Monday, May 25, 2009

Window on Eurasia: Gastarbeiter Transfer Payments from Russia to Homelands Decline by Half since Last Fall

Paul Goble

Vienna, May 25 – Gastarbeiters in the Russian Federation are sending approximately 50 percent less money back to their homelands in the CIS than they did six months ago, a decline that is hitting many of these countries, which remain heavily dependent on such transfer payments, extremely hard.
The Russian Central Bank has reported that in the last quarter of 2008, transfer payments by Uzbek, Tajik and Ukrainian migrant laborers amounted to 1.76 billion US dollars, a third less than in the third quarter. And results for the first quarter of 2009 suggest such payments have fallen 25 percent more (
As a result, the total decline has been 50 percent over the last six months. For some countries, that constitutes a real hardship. In Tajikistan, for example, such transfer payments constitute more than 45 percent of GDP, in Moldova, some 40 percent and in Kyrgyzstan, 35 percent.
The impact may be even greater than those numbers suggest. Muzaffar Olimov, the head of a Tajik research center, says that transfers have fallen 30 percent since the start of the year. And Moldovan bank officials say that the decline there has been 29.2 percent since the end of 2008.
Moreover, and in sharp contrast to several years ago, an increasing number of such Gastarbeiters are from the capitals of these countries rather than rural areas, a pattern that will mean any decline is likely to have a more immediate impact on the social and political face of these states.
According to Russian banking officials, Gastarbeiters are making about the same number of transfers as they did a year ago, but the size of each transfer is now smaller, a reflection of declining or, in many cases, unpaid wages. In addition, the number of workers is declining, with the total of legal immigrant workers having fallen 13 percent in the first quarter of this year.
Given the size of transfer payments relative to GDP in many of these countries, these declines are going to make it far more difficult for their peoples and governments to cope with the current economic crisis, a shortcoming that is likely to have both domestic and foreign policy consequences.
On the one hand, these trends may produce social unrest or, in anticipation of such unrest, even more repressive government actions. And on the other, these declines make any assistance from abroad even more significant in terms of the policy orientation of the governments of the region.
That in turn helps to explain why Moscow over the last few weeks has simultaneously been playing up reports of its assistance to CIS countries and been criticizing aid from the European Union or the US. And it also helps to explain why many commentaries now insist that these countries must choose between Moscow and the West.

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