Attachment_2_CDCS_Kyrgyz_Republic_Public_Version_Final_9-2014.pdf

USAID/Kyrgyz Republic

COUNTRY

DEVELOPMENT

COOPERATION

STRATEGY

FY 2015– FY 2019

U.S. Agency for International Development

TABLE OF CONTENTS

Executive Summary

Development Context, Challenges & Opportunities

Development Challenges

Nascent Democracy with Weak Rule of Law

Deteriorating Public Administration & Service Delivery

Health Care & Education Services

Geographic Disparities & Inclusion Challenges

Struggling Economy, Unemployment & Migration

Development Opportunities

Strong Political Will to Consolidate Democratic Gains

Foundation of Steady Annual Growth and Progress on MDGs

Health & Education Progress

Regional connections: New Silk Road & Almaty Consensus

Strategic Approach & Development Hypothesis

USAID/Kyrgyz Republic Results Framework

Integrated Approach

U.S. Foreign Policy Interests, U.S. Goals & Priorities

Alignment with the Government of the Kyrgyz Republic & Key Stakeholders

Critical Overarching Assumptions & Risks

Development Objective 1: Inclusive and Accountable Democracy

DO 1 Critical Assumptions & Risks

DO 1 Intermediate Results

DO 1 Linkages to Other USAID/ Kyrgyz Republic Programs & Central Asia Regional Development Cooperation Strategy

DO 1 Other U.S. Support, Donor Coordination & Key Stakeholders (GoKR)

Development Objective 2: Improved Service Delivery and Policies for All Citizens

DO 2 Rationale

DO 2 Critical Assumptions & Risks

DO 2 Intermediate Results

DO 2 Linkages to Other USAID/Kyrgyz Republic Programs & Central Asia Regional Development Cooperation Strategy

DO 2: Other U.S. Support, Donor Coordination & Key Stakeholders

Development Objective 3: Accelerated Growth of Diversified and Equitable Economy

DO 3 Critical Assumptions & Risks

DO 3 Intermediate Results

DO 3 Linkages to Other USAID/ Kyrgyz Republic Programs & Central Asia Regional Development Cooperation Strategy

DO 3 Other U.S. Government Support, Donor Coordination & Key Stakeholders

Annexes

Annex 1: References

Annex 2: Donor Landscape in Select Sectors

EXECUTIVE SUMMARY

The Kyrgyz Republic is located in the heart of Central Asia and is of crucial importance to U.S. foreign policy goals. This small, landlocked, former Soviet country features a nascent democracy, a vibrant and increasingly influential civil society, and robust cooperation with the U.S. on a number of issues. While it has been successful in lowering its rate of extreme poverty, over 38% of the population remains below the national poverty line. Continued U.S. Government development assistance will help the country consolidate its encouraging progress toward accountable, inclusive governance, and reap significant development outcomes such as increased economic opportunities and increased resilience to shocks.

Under this Country Development Cooperation Strategy (CDCS) for the U.S. fiscal years 2015-2019, USAID can build on the Government’s commitment to further reform in democracy and the social sectors as well as relatively strong recent economic growth in order to achieve the CDCS goal of assisting in the development of a democratic, well-governed, and prosperous Kyrgyz Republic. This goal is based on the hypothesis that if government institutions’ relationship with the citizenry is characterized by increasing accountability and inclusiveness, then its main ‘deliverables’ – service delivery and policy – will improve across all socio-economic development sectors, thus increasing the legitimacy and stability of the Kyrgyz

Republic’s nascent democracy.

This goal reflects the significant democratic gains that the country has made in the past few years, as well as the remarkable vibrancy of its civil society through periods of renewed authoritarianism.

USAID/Kyrgyz Republic is confident that the parliamentary democracy established by the 2010 constitution has developed strong foundations. Governing coalitions have dissolved and reformed, elections have been held peacefully and fairly, and most political parties and leaders see the advantages of participation in the democratic system. That is not to say that the democratic system is fully consolidated. In order for its democracy to be fully established, the Kyrgyz Republic must strengthen the rule of law and fight corruption, increase the level of inclusion and protection for all people – particularly ethnic minorities and women, and expand the role of civil society in providing oversight over the democratically elected government in order to enable the citizenry to peacefully and responsibly hold their government accountable.

While improvements in democracy are vital for the future of the Kyrgyz Republic, USAID/Kyrgyz Republic believes that the success of this democratically-elected government is fundamentally dependent on its ability to improve the lives of its citizens through their increased opportunities, ability to realize their full human potential, and freedom of expression in all its forms. This requires improvements in essential services that bring outcomes that the population can see and feel – in particular improvements to education and health.

Finally, the Kyrgyz Republic’s economy must be able to sustain the services and opportunities that the population needs to improve their overall quality of life. The country’s productivity in key sectors, including agriculture, is not sufficient to drive employment, trade, and economic growth. The population is not sufficiently prepared to participate in the modern workforce, and improvements to the business environment are needed to encourage increased investment and the expansion of job-creating sectors.

With this background, USAID/Kyrgyz Republic has identified three Development Objectives (DOs) necessary to achieve the goal of a democratic, well-governed, and prosperous Kyrgyz Republic. These three objectives are mutually reinforcing, and each is required to achieve the CDCS goal. As all citizens are better able to interact with government in an inclusive and accountable democracy, the legitimacy and effectiveness of the country’s nascent political and civil society institutions will grow. As the ability of governing institutions to better deliver services expands to include all segments of society, the environment and capacity for economic growth will improve. Similarly, with a stronger economy and empowered private sector, the Kyrgyz Republic’s ability to effectively mobilize revenues will increase and better enable service delivery.

Development Objective 1: Inclusive and accountable democracy: This DO seeks to build inclusive and accountable democracy by increasing the participation of all citizens in democratic processes, increasing mutual accountability between citizens and government, and protecting the universal human rights of all citizens.

Development Objective 2: Improved service delivery and policies for all citizens: This DO seeks to improve service delivery and policies for all citizens through building the capacity of key state bodies to govern, increasing the use of quality public services (particularly health and education), and increasing civil society partnerships with government for improved policy and service delivery.

Development Objective 3: Accelerated growth of diversified and equitable economy: This DO seeks to build accelerated growth of a diversified and equitable economy through expanded human capital, an improved business enabling environment, and improved competitiveness of key economic sectors.

This CDCS will be implemented in close coordination with the USAID/Central Asian Republics Regional

Cooperation and Development Strategy in recognition of the fact that the Kyrgyz Republic is an important player in the long-term stability and prosperity of the Central Asian region – including

Afghanistan and Pakistan. Just as stability and cooperation with its neighbors is vital for the Kyrgyz

Republic’s development, this country has the potential to serve as a model for democracy in the region.

DEVELOPMENT CONTEXT, CHALLENGES & OPPORTUNITIES

The Kyrgyz Republic is located in the heart of Central Asia and is of crucial importance to U.S. foreign policy goals.

This small, landlocked, former Soviet country features a nascent democracy, a vibrant and increasingly influential civil society, and robust cooperation with the U.S. on a number of issues. The past ten years have been marked by successive political revolutions and occasional bursts of ethnic violence. Following the ouster of the authoritarian president in April 2010, a new constitution established the Kyrgyz Republic as a parliamentary democracy. Since then, it is successfully passing through its transition phase to become a fully democratic country and stands as a positive model among its less progressive neighbors. Continued U.S. Government development assistance will help the country consolidate its encouraging progress toward accountable, inclusive governance, and reap significant development outcomes such as increased economic opportunities and increased resilience to shocks.

The Kyrgyz Republic is a mountainous country with a population of roughly 5.5 million. While it has been successful in lowering its rate of extreme poverty, over 38% of the population remains below the national poverty line of $1.30 per day (men: 39%, women: 37.2%).

It is a disaster-prone country particularly at risk for earthquakes and landslides. Further, the country is susceptible to a variety of other shocks such as volatile global and regional food prices, political instability and ethnic conflict. Although it has considerable gold resources and hydropower as a source of electricity, the Kyrgyz Republic has no hydrocarbon resources. Its considerable physical, educational, medical, and social service infrastructure is the legacy of Soviet subsidy and investment, but over two decades after the collapse of the Soviet Union, these systems are crumbling and suffering from overuse, neglect, and low human capital.

Although the Kyrgyz Republic faces many challenges, it also presents key opportunities for development assistance to have sustainable and powerful impact. USAID can build on the new Government’s commitment to reform gains in democracy and the social sectors combined with relatively strong recent economic growth. By applying timely assistance in concert with the donor partners and the people of the Kyrgyz Republic – and encouraging key reforms – over the five years of this Country Development Cooperation Strategy (CDCS), USAID will achieve the following:

10% increase in citizen satisfaction with key government institutions – courts and Parliament

10% decrease in the poverty rate in the Feed the Future zone-of-influence, by the National Poverty Rate

15% relative reduction in stunting rate in the Feed the Future zone-of-influence

90% of all primary grade students with improved reading instruction, curriculum, and reading materials

50% reduction in the number of MDR TB cases

Access to treatment for every patient diagnosed with MDR TB

75% treatment success rate for MDR TB

5% relative reduction in HIV among people who inject drugs

The GoKR poverty rate is set at 70.82 Kyrgyz Som (KGS) per day. In March 2014 the KGS fell against the U.S. Dollar, reaching a low of 58 KGS/U.S. Dollar (which dropped the national poverty rate to $1.22/day.) As of April 2014, the KGS has risen slightly to 54, which sets the national poverty rate at $1.30/day.

DEVELOPMENT CHALLENGES

As the newest democracy in the former-Soviet world and the only democracy in Central Asia, the Kyrgyz Republic faces a unique set of challenges to its stability. The democratic system, which presents real choices to an empowered electorate and requires power-sharing among the branches of Government, has yet to prove itself to either the people or Government. A risk remains that the country will return to the non-democratic systems of neighboring countries, as it did after the 2005 revolution. The country’s 22 years of independence show a pattern of severe shocks, including natural disasters, economic crises, government instability and ethnic conflict. For the population to become resilient to these shocks the Kyrgyz Republic will require a rapid increase in Government capacity for key social services, increased inclusiveness of development achievements, and expanded economic opportunity.

NASCENT DEMOCRACY WITH WEAK RULE OF LAW

The Kyrgyz Republic has made enormous strides since the overthrow of President Kurmanbek Bakiyev in 2010.

Nonetheless, as USAID’s 2013 Democracy, Rights, and Governance (DRG) Assessment notes, “the impressive democratic breakthroughs of the last three years are threatened by ineffective, unaccountable and often predatory government and rule of law superstructures that fail to deliver for all citizens, but especially fail to defend the human rights of the minority against the prejudice of the majority.”

While the opportunity to consolidate democratic gains is ripe in the Kyrgyz Republic, many significant challenges remain.

The new Parliament that came out of the October 2010 elections has seen its ruling coalition collapse three times and reconfigured itself without provoking an existential crisis. Political competition is being channeled into a legitimate, rule-based arena. Still, despite changes to electoral and political party legislation, there remains a structural incentive for parties to rely on opaque sources of fundraising and to ‘sell’ political patronage to business interests in exchange for support. This fundamental fact is difficult even for well-meaning parties to overcome, as financial and administrative resources are still the key to winning elections. This status quo will likely remain until a party with a clear identity, articulated platform, and transparent finances demonstrates that it can win elections.

Progress is also needed on gender equality in politics. While 27 of the 120 members of Parliament are women

(22.5%), this number is below the 30% quota adopted in 2007 and few top positions in the Government are held by women.

There is also a lack of women in political leadership at the local level.

Women make up 42% of public servants, though the problem of income inequality persists, with men occupying higher-paid managerial positions and women in lower-paid occupations. Additionally, anecdotal reports show an increase in domestic violence and gender based violence with limited assistance for victims from law enforcement institutions.

The Kyrgyz Republic suffers from a broad range of major weaknesses in rule of law that threaten its democratic reforms. The first is the Soviet legacy of political manipulation and the vestiges of a powerful police state designed to serve the interests of the ruling party and to control the population. This system was later captured by corrupt officials who manipulated it for personal gain. That led to the second problem: the legacy of criminal capture of the State and State-provided services during the first two decades of the Kyrgyz Republic’s independence. The third rule of law problem has emerged since the 2010 ethnic clashes in the South.

USAID/Asia Bureau. Democracy, Human Rights and Governance Assessment of the Kyrgyz Republic. USAID. March 2013. p. 13.

USAID/Kyrgyz Republic. Gender Analysis for USAID/Kyrgyz Republic. USAID. June 2013. p. 23.

Somach, Susan, and Deborah Rubin. Gender Assessment USAID/Central Asian Republics: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan. USAID & DevTech Systems Inc, March 2010. p. 34.

Increasingly the application of justice through the courts and the police, and even the level of payment necessary to avoid them has become an ethnicity issue, especially in the South.

Every government in the Kyrgyz Republic since 1993 has declared that it would strengthen the independence of the judiciary and the effectiveness of law enforcement agencies in order to reassure the public as well as foreign investors that the rule of law would prevail.

Yet after almost twenty years of judicial reforms, the goals of having an independent and professional judiciary and efficient administration of justice remain elusive. The post-revolutionary Government represents a new surge in stated political will to tackle rule of law reforms. In addition to changes to the Constitution, the President and

Parliament have publicly declared the importance of establishing an independent judicial branch and reforming the police.

More than anywhere else in Central Asia, the Kyrgyz Republic boasts a robust civil society, capable both of grassroots service provision and macro-level advocacy around a few key policy issues. However, strength and sustainability in the sector is unevenly distributed, with a small number of national civil society organizations

(CSOs) demonstrating high levels of organizational development and commanding a strong voice in national policy debates, while a mass of small organizations in the regions outside the capital and rural areas lead a hand-to-mouth existence. Over the past three years, CSOs have been able to work independently, openly and generally free of government interference.

Financial sustainability remains an elusive goal for CSOs in the Kyrgyz Republic. While CSO financial legislation is in place, widespread financial support has not emerged from the business community or population at large. The

Government has started to allocate funding to CSOs through state social procurement administered by the

Ministry of Social Development in increasing amounts over the last three years. Nonetheless, most funding still comes from international donors. Since the June 2010 events, a regional imbalance has emerged as donors directed funds to the South. As a result, CSOs in other parts of the Kyrgyz Republic have dwindled without financial support.

DETERIORATING PUBLIC ADMINISTRATION & SERVICE DELIVERY

The Kyrgyz Republic continues to suffer from the paradoxical ailment of being simultaneously over-governed and inefficiently governed. The Soviet and post-Soviet autocratic legacy has left an oversized four-layer government based on the old Soviet model of unitary, top-down hierarchical control by officials who have mostly been appointed from above.

The Kyrgyz Republic inherited the Soviet bureaucratic machinery to deliver a broad range of public goods, and remains highly centralized, inefficient, under-resourced, and in some cases subject to rent-seekers, impeding the ability of the Government to implement reforms even when there is political will. The problem is not that there are insufficient staff to implement reforms, but rather that both the quality of the country’s bureaucrats and the way they are used is inadequate to meet the task. The lack of competitive pay and adequate training make recruitment difficult and encourage rent-seeking and corruption among those in service.

In 2012 the Kyrgyz Republic was ranked 125 of 187 countries with a score of 0.622 on the UN Human Development

Index.

Many services of critical importance to the population (police, schools, health care, civic documents) are technically beyond the jurisdiction of now democratically-elected local officials and are managed by appointed and largely unaccountable representatives of central ministries and agencies. Local elections have made municipal and

USAID/Asia Bureau. pp 6-7.

USAID/Asia Bureau. p. 6.

UNDP. Kyrgyzstan Country Profile: Human Development Indicators. 2013.

http://hdrstats.undp.org/en/countries/profiles/KGZ.html Accessed August 27, 2013.

http://hdrstats.undp.org/en/countries/profiles/KGZ.html rural officials answerable to their population, regardless of whether they have the means to solve problems. The

Soviet legacy has been a strong countervailing force to decentralization throughout the past twenty years, with centralized ministries largely dominating the decision-making in many critical areas of service delivery, regardless of who gets elected or appointed locally.

On paper, the Kyrgyz Republic has pushed decentralization further than any other Central Asian country, with political power, representation and fiscal authorities devolved down to local government units. Unfortunately, decentralization in the Kyrgyz Republic remains only half-finished, which undermines long-term attempts to improve governance in the country. The current decentralization program fails to clearly delineate how local government units are to transition from their current service provision model to the one mandated by legislation.

At the heart of this process is the on-going redefinition of what the state does, what it reserves to itself, and what it allows to be managed outside of its control. The Kyrgyz Republic lacks a consensus vision of what this division of labor should be and how to manage the contraction of the state.

While corruption and inefficiencies have driven many citizens to minimize contact with the state, there are five key

‘touch points’ where these sorts of interactions are virtually inevitable and where citizen attitudes toward the government are formed. These are: 1) health care; 2) education; 3) law enforcement; 4) issuance of official documents; and 5) the criminal justice system.

HEALTH CARE & EDUCATION SERVICES

The Kyrgyz Republic is a country at risk of losing the social sector advantages of its Soviet past. Deteriorating

Soviet-era infrastructure is both expensive to maintain and inadequate to the task of supporting high quality health care for all citizens. Despite being an early leader in health sector reform, the Ministry of Health is having difficulty capitalizing on those reforms to ensure good health, combat priority infections such as HIV and Tuberculosis (TB), and reduce death and disability from chronic diseases. Substantial efforts to improve health care service delivery have not led to a commensurate impact on health status in the country. The health sector requires both resources and technical assistance in order to fulfill the promise of reform.

TB care is plagued by low capacity at the national and service delivery levels. Improved care for drug-susceptible

TB has successfully slowed the rate of new infections and TB mortality – over the last decade the TB incidence rate for men has fallen 29% and the rate for women has fallen 20%, although men remain 1.4 times more likely to be infected with TB than women.

The achievements with drug-susceptible TB demonstrate that the health sector is capable of providing good care, but capacity is still lacking in terms of MDR TB. The Kyrgyz Republic is among the

27 WHO high burden countries for MDR TB.

Rates of MDR TB are on the rise; they are an increasing proportion of all TB cases.

Furthermore, the number of patients who acquire MDR TB as their first infection, rather than developing drug resistant TB as the result of failed treatment, is also increasing.

This indicates poor case detection among the

USAID/Asia Bureau. pp 20-21.

Ibraimova A, Akkazieva B, Ibraimov A, Manzhieva E, Rechel B. “Kyrgyzstan: Health system review.” Health Systems in

Transition. 2011. 13(3):1–152.

USAID/Kyrgyz Republic. Gender Analysis for USAID/Kyrgyz Republic. pp 28-29.

WHO Fact Page on TB in Kyrgyzstan. http://www.euro.who.int/en/health-topics/communicable-diseases/tuberculosis/country-work/Kyrgyzstan. Accessed on December 27, 2013.

WHO, Kyrgyz Republic Tuberculosis Profile. Generated on December 27, 2013.

http://www.euro.who.int/en/health-topics/communicable-diseases/tuberculosis/country-work/Kyrgyzstan http://www.euro.who.int/en/health-topics/communicable-diseases/tuberculosis/country-work/Kyrgyzstan general population and weak infection control at the health care facility level. Innovative rapid testing technologies such as GeneXpert would improve case detection and support better patient segregation for infection control.

As of 2013, the Kyrgyz Republic could not treat every diagnosed case of MDR TB. In December 2013, approximately 600 people were wait-listed for MDR TB drugs and 200 people were receiving them. While wait-listed for care, infectious individuals live among the general population, putting family, friends, and colleagues at risk for MDR TB infection. Fifty-seven percent of the budget for TB control in the Kyrgyz Republic comes from donor funds.

HIV in the Kyrgyz Republic is concentrated among key populations and people who inject drugs account for the largest number of new HIV infections. Overall HIV prevalence in the Kyrgyz Republic remains low, but there has been a significant increase in HIV infections, driving the cumulative number of HIV cases from 826 registered people living with HIV (PLHIV) in 2005 to an estimated 8,700 in late 2013.

PLHIV also struggle to access treatment. Although the Government of the Kyrgyz Republic has increased the funding for HIV care, capacity remains weak. The Global Fund to Fight AIDS, TB and Malaria provides enough drugs for approximately 10% of people living with HIV, but that minimal supply goes underutilized. Health care providers lack the skills and knowledge to effectively prescribe them.

As part of the health sector reform process, responsibility for anti-retroviral (ARV) prescription and AIDS care was shifted to the primary care sector, but that responsibility was not accompanied by the necessary capacity building.

Although decentralized HIV care is a best practice, it must be accompanied by the capacity to provide high quality care.

Primary health care providers are unable and unwilling to manage ARVs, and patients go without if they lack geographic access to the AIDS Center in Bishkek. As a result, only 952 of the estimated 8,700 people living with

HIV in the Kyrgyz Republic are currently receiving ARV treatment.

Literacy in the countries of the Former Soviet Union was always considered an area of strength for the education system. As a result, more attention has been paid to adding new subjects to the curriculum, than to providing support to the fundamentals of a good education. This overloaded curriculum does not allow students time to master the basics of literacy and math, which has led to low learning levels in subjects across the learning spectrum. Additionally, the quality of education at all levels has been declining, with inadequate teacher training, inability to retain qualified staff, and inefficient management of educational institutions.

While school enrollment is still very high in the Kyrgyz Republic, the recent increase in male dropouts at the secondary level is concerning.

Over time this lack of attention to basic subjects has led to a dramatic decline in reading and learning outcomes over the past decade.

An Early Grade Reading Assessment (EGRA) conducted in 2011 in the Kyrgyz Republic show that while most students in grade two have some of the essential skills for reading, the percentage of children with these skills declines by fourth grade.

This decline represents a critical lost moment to teach children to read while they are

WHO, Kyrgyz Republic Tuberculosis Profile, generated on December 27, 2013.

UNAIDS. Global report: UNAIDS Report on the Global AIDS Epidemic 2013. “UNAIDS / JC2502/1/E”- Revised and reissued, November 2013.

UNAIDS. pp 99-100.

Kyrgyz Republic National AIDS Center. Monthly Report for November 2013. November, 2013.

Tvaruzkova, Mirka, and Duishon Shamatov. Review of Early Grade Teaching and Skills: The Kyrgyz Republic and Tajikistan.

USAID & Aguirre Division of JBS International, January 2012. p. 1.

Somach, Susan, and Deborah Rubin. p. 33.

Tvaruzkova, Mirka, and Duishon Shamatov. pp 13-14.

still active in school and interventions can still succeed. This decline in reading at grade level also impacts a child’s ability to advance in other subjects such as math and history, creating a downward spiral that can be stopped if addressed in time.

This low performance should have been expected after almost two decades of neglect to the system. Classrooms are overcrowded and in disrepair, approximately half the children in school lack textbooks, and teachers are leaving the profession faster than new teachers are brought on. Subjects and requirements are added to the outdated curriculum, crowding out time for learning basic skills and critical thinking. For these reasons, USAID’s decision to focus on measurably improving the reading skills of primary grade students comes at a critical time to encourage the Ministry of Education to focus on improving basic skills and measuring progress to show results.

In addition to the challenges facing the quality of education, access to education among children and youth is not assured. Trends show that an increasing percentage and absolute number of children are not in school or are registered for school but do not attend on a regular basis and are at risk of dropping out. According to the

UNESCO Institute for Statistics, 4.7% of primary age children and 8.2% of lower secondary age children were out of school in 2010.

These statistics are fluid, but show a persistent cohort of children that do not attend school and will not have the skills to succeed in later grades. Any effort to ensure that all children in the country improve their reading skills and ultimately learn to read with comprehension will need to decrease the percentage of out of school youth, and to keep students from leaving school early.

GEOGRAPHIC DISPARITIES & INCLUSION CHALLENGES

Significant inclusion challenges remain to be addressed in the Kyrgyz Republic. These challenges include geographic disparities that closely parallel ethnic divides, backsliding on issues of gender equality and the alienation and exclusion of youth from economic and political power. These challenges are at the core of the risks to the government’s stability and the risk of a return to violence in the country. Addressing these challenges is a necessary step to building the community-level resilience to shocks that is lacking in many regions of the country.

The wide disparity in malnutrition rates among oblasts is one symptom of inclusion challenges. Demographically, the population is divided both ethnically and geographically. The majority ethnic group is Kyrgyz, amounting to

65% of the population, and they are followed by Uzbeks (14%), Russians (12%), and small numbers of other ethnicities. The Uzbek population is largely concentrated in the Fergana Valley in the southwest, an area somewhat arbitrarily divided among Tajikistan, Uzbekistan, and the Kyrgyz Republic, leaving ethnic enclaves in each country and myriad international demarcation issues. Long-simmering ethnic tensions most recently erupted in June 2010. Since then, the large ethnic Uzbek population in the South has faced routine discrimination, increasing ethnic isolation and harassment by security services.

Political liberalization since 2010 has been coupled with a rising nationalist discourse among some ethnic Kyrgyz that the Kyrgyz Republic should be primarily a state for them. Uzbeks in the South appear to increasingly be forced to assimilate or emigrate. While the President has been working on a new ethnic policy, the multiethnic concept of citizenship and the narrative for peace and reconciliation has not been championed sufficiently by leading politicians. Without impartial investigation and prosecution of the perpetrators of the June 2010 violence and strong measures to improve rule of law, especially in the South, the legitimacy and stability of the Kyrgyz

Republic’s democratic experiment will be significantly undermined. The June 2010 inter-communal violence marked a sharp collapse of rule of law in the South that has not improved since. In the aftermath, the Uzbek

UNICEF. “Kyrgyzstan Country Study” All Children in School by 2015. Global Initiative on Out-of-School Children. 2012. p. 93.

minority was disproportionately charged in the investigations. While this ethnic bias in judicial proceedings has been acknowledged by many in private, only prominent human rights groups and a few media outlets are outspoken about it, often at the risk to their own safety. Ethnic Uzbeks are presented with few attractive choices in parliamentary or presidential elections since the national parties are dominated by and appeal to ethnic Kyrgyz.

However there have been increasing attempts to appeal to and include the ethnic Uzbek voter, as demonstrated by large numbers of Uzbek candidates in the Southern local council elections.

Media outlets suffer from these language dynamics, with outlets finding it difficult to produce Uzbek-language news as older, experienced Uzbek-speaking journalists have left the South or stopped working as journalists and few young people want to go into journalism.

Islam is undergoing a revival in the Kyrgyz Republic, a country with a political elite that is still largely secular.

In particular, there is a growing gap in perceptions of religion between young people and older people. Older people tend to view religion, particularly Islam, with suspicion, and are concerned about the spread of more austere forms of Islam into the Kyrgyz Republic. Younger people, on the other hand, seem to be identifying more with religion.

In UNDP’s analysis of young people, 68% of respondents identified themselves first as Muslims and second as citizens of the Kyrgyz Republic. American University of Central Asia (AUCA) findings indicate that young people view Islam not only as a cultural identity, but also as a political identity. At the same time, their knowledge of political Islam is superficial and largely gathered from Western media sources. The majority of respondents in the

AUCA study saw the Kyrgyz Republic as a secular state with Islamic values, similar to Turkey or Malaysia.

Gender equality is on the official agenda for the GoKR, civil society and the NGO and donor sectors. Laws provide for equal access to education, political participation and citizenship rights. However, the recurrent political and economic transitions in the Kyrgyz Republic are having different impacts on males and females.

The Kyrgyz

Republic has ratified all relevant international human rights documents, including those pertaining to gender discrimination. The principle of equal rights is specified in the Constitution as the equal rights of men and women to participate in elections and referendums; to obtain, to change and to keep citizenship; to receive education, medical aid, pensions and social benefits; to marry and to bring up children; to have parental leave for child-care;

and to hold property. In 2007, the Constitution was amended to guarantee not only equal freedoms and rights, but also the equal opportunities to execute them. Despite the significant de jure progress in gender equality, there is a lack of implementation of these laws that, in some areas, requires legal amendments to remedy.

Women also need better awareness of their rights and representation in cases to enforce them.

In addition, the role of women seems to depend on socio-economic status while the economic opportunities for women are declining.

Women decreasingly work in high-skill areas such as medicine and law in favor of lower-paid positions such as bazaar sellers. Even women working in the same fields as men make only 77% of the average male wage.

Women have occupied power positions, most notably the former Transitional President, but at the same time women continue to be exposed to discrimination and violence. The problem is deeply rooted enough that over

45% of women believe that gender based violence is justified, in some cases.

USAID/Asia Bureau. p. 9.

USAID/Asia Bureau. p. 11.

Oliver, Daniel, and Karin Akins. Youth Assessment: Kyrgyz Republic. USAID & the International Youth Foundation, October 2010. pp 13-14.

USAID/Kyrgyz Republic. Gender Analysis for USAID/Kyrgyz Republic. USAID. June 2013. p. 47.

Somach, Susan, and Deborah Rubin. p. 29.

Somach, Susan, and Deborah Rubin. pp 33-34.

USAID/Kyrgyz Republic. Gender Analysis for USAID/Kyrgyz Republic. pp 38-39.

USAID/Kyrgyz Republic. Gender Analysis for USAID/Kyrgyz Republic. pp 16-19.

Youth (people aged 10 to 25) in the Kyrgyz Republic represent a third of the population and face multiple challenges, including a lack of education, abuse of illicit substances, risky sexual behavior, and a lack of opportunities for participation in public life, as they transition from school into holding the rights and responsibilities characteristic of full, active citizenship. In reaction to poor governance, many youth are disillusioned about the promise of democracy, a significant obstacle to building a more stable and unified country.

Limited investment has been directed at engaging youth as partners for their own development.

STRUGGLING ECONOMY, UNEMPLOYMENT & MIGRATION

The Kyrgyz Republic does not have some of the economic advantages in terms of natural resource endowments that its neighbors have. Economically, it has largely depended on gold mining, which represents 12% of Gross

Domestic Product (GDP) and 26% of tax revenues. Remittances from the country’s estimated one million labor migrants, most of whom are working in Russia, represent up to 23% of GDP. The rest is largely subsistence agriculture. While real GDP fell in 2012 due to a reduction in gold output, poor agricultural performance due to a drought and a slowdown in the economies of its leading trade partners, in 2013 it is expected that positive growth will return due to a low base of comparison and a rise in gold production. Expansion may be strained in 2014 if international gold prices fall.

POVERTY AND FOOD SECURITY

Although the Kyrgyz Republic has been successful in achieving its MDGs by reducing its rate of extreme poverty

($1.25/day) to less than 5%, the rate has unfortunately begun to rise again – having sunk to 3.1% in 2009 only to rise back up to 4.4% in 2012. Further, the national poverty rate – which uses a standard of approximately $1.30 per day – has now reached 38% (men: 39%, women: 37.2%). This is up from 31.7% in 2008. Although the poverty is more acute in rural (39.6%) and mountainous areas (51%), rates remain alarmingly high even in cities (35.4%) and the relatively prosperous middle altitudes (32.1%).

It is further important to remember that in many ways the people of the Kyrgyz Republic are in a worst-of-both-worlds scenario. Like the residents of many developing countries, the Kyrgyz population is facing high rates of poverty and a Government that is too weak and poorly funded to help effectively. However, like residents of more developed economies, the Kyrgyz population’s only historical precedents are of a relatively wealthy society, leaving them without knowledge or access to common coping mechanisms. One sign of this are the country’s food security rates, which would normally be indicative of a society with higher rates of extreme poverty.

Food security in the Kyrgyz Republic is a major problem that is getting worse. The World Food Program (WFP) reports that 25% of Kyrgyz households are food insecure. Households with the smallest land holdings are especially hard hit. Household food insecurity is as high as 48% in Jalalabad, 38% in Osh, 38% in Batken, areas where there are a large number of people living below the national poverty line (e.g., in Osh the poverty rate is

40%).

Food insecure households in the Kyrgyz Republic spend over 60% of their budgets on food, indicating high dependency on food purchases and vulnerability to market price swings. The national stunting rate is 17.7% (boys:

19.9%, girls: 15.3%). Although rates of stunting among children are highest in the South and West (22.5% in

Oliver, Daniel, and Karin Akins. p. 9.

Adler, Beth, and Amanda Femal. Improving Financial and Agribusiness Linkages to Enhance Competitiveness in Kazakhstan, Kyrgyzstan, and Tajikistan.USAID. March 2013. p. 4.

National Statistical Committee of the Kyrgyz Republic, Standard of Living of the People of the Kyrgyz Republic. Bishkek. 2013.

pp 17-18.

USAID/Kyrgyz Republic. Kyrgyz Republic: Assessment of the Agricultural Sector. USAID. July 2013. p. 36.

Batken, 24% in Osh), they are also high elsewhere (between 9.7% in Issyk-Kul and 18.6% in Bishkek. Sex-disaggregated stunting rates are only available at the national level).

These households are particularly susceptible to the shock of food price increases. Building their resilience relies heavily on raising families out of poverty and increasing the reliability and availability of diverse, nutritious foods. In addition to heightened poverty and food insecurity, the Southern regions have traditionally been more susceptible to conflicts. While the causes of these conflicts are complex and often politically-driven, USAID conflict programs have identified resource constraints in rural areas – in particular access to irrigation water and pasture lands – as contributing factors for conflict.

Introducing new crops could simultaneously improve nutrition and raise farm incomes. The Ministry of Agriculture lacks policy decision making capacity, which hinders agricultural development. The Kyrgyz Republic is currently losing sizable export revenues due to the recent foot and mouth outbreak and trade embargo, leading to heavy

Government engagement to try to resolve the issue. There is a lack of value-added food processing chains that can improve product quality and create value-added employment in the agricultural sector. Finally, Kyrgyz crop yields have suffered from a deteriorating irrigation system.

Low levels of trust in agriculture value chains impede their development. Even with a purchase contract, producers and processors are concerned that the other party will break a contract if a lower price is found. The lack of reliable contract enforcement impedes trust and makes purchase order finance difficult. Producers are also reluctant to cooperate with one another to access buyers.

ECONOMIC POLICY AND GROWTH

The Kyrgyz Republic has made great progress in improving its business enabling environment, but many problems remain. Following the breakup of the Soviet Union, Kyrgyz lawmakers and government administrators methodically and purposefully adopted market-oriented policies. Much of the Kyrgyz Republic’s legal and regulatory code was revised soon after 1991, which ushered in many of the laws and institutions that typify a modern, market-oriented economy. However, reform is still needed in critical policy areas, including tax administration, trade regulations, commercial law and the labor market. Additionally, corruption and business formalization remain ongoing challenges for the private sector.

For example, among the (formal) trade transaction costs, there is substantial ‘border friction’ in the form of intentially delayed service from customs and other officials. This has the impact of an import duty in the receiving country and as an export tax in the Kyrgyz

Republic. In many cases, it is not simply the matter of paying an official fee, but rather facing the delays that represent an additional, resource-swallowing transaction cost.

USAID’s 2010 Gender Assessment for the Central Asian Republics notes that gender implications in issues such as customs policy, trade reform and gender budgeting are under-addressed. In particular, social payment reform does not seem to accurately reflect costs of different programs on a gender basis.

Government influence on small business is less problematic than in other parts of Central Asia. However, the Government struggles with

ICF International, Kyrgyz Ministry of Health, Kyrgyz National Statistical Committee. Kyrgyz Demographic and

Health Survey 2012. USAID & UNFPA. March 2013. p. 21.

Trueblood, Michael. "A Review of the Agricultural and Food Security Situation in the Kyrgyz Republic." USAID/Central Asia Mission, November 19, 2012.

Adler, Beth, and Amanda Femal. p. 7.

Chemonics International. USAID/Kyrgyz Republic Economic Growth Assessment. May 2013. p. 5.

Mogilevskii, Roman. 2012. Trends and Patterns in Foreign Trade of Central Asian Countries, Working Paper No.1, 2012.

University of Central Asia, Graduate School of Development Institute of Public Policy and Administration.

Somach, Susan, and Deborah Rubin. p. 31.

implementation of laws and regulations. While there are few restrictions on foreign investment, investors have high perceived risks and are concerned that polices could change with little or no notice.

The banking sector is fairly stable and steadily developing. In 2012, assets grew by 12.2%, while the deposit base grew by 24.7% and the total loan portfolio grew by 14.2%. The non-banking financial sector, specifically microfinance, is also growing. Microfinance accounts for more than 70% of the country’s individual loans.

Banks are risk adverse, requiring high levels of collateral for loans. The primary asset farmers have to pledge is their land, but banks are reluctant to take it as collateral as they have to sell it within a year of seizure. Banks are also reluctant to take small ticket loans due to the increased transaction costs incurred with doing many small loans versus a few larger loans. Banks also note that there is a scarcity of viable small and medium enterprises (SME) in agriculture and other industries (apart from mining) to which they can lend.

Cross-border trade is low in the Kyrgyz Republic, although there is a thriving sector importing goods from China for re-export to Russia and other countries in the region. Trade with other Central Asian countries, particularly

Uzbekistan, is limited by political disputes which frequently result in the closure of border crossings. Unofficial trade on these borders is common, but risky. The Kyrgyz Republic has committed to joining the Eurasian Customs

Union. The impact of this move on the Kyrgyz economy is a matter of much debate within the country. It is likely to hurt the current China trade, but it may increase potential for exports of agricultural products to Russia and

Kazakhstan if the country can overcome its inability to meet quality, health, and phytosanitary standards for foodstuffs.

The number of firms that would benefit from cross-border trade is increasing, but firms require assistance to access these markets. Shuttle trading and related sectors provide opportunities for those who would otherwise be unemployed – particularly many women.

The Kyrgyz Republic has a looming crisis in the electricity sector. Power assets are almost universally old and approaching the end of their economic life. Tariff increases are sorely needed, but there is well-founded public distrust of such increases. High losses should be addressed before tariffs are raised. Sector companies have poor financial management and performance due in which the sector not generate or retain sufficient funds to renew and expand its capital facilities. Donors agree that the energy sector is poorly governed and managed, and there is poor transparency and apparent widespread corruption. A sound legal, regulatory and policy framework is critical to the development of the sector and currently does not exist. Political will for reforms appears inconsistent.

Some donors have pulled out of the energy sector, citing a lack of progress on reform. Others, such as the World

Bank, believe that the country has reached a turning point and the next few years will be favorable for reform.

Meaningful metrics and valid data are needed to monitor the progress of sector reform and guide policy development. Current metrics are extremely weak. In December 2012, the Action Plan for Reforming the Energy

Sector 2012-2013 was jointly developed by donors and the Government, which may signal room for progress.

High unemployment and endemic poverty affect both men and women, although official statistics indicate women are more likely to be unemployed than men in almost all regions.

The 2013 USAID/Kyrgyz Republic Gender

Analysis noted that economic activity among women of working age decreases from 81.6% in 1991 to 42.3% in

Adler, Beth, and Amanda Femal. p. 6.

Adler, Beth, and Amanda Femal. p. 4.

Adler, Beth, and Amanda Femal. p. 6

Adler, Beth, and Amanda Femal. p. 6.

USAID/Kyrgyz Republic. Gender Analysis for USAID/Kyrgyz Republic. p. 46.

Hsu, Sharon, Almaz Asipjanov, and Gulzada Azhetova. pp. 1-2.

Somach, Susan, and Deborah Rubin. p. 29.

2007.

Young people in the Kyrgyz Republic face very difficult circumstances as it concerns employment. Having received poor training within elementary and secondary schools, vocational schools and universities, young people are often thrust into the job market with few marketable skills. The Kyrgyz Republic has a large population of young people and has an oversupply of labor as a consequence. Young people are anxious about their future, and lack the tools (practical, life, entrepreneurial, and citizenship) to change their circumstances.

The Kyrgyz Republic, like other Central Asian countries, has low levels of human capital which adversely impacts productivity.

What human capital there is often migrates abroad given the lack of opportunity at home.

According to UNDP, between 700,000 and one million citizens of the Kyrgyz Republic currently work abroad. Most labor migrants are aged 20-29. Women represent 27% of labor migrants.

Migration eases the oversupply of labor and offers opportunities for young people to gain decent work. In many cases young people build their professional capabilities while abroad with on-the job training that increases their chances to qualify for well-paid jobs either in the Kyrgyz Republic or elsewhere. Émigrés also send significant portions of their salaries back in remittances.

Despite these benefits, migration has significant downsides. It separates families and can potentially lead to exploitative labor practices, including human trafficking.

There is a perception among communities in the South that social cohesion is fraying as parents leave their communities to find work, leaving children behind. Family, neighborhood and other networks that once helped hold communities together are finding it increasingly difficult to do so. Internal migrants also become more vulnerable when they are separated from their traditional community support networks and risk becoming lost in urban communities.

The departure of working age men from rural communities…