Russia’s rouble crisis poses threat to nine countries relying on remittances

Drop in rouble value not only decimating amount sent home by workers from Caucasus and central Asia, but could lead to political unrest suggest  Shaun Walker and Alberto Nardelli in their publication in Guardian.

Russia’s rouble crisis is posing a major threat to countries along its southern fringe, whose economies rely heavily on billions of dollars shipped home every year by their own citizens working within Russia.

The 50% drop in the rouble has not only decimated the value of remittances sent home by workers from the Caucasus and central Asia, but is discouraging migrants from staying in Russia to earn a salary for themselves and their families. According to data projections by the Guardian, based on World Bank figures, nine countries that rely heavily on cash sent home from Russia for their economic buoyancy could collectively lose more than $10bn (£6.6bn) in 2015 because of the weak Russian currency.

“I’ve sacrificed starting a family, I’ve sacrificed any kind of normal life to work here, and now I’m only able to send home a few hundred dollars a month,” said Aziz, who works at a car repair plant in northern Moscow. His regular job and some moonlighting as a cab driver has typically earned him around £600 per month to send home to his parents and sisters, who live in the Fergana valley in Uzbekistan. Now he is lucky to earn half that sum. “I’m starting to think there is not much point in staying. Life is miserable enough here anyway, the only reason to be here was for the money. I think it could be time to go home.”

Aziz is not the only person thinking about leaving. As the economic situation in Russia deteriorates, authorities have also introduced a new harsher system for obtaining work permits for migrant workers. Currently, there are millions of citizens of former Soviet countries working illegally in Russia.

“So far people are not leaving en masse, mainly because they are worried they won’t be able to come back,” says Gavkhar Dzhurayeva, who runs an organisation offering free legal support to migrant workers. “However, lots of people are talking about it, if things don’t improve.”

According to the World Bank, 21% of Armenia’s economy, 12% of Georgia’s, 31.5% of Kyrgyzstan’s, 25% of Moldova’s, 42% of Tajikistan’s, 5.5% of Ukraine’s, 4.5% of Lithuania’s, 2.5% of Azerbaijan’s and 12% of Uzbekistan’s, rely on remittances.

These are some of the highest rates in the world. Of the five countries globally whose GDP is most reliant on these payments, three are former Soviet republics. In most of these cases money from immigrants in Russia comprises a significant portion of these inflows. About 40% of remittances to Armenia, Georgia, Moldova and Ukraine are from Russia, rising to 79% for Kyrgyzstan.

Already, the sharp decline in the rouble has forced currency devaluations in Turkmenistan this month, and speculation that Kazakhstan’s tenge may need a further devaluation against the dollar after a 19% move last February.

The economies of the region are strongly tied together, with Belarus sending more than half of its exports to Russia, and the nascent Eurasian Economic Union supposedly tying together Russia, Belarus and Kazakhstan as a single bloc. Armenia and Kyrgyzstan have also joined. In addition to the plummeting rouble, these countries will also have to deal with a potentially huge shortfall in remittances, which cannot but have an effect on GDP.

In October 2014 the World Bank estimated that remittances for the year to the nine countries mentioned earlier would have totalled $33.3bn by the end of 2014. Of this figure, about $19bn would have been outflows from Russia.

“If oil continues falling and the rouble continues falling, then migrants will begin to return home,” says Daniil Kislov, who runs, a central Asia news portal. “There are 2.4 million Uzbek migrants in Russia, and those are just the official figures. These people and their families are all surviving because of money made in Russia. Essentially Russia has saved Uzbekistan and Tajikistan from revolution, and if all these people return it will cause a social explosion. Not today, but maybe in a year, or two, or five.”



About Ahmed Islamov

I was born and raised in Uzbekistan and lived in that country for about two thirds of my life. I left the country about 14 years ago but sustained tight bonds with my family and friends living there. I know and communicate personally with hundreds of people including blue-, white- or pink-collar workers. I am naturally very attached to and concerned with everything that is going on there.
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