Publication: Eurasia Daily Monitor Volume: 4 Issue: 87

During his April 26 visit to Kyrgyzstan, Kazakhstan’s President Nursultan Nazarbayev promised greater economic integration with Kyrgyzstan. The president, however, slammed his Kyrgyz counterpart Kurmanbek Bakiyev for the continuous political turmoil in that country. Along with his pledges to increase involvement in Kyrgyzstan’s key economic sectors, Nazarbayev is likely to play an increasingly important role in Kyrgyzstan’s political life as well. Potentially, Kazakhstan’s economic and political influence in Kyrgyzstan could overshadow the Russian presence in the country, as well as in the Central Asian region at large.

Although Kazakhstan’s economic influence in Kyrgyzstan is already felt, it is dwarfed by Kazakhstan’s cooperation with Georgia. Kazakhstan has invested $1 billion in Georgia since 2005, compared to $300 million million in Kyrgyzstan over the same period. As the Kazakh economy has grown since the early 2000s, more Kyrgyz labor migrants have chosen to travel to Kazakhstan than Russia. Today, according to Marlene Laruelle, Kazakhstan hosts roughly 200,000 Kyrgyz migrants, almost as many as Russia. Furthermore, hundreds of Kazakh-Kyrgyz joint ventures function in Kyrgyzstan, Kazakh banks lead the Kyrgyz market, and Kazakhs comprise the majority of tourists visiting the Lake Issyk-Kul resort region.

The main obstacle to Kazakhstan’s greater involvement in the Kyrgyz economy, as Nazarbayev noted, is political instability and the rampant corruption in the government that generate great risks for Kazakh businessmen. Nazarbayev has been an active critic of Kyrgyzstan’s Tulip Revolution of March 24, 2005, but he has never openly supported any political force in Kyrgyzstan. During his visit last week, Nazarbayev promised to allocate $100 million to Kyrgyzstan as humanitarian aid. Given Kyrgyzstan’s current high external debt and the Kyrgyz government’s inability to pay off that debt, Kazakhstan is able to impose its own political conditions before providing financial aid to Kyrgyzstan. Both the Kyrgyz government and the opposition rely on support from their Kazakh counterparts. As Kyrgyzstan’s economic dependence on its large neighbor increases, Kazakhstan may play a decisive role in Kyrgyzstan’s future regime change.

Nazarbayev promised to invest in Kyrgyzstan’s hydropower sector, specifically the 1,900 MW Kambarata-1 and 240 MW Kambarata-2 plants, with annual generation capacity of 5,100 million kWh and 1,100 million kWh, respectively. Since Kazakhstan today produces electricity at cheaper prices than Kyrgyzstan, Nazarbayev’s decision may prove to be primarily motivated by political rather than commercial reasons. Kazakhstan’s domestic power tariff amounts to 2.5 cents per kWh, compared to more than 7.0 cents by Kambarata-1. Previously, the head of Russia’s Unified Energy Systems, Anatoly Chubais, announced Russia’s intention to invest into Kyrgyzstan’s hydropower plants. But since the sector is economically unattractive, no investment projects followed Chubais’ statement. Control over the Kyrgyz energy sector is highly centralized and encourages large-scale corruption. Any external investor will need to implement substantive technological, as well administrative reforms in the sector.

Another important result of Nazarbayev’s visit is the formation of a bilateral Central Asian Union with Kyrgyzstan that will deal with interstate border issues, trade, visa regimes, tourism, and security. The union’s formal name suggests that it is the first step toward realizing Nazarbayev’s idea to create a Central Asian regional organization that would not include any extra-regional forces such as Russia, China, or the United States. In effect, the Central Asian Union would represent a counter-balance to the existing Russian-dominated Collective Security Organization and the China-led Shanghai Cooperation Organization. Kazakhstan has the necessary economic leverage to reinforce the Central Asian Union by combining its commercial policies with political strategies. Kazakhstan’s growing economic and political influence in Kyrgyzstan is unlikely to be hindered by Russia or China as all three states have already built strategic economic, political, and military ties.

However, there is a cultural bias to Kazakhstan’s greater involvement in the Kyrgyz economy. Some Kyrgyz find it uneasy to admit that their culturally similar neighbor will dominate Kyrgyzstan. As Kyrgyz MP Azimbek Beknazarov commented, Nazarbayev’s address to the Kyrgyz parliament conveyed a sense of superiority and pomposity. Politicians such as Beknazarov may potentially inspire Kyrgyz nationalism against Kazakhstan’s greater economic involvement. As Kyrgyz civic activist Edil Baisalov observed, today the Kyrgyz public is more ready to accept the fact that hundreds of thousands of labor migrants work in Kazakhstan rather than agreeing to cater to Kazakh tourists in Issyk-Kul resorts.

Nazarbayev himself, however, officially ignores the idea of Kazakhstan being a regional leader, but insists that all Central Asian states should cooperate on an equal status. Such strategy may help Nazarbayev to win over political influence in Uzbekistan and Tajikistan as well.

(,, Bely Parohod,, April 25-May 2)