• KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00194 0%
  • TJS/USD = 0.10879 0%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28571 0%
16 December 2025

Cuts to USAID Leave Central Asia Facing Development Challenges

When American President Donald Trump announced a freeze and overhaul of his country’s foreign aid in early 2025, the move sparked concern across Central Asia. For more than three decades, the United States Agency for International Development (USAID) had been a key contributor to development in the region, supporting education, healthcare, agriculture, and environmental protection.

Support for Weaker Economies

USAID’s role was particularly critical in economically vulnerable countries like Kyrgyzstan and Tajikistan. Its sudden withdrawal now leaves local governments scrambling to compensate with limited domestic resources.

The cuts have not been uniform, but the overall impact has been profound. According to the Center for Global Development, Tajikistan and Kyrgyzstan lost 78 percent and 69 percent of their USAID-backed programs, respectively. In Kazakhstan, Turkmenistan, and Uzbekistan, nearly all aid programs were discontinued.

Foreign aid to the region has often reflected shifting geopolitical dynamics. In Uzbekistan, for example, support surged from $6 million to $40 million in 2016 following President Shavkat Mirziyoyev’s rise to power. Kyrgyzstan received $75 million in 2010 amid negotiations over the U.S. military base there. In contrast, aid to Turkmenistan fell to just $2.8 million by 2024.

Limited Time to Adjust

While Kazakhstan’s more robust economy allowed for a gradual reduction in U.S. assistance, American companies remain active in its vital oil sector. Yet the abrupt nature of the broader aid pullback has disrupted numerous projects with little warning. Health and education initiatives were halted, as were efforts to bolster trade and cross-border infrastructure, critical for Uzbekistan and Kazakhstan as they seek to deepen global economic ties.

Environmental initiatives also suffered. With Central Asia especially vulnerable to climate change, USAID had funded resilience-building programs focused on water access and renewable energy. These efforts have largely ceased, raising concerns among farmers and local communities who had come to rely on them.

Civil Society Under Strain

Some governments in the region may quietly welcome the cuts, particularly those wary of foreign-backed NGOs. USAID frequently partnered with local civil society organizations and media outlets, entities that Central Asian authorities often view with suspicion. The loss of U.S. support has left these groups increasingly exposed to state pressure.

Tajikistan offers a telling case. In 2020, USAID partnered with the Aga Khan Foundation during the COVID-19 pandemic. But two years later, following unrest in the country’s Gorno-Badakhshan Autonomous Region, the government launched a crackdown on the foundation. This underscores how some aid programs, especially those linked to civil society, are perceived as threats.

Although USAID did not operate programs directly, its funding empowered local partners. With that backing gone, and less pressure from Washington, several Central Asian governments have tightened their control over independent organizations.

Seeking Alternatives

Replacing USAID’s role will not be easy. The European Union and countries such as France and Germany have long supported development in Central Asia, but their resources are stretched, especially with increased attention and funding directed toward Ukraine. Despite EU pledges of investment via the Global Gateway initiative, support for democracy, civil society, and human rights appears to be deprioritized.

China and Russia continue to provide aid in the region, but their assistance aligns with different values. Their programs rarely promote media freedom, gender equality, or civil society empowerment. While state actors may welcome this model, independent activists often view it with skepticism.

In Uzbekistan, this dynamic has contributed to the emergence of government-organized NGOs, which serve a controlled function in international cooperation. Critics argue this approach weakens efforts to foster an open and resilient civil society.

With USAID largely absent, Central Asia must now navigate a complex development landscape, balancing state control with the aspirations of its people.

New Report Predicts Surge in Islamic Finance Across Central Asia

A new report co-published by the Eurasian Development Bank (EDB), the Islamic Development Bank Institute, and the London Stock Exchange Group forecasts robust growth for Islamic finance in Central Asia. Titled “The Future of Islamic Finance in Central Asia,” the report was unveiled at the 2025 Annual Meetings of the Islamic Development Bank Group in Algiers, Algeria.

The study offers a comprehensive overview of the Islamic finance landscape across Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. While Sharia-compliant financing remains a relatively recent addition to the global financial system, having developed over the past three decades, it is becoming an increasingly significant component in the sustainable development strategies of Central Asian economies. All five governments are reportedly prioritizing the expansion of Islamic finance.

As of early 2024, the region is home to 18 Islamic banks and 14 non-bank financial institutions, including Islamic banking windows. The sector also features takaful (Islamic insurance) operators, microfinance institutions, Ijara (leasing) companies, and emerging Islamic FinTech ventures such as digital banks and wealth management platforms.

Total Islamic finance assets in Central Asia stood at $699 million at the start of 2024. According to the Islamic Finance Development Report 2024, Kazakhstan ranked 19th globally in terms of Islamic finance development, above the global average, and leads the regional market.

Projections in the report anticipate substantial growth. Islamic banking assets in Central Asia are expected to rise to $2.5 billion by 2028 and $6.3 billion by 2033. Kazakhstan is forecasted to remain the regional leader, followed closely by Uzbekistan, buoyed by favorable demographics, economic momentum, and the depth of national banking sectors.

The sukuk (Islamic bond) market is also poised for rapid expansion. Baseline forecasts suggest sukuk issuance could reach $2.05 billion by 2028 and $5.6 billion by 2033.

EDB Chairman Nikolai Podguzov highlighted the bank’s commitment to fostering this growth: “The further development of Islamic finance in Central Asia will expand financial inclusion and connect local businesses to the global Islamic market, contributing to regional economic growth. With the Islamic Development Bank Group’s support, the EDB has initiated the creation of an Islamic Window to finance projects in compliance with Sharia principles.” He added that key investment priorities will include energy, transport, social infrastructure, food security, and industry.

Kazakh Schoolchildren Offered Summer Job Opportunities

Kazakhstan’s Minister of Labor and Social Protection, Svetlana Zhakupova, announced at a recent government meeting that the ministry is prepared to assist nearly 1.4 million schoolchildren aged 14 to 18 in finding summer employment.

Under the country’s Labor Code, minors are permitted to work under certain conditions, including a reduced schedule of no more than 24 hours per week. Importantly, such work must be undertaken outside of school hours.

“To facilitate employment, the following measures will be available to students during the upcoming summer holidays: selection of suitable vacancies through the Electronic Labor Exchange, online training programs, public works initiatives, and career guidance services,” Zhakupova stated.

The Electronic Labor Exchange, accessible via enbek.kz, now includes a dedicated section titled “My Summer Vacation”, which allows teenagers to register, upload their résumés, and search for job opportunities independently. For students under the age of 16, registration and the creation of a personal account must be handled by a parent or legal guardian.

As previously reported by The Times of Central Asia, approximately 1.8 million young people aged 15 to 28 were employed in Kazakhstan in 2024, a 0.6% increase over the previous year.

PepsiCo to Double Investment in Kazakhstan Plant, Triple Production Capacity

PepsiCo has announced plans to double its total investment in the construction of a snack production plant in Kazakhstan’s Almaty region, marking the launch of the project’s second phase. The expansion aims to triple the plant’s production capacity.

The announcement came during a meeting in Astana on May 20 between David Manzini, President of PepsiCo for Russia, Belarus, the Caucasus, and Central Asia, and Alibek Kuantyrov, Kazakhstan’s Deputy Minister of Foreign Affairs.

Construction of the first phase is currently underway with an initial investment of $160 million. Once fully operational, the facility, expected to be the largest snack production plant in Central Asia, will process up to 210,000 tons of potatoes annually and produce 70,000 tons of finished products. It is set to become a central hub in PepsiCo’s regional supply chain, serving both domestic and export markets across Central Asia. Production is scheduled to begin in spring 2026.

Manzini described the initiative as one of PepsiCo’s most significant investments and its first project of this scale in Central Asia. He noted that contracts have already been signed with 15 Kazakh farmers to supply potatoes, underscoring the company’s commitment to local sourcing. PepsiCo aims to transition entirely to locally grown chip-grade potatoes by 2035, actively integrating Kazakh farmers into its supply chain.

He also highlighted the importance of government support: “Launching a greenfield project of this scale in such a short timeframe is only possible with strong support from national and local authorities. Kazakhstan is creating favorable conditions for foreign investors, which enabled our decision to significantly expand our investment and project scope.”

Kazakhstan Invests in Science, But Economic Impact Remains Low

Over the past five years, Kazakhstan has nearly tripled its research and development (R&D) spending, reaching $430 million in 2024. Despite this, science’s contribution to the national economy remains minimal, just 0.16% of GDP. This figure is among the lowest for countries striving toward technological advancement, according to analysts at Ranking.kz.

Almaty: Kazakhstan’s Scientific Hub

Nearly half of last year’s R&D spending was concentrated in Almaty, which accounted for 43.1% of total investment, equivalent to $186 million. Astana followed with 20.4% ($88 million), while other regions lagged significantly. In the Ulytau region, for instance, only $67,000 was allocated to scientific endeavors.

Almaty retains its status as the country’s scientific capital thanks to its concentration of research institutions. Of the 423 organizations engaged in R&D nationwide, 142 are based in the city. Almaty hosts major institutions such as the National Academy of Sciences, the Fesenkov Astrophysical Institute, the Institute of Seismology, and the Kazakh Institute of Oncology.

Human Capital and Scientist Salaries

Kazakhstan’s researchers are the backbone of its scientific sector. In 2024, spending on salaries for scientific personnel rose to $226 million, marking a 32.1% increase. Almaty employed 10,600 of the country’s 27,100 researchers, representing 39.2% of the national total. This figure has grown by 20% over the past five years.

A key metric of scientific engagement is the number of researchers per 10,000 employed persons. In OECD countries, this figure ranges from 40 to 238. In Kazakhstan, it stands at just 23.7. Almaty leads domestically with 83.2 researchers per 10,000 employed, underscoring its pivotal role.

State Dependency and Business Apathy

One of the major challenges facing Kazakh science is its overwhelming dependence on public funding. More than 77% of research financing in Kazakhstan comes from the state; in Almaty, this figure is 87.5%. In contrast, government contributions in developed countries average around 40%.

This imbalance limits commercialization potential, dampens private sector interest, and constrains technological progress. As noted in a national report on science, “knowledge and innovation in Kazakhstan are separated from the economy. The state’s task is to ensure that R&D results are incorporated into the real sector, to create demand for research, and to stimulate private investment in science”.

Alatau: A New Frontier for Scientific Growth

One proposed solution lies in the development of Alatau, a newly emerging scientific and innovation hub. Plans are underway to build a “science city” equipped with facilities for start-ups, technology parks, and manufacturing based on R&D. The area will form part of a special economic zone offering tax incentives and large-scale investment opportunities.

Combining Almaty’s intellectual capital with Alatau’s potential could catalyze the development of a knowledge-based economy and position Kazakhstan competitively in the global technology race.

CSTO to Begin Arms Supplies to the Tajik-Afghan Border in 2026

Beginning in 2026, the Collective Security Treaty Organization (CSTO) will start delivering weapons and military equipment to bolster the alliance’s southern borders, particularly to reinforce the Tajik-Afghan frontier. This development was announced on May 19 by CSTO Secretary General Imangali Tasmagambetov during a meeting of the CSTO Parliamentary Assembly in Bishkek.

Armed Response to Regional Threats

Tasmagambetov highlighted that the initiative stems from the Targeted Inter-State Program (TIP), approved in Astana in November 2024. This program reflects the CSTO’s collective resolve to address security vulnerabilities along its southern periphery.

“The task now is to implement it in full,” he stated. These security issues were previously discussed during an April 2025 meeting in Dushanbe with Tajikistan’s President Emomali Rahmon.

Despite regional stabilization efforts, Afghanistan continues to pose serious risks, including terrorism, arms trafficking, and the narcotics trade. Tasmagambetov emphasized, “The Taliban regime is proving to be a long-term political factor.” He noted that CSTO members, Belarus, Kazakhstan, Kyrgyzstan, and Russia, have intensified diplomatic engagement with Afghanistan to support regional stability.

The CSTO Secretariat will maintain vigilance and enhance coordination to counter emerging threats.

Signs of Regional Progress

In contrast to the ongoing security challenges, Tasmagambetov acknowledged promising developments in Central Asia. He pointed to the March 13 state border agreement between Kyrgyzstan and Tajikistan, as well as the March 31 tripoint agreement involving Kyrgyzstan, Tajikistan, and Uzbekistan. These steps are seen as crucial in easing regional tensions.

Tajik-Afghan Border a Strategic Focus Through 2029

The TIP for strengthening the Tajik-Afghan border is scheduled to be implemented in three stages and will run until 2029. Its goals include reinforcing southern Tajikistan’s military infrastructure and improving the region’s capacity to respond swiftly to cross-border threats.

The program outlines measures for allied coordination, arms deliveries, and enhancements to logistics, communications, and border infrastructure.