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Central Asian Geopolitics: The Kyrgyz Republic

Central Asian Geopolitics
In the heart of Central Asia lies the Kyrgyz Republic. Many consider the country an island of democracy in the region and it sports a comparatively open and competitive economy. It can be surprising then that the average Kyrgyz family earns under $1,000 a year. Its importance in Central Asian geopolitics, combined with economic reforms, has helped make it the top recipient of development assistance in the region. With a presidential election scheduled for January 2021, the new government will have to answer serious questions about which global power it aligns itself to and whether or not that alignment will bring about progress in lifting roughly 23% of the country’s population out of poverty.

Kyrgyzstan emerged from the Soviet Union’s fall with a far different government than its fellow former Soviet states. While dictatorships and tightly-controlled economies rule its neighbors, Kyrgyzstan enjoyed economic and political reforms. This led to an influx of international supporters. Development aid became the crutch upon which Kyrgyzstan’s economy leaned. The diversity of donors has given the country the unique ability to align itself with countries that best suit their interests. The problem has been that the guiding interests have been too often those of the top politicians rather than the population. Much of the blame has gone to former President Kurmanbek Bakiyev. Bakiyev took over in 2005 and spent five years perfecting a system of crony capitalism that left nearly 34% of the Kyrgyz people under the poverty line, while deeply enriching himself, his family and his friends.

Help in Crisis

Ten years later, the country is still working to shake the lasting economic and political flaws of the Bakiyev Administration. During October 2020, the political landscape was changing on a seemingly daily basis. The leadership future for the country remains uncertain but will require an ability to maintain channels of aid from a wide array of actors. Much of Kyrgyzstan’s help comes from international organizations like the World Bank. Currently, it works to help Kyrgyzstan combat the pandemic with the Emergency COVID-19 Project.

The Kyrgyz Republic received $160.15 million with the bulk of the money focused on helping with recovery from the economic impacts of the pandemic. Specifically, the emergency aid has funded the creation of new hospitals, renovation of 24 existing hospitals, provisions of mechanical ventilators, defibrillators and an assortment of Intensive Care Unit equipment. These aim to not only provide aid during the current pandemic but also laying the groundwork for future health crises. This is, of course, just one example of a meaningful step towards helping the Kyrgyz people. Typically, the majority of that help has come from countries like Russia, China and the United States.

The Great Game

These world powers have been vying for economic and political leverage over Kyrgyzstan since its birth as a nation. Of those powers, Russia has historically been Kyrgyzstan’s preferred suitor. However, in 2001, the U.S. built its most important transit base for the Afghanistan War at Manas airbase, just outside of the capital, Bishkek. This was a landmark move because Kyrgyzstan became the only country in the world to host a Russian and U.S. military base simultaneously. In 2006, foreign aid started pouring in from the U.S. The uneasy relationship between the three nations nearly boiled over in 2009. That year, Bakiyev announced plans to close the U.S. airbase where roughly 98% of coalition forces were passing in transit to Afghanistan. Later that same year, Bakiyev signed a law allowing for the continued use of the Manas airbase after the U.S. agreed to triple the annual rent paid.

Bishkek and Beijing

Relations between the U.S. and the Kyrgyz Republic continued to decline. By 2019, U.S. foreign aid to the Kyrgyz Republic had dropped 37%. Russia’s economic influence also appeared to be waning as China gradually took on the role of the principal donor. While the Kyrgyz population largely dislikes its eastern neighbor, the governments of China and Kyrgyzstan have an increasingly cozy relationship; one built increasingly upon economic dependence. Roughly 32% of the country’s imports come from China including the majority of its oil. That marks a larger percentage than any other country in Central Asia. This statistic is only a window into the economic melding between the two countries.

As of 2017, Kyrgyzstan’s debt to China made up 42.3% of its GDP. Additionally, 26.2% of its Foreign Direct Investment came from China. Kyrgyzstan’s participation in Chinese President Xi Jinping’s Belt and Road Initiative (BRI) largely spurred this. The initiative is a multi-trillion-dollar plan for global infrastructure and trade routes spanning three continents. Kyrgyzstan has become one of the countries most indebted to China since the project’s start in 2013.

The Buckle in the Belt

Dependency on China has only grown. Despite there being serious rifts between the populations of the two nations, for China, this comes down to central Asian geopolitics. Kyrgyzstan controls the Tien Shan mountain range which surrounds the best overland connection between Europe and Asia. As China invests billions of dollars in a global effort to rebuild its land belt of trade, Kyrgyzstan rises as a crucial point of entry between vast mountains. Maintaining a favorable and dependent relationship is therefore essential for Beijing.

The Kyrgyz People

While the world superpowers use the Kyrgyz Republic as a chess piece in the great game of central Asian geopolitics, there is one group that seems left out: the roughly 6 million people living in Kyrgyzstan, 23% of whom still live below the poverty line. Whoever gains control of the government in January 2021 will have to decide how to handle the powerful suitors vying for influence over the country in a way that benefits the Kyrgyz people rather than simply the allies of a particular party or company.

– Scott Mistler-Ferguson
Photo: Flickr

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Examining the Belt and Road Initiative in Pakistan

The Belt and Road Initiative
Approximately 26.5 million out of 221.8 million Pakistani citizens live below the national poverty line, determined based on one’s ability to afford to consume 2,350 calories a day. Indigence is particularly widespread in rural areas, which houses almost two-thirds of the national population. Due to persistent fiscal deficits, Pakistan has failed to implement appropriate anti-poverty and welfare measures. Currently, Pakistan lacks an umbrella social protection institution, while state loan schemes exclude many rural inhabitants, whose economic activity is largely informal and temporary. However, the Belt and Road Initiative may provide support to Pakistan’s poor.

The Situation

Farming and animal husbandry remains indispensable to the country’s agrarian regions. However, while almost 40% of Pakistan’s labor force relies on other sources of income, rural development may not occur without industrialization and infrastructural advancements, which is essential to connect the locals with the neighboring urban areas. Luckily, the Belt and Road Initiative, launched in 2013 by the Chinese and the Pakistani authorities, has endeavored to facilitate these positive changes. The BRI or the China-Pakistan Economic Corridor is the collective name for a plethora of Sino-Pakistani projects that primarily concentrate on infrastructure and energy, with an estimated budget of more than $62 billion.

Although the BRI is not the only major investment scheme operating in Pakistan, with the Asian Development Bank similarly funding road construction and having spent circa $14 billion on developing the country’s energy sector and rural communities, the former’s scale is unprecedented. Whether one could say the same about its impact on the Pakistani poor is equally important to establish, and now that the Belt and Road Initiative’s initial projects have come to fruition, it is possible to discern that.

Energy Sector Benefits

Within the first seven years of its existence, the Belt and Road Initiative resulted in the completion of 24 energy projects, which are worth $25.5 billion altogether. These include the erection of non-renewable power plants, namely coal stations in the Pakistani towns of Port Qasim and Sahiwal, as well as of solar and wind facilities. Thanks to this, where Pakistan’s annual GDP growth has been traditionally undermined by at least 2% owing to energy shortages, and where only half of the rural population had permanent access to electricity in 2018, the projects successfully replenished its national grid with 3,240 MW.

This was an 11% increase in its overall power capacity, and it helped stabilize the electricity supply to the indefeasible benefit of rural communities due to its diversification of the national energy resources. Furthermore, rural communities are expected to benefit from the construction of natural gas pipelines from Iran to the Pakistani provinces of Baluchistan and Sindh, whose rural poverty rates remain the highest in the country.

Infrastructure Benefits

Besides helping Pakistan attain energy self-sufficiency, the Belt and Road Initiative has invested $12 billion in constructing new roads and modernizing the local railway system. For example, Pakistan is currently building a 680-mile-long motorway linking its two major economic powerhouses, Karachi and Lahore. Moreover, the equally ambitious Karakorum Highway is connecting those cities to other Pakistani towns.

With faster, higher-quality roads accelerating cargo movement across Pakistan, the government determines farmers will face fewer hardships when transporting their produce to urban markets and city-based purveyors of important amenities will be able to improve their presence in rural areas. Additionally, the former will increase earnings, whereas the latter might encourage competition and bring down prices for basic goods, thereby making them more accessible to the rural public.

Other Economic Benefits

In 2019, China gave Pakistan $1 billion to cover the costs of 27 projects in education, agriculture and poverty alleviation. Most of these projects are concentrated in Southern Punjab and Baluchistan, which scored few points on the Human Development Index and correspondingly have many impoverished villages.

Analyzing the Belt and Road Initiative

Although Sino-Pakistani cooperation under the BRI has created more than 70,000 jobs in Pakistan and the World Bank believes that it could lift as many as 1.1 million Pakistanis out of poverty, it constitutes no silver bullet to the problem of domestic rural poverty.

On many occasions, the dire state of the country’s economy stifled project implementation, which suffered yet another balance of payments crisis in 2018, as well as by government bureaucracy. Thus, the construction of a power plant in Gwadar, a Pakistani port located in the province of Baluchistan and leased to Chinese companies, experienced a three-year delay, awaiting local government authorization.

Some have also questioned the Belt and Road Initiative’s socioeconomic inclusivity. According to the Sino-Pakistani agreement concerning the lease of Gwadar, the Pakistani economy will only receive 9% of the port’s revenues. An even smaller proportion of these funds will go to poverty alleviation programs. Moreover, the nation’s skilled wages have not registered significant growth, which suggests that many professionals still receive meager pay and struggle to cover their daily expenses.

The Belt and Road Initiative in Pakistan is hardly a finished enterprise. Although the majority of the so-called “early harvest” projects have reached fruition, many more are undergoing planning and construction. For this reason, we cannot conclude our evaluation of the BRI’s contribution to fighting rural poverty in Pakistan. Yet, since impoverished populations have benefited from the energy sector and job creation initiatives, this project may indeed prove helpful in alleviating poverty in Pakistan.

– Dan Mikhaylov
Photo: Flickr