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Kyrgyzstan: A Democracy Only For The Rich

Bishkek, Kyrgyzstan; 14 October 1997 (RFE/RL) -- It isn't hard to recognize the people who call themselves democrats in Kyrgyzstan.

They work in the ministries or are involved in business. They travel abroad, sport well-tailored suits and have impeccable manners. Indeed, many of the very top democrats are former physicists, graduates of the same institute as President Askar Akayev. They drive, or are driven, in government Volgas or BMWs, while their offspring favor off-road Jeeps and Range Rovers. In the evenings, they sip imported beer in the outdoor restaurants that have sprouted around Kyrgyzstan's tree-filled capital, Bishkek. When the music starts up, they cluster around the karaoke sets and sing and dance the night away.

Such is the life of the democrats in Kyrgyzstan, six years after this mountainous republic on the eastern edge of Central Asia gained its independence. But sadly, the club of democrats in Kyrgyzstan is very small.

The rest of the country's 4.5 million inhabitants, more than 80 percent of them in fact, make an average wage of $25 a month. Indeed, according to a recent World Bank study, 49 percent of Kyrgyz families lived below the poverty level in 1996. You won't find these Kyrgyz willing away the evening hours in Bishkek's new crop of cafes. Feeding the family at home is enough of a problem and as for savings, well, there usually aren't any.

Who then, are these Kyrgyz democrats, who think little of handing over an average month's wage for an evening night out? And where do they get the means to do so?

Dooronbek Sadyrbayev, formerly a leading Kyrgyz filmmaker, is one of the few outspoken parliament deputies.

"Today's democrats are yesterday's Communists, who have cleverly exploited the change in government to cloak themselves in the mantle of democracy and enrich themselves in the process," he says.

It is hardly a unique phenomenon. In Russia, they are called the new Russians. Here, often with a bitter smile, they call them democrats. Across these newly independent states, as everywhere in the former Soviet Union, the wealthy and powerful are envied, but they aren't held in high esteem. Because few think there are legitimate ways of gaining riches or influence.

Today in Kyrgyzstan, all leading government posts are occupied by former Communist officials. In the absence of conflict of interest laws, many have direct ties to the business world through personal investments or extended family ties.

In the years 1992 to 1994, immediately after independence, many leading former Communists became overnight millionaires. It didn't take much work. Economist Sapar Orosbakov explains the process.

"These Communists-turned-businessmen used their government ties to obtain generous loans to purchase new businesses and refurbish existing enterprises," he says.

"At the time," Orosbakov notes, "inflation was running at an annual rate of 1,300 percent, but the loans were offered with interest rates of as low as 50 percent."

It doesn't take much arithmetic to see how these well-connected businessmen soon became rich, he adds. But even under such generous terms, few bothered to repay the loans at all, opting instead to gut the purchased enterprises and line their pockets with the extra proceeds.

As a result, the country's four leading banks quickly went under. In 1994, the International Monetary Fund (IMF) stepped in and forced the government to introduce a tight fiscal policy, which gradually brought down inflation and restored some stability to the economy. But the damage had been done.

After the credit binge of the early 1990s, Kyrgyzstan's remaining banks are wary of extending credits. Now that inflation is running at 20 percent a year, they offer loans at minimum annual rates of 60 to 70 percent, making it next to impossible for legitimate businesses to take out loans to purchase new equipment or modernize their assembly lines. The Communists-turned-democrats, meanwhile, have established themselves as the new captains of industry.

Kyrgyzstan's National Statistics Office says the country's gross domestic product (GDP) is on the upswing, citing growth figures of up to 18 percent so far this year. Observers say that given how far GDP dropped in the years following the breakup of the Soviet Union, this may even be true. But they say it masks the fact that many private companies and even government businesses still barter their goods and services.

Opposition newspaper editor Zamira Sydykova says economic statistics in Kyrgyzstan are cooked up.

"Statisticians count money that doesn't exist," she says. "Instead of paying its workers in cash, the finance ministry will pay them in kind, say with crates of beer which it in turn received from an indebted brewery that couldn't afford to pay its taxes."

"The whole transaction," she notes, "is marked down as a money transfer, and on top of it all, the value of the bartered goods, in this case the beer, is artificially inflated to make the whole deal look better on paper."

Sydykova says ruefully that "if anything works in the Kyrgyz economy, it is despite the government's policies."

Independent analysts do point to some promising developments, among them the Kumtor gold mine, a $300 million Kyrgyz-Canadian joint venture, which has begun to turn a profit. But most of the country's enterprises remain barely functional, while their workers try to earn a living by street trading.

The dominant agricultural sector is also in crisis, struggling to overcome the breakup of the country's collective farms. Individual farmers have little money to buy new equipment and cannot afford to get any loans. Most of the old equipment disappeared into the hands of the former Communist farm bosses, who appropriated it or purchased it with cheap credits during "privatization."

Dooronbek Sadyrbayev says that corruption under the new system is far worse than it was in Soviet times. For the well-connected, he notes, the opportunities to get rich are far greater.

"In the old days," he says, "officials used to steal enough for their present needs. Now they're attempting to steal enough for the next two generations."

It's little wonder that the word democracy has a bitter after-taste for the majority of people in Kyrgyzstan. Lenin, whose towering statue still dominates one of Bishkek's main squares, would surely have appreciated the irony.

(This article is one of a six-part series on Kazakhstan and Kyrgyzstan.)