Tuesday, October 14, 2008

Window on Eurasia: Economic Crisis in Russia Cuts Transfer Payments to Many Post-Soviet States

Paul Goble

Vienna, October 14 – Economic problems in Russia, themselves triggered in part by the world financial crisis, are having a major impact on other post-Soviet states, reducing transfer payments from their citizens who have been working in Russia and potentially leading many of them to think about leaving Russia and returning to their own countries.
These consequences at the societal level will make it more difficult for Moscow to exploit the current situation to unite some or all of the countries in the Commonwealth of Independent States (CIS) into a tighter organization and could spark more anti-Russian attitudes in these countries, given the experiences many non-Russian Gastarbeiters have had in Russia.
According to Azerbaijani journalist Dzh. Khalilov, what is happening in the Russian economy “will indirectly lead to the worsening of the financial situation of a number of low and medium income families” in his country who rely on transfer payments “from relatives in Russia” (www.ia-centr.ru/publications/2627/).
The amount of money potentially at stake is enormous. Some demographers suggest that there may be more than a million Azerbaijanis in the Russian Federation at the present time and that they are making monthly transfer payments home of approximately 200 U.S. dollars, a sizeable sum for many families there
In some regions of Azerbaijan, a Baku expert says, as many as one family in three will see its income fall as a result, a development that will not only impose hardships on these people but also on others because those not receiving this money will not be in a position to purchase goods and services from others.
And just how serious these economic and potentially social-political consequences could be, the article continues, is shown by what happened in Azerbaijan after the Russian default crisis 1998, a development that led to a fall in housing prices and even a recession in that South Caucasus country.
But Azerbaijani politicians suggest that there are three reasons why in that country at least, the impact of Russian financial problems on their country may be less. First, most Azerbaijanis working in Russia are in sectors that so far have not been hit hard by the decline in that country’s capital markets.
Second, they point out, Azerbaijan’s earnings from the sale of oil abroad have given it a financial cushion that will allow the country to ride out the current difficulties. And third, they note that Baku’s efforts to develop the economy in many formerly depressed regions means that many Azerbaijanis who had been working in Russia have begun to return.
Consequently, Nazim Mamedov, a member of the Azerbaijani parliament’s commission on economic policy, told the “Ekho” journalist that Azerbaijanis should avoid “exaggerating” the impact of the current events because they will be less affected by the current crisis than they were by the 1998 Russian default.
Because of its oil wealth, Azerbaijan is in a much better position than many of the other post-Soviet states such as Tajikistan and Moldova with significant Gastarbeiter populations in the Russian Federation. Those countries will be hard hit by any decline in transfer payments over a significant period of time.
In the past, the Moscow media has featured discussions of transfer payments and the way in which these payments are supposedly “robbing” Russia or providing the basis for tighter integration of the post-Soviet states. But in the current environment, such discussions are likely to become increasingly rare.
At the end of last week, the Ekho Moskvy radio station reported that Russian officials have banned the use of the words “crisis” or “collapse” in their coverage of the economic situation inside Russia. And news agencies like ITAR-TASS have told their journalists to follow that line.
In a message, that agency told its correspondents “not to send in petty provocativereports which can create panic among people” – including stories on lines at banks, the firing of a few workers, “and such like.” Only major stories that put these things in context should be filed in the future, it said (kavkazcenter.com/russ/content/2008/10/11/61531.shtml).

No comments: