Publication: Eurasia Daily Monitor Volume: 4 Issue: 19

The possibility of Kyrgyzstan joining the World Bank and International Monetary Fund’s Heavily Indebted Poor Countries (HIPC) Initiative has sparked heated debates among state institutions and civil society groups. Recently, Andrei Grozin, representing the Moscow Institute of the Commonwealth of Independent States, commented that Kyrgyzstan’s efforts to join the HIPC run against Moscow’s interests. Since Russia, according to Grozin, is among Kyrgyzstan’s key creditors, Moscow has the right to oppose the initiative. Grozin openly states that once Kyrgyzstan allows Western financial institutions a greater role in the country, “Russian leverage will obviously not end up widening” (Akipress, Delo nomer, January 24).

For Kyrgyz politicians and civil society groups, Moscow’s disapproval is a powerful argument against HIPC. Previously Kyrgyz experts had argued that since Russia, Kyrgyzstan’s major economic and political partner, is against the initiative, the Kyrgyz government should reject the program out of strategic interests. However, top government officials, including President Kurmanbek Bakiyev, interim Prime Minister Felix Kulov, and Minister of Finance Akylbek Japarov, have expressed their desire to join the initiative. They are opposed by the parliament and local civil society groups. Today, the HIPC issue stands as one of the main disagreements between the government and parliament. Some Kyrgyz experts even speculate that Bakiyev is trying to dismiss the parliament in order to proceed without its resistance. The issue is expected to be finalized in mid-spring in favor of joining HIPC.

A number of local civil society groups and political parties are organizing mass demonstrations against HIPC for tomorrow, Saturday, January 27 (Akipress, January 23). These activities will follow numerous previous protests staged in front of the World Bank office, outside the Ministry of Finance, and at the central square in Bishkek, the Kyrgyz capital.

For HIPC’s opponents, Kyrgyzstan’s prospective membership has become an issue of national identity, as the program requires changes in domestic economic policies. The issue raises feelings of patriotism and national dignity, unifying hardliners with nationalist views. Dastan Sarygulov, State Secretary and an initiator of a national ideology project based on Tengrism, is among the main supporters of the January 27 demonstration against HIPC.

HIPC’s opponents accuse the World Bank and IMF of pursuing their own financial interests in Kyrgyzstan. The international community in general is blamed for contributing to domestic corruption while also increasing the debt of poor people. Some Kyrgyz experts label the Initiative as the “Africanization” of Kyrgyzstan, because mainly poor African, Asian and Latin American countries have implemented HIPC in the past. The fact that Kyrgyzstan is the only CIS country to join the initiative also creates nationalist feelings. However, voices in support of the HIPC believe that, realistically, Kyrgyzstan will never be able to pay off its debt on its own.

Should Kyrgyzstan join the two-year initiative, about $500-800 million of its roughly $2 billion debt will be written off. The HIPC requires a number of substantial reforms in the public administration and energy sector, including designing an economic development strategy and reforming the social sector. According to World Bank representatives, Kyrgyzstan is lucky to qualify for HIPC with such favorable conditions.

Importantly, the current government could use the opportunity to improve its domestic popularity. The success of the Initiative depends to a large extend on domestic political actors, who bear the greatest responsibility to use the opportunity of reduced debt wisely. Local actors who are against the Initiative also worry that HIPC will only add up to existing corruption in the public sector.

The anti-HIPC hype in Bishkek coincides with a general increase in anti-Western sentiments. The current political regime has shown a preference for cooperation with Russia, while sporadically challenging the status of the U.S. military base at Manas airport. Rumors that the U.S. base will soon be shut down have been spreading in Bishkek. The December 2006 fatal shooting of a Kyrgyz citizen by a U.S. soldier added to the public’s discontent with the U.S. presence in the country (see EDM, December 15).

At a press conference on Wednesday, January 24, the U.S. Ambassador in Bishkek, Marie Yovanovitch, and Pamela Spratlen, director of the U.S. Department of State Office of Central Asian Affairs, reassured officials that the U.S. base will continue to function in Kyrgyzstan as long as terrorist threats exist in Afghanistan (Akipress, January 24). Both U.S. diplomats also spoke in favor of the Initiative. With Moscow reproaching and the United States backing the HIPC in Kyrgyzstan, the debate around it has turned into a matter of international preferences rather than domestic economic reform.