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Central Asia and the Caucasus (CAC) have become a major prize in a new complex mix of geopolitical struggles. Ironically, the region黑料社檚 deteriorating economic and security conditions have enhanced rather than diminished its appeal for those sucked into an increasingly confusing battleground that includes a revived Cold War, the US-led War on Terror and the Islamic State黑料社檚 (ISIS) campaign for a global caliphate.

The US, China, Russia, India and Japan are stepping up diplomatic, military and economic efforts to court the region黑料社檚 eight troubled countries that include Kazakhstan, Turkmenistan, Azerbaijan and Uzbekistan that have oil and gas reserves, and Armenia, Georgia, Kyrgyzstan and Tajikistan that do not. ISIS is recruiting Central Asians to extend its terror into the region and beyond, most notably into China. The US and Japan are loosely allied against China and Russia, while India has a foot in each camp, and they are all sworn to fight ISIS. The US 黑料社� backed by its European allies 黑料社� and Russia are fighting a new Cold War, but may have to set aside their differences to stop the greater threat posed by ISIS. The West covets greater economic ties with China, yet wants to check Beijing黑料社檚 global rise, which has Russia黑料社檚 support.

In Central Asia, Russia has roped in Kazakhstan and Kyrgyzstan 黑料社� along with Belarus and Armenia 黑料社� to form the Eurasian Economic Union (EEU), which will support China黑料社檚 plan to revive the old Silk Route under its ambitious 黑料社極ne Belt One Route黑料社� strategy to connect the markets of Asia, the Middle East, North Africa and Europe.

China is deepening its reach into Central Asia with plans for more infrastructure investments, focused particularly on the region黑料社檚 two most hydrocarbon-rich countries 黑料社� Turkmenistan and Kazakhstan 黑料社� to aid its push into the Middle East and Europe.

The world黑料社檚 rush into Central Asia has gained urgency in recent months amid mounting evidence of the region黑料社檚 alarming economic decline that began when oil and gas prices started crashing in mid 2014.

Region黑料社檚 oil importers not benefitting from low prices, says IMF

The IMF stated that the CAC region will continue to reel from the impact of weak oil prices through 2016, with little hope of their economies recovering to the levels before the collapse of the energy markets in mid 2014.

黑料社淎 wave of external shocks 黑料社� primarily falling commodity prices, spillovers from Russia, and movements in major exchange rates 黑料社� continue to weaken growth prospects and heighten financial vulnerabilities in the region,黑料社� the IMF said in its External Shocks Dim Growth Prospects for Caucasus, Central Asia survey.Growth will barely recover in 2016 despite improving trade with Russia and the Eurozone, as well as the short term impact of the wave of currency depreciations recently undertaken by the region黑料社檚 beleaguered governments.

Despite weak energy prices, the CAC黑料社檚 four oil importers will suffer more as they remain largely dependent on worker remittances and trade with its four oil exporters and Russia, said the IMF. Armenia, Georgia, the Kyrgyzstan and Tajikistan will feel the dual impact of Russia黑料社檚 recession and the rouble黑料社檚 collapse.The IMF expects the economies of Georgia and Kyrgyzstan to each grow by 2% in 2015, down sharply from 4.8% and 3.6% respectively in 2014. Armenia黑料社檚 economic growth will fall to 2.5% from 2014黑料社檚 3.4%, while Tajikistan黑料社檚 will plunge by more than half from 6.7% to 3%.

Despite the weak outlook on energy prices, Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan can still rely on revenue from oil and gas exports, and their hoard of past savings.

黑料社淭he region黑料社檚 oil exporters have been able to draw on savings built up when oil prices were higher. In the short term, this has helped them tackle their immediate fiscal challenges, but more needs to be done,黑料社� said the IMF.

The region黑料社檚 largest economy, Kazakhstan, will be its worst performer with growth expected to collapse to just 1.5% in 2015 and 2.4% in 2016. Azerbaijan黑料社檚 economy will expand by 4% in 2015, making it the only one in the region to show year-on-year improvement compared with 2.8% in 2014.

Part 2 coming soon!

Written by Ng Weng Hoong and edited by听

Read the article online at: /special-reports/25032016/the-battle-for-central-asia-part-1/