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: 275 - (01/12/03)
Militancy mounts in Kyrgyzstan
The Kyrgyz are more affected by terrorism than neighbouring Kazakstan. The Islamic Movement for Uzbekistan (IMU) operates in the region and has tentacles in Kyrgyzstan, in particular in its southern province of Osh which debouches into the well populated Ferghana Valley, a relative hotbed of Islamic extremism in former Soviet Central Asia outside Afghanistan. The police and security forces of the entire region liaise to combat the menace, pooling their resources.
The borders are highly porous in the south of the country. The Hizb ut-Tahrir al-Islami (HTI) also operates in Kyrgyzstan. It is not listed as a terrorist organisation by Western states, but it has been increasing in militancy in the last twenty months since the war in Afghanistan and distributes pamphlets of a subversive nature throughout most of the region. This may be due to widespread discontent at the new US military presence in Central Asia, which is resented by nearly all Moslems. This is especially true in Kyrgyzstan, which has a large 3,000 strong US base at Manas north-east of Bishkek. It is a surveillance centre for the whole region, including china and Afghanistan. These activities might be considered normal democracy, but in this repressive regime, protest can quickly change to violence if only because of frustration.
Although it is not so likely that the bulk of the HTI network would join the IMU, there remain concerns that frustrated HTI cells may act as sleepers for future IMU activity. Moreover, the growing discontent within HTI ranks indicate that the group may feel obliged to turn to alternative modes of action in the near future. These could include organising demonstrations against the detention and imprisonment of HTI members and even the use of violence to confirm commitment to the cause.
A third group operates in the region, mostly in Kyrgyzstan, that has stirred up unrest. This is The Eastern Turkmenistan Islamic Movement (ETIM) of Uighur separatists that has been added to the list of terrorist organisations by the US. The ETIM has sporadically targeted the Chinese population in Kyrgyzstan. Most recently it has been blamed for the killing of 21 Chinese on a bus in Bishkek.
Its main objective is separation from China, notably in Xinjiang, where its bombing outrages are common. Kyrgyzstan, which has a smaller Uighur minority, is used as a base of operations for the separatists. The primary targets of the bombers are public transport, restaurants, cinemas, department stores and hotels in Xinjiang. Cooperation between Kyrgyz and Chinese police forces is close.
Russians move into a new base
The Russians are touchy about being pushed out of Central Asia after 9:11. The Russians are being given the use of a new base at Kant, the Turkic word for town. This is partly to mollify them for the extension of the Manas base to the Americans and eight other nations
Economy in poor shape, but help from abroad
Kyrgystan lacks the huge resources of Kazakstan next door and has a considerably poorer economy. Thins have not been helped by a crisis in its one key resource sector, the gold industry, in which production plummeted in 2002.
The Kazaks have been investing in Kyrgyzstan for all that. The Kazakstan-based Temirbank picked up a 46% stake in Ineximbank recently, the sixth largest bank in the country. This is the second example of Kyrgyz and Kazak banks working together after Kazcommertsbank bought Kyrgyzavtobank last year.
The EBRD is giving its blessing and support by buying up a quarter of Ineximbank, paying $1.4 million. The investment was made, says Fernand Pillonel, the EBRD head in the country, to ensure Ineximbank has a stable role in financing small-to-medium companies in the republic.
EBRD to buy 25% stake in Kyrgyz bank
The European Bank for Reconstruction and Development (EBRD) will buy a 25% stake in Ineximbank, Kyrgyzstan's sixth biggest bank, for US$$1.4m Interfax News Agency has reported.
The banks signed an agreement in Bishkek. Fernand Pillonel, the head of the EBRD office in Kyrgyzstan, said the investment was to make sure Ineximbank held a stable role, aimed, especially, at financing small and mid-sized business.
Temirbank of Kazakstan bought 46% of Ineximbank earlier this year. This is the second example of Kyrgyz and Kazak banks working together after Kazkommertsbank acquired Kyrgyzavtobank in 2002.
Kyrgyzstan plans to pay its debt to IMF by 2004
Kyrgyzstan plans to pay off its debt to the IMF and petition for part of its external debt to be written off, Interfax News Agency has reported.
Prime Minister, Nikolai Tanayev, said that "In 2004, we have to finish the joint program with the IMF and get the Paris Club to write off part of the country's external debt amounting to US$450million."
Kyrgyz Finance Minister, Bolot Abildayevm, said that "since the beginning of the year, to clear the domestic and foreign debt of Kyrgyzstan, 1.8 million som have been allocated." There are 41.40 som/$1.
He also said that 11.4 billion som have come into the budget in the first nine months of 2003. Tax revenue reached 8.4 billion som, and in comparison with 2002, has grown by 967.9 million som.
The minister said the general expenses of the central budget, with account taken of state debt, reached 6 billion som.
At the same time, Abildayev said the general debt of local budgets on salary payments has increased. After nine months, it has reached 124.5 million som, while last year, this debt equaled 92.7 million som for the same period.
"With the goal of relieving national tension in the regions, the Finance Ministry has allocated 22.7 million som to local administrations since the beginning of 2003. These means were sent for the cancellation of the debts on salaries," the finance minister said.
EBRD may allocate US$$1m for Kyrgyzstan glass factory
The European Bank for Reconstruction and Development may allocate about US$1m for the reconstruction of the Ainek Industries glass factory in Bishkek, Interfax News Agency has reported quoting Rifat Utyushev of the EBRD office in Kyrgyzstan.
The project is estimated to cost US$3.5 million. The CIS Interstate Bank is to provide US$1.5m and other funds will come from local investors, he said.
The EBRD, Interstate Bank and Ainek Industries signed a protocol of intent on the project on October 24th during a Kyrgyzstan-Russia investment forum.
MINERALS & METALS
Sale of Khaydarken mercury plant fails again
The Krygyz government tried but failed to sell a 99.98% stake in the Batken-based Khaydarken Mercury Combine in late October, according to Interfax News Agency. This is the third sales attempt of the combine, which specialised in processing mercury and mercury-antimony-fluorite ores. Even though Kyrgyzstan dropped the selling price sharply, there were not many bidders. As a result, the sale failed.
"The combine's problems scared off potential buyers," Zholchu Dzhusupov, chief of metallurgy and engineering at the foreign trade and industry ministry, said, Interfax News Agency reported.
Main problems are the unrepaired damage after an accident caused flooding in the main adit in 2002 and fines of over 10m som (US$242,000) for gross violations found by the domestic energy service during a recent inspection, the government said in a statement.
Two tenders, dated September 25th and August 10th, failed to draw a buyer. The tender commission then decided to cut the starting price for the stake from US$2m to US$1.5m, and the mandatory investment from US$6m to US$3m.
Khaydarjeb has capital of US$3.07m and its assets stood at US$3.27m as of January 1st, 2003.
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