Kyrgyzstan

Kyrgyzstan demonstrates what happens when geopolitical disruption creates economic opportunity—and the risks of building growth on that disruption. Since Russia's invasion of Ukraine, Kyrgyzstan has experienced an economic boom as re-exports of sanctioned goods flow through its territory to Russia. GDP grew 11.7% year-on-year in the first half of 2025 and 10% year-to-date through September. The economy is visibly thriving on arbitrage.

The structure reveals deep dependencies. Gold accounts for 42.9% of exports, primarily from the Kumtor mine—nationalized from Canadian company Centerra Gold in 2021, triggering $300 million in arbitration losses but securing 147 tonnes of projected production for the state. Remittances from migrant workers in Russia comprise 14.6% of GDP, down from a peak of 33% but still critical. An estimated 600,000 Kyrgyz citizens work abroad, predominantly in Russia.

The transit opportunity has real infrastructure backing. The China-Kyrgyzstan-Uzbekistan railway, signed in June 2024, will connect Chinese manufacturing to European markets through Central Asia. The logistics sector benefits from rerouting around sanctioned Russian routes. Kyrgyzstan positions itself as part of the Trans-Caspian 'Middle Corridor' bypassing Russia entirely.

But the sanctions arbitrage carries escalating risk. The US sanctioned four Kyrgyz companies in July 2023 for aiding Russian sanctions evasion. EU measures targeted Kyrgyz banks handling Russian transactions in 2024-2025. Banks severed ties with Russia's MIR payment system. Secondary sanctions could collapse the re-export boom as quickly as it emerged. The question: can Kyrgyzstan convert temporary arbitrage gains into permanent capacity before the window closes?