Kazakhstan Drags Feet on $100M Aid to Kyrgyzstan

Kazakhstan officially notified of denunciation of agreement with Kyrgyzstan

Kazakhstan is dangling more than $100 million in financial support in front of struggling neighbor Kyrgyzstan, but the transfer is reportedly being hindered by a combination of bureaucratic muddling and a turn of diplomatic ill-will, writes EurasiaNet.org.

The fate of the funds, which have been earmarked to smooth integration within the Russia-led Eurasian Economic Union (EEU), came up in Kyrgyzstan’s parliament on March 13 as MPs wondered aloud why the money was taking so long to arrive.

Agreement on the payment of $100 million in aid was reached late last year, and Kazakhstan’s prime minister Bakytzhan Sagintayev said earlier this month that he had agreed with his Kyrgyz counterpart for the sum to be increased by a further $41 million.

Saidulla Nyshanov, a deputy with the Ata-Meken party, said that the delay had been caused by the failure of Kyrgyz government departments to provide Kazakhstan with certain required paperwork.

The earmarked funds have been described as “technical aid” required to enable Kyrgyzstan to implement regulations in line with its membership in the EEU, which it joined in mid-2015. More specifically, the money is to be spent on building customs infrastructure and developing laboratory facilities for testing goods destined for export with the trading bloc. Kyrgyz deputy prime minister Oleg Pankratov also said in the last week of December that the support would go toward harmonization of railway cargo tariffs.

That these matters are only now being addressed — so long after Kyrgyzstan’s accession into the bloc — is a stark illustration of the haste with which the membership process was undertaken. Indeed, despite Kyrgyzstan’s EEU membership, Kazakhstan has reserved the right to periodically slap bans on the import of certain suspect items from its economically weaker neighbor, such as allegedly contaminated potatoes. The trading bloc has proven no insurance against selective embargoes.

Kyrgyz deputy economy minister Eldar Abakirov admitted on February 17 that the funds from Kazakhstan — or at least an initial $40 million — are required urgently.

“Kyrgyzstan has given Kazakhstan a list of activities required to meet 18 EEU technical regulations, which will cost $40 million. We have already told them that we need $40 million today,” he was cited as saying by CA-News.

Bilateral trade between Kazakhstan and Kyrgyzstan in 2016 totaled $577 million — a startling 18 percent annual drop that has severely undermined confidence in the viability of the EEU. (The scale of Kazakhstan’s fall in trade with other bloc members has been similar if not worse).

In view of those worrying figures, it would seem efforts to boost trade might be implemented with more urgency, but there is speculation that Astana may be holding back on its aid out of pique at remarks made recently by Kyrgyz President Almazbek Atambayev.

Speaking to Euronews in an interview during a visit to Brussels in February, Atambayev argued that Kazakhstan’s decision to limit border crossings for several weeks in response to political unrest in Kyrgyzstan in 2010 claimed human lives. The response in Kazakhstan was one of marked irritation, leading to speculation that Astana may keep Bishkek hanging on a little longer for its money to teach it a lesson in good manners.