Country with a name for business teeters

March 9, 2005

Kyrgyzstan is not a country on many peoples lips. One reason is because few know how to pronounce it (try Kee-er-gistan). But it has been in the news lately. The first round of parliamentary elections was held there last week. The results are a mixed bag. The president's supporters did not win an outright majority of the contested seats but, even so, opposition parties have mounted protests.

The Central Asian republic is poor, mountainous and land locked. Three-quarters of its 5.1 million people are Muslim; the rest mostly are Russian Orthodox. GDP per capita is just $US1600 ($A2000). Corruption is a big problem. Kyrgyzstan ranked 122 out of a possible 145 in Transparency International's 2004 survey of perceptions of corruption.

The economy is largely agricultural: cotton, tobacco, wool and meat are the main products. It lacks the oil and gas reserves of other countries in the region. But it does have gold.

Its Kumtor goldmine holds as much as 70 tonnes of gold. The mine had been a joint venture between the Kyrgyz Government and Canada's Cameco but was folded last year into a new company, Centerra Gold Inc, along with majority stakes in Mongolia's Boroo goldmine and a stake in a mine in Nevada. The new entity was listed on the Toronto Stock Exchange. The Kyrgyz Government was allocated about 27 per cent of the shares in Centerra in exchange for its two-thirds share in Kumtor. It then sold this down to about 16 per cent.

The terms of the deal dismayed some Kyrgyz parliamentarians and there were whispers of corruption.

Foreign military bases are another earner. The Government has allowed both the US and Russia to establish military bases within its borders. Just 56 kilometres apart, each pays a hefty rental. Reportedly, the US, for one, also pays an extraordinary $US7000 landing fee every time a plane lands at its base.

Poor as the country is, it has been something of a regional leader on economic and political reform since the end of the Soviet era. The Government has privatised state assets and encouraged a market economy. It has been eager, too, to reach out to the outside world. Kyrgyzstan was the first ex-Soviet country to become a member of the World Trade Organisation, for example.

The liberal tendencies are due to President Askar Akayev, the only former Soviet Central-Asian head of state who was not a senior communist. A former physics professor, he won the presidency in 1992 in elections that were widely regarded as democratic. There has since been some retreat from these democratic principles but, on the whole, the country remains the most liberal in the region.

Last week's elections, turnout for which was about 50 per cent, fell short of international standards, according to observers from the Organisation for Security and Cooperation in Europe. But the OSCE did feel it was better run than previous elections. A run-off election for those seats in which there was no clear winner will be held later this month.

Akayev himself is due to retire in October, having served the constitutional limit of two terms. He has long maintained that he does not intend to run again. But the talk now is that, with a compliant Parliament, he will have the constitution changed to allow him to run for a third term. But he remains unequivocal. "I have not had, and do not have, intentions to change the constitution," he said last week.

One reason he might stay on is to protect his family's interests. His son Aider, who was a successful candidate for a parliamentary seat last week, has great television interests in Kyrgyzstan. Bermet, a daughter, also stood for a seat. She won the most votes but not outright victory and so now must face a run-off vote. Her husband Adil Toigonbaev owns several media outlets, including a popular newspaper and television station, and is involved in the local tobacco, alcohol, building materials and oil products businesses. Another family member is said to control fuel sales to the US base.

So, this year will be a watershed one for Kyrgyzstan. If Akayev is no longer president by the year's end, he will have a genuine claim to the title "Central Asia's most progressive leader". But, if he's still there, he risks going down in history as just another despot.

Meanwhile, his country remains an enigma. A pity, as it has one of Central Asia's more business-friendly environments. It's the marketing that has let the country down. And its name.