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Kyrgyzstan: Reformers Contributed To Entry Into WTO

  • Julie Moffett

Washington, 14 May 1999 (RFE/RL) -- Kyrgyzstan's entry into the World Trade Organization (WTO) last December was a stunning and remarkable achievement for a small country facing many of the same difficult economic problems as the rest of the former Soviet Union.

That is the view of Frederick Starr, chairman of the Central Asia-Caucasus Institute at John Hopkins University in Washington. Starr, who recently returned from a trip to Kyrgyzstan, was interviewed this week by RFE/RL.

He said Kyrgyzstan had accomplished something "very significant" by undertaking painful and complex reforms in order to meet the WTO entrance criteria. Kyrgyzstan, along with Latvia, became the first countries of the former Soviet Union to be admitted.

Starr says Kyrgyzstan's decision to undertake such bold reforms flowed from an appreciation for and astute understanding of the world economy by many in the country. He says those Kyrgyz who encourage and support both economic and political reforms are highly-educated and have a sound knowledge of the dynamics of the world market and the political arena. It is these same reformers, says Starr, who also realize that Kyrgyzstan's greatest asset lies in the determination and skills of its people.

"Since Kyrgyzstan is not a big oil and gas exporter, and since it, in the long run, is very remote physically from the major markets of the world -- its only unique, distinct asset is going to be the modernity of its human resources and their full involvement in the world economy. Now that is a real strategic decision."

Starr says because the human resources of Kyrgyzstan are more important than gold, oil, water or gas, the best and fastest way for the country to integrate itself fully into the global economy is to better utilize and improve the skills of its labor force.

Kyrgyzstan also needs to undertake serious agricultural reform, says Starr, adding that the country has the ability to become completely self-sufficient in food production. One step in the right direction, says Starr, is its aggressive approach to privatizing land -- far above and beyond the efforts of many of the other countries in the former Soviet Union.

But Starr says despite Kyrgyzstan's best efforts, its economy is currently teetering on the edge of financial disaster. Kyrgyzstan's economy has been hit hard by the financial collapse of Russian and Asian markets, as well as the low prices of commodities such as gold, he says. Further complicating matters, Starr adds, is Kyrgyzstan's "complex relations" with several of its neighbors.

Russia heads the list of those neighbors causing economic difficulties for Kyrgyzstan, says Starr. He says that Russia, irritated by Kyrgyzstan's rapid entrance into the WTO, imposed a series of heavy tariffs on trade with that country and lowered import quotas on Kyrgyz goods. To make matters worse, Russia then pressured Kazakhstan and Uzbekistan to impose similar tariffs, further inflicting pain on Kyrgyzstan's struggling economy, he says.

Starr explains further: "If you speak with the people in those three countries, they all have their reasons for imposing these tariffs. I think all three are seriously mistaken if they think that the few pennies they make on these tariffs are worth the price they are paying in neighborliness."

Starr says he thinks Russia's motivation behind the heavy tariffs was in part to punish Kyrgyzstan for seeking closer ties with the West and Asia, and drifting away from Moscow's economic and political control. But he adds that Russia is possibly also annoyed because its own entry into the WTO will now be more difficult given the standard set by Kyrgyzstan.

"Kyrgyzstan did not try to make deals with the WTO. It simply [asked] what are the criteria for entry and then seriously went about making the reforms necessary to gain entry. I think this is very serious for Russia, which would have been tempted to try and make deals, to try to put off this or that reform, to delay, or to change the timing. None of this is going to be possible for Russia now that Kyrgyzstan has done it, if you will, 'the old-fashioned way'."

Clifford Bond, Director of the Office of the Caucasus and Central Asia at the U.S. State Department, agrees. He told RFE/RL that the terms of Kyrgyzstan's accession into the WTO set a high standard which the other countries in the former Soviet Union will have to work hard to meet. He calls Kyrgyzstan's entrance into the WTO "extremely important," adding that the U.S. considers Kyrgyzstan to be a leader in both democratic and economic reform in Central Asia.

"A country that can assume the WTO obligations and responsibilities for transparency and rule of law and due process -- which sort of cut across all the other obligations that are done in sections of the economy or in customs procedures -- is the sort of country that is advancing on a democratic path as well."

But Bond says the U.S. has harbored some serious concerns about the pace of reform in Kyrgyzstan, especially on democratic issues such as the conduct of elections, respect for human rights, and civic freedoms. He says the U.S. will be closely monitoring the upcoming parliamentary and presidential elections to ensure that they meet OSCE standards.

"It is very easy for governments to make [those issues] a secondary priority and focus on the economy. We believe the two have to move forward together, in parallel, and that they are mutually reinforcing. And that's a message we give, not only to Kyrgyzstan, but to all of the countries in the NIS -- that movement on democracy is important if they are going to achieve the integration into the global economy they want."