Monday, December 4, 2023
 
 

Economic progress and political reforms give post-Soviet space reason to celebrate

Under the leadership of President Shavkat Mirziyoyev, Uzbekistan - Central Asia's most-populous nation as well as its cultural heart - has launched a major reform drive to make the country more attractive for investors. This has included liberalizing exchange controls, modernizing the tax regime and privatizing state-owned behemoths, while also encouraging growth in the tourism industry to help boost the local economies of historic Silk Road cities such as Bukhara (Pictured).

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On August 30th, Kazakhstan celebrated one of the country’s most important holidays—Constitution Day, which commemorates the adoption of the 1995 constitution which confirmed the Kazakh people’s determination to become a democratic and secular republic. This year’s celebration will undoubtedly be particularly festive, given that Kazakhstan is also marked 30 years of independence—a milestone that many of its fellow post-Soviet states are sharing. Uzbekistan marked its 30th Independence Day on September 1st, while Estonia also commemorated three decades as an independent country this month. 

All three countries have a great deal to celebrate, as each has made significant progress in transitioning to market economies and ensuring that democratic values are respected. Kazakhstan has managed to parlay its strategic location into a role as a bridge between Europe and other great powers like Russia and China, as well as a hub of international mediation. Uzbekistan has embarked on an ambitious wave of privatization that has made it the leading Central Asian destination for foreign investment. Estonia, meanwhile, has demonstrated dexterous policymaking that has allowed the smallest Baltic state to become known as “the world’s most digitally advanced society”. 

Kazakhstan: The diplomatic hub of an increasingly important region

Nur-Sultan is clearly aware of Kazakhstan’s strengths, which include its abundant natural resources and its strategic geographical location, and has made these advantages a central pillar of its development. One of the Central Asian country’s most notable successes has been its crafting of a multifaceted foreign policy centred around neutrality and pragmatic engagement with a variety of actors. Kazakhstan has consistently maintained good relations with both Russia and China yet has resisted attempts to politicise these tight trade links. In parallel, Nur-Sultan has steadily carried out political and economic reforms and has taken pains to maintain an equally collaborative partnership with the EU, which is both Kazakhstan’s biggest trade partner and its most significant foreign investor.

This careful balancing act has maximized Kazakhstan’s ability to attract foreign investment from all sides, but it’s also allowed Nur-Sultan to carve out a niche as a trusted interlocutor in the region, in keeping with its ambitions of becoming an international diplomatic hotspot akin to Geneva. The country has already hosted a number of high-profile diplomatic talks, including the Astana peace process between Russia, Turkey and other actors with interests in Syria.

Kazakhstan’s leadership, including President Kassym-Jomart Tokayev (Left of Center) and former president, Nursultan Nazarbayev (Center), have spearheaded an effort to make Central Asia’s largest nation a regional hub for diplomacy.

Kazakhstan will likely have further opportunities to flex its diplomatic muscle in the coming years, as international eyes increasingly turn to Central Asia. As EU foreign policy chief Josep Borrell recently highlighted, the Taliban’s takeover of Afghanistan is a seminal geopolitical event with wide-ranging consequences, including the fact that Central Asia will become a region of greater strategic importance for Europe. 

Uzbekistan: A magnet for foreign investment 

Uzbekistan will undoubtedly see its profile on the global diplomatic stage grow as well following the crisis in Afghanistan. The country is already in talks, for example, with the United Nations and the European Union about how to use a 400,000 logistics facility in the border city of Termez to supply Afghanistan with humanitarian aid, and the recently-appointed EU special representative for Central Asia visited the logistics center, herself, earlier in August.  

While Nur-Sultan has made a name for itself with its efforts to resolve international conflict, Tashkent has focused the lion’s share of its international outreach efforts on attracting international investment. Uzbekistan has big dreams of forging tighter links between Central Asia and the international trading system, as illustrated by the large-scale conference on connectivity recently held in Tashkent. It’s no accident that Uzbekistan’s inflows of foreign investment have soared, even during the coronavirus pandemic.

Uzbek President Shavkat Mirziyoyev took steps within months of his election five years ago to make the country more attractive for investors, including liberalizing exchange controls, modernizing the tax regime and privatizing state-owned behemoths. Uzbekistan’s sweeping national reform agenda is far from complete, but it is clearly already bearing fruit with the country rising through the ranks of the Ease of Doing Business index and netting billions a year in foreign investment. 

Estonia: digital drive allows small nation to punch above its weight 

Directly across the Baltic Sea from Finland, Estonia offers its fellow post-Soviet states a shining example of how innovative policymaking can build a robust economy even in a small country with relatively few natural resources. Tallinn was quick to implement reforms after its independence from the Soviet Union, swiftly building a democratic state with a free press and a fair court system, but the real game-changer for the Baltic nation was its early focus on technology and digitalisation. 

Estonia’s e-residency program has been a major success in attracting investors and entrepreneurs from around the world.

As early as 1996, Estonia implemented programmes like “Tiigrihüpe” (Tiger Leap) to turbocharge entrepreneurship and digitalisation. Tallinn’s early commitment to a digital future has borne significant fruit. The country’s e-residency programme has attracted investors and entrepreneurs from around the world. Government services, meanwhile, have become radically streamlined—not to mention less prone to corruption—through the move to the digital sphere; some 98% of government interactions in Estonia now take place online.

Estonia has more unicorns per capita than anywhere else in Europe, and its striking boom in entrepreneurship has had knock-on effects across its whole society—the Baltic nation is not only the wealthiest out of the former Soviet states, but its GDP per capita surpasses many longstanding EU members, including Portugal. 

The countries which once formed the Soviet Union have each faced unique challenges since that country’s dissolution nearly 30 years ago, but they have nevertheless made extraordinary progress over the past three decades, establishing themselves as important international diplomatic players, attractive targets for foreign investment and hubs for digital innovation.

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