Publication: Eurasia Daily Monitor Volume: 4 Issue: 135

On July 11 Kazakh Prime Minister Karim Masimov and Kyrgyz Prime Minister Almazbek Atambayev signed an agreement to establish a common investment fund that should increase economic assistance to Kyrgyzstan and boost relations between both countries. According to the agreement, Kazakhstan will invest $100 million, while Kyrgyzstan will put $20 million into the fund. The bulk of this sum will be invested into Kyrgyzstan’s economy and be used to create joint Kazakh-Kyrgyz enterprises. The fund’s budget might increase over time.

According to Atambayev, the idea of creating the fund matured “in the morning within half an hour” during his working visit to Kazakhstan. At first, Atambayev was seeking to receive credit assistance from Kazakhstan, but his talks with Masimov were more fruitful than he had expected.

The investment fund agreement is asymmetrical in nature, with Kazakhstan playing a bigger role. But it also represents part of a chain of rapidly growing economic and political relations between stronger Kazakhstan and weaker Kyrgyzstan. In his official speech at a Bishkek business forum for Kazakh and Kyrgyz political and business circles, Atambayev noted “Kazakhstan today is the main trade partner for the Kyrgyz Republic and occupies first place among [foreign] investors.”

Although this Kazakh-Kyrgyz economic agreement precedes the Shanghai Cooperation Organization’s (SCO) summit in August, it was not achieved within the organization’s framework. Instead, Kazakh President Nursultan Nazarbayev’s May visit to Bishkek resulted in mutual promises between him and Kyrgyz President Kurmanbek Bakiyev on creating a Central Asian Union. If the Kazakh-Kyrgyz union succeeds, it could propel Astana toward a formal leadership role in the region and become an alternative to the existing SCO and Russian-led Collective Security Treaty Organization. The Kazakh government and businessmen have also expressed their wish to invest in Kyrgyzstan’s recently privatized energy sector. Furthermore, Kazakhstan will invest in the construction of a ferro-alloy production project in southern Kyrgyzstan. This project will need $100 million to fund.

Amid discussions about Kyrgyzstan and Russia possibly creating a confederation, an idea proposed by Atambayev predecessor and current opposition leader Felix Kulov, many Kyrgyz citizens have mixed feelings about the visibly increasing cooperation with Kazakhstan. Elements of a rivalry still exist when comparing the two countries’ economic development, but this competition has also considerably lessened since the early 2000s. Several Bishkek residents told Jamestown that if Kyrgyzstan ever needs emergency foreign support in the form of formal accession, Kazakhstan would be preferable to Russia.

These pro-Kazakh moods are quite a new development among the Kyrgyz public, and can partly be attributed to Kazakhstan’s rapid economic growth. As one civil servant from Bishkek told Jamestown, during former Kyrgyz president Askar Akayev’s regime, there was a greater national antagonism toward accepting the idea of economic dependence on Kazakhstan. The government even imposed a hidden ceiling on the development of trade ties between both countries. With the change of political regimes in May 2005, the government gave up control of Kazakh-Kyrgyz relations, and bilateral ties began to develop more rapidly and informally.

Kazakhstan’s major cities are becoming more attractive for Kyrgyz migrant workers, including businessmen and highly skilled workers. As Ashirbek, an entrepreneur from Almaty, pointed out, “Young professionals from Kyrgyzstan, Tajikistan, and Uzbekistan coming to Kazakhstan are regarded as very determined and hard working, sometimes succeeding better than the locals.” At the same time, more and more residents of southern Kazakhstan are traveling to Kyrgyzstan for tourism and various services today, as prices are much lower in Kyrgyz cities.

Kazakhstan and Kyrgyzstan have similar international goals when it comes to maintaining friendly relations with Russia, China, and their Central Asian neighbors. Both states are members of similar regional organizations. Indeed, like Russian President Vladimir Putin, Nazarbayev enjoys wide popularity among the Kyrgyz population. Putin and Nazarbayev are far more popular in Kyrgyzstan than is President Bakiyev. Kyrgyz citizens endorsed Nazarbayev’s efforts to prosecute his former son-in-law, Rakhat Aliyev, and decision to omit his daughter Dariga from his Nur Otan political party, praising those resolute actions in contrast with the widespread clan corruption in Kyrgyzstan. Unlike the political uncertainty in Russia, which is scheduled to elect a new president next year, Nazarbayev’s hold on state power is more stable. Bakiyev and any future political leader in Kyrgyzstan will likely deal with Nazarbayev in the years to come.

(Akipress.kg, Interfax-Kazakhstan, Gazeta.kz, June 10-12)