Dieter, Herbert. "Regional Integration in Central Asia: Current Economic Position and Prospects". Central Asian Survey, Vol.15, No.4 (1996): 369-386.

Dieter, Herbert. "Regional Integration in Central Asia: Current Economic Position and Prospects". Central Asian Survey, Vol.15, No.4 (1996): 369-386.

• The continued deterioration of the economic situation in Central Asia -- a pattern to which Uzbekistan is the only exception -- poses a threat to regional peace. Conflict is made more likely by the artificial nature of post-Soviet borders and the large minority populations in each state, the continued degradation of the environment, and competition over scarce water resources (369).
• There are still many reasons to be hopeful about Central Asian development, namely its robust human resources and plentiful mineral and petrochemical deposits, which can be used to fund industrialization. Its workforce will need to be retrained to function under free market conditions, however (370).
• The economic situation is caused by the breakdown of the Soviet system of resource and labour exchange and specialization. The Central Asian republics can avert their economic collapse by engaging in mutual aid and cooperation, learning from the failures of autarkic development in the western former-Soviet republics (370).
• The Central Asian states are well positions to engage in economic cooperation: they share a common language, they have a history of cooperation, no republic has so much of a comparative advantage that trade would be exploitative, pooling capital could speed up the industrialization process, and all countries have national minorities in other republics (370-371).
• "The only alternatives realistically available to the smaller countries, i.e. Kyrgyzstan, Tajikistan, and Turkmenistan, are progressively increasing poverty or regional integration" (371).
• Central Asia is not at a position where successful integration into the global market is an option, since exports would have to flow through other countries along the limited pre-existing infrastructure. Successful engagement with global markets necessitates regional integration (371-372).
• It could be argued that economic integration in Central Asia is not economically viable because the national economies are so similar. Whereas wealthy countries benefit from increased industrial competition, mainly commodity-based economies would simply be less able to protect their producers without an competitive benefit (380).
• The economies of the Central Asian republics under the Warsaw Pact were specialized to supply cotton and other raw materials, as well as some kinds of industry (372). The populations are extremely well educated, especially compared to income levels, but the collapse of Soviet educational systems may lead to a long-term shortage of skilled professionals (373).
• Uzbekistan has able to maintain industrial productivity at Soviet-levels, and Turkmenistan also had a limited depression in comparison to other former-Soviet states. All the other republics, however, suffered recessions of around half of GDP over the course of a few years (374).
• Central Asian states are divided on the form of economic reforms they are making. On one side, the Kyrgyz Republic and Kazakhstan have undergone radical liberalization, whereas Uzbekistan and Turkmenistan have maintained a state-dominated protectionist economy. Tajikistan has done nothing since it is in civil war (375-376). These divergent policies will make future economic integration more difficult (376).
• The financial and economic advise of Western organizations, including the World Bank and IMF, is of limited utility in Central Asia, as demonstrated by the collapse of the Kyrgyz economy after it implemented the liberalization policies recommended by the IMF (375).
• The environmental degradation of the Central Asia and the transboundary nature of most natural resources necessitate regional cooperation. Issues like the desertification of the Aral Sea can only be solved through coordinated and collective action by all the republics, as water cannot be handled unilaterally (377).
• Discussions of enhanced cooperation within Central Asia began as early as 1990, but nothing came of talks until 1994, when Kazakhstan and Uzbekistan -- later joined by the Kyrgyz Republic -- signed the Almaty Declaration, resolving to work towards a common market and proclaiming the necessity of regional integration and cooperation on water issues. The council created under this agreement is chaired at Almaty and oversees multiple ministerial meetings to come up with international solutions to regional problems (378-379).
• Kazakhstan has proposed to expand this integration through a Eurasian Union, which would essentially mimic the functions of the Almaty Declaration council, but with more powers and the addition of a shared parliament (381).
• The Eurasian Union represents a Kazakhstani vision of a reintegrated common economic and political space in the former USSR, largely constructed to account for the failure of the CIS to achieve integration. This vision has been most deeply opposed by President Islom Karimov of Uzbekistan, who has attempted to link Central Asia to both Asian powers and pivot itself away from Russia (381-382).
• All Central Asian republics, as well as Azerbaijan and Afghanistan, joined the Economic Cooperation Organization [ECO] in 1993 during the Quetta conference. The ECO no longer functions to promote integration, since its founding states of Pakistan, Iran, and Turkey all instead us the organization to promote their own interests in the former USSR (379-380).
• The Commonwealth of Independent States [CIS] is unlikely to form a major integrationary organization in either Central Asia nor most of the former USSR. It is very influential in the core territories of Russia, Belarus, Kazakhstan, and the Kyrgyz Republic, but has little influence outside of that ring (381).
• Kazakhstan in particular has been advocating for the enhanced economic integration of the former Soviet Union, likely due to the economic pressures tying the Kazakhstani economy to Russia. A firm relationship with Russia has been important for President Nursultan Nazarbayev, partially due to the political support he receives from the Russian majority in the north of the country, demonstrated by his reluctance to the leave the ruble zone (381).
• Concrete discussion of economic integration in Central Asia has been limited. A customs union would make the most sense, since it would enhance inter-state trade and having competent and organized customs would be a necessary precondition for other forms of integration, like establishing free trade zones or a common market (382-383).
• The EU has been a major partner in helping Central Asia integrate economically, particularly the German government. The EU can provide an example of successful regional integration, and thus the EU -- rather than national governments -- should take the led to promote cooperation in Central Asia (383-384).