Kazakhstan & Central Asia Defence and Security Report Q2 2011

The outlook for the defence sector in all five countries comprising Central Asia remains relatively stable. An antiquated defence sector and lack of investment for new development is the key characteristic across the region.

In Kazakhstan, the Parliament approved plans to hold a referendum regarding the extension of the Nazarbayev presidency until 2020 and to cancel the next two presidential elections. This provides some concerns over the openness of the parliamentary system, particularly in light of the trial against opposition presidential hopeful Zhasaral Quanyshalin on libel charges and the concurrent investigation for tax evasion against other opposition presidential candidate Vladimir Kozlov.

The country however continued to post stellar economic growth, with the IMF stating that Kazakhstan could see growth of 6% by 2012, as long as banks can get rid of the problematic loans that are hindering plans to diversify the economy. The IMF said it expects the tenge to strengthen in 2011, following moves by the government to restore the currency to a managed float. The government's strategy to diversify the oil-dependent economy over the coming years bodes well for long-term growth.

In Kyrgyzstan, senior officials detained nine suspects in November 2010 in connection with suspected Islamist terror campaigns in the country. The suspects were arrested in Bishkek and the southern city of Osh on accusations of planning terrorist acts. The same group was also accused of planning the blast outside the house of former President Bakiyev.

Political leaders in Kyrgyzstan agreed to form a coalition government on November 30 2010. However, parliament rejected the sole candidate for the speaker of the parliament, potentially forcing the parties back to the negotiating table. Should there be fresh elections, this would not only lead to a further protracted period of political jockeying but would also seriously undermine the legitimacy and effectiveness of Kyrgyzstan's democratic project. While presidential elections are set to take place in late 2011, we stress that this will be dependent on a working government emerging in parliament, which for now looks doubtful.

In November 2010, the Tajikistan government declared its campaign against militants in the eastern Rasht district almost complete, with over 20 killed and 30 arrested or surrendered. The government has accused followers of banned Islamic Movement of Uzbekistan (IMU) of bombing police stations in the northern town of Khujand. In response to these terror attacks security along the border with Afghanistan strengthened after Afghan authorities early month warned against possible Taliban incursions.

Turkmenistan continued to see strained relations with Russia in the last few months. No breakthrough was achieved in talks held in October 2010 with visiting Russian President Medvedev to discuss natural gas prices and volumes. Tension was also highlighted with Russia-based telecommunications company Mobile TeleSystems (MTS) filing a lawsuit with an arbitration court after it had its operating license in Turkmenistan suspended for a month. While such tensions are unlikely to pose any security risk in the short term, Russia, as the largest defence supplier in the region continues to have a very direct effect on defence strategy.