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Russia Gives Kyrgyzstan $30M Lifeline

Kyrgyz President Almazbek Atambayev meets with his Russian counterpart, Vladimir Putin, in Moscow on March 2, 2016.

Russia has thrown Kyrgyzstan a bone — albeit not a particularly large one — in the form a $30 million grant to help cover budget shortfalls.

Economic news website Tazabek cited Kyrgyzstan’s presidential administration on March 6 as saying the money would go in part toward completing construction of social housing for military and police personnel. 

News of the pledged assistance followed a meeting between President Almazbek Atambayev and his Russian counterpart, Vladimir Putin, in Moscow on March 2.

Atambayev’s working visit was transparently motivated by a desire on both sides to seek clarity about the state of bilateral relations, which have been tested by the failure of Russian companies to complete essential energy-related projects in Kyrgyzstan.

Putin spoke reassuringly.

“There is no need to talk about the nature of our relations,” Putin said, before going on to talk about the nature of the countries’ relations. “Kyrgyzstan is a reliable partner with which we we have truly strategic relations. Since Kyrgyzstan joined the Eurasian Economic Union, the opportunities for cooperation have increased. I think this will be reflected not only in indicators, but also in real life, and in the development of our economic and social spheres.”

Atambayev was similarly positive, while his office hinted strongly that talks touched upon the stalled hydroelectric plant projects that Kyrgyzstan sees as key to its economic survival. 

“During the meeting, the heads of state discussed current issues in Kyrgyz-Russian cooperation, progress in the completion of joint projects, and prospects for future collaboration in various spheres and in the development of Eurasian integration,” Atambayev’s office said in its statement.

All well and good, but that sheds little light on what exactly is going to happen to the Upper Naryn and Kambarata hydropower projects. 

The Kambarata-1 hydropower plant was expected to cost $2 billion to complete and eventually generate around 4.4 billion kilowatt hours annually. Upper Naryn, which is intended to be composed of four staggered hydropower plants, was designed to have an annual production of 942.4 million kilowatt hours. It is essential that those plans come to fruition if Kyrgyzstan wants to live up to dreams that it could one day become a net power exporter.

In January, however, parliament voted overwhelmingly cancel deals with the Russian companies leading the projects, citing lack of progress in work. Atambayev suggested hopefully that alternative investors could be found, but that appears to have been an expression of deluded optimism given the many factors to consider — first and foremost being that it is hard to think of which international investors would want to go anywhere near the projects.

Complicating matters was the fact that Kyrgyzstan now apparently owes Russian state energy company RusHydro, which was servicing the Upper Naryn project, $40 million for work done to date.

Another spoiler in relations is the mounting perception among Kyrgyz entrepreneurs that last year’s accession to the Eurasian Economic Union has done little to advance their interests.

Seeking to dispel those concerns, Russian state television presaged Atambayev’s visit with a glowing report hailing the achievements of the EEU.

The director of a sewing factory, Chynybek Azhibekov, was shown explaining how easier access to EEU markets — ostensibly Kazakhstan and Russia for Kyrgyzstan’s purposes — had helped boost turnover.

Another speaker was bullish about another oft-cited concern.

“What they used to say before — that after Kyrgyzstan’s entry into the Eurasian Economic Union, the large markets that used to re-export Chinese goods would stop working — is absolutely incorrect. They continue to work as before,” said Zhumakadyr Akeneyev, chairman of the For the Union of Kyrgyzstan With Russia and Belarus society.

Anecdotal evidence suggests that latter assertion is a flagrant falsehood, and although border controls have indeed been substantially relaxed, reports of delays on the Kazakh frontier are still commonplace.

The television report on state-owned Vesti was patently aimed as a palliative for Kyrgyz viewers, many of whom rely on Russian television for their perspective on international events.

Until Moscow stumps up serious cash, which it is hardly at liberty to do for now given its parlous economic position, these attempts at bolstering broad enthusiasm for its geopolitical projects are doomed to struggle.

Russia Gives Kyrgyzstan $30M Lifeline

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