corporations. very odd...as is odd the promise that local firms will be allowed in the future.

Journalists claim this is all not more than a 'retirement project' for Ivanov that has very little chances of success, at least in the form declared. I agree. 

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Legacy of Soviet "colonialism"

Last two weeks of March and first two weeks of April, extensively travelled throughout Kyrgyzstan, from Batken’s Kizilkia and the city of Osh to Jalalabad’s Aksy and Nooken rayons and Bishkek mikrorayons. The primary objective was the administration of assessment program in primary education, however, the secondary objective was to see more of such diverse Kyrgyzstan. Impressions boiled down to the following:

Corruption seems to be the primary ill this country has to access. Anecdotal evidence suggests that a clean-hands public administration would immediately cure Kyrgyz society of myriad of contemporary ills. To cite several examples, in this country producing twice as much electricity as it needs (14.5 against 7 million mW), electricity cuts are still endemic in faraway places, while officially close to 40% (!!!) of electricity is lost. A local TV station aired a story today of cases of corruption in using foreign-provided grants for school repair.

USSR with all its ills and savageries and “colonial” domination of Kyrgyzstan executed a feat that hardly other great Kyrgyz patron will be able to repeat – brought railway, paved road, highly educated professionals and resources to the most faraway regions of this country. Such faraway places like KizilKia, practically a nowhere of great Soviet heartland used to enjoy such state of the art infrastructure as underground telephone cables, German-Jewish teacher passionaries sent directly from Moscow and a mining school that is still respected in Central Asia.

On Bishkek-Osh road, driving by numerous gigantic hydro-power dams and through several tunnels, all accomplishments of Soviet-time engineering thought and construction might, I could not but sadly realize that such intellectual potential that nowadays only economically mighty states can afford has left Kyrgyzstan for long, if not forever. For if you think about it, public engineering system is but a luxury not every state can afford.

Nowadays it is clear that with the above mentioned corruption state-of-the-art engineering project would have to be outsourced to Russian companies and cottage-house tiny school like the one I visited in Dostuk village of Nooken rayon would never enjoy a metropolis-trained intellectual and an adequate library in all three languages people around speak.

The saddest thing for this country is that there is no light at the end of the tunnel. The current political system would most likely continue to engage in myopic rent-seeking and exhaustive strip-off of national resources, as well as stealing from budget and inhibiting normal development of medium and small enterprises, while the country would be deeper engulfied into the slough of social problems.