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Kyrgyzstan: Is Bishkek Ready to Spend Its Aid Money Wisely?

A recent donors' conference in the Central Asian republic of Kyrgyzstan resulted in pledges of some $700 million aimed at battling poverty over the next three years. But observers are worried that the country's past record on spending aid money leaves doubts about the effectiveness of foreign assistance there.

Prague, 16 October 2002 (RFE/RL) -- Kyrgyz President Askar Akaev said the results of last week's donors' conference in Bishkek surpassed all expectations.

The 2002 Consultative Group Meeting for the Kyrgyz Republic concluded on 10 October with donor countries and international financial institutions pledging some $700 million over 2003-05.

It's a generous sum, but Dafne Ter-Sakarian, an analyst at the Economist Intelligence Unit in London, says it is possible that the money pledged might not be delivered to Kyrgyzstan: "The main thing to consider is that the $700 million is just a commitment. And often in donor conferences, you know, a lot of people come up with a lot of pledges, but they're not actually disbursed. In Afghanistan, for instance, they have received half of the amount that was pledged to them [at the Tokyo donors' conference in January]."

Geert Van der Linden heads East and Central Asia programs for the Asian Development Bank, which pledged some $30 million at the Bishkek conference last week. He says the international community is committed to helping Kyrgyzstan cross its post-Soviet hurdles: "In the last 10 years, the country has tried to meet several major challenges. One is to change its political system from being part of the Soviet Union to become an independent country with its own government, currency, central bank, and so on. Another challenge is the shift from a communist command-type of economy to a market economy."

But some observers say Kyrgyzstan's track record on foreign aid spending leaves doubt that, if and when the $700 million are delivered, they will be wisely spent.

Marat Sultanov chairs the Kyrgyz parliamentary Budget and Finance Committee. He says widespread corruption remains a major obstacle to the efficient and fair distribution of aid: "There is a problem. What kind of problem? Officials want this money to be distributed by the government. Here there is a risk of unfair decisions. This money will be given to relatives, close circles, and friends. This is why the donors require that we collaborate with NGOs and civil society, and that we reinforce local structures. [Otherwise], in my point of view, we cannot say that this aid is 100 percent effective."

Half of the money pledged during the donor conference will go toward the country's three-year poverty-reduction plan. But Ter-Sakarian says it remains unclear how the country can effectively distribute the money without an efficient banking system: "Poverty reduction would depend, for instance, on getting the small- and medium-enterprise sector going. But banks don't work, they don't lend to people who are poor anyway. So how is this money going to be distributed efficiently according to market mechanisms? At the moment that doesn't seem possible."

Despite repeated pledges by the Kyrgyz government to establish a market economy, the budget remains largely dedicated to subsidies and other forms of socialized support. The practice has left the country staggering under some $1.8 billion in external debt.

Natalia Ablova heads the Kyrgyz-American Bureau for Human Rights and Rule of Law in Bishkek. She says she expects few fruitful results from last week's conference, and says that in the past, half of the foreign aid to Kyrgyzstan ended up back in the donor country -- usually via technical assistance contracts. "What was going on before, it was really a frustrating and disappointing experience, and donor countries [are] actually guilty. I blame them [for not] understanding that all the money they have put in the framework that exists now in my country will never help. It will only further empower the authorities and make the lives of ordinary people even harsher."

Instead of pledging money to the Kyrgyz government, Ablova suggests, the international community should put its efforts behind helping to build rule of law, respect for private property, and people's rights.

But Geert Van der Linden says donors like the Asian Development Bank cannot cast judgment on a country's political system, but must make its decisions based on economic and social considerations. He also disagrees that foreign aid money pledged to Kyrgyzstan in the past has been poorly spent or lost to corruption: "I do not agree with the comment that much of this money has been wasted. If you visit Bishkek now and other parts of the country, you see that there has been a significant change in terms of improving the education and health facilities, the roads, building of government institutions. There have been major changes in just a short period of 10 years."

Van der Linden says donors agreed to proceed with caution before approving any new loans. If any assistance is given, he adds, it will preferably be on a grant basis.

(Ainura Asankojoeva of RFE/RL's Kyrgyz Service contributed to this report.)