In the distant past, Central Asia was significant because of its location on the Silk Road. It once again occupies a strategic geographic position. Central Asia lies on the border of influence between Russia, China and the United States. It also lies adjacent to Afghanistan and the Middle East. The five countries in the region are all in a position to either benefit or suffer due to the interest of the major powers and also the presence of regional liberation, terrorist and Islamic militant groups. In the immediate future the region faces economic pressures from rising energy and (most importantly) food prices. In Tajikistan for instance 50% of the population already lives below the poverty line. Rising prices will be felt most harshly by the poor.



Politically the region features a number of very long term rulers (Kazakhstan and Uzbekistan) and one party states. There seems little prospect of democratic reforms, at least in the short term, despite some rhetoric. In Kazakhstan, for instance, President Bakiyev signed a new broadcast law on June 4 that contradicts the promises of a free media that he bandied around in the run up to the 2005 elections. The region receives a poor terrorism rating. Many groups are reported to be operating in different parts of the region. Sometimes they are targeting countries and regimes in Central Asia; other times they are simply using the region for training and base operations. In addition, there are concerns about the operation of organised crime organisations feeding off the drug trade and the security threat these groups pose.



All five Central Asian states are in need of defence equipment, but it is unlikely that budget constraints suffered over the last decade will ease in the medium term. No significant defence procurements are expected from any of Central Asia’s governments. However, as the threat of Islamist insurgency continues to menace governments in the region, a number of small procurements can be expected. There is little indigenous defence industry capacity in the region but a significant amount of arms trading and It is estimated that approximately 75 million firearms have found their way to conflicts in South Asia via the Central Asia region. In summary, the outlook for Central Asia in Q3 remains relatively stable, but with tensions remaining unresolved.