The Steppe #15: Top Dogs, an IT Frontier, and Brussels On the Silk Road
Montfort Eurasia's newsletter covering Central Asia and the Caucasus
Hello, and welcome back to The Steppe, your newsletter bringing you the latest business- and investor-relevant happenings in the South Caucasus and Central Asia, brought to you by Montfort Eurasia. In this edition, we look at these key developments:
Turkmenistan’s Paw Patrol
Kazakhstan’s Wired Wanderers
Uzbekistan’s Economic Outlook for 2025
Kyrgyzstan’s $3 Billion Bet
Central Asia Rising: The EU’s Strategic Pivot in Action
Please don’t hesitate to contact us for feedback and tips at eurasia@montfort.london
Canine Officers in Turkmenistan’s Border Security Push
Under the vast, open skies of Turkmenistan’s Lebap region, trainers guided eager dogs through a series of drills in an intensive five-day course that began on February 17. Bringing together 24 canine officers, veterinarians, and dog breeders, this marked the final instalment of a five-part Training-of-Trainers (ToT) series conducted across Turkmenistan’s regions, organized by the OSCE's Centre in Ashgabat.
More than just a skill-building exercise, this OSCE-organized initiative was part of a wider effort to improve Turkmenistan’s border management as cross-border trade continues to grow. With EU support, the country is building stronger defences against terrorism and trafficking.
Turkmenistan's transport sector showed exceptional growth in 2024, and the government continues its efforts to improve the capacity of law enforcement agencies and cooperate with international organizations to prevent violent extremism and counter international terrorism.
The canine training program is just one of many aimed at improving the country's border management. Specialized courses in maritime operations, alpine skills, and medical response have also been introduced, extending to Afghan participants and addressing trade security concerns.
Beyond these initiatives, the OSCE’s Centre in Ashgabat provides targeted training for security personnel in key areas such as surveillance, safety protocols, anti-drug trafficking measures, and professional conduct standards. In a related effort, UNODC recently conducted a workshop in Ashgabat aimed at bolstering Turkmenistan’s border security capabilities. That two-day event brought together officials from national agencies—including the transport, interior, and justice ministries, as well as intelligence agencies—to enhance skills in handling border security data and information sharing.
Visas and Ventures: Kazakhstan’s Plan to Attract Digital Nomads
Kazakhstan is launching ambitious Digital Nomad and Residence Visas to attract global tech talent and position itself as the region’s next digital frontier. By easing pathways for international professionals, IT specialists, and entrepreneurs, the country aims to build an innovation-driven economy and deepen its integration with global markets.
This strategy is particularly appealing to skilled workers who may find Western Europe’s visa restrictions or high costs prohibitive. It also allows Kazakhstan to absorb high-skilled talent from Russia, where over 930,000 Russians have relocated since the Ukraine war, taking advantage of Kazakhstan’s visa-free entry and Russian-speaking environment.
However, the success of these initiatives will depend on tangible improvements in business conditions, digital infrastructure, and long-term stability. Kazakhstan has made strides in expanding high-speed internet access — ranking 49th globally in mobile speed and 83rd in fixed broadband, close to the likes of Hong Kong, Italy and Australia — while investing in smart cities and IT education. Almaty and Astana have growing startup ecosystems, supported by tech parks and co-working spaces like Astana Hub.
The government is a major driver of these changes. As Central Asia's largest oil producer, Kazakhstan under President Kassym-Jomart Tokayev has pursued economic diversification, pledging to reduce state involvement in the economy and attract $150 billion in foreign investment by 2029. This month, the government also announced plans to launch a venture capital fund of funds by 2025, aiming to secure $1 billion in private investment for regional startups and advanced technologies.
"We want startups, including fintech, medtech, and AI, to come to Kazakhstan," Minister of Digital Development Zhaslan Madiyev told Bloomberg.
Yet challenges remain, including insufficient technological infrastructure and regulatory frameworks, bureaucracy and a small pool of VC investors. The country has experienced fraud incidents and presents some regional cybersecurity and data protection concerns
Is Kazakhstan emerging as an innovation hub? Opinions are mixed. Some entrepreneurs see potential in its low costs, improving infrastructure, and strategic location. Clearly, the likes of fintech Kaspi, which is listed on Nasdaq, were able to succeed. Others remain cautious due to regulatory uncertainty and a reliance on government-driven initiatives. While not yet a full-fledged innovation hub, Kazakhstan is steadily positioning itself as a serious player in Central Asia’s tech scene.
Trade, Tariffs, and Transformation: Uzbekistan’s Challenges and Opportunities in 2025
The Central Bank of Uzbekistan has released a report outlining economic conditions and monetary policy, highlighting key uncertainties and risks for macroeconomic development in 2025.
The report projects that GDP growth will remain strong, with economic activity expected to drive a 6% expansion by year-end. Increased private investment will play a key role, boosting the supply of goods and services. The recent strengthening of the real effective exchange rate – a measure of currency stability against those of key trading partners - in late 2024 is seen as temporary, influenced by the depreciation of some trading partners' currencies and Uzbekistan’s relatively higher inflation rate. However, as inflation eases in the second half of 2025, the exchange rate is expected to return to its medium-term trend.
Independent analysts offer additional perspectives on both the risks and opportunities. Saodat Umarova, Head of the Socioeconomic Development Department at the Centre for Progressive Reforms, emphasizes that legislative reforms and Uzbekistan's WTO accession will fundamentally reshape the country's economic landscape.
"As reforms progress, previously state-supported, non-competitive industries will likely face bankruptcy, while import-competing industries will need to restructure to align with global prices and demand. Meanwhile, competitive producers will gain broader access to export markets,"
Umarova explains. However, additional measures are necessary to help local industries adapt and thrive.
"To buffer against external shocks, Uzbekistan needs to diversify both its export markets and products, with greater emphasis on high-value-added goods. Building economic resilience through trade diversification will help protect against external market fluctuations"
She also notes that the threats to supply chains identified in the Central Bank's report—stemming from rising global protectionism and trade restrictions—can be mitigated through regional trade initiatives.
“Given Uzbekistan’s double-landlocked status, regional trade is strategically vital. The country has prioritized economic cooperation within the region, as demonstrated by the establishment of free economic zones near border areas, such as the Airitom zone near Afghanistan. Additionally, Uzbekistan is expanding industrial cooperation through joint ventures, including Artel Avesto Electronics (household appliances) and Talco-Krantas (construction and municipal transport) in Tajikistan, Chevrolet Onix automobile production in Kostanay, Kazakhstan, household appliance manufacturing in Sarani, Kazakhstan, textile and spinning mills in Shymkent and the Turkistan region of Kazakhstan, autoclaved aerated concrete production in Angren, Uzbekistan, and others.”
She emphasizes that expanding industrial cooperation and developing new transport corridors will accelerate economic growth, enhance investment attractiveness, and strengthen regional economic potential. Umarova concludes:
“These measures will not only bolster Uzbekistan’s economic prospects but also contribute to the broader development of Central Asia’s economic landscape.”
New Tracks, New Future: Kyrgyzstan’s Railway Expansion
Kyrgyzstan has taken a major step in modernizing its railway infrastructure by signing a $3 billion public-private partnership (PPP) agreement for the "Trans-Eurasian Route." The initiative aims to strengthen the country’s transportation links, improve trade logistics, and boost economic growth.
The agreement was signed by the National Investment Agency of the Kyrgyz Republic, the state-owned enterprise Kyrgyz Temir Zholu, and the All American Rail Group Global Infrastructure Partner LLC (AARG).
According to Talantbek Imanov, Director of the National Investment Agency, the project marks a key milestone in Kyrgyzstan’s infrastructure development.
"This investment will not only create new jobs but also significantly enhance the country’s transport network, ensuring long-term economic benefits for the republic," Imanov said in a government press release.
At the heart of the project is the construction of the Makmal–Karakol railway route, which will improve domestic transportation and strengthen trade connections with neighboring countries. The railway is expected to enhance the competitiveness of Kyrgyzstan’s economy by facilitating smoother logistics and regional integration.
The Cabinet of Ministers recently approved the project, endorsing it as a strategic initiative under a “regulatory sandbox” framework, which allows for flexible policy implementation to encourage investment and innovation.
The All American Rail Group Global Infrastructure Partner LLC (AARG) is a U.S.-based international consortium specializing in railway infrastructure development. Established in 2022, AARG brings together industry leaders in railway design, engineering, construction, and management. It has completed over 3,000 railway projects worldwide and operates in North America, Europe, Africa, and Australia.
The National Investment Agency has been tasked with finalizing the PPP agreement with AARG. Once signed, both public and private partners will engage in detailed project planning, including financial structuring and operational strategies.
Oversight of the project’s implementation has been assigned to the Presidential Administration and the Cabinet of Ministers, ensuring its alignment with Kyrgyzstan’s broader economic and infrastructure goals.
Bridging East and West: the EU and Central Asia’s New Era
The European Union is set to hold its first-ever EU-Central Asia summit on April 3-4, marking a significant milestone in strengthening relations between the two regions. European Council President António Costa and European Commission President Ursula von der Leyen will travel to Uzbekistan for the high-profile gathering, hosted by Uzbek President Shavkat Mirziyoyev. The summit will bring together the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan.
The summit comes at a critical juncture, as geopolitical shifts have heightened the strategic relevance of Central Asia for the EU. With the world becoming increasingly fragmented, European leaders view stronger partnerships as essential for fostering global stability, economic cooperation, and sustainable development.
During the summit, the EU will reaffirm its commitment to expanding cooperation with Central Asian nations in several key areas, including:
Transport and digital connectivity: Improving regional infrastructure and digital networks to improve economic integration.
Critical raw materials: Strengthening partnerships to secure essential resources for technology and industrial development.
Economic and security cooperation: Addressing shared challenges such as trade, counterterrorism, and border security.
Energy transition: Supporting sustainable energy initiatives and promoting renewable energy adoption in the region.
These initiatives are not solely driven by the EU. In recent years, high-level dialogues and strategic initiatives have been led by Central Asian leaders themselves, adopting a more proactive approach in their relationship with the EU and showing a greater willingness to diversify their foreign policies.
The EU remains a key economic partner for Central Asia, ranking as the region’s second-largest trading partner and top investor. Over 40% of foreign investment in Central Asia originates from the EU. To further cement these economic ties, the EU has been negotiating Enhanced Partnership and Cooperation Agreements (EPCAs) with Central Asian countries, with Turkmenistan being the only exception.
Stat of the Month
300,000+: Central Asia is on the move — literally! According to the Migration Data Portal, in 2021, over 300,000 students from the region packed their bags and set off to study abroad, with Uzbekistan leading the way. Meanwhile, Kyrgyzstan became the region’s favored education hub, welcoming tens of thousands of international students. So, where are Central Asia’s brightest minds heading, and who’s coming to study in the region? Let’s dive in!
And where are Central Asian students jetting off to? According to UNESCO, the most popular destinations for Central Asian students were Türkiye, Kyrgyzstan, Republic of Korea, Ukraine and Belarus. Meanwhile, students from India, Russia, Turkmenistan, Pakistan, and Türkiye were heading the other way, making Central Asia their classroom.
What We’re Reading
Rewind and Recycle, Christian Ginosyan, EVN Report