Sanctions - The Times Of Central Asia

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Inflation

Inflation in Kazakhstan “Eating Away” at Incomes: Authorities Struggle for Answers

Inflation in Kazakhstan is continuing to erode household incomes, driven by the country’s dependence on imports, rising utility tariffs, and increasing tax burdens. While living costs soar, wages remain sluggish, forcing many families to allocate most of their earnings to essentials such as food, medicine, and utilities. Rising Prices, Stagnant Wages As of August, annual inflation had reached 12.2%, and experts warn it could climb even higher by year’s end. The National Bank’s original 2025 inflation target of 5% has proven to be overly optimistic. “This is a negative, sad trend. It shows that not enough measures have been taken. That it was necessary to tighten monetary policy earlier. It was necessary to contain inflation risks,” said Ramazan Dosov, chief analyst at the Association of Financiers of Kazakhstan. The National Bank’s base rate, its primary instrument for controlling inflation, currently stands at 16.5%. Financier Rasul Rysmambetov notes that the rate is unlikely to be lowered in the near future. However, high interest rates also reduce access to loans for businesses, curbing investment. Despite frequent government statements about inflation-control measures, experts argue that artificial price regulation offers only temporary relief. In his September 8 address to the nation, President Kassym-Jomart Tokayev acknowledged the severity of the issue, stating, “Today, the main problem is high inflation, which is eating away at economic indicators and household incomes. There is no ready-made solution to this problem.” Tokayev called for coordinated efforts across government agencies. At the beginning of 2025, Kazakhstan’s average monthly salary was reported at 424,200 KZT (about $800), reflecting a 24% increase over the previous year. However, this figure obscures wide regional disparities. In many areas, typical monthly salaries range between 180,000 and 230,000 KZT ($330-430). Per capita income reached 194,000 KZT ($362), up 17% from early 2023, but not enough to keep pace with inflation. According to kazkredit.kz, average families now spend up to 95% of their income on day-to-day expenses. In 2023, 52% of income went toward food; that figure has risen to more than 54% in 2025. Halyk Finance, cited by inbusiness.kz, reports that more than half of Kazakhstan’s workers earn below the national average. Salary data reveals stark income inequalities across sectors, with higher wages in mining, finance, and telecommunications, and significantly lower wages in agriculture, healthcare, and public administration. Analyst Arslan Aronov notes that although nominal wages increased by 11.3% in the second quarter of 2025 compared to the same period in 2024, real wage growth was effectively zero due to inflation. Public sentiment reflects the strain. Economists at KZTnomika reported a slight easing of inflation expectations in August 2025, but overall confidence in price stability remains low. Eighty-two percent of survey respondents reported rising food costs, with meat and dairy products leading the list. Among non-food items, medicines, clothing, and cleaning products were most frequently cited. For paid services, rising costs for housing, internet, mobile communication, and healthcare were prominent concerns. Background and Analysis Kazakhstan’s struggle with inflation is rooted in both external shocks and structural...

Russia's War

Central Asians in Putin’s War: Fighting for Ukraine, Forced for Russia

As the war in Ukraine continues to drag on, fighters from across Central Asia have found themselves on both sides of the frontlines. In Kyiv, Kazakh national Zhasulan Duysembin has traded his past life as a sales agent for a rifle, sporting a tattoo of Kazakhstan’s flag on his back as he battles to defend his adopted home. He now fights, he says, to protect his children and believes that “Russia will not stop in Ukraine, it will go further. We must make every effort to ensure that our Kazakhstan does not suffer.” Alan Zhangozha, an ethnic Kazakh who grew up in Kyiv and now serves as a public relations officer in the Ukrainian Army, echoes this sentiment. “Ukraine’s victory will also be a victory for my Motherland,” he told The Diplomat. But as the war drags on, in Kazakhstan, families mourn men like 22-year-old Kiril Nysanbaev - a labor migrant in Russia coerced into signing up for the war who only came home in a coffin. His sister recalls how her brother told her that Russian officers beat and forced him to enlist while he was detained on dubious charges in Chelyabinsk. Nysanbaev was killed in Ukraine’s Donetsk region in March 2024, news that only reached his family three months later. Citizens of all five Central Asian countries have been pulled into the conflict since Russia’s invasion in 2022. Some have volunteered to fight for Ukraine, driven by personal ties or ideals, while others, mostly labor migrants, have been recruited, enticed, or pressured into fighting for Russia. These parallel currents reflect the complex impact of the war on a region that remains officially neutral but was historically deeply entwined with Moscow. While a handful of Central Asians now wear the blue-and-yellow insignia in Ukraine’s defense, far more have ended up in Russia's ranks, often as expendable foot soldiers. From Bishkek to Bucha In November 2022, a Kyrgyz former labor migrant, Almaz Kudabek uulu, announced the creation of the Turan Battalion, a volunteer unit of Turkic-speaking fighters formed to assist Ukraine. “Kyrgyzstan is my homeland; I will always love it. But Ukraine is my home now; I am fighting for Ukraine,” he told reporters. The battalion, joined by volunteers from Kyrgyzstan, Kazakhstan, Azerbaijan, and elsewhere, operates as a semi-autonomous unit supported by private donations and allied Ukrainian brigades. Back in Kyrgyzstan, however, the authorities opened a criminal case against Kudabek, punishable by up to eight years in prison, and local media that covered his story faced pressure. Others have supported Ukraine in tangible, humanitarian ways. Early in the war, members of Ukraine’s Kazakh diaspora erected traditional yurts in cities like Bucha and Kyiv as heated shelters dubbed “Yurts of Invincibility.” These spaces provided food, tea, and electricity during blackouts, a gesture of solidarity that irritated Moscow but drew only a muted response from Kazakhstan’s government. Moscow’s Migrant Recruits: Coercion and Casualties Far greater numbers of Central Asians have ended up fighting for Russia, which hosts millions of migrant workers from...

Sanctions

Kyrgyz President Denounces “Politicized” Sanctions on Banks

President Sadyr Japarov has sharply criticized the United States and United Kingdom for imposing what he has called unfounded sanctions on Kyrgyz financial institutions, urging Western leaders to stop “politicizing the economy.” In an interview with state news agency Kabar, Japarov defended two state-owned banks – Keremet Bank and Capital Bank – against allegations that they helped Russia skirt international sanctions, insisting that no evidence of violations has been presented. Neither the UK nor the U.S. has provided a single fact of violation… such facts simply do not exist,” Japarov said, dismissing the sanctions as politically motivated. UK and U.S. Target Kyrgyz Banks for Russia Sanctions Evasion Japarov’s comments come after a new wave of Western measures targeting Kyrgyzstan’s banking and crypto sectors for purported links to Russian sanctions evasion. On August 20, London sanctioned Kyrgyzstan-based Capital Bank – along with its director, Kantemir Chalbayev – alleging the bank was being used by Moscow to pay for military goods as part of a “convoluted scheme” to evade sanctions. The British authorities also blacklisted two Kyrgyz cryptocurrency exchanges - Grinex and Meer - that ran the infrastructure for a new rouble-backed crypto coin called A7A5, which moved an estimated $9.3 billion in just four months and was “intentionally created to evade sanctions.” The UK’s sanctions minister, Stephen Doughty, warned that “laundering transactions through dodgy crypto networks” would not soften the blow of Western sanctions. These steps followed a U.S. Treasury designation in January 2025 against Keremet Bank, a mid-sized Kyrgyz lender, for creating a hub for trade payments that helped Moscow evade restrictions. U.S. officials allege that Keremet Bank facilitated cross-border transactions for Russia’s sanctioned Promsvyazbank and even sold a controlling stake to a firm linked to a pro-Kremlin oligarch – moves Washington viewed as part of a secret channel to re-export dual-use goods and finance Russia’s defense sector. Those actions marked one of the first instances of Western “secondary sanctions” against Central Asian entities – penalties on third-country institutions accused of abetting a sanctioned nation’s activities. Kyrgyz Government’s Defensive Measures President Japarov contends that Kyrgyzstan has been proactive in compliance and that the West’s suspicions are misplaced. He noted that 21 banks operate in Kyrgyzstan, and authorities deliberately limited all Russian rouble transactions to just two state-controlled banks to shield the rest of the financial sector from any inadvertent sanctions breach. “To prevent any of them from falling under sanctions, we decided that only the state-owned Keremet Bank would work with the Russian rouble… All operations are under state control, and the income goes directly to the state treasury,” Japarov stated. Earlier this year, the government expanded this approach by channeling rouble remittances and payments through Capital Bank, which was brought under 100% state ownership in April. The National Bank of Kyrgyzstan ordered that all cross-border transfers in roubles – including the billions of roubles sent home by Kyrgyz migrant workers each day – be processed exclusively via Capital Bank. Kyrgyz officials argued this centralization was meant to “ensure transparency of...

Sanctions

Britain Imposes Sanctions on Kyrgyzstan’s Capital Bank, Other Entities

Britain has announced sanctions against Kyrgyzstan-based Capital Bank and its director, Kantemir Chalbayev, as part of a growing crackdown on financial networks allegedly being used by Russia to get around international restrictions and fund the war in Ukraine. The bank has previously denied circumventing such restrictions. “With sanctions continuing to bite, Russia has turned to the Kyrgyz financial sector to channel money through opaque financial networks, including through the use of cryptocurrencies. These networks have created a convoluted scheme to evade sanctions imposed by the UK and its partners,” the Foreign Office said on Wednesday. So-called secondary sanctions also targeted the Grinex and Meer cryptocurrency exchanges, as well as the infrastructure behind the new rouble-backed cryptocurrency token A7A5, which has moved $9.3 billion on a dedicated crypto exchange in just four months, according to the British government. The new round of British sanctions was also applied to the Kyrgyzstani firm Old Vector. The firm collaborated with Garantex, which had created Grinex to evade sanctions, and others in the development of the A7A5 token, according to an Aug. 14 statement by the U.S. Treasury Department that imposed similar measures. In May, state-owned Capital Bank said it was complying with international sanctions regulations. “Since 2023, as part of its risk management policy, Capital Bank has ceased all forms of financial interaction with individuals and legal entities subject to sanctions imposed by the United States, the European Union, and the United Kingdom,” the bank said. “This decision was made to protect the financial system of the Kyrgyz Republic from the potential impact of secondary sanctions and to ensure the security of operations for both resident and non-resident clients.” The Foreign Office statement comes as U.S. President Trump tries to end the war in Ukraine through dialogue, meeting last week with Russian President Vladimir Putin and this week with Ukrainian President Volodymyr Zelenskyy and European leaders.

EAEU

Has Kyrgyzstan Benefited From Its Membership of the EAEU?

On the sunlit shores of Lake Issyk-Kul this August, Kyrgyzstan played host to leaders from across the Eurasian Economic Union (EAEU). On August 14-15, officials from Armenia, Belarus, Kazakhstan, and Russia descended on the resort town of Cholpon-Ata for a meeting of the Eurasian Intergovernmental Council, accompanied by ceremonies to mark a decade since Kyrgyzstan joined the Moscow-led economic bloc. The Kyrgyz government issued a commemorative stamp to celebrate the anniversary, while the guest of honor, Russian Prime Minister Mikhail Mishustin, arrived with pledges of deeper integration. Rosatom, Moscow’s nuclear agency, signed agreements to build Kyrgyzstan’s first wind farm near Issyk-Kul, while the union’s five governments also agreed to recognize each other’s digital documents, and talks continued on a long-awaited gas union. Mishustin also caused a stir on social media by addressing the Kyrgyz honor guard in their own language. The words “Salam Asker” (hello, soldiers) were enough to draw appreciation from a Kyrgyz society unused to hearing Russian politicians use any language but Russian in its former colonies. The flattery was all part of the choreography: in return, Kyrgyz government officials and state media fell in line to proclaim the benefits of EAEU membership. But have these benefits been worth it? Or has the EAEU merely tethered Bishkek to a partner whose grip is more suffocating than supportive? [caption id="attachment_35121" align="aligncenter" width="1600"] The Conference Hall at Cholpon-Ata, where the council meeting took place; image: Joe Luc Barnes[/caption] The Case for the Union Kyrgyz officials are keen to emphasize the upsides. In an interview with state mouthpiece Slovo.kg, former economic minister Arzybek Kozhoshev said that joining the bloc had eased conditions for Kyrgyz migrant laborers in Russia and Kazakhstan. “With the accession of the Kyrgyz Republic to the EAEU, the conditions of stay and work of citizens of the Kyrgyz Republic in other EAEU countries have changed significantly,” Kozhoshev said, highlighting simplified entry, no requirement to take a Russian language exam, equal access to health insurance, and even the right to draw pensions on par with local workers. For a country where remittances have accounted for around 25% GDP over the past decade, these measures are not insignificant. Kyrgyz drivers, once barred from operating commercial vehicles in Russia, now enjoy full rights. Digital labor platforms like Work Without Borders make it easier to find jobs, and migrant workers in Russia pay the same flat 13% tax as local workers. In short, for the hundreds of thousands of Kyrgyz toiling in Moscow, Novosibirsk, and Almaty, the EAEU has meant fewer hurdles and more predictability. It’s worth bearing in mind that other potential labor destinations, such as Korea, the United States, or the European Union, are not handing out hundreds of thousands of visas to Kyrgyz citizens every year. Kremlin officials have also stressed that Kyrgyzstan pays lower tariffs on Russian gas – only $150 per 1,000 cubic meters, due to its EAEU membership. That said, given Russia’s current oversupply of gas with the closure of the European market, this is not...

Peace Talks

Trump-Putin Alaska Summit Ends Without Ceasefire

U.S. President Donald Trump and Russian President Vladimir Putin met on Friday in Alaska for their first face-to-face summit since the start of the Ukraine war. Despite optimism from the U.S. side, the talks ended without an agreement on a ceasefire. The leaders met for nearly three hours at Joint Base Elmendorf-Richardson in Anchorage, following a red-carpet welcome and military flyover. Only a handful of aides joined the private session. Afterward, Trump called the exchange “extremely productive” and said “some headway” had been made, but stressed that “there’s no deal until there’s a deal.” Putin described “progress” and “agreements,” though neither leader offered specifics, and neither took questions. No Ceasefire, Continued Dialogue Ending Russia’s invasion of Ukraine dominated the agenda. Trump had vowed to bring the war to a close quickly, but the Alaska talks produced no ceasefire. Ukrainian officials noted that Putin appeared to have “bought more time” as fighting continues. Air raid sirens sounded in Ukraine, and Russian border regions came under drone attack even as the summit unfolded. Having previously said on the way to his summit with Russian President Vladimir Putin that he wouldn’t “be happy if I walk away without some form of a ceasefire,” U.S. President Donald Trump walked away from the talks with no agreement in place, instead urging Ukrainian President Volodymyr Zelenskyy to “make a deal.” “I believe we had a very productive meeting,” Trump stated. “There were many, many points that we agreed on… I will call up NATO… I’ll of course call up President Zelenskyy and tell him about today’s meeting… We really made some great progress… I’ve always had a fantastic relationship with President Putin – with Vladimir…We were interfered with by the ‘Russia, Russia, Russia’ hoax,” he added. “Again, Mr. President, I’d like to thank you very much, and we’ll speak to you very soon and probably see you again very soon,” Trump said. “Thank you very much, Vladimir.” “Next time in Moscow,” Putin replied, chuckling, with a rare use of English, before Trump abruptly ended his press event, refusing to take any questions. Both leaders said the dialogue would continue. Trump claimed he and Putin agreed on “most things” and floated the idea of joining a future meeting between Putin and Ukrainian President Volodymyr Zelenskyy. Putin, while not referencing direct talks with Kyiv, urged Ukraine and its allies not to “derail” what he called constructive progress. Signals from Washington and Moscow Trump emphasized his desire to stop the fighting, stating, “I want the killing to stop,” and suggested he believed Putin wanted peace as well. He also said he would hold off on imposing new “severe” measures on Russia, a shift from earlier rhetoric. Trump also revealed that he would pause plans to levy tariffs on Chinese imports over Beijing’s purchases of Russian oil, saying progress in Alaska made that step unnecessary for now. Putin, meanwhile, repeated his long-standing demands that NATO expansion and other “root causes” be addressed before peace can be achieved. He warned that...