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Kyrgyzstan
The Development Challenge
Kyrgyzstan is a small, poor, mountainous country with limited natural resources, high indebtedness, and a predominantly agricultural economy. Despite these constraints, Kyrgyzstan is the most open, progressive, and cooperative country in Central Asia. It leads the region in local government reform, health care reform, and in actively addressing new health issues, such as malaria, TB, and HIV/AIDS, in an open and direct manner. Civil society and media are, at times, able to influence government policy and legislation. Parliament is increasingly active and sometimes provides a check on government control. The budgeting process is one of the most transparent in the region. Despite widespread poverty, pervasive corruption, and deteriorating infrastructure, Kyrgyzstan is at least able to hold its own economically, with GDP growth at 5.9% during the first 10 months of 2003, per capita income growth at 1.5%, and average monthly salaries up by 13.5%. Banking deposits increased by 25% which, together with investments by three Kazak banks, indicates increased confidence in the system.
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Kyrgyzstan is the only country in Central Asia in which a majority of local government officials are elected, and almost 42% of incumbents were voted out of office in the last elections. The 2005 Presidential elections will be an important barometer of Kyrgyzstan's commitment to democratic reform. Nevertheless, corruption, stemming in part from very low government salaries and a powerful oligarchy, has become a primary concern. Many lucrative businesses and investment projects have been monopolized by a small group of politically well-connected entrepreneurs. A maze of uncodified "fees" continues to constrain free enterprise. The government's control of the media and its harassment of critics are generating increasing cynicism among the population. Essential social services, critical to maintaining public support for reform, are still inadequate. Poverty-level wages in the education sector are jeopardizing the education of an entire generation. Government estimates place approximately half the population at or below the poverty line. Trade barriers, such as the closed border with Uzbekistan and protectionist measures in Kazakhstan, continue to constrain trade.
Kyrgyzstan is a strong U.S. ally in the war on terrorism. Its support in the form of the vital coalition airbase in Manas and over-flight rights was essential to efforts to combat terrorism. Kyrgyzstan's reform agenda directly advances U.S. national interests by promoting economic and democratic reform. Its location at the headwaters of major river systems in Central Asia also enables it to play a pivotal role in regional resource management, such as irrigated agriculture, power generation, and flooding in the downstream countries. The challenges described above, and protectionist trade measures from neighbors, especially the closed border with Uzbekistan, are potential sources of conflict that could undermine regional stability.
The USAID Program: USAID's strategy has been to strengthen democratic culture, foster a favorable business environment, promote health system restructuring, support anti-trafficking measures, improve basic primary education, and encourage "self-help" initiatives to avoid conflicts and improve living conditions within local resource constraints. These efforts contribute to an environment in which democracy and open markets can flourish, thereby promoting internal stability and greater prosperity. The U.S. is providing assistance to help Kyrgyzstan fight trafficking in persons. Partnerships, training, and exchanges remain an important component of U.S. assistance. USAID supports a number of U.S.-Kyrgyzstan institutional partnerships that seek to build lasting relationships. USAID also supports a successful program for independent testing of secondary school graduates, and collaborates where possible to support the American University of Central Asia.
All of USAID's programs work directly through private firms and NGOs. USAID provides technical assistance to government ministries and agencies to implement reform; no funds are given directly to the government. Technical assistance is also given to Parliament to strengthen its role as a counterweight to executive power. To help the government compensate for the steady brain-drain to the private sector since Kyrgyzstan's independence, USAID has provided training as a key component of all programs.
The Program Data Sheets cover seven strategic objectives for which USAID is requesting funds. The strategy aims to promote reforms that foster the growth of small/medium enterprises, promote democracy and civil society, increase utilization of quality primary health care and prevent infectious disease, encourage better use of the region's water and energy resources, improve basic education, strengthen conflict prevention, and address cross-cutting issues within the program (i.e., training). FY 2005 funds will be used to implement the program as currently planned, including cross-cutting objectives in youth, gender, anti-corruption, and rule of law. USAID will continue to integrate conflict prevention into the overall program through education, agro-enterprise growth, and community development, especially in the more vulnerable southern portion of the country.
Other Program Elements: The Farmer-to-Farmer Program, managed by USAID's Bureau for Economic Growth, Agriculture, and Trade, is active in Kyrgyzstan. The Eurasia Foundation has an active small grants program, which complements the USAID programs in education, small business, local government, and civil society. Centrally-funded activities include some applied research in health. The Departments of Commerce, Defense, and State also manage programs complementary to USAID field activities in various sectors. At the U.S. Embassy's request, USAID coordinates a very large program of donated humanitarian commodities, transported with State Department funding.
Other Donors: Almost all major multinational donors are active in Kyrgyzstan, together with many important bilateral donors such as the European Union, the British, Germans, Swiss, and Japanese. The largest donors are the Asian Development Bank, the International Monetary Fund, and the World Bank. Also important are the Economic Bank for Reconstruction and Development, the International Organization for Migration, the Islamic Development Bank, the Aga Kahn Foundation, and the Open Society Institute. USAID coordinates with all regularly, working in particular with the World Bank and the United Nations. Kyrgyzstan has received a grant from the Global Fund to fight AIDS, Tuberculosis, and Malaria, and USAID will continue cooperation with the government throughout its implementation. The World Bank leads the donor coordination efforts in the country and maintains an active database of projects and programs. USAID collaborates in all areas, but especially significant are joint efforts in health reform with the World Bank.
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