A special direction of foreign policy activity during the past period has been the development of cooperation between Kyrgyzstan and donor countries and international financial institutions. This cooperation has played a significant role in carrying out economic and political reforms.
The Government of Japan allocated to Kyrgyzstan:
• two grants for the reform of medical services amounting to 688 million and 399 million Japanese yen;
• two grants to support the ongoing agrarian and land reform amounting to 3 billion 290 million and 1 billion 500 million Japanese yen (1995-2001). Kyrgyzstan used these funds to acquire 706 tractors, 269 grain harvesters, and 512 units of other agricultural machinery, 23.5 thousand tons of diesel fuel, and 43.9 thousand tons of mineral fertilizers.
Technical assistance from Germany was provided by the Society for Technical Cooperation (GTZ), with which contacts began in 1993. Financial resources were directed towards the implementation of seven projects totaling 17 million dollars. Among them:
• planning and monitoring the German contribution to projects or programs;
• selection and management of experts;
• training and upgrading the qualifications of technical personnel;
• acquisition of technical equipment;
• provision of non-repayable financial contributions.
Assistance from the United Kingdom was aimed at promoting sustainable development in the Kyrgyz Republic and reducing poverty levels:
• GSAC — support for the programs of the Government of Kyrgyzstan;
• promotion of tariff policy and reform of public utilities;
• assistance to the National Statistical Committee;
• reform of medical services; support for the national HIV/AIDS program;
• technical support for the rural investment program.
Throughout the cooperation with the Asian Development Bank, Kyrgyzstan received 22 loans totaling 536 million dollars and 52 grants for technical assistance amounting to 31.5 million dollars. The Asian Development Bank has become one of the largest international donors to Kyrgyzstan and included it in the list of borrowers that will receive the largest share of concessional lending. This bank has become a primary source of assistance for the country's development and poverty reduction.
Since Kyrgyzstan joined the Islamic Development Bank, six technical assistance projects and four special assistance projects have been developed, totaling 3.059 million dollars. The IDB approved six loans totaling 43.61 million dollars and two installment sale projects amounting to 18.5 million dollars. The transport and communications sector has become the most important, accounting for 40.1% of the IDB's project portfolio. Loans totaling 28.65 million dollars were provided for the rehabilitation of the Bishkek — Osh road, and the Taraz — Talas — Suusamyr road. The energy sector became the second largest sector (28.2%), while industry and mining ranked third (25.9%), and the share of the social infrastructure development sector accounted for 6.8% of total borrowing from the IDB.
Friendly China provided assistance in the form of 4 grants and 6 projects of non-repayable assistance totaling 174 million Chinese yuan. These were directed towards exploratory work and the development of a feasibility study for the construction of the China — Kyrgyzstan — Uzbekistan railway line, rehabilitation of the Osh — Sary — Tash — Irkeshtam road, development of technical and economic cooperation, strengthening the material base of law enforcement agencies, and others.
The Turkish International Cooperation Agency (TIKA) allocated 12 million dollars to Kyrgyzstan for the implementation of economic, trade, technical, educational, social, and cultural programs and projects from 1992 to 2004.
Switzerland allocated grant funds totaling 40 million Swiss francs (about 24 million dollars) and 38 million Swiss francs (about 23 million dollars) to Kyrgyzstan from 1993 to 2001 as part of financial and technical assistance programs. In 2002, funds amounting to 21.5 million Swiss francs were allocated.
The World Bank is the largest donor to the Kyrgyz Republic, with annual funding of about 70 million dollars. Since the Kyrgyz Republic joined the World Bank (1992), it has committed to pay 621.4 million dollars for 25 projects financed by the International Development Association, of which 469.7 million dollars has already been disbursed. In addition, two projects are financed on a grant basis by the Global Environment Facility (GEF) (6 million dollars). During the World Bank's operations in the Kyrgyz Republic, targeted projects have led to the reform of the agricultural sector, modernization of the flood protection system, improvement of water user associations, provision of broad access to credit services in rural areas, establishment of clean drinking water supply in rural areas, and improvement of sanitary conditions. With the help of the World Bank, 73 km of roads have been reconstructed in the cities of Bishkek, Osh, and Jalal-Abad, and 278 medical institutions have been modernized and equipped with modern equipment.
The Kyrgyz Republic joined the International Monetary Fund (IMF) in 1992 and has since received official assistance under various programs. The key area of cooperation between Kyrgyzstan and the IMF has been the development of policies aimed at maintaining macroeconomic stability, reducing external debt, and strengthening the banking system. The first joint structural adjustment programs were called ESAF-1 and ESAF-2. The funds allocated to the republic contributed to macroeconomic and financial stability. Thus, hyperinflation of 1993 was suppressed to 2.3% in 2002. The budget deficit was reduced from 13.89% of GDP in 1992 to 5.24% of GDP in 2004.
Reforms in the monetary and credit system ensured the convertibility of the national currency. Under a three-year program signed by the government and the National Bank from October 1, 2001, to September 30, 2004, support was provided for reasonable budgetary and tax policies, as well as structural reforms outlined in the National Strategy for Poverty Reduction. On October 1, 2003, the second year of the agreement with the IMF under this program was completed, and the third year of the PRGF implementation began.
The restructuring of interest and principal payments on bilateral loans, achieved in March 2002 with members of the Paris Club, was made possible only due to the results of Kyrgyzstan's work under the PRGF program, prepared jointly with the IMF. The liquidity problem in the medium term was resolved, deferring the payment of unsustainable amounts for the economy of a developing country. Through the PRGF program, concessional loans specifically designed for low-income countries have been flowing into the republic.
The International Finance Corporation's (IFC) unified portfolio grew to 27.72 million dollars (financed as of September 2002). The largest investments in the existing portfolio were made in the Kumtor gold mine project, with additional investments in a packaging factory (Altyn-Azhidar) and three financial sector projects (Demir Bank, KICB, and FINCA). The IFC also approved investments in a regional small equity fund (CASEF). Recently, within the framework of the Small Enterprises Fund, the IFC made direct investments in a pasta production factory (Akyn) amounting to 1.4 million dollars.
Kyrgyzstan has been a member of the European Bank for Reconstruction and Development (EBRD) since June 1992 and is one of its shareholders (1000 shares) totaling 10 million euros. Since the establishment of cooperation, the EBRD has approved 30 investment projects in Kyrgyzstan totaling 155 million euros. The EBRD provides financing under the following main programs: direct investment program, trade facilitation program, micro and small enterprise financing program, EBRD credit line. Over the past years, the EBRD has approved trade financing programs totaling 4 million dollars. In total, since the involvement of Kyrgyz commercial banks, trade operations amounting to 3.5 million dollars have been financed.
Kyrgyzstan — OIC
The Kyrgyz Republic was admitted as a member of the Organization of Islamic Cooperation (OIC) at the 5th extraordinary session of OIC foreign ministers held on December 1-2, 1992, in Jeddah (Saudi Arabia).
One of the main motives for Kyrgyzstan's membership in the OIC was the need for economic cooperation through establishing political contacts to seek new opportunities for implementing various projects aimed at reforming sectors of the economy and overcoming the difficult socio-economic situation in the republic. Kyrgyzstan's participation in OIC forums allowed for the expansion of political and economic cooperation with leading countries of the Islamic world.
Kyrgyzstan — (ECO)
Within the framework of the Economic Cooperation Organization, the republic has shown interest in expanding trade and economic relations with ECO countries by concluding the ECO Trade Agreement (ECO-TA) to eliminate trade barriers in the region. By signing a framework agreement on the trade agreement during the 1st meeting of ECO trade ministers in 2000, the republic actively participates in the development of ECO-TA.
In the framework of cooperation among ECO member states, the future task is to reconnect the energy systems of the Central Asian republics with the energy systems of ECO member countries. Kyrgyzstan has enormous hydropower potential, with 18 hydropower stations operating in the republic with a total capacity of 2710 MW. This, according to world experts, is only 9-10% of the developed potential, which allows the country to pursue the most ambitious long-term projects. In this sense, the priority for Kyrgyzstan within the ECO has become the project of interconnection and parallel operation of the energy systems of the countries of this organization.
In the framework of cooperation with the ECO, Kyrgyzstan is also extremely interested in strengthening the state and regional drug control and trafficking systems.
Diplomacy of the Great Silk Road
The main content of the diplomacy of the Great Silk Road is the affirmation of the principles of Kyrgyzstan's integration with the countries of the Silk Road. The main goal of reviving the Silk Road is not so much the restoration of ancient communications, but rather an appeal to the countries of the Silk Road region: "Let us be open to each other, ensure freedom of movement for citizens, freedom of trade, and not erect barriers that hinder economic development and human contacts. Let us cooperate on a mutually beneficial and equal basis."
The revival of the idea of the Great Silk Road implies transforming the space along this route into a zone of stability, security, cooperation, and equal partnership; creating favorable conditions for deepening international cooperation to undertake joint actions and address global problems faced by humanity on the threshold of the third millennium.
The doctrine contains the idea that sustainable and dynamic development of political and trade-economic relations at the present stage is unthinkable without strengthening friendly, partnership, trusting, and mutually beneficial relations among all states in the Silk Road region. This dictates the necessity for Kyrgyzstan to establish and comprehensively develop these connections with the countries of Central Asia at all levels and in all areas of cooperation, including in the field of ensuring regional and global security.
The idea of reviving the traditions of the Great Silk Road, framed in diplomacy, has received high appreciation worldwide.
Formation of a Favorable Image
Updating the foreign policy image of Kyrgyzstan is a call of the times. The scale of the tasks facing Kyrgyzstan at the present stage requires conducting an offensive, focused, and flexible explanatory, informational, and propaganda work using any available information and communication resources of local, regional, and global scope to ensure the national interests of the country on the international stage.
Kyrgyzstan uses the resources at its disposal to ensure a positive perception abroad, awaken friendly relations from the global community and political circles towards the people of Kyrgyzstan, and to convey to broad audiences objective and reliable information about the successes in building statehood.
Kyrgyzstan continues to be a depressed part of Central Asia due to political, transport, and customs isolation, as well as the backwardness of the territories adjacent to the south of the country, namely Tajikistan and Uzbekistan. The basis for an image breakthrough from the periphery to the "golden mean" of Central Asia could be the development of transport and other regional communication projects. The entry of Kyrgyzstan into the WTO provides significant opportunities for the development of telecommunications and an image breakthrough.
During the past period, Kyrgyzstan's foreign policy has been directed towards finding its niche in the global community, striving to enter the regional integration space, and establishing cooperation both bilaterally and multilaterally.
Kyrgyzstan is a small country. But unlike many microstates, it has sufficient resources to maintain independence and territorial integrity.
The population accounts for about 10% of Central Asia. The territory, according to local experts, is about 5% of the territory of Central Asia. The GDP of Kyrgyzstan is within 6% of the total GDP of Central Asian countries. It is a landlocked country with a historical tradition of predominantly mountainous, nomadic civilization developed over 40 centuries.
In practice, Kyrgyzstan's place in the global economy can change in relatively short historical periods — within the lifespan of one generation (21-26 years). This is the advantage of the economic mobility of a small country.
Kyrgyzstan is partly located in the Fergana Valley and partly in the Chui Valley, which are two of the six areas recognized as the most favorable for human development in the territory of the former USSR and allow for harvesting twice a year.
The wealth of mineral resources in Kyrgyzstan's mountainous territory can be seen as a distant prospect for profitable development in the 22nd century. The mountains are the source of the main real national wealth — water and hydropower. The small size of the country (compared to larger neighboring countries) is exacerbated by the existing fragmentation of the economic space, the mismatch of regions in terms of the tempo of post-industrial development, and the scales (transnationality and informational virtuality) of globalization processes in the global economy.
Modeling the prospects for the country's development under various scenarios shows that Kyrgyzstan has a governance factor status rated from 2 to 1 point. There is a high dependence on external investments and a growing external debt. The way out is in exchanging debt for ecological development programs. Establishing public order and strengthening the vertical of state governance are necessary conditions for attracting investments. The main change in the paradigm of the current authorities is: "From the redistribution of power and property — to mastering state governance and strategizing."
The definition of the values of the "Territory" factor goes beyond geographical research. Kyrgyzstan can confidently (due to the historical experience of the Kyrgyz Khaganate and fragments of the imperial psychology of the former USSR) don the ideological attire of a cultural empire. Moreover, this can be done without the imperialist ideas of aggression and expansion. Relying on the space of Kyrgyz diasporas, Aitmatov's literature, and the new wave of Kyrgyz cinema, it is possible to introduce and promote the brand "Kyrgyz World," which will help overcome the mental inferiority of the people of a small country. Kyrgyzstan occupies and will occupy a much larger place in the sociocultural space of the world than dictated by its state borders.
By the "Territory" factor, Kyrgyzstan has a state status rated at one point. The trend is positive — growth to 2 points. Migration can be viewed as the mastery of the territories of the Kyrgyz world, a kind of cultural extraterritoriality across Eurasia.
The "Natural Resources" factor is difficult to assess due to the different understandings of the concept of "national wealth" by various groups of people. On the one hand, Kyrgyzstan has unique biodiversity, and its natural resources are simply vast. On the other hand, they cannot be utilized due to low technological culture of development.
The aggression of barbaric agrarian and industrial development, attempts by external countries to use Kyrgyzstan as a dumping ground for radioactive waste, provoke a wave of anthropogenic disasters, based on a very subjective perception of the philosophy of ecology, far removed even from the views of an illiterate nomad. Adopting the paradigm: "Debts in exchange for ecology" is one way to establish a situation of a common home.
Nevertheless, in terms of the "Natural Resources" factor, Kyrgyzstan's status is that of a regional power (3 points). The presence of a regional center in Kyrgyzstan for addressing global warming issues elevates it to the ranks of regional powers, as the circle of its own resources for economic development expands through regional acquisitions. Initiating actions for a water-energy consortium and the transport junction of China — Kyrgyzstan — Uzbekistan defines the trend of using regional resources to address issues of disintegration and backwardness.
The prospects of a sociocultural nature extend to the "Population" parameter. The research organization Population Reference Bureau predicts that the population of Kyrgyzstan will grow to 8.3 million by 2050. The natural growth rate of one and a half times (5 million people in 2005) is not significantly influenced by GDP dynamics, inflation levels, marriage and divorce ratios, youth higher education enrollment rates, or migration. All this allows us to characterize this social phenomenon as a demographic "explosion," which followed a slight decline in the mid-90s, and to view it as a strategic resource for development.
With a rich ethnic diversity in the country (up to 80 ethnic groups), the Kyrgyz represent a special ethnicity, as the key to entry has been the sanjyr. It is also the basis for preserving the clan division, which can be utilized but not overcome for sociocultural reasons.
Even civic identity, for these reasons, is viewed in terms of integrated Islam. The slogan "Kyrgyzstan is our common home" may be replaced by the motto "All Muslims are brothers." The instinct for self-preservation of the ethnic identity cannot be canceled by slogans or legal norms. It can only be accepted, understood, and experienced.
Strangely enough, the introduction of private land ownership (PLO) did not become a revolutionary step stimulating capitalist market relations. Private land ownership became the economic basis for tribalism and de jure cemented backwardness. Reformers remembered too late that PLO is a sign not only of capitalism but also of earlier stages of development. Multilingualism and multiculturalism have divided the ethnic space of the country.
Migration has not become a sign of dynamism in societal development. Society has not distanced itself from total statehood and has not put forward its own development programs. Therefore, it is recorded that migration represents a decline in the most active and productive part of the population and the consolidation of the conservatism of those remaining.
There are concerns that the processes of decentralization (communalism) of governance, along with the establishment of PLO, will cement clan relations in state governance. If this happens, the country's backwardness will be finally established. The unpassed historical stage of a feudal, agrarian state may well arise, firstly, from the insurmountable psychology of traditional nomadic statehood and, secondly, become a consequence of regressive development. The latter is more likely for Kyrgyzstan.
Thus, the significance of Kyrgyzstan's status in terms of the "Population" factor is that of a small state (1 point). Indeed, Kyrgyzstan is a small, landlocked country. According to experts, a reference for comparison in the development of agriculture, industry, and services for the KR could be Cameroon or Nepal.
The parameters considered in the modeling methodology are significantly narrower than the actual parameters of the economy or economic activity. The limitation of the action of purely economic indicators has been recorded. The approaches to economic activity are more acceptable, encompassing incomes from both the "shadow" and "white" economies, as well as accounting for processes of mutual settlements and barter transactions, often based on natural relations.
Low-yield agriculture, dead-end transport routes, multi-structured economies, fragmentation of economic activity, and a backward survival model are signs of a low level of economic development. All this generates a "closed cycle of poverty," one-sided migration, and a "zone of instability and armed conflicts."
The reanimation of the zone of actions of Soviet military-industrial complex enterprises models the old gap between the economy and the well-being of the population. Hence the sharp decline and practical impossibility of reconstruction. The transition to world prices for imports will lead to the collapse of an economy designed for survival and will again raise questions of external management to smooth out processes.
In terms of the "Economy" factor, Kyrgyzstan's status is 1 point. The trend is growth to two points with the construction of large hydropower plants and the transport junction of China — Kyrgyzstan — Uzbekistan.
In terms of the "Culture and Religion" factor, Kyrgyzstan's status is 1 point. The growth trend is to 3 points. The fact of privatization by each country of the common historical and cultural space for Central Asia is recorded. Islam plays a very important role. Historically, it has always been a stronghold of state strengthening. Currently, the role of Islam is not so unambiguous, as radical groups are ready to oppose and do oppose secular regimes in Central Asia. The involvement of religious organizations in politics has become a vector for the evolution of civil society. The resourcefulness of this parameter for the contours of future social development in Kyrgyzstan is significant.
In terms of the "Science and Education" factor, Kyrgyzstan also has 1 point. The trend is growth to 3 points. As noted in paragraph 2.7, if Kyrgyzstan enters the regional Central Asian higher education market, then with the education of 360 thousand students and a payment of 6 thousand dollars per year, it could receive up to 2 billion dollars in GDP by 2020. Therefore, education is a strategic resource for Kyrgyzstan.
In terms of the "Army" factor, Kyrgyzstan still has 1 point. Kyrgyzstan perceives itself as a front-line militarized state. The change of border guards, the Batken war, and the unresolved threat of incursions by international terrorists, along with the saturation of the territory with drugs and light firearms — all this determines the growth of forced hidden military expenditures comparable to the republic's budgetary costs. The introduction of two foreign bases and entry into military-political alliances represent attempts to reduce the unbearable military burden.
In terms of the "Foreign Policy" factor — 1 point. The country is characterized by an evolution from the brand "Island of Democracy" to the image of a small isolated country with unstable governance and limited resources. The potential of the country's image brands has not been fully realized and accounted for as resources for the development strategy.