The Political and Economic Challenges in the Kyrgyz Republic

Mr. Tazabekov sits on the boards of the Soros Foundation and the American University in Kyrgyzstan, and in 1998 he was named honorary consul of Canada for the Kyrgyz Republic. He also served as the First Deputy Minister of Foreign economic relations. He spoke at the Carnegie Endowment in an event moderated by Senior Associate Anders Aslund.

 The text of his speech is presented below, followed by a summary of the discussion.

On the Eve of Changes

The Kyrgyz Republic is on the eve of crucial changes. The constitution will be changed and the balance of power will be re-assigned between the president, the government and the parliament. These modifications were developed during a special Constitutional Meeting, which involved the opposition and the civil sector. The overhaul of the Constitution is an attempt to overcome the systemic crisis that has been growing over the last several years and finally erupted in March of this year. On March 17th-18th mass protests in support of the MP Beknazarov took place in Aksy, the Kyrgyz part of Ferghana Valley. The popular protest resulted in death of 5 civilians, who were shot by the police. Prior to the tragic Aksy incident, one person died in Bishkek while on a hunger strike organized by the opposition.

September 11th and the Kyrgyz Republic

The tragic events of September 11th greatly influenced the Kyrgyz Republic. Firstly, the liquidation of Taliban regime and Al-Qaeda removed the biggest threat to Kyrgyzstan since independence-the war in Ferghana Valley and threats to its territorial integrity. Secondly, the military air base was established in Bishkek. According to the latest data as of July 1st, 2002, the United States has spent about $28.5 million, including $15 million for jet fuel and $2 million for landing and navigational fees. Expenditures of the French air force in Kyrgyzstan (which left the country by November 2002) totaled about $8.7 million, including $5 million for jet fuel and $0.8 million for landing and navigational fees. Thus, the total expenses of the military air base during 2002 will be about $50 million-a sum roughly equivalent to 14% of the $348 million national budget for 2003. The presence of the air base has also affected the country in many other aspects, both economic and non-economic.

After the liquidation of the Taliban and establishment of the military air base, Akaev and his circle believed that Kyrgyzstan's foreign political situation had significantly improved. Akaev made changes to the cabinet of ministers, removing the representative of the South Prime Minister Bakiev, whose popularity has grown recently. Akaev also replaced the heads of two important structures - the ambitious Minister of the Interior Aitbaev and the Minister of National Security Djanuzakov. Both of them were compromise figures for Akaev. Aitbaev, the former Komsomol leader of Soviet Kirghizia, was supported by Usubaliev, who was the leader of the Kyrgyz Communist Party for 25 years. Akaev appointed Aitbaev in an attempt to keep peace and order within the country in the face of numerous external and internal threats. As an aside, the Ministry of Interior employs 17,000 policemen, while the whole Kyrgyz Army is comprised of 10,000-11,000 soldiers. Akaev recently appointed Akmataliev the Minister of Interior and Imankulov the head of the National Security Service. Both of them are loyal to Akaev.

These replacements were followed by the introduction of a dragon decree on the freedom of speech, the famous governmental decree No. 20. The decree was an attempt to shut down the media and political parties under the guise of the fight against religious extremism.

Finally, Akaev resumed his struggle with the political opposition, including the parliament members. Akaev and his circle started proceedings against the already incarcerated Kulov.

The conclusion is the following: The appearance of the multinational, basically American, military base was perceived by Akaev as a carte-blanche for rigid and uncompromising actions against certain members of the government, parliament, media and public figures. When the country was facing external threats and internal instability, Akaev and his key figures had to act carefully. Now they have started to act more severely. The executive seized the opportunity offered him and began to look for quick fixes to complicated problems. The Aksy demonstrations grew out of Akaev's new severity.

At the same time, the Kyrgyz population reacted to establishment of the military base with great enthusiasm. The heightened US presence in our country and Central Asia as a whole gave the people hope that they will be able to appeal to the US on matters of unfair persecution and Akaev's dictatorial tendencies. This hope has proven unfounded. The authorities, more confident in their strength, act more aggressively, while the United States does nothing except issue declarations, as if its hands were bound. As a result, the society and the media feel frustrated and believe that the US applies a policy of double standards: on one hand, democracy and human rights are necessary, on the other hand, the military base and friendly President Akaev are much more important to US geopolitical strategy in the region.

A final consequence has to do with the relations between Kyrgyzstan and China. 90 thousands hectares of the Kyrgyz territory were transferred to China, an area equal to about 0.5% of the whole territory of the country. Akaev began the extremely unpopular process of ratifying the agreement with Jiang Zemin before the September events, because at that time it was vitally important for him to gain China's support in case of military clashes with the Uzbek Islamic guerrillas in the Ferghana Valley. The establishment of the military base and the abolishment of Taliban regime eliminated the external threat of the country. The transfer of that territory was wrong, and resistance to it has united the opposition of the north and the south, the intelligentsia and the nationalists.

Consequences of the Aksy Incident or the Aksy Syndrome

The protest marches in support of the parliament member Beknazarov, and the shooting of civilians by the police, have changed Kyrgyzstan. On November 15th, the Aksy villagers' original ultimatum expired. In that ultimatum, the villagers demanded the resignation and punishment of key officials close to the president: the head of the President's Administration, the Minister of Interior, and the General Prosecutor. In response President Akaev has taken measures to change the constitution. Discussions regarding constitutional reform will be concluded on November 18, after which a referendum will be held.

Before this March incident, any politician or public figure (a minister, the mayor of Bishkek, the speaker of the parliament or the Prime Minister) was defenseless before the president and the persecution of the state machine. Even the people loyal to Akaev were frequently treated in the same way. There are numerous examples. There was no immunity from any actions of the authorities. Any business could be made insolvent or taken away. But after the Aksy incident, everyone understood that a politician could be protected by the support and protests of the citizens from his or her home region in Kyrgyzstan. Such actions have proved their effectiveness. We have a concrete example in the parliament member Beknazarov. When his criminal case was ceased, he was released from prison and kept his position in parliament. That is why other leaders organize their political activities based upon this principle.

Most recently, the relatives of those killed in the Aksy demonstrations forced the authorities to prosecute the policemen who had fired on the demonstrators. The relatives of those policemen and other people from their district, indignant at the cynicism of the authorities, blocked the main roads and organized riots in various regions of Kyrgyzstan and in front of the House of the Government in Bishkek under the slogan "they are not to blame, they merely executed the order." In Kirghizia we immediately repeat and copy something that is very effective. As the result, the entire social and political life of the country is based upon this principle.

In other words, the Aksy incident led to the societal realization that neither the court nor the law, but only force and the threat of its application can solve the people's problems. That force is the last hope for justice. It's difficult to invent any more terrible blow to state power. Askar Akaev has also realized that he cannot stay any longer. The Aksy incident has launched a dangerous process to set up a new system of real political power, which, however, might ultimately lead to tribalization and the weakening of central government.

Referendum

The referendum is supposed to effect the following changes.

1. Guarantees will be introduced for the ex-president. That is, the ex-president cannot be persecuted, detained or arrested, etc. for his activities while he was the president. The same applies to his family members.

2. The parliament will become stronger and more powerful. Firstly, the two-chamber parliament (which could be manipulated) will be transformed into one-chamber parliament. This reform will concentrate the power of the parliament, which is now divided between two assemblies. Secondly, the parliament will gain additional powers. It will approve appointment and dismissal of the Prime Minister, the chairs of the constitutional and supreme courts, members of the government and heads of administrative bodies.

3. The powers of the Prime Minister will be extended. He will be empowered to nominate new members of the government for approval by the president and the parliament. Earlier the president himself appointed and dismissed all ministers without the approval of the premier and the parliament.

4. The power of the president will still remain important (the power to dismiss the parliament, the power to dismiss the chairman of the central bank, accounts chamber, etc.).

Hence, the balance of power will be changed after the parliamentary elections in 2004 and the presidential elections in 2005. President Akaev will leave the post he held for almost 15 years. The constitutional and peaceful transfer of power from the first president to the next president might take place in Central Asia for the first time. Power will be re-assigned in a way that will reduce the significance of the next president and will make the parliament and the Prime Minister stronger opponents to the president. Akaev had to re-write the constitution and disperse power to protect himself and make himself less dependant on the new president. Akaev will do his best to put his people in the three key positions - the president, the speaker of the parliament and the Prime Minister. Even so, after 2005 the country will live in a different reality.

Economic failure

In spite of the fact that Kyrgyzstan has carried out radical and rapid economic reform, including the private land ownership, we have yet to reach the level of the economy of 1991 (the GDP is now 76% of what it was in 1991, and industry is now 44% of the 1991 levels).

During the last five years, Kirghizia has maintained an average 5% of economic growth a year, made possible by direct loans received from such international donors as the Asian Development Bank and others. These loans funded infrastructure projects worth hundreds of millions of dollars and also supported the gold mine company Kumtor, which extracted 20-25 tons of gold every year. This growth in turn supported the development of construction, industry, and consumer services. The gold extracted by the Kumtor is decreasing, and the donors have insisted on radical cuts to the program of state investments (from 8.4% of GDP in 1999 up to 4.4% of GDP in 2001, by 2005 it is expected to have it less than 3%).

The landslide at the Kumtor site resulted in a negative growth. By the end of the year, we will have zero or 1% growth instead of the expected 5% growth. The net inflow of foreign investments decreased from $109 million in 1998 to -$2.4 million in 2001 and -$1.1 million in 2002. It's rather difficult to talk about any stable economic growth. Moreover, the Kumtor site, comprising 11% of the GDP, does not bring profits into the national budget, even though the government owns 70% of the company. Agriculture comprises another 41% of GDP, and since it is practically exempt from taxation, there is an even bigger part of the GDP failing to contribute to the national budget.

Mass Media and the Civil Society

The civil society in our country is strong. There are about 3,000 independent organizations in Kyrgyzstan, one of several factors that makes Kirghizia different from its neighboring Central Asian republics. Additionally, these institutions will continue to play a critical role in the constitutional and peaceful assignation of power to the next president. Even strong players, however, need to be supported.

When we talk about freedom of the press in Kirghizia, we usually focus on the persecution of certain newspapers, editors or journalists by the government. But I would like to underline that the most significant problem facing the Kyrgyz media is its poor economic situation. The reason is rooted in the general economic situation of the country. First of all, in a country with 5 million people, out of which 1.5 million are children and 50% live below the official poverty line, buying a newspaper is luxury. Secondly, the real economy is still weak and very few businesses operate in it, meaning that the advertising market is tiny. In the developed countries the electronic media earns 100% of its revenue from advertising and the print media earns 50-70% of its revenue from advertising. In Kirghizia the print media makes only 10% of its total revenue from advertising. Furthermore, our country is bilingual and the media market is divided into two sectors: Kyrgyz and Russian-speaking audiences.

There is a sole state-owned printing house in the country. The project of setting up independent printing houses, funded by the US, is moving slowly, but we do hope that the independent printing press will start working in a year. According to our analysis of printing costs the introduction of the independent printing press will cut current tariffs for newspapers by about 40%. At present high printing tariffs are caused by the high rates of the state printing monopoly, a result of its ineffective management system, inflated staff, etc. The majority of the local mass media, about 70%, is composed of loss-making companies. They always lack financial resources for salaries and adequate technical equipment. On average, journalists make from 30 USD up to 50 USD. The profession of a journalist is not prestigious. Thus most media sources produce staid and subjective stories that undermine confidence in the media. Tax regulations are more severe for the media compared to other businesses.

While official reports say that Kirghizia is a country of free speech, where about 500 mass media outlets operate, this data is not objective. This figure includes the newspapers that closed due to a shortage of funding. About 20 publications come out regularly along with 5 TV channels and 6 radio stations.

On the other hand, the local media are really independent and we enjoy a greater freedom of speech than do our neighbors. The media and NGOs are active and effective elements of the civil society that need to be supported. It's a pity that numerous donor organizations, except from the US, provide assistance only to the government and have no mandate to work directly with the civil institutions of Kyrgyzstan.

Donors and the National Strategy for Poverty Reduction

On October 9-11 the Consulting Meeting of donors was held in Bishkek. 18 countries and 17 international institutions were invited to discuss the National Strategy for Poverty Reduction. For the first time such a meeting took place in Kyrgyzstan and not in Tokyo or Paris. At the meeting the donors expressed their readiness to allocate about $700 million for the next 3 years. Half of that amount might be extended on a grant basis. The National Strategy is 400 pages long. One of the western experts said, "there might be 10-12 people in Kyrgyzstan and one or 2 persons abroad who have read the program from the beginning to the end. And I am one of these poor people." The priorities of the Strategy are as follows: reforms of public administration, facilitation of the economic growth, and expansion of the civil sector. The Strategy contains very detailed plans, reminiscent of the plans written during the Soviet period. But there are differences - now we're asking for money from donors instead of from Moscow. The problem, however, is that the Strategy itself lacks a broad and coherent strategy. For instance, the National Strategy declares the necessity of fighting against corruption. It is clear that this is only a declaration and nothing will be done in reality. The National Strategy calls for the facilitation of the economic growth, but it is not clear how this growth will be achieved. The National Strategy calls for an improved export regime, but says nothing about how to end the blockades against our transit cargoes.

For the first time, representatives of the civil society and the private sector were invited to the Strategy meeting. We raised two key issues.

1. Was the external assistance used effectively by the government and how it will be used in the future (the government has received 95% of $2 billion in external assistance)? Civil society representatives insisted that donors monitor their money better and use local independent NGOs for that purpose. Akaev was very unhappy with these suggestions.

2. Numerous donors have mandates to work only with the state. NGOs want the donors to extend the scope of their assistance to the civil sector, particularly to the media and NGOs.

Often it seems the civil sector in Kirghizia is stronger than the government, in part because several hundred former members of the government are now employed in the civil and private sectors. These are the people who used to work and hold negotiations with donors. They speak the language of the donors and can develop sustainable projects that meet the real needs of the country.

One should not think that Akaev is the face of Kyrgyzstan. Before 1998, President Akaev was wonderful. For that reason, the donors provided assistance to the government, which carried out important reforms and observed democratic values. But then the president and the government gradually became different than they were. Violations of basic human rights and restrictions on the freedom of the press grew more prevalent. Parliament lost its power and the parliament members lost their immunity. At that time, we learned that our civil society institutions lacked sufficient funding. The achievement of Akaev, however, is that the present-day Kyrgyzstan is more than Askar Akaev. In response to increasing restrictions, Kyrgyzstan developed a strong civil society. We have no natural resources to finance autocratically. Among all Central Asian republics, Kirghizia is the first that has a chance at democracy. The rest of the republics may follow us sooner or later. We could be a powerful example in the eyes of our neighbors.

A peaceful designation of power is not the achievement of Akaev or the gift of his good will. It is already impossible for him to retain power, unless he is willing to shoot people every time there a protest arises. Today not only radical members of the opposition, but the majority of the population believe that 15 years under his rule are enough. Even if he was a good president, his time is over and the country should move ahead. This is the achievement of the civil society and the mass media, and these effective elements of the society need to be supported.

End of speech text.

Discussion
Nikolai Zlobin of the Center for Defense Information asked whether Tazabekov considers the Kyrgyz army loyal to President Askar Akaev, and whether the army can guarantee the nation's security. He also wondered the extent to which Islamic schools have superceded secular schools in Kyrgyz society, noting that statistics show the number of schools at mosques to be increasingly sharply. Tazabekov replied that the army is stable and loyal, but also poor and badly fed. It is led primarily by generals who are professional military men and would hardly involve themselves in civilian unrest. Tazabekov was reluctant to comment precisely on the statistics Zlobin offered regarding Islam in Kyrgyz schools, but said that Islamic schools likely outnumber secular ones. "I can assure you that the Kyrgyz have always been very bad Muslims," he continued, noting that radical Islam was not a threat among the Kyrgyz, who comprise the majority if Kyrgyzstan's population, but perhaps posed a greater danger among the substantial Uzbek and Dungani minorities in Kyrgyzstan.

David Merkel asked Tazabekov about the composition of Kyrgyz opposition groups, noting that the International Crisis Group describes a division between moderate and radical parts of the opposition. Merkel wondered whether the more radical group was pushing for President Askar Akaev to leave before his term ends. Tazabekov responded that the opposition consisted of a "total" opposition, prepared to undertake more violent protests, and a moderate group willing to work through state institutions. Akaev is prepared to work with the moderate opposition, and invited its members to participate in the round table drafting the new constitution, but he ignores the radical opposition. While some among the radical opposition insist that Akaev leave office early, Tazabekov believes that the group does not fully understand the implications of its demand. If Akaev resigns early, a new president selected by Akaev himself could be easily elected because the opposition would not be prepared to promote its own candidate.

Tazabekov described three situations in which early elections might be called. The first would be if the rural parts of the country, increasingly independent of state power, experienced even greater popular unrest than has already occurred. A recent incident in which the former Prime Minister Zadekov was elected to parliament but blocked by the government from taking office highlighted that concern. Residents of Zadekov's district instigated massive protests in his support, aided by the radical opposition. The opposition has devised a more efficient operating structure that helps it maintain secrecy and improve local contacts. In some parts of the country, the radical opposition is better organized than the government, clearing the way for dangerous popular action. In the second scenario, continued violence alongside or after popular protests would terrorize the populace and damage the democratic image of the country. The international assistance that the government requires to function would dry up, forcing a change of power. The third situation in which Akaev might leave office would be if the opposition were to put forward a strong candidate trusted by the populace to challenge him. Tazabekov also suggested that even if Akaev leaves office, whether early or at the end of his term, he might continue his political career as a member of the parliament.

Michael Ochs noted that the Kyrgyz authorities seem to have improved their crowd control procedures and wondered whether they would be able to maintain this new, more effective stance. Ochs continued the previous line of questioning, wondering specifically what kind of incident would be powerful enough to end Akaev's term prematurely while still permitting him to continue his political career. Ochs also asked Tazabekov who he believed might take up the presidency once Akaev is gone. Tazabekov agreed that it would take a very serious event to force Akaev out of office, and noted that Akaev, "a smart physics professor, will likely make clear calculations about the future, maintaining both the security of the country and his personal business interests." If the effectiveness of the central government were to be seriously circumscribed, however, the country could simply disintegrate. Several separate incidents of unrest could resonate with the public as a whole and lead to ever more serious uprisings, just as happened during the summer of 2002. Particularly dangerous is the seeming inability of the authorities to learn from previous instances of popular unrest. "The underlying cause of the Aksy riots was that the teachers and the doctors did not get their measly 12 to 13 dollars a month. These incidents of non-payment are being repeated," Tazabekov said. With regard to potential presidential candidates, Tazabekov suggested vice Premier Otorbaev and former Prime Ministers (PM) Bakeev, Moraleev, and Jumalaev, the latter a disciple of Akaev and a very wealthy man. He noted, however, that the weight of politicians changes very swiftly, and that the next president could be someone new to the political scene.

Tapio Saaralainen of the International Monetary Fund (IMF) commented that Tazabekov's speech, like many of President Akaev's, dealt with the Kyrgyzstan's political situation instead of its economy. Saaralainen wondered if, despite the upcoming disbursement of another $700 million from the international donors, the attention being paid by the president and the rest of the society to political reform would compromise attempts at economic reform. Tazabekov agreed that the authorities have already had to sacrifice economic reforms to the country's volatile political situtation. If the IMF and other international lending authorities refuse to provide the next disbursement because of this inattention to the economy, Kyrgyzstan's budget deficit will go unfinanced and economic reform will return to the fore. Furthermore, the question of Kyrgyzstan's poor economic performance during 2002, despite two preceding years of relative stability, will necessarily be taken up in the political arena. Tazabekov cautioned against raising economic demands on Kyrgyzstan, however, noting that, "while Akaev speaks the language of the IMF, and Kyrgyzstan needs foreign aid, the alternative to the current powers would be much less open to IMF-like policies."

John Parker of the US State Department asked what kind of successor Akaev might choose if he leaves office early and attempts to control the election. Tazabekov replied that the successor first and foremost must be loyal to Akaev, his family, and their business interests. The sucessor must have a good image in western society, and must have the reputation of not being a thief. Finally, the decision will be made not just by the president, but by his family as well. Often Akaev finds a talented person whom he likes but his wife does not, and thus that person is refused access to power.

Elshan Alekperov of LPI Consulting asked what effect Akaev's early departure from office might have on other Central Asian countries, as the region seems to be standing on the verge of political change. Tazabekov replied that Tajikistan was the only other country in the region with the potential for rapid change. If Akaev were to leave office in Kyrgyzstan, however, Tazabekov suggested that Uzbeks, Kazakhs, and Tajiks might wonder why their own countries cannot reform, when Kyrgyzstan has shown that change is possible. These other nations have more substantial natural resource desposits than does Kyrgyzstan, and in Kazakhstan, for example, wages are on average 45 times higher than Kyrgyz salaries. Whether Kyrgyzstan is seen as a model, however, depends on the outcome of its regime change. The new president could either bring new opportunities and economic stabilization, or set Kyrgyzstan on the "special path" of an eastern country, shunning further reform.

Summary prepared by Anne O'Donnell, junior fellow in the Russian and Eurasian program at the Carnegie Endowment.