KYRGYZSTAN

COUNTRY OVERVIEW

LOCATION AND SIZE.

Located in the central region of Asia, bordered by China on the east, Kazakhstan on the north, and Uzbekistan and Tajikistan on the west and south, Kyrgyzstan is a remote, landlocked, mountainous country with a total area of 198,500 square kilometers (76,641 square miles). It is a bit smaller than the U.S. state of South Dakota. Kyrgyzstan's capital, Bishkek, is located near the northern border of the country close to the border with Kazakhstan and Kazakhstan's largest city, Almaty.

POPULATION.

The population of Kyrgyzstan was estimated at 4,685,230 in July 2000. In 2000 the birth rate stood at 26.29 births per 1,000 while the death rate was 9.15 deaths per 1,000 persons. The population growth rate was estimated at 1.43 percent in 2000. Migration out of the country was estimated at 2.8 per 1,000.

The vast majority of Kyrgyzstanis live in rural areas. The World Bank reported that only 33.6 percent of the population lived in urban areas in 1999. The population density for the entire country was 25 per square kilometer (65 per square mile) that same year, according to the World Bank.

At the beginning of the 21st century, roughly 50 percent of Kyrgyzstan's multinational population was ethnic Kyrgyz; 20 percent was ethnic Slavic (Russian, Ukrainian, and other Slavic groups); 13 percent was Uzbek; about 2 percent was German; and other groups comprised the remaining 12 percent. The Kyrgyz (also spelled Kirghiz) language is a Turkic language. Russian and Kyrgyz are the principal languages spoken in Kyrgyzstan, but Uzbek, Tajik, and Uigur are also widely spoken outside the major towns. In practice, most government and commerce is conducted in the Russian language in the large cities. Many Kyrgyz government officials and professional and technical workers use Russian as their principal language. Most rural areas use Kyrgyz or one of the other indigenous languages of the region as their principal language.

OVERVIEW OF ECONOMY

Kyrgyzstan is a remote, landlocked country with inadequate trade and transportation infrastructure. Kyrgyzstan's economy heavily emphasizes agriculture and animal husbandry, but there is a growing service sector in the urban areas. In 1999 agriculture accounted for 45 percent of the economy, while services comprised 35 percent. Industry made up the remaining 20 percent. Oil and gas, machinery and equipment, and foodstuffs are Kyrgyzstan's main imports. Kyrgyzstan's principal trading partners are Germany, Russia, Kazakhstan, and Uzbekistan. Cotton, wool, hides and meat are the main agricultural products and exports. Industrial exports include gold, mercury, uranium, and electricity. Kyrgyzstan is a mountainous country with significant hydroelectric power generating potential.

While it was part of the Union of Soviet Socialist Republics (USSR) from 1917 to 1991, Kyrgyzstan had a highly specialized economic niche in the communist economic system. Kyrgyzstan served primarily as a provider of primary commodities such as gold, mercury, and uranium, and unprocessed agricultural goods such as foodstuffs, cotton, wool, and meat. After the USSR collapsed in 1991, Kyrgyzstan's mining and industrial enterprises underwent rapid contraction due to the loss of orders from buyers and the inability of the existing transportation infrastructure to make possible a rapid entrance into other markets. Kyrgyzstan's military industrial enterprises soon lost their financing. Production at Kyrgyzstan's gold, mercury, and uranium mines fell sharply.

After national independence on 31 August 1991, the newly established Kyrgyz government planned to create a market-based economy and to integrate into the world economy. Among the former communist countries, Kyrgyzstan became a leader in the movement of the post-So-viet states toward an open market economy. But the transition to an open economy has been difficult for this small country with few manufactured goods. The economy underwent severe contraction between 1990 and 1995. However, the Kyrgyzstan economy began to rebound in 1996 as new, post-communist practices began to take effect. The budget deficit as a proportion of the GDP was cut in half during the period 1995 through 1997.

With assistance from international organizations, such as the World Bank and the International Monetary Fund, the Kyrgyzstan government has made good headway in establishing the legal and regulatory foundation for a market economy. Kyrgyzstan carried out privatization of small enterprises and overhauled the country's banking and financial systems. In 1998 the Kyrgyzstan constitution was amended to allow for private ownership of land. Kyrgyzstan was the first country of the CIS to join the World Trade Organization (December 1998). At the urging of international financial institutions, the Kyrgyzstan government took steps to liberalize its foreign trade relations. These steps included eliminating some tariff restrictions (1991-92), eliminating certain highly bureaucratic export registration requirements (1998), and eliminating export duties (1999).

But Kyrgyzstan's enthusiastic pro-market posture has not met with the anticipated level of economic success. Basic economic indicators plunged between 1991 and 1995 when Soviet-era government subsidies for industry, farming, and public services were eliminated. Rapid restructuring of the economy led to sharp drops in farm and industrial output. From 1996 to 1997, the declines in output were reversed and the economic picture for Kyrgyzstan brightened considerably. A large increase in government revenue from the newly opened Kumotr gold mine, the largest single industrial enterprise in the country, combined with favorable weather that helped boost agricultural production. Economic growth in 1996 registered 7 percent and climbed to 10 percent in 1997. Inflation declined, and the government's current account deficit, an indicator of the government's fiscal responsibility, dropped to its lowest level since independence.

This picture changed when Kyrgyzstan was hit hard by the 1998 financial collapse in its major trading partner, Russia. The financial collapse in Russia led to a sudden drop in orders for Kyrgyzstan goods from Russia. The contraction in output led also to a deterioration in Kyrgyzstan's balance of payments at the same time as the country's indebtedness to foreign lenders increased substantially.

POLITICS, GOVERNMENT, AND TAXATION

The Republic of Kyrgyzstan was an early leader in the post-communist transition. The country's pro-reform leader, Askar Akaev, a scientist and former president of the republic's Academy of Sciences, quickly established an impressive record of encouraging political and economic liberalization. The Kyrgyz government liberalized most prices, established a national currency, began privatization and financial sector reform, and introduced the legal and regulatory framework for open trade with its neighbors. Non-tariff barriers were removed, and export taxes were eliminated on all goods between 1994 and 1997. In December 1998, the Kyrgyz Republic became the first former communist country to qualify for entrance to the World Trade Organization.

Kyrgyzstan's legal system is based on the continental legal system. Kyrgyzstan's constitution was adopted in 1993. The constitution recognizes a separation of powers among 3 branches of government: an accountable executive, a deliberative legislative, and an independent judiciary. The constitution has provisions to ensure checks and balances, competitive elections, and judicial independence. The judiciary consists of Constitutional Court (to decide issues of constitutional import), the Supreme Court, an arbitration court to resolve commercial disputes. There is a system of lower courts. The constitution was amended in February 1996 by a popular referendum that substantially expanded the powers of the president.

The Kyrgyzstan political system is formally a competitive system. Officials are popularly elected in multi-candidate elections. The country's president is elected by popular vote for a 5-year term. Kyrgyzstan president Askar Akaev was first elected in October 1990 and reelected in December 1995 and December 2000. High officials such as the prime minister and other top cabinet officials are appointed by the president and submitted for approval to the Kyrgyzstan legislature, the Zhogorku Kenesh. There are numerous parties and political movements. The officially registered political parties are the Agrarian Party, the Agrarian Party of Kyrgyzstan, the ASABA party, the Communist Party of Kyrgyzstan, the Democratic Movement of Kyrgyzstan, the Dignity Party, the Fatherland Party, the Justice Party, Kyrgyzstan Erkin Party, the Movement for the People's Salvation, the Ashar Party, the National Unity Democratic Movement, the Peasant Party, the Republican Popular Party of Kyrgyzstan, and the Social Democratic Party.

The Kyrgyzstan government has sought to limit the size of the public sector to enable greater opportunities for the growth of private industry and services. Accordingly the government has sought to reduce the total government revenue as a percentage of the GDP. However, after the 1998 economic crisis, tax collection fell behind anticipated levels. Tax revenue collection relies heavily on industry. Poor industrial performance contributed to the shortfall in tax revenue. Yet during the economic crisis total government expenditures were higher than anticipated in recent years due to the increased costs of social protection programs. International financial institutions urged the Kyrgyzstan government to maintain a tight monetary policy, reduce government spending, and increase revenue collection. Yet the Kyrgyzstan government was reluctant to adopt these politically unpopular measures.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

The main components of Kyrgyzstan's physical infrastructure include roads, rail, electric grids, gas pipelines, and a telecommunications system. The country's road system consists 16,854 kilometers (10,467 miles) of paved roads. The rail system consists of 1 major rail line of a length of 370 kilometers (299 miles) linking the Kyrgyz capital, Bishkek, with Kazakhstan. The fixed (copper wire) telephone system and microwave relay stations dating from the Soviet period (consisting of 357,000 lines) are rapidly being overtaken by new, decentralized mobile phone services. Of the country's 14 airports, only the capital airport is capable of accommodating international flights.

Mountainous Kyrgyzstan has abundant low-cost hydropower but only very limited amounts of oil, gas, and coal. Consequently, Kyrgyzstan is dependent upon the other Central Asian countries for much of its gas and petroleum. Kyrgyzstan trades hydroelectric energy for natural gas with both Uzbekistan and Kazakhstan. With the urging of international donors, Kyrgyzstan is seeking to adopt an energy policy that will reduce the role of the state, increase private sector involvement, and explore the potential for energy exports, particularly to China. China's recently adopted "Go West" policy has opened a potentially rich market for hydroelectric energy in the adjoining Xinjiang-Uigur Autonomous Province of China.

Since being corporatized (that is, separated from the previous unified Soviet system and turned into a Kyrgyzstan state-owned corporation) in 1994, the Kyrgyz state power company, Kyrgyzenergo, has operated 22 hydroelectric power stations with a combined capacity of over 30 billion kilowatt hours (kWh) annually. Electricity production averaged roughly 12 billion kWh per year. The expansion of electricity output was held back, though, by inadequate transmission equipment and inadequate pricing and cost recovery. Given these factors, Kyrgyzstan commenced the privatization of its energy utility in 1998. The process came to a conclusion in early 2001. The goal of the privatization was to separate regulatory functions from energy production and sales. As a result of the strategy to separate the various energy functions and shift to a cost-recovery basis for energy production, there have been significant increases in electricity and district heating costs. Loans and credits with the World Bank and other multilateral development banks are earmarked to reduce the social costs of the transition to a privatized energy sector.

ECONOMIC SECTORS

The 3 most important sectors of Kyrgyzstan's economy are: agriculture, accounting for about 45 percent of the GDP (US$52.8 million in 1999); industry, accounting for about 20 percent of the GDP; and services, accounting for the remaining 35 percent in 1999. The most significant economic sector, agriculture, is the largest employer in the country, employing over half of the country's labor force. In 1999 the International Monetary Fund estimated that 886,000 workers were employed in Kyrgyzstan's agriculture and forestry sectors. Agriculture accounted for about 22 percent of the country's exports in 1999. Other important sectors are hydroelectric energy production, mining, particularly gold mining, and service. Small industries and processing plants are located in Kyrgyzstan's larger cities, particularly Jalalabod, Osh, and Talas in addition to the capital, Bishkek.

AGRICULTURE

Kyrgyzstan produces cotton, sugar beets, vegetables, potatoes, grapes, melons, tobacco, fruits and berries, grain, wool, and meat. Total agricultural production dropped in 1992 from earlier levels and then began to rise. The disruption in farm inputs such as seeds, farm machinery, and agricultural extension services, along with transportation difficulties and weak consumer demand, led to the drop in output. After the effects of the market transition from communism began to be felt, overall agricultural production began to increase after 1996. However, livestock and wool production, 2 of the traditional mainstays of the Kyrgyzstan rural economy, continued to decline due to slack demand for products such as hides and wool and new competition from Turkish, Chinese, and other suppliers.

In connection with the Kyrgyzstan government's goal of maintaining an open market and liberal economic order, the government has avoided intervention in the agricultural economy through price supports and targeted subsidies. This policy contrasts sharply with that of neighboring Uzbekistan, where the government has continued to maintain a major presence in the agricultural economy. Kyrgyzstan instituted a land reform program to transfer use rights to land from the Soviet-era large state farm cooperatives to individual farmers. By 1999 over 90 percent of Kyrgyz farms were held in private hands with long term (99 years) use rights. Farm land may be bought and sold and transferred through inheritance. The CIA World Factbook reported that 55 percent of the Kyrgyzstan workforce was engaged in agriculture in 1999.

INDUSTRY

Since the collapse of the USSR, the industrial and manufacturing sector has undergone considerable contraction. Between 1990 and 1995 production declined in all sectors of the power industry, engineering and metal-work, and fuel, light, chemicals, and petrochemicals sectors. By 1999, the industry sector accounted for 20 percent of the country's GDP and employed 15 percent of the labor force, according to the CIA World Factbook.

Kyrgyzstan's manufacturing plants are concentrated in and around the capital, Bishkek. Many of these enterprises were not competitive on international markets and thus have been shuttered and closed since they lost subsidies from the government. The enterprises that remain tend to operate well below capacity.

Unlike other developing countries faced with transferring workers from low productivity subsistence agriculture to higher productivity industry, Kyrgyzstan faces the opposite problem. The government seeks to spur industrial restructuring to cut employment in formerly subsidized, inefficient industries, and to encourage the emergence of new lower tech enterprises in the agricultural and service sector.

The only industrial sector that experienced significant growth recently was gold mining. In May 1997 the Kumtor Operating Company, which is two-thirds owned by the Kyrgyzstan Republic and one-third by a Canadian company, began gold mining operations. The construction of the mine cost US$450 million. The initial estimate of recoverable gold was 16.5 million troy ounces of gold, and gold was expected to average around 485,000 ounces a year over the life of the project. In late 1999 the company revised its estimates of recoverable gold downward, taking into account the changes in the price of gold and a revision of the geological expectations of the mining work. Accordingly, the amount of recoverable gold was revised downward to 4.27 million troy ounces. Company officials announced that the mine would be closed in 2008. This represents a major setback for the Kyrgyz government's development plans, given that revenue from the gold mine constituted a major portion of the government's income (40 percent in 1999).

SERVICES

The service sector is the second largest sector after agriculture. An estimated 566,000 workers were employed in the Kyrgyzstan service sector in 1999, according to the International Monetary Fund. This sector was under developed during the Soviet period when the government put most emphasis on heavy industry and agriculture. After independence, the service sector expanded rapidly. New laws and regulations made it possible to open private businesses offering consumer goods and services. The small service sector surged ahead as business people began offering services, such as car repair, housing construction and improvement, real estate services, legal services, beauty shop services, and other small business that did not require substantial investment.

The banking and financial services industry expanded rapidly, although during the first decade of independence (1990-2000) this financial sector continued to be heavily oriented toward foreign economic activity rather than local financial services. The government adopted a program in 2000 to support micro-credit lending to put more emphasis on local financial services.

TOURISM.

The year 2001 was declared the "year of the tourist." Since Kyrgyzstan is the "Switzerland of Asia," the government has sought to take advantage of the beauty of Kyrgyzstan's spectacular mountains and lakes to encourage greater tourism. The tourism sector is a priority area for economic development in Kyrgyzstan. The country, with major mountain ranges and some of the highest peaks in the world, possesses breathtaking natural features. The towering mountains of Peak Pobeda (7,439 meters), Peak Lenin (7,134 meters), and Peak Khan-Tengri (6,995 meters) exist in what is called the "realm of eternal ice and snow." The country offers white water rafting, pony trekking, hiking, mountaineering, skiing, mountain biking, and many other possibilities.

INTERNATIONAL TRADE

Very nearly one-half of Kyrgyzstan's foreign trade is with former Soviet countries. Kyrgyzstan's largest trading partner is Russia, comprising almost 40 percent of foreign trade. Behind Russia is Ukraine, the United States, Uzbekistan, Turkey, the United Kingdom, Germany, South Korea, and other countries. Kyrgyzstan exported to Germany goods worth US$148 million in 1999. Russia imported goods worth US$70 million, Kazakhstan imported goods worth US$50 million, Uzbekistan imported US$46 million, and China imported goods worth US$25 million. In the same year, Kyrgyzstan imported from Russia goods worth US$110 million, from Kazakhstan US$73 million, from Uzbekistan US$50 million, from the United States US$56 million, from Germany US$47 million, from China US$36 million, and from Canada US$26 million.

Kyrgyzstan's main exports are processing industry products (67 percent) and agricultural goods (17 percent), while the main imports were machine-building products (21 percent), coal and petroleum products (11 percent), food and tobacco (7 percent) and textiles (6 percent).

Kyrgyzstan is heavily dependent on the outside world for fuel imports. In 1999 Kyrgyzstan imported 576 million metric meters of natural gas, 1,075,000 tons of coal and 368 tons of high grade petroleum fuels (diesel and gasoline). Kyrgyzstan sustains this level of fuel imports primarily through exporting electricity. The country exported, primarily to Kazakhstan and Uzbekistan, 2,001 million kilowatt hours in 1999.

The Kyrgyzstan government has taken measures to improve the trade environment. Customs procedures and non-tariff barriers have been reduced in recent years in anticipation of the country's joining the World Trade Organization (1998). However, Kyrgyzstan's trade potential is complicated by the fact that Kyrgyzstan is land-locked. Few goods and services move from Uzbekistan into Kyrgyzstan. The borders with Tajikistan and China have been subject to heavy security regulation. But Kyrgyzstan's border with Kazakhstan is a long and relatively open border. The Kazakh and Kyrgyz languages are closely related and mutually comprehensible. However, Kazakhstan produces few of the manufactured goods that Kyrgyzstan requires. Consequently, Kazakhstan serves mainly as a transshipment point for goods from outside Central Asia, particularly Russia and Europe.

The Kyrgyzstan government has taken steps to improve the foreign investment climate in the country. A new foreign investment law was adopted in September 1997. The law was adopted to bring the country into conformance with the standards of the World Trade Organization. The law provides protection against expropriation, that is, nationalization of property by the government. According to the law, foreign investors have the same legal status and conditions as Kyrgyz investors and can do business as wholly-owned foreign businesses in Kyrgyzstan or as joint ventures either with Kyrgyz partners or other foreign partners. Foreigners can buy stocks and securities in Kyrgyz companies and participate in privatization programs. Foreign investors can repatriate capital, that is bring earnings from foreign investments and foreign trade back into the country. They can also freely export profits as foreign currency or as goods produced or as commodities or services bought. Local currency is freely convertible into foreign currency, including for import purposes or payment against project expenses. Investors may retain earned foreign currency, without having to convert it into local currency.

MONEY

Kyrgyzstan was the first country in Central Asia to introduce its own currency (May 1993) following the collapse of the USSR. When first introduced, 4 som were equal to US__BODY__. However, over the years since the som was introduced inflation reduced the value of the som relative to the dollar. Kyrgyzstan experienced hyperinflation in the early 1990s, with inflation reaching 1,400 percent, but economic measures have since brought inflation down.

Between 1995 and 1997, positive developments in the economy reinforced the government's intention to restrict the supply of money. A scarce currency will tend to be valuable, but as the currency becomes more available, its value declines. Accordingly, as the money sup-

ply increased, the value of the Kyrgyz som declined. Following the 1997 crisis in the Asian financial markets and, in particular, following the collapse of financial markets in Russia in August 1998, the Kyrgyz economy suffered dramatically. Kyrgyzstan's money supply rose in 1998 and 1999. During this period inflation, which had been brought under control, rebounded in 1998 and reached nearly 40 percent in 1999. During 1999, the som lost 35 percent of its value to the U.S. dollar. Public confidence in the currency was further shaken by a major financial fraud involving some of the country's largest commercial banks.

In 1998 the Kyrgyzstan banking system suffered a major financial crisis which led to closing half of Kyrgyzstan's 26 commercial banks in 1999. The Soviet-era banking system had been expanded and slightly modified during the period between 1992 and 1995 but had not adopted standards of bank operations in accordance with international practice. As a result, in 1995, according to a World Bank study, over half of the commercial banks had a negative net worth. The study also concluded that 60 percent of all the banking sector's loans were considered unrecoverable, that is, these loans would never be paid back by the borrowers, according to the IMF. The public lost confidence in the banking system, and many people withdrew their funds, leading many of the banks to go out of business.

Kyrgyzstan is a relatively heavily indebted country. Outstanding debt in the first quarter of 2000 amounted to US__BODY__,409 billion, according to the IMF. Much of the Kyrgyzstan republic's debt is concessional; that is, it has been loaned by public entities as special assistance at better-than-market terms by international financial institutions such as multilateral development banks. But a considerable portion is non-concessional; that is, it is money that was loaned by private lenders such as commercial banks. Even if Kyrgyzstan is granted special repayment terms, delays, or postponements in the repayment schedule, the burden of future debt will remain high. The Kyrgyzstan government will need to bolster its fiscal position through reducing government expen-

ditures and increasing revenue. More competent debt management and limits on contracting debt will help. More emphasis on government reforms may also improve the overall economic pictures by improving the investment climate and enhancing the productive and export potential of the country.

POVERTY AND WEALTH

Poverty in Kyrgyzstan increased between 1994 and 2000. IMF estimates of the consumer price index rose in 1995 to 143 percent, in 1996 to 189 percent, in 1997 to 233 percent, in 1998 to 252 percent, and in 1999 to 343 percent, and in 2000 to over 400 percent. At the same time, the index of real wages (adjusted for inflation and other factors) climbed only gradually from 100 percent in 1994, to 117 percent in 1995, to 112 percent in 1996, to 116 percent in 1997, to 139 percent in 1998, dropping to 128 percent in 1999 and further to 105 percent in 2000. Thus, while the cost of living increased fourfold between 1994 and 2000, wages remained approximately at the same level.

In 2000 Kyrgyzstan ranked 98 out of 174 countries listed on the UNDP Human Development Index. Income distribution and social indicators for Kyrgyzstan fell considerably behind other countries at comparable stages of

development. For instance, nearly a quarter of the population was not expected to reach age 60. The proportion of young people enrolled in schools dropped. The rates of infectious diseases, particularly tuberculosis, increased. By 1997 an estimated one-half of the population had fallen below the official poverty line, living on the equivalent of less than US__BODY__.75 per day. The average monthly pension payment was among the lowest in the former Soviet states, amounting to less than US$10 in 1999.

Although on national average only 1 in 2 persons in Kyrgyzstan is categorized as poor, 80 percent of the poor live in rural areas. During the 1990s, despite substantial recovery in agricultural production, rural incomes per capita fell substantially. The degree of poverty in rural areas has also become more severe relative to urban areas. While extreme poverty decreased from 19.1 percent of the population in 1996 to 14.8 percent in 1997, most of this resulted from a targeted poverty reduction program in urban areas only. Poverty is also distributed unevenly in the population, affecting more women than men. The Kyrgyzstan government has initiated a national poverty reduction program, the Arakat program. Moreover, the government is waging major efforts to revamp its poverty-fighting strategy in coordination with major donors, including the Asian Development Bank and the World Bank.

WORKING CONDITIONS

Kyrgyzstan had a working population in 1999 of 1,854,000 people, but the total number of people within working age (16 to 60) was 2,542,000. An estimated 1,718,000 of these were employed, and 54,000 people were estimated as unemployed in 1999, only 5,400 of whom received unemployment benefits.

The decline in Kyrgyzstan industrial sector has pushed many people out of technical and professional positions. Most of this movement has been in the direction of the service sector. A large proportion has also moved to agricultural employment. While the legal system and social security systems traditionally provide for fewer protections for these sectors, in fact working conditions in Kyrgyzstan's declining industry deteriorated significantly in the post-Soviet years as workers' unions and collective bargaining was unsuccessful in promoting the health and safety of working conditions in such declining industries. The international donor organizations, such as the World Bank and the multilateral development banks, have identified social protection as one of the highest priorities of future assistance to Kyrgyzstan.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

552. Formation of the first Turkic khanate, uniting Turkic-speaking regions under one political leadership.

750. Arabs conquer the area that is now Kazakhstan, spreading the influence of the Islamic culture and religion.

840. Formation of the Kyrgyz khanate.

1240-1440. The Mongol Horde—armies originating from what is now Mongolia—overwhelm the Kipchak nomads. The Mongol Horde sweeps westward and southward, extending Mongol influence over much of modern-day Central Asia.

1850. Major Russian emigration to Kyrgyzstan occurs as emigrants search for new agricultural lands.

1867. The Russian tsar decrees the establishment of the Turkestan general-governorship, extending official Russian rule into Kyrgyzstan, making the country part of the Russian Empire.

1917. The Russian provisional government, unable to rule a country exhausted by World War I, falls to the Bolshevik Revolution. Bolshevik revolutionaries (communists) in St. Petersburg proclaim the establishment of a communist government.

1918. The communists announce the establishment of the Russian Socialist Republic (which includes the territory of present-day Kyrgyzstan). Opponents of the communists rally to restore the monarchy. Civil war ensues and continues for 2 years.

1924. The Kyrgyz Autonomous District is formed within Russia.

1936. The Kyrgyz Autonomous District is transformed into the Kyrgyz Socialist Republic.

1957-61. Under Soviet leader, Nikita Khrushchev, a new agricultural initiative called the "Virgin Lands Campaign" relocates tens of thousands of people from the European parts of the USSR to Central Asia, including Kyrgyzstan.

1991. An unsuccessful attempt to take over the Soviet government by Communist Party hard-liners precipitates a crisis in Moscow. Kyrgyzstan declares independence from the USSR on 31 August. A group of 11 high Communist Party officials gather in Almaty (then known as Alma-Ata) to sign a document announcing the end of the USSR and the establishment of the Commonwealth of Independent States (CIS) on 21 December.

1992. Kyrgyzstan joins major international organizations: the UN, World Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development.

1993. The Kyrgyzstan constitution is adopted.

1995. A new version of the Kazakhstan constitution, assigning greater powers to the executive branch, is adopted.

1998. Kyrgyzstan is the first post-Soviet state to be admitted as a member of the World Trade Organization.

2000. Kyrgyzstan joins the Eurasian Economic Community, an international organization designed to create a common economic market throughout much of the former USSR.

FUTURE TRENDS

Kyrgyzstan faces major challenges. The country has liberal trade orders in the former Soviet Union. However, as a small, landlocked country with only limited trade potential, the latitude for development through globalization is limited. The most urgent issue is reducing poverty. Changes in the way that the government treats foreign investors, tourists, and foreign companies may lead to an improvement in the country's ability to promote investment and create new jobs.

DEPENDENCIES

Kyrgyzstan has no territories or colonies.

BIBLIOGRAPHY

Anderson, John. Kyrgyzstan: Central Asia's Island of Democracy? London: Harwood Academic Publishers, 1999.

Brinton, William M. An Abridged History of Central Asia, 1998. <http://www.asian-history.com/choose.html>. Accessed September 2001.

Child, Greg. "Fear of Falling." Outside Magazine. November 2000. <http://www.outsidemag.com/magazine/200011/ 200011hostages1.html>. Accessed September 2001.

Haghayeghi, Mehrdad. Islam and Politics in Central Asia, NewYork: St. Martin's Press, 1995.

Hopkirk, Peter. The Great Game: The Struggle for Empire in Central Asia London: Kodansha International, 1994.

International Monetary Fund. "Kyrgyz Republic: Selected Issues and Statistical Appendix." IMF Staff Country Report No. 00/131, October 2000.

Pomfret, Richard. The Economies of Central Asia. Princeton:Princeton University Press, 1995.

Rashid, Ahmed. The Resurgence of Central Asia: Islam or Nationalism? Karachi [Pakistan]: Oxford University Press, 1994.

Roy, Olivier. The New Central Asia: The Creation of Nations London: Tauris, 1998.

United Nations Development Programme. Human Development Report 2000. <http://www.undp.org/hdro/>. Accessed September 2001.

—Gregory Gleason

CAPITAL:

Bishkek (formerly known as Frunze).

MONETARY UNIT:

Som (KS). One som equals 100 tyiyn. Som are circulated in denominations of 1, 3, 5, 10, 50, 100, 500, 1,000, 2,000, and 5,000.

CHIEF EXPORTS:

Cotton, wool, meat, tobacco, gold, mercury, uranium, hydropower machinery, shoes.

CHIEF IMPORTS:

Consumer durables, oil and gas, machinery and equipment, foodstuffs.

GROSS DOMESTIC PRODUCT:

US$10.3 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$515 million (1999 est.). Imports: US$590 million (1999 est.).