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KYRGYZSTAN


 

 

In-depth Business Intelligence

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: 310 - (26/10/06)

Geography defeats ideology
Russia has moved to boost security ties with Kyrgyzstan in a perceived bid to guarantee the loyalty of the Central Asian state, once considered to be among Moscow's most trusted allies in that strategically important region. The Tulip Revolution in March last year caused a frisson in relations for a while, but both sides wish to restore them. 
The Kyrgyz now espouse Western values in the wake of their revolution; while the Russians, having flirted with them in the days of Gorbachev and Yeltsin, are moving away from them at accelerating speed, as the emasculation of their fledgling liberal-democracy shows. Nevertheless, the Kyrgyz and the Russians are now finding common ground - albeit only metaphorically!
It is of vital importance that the two states have no common border. Kyrgyzstan is separated from Russia to the west by the immensity of Kazakhstan, the size of Western Europe no less. To the north and east it is protected by deserts and vast mountain ranges. It has no need to be afraid of re-incorporation by Russia. Nor does it. 
To the south lies India, but across the vastness of the Himalayas! It was in the third century BC in the Mauryagupta Empire in the Punjab that a brilliant precursor of geopolitics, the chief minister of the state moreover, Kautilya, enunciated the simple doctrine that neighbours are always enemies, but that neighbours of those very neighbours, as long as they are not neighbours themselves, are potential friends. Such is the case with Kyrgyzstan and Russia.

Moscow beefs up security ties with Bishkek 
Russia and Kyrgyzstan held joint anti-terrorism exercises October 2-5 in Osh, in southern Kyrgyzstan. Some 350 special force troops, combat vehicles, artillery, Su-25 jetfighters, and Mi-8 helicopters took part in the manoeuvres.
Officially, the South-2006 exercises were aimed at practicing coordination of combat units in a joint operation against suspected terrorists, the Kyrgyz Defence Ministry said. The drill was also supposed to improve the combat skills of military personnel operating in mountainous areas.
Russian Deputy Prime Minister and Defence Minister Sergei Ivanov, Kyrgyz Prime Minister Felix Kulov, and Kyrgyz Defence Minister Ismail Isakov attended the exercises. During the drill, Isakov reiterated the role of the Collective Security Treaty Organization (CSTO) as a military-political institution. "The CSTO was set up so that [members] can help one another in action rather than dealing with military or terrorist threats on paper," he explained.
Ivanov, a key player in Russian politics, the long-time friend of Putin since their KGB days together and tipped as his likely successor in 2008, said that the anti-terrorism exercises in Kyrgyzstan were designed to practice interaction between special force units against a backdrop of increased activity by radical Islamic groups in Central Asia. He urged the two countries to "effectively join forces in countering terrorism and extremism." 
Ivanov also said Russia was ready to provide military-technical assistance to all its allies but did not want to force anyone to accept the aid. So far, Russia has provided military equipment worth 15 million roubles (about US$560,000) to Kyrgyzstan as part of their military cooperation agreements.
Ivanov praised military cooperation with Kyrgyzstan and said Russia would continue to develop the Kant base. He assured Bishkek that Moscow is committed to the facility, declaring, "We will continue making major investments in the development of the Kant base."
In October 2003, Russia set up an airbase in Kant, about 20 miles west of the Kyrgyz capital, Bishkek. The base is supposed to enable Russian combat aircraft to provide close air support for the ground units of CSTO member states.
The base is also seen as being capable of protecting Russia's economic interests in Kyrgyzstan. For example, in 2002 Russia and Kyrgyzstan formed a $10 million uranium joint venture. The venture's Kara-Baltinsk processing plant in Kyrgyzstan is intended to process raw uranium from the Zarechnoye field in southern Kazakstan, where reserves are estimated at 19,000 tons.
Economics remain a significant factor in Moscow's relationship with Kyrgyzstan. At a summit meeting in Moscow on September 5, 2005, Russian President Vladimir Putin and Kyrgyz President Kurmanbek Bakiyev agreed to boost economic cooperation, including energy-sector projects and greater investment. Moscow also agreed to restructure Kyrgyzstan's $184 million debt and extended the repayment period up to 33 years.
During Bakiyev's official visit to Moscow in April 2006, Moscow and Bishkek reiterated their allegiance to the bilateral friendship and cooperation treaty of June 1992 and the "eternal friendship" declaration of July 2000.
Trade between Russia and Kyrgyzstan increased by some 20% in 2005, according to official figures. Bilateral trade has nearly tripled since 2000 to reach $514 million last year. As Kyrgyzstan's top trade partner, Russia is responsible for roughly one-third of Kyrgyzstan's total foreign trade turnover.
Kyrgyz authorities have indicated economic cooperation with Russia is a government priority. Kyrgyzstan was particularly interested in Russian companies assisting the construction of the Kambaratin-1 and Kambaratin-2 hydropower plants.
In terms of security cooperation, Moscow and Bishkek have long pledged to combat international terrorism within the framework of the Shanghai Cooperation Organization (SCO) and reiterated the importance of the Russian air base in Kant as "an important factor of peace and stability in Central Asian region."
As one of the SCO founding members, Bishkek officially recognizes the regional bloc as one of Kyrgyzstan's foreign policy priorities, Bakiyev announced last June. The SCO is an important and efficient tool of confidence building in the region, he noted (Interfax, June 13).
In the meantime, the Kyrgyz leadership has been careful to avoid giving any impression that it is drifting toward Beijing. In September 2005, Bakiyev announced in Moscow that there had been no contacts with China concerning the alleged creation of a Chinese military base in Kyrgyzstan.
In addition, during the security drill in Kyrgyzstan, Russian Defense Minister Ivanov dismissed rumors that Russia and China were planning an anti-Western military alliance. He described Russia and China as "strategic partners," adding that Moscow sought to develop bilateral cooperation with China as well as multilateral ties within the SCO. This cooperation "does not threaten other countries and does not aim at creating a new military-political union in Eurasia," he said.
Subsequently, both Russia and Kyrgyzstan have been keen to avoid claims that their security cooperation could have any anti-Western overtones. 
But of course they would, wouldn't they?

Kyrgyz President regains political footing 
On the domestic front the revolution is stabilising, so it would seem, although the situation is still fraught.
Taking advantage of divisions within the opposition, President Bakiyev is rapidly regaining his political footing after being knocked off balance by accusations that the National Security Service planted drugs on a prominent member of parliament. 
In fact, damage-control measures undertaken by Bakiyev appear to have blunted the opposition's political momentum - for the moment. Bakiyev critics had hoped to use the recent scandal -- in which NSS agents were implicated in the set-up of Omurbek Tekebayev, a former parliament speaker and still fierce critic of the president -- to prompt a radical change in Bakiyev's reform course, or even to force him from office. Tekebayev was arrested and briefly held in Poland on a drug possession charge. The implication of the NSS in the affair prompted the resignation of the service's chief, Busurmankul Tabaldiyev, and his deputy, Janysh Bakiyev, who is also the president's brother. 
The president appeared in the legislature on September 14th to head off a parliamentary resolution calling for his resignation. In explaining his conduct, he insisted that both Tabaldiyev and Janysh Bakiyev "had nothing to do" with the set-up of Tekebayev, the AKIpress news agency reported. He also appeared to open the way for their return to the security service, pending the results of various official inquiries. "I agreed that until the end of the investigation both of them have to be suspended from their work," Bakiyev said. He suggested that foreign agents might have put heroin in Tekebayev's luggage in an effort to destabilize Kyrgyzstan. 
In addition, Bakiyev adamantly denied accusations that he met in late July with fugitive Russian tycoon Boris Berezovsky, a meeting that would have violated international agreements concerning extradition. "I have never seen him [Berezovsky] and have never had any relations with him," Bakiyev said. 
He voiced vigorous opposition to a parliamentary attempt to open its own investigation into the Tekebayev affair. "Parliament should be a parliament, and not an investigative or punitive body," Bakiyev said. 
Meanwhile, the opposition continues to struggle. Radical opposition leaders and their supporters tried to maintain the pressure on Bakiyev during a mass meeting in Aksy, the scene of a bloody confrontation in 2002 between police and protesters. The so-called kurultai adopted the type of resolution that the national parliament so far has shied away from -- demanding that Bakiyev resign unless he dismisses all his relatives from government posts, undertakes far-reaching constitutional reform and gives an accounting of security troops' behavior during the Aksy events. 
One of the leading figures associated with the kurultai, Azimbek Beknazarov, head of the Asaba Party, had vowed that 15,000 people would attend the meeting. Journalists estimated only about 2,000 people actually showed up. The low attendance appeared to undercut the significance of the meeting's resolution. 
Since the Tekebayev scandal broke, radicals, including Beknazarov, have made regime change their top priority. Moderates within the opposition, on the other hand, believe the emphasis should be on promoting constitutional reform. 
The opposition cause has not been helped by the fact that a witness, Nadir Mamirov, who implicated Janysh Bakiyev in the Tekebayev affair, has subsequently changed his story, and now denies that the president's brother ordered drugs to be placed in the MPs luggage. 
Observers say state-controlled media outlets, including Vecherny Bishkek and the National TV Corp., have been used in an attempt to erode public support for the opposition. For example, a September 16 commentary published in Vecherny Bishkek quoted political analyst Imankadyr Rysaliev as warning that opposition leaders were intent on destabilizing Kyrgyzstan. "If we follow political extremists, this can lead to civic confrontation and blood," Rysaliev said. 

Kyrgyz-Uzbek relations: harmonious now, but trouble looms
Converging interests have prompted Uzbek President Islam Karimov and his Kyrgyz counterpart, Kurmanbek Bakiyev, to become political best buddies. But their newfound alliance could prove short-lived, regional experts say. 
Bakiyev travelled to Uzbekistan on October 3-4 for talks with Uzbek officials, including Karimov, as well as a little sightseeing in Samarkand. After the talks, Bakiyev indulged in hyperbole as he described the current state of bilateral affairs, speaking of the "eternal friendship" of Kyrgyzstan and Uzbekistan. "Uzbeks and Kyrgyz will never be separated," Bakiyev told Uzbek television on October 4. "They should live together, as well as grow and develop together." 
While not inclined to make rapturous predictions about future cooperation, Karimov was equally pleased with the outcome of Bakiyev's visit. The Uzbek leader characterized the talks as a "fruitful exchange" taking place within a "trustworthy atmosphere." He called attention to a joint statement that reaffirmed both states' commitment to a 1996 friendship treaty, and hailed the shared commitment to combating Islamic radicalism in Central Asia. With Uzbek assistance, Bakiyev's administration in recent months has cracked down on suspected Islamic radicals, especially in southern Kyrgyzstan. Of course Karimov always seeks to characterise his domestic political opposition as 'Islamic radicalism,' (ie terrorism), which for the innocent and ill-informed, muddies the waters.
Uzbek state media outlets offered an unusually extensive and favourable coverage of Bakiyev's visit. One Uzbek State TV broadcast commented: "For centuries, the people of Uzbekistan and Kyrgyzstan have lived in friendship and agreement, and contributed to each others' culture and art. Today too, the commonness of history, culture and traditions, language and religion continues to serve as a strong foundation for our cooperation." 
The most significant outcome of Bakiyev's trip was a bilateral agreement lifting visa requirements for citizens of both countries for travel between Kyrgyzstan and Uzbekistan. In addition, Karimov and Bakiyev agreed to open a new border-crossing point in the Ferghana Valley. For Karimov -- who has tried to seal Uzbekistan off in the hopes of preventing the further penetration of radical Islamic ideology -- opening the frontier to Kyrgyz nationals is the ultimate sign of approval of the Bakiyev administration's efforts to root out militants in southern Kyrgyzstan. 
Citizens of both countries cheered the suspension of visa requirements. Cross-border shuttle trading, a vital source of income for many in frontier areas, has withered due to the Karimov administration's increasingly restrictive policies. Uzbeks and Kyrgyz citizens interviewed expressed hope that visa-free travel will greatly reduce instances of harassment and extortion at the border. Kosimjon Hamrakulov, an Uzbek resident, told EurasiaNet: "I have many relatives in Kyrgyzstan and it makes it easier for us to visit each other." 
Less than 18 months ago, Kyrgyz-Uzbek relations were marked by acrimony generated by Kyrgyzstan's acceptance of refugees who fled Uzbekistan in the aftermath of the Andijan massacre. Bilateral antagonism dissipated, however, with the growth of security cooperation. Domestic political factors played a major role in prompting both Karimov and Bakiyev to set aside previous differences and engage each other. 
Both leaders have seemed eager to shore up outside political support for their respective administrations. Bakiyev has faced considerable pressure throughout 2006 from political rivals in Bishkek. Karimov, meanwhile, remains obsessed with the Islamic radical threat to his administration. He had long viewed southern Kyrgyzstan as a haven for Islamic militants, and was quick to act on the opportunity to work with Kyrgyz leaders to undertake a security sweep of the area. In addition, Karimov's approval of visa-free travel may be designed to relieve the building pressure on the Uzbek economy, which at present is stagnating amid the government's efforts to tighten control over all aspects of Uzbek life. 
In extending an enthusiastic welcome to Bakiyev, Uzbek officials were also seeking to send a message to another neighbour, Tajikistan: cooperate with us and you will be rewarded. Uzbek-Tajik relations, chilly since the Islamic radical threat first manifested itself in the late 1990s, have experienced a frost in recent months. 
Kyrgyz-Uzbek ties may be exceedingly harmonious now, but that may not be the case for long. Bakiyev and Karimov, some political analysts point out, avoided discussing the divisive issue of energy supplies. 
Kyrgyz officials had hoped that increased security cooperation with Uzbekistan would secure generous Uzbek export terms for natural gas needed for the fast-approaching winter heating season. Members of the Karimov administration, however, seem disinclined toward such generosity. One Uzbek official who requested anonymity told EurasiaNet: "We should separate political issues from economic issues. Uzbekistan cannot provide gas at reduced prices because it would harm its own economy." 
Uzbekistan intends to supply Kyrgyzstan with gas at US$55 per 1,000 cubic meters (tcm) until the end of this year. But starting in January, the Uzbek government is expected to seek a price of up to US$100/tcm. 
Such a price hike would likely create a domestic crisis in Kyrgyzstan. According to KyrgyzGas, a state company that imports Uzbek gas, Kyrgyzstan's demand is projected to reach 900 million cubic meters of gas in 2007, roughly a 20 percent increase over this year's consumption level. In addition, Kyrgyz Minister of Finance Akylbek Japarov said recently that the country lacks the means to subsidize gas prices for low-income consumers, who constitute a large segment of the Kyrgyz population. Thus, Bakiyev's administration stands to face extreme political pressure from his constituents, if Tashkent raises the export price as expected. 
The potential repercussions would also likely hurt Uzbekistan, as Kyrgyzstan would undoubtedly try to ease a wintertime energy crunch by releasing large volumes of water from reservoirs to generate extra electricity. Downstream areas of Uzbekistan could experience ruinous flooding, and Uzbek farmers could well find themselves without sufficient water for irrigation during the agricultural growing season. 

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ENERGY

Central Asia declares itself a nuclear weapons free zone 


The five countries of Central Asia, Kazakstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan have signed a treaty creating a nuclear weapons free zone in their lands. Semipalatinsk, the former Soviet nuclear test site in eastern Kazakstan, was the scene for the treaty's historic signing on September 8th, New Europe reported.
Under the treaty, the five countries have committed themselves to ban the production, acquisition and deployment of nuclear weapons and their components. The treaty does not prohibit the use of nuclear energy for peaceful purposes. "This is our contribution to global security," Kazakstan' Foreign Minister, Kasymzhomart Tokayev, said. "It will become an impetus for the coordinated efforts of the world community in non-proliferation and prevention of the acquisition of weapons of mass destruction by terrorists. It will undoubtedly become an important step in the development of peaceful nuclear energy."

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FOREIGN COOPERATION

Kyrgyz PM to pursue cooperation with Russian regions 

The outlook for cooperation between Kyrgyzstan and Russian regions is very favourable, Kyrgyz Prime Minister, Felix Kulov, said, New Europe reported.
"We regard Russia as our number one partner in the economic, social and cultural fields. Relations with the Yaroslavl, Moscow and Sverdlovsk regions and the city of Moscow reinforce cooperation between the two countries. 
Many Kyrgyz people are working in Moscow. They are sending home to their relatives, remittances amounting to the republic's annual budget. We should not underestimate that," Kulov said in Yaroslavl, where he arrived to celebrate the 30th anniversary of the "Kyrgyzstan" state farm. Commenting on whether he keeps in contact with former Kyrgyz President Askar Akayev Kulov said: "We have no personal relations. As far as I know, Akayev lives and works in Moscow and from time to time publishes articles in the press." Kulov said that Akayev had been partly responsible for his imprisonment. However, "I have no personal grudges or hard feelings towards him. It seems that he was then facing a difficult situation. Personal relations should never translate into big politics. I wish he lives through his years of life respectably," he said.

Implementation of MoU with Iran discussed 

Iranian Ambassador, Mohammad Reza Saburi, and Kyrgyz Minister of Finance and Economic Affairs, Akylbek Japarov, on October 8th discussed ways to implement the articles of a memorandum of understanding (MoU), Interfax News Agency reported. 
The MoU was signed at the eighth joint commission of Iran and Kyrgyzstan. At the meeting, Japarov said that the high-ranking officials of the two countries are willing to broaden bilateral economic and trade ties, according to a report released by Iranian Embassy in Kyrgyzstan. He also said that his ministry will spare no effort to fully implement the articles of Iran-Kyrgyzstan MoU. Turning to the problems facing some Iranian tradesmen and industrialists currently residing in Kyrgyzstan who attended the meeting, he underlined that they will be solved as soon as possible. The Iranian ambassador to Bishkek expressed satisfaction over the progressing trend of bilateral trade and economic and commerce interactions between the two countries. The Eighth Iran-Kyrgyzstan Joint Economic Commission was held in Tehran on August 19th-21st, 2006. 

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FOREIGN RELATIONS

Bakiyev strengthens security ties with Karimov 

Kyrgyz President, Kurmanbek Bakiyev, and his Uzbek counterpart, Islam Karimov, have signed a joint statement after their negotiations in Tashkent on October 3rd that stresses their joint efforts at countering threats to regional stability. The Kyrgyz president was in Uzbekistan till October 4th. It was noted that the results of the visit of Bakiyev will have great value in the development of Kyrgyz-Uzbek relations. The negotiations were held in spirit of efficiency and mutual understanding, Interfax News Agency reported. 
The two leaders also signed a treaty and a 2007-2011 programme on cooperation in business, science and humanitarian affairs. Uzbekistan and Kyrgyzstan pledged to create conditions for bridging the gap between the two countries' laws and other regulations in foreign trade, trade and business relations, the tax, customs and tariff system, the environment, subsoil use, anti-monopoly policy and consumer rights. The two nations also signed intergovernmental travel agreements and a document on contacts between the governments. In addition, cooperation agreements were signed between the Uzbek and Kyrgyz Prosecutor General Offices, as well as the Uzbekturism national company and the Kyrgyz state committee for tourism, sport and youth policy. The leaders of both countries have noted the need to overcome the low level of activity in bilateral relations. Neither Tashkent nor Bishkek have paid official visits to the other in ten years, the two presidents said at a press conference after talks.
Addressing reporters after his talks with Karimov, Bakiev praised the current state of bilateral ties. Bakiev said. "Both sides noted they were mutually interested in bringing bilateral relations to new heights. They also emphasized the need to enhance all aspects of their current cooperation." 
Bakiev has been criticised in his country for not opposing the extradition of a number of Uzbek refugees and asylum seekers wanted in their home country for their alleged participation in last year's Andijan unrest. Kyrgyz rights campaigners have criticised Bakiyev for strengthening security ties with Uzbekistan, saying he is imitating Karimov's tough policy against banned Islamic groupings.

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MINERALS & METALS

Another failure to sell Kara-Balta uranium plant 

The tender to sell the state's 72.28 per cent stake in Kara-Balta Mining Works, a major Soviet-era uranium-processing enterprise and one of Kyrgyzstan's biggest industrial enterprises, failed to go ahead for the fourth time, the spokeswoman for the State Property Committee Tatyana Nagavitsina, said, Interfax News Agency reported.
The deadline for applications to bid in the tender was October 2nd. "The members of the tender commission met on October 3th, did not even review the one and only application, and decided to declare the tender invalid due to the insufficient number of participants," Nagavitsina said. 

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