Kyrgyzstan heads to the polls on October 10 to elect its first democratic Parliament since the uprising in April that overthrew authoritarian president Kurmanbek Bakiev, followed by summer violence in the southern region of the country. Deep-seated economic troubles fomented both violent events this year. It was arguably blatant mismanagement, nepotism, and flawed privatization that led to the overthrow of the government in April 2010.
The April uprising was bloody – estimates include hundreds of dead and wounded victims of government’s snipers, as well as thousands of destroyed and looted business and homes. Ethnically-charged violence enveloped Kyrgyzstan’s southern region of Osh two months later, presenting a major challenge to the Interim Government. In addition to ongoing infighting of key factions, June’s events drowned out calls for democratic reform with urgent security and legitimacy concerns. While investigations into root causes of the Osh events are pending, death estimates reach over 1,000 and allegations of payouts to violent youth gangs find base in countless accounts of the events.
The opposition tried previously to lead uprisings based on political, not economic, reasons, but failed. Last year several attempts by the opposition in Kyrgyzstan to get the government to resign did not pan out. Presidential elections (that did not meet OSCE standards) ultimately delivered a landslide victory to President Bakiev; afterward, the demonstrators went home.
In April 2010, it was a different story. The Bakiev government’s tactics were so repressive that many of the democratic activists were forced to flee the country for safety. Businesses were increasingly stifled by intimidation, harassment and extortion from government officials; corrupt courts did not uphold property rights. As bad as things were under the Akaev regime, which was toppled by the so-called “Tulip Revolution” only five years earlier, this time around was much worse. The final blow to the government’s legitimacy was when President Bakiev handed over much of the country’s economic management and most profitable assets to his young son Maksim and other elite affiliates.
The Bakiev government sold key companies to questionable, if not unknown, local bidders, pushing aside viable international investors through a blatantly corrupt and opaque privatization process, accompanied by sharp price hikes in basic utilities. Restaurants struggled to keep refrigerated goods from spoiling due to rampant electricity shortages; regular people could not afford telephones, or in many cases even basic necessities such as clothing or food; pensioners were nearly reduced to paupers within only a few months.
In an open letter in February 2010 the now-president Roza Otunbaeva laid the blame for mismanaging the country’s assets and impoverishing its people squarely on the government. Ultimately, these factors united the opposition in consensus behind concrete grievances and detailed the fundamental reasons behind the opposition’s success in mobilizing the popular overthrow of an authoritarian regime by April.
In Osh, regardless of the findings that will result from numerous investigations into the root causes of June’s violence, the overarching reasons for the wide-scale violence are economic. In Fergana Valley, where Osh is situated, poverty and economic hardship are pervasive. Forty percent of Kyrgyz live below the poverty line, and in Osh, known as the “Southern capital of Kyrgyzstan,” that number is much higher.
A fall in remittances, as Kyrgyz migrant workers return from Russia and Kazakhstan and are unable to find jobs, are another issue contributing to the frustrations in the area.
The North-South divide of Kyrgyzstan has long been cited as a challenge to the nation’s sovereignty, and the disenfranchisement of the impoverished Southern population from the economic and political processes exacerbate these difficulties. These factors make this region particularly volatile to clashes and susceptible to manipulation. Meager payouts or promises of payouts to local youth to attack rival groups, coupled with poverty and narcotics, was reason enough to spark the brutal violence in June 2010.
The country’s Interim Government, in power for only two months, was unable to quell the tensions, which escalated quickly. Gangs of murderers, criminals and marauders attacked each other with weapons, military grade and home-made, in most brutal ways. Had the Fergana Valley been more economically developed with level a stable middle class of entrepreneurs and property owners, rather than the impoverished unemployed population of angered and hungry youth, things could have turned out differently.
Both violent events in Kyrgyzstan this year illustrate the importance of focusing on economic issues and underscore the value of a sound entrepreneurial climate. The government will need to work with the business community to focus on improving the environment for small and medium-sized businesses to drive employment growth; engage in transparent privatization processes to ensure legitimacy and efficiency of valuing key assets; as well as commit to the fundamental reforms that will strengthen national prosperity.
The government that will form following the Parliamentary elections in October in 2010 (with an eye toward Presidential elections scheduled for October 2011) will need to address the economic concerns that have been at the core of the nation’s troubles. Barring outside interferences or major voting irregularities or infractions, the Ata Meken party led by Omurbek Tekebaev, the author of the revised constitution that establishes a more decentralized form of government, is expected to garner most seats. Ata Meken will likely have to work closely with runner-up parties to establish a ruling coalition government that can be a model of democratic processes for its neighbors in the region.
The new government’s task will be to live up to its promises to start a new chapter in Kyrgyzstan’s history by gaining legitimacy through democratic processes and balancing security with prosperity. Working closely with the business community to improve the entrepreneurial climate in Kyrgyzstan will help to secure prosperity throughout the country. In the United States, for example, small businesses represent 99.7 percent of all employment and small businesses have created almost two thirds of new jobs in the last 20 years. In Kyrgyzstan, however, SMEs’ contribution to the GDP is meager – 41.2 percent in 2009, according to the official statistics, though local experts say it is much lower, with about half of the employment in Kyrgyzstan being in the informal sector.
The government will have to focus improving the environment to increase legal employment, bridge the income gaps, and reduce the disparities between urban and rural areas, as well as between the North and South. Today, Kyrgyzstan is one of the poorest countries in the region with a weak competitiveness and unfavorable environment for job creation, according to the World Bank.
It will be crucial for the government to establish transparent, market-oriented privatization of nationalized assets as a fundamental approach to demonstrating its commitment to democratic reform and gain legitimacy in the eyes of the population. To-date, according to local experts, the Interim Government nationalized all or partial shares in 35-40 major companies that were known to have been owned by President Bakiev or his affiliates. Unfortunately, the confiscations took place with no due or transparent processes, and not through the court system. A key property rights protection clause was also removed from the constitution at its final adoption phase in June 2010, despite the protests from the business community and Kyrgyzstan’s abysmally low ranking on property protection by international indicators.
These actions sent shivers through the business community, which has been tirelessly advocating for stronger property rights protection as a tool to improve the economic climate and attract foreign investment. The business community will need the commitment of the newly elected government to secure this basic democratic principle.
The government will need to focus on small and medium-sized businesses as the engine to economic growth and social stability. The new government will need to pay much more attention to leveling the playing field for state-owned and private businesses with particular emphasis on small and medium-sized enterprises; strengthening fundamental individual freedoms that are essential to a democratic society, including engagement in the policymaking processes to reduce disenfranchisement; and instituting a sound investment regulations to encourage an unimpeded entrepreneurial climate that fosters economic growth and prosperity in all geographic areas of Kyrgyzstan.
The Tulip Revolution in 2005 arguably brought about a much less democratic regime than it overthrew. In 2010, Kyrgyzstan has a new window of opportunity to overcome authoritarianism and institute true democratic progress that will send a message of hope to the world. Hopefully, it can happen, with support from the international community that has already lined up to re-build Osh and lend support to the Interim Government. Kyrgyz civil society has an important challenge to maintain pressure on their government to live up to its promises of democratic reform, keeping in mind that democratic reform will not succeed unless it goes hand-in-hand with crucial economic reform.