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A consequence of the war on Ukraine: Economic strife in Kyrgyzstan


 

Southern Kyrgyzstan (photo: Erica Manning)

 

Kyrgyzstan is experiencing immediate economic effects from Russian's invasion of Ukraine, a consequence of a world-wide response to economically isolate Russia. 

 

Whenever we talk about the founding of June Cashmere, we recount the history that led to Kyrgyzstan's need for economic development. Like Ukraine, Kyrgyzstan was once part of the Soviet Union. It was part of a thriving textile-producing region in which shepherds belonged to cooperatives that directly sold their fiber to spinning mills with thousands of employees. The mills in turn had a vast market in the Soviet Union to which they could sell their goods.

 

Archival photo of textile mill in Kyrgyzstan, mid-20th Century

 

Also like Ukraine, when the Soviet Union collapsed in 1991, Kyrgyzstan became an independent country. Mountainous and land-locked without a larger market to sell goods, their textile system collapsed almost immediately. Mills were privatized and equipment sold off, closing the mills and leaving shepherds without a buyer for their fiber.

 

Mills today that lay in ruin. (Photos: Erica Manning)

 

It is this history that has led entities such as the World Bank to search for ways to help Kyrgyzstan rebuild economically, often looking to its textile traditions for inspiration. And it is this ongoing need for economic independence that led our founder, Sy Belohlavek, to attend a talk by researcher Carol Kerven and cashmere specialist Sabyr Toigonbaev on the potential of cashmere  production in Kyrgyzstan, ultimately resulting in the founding of June Cashmere. (Note: watch for our story on Carol Kerven and Sabyr Toigonbaev's research and work with native goats coming soon.)

 

Fast forward to the events of the last week in Ukraine that in turn, have brought more economic suffering to the people of Kyrgyzstan.

 

Kyrgyzstan (and other former Soviet republics in Central Asia) still have close economic ties to Russia for a few reasons. First, the Kyrgyz currency som is closely tied to the ruble for value. As the ruble tumbled due to world efforts to isolate Russia economically, so did the som. When money devalues, so do personal savings and income.

 

Second, an estimated 1 million Kyrgyz workers leave their country to earn money to send back to their families in Kyrgyzstan. Many of these workers go to Russia. This transfer of money - called remittances - accounted for over 2 billion dollars of money coming into the country in 2021. As Russia becomes more economically isolated, the trickle-down effect is the potential loss of jobs for Kyrgyz workers, resulting in families back in Kyrgyzstan with little to no income. More immediately, it results in less income because of the daily value fluctuation of the som as it relates to the ruble.

 

Kyrgyzstan also is highly dependent on Russia for trade; fuel, gas, medicine, flour, meat are just some of the items that will become difficult to get and whose prices likely will inflate.

 

This is a bleak picture for a country already trying to rebuild economically. The picture makes is even more clear why the work of people like Carol Kerven and Sabyr Toigonbaev (discoverers and breeders of the native cashmere-producing goat in Kyrgyzstan) and our founder Sy Belohlavek (through the establishment of June Cashmere and now a de-hairing facility in Kyrgyzstan) are important. Their work centers on preservation -- of the lifestyle of people and the native goat; of  building an infrastructure toward economic development in Kyrgyzstan so that people can stay in their country and gain autonomy economically.

 

Resources

https://www.rferl.org/a/russia-ukraine-kyrgyzstan-sanctions-economies-central-asia/31718918.html

 

https://www.rferl.org/a/central-asia-migrants-ruble-impact/31730968.html

 



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