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.'

Life and Style
Social media users in Mexico who commented on cartel violence have been killed in the past
techTweets not showing up or loading this morning, users say
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
i100
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
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

Maths Teacher

£110 - £200 per day: Randstad Education Leeds: Secondary Maths Teacher for spe...

Business Analyst - Surrey - Permanent - Up to £50k DOE

£40000 - £50000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***ASP.NET Developer - Cheshire - £35k - Permanent***

£30000 - £35000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***Solutions Architect*** - Brighton - £40k - Permanent

£35000 - £40000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker