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kyrgyzstan

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  KYRGYZSTAN

REPUBLICAN REFERENCE

Area (sq.km)
198,500

Population
4,753,000

Principal
ethnic groups

Kyrgyz 52.4%
Russians 21.5%
Uzbeks 12.9%

Capital
Bishkek

Currency
Kyrgyz Som

President
Askar Akayev

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Background:
A Central Asian country of incredible natural beauty and proud nomadic traditions, Kyrgyzstan was annexed by Russia in 1864; it achieved independence from the Soviet Union in 1991. Current concerns include: privatization of state-owned enterprises, expansion of democracy and political freedoms, inter-ethnic relations, and terrorism.

Update No: 260 - (29/08/02)

The Kyrgyz are in a spot. After GDP grew by 5.1% in 2000 and 5.3% in 2001, it spluttered badly this year. A figure of 1% already looks optimistic for 2002, with industrial production having plunged 12% year-on-year and GDP 1.9% in the same period.
One gold mine, the Kumtor mine, has failed badly and that accounts for much of the industrial decline. But the Kyrgyz industrial sector is in a fragile condition with agriculture also in poor shape. The remote Central Asian state is not an obvious place to invest or to expect to prosper. The Germans, with a German ethnic minority at hand, have shown an interest in regular meetings of the German-Kyrgyz Economic Forum. But FDI remains low

High official aid and credit
What Kyrgyzstan has received is abundant, indeed rather over abundant, official credits to the tune of US$1,690m in loans from 1992 to 2001. Aid has also been lavish for a small country of four million people.
The reason is not hard to seek. President Askar Akayev is an unusual leader. An intellectual who speaks several languages, he was trained as a physicist and was a resident of Leningrad for 17 years in Soviet times. He knows how to talk to foreigners in their own idiom and won over Thatcher in the early 1990s. 
The main international institutions backed him as a comparative liberal and pro-marketeer. Hence why the funds began to flow.

Harsher measures
Actually, he is adopting dictatorial ways. This is not so surprising or alarming to Western interlocutors, who can even see their expediency in the post 9:11 world. Kyrgyzstan is a main target of IMU, the Islamic Movement of Uzbekistan, which has invaded the southern province of Osh several times.
Akayev is clamping down on the independent press and opposition, like his neighbours. Democracy is not a live issue in Central Asia, any more than liberalism.

Star billing in the anti-terrorist effort
The Kyrgyz are doing well out of 9:11 in more ways than one. They have participated successfully in the anti-terrorism campaign, granting the US a new base at Manas, 150km from the Chinese border. This will become the largest surveillance base and airfield the US has on the mainland of Asia, outside South Korea, completing an arc from Japan and Taiwan.
The main focus of attention for the long run is obvious. But in the immediate term, the 3,000 personnel will no doubt be concentrating on Afghan developments. The US$54m being extended this year by the US will come in handy, plus the US$5m for military equipment. But problems remain.

Swiss come to the rescue
Nothing could be more indicative of Kyrgyzstan's importance in Western eyes than the recent visit of Switzerland's top banker.
Swiss National Bank (SNB) Chairman, Jean-Pierre Roth, recently visited the republics of Kyrgyzstan and Tajikistan in an effort to boost ties with both countries. In particular, Roth met Kyrgyz President Akayev to discuss issues related to cooperating in banking.
Roth told journalists that he had informed Akayev about the results of the 10-year long cooperation between the national banks of the two countries and expressed his readiness to continue it. Roth expressed confidence that the Swiss government would continue to invest in Kyrgyzstan's economy. The banking official evaluated Kyrgyzstan's economic potential as quite strong, especially in the financial and banking sectors.
"The leading role here should be played by the Kyrgyz National Bank, which should seek to establish more solid contacts with commercial banks," he said.

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ENERGY

Kazak-Kyrgyz potential in hydroelectric joint projects

As announced by Kazakstan's Prime Minister Imangali Tasmagambetov at a news conference after his recent visit to Bishkek, his country is considering investing US$1.9bn in the construction of two Kyrgyz hydroelectric stations. The visit amounted to the signing of an intergovernmental agreement on the rational use of water and power resources, CEE reported.
Kazakstan has also pledged to purchase 1.1bn kilowatt hours of electricity and 1.250bn cubic metres of water from Kyrgyzstan from July 2002 to April 1st 2003. The Kazak prime minister held talks with Kyrgyz President Askar Akayev and Prime Miniser Nikoloai Tanayev in Bishkek on prospective hydroelectric station projects. The projects were identified as one of the key priorities of bilateral cooperation.

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FOREIGN INVESTMENT

US to exploit more investment initiatives in Kyrgyzstan

Ways to develop cooperation between the Kyrgyz Republic and the United States in the economic and finance spheres were discussed during a meeting between Kyrgyz President Askar Akayev and US Treasury Secretary Paul O'Neill, in the course of the latter's official vision to Kyrgyzstan.
Cited by Kabar News Agency, the US Treasury secretary told journalists after the meeting with Akayev, that the sides had discussed economic reforms in the republic. 
According to him, the reforms in the healthcare and education systems had produced good results. O'Neill also stressed the fact that special attention had been given to ways of increasing the inflow of private investments to the republic.
In particular, the American official was of the opinion that the country's policy on economic reforms has been in the correct direction. "There is more potential for development of small and medium business of the country," he was quoted as saying by the agency. According to local reports it has been a long time since the US has expressed interest in cooperation in the hydropower sector and extraction of natural resources mainly in aluminium.
According to O'Neill, the main target of his visit to Kyrgyzstan as well as to other post-Soviet countries was to familiarise with the course of economic reforms, the situation on fighting against corruption, reforms in healthcare and education spheres, observance of the legality of conditions and contracts. So, by these criteria, the opportunity of rendering of economic and financial aid by the US would be best determined. According to him, US President George W Bush has reviewed the initiative to allocate a supplementary US$5bn for the countries that the US assists, including Kyrgyzstan.
Moreover, the American official informed the press that a trade mission to Kyrgyzstan, which will include representatives of leading world companies would be organised soon. O'Neill supposed that the reason for the small volume of direct investment to Kyrgyzstan is caused by the non-acquaintance of European countries and America.
Therefore, he acknowledged the importance for the American embassy in the republic to become one of the initiators in conducting the Investment Summits in Kyrgyzstan.
The US is one of the largest donors to Kyrgyzstan. Total financial aid to the country stands at US$500m.

Kyrgyz president calls for Malaysian investments 

Kyrgyz President Askar Akayev has called on Malaysian businessmen to invest in his country's tourism, agriculture, food processing, textile industry and information technology sectors, the Vietnam News Agency has reported. 
President Akayev, who is on a two-day visit to Malaysia, affirmed that his government would provide a favourable environment for Malaysian investors and hoped to arrange a free visa policy for Malaysians in the future. 
Akayev praised Prime Minister Mahathir Mohamad as an outstanding leader for Malaysia and developing countries, according to the Malaysian News Service (Bernama). 
The Kyrgyz President expressed his admiration for Malaysia's rapid development in a short time, particularly the administrative city of Putrajaya, and the smart city of Cyberjaya, as well as Kuala Lumpur as major commercial centres. 
He also hailed Malaysian PM Mahathir's assistance to his country in carrying out its comprehensive 10-year development plan. 
While he is in Malaysia, President Akayev and his entourage visited Malaysia's Multimedia Development Corporation (MDC) where they were briefed on the MDC and opportunities for joint development in information technology.

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