Leading Western countries as investment and development assistance providers in Central Asia: Logic of risk perception and mitigation

• Published in: Vestnik Moskovskogo universiteta. Seriâ 25. Meždunarodnye otnošeniâ i mirovaâ politika (Online) Vol. 17; no. 2; pp. 177 - 207
• Main Author: Mendagaziev, A. E.
• Format: Journal Article
• Language: English
• Published: Moscow University Press 01.08.2025
• Subjects: central asia; china; foreign direct investment; foreign economic activities; germany; international development assistance; official development assistance; political risks; russia; usa
• ISSN: 2076-7404
• DOI: 10.48015/2076-7404-2025-17-2-177-207

In recent years, many regions of the world have witnessed an increasing political and economic rivalry between Western countries and Russia and China.  Central Asia is no exception, where investment flows and international development assistance (IDA) programs are subject to interstate competition and political instrumentalization. This article examines how key Western donors perceive the nature and scale of political investment risks in the region and what tools they use to mitigate them. The first section of the article shows how the global trend toward strengthening the positions of non-Western countries in the structure of financial flows manifests itself at the regional level. The author concludes that this shift in balance toward non-Western states in Central Asia is quite evident, forcing Western countries to adapt their regional policies to the changing landscape of political risks. The second section examines how the policy documents of the leading Western countries, i.e., the United States, Germany, and Great Britain, address the issue of countering the growing influence of Russia and China in Central Asia. The article shows that they all advance the idea of conditioning the provision of development assistance to the implementation of measures designed to reduce the influence of China and Russia on regional affairs. The third section specifies the practical steps taken by the Western states, including those aimed at mitigating political risks for their national businesses in Central Asia. The author shows that, despite certain differences, the main mitigation burden in all three cases lies on the ‘classical’ IDA instruments. The latter include programs aimed at strengthening legal and institutional systems, combating corruption, improvement of the business climate, and transformation of the regional energy infrastructure in order to close it on the Western countries. According to the author, whereas such IDA policies of the Western donors, aimed at mitigating the perceived risks posed to them by the Russian Federation and China, have mixed results, they significantly imperil the foreign economic activities of Chinese and Russian companies in Central Asia. However, the analysis of such risks requires separate applied research.