TSG IntelBrief: Kyrgyzstan: Strategic Opportunities and Hurdles
January 17, 2014

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TSG Central Asia Series:

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Located strategically in southeastern Central Asia, Kyrgyzstan is a country heavily dependent on an agricultural economy and remittances from migrant Kyrgyz laborers. Of all the Central Asian economies, Kyrgyzstan and Tajikistan are the region’s poorest, but with abundant natural water resources in a water-scarce region. The immense potential for the development of hydropower resources makes both Kyrgyzstan and Tajikistan strategic players in Central and South Asia.

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Political Dynamism and Periodic Instability

Kyrgyzstan’s politics is among the most dynamic in Central Asia. In contrast to neighboring states that have seen only one president since independence from the former Soviet Union in 1991, Kyrgyzstan has had four presidents and is the region’s first parliamentary democracy following the revolts of 2010. The country’s first President, Askar Akayev, took power shortly after independence and was twice re-elected. Akayev implemented constitutional and civil reforms, but he was ousted from office in 2005, in a popular uprising known as the Tulip Revolution. It was a backlash against alleged attempts to ensure his son or daughter succeeded him. Kurmanbek Bakiyev, the leader of the People’s Movement of Kyrgyzstan, followed Akayev. Bakiyev’s presidency was marked by widespread economic corruption and a number of high-profile political assassinations. The resulting instability led to public uprisings in 2010, and Bakiyev’s fleeing the country. Roza Otunbayeva, a former foreign minister, took over as interim president until November 2011 elections. Almazbek Atambayev of the Social Democratic Party emerged as the country’s new president.  

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Economy: Still Emerging from the Shadows

Nearly a quarter of a century after independence, Kyrgyzstan remains an agrarian economy with heavy reliance on remittances from Kyrgyz migrant workers who reside mainly in Russia. Agriculture and foreign remittances together account for nearly half of the Kyrgyz economy, an indication of the existence of weak economic institutions, ineffective policy apparatus, and an under-invested critical infrastructure.

The loss of Russia as a key export market upon the dissolution of the Soviet Union has been another factor of enduring impact on the country’s weak economic performance. However, there are bright spots. Economic reforms since independence include reduction of subsidies, introduction of a value-added tax system, and accession to the World Trade Organization. But the country has yet to generate growth seen in other Central Asian states. Significant opportunities for development include hydroelectric energy—due to plentiful water resources—post-secondary education, information and communication technology, and mining.

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Islamic Extremism and the State

Under the Soviet Union, Islam was largely regulated by the Spiritual Administration of the Muslims of Central Asia and Kazakhstan (SADUM), a state body covering the five Central Asian republics. SADUM was tasked with training clergy, publishing spiritual materials, and religious guidance. The organization was headquartered in Tashkent, the Uzbek capital, until it disbanded upon the Soviet Union’s collapse. Later, the newly independent Central Asian states established the Spiritual Board of Muslims (SBM) which assumed roles similar to SADUM’s.

Kyrgyzstan is a majority Muslim country, but over sixty percent of the population identifies itself as non-denominational Muslims, a unique characteristic in a region that continues to struggle with Islamic extremist organizations. The most active of such organizations are Jaishul Mahdi and Hizbut Tahrir with strong roots in Kyrgyzstan and Uzbekistan. They are particularly active in the Osh and Jalal-Abad regions, but their activities have been largely curtailed as a result of continued pressure and covert operations by the government in Bishkek. In addition to the SBM, the state encourages spiritual guidance through support of the Grand Mufti, the country’s highest religious authority.

But recently, and ironically, Grand Mufti Rakhmatullah-Hajji Egemberdiev plunged the country into an ethical crisis after an explicit video involving him was posted on the Internet. Shortly after, Mr Egemberdiev stepped down. Kyrgyz religious scholars are now calling for fundamental reforms in the SBM, claiming that the country is suffering from a spiritual crisis.

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A Strategic Look

Kyrgyzstan is in a crucial transition period. It is, with difficulty, trying to build a market economy and bring in the much-needed foreign investment to move to the next stage of development. The country’s leadership is increasingly concerned about the security situation in Southwest Asia with the impending US-NATO withdrawal from Afghanistan and the potential threat of spreading Islamic extremism.

Bishkek takes seriously the threat of extremism. It has implemented legal measures including the “Law on Countering Extremist Activities” and “Law on Countering Terrorism.” The two measures have been preventive in nature and led to changes in the country’s criminal code. Some regional specialists cite the opportunity—need—for China and the US, with their mutual security interests, to  assist regional states in formulating counter narratives to the violent extremist messages.

Economically, the Atambayev government is as open to working with Western multinationals as much as it is with their Chinese counterparts. For example, the country’s Kumtor Gold Mine, the world’s second largest, is owned and operated by Canada’s Centerra Gold.

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  • Kyrgyzstan will continue to implement market reforms geared to make the country a prominent investment destination, but the reforms need to be moved more efficiently to achieve intended objectives

 

  • Security issues will be eventually looked upon from a regional perspective rather than a go it alone view

 

  • Kyrgyzstan will continue to have the most promising political system in the region, given its success in building a parliamentary democracy and a relatively dynamic civil society, however inefficient 

 

  • With a new regional pipeline agreement in place with China’s CNCP, Kyrgyzstan will gradually become a major energy transport route, marginalizing Russia’s Gazprom as a key distributor of energy in the region and beyond

 

  • Russia will be a second-tier player in Kyrgyzstan’s politics and economy as the deluge of investment from Beijing will overshadow Moscow’s presence.

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  • Kyrgyzstan’s official name is Kyrgyz Republic; official languages are Russian and Kyrgyz, a Turkic language

 

  • Population is 5.5 million, with the three largest ethnic groups Kyrgyz 65%, Uzbek 14%, and Russian 13%

 

  • Approximately 50% of the population is age 0-24  

 

  • Literacy rate is over 99%

 

  • It has Central Asia’s lowest per capita GDP; real growth rate estimate for 2012 was -0.9%; however, the World Bank projected GDP growth at 10.5% for 2013, and 6.5 % for 2014

 

  • Ranked 68 of 189 countries assessed in the 2014 World Bank, International Finance Corporation Ease of Doing Business survey

 

  • Kyrgyzstan is approximately 75% Muslim and 20% Russian Orthodox.

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