Turan Research Center

In 2025, Kyrgyzstan's licensed cryptocurrency market generated more than $30 billion in turnover — over twice the country's GDP. At the same time, the government began issuing its own sovereign stablecoins: the gold-backed USDKG and the som-pegged KGST.

This paradox — a small Central Asian economy whose crypto activity vastly outpaces its formal GDP, while the state itself becomes a direct player in digital assets — makes Kyrgyzstan one of the most intriguing crypto experiments in the world today.

The global financial system is fragmenting. Western sanctions, de-dollarization, and the search for alternative payment rails have pushed emerging economies toward new tools for cross-border transfers, currency hedging, and capital access. Central Asia has emerged as one of Eurasia's most dynamic cryptocurrency regions, and Kyrgyzstan stands out even among its neighbors.

The market is predominantly practical rather than speculative. Most operations involve quick, low-cost conversions between fiat (traditional money such as the Kyrgyz som or US dollar) and stablecoins — digital assets engineered to hold a stable value, typically pegged to the dollar — to facilitate remittances from labor migrants. What distinguishes the Kyrgyz model is the active role of the state. Following 2025 amendments to the Law on Virtual Assets, authorities legalized state mining, the creation of a national crypto reserve, and stricter requirements for stablecoins. The introduction of USDKG and KGST signals Bishkek's ambition to harness blockchain not as a regulatory object, but as an instrument of national financial policy.

Located at the heart of the Eurasian corridor, Kyrgyzstan sits at the intersection of Russian, Chinese, Turkish, and Western interests. Its crypto activity can serve as both a bridge for regional integration and a channel for circumventing traditional financial restrictions. This article places Kyrgyzstan's crypto market in the wider Central Asian landscape, analyzes its scale, structure, and state strategy, and evaluates the emerging geopolitical risks and opportunities.

The Cryptocurrency Landscape in Central Asia

Central Asia — Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan — is emerging as a notable crypto region globally. The drivers are structural: heavy dependence on remittances (30–50 percent of GDP in some countries), chronic local-currency volatility, and access to relatively cheap electricity for mining.

Chainalysis' Global Crypto Adoption Index 2025 places Kyrgyzstan 19th worldwide, the strongest performance in the region, driven by massive transaction volumes and active state involvement. Uzbekistan follows with solid grassroots adoption, Kazakhstan excels as a mining and infrastructure hub, while Tajikistan and Turkmenistan lag.

National models diverge sharply. Kazakhstan has built its strategy around industrial-scale mining and the Astana International Financial Centre (AIFC), temporarily capturing a significant share of global Bitcoin hash rate after China's 2021 mining ban; regulation emphasizes "clean" mining and mandatory sales through licensed platforms. Uzbekistan leads the region in the share of population holding crypto assets (around 1.5 percent, or 512,000 people), with licensed providers processing over $1 billion in transactions under a controlled legalization regime that includes a regulatory sandbox for stablecoins and tokenized securities. Kyrgyzstan runs the region's most voluminous exchange-oriented market, with over 200 licensed operators and turnover that vastly outpaces its neighbors relative to economy size, and the government is now experimenting with national stablecoins. Tajikistan and Turkmenistan remain at earlier stages — Dushanbe has only recently established a department for digital assets, while Turkmenistan's Law on Virtual Assets took effect in 2026 under tight state control.

A common regional trend is the rising share of stablecoins — up an estimated 52 percent in 2025 — used as efficient tools for cross-border payments. Governments increasingly opt for controlled integration of blockchain, combining licensing with the development of national digital instruments. Within this landscape, Kyrgyzstan occupies a distinctive niche: a market volume that dwarfs the national economy, paired with state initiatives — USDKG, KGST, and a planned national crypto reserve — that make the country a potential testbed for the region.

The Scale and Structure of Kyrgyzstan’s Crypto Market

The growth has been explosive. In 2025, licensed Virtual Asset Service Providers (VASPs) recorded total turnover of 2.73 trillion soms, roughly $30–31 billion at average exchange rates — a nearly threefold increase over 2024 and two to three times the country's GDP of approximately $14 billion. The Financial Market Regulation and Supervision Service logged more than 2.12 million transactions over the year.

The structure is as striking as the scale. Simple exchange operations dominate, not sophisticated trading. Crypto exchange points (obmenniki) accounted for 2.58 trillion soms ($29.5 billion) — more than 94 percent of total volume — while full-fledged exchanges handled just 157 billion soms ($1.8 billion) , under 6 percent. Average transaction size reinforces the divide: around 1.23 million soms ($14,000) at exchange points, and substantially larger sums on formal exchanges.

This exchange-heavy profile reflects the market's core function. The bulk of activity involves converting between local fiat and stablecoins — primarily USDT — to facilitate remittances, hedge against som volatility, or enable faster and cheaper cross-border payments. For labor migrants' families and small businesses, crypto serves as a digital bridge to hard currency rather than a speculative asset.

By early 2026, Kyrgyzstan had registered over 200 licensed operators, including more than 80 exchange points and around five dedicated exchanges. The sector also includes 11 industrial mining companies, though mining remains secondary to the exchange business. Crypto tax revenue reached approximately 1.7 billion soms (about $22.8 million) in 2025 — more than the combined receipts from the Dordoi bazaar, Central Asia's largest wholesale market, and all patent-based entrepreneurs. That fiscal contribution has quietly elevated the sector's legitimacy in the eyes of Bishkek policymakers.

Yet the ecosystem's limits are equally clear. More advanced use cases — DeFi (decentralized finance platforms that let users lend, borrow, and trade without banks), yield farming (earning returns by locking up crypto assets), and complex tokenized real-world assets — remain marginal. Kyrgyzstan has built a highly liquid exchange corridor while Kazakhstan pursues mining infrastructure and Uzbekistan focuses on retail adoption under tighter licensing. The question now is whether this volume can evolve beyond basic conversions — and how the state's growing involvement will shape the next phase.

State Strategy: From Licensing to National Stablecoins

Kyrgyzstan's approach stands out in Central Asia for its proactive state involvement. Rather than simply regulating a booming informal market, Bishkek has moved to shape and participate in it directly. The foundation was the 2022 Law on Virtual Assets, which introduced VASP licensing. The real turning point came in September 2025, when parliament passed amendments in three readings, formally introducing a state cryptocurrency reserve and state mining while refining rules for stablecoins and real-world asset (RWA) tokenization. The amendments also raised capital thresholds for exchanges starting in 2026 and encouraged hydropower-based mining. The government no longer treats crypto merely as a remittance or hedging tool, but as an instrument of national financial policy.

The most visible expression of this strategy is the launch of two sovereign-backed stablecoins in late 2025.

USDKG, a dollar-pegged stablecoin backed by physical gold, was issued in October–November 2025. The initial emission totaled approximately $50 million (50.14 million tokens at $1 each) on the Tron network, with plans to expand to Ethereum. It is issued by OJSC Virtual Asset Issuer, a fully state-owned entity under the Ministry of Finance, and positioned for cross-border payments and international trade. Long-term ambitions include scaling reserves to $500 million and eventually $2 billion.

KGST, pegged 1:1 to the som, followed shortly after. Launched in partnership with international platforms and listed on Binance in December 2025, it is designed for domestic and regional settlements and for integration with the planned Digital Som, Kyrgyzstan's central bank digital currency (CBDC), currently in the pilot design phase. President Sadyr Japarov framed the Binance listing as recognition of Kyrgyzstan's regulatory maturity. The som-pegged token is seen as particularly useful in rural areas with underdeveloped banking infrastructure and for easing remittance flows.

These initiatives are part of a broader vision. The government is exploring a national crypto reserve that could include Bitcoin and other assets accumulated through state mining, and it has announced plans to pilot Digital Som payments in public finance.

For a small economy, this level of state engagement is ambitious. It reflects a desire to capture value from an already massive exchange market while reducing the risks associated with purely private or offshore operators — and it positions Kyrgyzstan as an experimental laboratory for the region, testing how sovereign digital assets can coexist with high-volume, remittance-driven crypto activity. Whether the model delivers long-term stability or introduces new vulnerabilities will depend on implementation, particularly as external scrutiny from the IMF and FATF intensifies.

Geopolitical Context and Risks

Kyrgyzstan's crypto market sits at the intersection of practical economic needs and broader geopolitical currents. Located at the heart of the Eurasian corridor, the country has become a de facto crypto corridor linking remittance and trade flows among Russia, Central Asia, and China.

This role drew sharper attention after Russia's full-scale invasion of Ukraine in 2022. Since then, Moscow has increasingly used Central Asia — and, to a lesser extent, the South Caucasus — as a transit corridor for both physical goods (especially dual-use items) and financial flows routed around conventional banking channels. Kyrgyzstan, thanks to its relatively open licensing regime and geographic position, has emerged as one of the most active nodes in this network. Much of the activity involves converting rubles or dollars into USDT for migrant remittances or cross-border trade that bypasses slower traditional banking.

External observers have flagged particular concern over the ruble-pegged stablecoin A7A5, issued by Kyrgyz-registered Old Vector LLC. According to the blockchain analytics firm Elliptic, A7A5 processed more than $100 billion in transactions in 2025 and accounted for roughly 43 percent of the global non-dollar stablecoin market by year-end. The token, which processed tens of billions of dollars in volume in 2025, was specifically designed, according to the U.S. Treasury, to allow Russian entities to move value outside the conventional financial system. In August 2025, the US Treasury's Office of Foreign Assets Control (OFAC), the UK, and subsequently the EU sanctioned A7A5 along with related Kyrgyz entities, including Old Vector and the exchange Grinex, for their alleged role in large-scale sanctions evasion. The EU's 20th sanctions package, adopted in April 2026, extended these measures with an industry-wide ban on Russia-based crypto services and additional restrictions on the Kyrgyz exchange operating A7A5.

A7A5 is the digital arm of A7, a Russian cross-border payments platform launched in 2024 and itself now under Western sanctions. On paper, A7 is owned by the fugitive Moldovan oligarch Ilan Shor (51 percent) and the sanctioned Russian state bank Promsvyazbank (49 percent), with reported backing from the state development corporation VEB.RF. An April 2026 investigation by the independent Russian outlet Proekt added significant texture to this picture. Citing leaked financial documents and sources in the cross-border payments market, Proekt identified Russian billionaire Roman Abramovich as A7's alleged "roof and sponsor" — a claim Abramovich's representatives have denied — and pointed to multi-billion-ruble loans from Pharmstandard, the pharmaceutical holding controlled by Abramovich's longtime associate Viktor Kharitonin. The investigation also identified at least 25 EU- and US-sanctioned Russian firms among A7's clients, including five manufacturers and suppliers of combat drones used by the Russian army in Ukraine. President Vladimir Putin attended the virtual ribbon-cutting of a new A7 branch in September 2025.

The implications for Kyrgyzstan are substantial. The A7/A7A5 architecture illustrates how the country's open licensing regime and geographic position have been leveraged by an externally directed financial network operating largely outside Bishkek's effective control — and tied directly to Russia's war economy. This is the dimension of the crypto corridor that international regulators have focused on, and the one most likely to shape how the country's broader sector is perceived abroad.

The Kyrgyz government has sought to address these risks through tighter licensing and sovereign-backed instruments. By emphasizing gold backing, independent audits, and state oversight, Bishkek aims to project transparency and differentiate its model from offshore or unregulated platforms elsewhere in the region.

International scrutiny has nonetheless continued. In its Staff Concluding Statement for the 2026 Article IV consultation, released April 9, 2026, the IMF acknowledged Kyrgyzstan's strengthened regulatory framework but warned that "growing exposure to crypto asset activities and cross-border trade and financial flows could pose new risks" to macro-financial stability. The Fund urged authorities to enhance supervisory capacity, improve risk monitoring, and strengthen anti-money-laundering and counter-terrorist-financing (AML/CFT) measures to match the sector's expansion.

The timing was pointed. In mid-April 2026, Chairman of the Cabinet of Ministers Adylbek Kasymaliev led a high-level delegation, accompanied by National Bank officials, to the IMF–World Bank Spring Meetings, where they held bilateral discussions with representatives of the International Monetary Fund, the World Bank, and the U.S. Department of the Treasury, alongside other international financial institutions.

The public agenda centered on hydropower projects and macroeconomic support, but the IMF statement underscored growing external pressure on Bishkek to demonstrate effective oversight of its crypto corridor.

Kyrgyzstan has responded by proposing partnerships in regulatory technology (RegTech) and positioning itself as a potential regional hub for compliant digital finance. Compared to Kazakhstan's mining-centric model and Uzbekistan's controlled retail adoption, the Kyrgyz blend of high-volume exchange activity and state-backed stablecoins produces a distinctive — and more exposed — profile. The risks are multifaceted: potential sanctions blowback, capital-flight pressure on the som, and gaps between licensing rules and enforcement. But successful implementation of sovereign stablecoins and improved supervision could flip these vulnerabilities into strategic advantages, allowing Kyrgyzstan to serve as a regulated gateway for Central Asian digital payments.

Conclusion

Kyrgyzstan is no longer a passive participant in the global crypto space. It is actively shaping a Central Asian model of its own. With licensed turnover above $30 billion in 2025 — more than double GDP — and the launch of sovereign stablecoins USDKG and KGST, the country is testing whether a small economy can wield digital assets as both an economic lifeline and a tool of statecraft.

The coming years will be decisive. If Bishkek strengthens regulatory oversight, secures the credibility of its gold-backed instruments, and contains sanctions-related exposure, Kyrgyzstan could evolve into a genuine regulated crypto corridor for Central Asia — offering efficient remittance channels, sovereign digital tools, and a bridge between Russia, China, and wider markets. That outcome would make the country a bellwether for the region, demonstrating how states can exert meaningful control over crypto activity rather than merely react to it.

The downside scenario is equally plausible. Failure to close the gap between ambitious regulation and effective enforcement, or sustained exposure to sanctions-circumvention channels, could trigger stronger pressure from the IMF, FATF, and Western regulators. In that case, the very openness that fueled rapid growth would become a liability.

As Central Asia navigates financial fragmentation and geopolitical realignment, Kyrgyzstan's experiment carries implications well beyond its borders. The choices Bishkek makes between 2026 and 2030 — balancing innovation against stability, sovereignty against international legitimacy — will help determine whether the region develops resilient, sovereign-led digital finance ecosystems or remains vulnerable to external shocks and regulatory crackdowns. Kyrgyzstan's crypto story is still being written. Its outcome may well signal the trajectory of digital assets across Eurasia.

Aigerim Turgunbaeva is an independent journalist and researcher specializing in Central Asia. She covers press freedom, human rights, and China’s regional influence, with work published in The Guardian, The Diplomat, Reuters, and Eurasianet. A Rumsfeld Fellow, she also contributes to the AFPC’s Central Asia-Caucasus Institute.

Beijing is gaining ground economically and diplomatically, but avoiding the risks – and rewards – that global leadership can bring.

The war in Iran and the blockade of the Strait of Hormuz are, depending on whom you ask, either a strategic windfall for Beijing or a black swan event that could eventually undermine its export-driven economy.

But after months of war — and a new phase shaped by tenuous cease-fire talks and a U.S. blockade of Iranian ports — the reality is more complicated. The war has proved a mixed blessing for Beijing, exposing its unwillingness to take up the mantle of global leadership.

Rising yuan transactions, new frictions between the United States and its allies, and a U.S. strategic pivot back to the Middle East from the Asia-Pacific all benefit Chinese policymakers. But the war in Iran is also showing Beijing’s limits as a power broker and revealing that its superpower ambitions remain confined, for now, to trade hegemony.

China has moved to seize some opportunities, capitalizing on rising anti-American sentiment and strengthening its global standing amid the fallout. But Beijing has stayed on the sidelines, opting for a slow, diplomatic approach: prioritizing opportunistic inroads, shielding its economy, and stabilizing its rivalry with the United States ahead of a high-profile summit between U.S. President Donald Trump and Chinese leader Xi Jinping scheduled for mid-May.

Beijing would prefer that the global economic uncertainty brought by the war did not exist at all. Its actions should therefore be viewed less as a bid for greater influence and more as a defense of stability — both at home and in an increasingly disrupted Middle East.

Playing Defense In A Disrupted Global Economy

Since U.S.-Israeli strikes on Iran on February 28, Beijing has cast itself as a pillar of international stability and as a foil to a more erratic White House. That strategy has yielded real dividends. China has edged ahead of the United States in recent Gallup polling, and longtime U.S. partners like the United Kingdom and Canada — already navigating frictions with the current administration — have looked to repair and deepen ties with Beijing as a hedge against American volatility amid the war.

Other secondary benefits have followed. The blockaded Strait of Hormuz and rising oil and gas prices have boosted demand around the world for China’s green technology sector, driving orders for Chinese-made solar panels and electric vehicles.

The war has also fueled fresh enthusiasm about the yuan’s prospects to rival the U.S. dollar. The currency has become a main form of payment for ships that have paid illegal tolls to Iran for safe transit through the Strait of Hormuz. and the volume of yuan-denominated crude oil sales has increased due to the war. Chinese state media report that the nation’s Cross-Border Interbank Payment System (CIPS) — China’s alternative to the U.S. SWIFT payment system — has logged record highs, surpassing 1.22 trillion yuan ($178 billion) in single-day transactions for the first time in April.

Beijing has also sought diplomatic gains elsewhere. Both Xi and Chinese Foreign Minister Wang Yi have been quick to denounce U.S. actions and frame Beijing as an arbiter of international norms, with the Chinese leader calling the disruptions brought from the war a “return to the law of the jungle.” Some reports, including comments from Trump himself, have also suggested China played a role in bringing Tehran to the table for cease-fire talks in Islamabad.

But it is unclear how much strategic gain Beijing actually reaps. The stepped-up activity likely reflects Chinese anxiety that the war’s economic fallout could rebound on China itself. Rising commodity prices driven by Middle East supply disruptions could squeeze profit margins.=, while sustained oil price increases could weaken global demand and slow orders for Chinese manufacturers.

China has also held back from a larger play for influence. Beijing’s strategic petroleum reserve is the largest in the world, with the commodity intelligence firm Kpler estimating that Chinese refineries stockpiled between 1.2 and 1.4 billion barrels of oil before the war began. China is also the world’s second-largest exporter of fertilizer and holds stockpiles of industry-critical materials. Some analysts have suggested that Beijing could contribute a portion of its oil reserve to a global stability pool and extend similar support with fertilizer to head off a potential food crisis in the Global South.

Instead, it has restricted exports to bolster domestic security and an economy still grappling with the aftershocks of COVID-19 policy missteps and a collapsing property sector.

A Fragile Partnership and a Tightrope in the Middle East

This defensive posture is also visible in China’s complicated relationship with Iran and its delicate balancing act with the Gulf States.

China is Iran's largest oil buyer by far, taking up to 90 percent of the country’s crude. Beyond providing discounted oil, Tehran has also been a reliable anti-Western bulwark. In return, Beijing has become Tehran's largest trading partner and an increasingly important source of technology and security cooperation — vital to Iran's ability to withstand Western political and economic pressure.

But the relationship has also been marked by mismatched expectations and behind-the-scenes frictions. The two countries signed a comprehensive strategic partnership in 2016, culminating in a highly touted 25-year strategic cooperation agreement in 2021. Reports suggested the deal envisioned up to $400 billion in Chinese investment in Iran, but only $2-$3 billion has been confirmed to date, with many Chinese firms steering clear due to U.S. secondary sanctions. This gap has spilled into public view: in 2023, then-Iranian President Ebrahim Raisi said that there was a “serious regression” in ties with Beijing and that the economic dimension of the relationship had become unsatisfactory for Tehran.

The war has also tested China’s dual-track approach in the Middle East. As Beijing has maintained its partnership with Tehran, it has meticulously deepened its ties with Arab states, with energy as a key focal point. China currently sources more oil from the Gulf than from Iran, and Qatar was the country’s top LNG supplier prior to the war.

This represents another tension Beijing will find increasingly difficult to balance. As China calibrates its support for Tehran — seeking to prevent regime collapse while avoiding a wider regional war — it must also account for the interests of Gulf nations facing Iranian attacks.

That has opened a door for Beijing. The war’s disruption has prompted many traditional U.S. partners in the region, including Saudi Arabia and the UAE, to question their strategic reliance on Washington, and Beijing has moved to exert greater influence. Xi hosted Abu Dhabi Crown Prince Sheikh Khaled bin Mohammed in mid-April, vowing to make the partnership between China and the UAE “more solid, resilient, and dynamic.” That was followed by a call with Saudi Arabia’s Crown Prince Mohammed bin Salman — the first in more than three years — in which Xi pledged to deepen mutual strategic trust and called on Middle Eastern nations to “hold their future in their own hands,” according to a Chinese readout.

But the war has also exposed the limits of Chinese influence and how much skin Beijing is willing to put in the game. Both Saudi Arabia and Iran have called for China to play a bigger role as a mediator, but China’s leadership has so far kept its distance and appears unwilling to get further entangled in a crisis that it did not create.

Calibrating the U.S.-China Rivalry

Perhaps the most striking display of China’s slow approach to the war in Iran is how it has managed its rivalry with the United States. There have been no vitriolic denunciations of U.S. strikes and no visible attempts to exploit the thinning of American military forces in the Asia-Pacific.

This partly reflects hard lessons learned from China’s era of “Wolf Warrior” diplomacy — a confrontational and nationalist style of public diplomacy adopted by some Chinese diplomats — that damaged its global image in the aftermath of the COVID-19 pandemic and provoked backlash in multiple regions.

There is also a strong incentive to keep relations with Washington stable for the time being. The Xi-Trump summit, set for May, was already rescheduled once, and Beijing believes it holds a strong hand with the United States following their earlier trade war. The summit will focus on a range of trade, technology, and military issues, but Beijing has its sights on possible changes in the U.S. posture on Taiwan or a reduction of arms sales to the island. It is no coincidence that Xi hosted Cheng Li-wun, the leader of Taiwan’s opposition Kuomintang (KMT), in April and offered incentives to a future KMT government for bilateral cooperation.

This may indicate that Xi has no near-term designs on Taiwan —a view recently expressed by the US intelligence community — but also that China's leader is wary of rocking the boat amid fears of another escalating crisis. For all the criticism of Washington's moves on Iran, it has been a formidable display of American military power that Beijing cannot rival, particularly given a hollowed-out military leadership following successive purges.

Xi appears to have decided that the war in Iran is not Beijing’s moment. The United States remains a military and financial superpower, occupying a role on the world stage that China is not ready for — and may never be willing to fully assume.

Chinese leadership appears focused on weathering the global shocks of the war and is content to wait for an outcome in Iran before engaging in the aftermath. This offers a playbook for a country that still primarily defines success by its domestic situation at home, not one of a government ready to assume the risks and reap the rewards of global leadership.

Reid Standish is a journalist covering Chinese foreign policy across Eurasia and is RFE/RL's Prague-based China Global Affairs Correspondent. He has reported extensively on Chinese investment, security policy, and political influence across Eastern Europe and Central Asia. Prior to RFE/RL, Reid was an editor at Foreign Policy magazine and its Moscow correspondent. He has also written for The Atlantic, Politico, and The Washington Post.

Economic cooperation between Kazakhstan and Armenia is gaining momentum, set against Trump administration-backed efforts to normalize Armenian–Azerbaijani relations. This engagement could give the Trump Route for International Peace and Prosperity, or TRIPP, initiative real economic substance, driven by regional actors seeking to develop new transport corridors and diversify existing routes. For now, however, significant military and political risks remain beyond the capacity of local actors to overcome.

How Astana Entered the TRIPP Conversation

On April 8-9, Kazakhstan's Minister of Foreign Affairs, Yerzhan Kosherbayev, and Minister of Transport, Nurlan Sauranbayev, traveled to Armenia on an official visit. The discussions built on issues first raised on November 20, 2025, when Armenian Prime Minister Nikol Pashinyan visited Kazakhstan. Pashinyan's trip followed a new stage in the Armenian-Azerbaijani peace dialogue, backed by the Trump administration, and the announcement of the TRIPP project. In November 2025, the Kazakh side proposed a new transport artery based on TRIPP and linked to the Middle Corridor, which would pass through Armenia to provide faster access to Turkey and, through it, to Europe.

The April visit also produced a strategic partnership between Kazakhstan and Armenia. The Armenian-Azerbaijani peace process has allowed Astana to deepen ties with Yerevan without risking discontent from Azerbaijan, with which Kazakhstan also maintains close relations.

Kazakhstan had signaled its interest in the project as early as August 2025, in the first days after the TRIPP agreement was signed. A new international transit route is emerging — an alternative to the Georgian segment of the Middle Corridor — and Kazakhstan is a central player in freight transport between China and Europe.

Kazakhstan is closely monitoring the prospects for integrating TRIPP with the Middle Corridor, as well as the durability of the Azerbaijani-Armenian peace process that made the TRIPP initiative possible in the first place. Oil-rich Kazakhstan, one of the wealthiest post-Soviet states by GDP per capita, is exploring investment opportunities along the route.

Against this backdrop, Kazakhstan and Armenia have begun exploring the practical implementation of TRIPP, including viable commercial applications for an initiative that remains largely political in scope. Developing its commercial dimension could help stabilize the Armenian-Azerbaijani peace process while expanding the transit capacities of Central Asian countries.

At the April 9, 2026, meeting between the two foreign ministers, both sides announced their intention to advance TRIPP and to deepen bilateral trade, economic, and investment dialogue. In a subsequent meeting with Prime Minister Pashinyan, Kazakhstan's foreign minister reaffirmed Astana's readiness to develop TRIPP as a means of expanding the region's transit potential.

Trade is Growing, But Moscow Still Shapes the Ceiling

Kazakh-Armenian economic relations are developing rapidly. In 2025, exports of Kazakh grain to Armenia resumed via a railway route through Russia, Azerbaijan, and Georgia. Contracts for Kazakh food products — including grain and meat — are expected to be long-term.

Bilateral trade volumes nonetheless remain modest. Trade turnover between Kazakhstan and Armenia amounted to $69.2 million in 2025, $49 million in exports from Kazakhstan to Armenia and $20.2 million in imports from Armenia. The two countries have signed a Roadmap for Trade and Economic Cooperation for 2026–2030 that is expected to drive rapid expansion in bilateral trade.

An intergovernmental commission and a Kazakh-Armenian business council are already in place. Mutual investment is growing: more than 100 enterprises with Kazakh capital are registered in Armenia, while over 400 Armenian companies operate in Kazakhstan. The Kazakh government has shown particular interest in expanding cooperation in high-tech sectors; a branch of the Armenian educational program TUMO recently opened in Astana.

A potential breakthrough in bilateral relations could come if Armenia's railways were transferred to Kazakh investors — a possibility that surfaced in media reports around the April negotiations. Such an investment would significantly advance the practical realization of TRIPP. But this is only one of several possible scenarios. Armenia's railways remain under the control of Russian investors. While the Pashinyan government does not enjoy particularly strong relations with Moscow, Pashinyan himself has stated that any decision on the railways will be made in dialogue with Russia. The Kazakh government, which maintains fairly close ties with Moscow within its multi-vector framework, is unlikely to invest in Armenia's railways unless such a move is, in some form, coordinated with Russia.

More broadly, extending Kazakh-Armenian cooperation into the implementation of TRIPP faces significant geopolitical risks — above all, the positions of Iran, China, and Russia. Neither Yerevan nor, still less, Astana is willing to challenge these players in the South Caucasus. Both are instead exploring practical pathways for TRIPP's implementation, contingent on the Trump administration reaching an understanding with other extra-regional powers. So long as there are serious risks of spillover from hostilities involving Iran into the South Caucasus (as with recent Iranian drone strikes on Nakhchivan), continued Chinese resistance to expanding U.S. influence in Central Asia and the Caspian region, and the potential escalation of U.S.-Russia confrontation, major investments in TRIPP from a cautious actor like Kazakhstan are unrealistic. Additional risks stem from Armenia's relations with Azerbaijan and Turkey. In both cases, the Pashinyan government has made progress toward a stable peace, but the process remains incomplete. Significant domestic political forces in Armenia opposed to such reconciliation continue to challenge Pashinyan. This internal uncertainty further discourages potential Kazakh investors.

Why Kazakhstan Needs TRIPP — and Why TRIPP Needs Kazakhstan

TRIPP runs through the Syunik Province in southern Armenia, linking mainland Azerbaijan with its Nakhchivan exclave and onward to Turkey. Kazakhstan is not a direct participant in the corridor. Indirectly, however, if the route is integrated with connections across Kazakhstan, the Caspian Sea, Azerbaijan, Armenia, and Turkey, it could provide Kazakhstan with an alternative pathway to Turkey and, beyond it, to Europe, bypassing Georgia. This would create an additional branch of the existing Middle Corridor linking the Caspian region to Europe. Kazakhstan and transit shippers using its territory would gain greater flexibility in using the Middle Corridor.

From Kazakhstan's perspective, TRIPP establishes a second Trans-Caucasian route that allows cargo flows to bypass the Georgian segment. This is less about direct competition with the Georgian route than about diversification within a single macro-corridor. Such diversification could expand overall capacity and improve system resilience, reducing exposure to political disruptions and infrastructure bottlenecks. The Georgian and Armenian routes may also compete on cost and speed, driving down transit prices. In turn, this would strengthen the throughput capacity of the Middle Corridor, improve access for Central Asian exports to global markets, and support the scaling up of China-Europe transit through Kazakhstan.

The Armenian route to Southern and Central Europe via Turkey is more direct than the Georgian alternative — which relies on Black Sea shipping — potentially reducing delivery times along with fuel and operating costs. Diversifying the Middle Corridor across the South Caucasus also allows stakeholders to hedge against rising risks in Georgia, particularly those tied to the deterioration of relations between Tbilisi and the West. These include regulatory risks (potential instability in trade regimes with the EU), institutional risks (declining trust from EU governments, international banks, and logistics operators), and the prospect of domestic political instability linked to polarization within Georgia. All of this may affect insurance and transit costs, increase customs friction, and lead investors to price in higher risk premiums.

Kazakhstan occupies a pivotal position among actors interested in developing TRIPP as part of the Middle Corridor. It is the largest transit economy in Central Asia and a key overland bridge between China and the Caspian Sea. Kazakhstan also accounts for a significant share of Central Asia's trade with the European Union. Its interest in investing in TRIPP stems from the fact that the project would expand a system in which Kazakhstan already serves as a central hub. If Middle Corridor capacity grows through integration with TRIPP, overall cargo flows are likely to grow with it, along with transit volumes passing through Kazakhstan.

Kazakhstan has a clear interest in investing in TRIPP as a way to secure influence over tariffs, participate in governance mechanisms, and gain access to data and cargo flows. It is well-positioned to do so, drawing on substantial financial resources, state-controlled enterprises, and sovereign wealth funds.

Even without direct investment in Armenia, integrating TRIPP with the Middle Corridor would require Kazakhstan to expand its own transport capacity — overland and maritime. It would also require investment in digital infrastructure, including unified cargo tracking systems, electronic documentation, and integrated tariff platforms. Without such upgrades, broader expansion of trade along the Middle Corridor would be difficult to achieve.

As for Astana's political role, integrating TRIPP with the Middle Corridor will require coordination among a wide range of regional and external actors. Kazakhstan is well placed to act as a neutral mediator, consistent with its multi-vector foreign policy. Kazakhstan and Azerbaijan are already discussing an agreement aimed at strengthening the status of the Trans-Caspian Corridor in the context of the opening of the Zangezur Corridor.

Astana has developed a reputation as an "honest broker" for several reasons:

·      Multi-vector diplomacy — maintaining working relationships with the United States, China, Russia, Turkey, Armenia, and Azerbaijan, among others.

·      A track record as a neutral platform — Kazakhstan has previously hosted direct Armenian–Azerbaijani negotiations and played a role in facilitating dialogue between Russia and Turkey over Syria within the so-called "Astana process."

·      No direct territorial or military interests in the South Caucasus.

Kazakhstan can convene formal, high-level meetings among relevant stakeholders while also facilitating informal contacts (Track 1.5 and Track 2). Such consultations could help build political consensus on key issues, including security arrangements along the Armenia-Azerbaijan border, corridor governance, transit security, and the protection of investments.

Kazakhstan could also act as a technical intermediary and "systems integrator" in logistics, aligning the interests of different states and commercial actors in integrating the Middle Corridor and TRIPP — particularly in harmonizing customs procedures, digital transport documentation, and transit tariffs.

Kazakhstan would, however, face important constraints. These stem from its role as a formally neutral actor in South Caucasus affairs and from the sensitivities embedded in its relations with multiple partners. Astana neither can nor seeks to guarantee security in the South Caucasus, nor is it in a position to impose solutions on the parties involved. Maintaining balance among actors themselves in conflict will require considerable caution. Armenia could perceive a "pro-Turkish" or "pro-Azerbaijani" tilt; Azerbaijan might view Kazakhstan as insufficiently supportive; Iran, China, or Russia could read Kazakhstan's involvement in a U.S.-backed initiative as a challenge to their own interests. If Astana chooses to mediate on TRIPP within its multi-vector framework, it will do so with considerable restraint.

Kazakhstan is best understood, in this sense, as an "architect of the negotiating environment" — providing a platform, facilitating dialogue, and helping develop technical agreements, rather than acting as a guarantor or enforcer.

A Decisive Role, With Hard Limits

Economic cooperation between Kazakhstan and Armenia is deepening rapidly. This engagement could give TRIPP tangible economic substance, driven by regional actors interested in developing new transport routes. Kazakhstan has a particularly strong stake in diversifying the Middle Corridor and is well-positioned to contribute substantially to its practical implementation through investment, diplomacy, and technical coordination among stakeholders.

Significant military and political risks nonetheless persist. Neither Yerevan nor, especially, Astana is likely to move from economic cooperation to TRIPP implementation unless the Trump administration addresses the project's broader geopolitical risks.

Until these risks are mitigated, Armenia and Kazakhstan will continue to deepen economic cooperation in other areas, laying the groundwork for a rapid pivot to joint engagement in international transport projects should the geopolitical environment become more favorable.

Dr. Andrei Kazantsev-Vaisman is a Research Fellow at the Turan Research Center specializing in international relations and security in Eurasia. He is also a fellow at the Begin-Sadat Center for Strategic Studies at Bar-Ilan University and has held academic appointments at the Higher School of Economics in Moscow, the Eurasian National University in Astana, and Narxoz University in Almaty. During the war on terror in Afghanistan, he directed the Center for Central Asian and Afghan Studies at the Moscow State Institute of International Relations and served on the Russian–American Working Group on Counterterrorism in Afghanistan under the East–West Institute. He is the author of over 100 publications, including 25 peer-reviewed articles indexed in Scopus, and his expert analysis has been cited by major international media including The Wall Street Journal, Associated Press, The Washington Post, BBC, and Deutsche Welle.

Kazakhstan has definitively abandoned Russia's participation in the construction of three combined heat and power plants (CHPs) in the cities of Kokshetau, Semey, and Ust-Kamenogorsk. Samruk-Energo, a subsidiary of the National Wealth Fund Samruk-Kazyna, announced that a Kazakh-Singaporean consortium will now lead construction. The plants will use Chinese technology, raising the likelihood that Chinese firms such as China Energy Engineering/PowerChina will be brought on board.

The decision to build these CHPs with Russian investment was formalized in two stages. In the fall of 2023, a memorandum was signed during President Putin's visit to Kazakhstan — a framework document outlining intentions to build the plants. In April 2024, an intergovernmental agreement followed. Samruk-Energo was designated as the Kazakh partner and Inter RAO–Export as the Russian one. Financing was to come through a preferential Russian export credit tied to the supply of Russian equipment.

Soviet-Era Infrastructure, Twenty-First-Century Consequences

Kazakhstan's push to build new CHPs stems from the catastrophic deterioration of its energy infrastructure, much of which dates to the Soviet era. The average age of the country's CHPs was 61 years; roughly 76 percent had been in operation for more than 50. Private owners of several plants invested almost nothing in modernization, and the situation was compounded by ineffective tariff policy and heavy debt burdens on energy enterprises.

In December 2022, then-Energy Minister Bolat Akchulakov noted that the average equipment wear across the country's CHPs stood at 66 percent, with plants in Uralsk, Stepnogorsk, Taraz, Kyzylorda, and Kentau exceeding 80 percent. Between 2022 and 2023, serious accidents struck CHP-2 in Petropavlovsk, the Ekibastuz CHP, the Ridder CHP, and CHP-3 in Karaganda. In February 2023, heating network failures linked to the local CHP in the city of Rudny left dozens of buildings without heat, prompting a local state of emergency.

An additional pressure was a growing electricity deficit. In 2025, Kazakhstan significantly increased electricity imports from Russia, primarily to cover shortfalls during evening peak consumption — but at higher prices.

Against this backdrop, the government adopted the National Project for Modernization of the Energy and Utilities Sector (2025–2029) and the National Project for the Development of Coal-Fired Generation (2026–2030) to modernize aging CHPs and construct new ones. Twelve CHPs in municipal and quasi-state ownership were to be financed from the state budget; 22 privately owned plants were to be upgraded at the owners' expense. Foreign investment was also sought.

How the Russian Deal Collapsed

Kazakhstan's Energy Ministry acknowledged that the Kokshetau, Semey, and Ust-Kamenogorsk projects had encountered difficulties from the outset, particularly given international financial institutions' refusal to fund coal-fired generation. That constraint is precisely what led Kazakhstan to turn to Inter RAO–Export. But negotiations dragged on.

On June 15, 2025, new Energy Minister Yerlan Akkenzhenov declared that Kazakhstan could begin building the three CHPs independently if talks with Russia failed. By July, construction of the Kokshetau CHP had already begun without Russian participation. Prime Minister Olzhas Bektenov stated that Kazakhstan had never received firm guarantees of the promised preferential financing from Russia. By January 2026, President Tokayev publicly criticized the delays, singling out both the government and Samruk-Kazyna. Bektenov then directed Samruk-Kazyna to finalize construction contracts for all three cities by the end of January 2026, with work to begin in April.

Samruk-Energo met that deadline. The Semey plant — 360 MW and 1,000 Gcal — is budgeted at 578 billion tenge. The Ust-Kamenogorsk plant, of equivalent capacity, will cost 602 billion tenge. Construction and installation at both sites is set to begin in April 2026, with equipment deliveries spanning 2027–2029 and commissioning targeted for December 2029. The Kokshetau plant will cost 355.6 billion tenge and is scheduled for commissioning in February 2029. All three facilities will incorporate artificial intelligence and clean coal technologies.

Sanctions, Costs, and Misaligned Expectations

Inter RAO–Export's withdrawal was the product of overlapping financial, sanctions-related, institutional, and strategic factors. The estimated cost to Russia as investor and creditor was approximately $2.5–2.8 billion for all three plants. Since the start of the war in Ukraine, Russian energy companies have lost access to cheap Western capital, face secondary sanctions risks on foreign projects, and have grown more cautious about long-term infrastructure commitments amid deepening financial strain at home. Russia also confronted a deficit of imported equipment needed for CHP construction — a problem sharpened by Kazakhstan's insistence on modern AI-integrated technologies. Russian firms struggled to supply turbines and control systems, most of which depended on Western components now subject to restricted access.

A structural misalignment in expectations compounded the problem. Russia was asked to finance and build three plants without receiving equity stakes. Kazakhstan wanted preferential financing to solve its energy crisis quickly. Russia wanted guaranteed returns, tariff-based cost recovery, and minimal risk on a faster timeline. Kazakhstan's "Tariff in Exchange for Investment" program allows investors to channel tariff revenues toward equipment upgrades, but under strict state oversight. Meanwhile, the Kazakh government is reluctant to raise electricity and heating tariffs sharply, fearing social unrest — especially as the country prepares for a political transition. Tariffs in Kazakhstan are politically sensitive, yet without increases, project viability is doubtful. Russia, for its part, faces more immediate concerns: Ukrainian drone strikes on its own energy infrastructure and escalating military expenditures.

Closing the File Before Putin's VisitAlthough Russia's withdrawal generated frustration in Astana, it is unlikely to damage bilateral relations — particularly ahead of Putin's state visit to Kazakhstan in May 2026. The matter was likely addressed during Prime Minister Mikhail Mishustin's working visit to Kazakhstan in March, when Kazakh officials could have notified the Russian side of the investor change, effectively closing the issue before Putin's arrival.

If Russia Can't Build Power Plants, Can It Build a Reactor?

Russia's failure on three CHP projects raises a more consequential question about the viability of a far more expensive undertaking: Kazakhstan's first nuclear power plant, to be built by Rosatom. It is worth noting that the construction of Kazakhstan's first nuclear power plant has generated significant public opposition. This stems from the country's history as a Soviet nuclear testing ground: the Semipalatinsk test site hosted 468 nuclear tests between 1949 and 1989, causing a spike in fatal illnesses among the local population living near the site. In 1989, the international anti-nuclear movement Nevada-Semey was founded to demand the polygon's closure, which came on August 29, 1991. Kazakhstan also relinquished what was then the world's fourth-largest nuclear arsenal. The result is a deep historical aversion to all things nuclear.

Public unease was compounded by the fact that Russia would be building the plant in a seismically active zone. In the fall of 2024, authorities held a referendum on nuclear power plant construction; official figures showed 71.12 percent of voters in favor. Many questioned that result, however, citing a lack of transparency in vote counting. Nuclear power plant construction remains a politically sensitive issue in Kazakhstan.

The planned facility — 2.4 GW, consisting of two VVER-1200 units — is expected to break ground in 2029 and reach completion by 2035–2036. Its most recent cost estimate stands at $15 billion, up from an initial projection of $10 billion. Russia has pledged preferential export financing. But whether Moscow can deliver is uncertain, given that Rosatom's construction of new reactor units at Turkey's Akkuyu plant has been plagued by financial delays, sanctions-аrelated payment blockages to subcontractors, equipment delivery disruptions, labor protests over unpaid wages, and contractor difficulties.

These risks may explain why Kazakhstan has hedged its bets: in addition to the Rosatom project, Astana plans two additional nuclear plants with China's CNNC — one of the company's first overseas projects. If Rosatom encounters financial or technological difficulties, China may be positioned to deliver faster.

The Broader Retreat

More broadly, China could emerge as the leading source of foreign direct investment in Kazakhstan within five to six years. For now, the Netherlands leads with $2.88 billion, followed by China at $2.6 billion. Russia sits third at $2.1 billion. Russia's investment challenges in Kazakhstan reflect a convergence of factors: sanctions pressure, weakened financial capacity, loss of access to Western technology, and rising competition from China and Middle Eastern investors willing to fund Kazakh infrastructure.

Russia is no longer the dominant investor — it is becoming one player among several. This shift has accelerated since the United States, the European Union, and the United Kingdom imposed sanctions on major Russian oil and gas companies — Lukoil, Transneft, and Tatneft — all of which had significant investment projects in Kazakhstan, from upstream oil and gas development to the construction of a butadiene petrochemical complex in Atyrau region.

The Visit, the Pipeline, and the Reactor

Since the start of the war in Ukraine, Russian investment activity in Kazakhstan has moved through several phases. From 2022 to 2024, investment rose as Russian businesses relocated to Kazakhstan — a temporary boom driven largely by sanctions evasion and business transfers. In 2025, Russian investment activity dropped sharply: inflows fell from $1.2 billion to $180 million over nine months. In 2026, stagnation is the most likely trajectory, as the relocation effect exhausts itself.

Putin's state visit to Kazakhstan will almost certainly produce declarations about expanded Russian investment. The more important question is what new projects that investment will actually fund. During Mishustin's visit, officials cited 122 major projects between the two countries worth approximately $25 billion — but these likely refer to legacy commitments. Among genuinely new large-scale projects, only the nuclear power plant and Gazprom's investment in the Ishim–Astana gas pipeline for Kazakhstan's northern and northeastern regions stand out. The pipeline investment figure has not been disclosed, but analogous projects of this scale typically run to several billion dollars — a significant commitment for Gazprom, given the company's unstable financial position in recent years.

Dosym Satpayev is the founder and director of the Kazakhstan Risks Assessment Group, an independent consulting organization established in 2002. He received his PhD from Abai Almaty State University in 1999 and is the author of four monographs. In 2015, he founded the Söz cultural and literary foundation, which has published 30 books by Kazakh and international authors, established a museum and library, and produced five documentary films.

Tucker Carlson is “tormented.”

Not by a policy failure, not by a domestic crisis — by the fact, he said this week, that President Donald Trump backed Israel in a war against Iran.

It’s in line with a grievance the podcaster and former Fox News host has nursed for months.

He’s told his followers that Israel is “a completely insignificant country” with “no resources.”

America gets “nothing” from the relationship, he’s said, repeating a theme that echoes throughout the right-wing influencer world.

Theo Von, the third-biggest podcaster on Spotify, declared on his show: “All of our f—ing money goes to Israel.”

Candace Owens turned such complaints into her brand’s growth engine.

Influencers are political adolescents — especially in this era of grift, when an emotional statement on a visceral topic can achieve instant fame.

But to be fair to Von and those who rightfully question US foreign aid, the idea of giving $3.8 billion a year to a country of 10 million on the other side of the world while Americans struggle at home is genuinely puzzling.

It deserves a real answer.

Read the full article on the New York Post.

Joseph Epstein is the Director of the Turan Research Center.

On April 1, Armenian Prime Minister Nikol Pashinyan met with Russian President Vladimir Putin in Moscow (Prime Minister of Armenia, April 1). Putin effectively issued an ultimatum to Yerevan, demanding that it choose sides in Armenia’s foreign policy. The warning highlighted Armenia’s dilemma in practicing a balanced foreign policy. A cornerstone of Armenia’s foreign policy of the past few years has been the signing of strategic cooperation agreements with multiple European and Asian countries. The development has been notable given Yerevan’s more traditional reliance on Russia since the early 1990s. Despite efforts to diversify its partners, Yerevan faces limits to how far it can go in balancing its interests.

A key driver behind the shift in Yerevan’s balancing of foreign policy was Armenia’s defeat in the Second Karabakh War in 2020 and the subsequent loss of the enclave in 2023. In Yerevan’s view, Russia failed to provide sufficient security guarantees to Armenia, especially in 2021 and 2022, when its territory came under direct fire from Azerbaijan (Prime Minister of Armenia, September 24, 2023). This pushed Yerevan to reformat its ties with its longtime ally.

Read the full article on Jamestown Foundation.

Emil Avdaliani is a Research Fellow at the Turan Research Center.

The war with Iran has consumed Washington’s bandwidth for the last month and a half. But the conflict has distracted from more than Ukraine. In the South Caucasus, Russian President Vladimir Putin is waging a quiet campaign to reverse one of the Trump administration’s signature foreign policy achievements—the Armenia-Azerbaijan peace deal—and doing so on the cheap.

The centerpiece of that deal is the Trump Route for International Peace and Prosperity (TRIPP). This transit corridor would link Azerbaijan to its exclave, Nakhchivan, through Armenian territory and open a land bridge from Central Asia to global markets, bypassing both Russia and Iran. TRIPP is more than infrastructure. It is America’s foothold in the South Caucasus and the key to unlocking Central Asia’s vast rare-earth reserves—resources essential for smartphones, electric vehicles, and advanced weapons systems—at a moment when the United States relies on China for roughly 70 percent of those critical imports.

Armenia holds parliamentary elections on June 7. The vote is a referendum not just on Prime Minister Nikol Pashinyan’s government but on the country’s geopolitical orientation—West or Russia, peace or managed conflict. If TRIPP becomes reality, Russia loses its chokehold on Caucasus trade routes and its leverage over two former colonies.

Read the full article on The National Interest.

Joseph Epstein is the Director of the Turan Research Center.

For years, proponents of the Middle Corridor argued that any transit architecture dependent on Russian or Iranian territory was one crisis away from collapse.

They were right.

The Strait of Hormuz remains closed—first by Iranian blockade, now by American policy—taking roughly 20 percent of global petroleum transit offline. Southern routes through Iran that Central Asian states had been building as alternatives to Russian infrastructure are worthless. The only east-west corridor that bypasses both is the Middle Corridor, running through the South Caucasus. Iran grasped this before Congress did: On March 5, its drones struck Azerbaijan's Nakhchivan airport, targeting the precise route where the Trump Route for International Peace and Prosperity— TRIPP—is planned.

Read the full article on Newsweek.

Joseph Epstein is Director of the Turan Research Center.