Out of Central Asia: The floating cost of cocktail parties

TASHKENT - The rough crowd of money-changers huddled at an icy corner of a bazaar in Central Asia's biggest city were in fine spirits, even if the bowed heads scurrying by belonged to a people struggling to survive in a sea of monetary confusion.

Arbitrage opportunities have been miraculous in the past month as new currencies have taken hold in the five states of the former Soviet Union's Muslim southern rim, an extraordinary conjuncture of state bungling, Russian economic bullying and high-minded Western ideological intervention.

Take the Snickers chocolate bar, an omnipresent free market item of apparently obvious worth. On the first day one of the new currencies was issued, a diplomat went from kiosk to kiosk asking for a price: one wanted 2,800 roubles, another 10,000 roubles, a third dollars 2 and the last refused to sell. 'The worst bit came when we got the quotes for a cocktail party,' he said. 'Even though it was always a price quoted in hard currency, it went up from dollars 300 to dollars 3,000.'

In the short term, the losers are the 50 million people of Central Asia. Former Soviet peoples had enough trouble understanding the Western concept of money. Now nobody knows the value of anything, and they are learning the hard way how to cope with a collapse in living standards.

'I don't feel this is a real currency. Prices are very high. I buy all the products, but less of everything. There are no medicines either,' said Vazira Akhmesinova, looking at a truckful of cabbages whose price had risen 50 per cent in a fortnight. The peasant salesman was getting richer, but the former radio scientist's institute had collapsed with the Soviet system and she was now getting by as a secretary.

The Central Asian states' great leap into independent currencies was a hurried affair few can explain. Did the International Monetary Fund (IMF) blackmail them into taking on a fiscal responsibility for which few were prepared? When Moscow demanded all foreign currency and gold reserves in return for membership of a new rouble zone in October, was it deliberately forcing an ungrateful Central Asia to walk the plank? Or did Moscow believe that even if the area had the guts to go it alone, it would soon fail and come running back to rule by mother Russia?

The answer seems to be that although the former Communist leaderships may not have asked for the independence thrust upon them with the collapse of the Soviet Union in 1991, most are now determined to create real nation-states. The choice was inevitable after Russia struck out alone with a new currency in July and Central Asia was overwhelmed by pre-1993 Russian currency.

For now, Russian neo-imperialists have kept control over the strategic land of Tajikistan, a monetary black hole and the only state of the old Union to stay in the new rouble zone. The wizards from the IMF have landed up with Kyrgyzstan, a country with virtually no resources that the IMF persuaded to launch its new som in May as part of an effort to show Central Asia a model of fiscal reform.

The prospects look brighter in the other three more resource-rich states that launched their currencies in November. Economically best-off is Kazakhstan, which produced the most successful - and certainly the prettiest - new currency, the British-printed tenge.

Confused Uzbekistan produced a transitional unit called the som-coupon, an unlovely Monopoly money of uncertain value. President Islam Karimov flies to Europe with Uzbek gold bars to show off as guarantees to would-be investors, but at home even officials are in the dark. The government is trying to maintain parity with the new Russian rouble while the state-controlled Uzbek press talks of both a return to the rouble zone or, more probably, an exchange for a new Uzbek currency.

'Uzbekistan's idea of a free market is to arrest the street marketeers and send police goons out to the bazaar, offering to trade roubles one-to-one for som-coupons,' one diplomat said. In fact, the rate has swung wildly from 1:2 to 1:5.

Turkmenistan has seen confusion and a fall in the value of its new manat. But by balancing an idiosyncratic dictatorship, apparent obeisance to Russia and a steady flow of income from its trans-Russian shipments of natural gas, its medium-term future seems fairly secure.

The multiplication of currencies in Central Asia will probably speed the divorce of economic systems from Russia, diplomats say, especially since suppliers are increasingly asking for payment in hard currency. But the currencies are also exacerbating divisions within Central Asia itself.

The West has no magic wand to wave. The IMF is negotiating stand-by agreements and macro-economic stabilisation programmes, but it has seen that financing reform even in liberal Kyrgyzstan is a bottomless pit. Western chancelleries have already shown in the Caucasus that if push comes to shove, they have little political will to compete with Russia in its old territories.

Russia will thus be dominant for some time, controlling shipment of most exports and imports either by pipeline or truck. Alternative routes through China, Afghanistan, the Caucasus and Iran are problematic and only beginning to develop. But ethnic Russians are leaving the region and, even if it wants to, Moscow cannot rule as before.

Central Asia is now far more in charge of its own destiny. Shop shelves are filling up and people are learning to make economic choices that one diplomat said was 'the beginning of wisdom'. But the people face years of lower living standards. Many have still not yet accepted this, a fact that may yet unseat some of the old Communist leaders.

'Our currency, the som, means a kind of fish in Russian,' said one unhappy Kyrgyz man. 'The som may now be floating, but we are sinking.'

Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Life and Style
tech
Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Helpdesk Analyst

£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Recruitment Genius: Business Development Executive - Nationwide - OTE £65,000

£30000 - £65000 per annum: Recruitment Genius: This small technology business ...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum