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KYRGYZSTAN


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 1,737 1,632 1,500 145
         
GNI per capita
 US $ 330 290 280 178
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
198,500 

Population 
5,081,429

Principal 
ethnic groups
Kyrgyz 52.4%
Russians 21.5%
Uzbeks 12.9%

Capital
Bishkek 

Currency 
Kyrgyz Som 

President 
Askar Akayev



Update No: 300 - (01/01/06)

The aftermath of revolution
The Tulip Revolution in Kyrgyzstan in March last year was a formidable event. It seemed to bear out the prophecy of Francis Fukuyama that liberal-democracy, coupled with capitalism, is the only way forward. A crude democracy of a clannish sort was brought to Central Asia by force of arms in Afghanistan in 2002. Last year it became the turn of people power in Kyrgyzstan. 
But it has certainly not brought 'The End of History,' the title of Fukuyama's tome, as far as Kyrgystan is concerned. Quite the contrary. The revolution has unleashed a new confidence in the different clans that make up the country and factions in Bishkek that they can take charge of their own destiny. 

North-South divide again
It is a curiosity of human history that northerners always feel superior to southerners, even when the latter clearly inhabit a more clement clime. A main concern now is that political tension in Bishkek could deepen the divide separating residents of northern Kyrgyzstan from southerners. Many northerners associate the rise in crime and corruption with the March revolution, which was led mainly by politicians with southern political roots, including President Kurmanbek Bakiyev. 
In a broader sense, the political wrangling is prompting many Kyrgyz to lose faith in the revolution's potential to bring about a more responsive government. The great popular complaint against Akayev's regime was that it had grown out of touch with the day-to-day concerns of the population.
Now, the perception is growing among Kyrgyz citizens that members of the executive and legislative branches are intent mainly on accumulating personal wealth and gaining control over income-generating state assets, instead of working to improve socio-economic conditions in the country and to keep it together.

Son of President builds a pyramid
Another truism of human affairs is that once in power people are always inclined to feather their nest and put their family and pals in place. Nowhere is this more true than in Central Asia.
There has been nothing more important of late in Kyrgyzstan than control of the media. In response to the arbitrary practice and silence of the authorities, the staff of independent Pyramid TV Co., Kyrgyzstan went on an unlimited strike in mid-December, saying the younger son of Kyrgyz president, Maxim Bakiyev, had attempted to seize their channel. Kyrgyz President, Kurmanbek Bakiyev, ordered a probe into the facts of the case, a palliative, but not necessarily a cure. 
Around four hundred Bishkek residents signed to back up Pyramid TV Channel, whose staff stepped in to oppose the 50 per cent buyout of the company and arbitrary practices of the new owners. More than a hundred TV employees and their supporters gathered in front of the Kyrgyz Parliament calling for a court settlement for the conflict. Twenty reporters stuck adhesive tape over the mouths and were holding posters reading "They will come for you tomorrow!" and "Let's defend the right to tell the truth!"
Such bold moves by reporters were provoked by the so-called representatives of the new owners, willing to grab control over TV/radio programmes. Prompted by them, the police occupied the premises of the TV Channel at night from Friday to Saturday, endeavouring to make reporters vacate the building. Parliament deputy, Kabay Karabekov, and rights advocate, Tursunbek Akunov, stepped in to prevent the seizure. 
"In 2004, we [Pyramid] transferred the 50 per cent of stocks for US$100,000 to Areopag Co. with the right for back purchase during three years," said Oleg Vassil, vice president of the company. "We may buy them back before the term expires and are ready to do it now." Areopag sold the stocks without notifying other owners, Vassil said.

Judiciary curbed
The revolution in Kyrgyzstan is at risk, as the country's new president and parliament find themselves on a collision course, as well as the president and the judiciary. 
Two recent developments - the dismissal of Azimbek Beknazarov as prosecutor general, and the assassination of MP Bayaman Erkinbayev - have intensified a long-simmering power struggle involving the executive and legislative branches. The incidents also underscore the prominent role of criminal elements in Kyrgyz politics. 
President Kurmanbek Bakiyev dismissed Beknazarov on September 19th. Beknazarov had been aggressively pursuing corruption cases, including several involving friends and relatives of former president Askar Akayev, who fled the country amid the Tulip Revolution in March. Officially, presidential aides attributed the dismissal to supposed malfeasance in two particular cases, one involving the murder of prominent businessman Abdalim Junusov and the other related to a shooting incident at a hotel in the southern city of Osh. 

Legislating media freedom proving more difficult than originally anticipated
Establishing new boundaries for mass media outlets in Kyrgyzstan is proving more difficult than originally anticipated. In the meantime, Bakiyev's administration appears to be steadily widening its influence over broadcast and print outlets. 
Draft legislation on media freedom and on journalists' rights and responsibilities has been developed by parliamentary working groups. The legislation, however, remains under review by Bakiyev administration experts. Some Bakiyev critics complain that the president is stalling on the legislation. 
On November 7, Miklos Haraszti, the Organization for Security and Cooperation in Europe's representative on media freedom, announced that his office had completed detailed reviews of the draft laws. In a letter to Kyrgyz Foreign Minister, Alibek Djekshenkulov, Haraszti wrote: "While the reviews provide some very positive signs with regard to the legal situation concerning media, there are still a number of issues which are of concern and hinder the activity of journalists and the functioning of the media in your country." 
In some instances, the language contained in the legislation needs to be clarified, OSCE experts suggest. One bill, the draft Law on Mass Media, came under criticism for containing "illegitimate content restrictions," said one review prepared by the global media freedom group Article 19, under the auspices of the OSCE. "Some restrictions," the review states, "are so vague that they could mean almost anything. The prohibition on printing 'unprintable expressions' is probably the best example of [such] restrictions." 
As debate continues on the creation of a new media framework, some observers in Bishkek express caution about the growing influence of the Bakiyev administration over mass media. The concern is rooted in the fact that prior to his ouster in the March revolution, former president Askar Akayev managed to establish control over most major media outlets in the country. The March revolution raised hopes that the country's media would gain independence from government interference. 
But old habits seem to die hard. In mid-October, the government announced it was re-privatising KOORT, a television station once controlled by Akayev son-in-law Adil Toigonbayev. Following the March revolution, the station had remained critical of Bakiyev. An attempt to install a new management team, comprising Bakiyev administration loyalists, touched off an employee revolt at the station, forcing officials to back off. 
At about the same time, officials ordered the return of the Vecherny Bishkek newspaper to Alexander Kim, who was the leading opposition media figure during the Akayev era. 
Since the March revolution, however, Kim has become closely aligned with the Bakiyev administration. For example, during the presidential election campaign in June, another Kim-controlled newspaper, MSN, appeared to favour Bakiyev in its coverage over other candidates. Some observers in Bishkek say that Vecherny Bishkek -- which, like KOORT TV was formerly controlled by Toigonbayev - is now mimicking MSN's pro-Bakiyev editorial stance. 
Perhaps the most unbiased media outlet since the March revolution has been state television, analysts in Bishkek say. During the Akayev era, the channel, NTRK, was tightly controlled by the presidential administration. But almost immediately after Akayev fled into exile, NTRK directors adopted an independent editorial philosophy. Since the presidential election in July, won handily by Bakiyev, observers have noted a tendency of the channel to back administration policies. 
Bakiyev in recent months has faced increasing political opposition to his agenda, but there are only a few media outlets that feature regular criticism of the presidential administration.
One such channel is Pyramid TV, yet another outlet once part of Toigonbayev's media empire. Another is the NTS channel, which began broadcasting in early 2005, and has quickly attracted a large audience share with its sleek production values. The station has also managed to recruit many top journalists from other media outlets. According to Bermet Bukasheva, an aide to Parliament Speaker Omurbek Tekebayev, NTS has "Russian capital but does not belong neither to Akayev nor Bakiyev".

A can of worms opens up
The Tulip Revolution is leading to all sorts of revelations about the previous regime. It is becoming clear that the Akayev regime was even more corrupt than was imagined.
These help to bolster the legitimacy of the new government, although they also by implication set it high standards to live up to. 
There is one that is particularly important because it concerns the Americans. It must be gratifying for Bishkek to hold the high moral ground here over Washington, whose sermonizing about democracy, etc, does rather grate on the nerves of all who are subjected to it. It also gives it greater leverage in future negotiations.
Soon after the American invasion of Afghanistan in 2001, the Pentagon opened an air base in neighbouring Kyrgyzstan and made a deal to get jet fuel from the only two suppliers available. The companies just happened to be linked to relatives of the country's president. 
Now the two businesses are under scrutiny by Kyrgyz prosecutors and US Federal Bureau of Investigation agents who are looking into whether the man who was then the president, Askar Akayev, and his family pocketed hundreds of millions of dollars, partly from Pentagon fuel contracts, before being ousted in March. 
The family's involvement at the Bishkek base, a critical site for refuelling US Air Force planes flying over Afghanistan, is seen as a story of everyday cronyism in an impoverished country where the Americans' arrival was apparently a financial windfall for the well connected. 
But the case also illustrates how the Pentagon, needing new bases in Central Asia after the Sept. 11 terrorist attacks, has forged alliances that have required difficult choices about when to protest - and when to ignore - corruption, human rights abuses and other unsavoury practices in countries important to the military effort. 
"The Pentagon was doing contracts that they knew were going to benefit the ruling family," said Scott Horton, an American lawyer who says he was informally consulted by the Kyrgyz government at the time the base was established. 
"It was very clear that this was an effort to secure the support of the old regime." 
Pentagon officials say the two firms, Manas International Services Ltd. and Aalam Services Ltd, were used not because of their high-level connections but because they were the only ones with facilities that could be used to transport and store fuel at the airport in Bishkek, the capital. Even though the Akayevs may have benefited, Defence Department rules do not bar companies with ties to a foreign leader from such contracts, the officials said. 
The fuel deal, however, has created a political problem for the Bush administration, which is seeking an agreement with Kyrgyzstan's new leaders for long-term access to the air base. 
The country's current president, Kurmanbek Bakiyev, who was elected in the summer after Akayev fled a popular uprising in the spring, is insisting that Washington make retroactive lease payments and help recover the fuel contract money that he contends should have gone into Kyrgyz government coffers. 
Kyrgyz officials argue that Washington knew where the fuel proceeds were going. 
The Pentagon's handling of the fuel contract has become a liability at the very time when the military needs the base more than ever. 
Uzbekistan, where the United States also opened an air base to support operations in Afghanistan, ordered its US base closed after the United States joined calls for an international investigation of the Uzbek security forces' suppression of antigovernment protests in May. 
Loss of the Uzbek base has required the American military to shift more air operations to Kyrgyzstan. But the talks between the new leaders and American officials over use of the Bishkek base recently have grown tense. 
"The US was paying inflated fuel prices to companies stolen by the family of the former president," said Zamira Sydykova, Kyrgyzstan's ambassador in Washington. "The US has said it would discuss these back payments," she added. "However, to date, the Pentagon has refused to honour these commitments." 
Pentagon officials say the Kyrgyz demands amount to asking the United States to pay twice for use of the base over the past four years. "Any possible misappropriation of funds is an internal Kyrgyz matter," a Pentagon spokesman, Bryan Whitman, said in a statement. All Department of Defence contracts "for goods and services in Kyrgyzstan were negotiated in accordance with U.S. laws," he said. 
An internal FBI report given to Kyrgyz prosecutors in September found that the two businesses might be involved in money laundering through accounts at Citibank in New York and the Dutch bank ABN AMRO. The companies also had transactions with "a myriad of suspicious U.S. shell companies" associated with Akayev, his family and supporters, and with arms traffickers, the report said. A copy of the document was given to The New York Times. 
When a Pentagon team showed up for talks at the Bishkek base in early November, they barred the Kyrgyzstan government's attorney, Edward Lieberman, a Washington lawyer, from participating, Sydykova, the ambassador, and other Kyrgyz officials said. The Americans said they were under orders not to deal anymore with the lawyer. 
Lieberman declined to comment, as did a spokesman for the U.S. military's Central Command. Kyrgyz officials, noting that they are under pressure from Russia and other countries in the region to kick out the American military, say they could still ask the Americans to leave if no help is forthcoming. 
"We made an agreement between the governments of the United States and Kyrgyzstan to find out about all the sales, all the affairs of Aalam Services and Manas," said Miroslav Niyazov, head of Kyrgyzstan's national security council. "There is a basis to believe there were serious embezzlements and harmful misdeeds." 

Balancing act between the US and Russia
Kyrgyzstan still prefers to balance off the Americans and the Russians, rather than give either preference. It has no plans to host a new Russian airbase in Osh in addition to that existing in Kant outside Bishkek, Kyrgyz Foreign Minister, Dzhekshenkulov, announced on November 17th in a speech from which we have already quoted above.
"The issue of the deployment of a Russian air base in Osh is not under discussion. First, we need to create a fully-fledged air base in Kant," he told Interfax News Agency. Dzhekshenkulov was then in Moscow on a working visit. He met with Russian Foreign Minister, Sergei Lavrov.
The Russian base is a powerful factor in ensuring stability and security in Central Asia, the Kyrgyz minister said.
As for the American base in Kyrgyzstan, the minister said that "it is too early to set any time constraints on the base's presence as the situation in Afghanistan is hard to predict. Attacks by Islamic extremists have continued after the presidential and parliamentary elections and the problems of al-Qaeda and the Taliban have not yet been eliminated."
"The presence of an anti-terrorist coalition air base in Bishkek plays an important role in the situation in Afghanistan. We support efforts made by the anti-terrorist coalition to stabilize the military and political situation in Afghanistan," Dzhekshenkulov said.
At the same time, he added that the technical and financial terms of the U.S. base's deployment were being revised.
Dzhekshenkulov also said Bishkek was counting on Russian participation in the development of major Kyrgyz economic facilities.
"In the trade and economic sphere, we are not fully realizing the potential of sectors such as energy, mining and tourism. We believe our strategically important industrial and economic facilities could be developed with Russian participation," he said. Kyrgyzstan would like to attract major Russian companies with sufficient industrial and financial potential to Kyrgyz investment projects, Dzhekshenkulov said.
"We are interested in drawing Russian capital to the building of the Kambarat hydroelectric power plants, the construction of an aluminium smelter in Kyrgyzstan and other major projects," he said. Russian-Kyrgyz relations are currently at a high level, the Kyrgyz minister said.
Russia is Kyrgyzstan's main foreign trade partner, he noted. 

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ENERGY

Kyrgyzstan exported 2.4bn kw/hours of electricity 


The export of electric power went up and has this year made 2.4 billion kw/hours. This trend began in August due to negotiations on signing of quadripartite Intergovernmental protocols, press service of JSC "Electriheskie Stantsii," stated, New Europe reported.
The largest importer of Kyrgyz electricity in the current year became Kazakstan - 1.43 billion kw/h. Also, cooperation with Kazakstan has allowed the conclusion of the contracts about fuel supply of heating stations in Kyrgyzstan, and also to transit electricity in Russia.
Tajikistan bought 95 million kw/h and acted as a stable consumer of Kyrgyz electricity in spring and autumn. Around one million kw/h was exported to Xuad, China. Tariffs for the electricity exported in China make three cents for 1 kw/h. However, currently there is no physical opportunity to increase supply there because the increase of exports is connected to the large investments on construction of new passage capacities. The expansion of the export of electric power in China is a prospective goal for the company and 882 million kw/h have been exported to Russia since August.

Kyrgyz president wants private power networks 

Kyrgyz president, Kurmanbek Bakiyev, has called for the granting of concessions to enable the passing of power distribution networks to the private sector as soon as possible. "To establish stability in the energy sector, distribution companies should be passed to the private sector," Bakiyev said at a recent government session, Interfax News Agency reported.
"An increase in prices will not increase the collection of payments. They would simply be stolen, just as before. It is necessary to pass the companies over to the private sector, which will not tolerate theft," he said. "I will insist that we grant concessions, using the Severelectro joint-stock company as an experiment," Bakiyev said. "There is a need to appeal to investors who are willing not only to invest money in the Kyrgyz energy sector, but who are also willing to bring order to it," he said.

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TELECOMMUNICATIONS

Russia's MTS may get control of Bitel 

Russian mobile market leader Mobile TeleSystems (MTS) may secure control over Kyrgyzstan's largest cellco, Bitel, by the end of the year, according to sources close to the deal, Vedomosti business daily recently reported. 
The sources have not revealed the stake size MTS seeks to buy or the price it will pay. MTS' President Vasily Sidorov said that information that the deal may be closed soon is "incorrect," but confirmed that MTS is interested in Bitel. If its bid for Bitel falls through, MTS has its eye on other cell companies in CIS countries. Sidorov said that MTS is interested in entering the markets in Armenia, Azerbaijan, Georgia, Kazakstan, Moldova and Tajikistan. According to analysts, the value of Bitel is estimated at 150 million Euro to 200 million Euro. However, MTS may buy a stake in Bitel with a discount as the company's ownership has been challenged in court several times this year, Vedomosti said, citing sources.

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