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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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Update No: 331 - (24/05/11)

The failure of Kyrgyzstan's government to push the country towards democracy, improve conditions for investors and work on relations with its neighbour Uzbekistan, is pushing the Central Asian state further into Russia's hands, making it likely that the US military airbase at Manas, outside the capital Bishkek which is crucial for operations in Afghanistan will close in 2014 as planned.

It has been a year since the 'revolution' in April that toppled former Kyrgyz President Kurmanbek Bakiev, and ethnic clashes in June between Uzbeks and Kyrgyz in the south of the country that killed hundreds. Since then, the opposition that took power under interim President Roza Otunbaeva has established the region's first parliamentary democracy and weakened the president's power. However, the government is paralysed by infighting and corruption, and is not doing enough to calm ethnic tensions or prevent the cash-strapped country from falling into economic collapse.

Since the June violence subsided, the new government has done almost nothing to deal with its causes, and most of those tried and sentenced in connection to the bloodshed have been Uzbeks.

In addition to Kyrgyzstan's one-sided treatment of the perpetrators, Uzbekistan has closed its shared border with Kyrgyzstan, essentially cutting off the region where the violence occurred and increasing the risk of further clashes between ethnic groups.

The rise in tensions is already apparent. In some places, the poorly defined Kyrgyz-Uzbek border runs through villages, making it difficult to know which side people are supposed to be on, and the Kyrgyz authorities say there were about two dozen border-related skirmishes with Uzbekistan last year alone. Farmers have been shot chasing stray cows and a group of 30 Kyrgyz residents of Aidarken, a village in Batken, recently attacked an Uzbek checkpoint near Sokh, demanding that the border reopen.

Uzbek officials say that they've closed the border as they do not have any faith in Kyrgyzstan's interim government and they want to protect their security. However, people in southern Kyrgyzstan say that the closure has halted trade, preventing farmers from taking their produce to market. According to Sergey Ponomarev, president of the Bishkek-based Association of Markets, Trade and Services Sectors, Uzbekistan's decision to close its border with Kyrgyzstan has decreased official trade turnover between the two countries by 90 per cent, deepening poverty and feelings of isolation in the border zone.

As well as the potential for further violence in the south and declining relations with Uzbekistan, Kyrgyzstan's main problem is its collapsing economy. Last February, the International Monetary Fund offered hope, saying that Kyrgyzstan's GDP could rise by up to 5 percent this year. But the impoverished state produces little besides gold, and economists say the country still faces possible economic catastrophe.

The government's attempts at reform, such as the privatisation of state assets, have been hampered by corruption and the local population are disillusioned. Foreign investors are too. Kyrgyzstan is potentially capable of doubling its gold production within a decade, but the foreign companies needed to invest in the industry are increasingly nervous about working there. The country's political instability and back-hander-style of asset management have undermined confidence, and the government has made the outlook worse by conducting a regulatory overhaul that has brought mining operations to a standstill. Exploration licenses have been frozen since February while a ministerial committee makes the effort to weed out ineffective companies who are not actively developing their holdings.

As for political progress, Kyrgyzstan is falling down there too. The opposition that called for Bakiev to leave last year has splintered and members of parliament are fighting one another in the lead-up to presidential elections in October. Interim leader Rosa Otunbaeva has said that she won't be running in the poll, and in order to jostle for power, some members of parliament are accusing their rivals of not holding Kyrgyz citizenship, a charge that was even levelled against Deputy Prime Minister Omurbek Babanov.

While the country flays in the dark, Russia is swooping in and exerting its influence. A year ago, Russia helped to destabilise Bakiev's government after the former Kyrgyz leader reneged on his promise to kick out the Americans from Manas airbase in exchange for a $2 billion loan.

Alexander Cooley, an associate professor at Columbia University's Barnard College, says that Russia pushed for Bakiev's end. "The Russian media launched an all-out blitz against Bakiev, accusing him of nepotism and corruption and repression and so forth," Cooley says. "[Russia] also pulled its fuel subsidy, which led to the sky-rocketing in prices in early April. That mobilised a lot of the first anti-Bakiev demonstrations over inflation and unacceptable spikes in energy prices."

Russia was the first country to recognise the leadership of interim President Roza Otunbaeva, and she repaid the favour by praising Moscow's role as a key partner. And after parliamentary elections in October, newly elected Prime Minister Almazbek Atambaev hinted that the agreement with Washington on Manas would not be renewed once it expired in 2014. In addition to America's probable exit from Manas, China has announced that it will not be investing any significant capital in Central Asia for the next five years, leaving Russia in the driver's seat and the fate of US-led operations in Afghanistan uncertain.

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