Wednesday, 04 May 2005

NEW AUTHORITIES BLAME AKAYEV’S RULE FOR ECONOMIC DOWNFALL AND CORRUPTION

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By Aziz Soltobaev (5/4/2005 issue of the CACI Analyst)

For the first years of Kyrgyzstan’s sovereignty, Askar Akayev conducted reforms in a transparent manner for civil society and once was marked as a ‘Jefferson of Central Asia’. In 1998, Akayev’s leadership took gradual step toward setting up an authoritarian regime following the example of neighboring countries. Corruption in the state system became an aggravating factor, as bribes and abuse of office penetrated to all branches of power.
For the first years of Kyrgyzstan’s sovereignty, Askar Akayev conducted reforms in a transparent manner for civil society and once was marked as a ‘Jefferson of Central Asia’. In 1998, Akayev’s leadership took gradual step toward setting up an authoritarian regime following the example of neighboring countries. Corruption in the state system became an aggravating factor, as bribes and abuse of office penetrated to all branches of power. Officials pursued primarily personal interests, and cared less about the economic future of Kyrgyzstan. As a result, by the end of the year 2004 the national poverty level was over 50%, the economy survived largely thanks to donor grants, technical assistance and international loans. The flawed parliamentary elections of 2005 and the following public protests and seizures of building were attempts to counter the corrupt Akayev regime. Social discontent reached such a critical point that on March 24, the Government House in Bishkek was taken over in three hours. This unexpected scenario revealed the vulnerability of the corrupt system and the lack of power of the ruling authoritarian regime.

After Akayev’s ouster, opposition leaders ostensibly found files in Akayev’s cabinet that painted a picture of the depth of corruption in the state system. In the first days, acting president and Prime Minister Kurmanbek Bakiyev declared that two-thirds of all tax collections had not reached the state budget, but went to Akayev’s so called ‘family purse’. The list of possible organizations involved in personal deals with the ex-president reached 70; the number of people that were somehow affiliated with the former regime’s corruption deals reached 102 persons. For a review of Akayev’s property and corruption, a special governmental commission was created.

Bakiyev stated that the top priority of the new government should be “dismantling the system of corruption built by the previous leadership.” He also stated that this problem could not be addressed without civil society support. “Corruption influenced all fields of our lives. We have to stop giving bribes. The government promises on its side to provide worthy salaries for state employees”, the Akipress information agency reported him as saying.

Most of the corruption deals somehow had relations with Askar Akayev’s family and aides. Akayev’s son-in-law Adily Toygonbaev, had been either formally or informally controlling key state and the largest private enterprises of country. Akayev’s son Aidar Akayev, deputy of the new parliament, had also owned some enterprises mostly subject to hostile takeover by him. Under Akayevs’ protection, such enterprises had been avoiding tax collections and received better market positions by using administrative resources to push out or defeat competitors.

The first criminal case against Akayev’s family members was filed against the ex-president’s wife Mayram Akayeva, who is charged with illegally appropriating a 30% state share in the Charity Fund “Meerim” lead by her. Their two children – Bermet and Aidar Akayevs – could not be charged, since they enjoy parliamentary immunity. In the meantime, the investigation commission had not found anything disrupting or discrediting against ex-president Akayev. He had only used a car and apartment in Bishkek city.

Acting vice premier minister Daniyar Usenov said corruption has already been alleviated in the customs service, and in the next months, it would be alleviated in the alcohol and energy sectors of Kyrgyzstan. Usenov stated that nearly 40% of all supplied energy was registered as “energy losses in transmission”. This does not fit with reality and some corruption deals might be present in the energy sector. Responding to the governmental signals, some top managers of energy companies recently resigned.

Mr. Usenov also touched on the finances of the Kumtor Operating Company, a joint project of the Canadian Cameco Corporation and the Kyrgyz government launched in 1993. “During the period of Kumtor’s operations, it produced 207 tons of gold sold for more than US$2 billion. However, the Kyrgyz budget received only US$107 million, even though it held 70% of shares in the gold mining Company”.

Having revealed additional funds, the interim government promises to redistribute the funds for payroll increases and expansions of mortgage availability. The government plans to a 50% increase in salaries in the next months, as opposed to the 15% promised by Akayev earlier this year. The issue of mortgages turned out to be thorny when real estate prices increased by up to 50% last fall, while personal income remained unchanged. Many citizens hoping to buy apartments lost their chance, because the construction of new residential buildings had been frozen, while bank mortgage terms where inaccessible for most of Kyrgyzstan’s residents.

These popular actions of the interim government could increase its chances in the upcoming presidential elections, where acting President Kurmanbek Bakiyev intends to stand for election.

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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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