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Kyrgyzstan: Prime Minister Seeks Investors Amid Doubts

  • Nikola Krastev

Kyrgyzstan's prime minister, Kurmanbek Bakiev, told a gathering of investors in New York his country is "an island of stability" in a war-plagued region. He says his government is developing a legal framework that will provide favorable conditions for foreign investors in Kyrgyzstan. But his comments come amid continuing signs that Kyrgyzstan's government lacks commitment to sustaining political and economic reforms.

New York, 12 December 2001 (RFE/RL) -- Kyrgyz Prime Minister Kurmanbek Bakiev is touting his country as a promising opportunity for foreign investors, despite his country's shaky record on human rights and economic reforms.

Bakiev spoke to investors earlier this week (10 December) in New York at a meeting sponsored by the Eurasia Group, a nonprofit organization that provides analysis and consultancy on issues related to Eastern Europe and Central and Southeast Asia.

During his presentation, Bakiev outlined the Kyrgyz government's strategy for attracting foreign investors and spoke about his country's contribution to the U.S.-led war on terrorism in nearby Afghanistan. Bakiev said poverty and external debt are the most crippling obstacles to the country's economic advancement.

But he was also upbeat about his country's prospects. Speaking later to RFE/RL, Bakiev said the convertibility of the Kyrgyz currency -- the som -- simplifies rules for registration of joint ventures. He said that fact, paired with a continuity in economic policy, provides a solid base for foreign investment. Those advantages, he added, are not available in other Central Asian states.

"First of all, I'd like to say that we have a convertible currency. Our neighbors keep separate state currency rates and market currency rates. We have only one rate -- the market rate. [There are] simplified rules for registration of joint ventures. The prices are fully liberalized, [and they are] established by the market. And now legislative bodies are creating a framework for favorable conditions so that investors in Kyrgyzstan may [have continuity] between economic policies of different governments."

But a number of Central Asian experts are skeptical of the country's prospects. John Schoeberlein, who is the director of the Harvard Forum for Central Asian Studies, described the economic situation in Kyrgyzstan to RFE/RL in September as "very difficult." He called Kyrgyzstan a country with "very few economic resources."

Scott Horton is a partner in the law firm Patterson, Belknap, Webb, and Tyler, which has offices in Bishkek and throughout Central Asia. Speaking to the Eurasia Group meeting on 10 December, Horton expressed skepticism about the Kyrgyz government's performance, especially on political reforms. He said the issue of continuity is of particular concern to U.S. investors. Bakiev's government is the seventh to come to power since Kyrgyzstan gained independence in August 1991.

Until 1995, Kyrgyzstan was considered the most democratic state among the former Soviet republics in Central Asia. But, Horton told RFE/RL, the increasingly authoritarian rule of President Askar Akaev shattered hopes that democratic reforms would continue.

"We saw a lot of promise, a lot of hope, and in the early years some fulfillment of real democracy in the country, with the organization of alternative political parties, real competition, and so forth. And we have seen over the last several years a gradual ratcheting back of this free space for democratic activity. It's involved dozens of political figures. The most prominent one by far is Felix Kulov, former vice president, former minister of the interior, former minister of state security, former mayor of Bishkek, former governor of Chui Oblast. One of the most prominent political figures in the country -- who's now in prison."

Horton said the Bakiev government proposed legislation three months ago that would have made it more difficult for political parties to register. But the proposal's defeat in parliament, Horton says, is a promising sign.

"Prime Minister Bakiev's government put forward a proposed resolution that was clearly on the face designed to make it much more difficult for political parties to register and to operate. It was Resolution Number 359. That resolution was defeated in the Kyrgyz parliament and then withdrawn, and I think the fact that parliament votes down things that the government puts forward shows you that there is more democracy in Kyrgyzstan than in most of the others [Central Asian states], because that would be almost unthinkable in almost any of its neighbors."

Addressing the Eurasia Group in Russian, Bakiev spoke about an "irreversible mentality change toward a market economy," an achievement he takes pride in and describes as a major accomplishment since Kyrgyzstan gained independence. Bakiev said privatization trends in the country should give an additional layer of confidence to potential foreign investors.

"We established a legal framework that allowed Kyrgyzstan to fully embrace the free market economy, and there is no way back. The majority of branches in the agricultural and the industrial sector have been privatized. I would say that approximately 80 to 85 percent of the industrial and agricultural sectors have been privatized."

As the most promising fields for foreign investors in Kyrgyzstan, Bakiev pointed to the energy sector, telecommunications, mining, agricultural processing, and the textile industry. While Kyrgyzstan's agricultural resources are plentiful compared to the country's size, the agricultural sector is still hampered by a lack of processing facilities, Bakiev said.

Asked about the lack of regional cooperation among the Central Asian states, Bakiev said there are issues of concern, particularly border issues. But he expressed confidence the Central Asian neighbors will eventually find common ground and overcome their differences.

"As of today, we are in negotiations with Uzbekistan and Tajikistan with regard to the border line demarcation. During the Soviet times, it was one country, and the issue did not exist. Now, when we are clarifying border issues, there are points of disagreement. And, of course, these disagreements impose a certain strain. But I'd like to emphasize that due to their historical [geographical] position, the countries of Central Asia -- Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan -- in any case, even being independent countries, they have many things in common. They have a common history, related languages, traditions, customs, habits. These are ties that cannot be broken overnight."

Meanwhile, the region as a whole has raised concern among human rights watchdogs. The International Helsinki Federation issued a warning yesterday that authoritarian regimes in Central Asia are committing an increasing number of human rights violations, and could use the war on terrorism as an excuse to clamp down further on their domestic critics.

EU foreign ministers recently welcomed the cooperation of the five Central Asian states -- Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan -- in the fight against terrorism and in facilitating the transit of humanitarian aid to Afghanistan. Some activists worry that such praise may contribute to a decrease in vigilance by Washington on rights issues. The IHF report is to be presented at a counterterrorism conference later this week in the Kyrgyz capital of Bishkek.

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