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KYRGYZSTAN

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In-depth Business Intelligence

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 1,632 1,500 1,400 143
         
GNI per capita
 US $ 290 280 280 179
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
198,500 

Population 
4,892,808

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

Capital
Bishkek 

Currency 
Kyrgyz Som 

President 
Askar Akayev

  

Update No: 287 - (29/11/04)

Putin, Akayev meet in Novo-Ogarevo 
Kyrgyzstan's President Askar Akayev arrived at Vladimir Putin's residence in Novo-Ogarevo on November 10th. As it so happens, he had his sixtieth birthday the day before. Akayev turned 60. "I am happy that the Kyrgyz President has paid a visit to Russia just after his birthday," the Russian leader noted greeting the guest. Putin wished all the best to his Kyrgyz counterpart. 
The Russian President pointed out progress in Russian-Kyrgyz relations in all spheres. However, according to Vladimir Putin, the two leaders always have many important issues to discuss. 
Akayev noted the development of Russian-Kyrgyz relations. Mutual trade turnover grew by over 50% in the first nine months of 2004 as compared to 30% in 2003. Kyrgyzstan's leader focused on the bilateral energy cooperation. In his words, the agreement on the construction of the two hydroelectric power plants Kambarata-1 and Kambarata-2 will be signed soon. "These will be the largest power plants on the Naryn River," he added. 
According to Askar Akayev, he will go to St. Petersburg "to resume cooperation with its largest electrotechnical companies, Elektrosila and Metal Plant, which have launched production of turbines and generators for the Kyrgyz hydroelectric power plants. 
Moreover, the Kyrgyz President assessed highly the Russian airbase in Kant. "The base is functioning very well," he noted. "I believe that this base provides reliable protection against international terrorism," Mr. Akayev said adding that he had met with the commander of the 5th air army in Kant on his birthday. 
"We have no claims on Russian servicemen and are grateful to them," Askar Akayev said to Vladimir Putin. According to the Kyrgyz President, the deployment of the base has boosted Kant's development. 

The ABD's involvement after a decade
The Asian Development Bank (ADB) has begun a new credit line for entrepreneurs in Kyrgyzstan without government guarantees, as a sign of its confidence in the republic's political and economic reforms since independence. Half of the incoming aid to the republic will be grant-based. 
"All the credits being sent to Kyrgyzstan have been given on preferential terms. Now Kyrgyzstan is not the country it used to be 12 years ago. Our main task is poverty alleviation in the country as well as regional cooperation improvement," ADB President Tadao Chino said, while visiting the country recently to review progress. The ADB and Kyrgyzstan have been working together since 1994, with the bank providing US$530 million in aid since then. The funds have been directed to the country's key ministries, along with implementation of 10 social and economic projects. They include developments in agriculture, education, disaster preparedness and improvement of the road linking the capital Bishkek with the second city of Osh, due to be completed in 2005. 
The bank will also finance the improvement of two other important roads - from the Kazakh commercial capital Almaty to Bishkek and from Bishkek to Kashgar in the Chinese province of Xinjiang. "It will be the largest regional project, which will connect all the countries of Central Asia. This road will become the primary factor of the sustainable social-economic development in the 21st century," President Askar Akayev said. The international financial organisation has also given aid to hundreds of schools and hospitals as well as the printing of more than 4 million text book. 

Electoral season opens
Kyrgyzstan is slated to hold parliamentary and presidential elections in 2005. Akayev has pledged not to seek a new term, becoming the first Central Asian leader to make such a promise.
Although regarded as the most liberal of the Central Asian leaders, Akayev is not above certain political misdemeanours all the same. He is criticised for persecuting the opposition.
Louise Kantrow, Executive Director of the International League for Human Rights addressed a letter to President Askar Akayev of the Republic of Kyrgyzstan on October 29, 2004 in regard to the continuing imprisonment of Feliks Kulov, a leader of opposition. 
The following is the text of the letter:- 
"The International League for Human Rights is deeply concerned about continuous denial of conditional release to former vice president and national security chief, Feliks Kulov, who is currently the head of the opposition Ar-Namys Party. Kulov's arrest is widely regarded as politically motivated. 
"On January 22, 2001, a military court, which was closed to the public, sentenced Feliks Kulov to seven years of imprisonment, convicting him of abuse of power when he was minister of national security in 1997-1998. The sentence was delivered despite his acquittal of the same charges in August 2000. On May 8, 2002, the Pervomai District Court of Bishkek sentenced Feliks Kulov and his co-defendant Alexander Gasanov to ten and six years in prison respectively, with confiscation of property. Both Kulov and Gasanov were convicted of embezzlement in 1993-97, when Kulov was governor of the Chui Province and Gasanov was manager of a construction company in the province. The court then followed articles 59-60 of Kyrgyzstan's Criminal Code, combining the two sentences for a total of 10 years. 
"According to Kyrgyz ombudsman Tursunbai Bakir-Uulu, Kulov was eligible for release as early as August 5, 2004. The Sokuluk District Court, however, denied Feliks Kulov parole on August 13, failing to take into account the time Kulov spent incarcerated in the detention centre under the auspices of the Ministry of National Security from March 22, 2000 until August 7, 2000; and from January 22, 2001 until July 26, 2001. 
"On August 23, 2004, head of Kyrgyzstan's penitentiary department, Vladimir Nosov, said at a press conference that Kulov will only be subject to parole after November 12, 2005, which would prevent Kulov from being at liberty in the run-up to the presidential election in October 2005. Kulov's continued incarceration violates Kyrgyzstan's obligations under the International Covenant on Civil and Political Rights to desist from arbitrary detention. Recognizing your repeated promise to ensure the presidential elections are conducted in a constitutional manner, we urge you to grant immediate conditional release to Mr. Kulov. 
"We also urge you to stop persecuting political opposition and other persons disagreeing with your policies and create an equal playing field in the run-up to the presidential elections."

Concern of ethnic minorities
Concern about Kyrgyzstan's civil rights climate is prompting the country's sizeable Uzbek community to throw its weight behind the government as election season approaches. The show of support comes even as many Kyrgyz express frustration that their own interests have gone unnoticed by Akayev's administration.
Comprising roughly 13 percent of Kyrgyzstan's overall population of 5 million, Uzbeks are the country's largest ethnic minority group. The Russians are the second, but are more confident of their position with the weight of Russia behind them, on which Kyrgyzstan is dependent for energy and many other things. Akayev is a decided Russophile, having spent 17 years in Leningrad in the days of the USSR.
Uzbek election preferences are sure to be driven by memories of the bloody 1990 rioting involving Uzbeks and Kyrgyz in the southern Osh region. Akayev's domestic policies, casting Kyrgyzstan as a "common house," have helped restore a sense of order, and have reassured many Uzbeks that they are welcome in Kyrgyzstan. 
Now, with Akayev's pending retirement in 2005, many Uzbeks are approaching the parliamentary and presidential votes in 2005 with apprehension. They are keen to see Akayev's "common house" course continued, but wonder what will happen if Akayev leaves the political stage. 
Akayev has publicly stated that he will not run again, but the issue of the incumbent's candidacy remains unsettled. The constitution appears to bar Akayev from seeking another term. However, some local political analysts believe the Basic Law could end up being reinterpreted to enable Akayev to seek re-election. If that occurs, Uzbeks could be counted to be strong Akayev backers. "Akayev should stay in power because he will ensure stability and peace," Gafur Soliev, an Uzbek retiree, told EurasiaNet. "Others cannot do it."
Regardless of Akayev's final decision on the 2005 presidential election, Uzbeks are likely to look to the incumbent president for guidance on how to vote in the parliamentary poll, scheduled to occur in February. In the event that Akayev indeed retires, Uzbeks also will be eager to see if he endorses a particular presidential candidate. 
At present, Uzbeks are wary of the growing influence of Kyrgyz nationalists in politics. Nationalist sentiment is arising out of the frustration generated by the country's stagnant economic conditions, some observers say. Among the more outspoken adherents are leading members of the opposition, including parliamentary deputy Adahan Madumarov and Omurbek Tekebayev, a former presidential candidate and leader of the opposition group Ata Meken (Fatherland). Both men have expressed distrust of Kyrgyzstan's Uzbek population
This association has prompted many Uzbeks to steer clear of the country's opposition movement, according to one journalist based in Osh, a city with a large Uzbek population. "The reason why Uzbeks play no role in Kyrgyzstan's opposition movement can be explained by the fact that the opposition movement is dominated by Kyrgyz nationalists," said the journalist, who requested anonymity. "The rhetoric of these politicians frightens many Uzbeks."
Uncertainty over the future has already prompted several Uzbek community leaders to join the pro-presidential movement "Alga, Kyrgyzstan!" the journalist added. Their action is meant not only to protect the status of Uzbeks, but, also, to protect what whatever economic gains that have been made by the Uzbek community during Akayev's tenure.
As many Uzbek entrepreneurs see it, political change could pose a threat to their economic livelihood. "If new people come to power, they will start extorting money from us, and [the cycle of] corruption will start all over again," explained Abdurashit, an Osh restaurant owner who gave only his first name.
For all their outward show of support for Akayev, Uzbek voters are not necessarily content with the status quo. A 2003 poll conducted by the Osh-based Uzbek Cultural Centre found that more than 60 percent of 1,436 ethnic Uzbek respondents thought that the government did not do enough for them. Over 79 percent called for the formation of an Uzbek political party, and 78 percent believed that the Uzbek language should be given the status of an official state language.
An additional source of discontent is the fact that Uzbeks are underrepresented in regional and local administrations. "It's time to overcome stereotypes and improve work" in personnel policy, commented Bakhtyar Fattahov, a prominent Uzbek leader, in an interview with the government newspaper Slovo Kyrgyzstana. "In short, the problem exists, and it should not be silenced."
But for now, chances for a campaign to address these issues are slim. Top Kyrgyz officials are reluctant to tackle such a sensitive issue in an election year. In addition, there is broad concern among Kyrgyz that granting more rights to Uzbeks would lead to additional demands, including long-suppressed claims for autonomy. Such a cycle could ultimately give rise to a secessionist movement, the Kyrgyz thinking goes. 
Despite their numbers, Uzbeks have yet to voice a defining set of policy goals, or mobilize around a single Uzbek leader. Ordinary Uzbeks often see the community's leaders as having been co-opted by the Kyrgyz government and varying interests hamper the search for replacements. Geographical differences also pose an obstacle: Uzbeks from Jalal-Abad Province tend to be more assertive on civil rights issues than are Uzbeks from the Osh, site of the 1990 riots.

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BANKING

Kyrgyz Ineximbank to increase credit portfolio 16% by year-end 


Kyrgyzstan's Ineximbank plans to increase its credit portfolio 16% to 1 billion sum by the end of 2004, the bank's chairman Murat Kunakunov said at a press conference, Interfax News Agency reported. 
He said the bank's portfolio was 863.2 million sum on October 1st, 2004, its assets were 1.34 million sum and individual accounts were 204.6 million sum. Ineximbank is the leading Kyrgyz bank, Kunakunov said. 
He said that Ineximbank both directly and through its partners have recently financed various sectors of the country's economy, including the industrial, construction, trade, agricultural and mortgage sectors for a total of some US$40 million. 
He said credit operations are the bank's major activity. One of the priority directions of the bank is developing credits according to a European Bank for Reconstruction and Development program for micro and small financing. Ineximbank currently has two credit lines under the program for US$1 million and US$3 million, and also a World Bank project to finance the rural sector. 

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ECONOMIC NEWS

President says Kyrgyz economy shows sustained development 

President Askar Akayev recently expressed satisfaction with Kyrgyzstan's economic performance for the period from January to September 2004. 
"It has been possible in the republic for the past few years not only to stabilize the situation by overcoming the effects of the systemic crisis but also to begin sustained forward movement," Akayev said in an annual message to the nation and parliament. 
"GDP in Kyrgyzstan for the January to September period of this year was 7% larger than that for the same period last year, exports were 41% higher, capital investment was 9% larger in volume, and inflation amounted to 0.2%, which is the lowest rate among the countries of the Commonwealth of Independent States," Akayev said. 
"It can be stated in all confidence that economic growth in the republic has become stable, dynamic, and irreversible," he summed up. 
"The government of the republic and regional leaderships should make use of the positive trend that has taken shape for further movement ahead," he went on. 
"The energy industry is the key problem of economic development for the majority of countries, and this is a particularly important issue for the republic with its lack of sufficient hydrocarbon resources of its own," Akayev said. 
"We are taking well-considered measures to carry out structural reforms in the energy sector, and we can expect tangible assistance in this industry from the World Bank and other foreign partners," he said. 
"That is the only way to sustain and develop the energy sector," he added. 
Other major tasks are "the need to fit [Kyrgyzstan] into the wave of economic growth" that has engulfed "Russia, Kazakstan, and China" and "is opening up a window of new opportunities for the republic," Akayev said. 
He also called for a more aggressive export policy, for seeking investment from Russia and Kazakstan, for setting up Kyrgyz-Russian and Kyrgyz-Kazak ventures, for joint innovation projects, and for more extensive tourism. 
He also said Kyrgyzstan needed one more round of privatisation, one to involve "reorganization of strategic facilities, natural monopolies in the energy and natural gas industries, and also in the air transportation and communications sectors, which need considerable investment." 
He set targets of bringing budget deficits to the equivalent of 3.5% of GDP by 2007 and of securing economic growth of between 7% and 10% by that year. 
Moreover, "it is planned to substantially raise overall state revenues, simultaneously reducing state expenditures to between 20% and 22% of GDP," he said.

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