DAS FEIGENBAUM'S ROUNDTABLE MEETINGS WITH CIVIL

UNCLAS SECTION 01 OF 04 BISHKEK 001521 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR SCA/CEN E.O. 12958: N/A TAGS: PGOV PREL PINR KCRM KG SUBJECT: DAS FEIGENBAUM'S ROUNDTABLE MEETINGS WITH CIVIL SOCIETY AND NGOs IN KYRGYZSTAN BISHKEK 00001521 001.2 OF 004 Sensitive but unclassified. Not for Internet distribution. ¶1. (U) SUMMARY: On October 17 and 18, DAS Evan Feigenbaum held separate roundtable discussions with political analysts, democracy NGO leaders, economic development NGO leaders. Participants offered a range of views about what would happen as a result of planned opposition protests on November 2, though most thought there government and opposition would reach some sort of compromise before then. All agreed there was a serious need for constitutional and judicial reform, both to protect democratic rights and to improve the business climate. DAS Feigenbaum also visited a USAID-funded condominium association project where he saw the tangible benefits of grassroots organization and initiative: better living conditions and increased property values. END SUMMARY. Political Analysts: Lack of Policy, Talent -------------- ¶2. (SBU) On October 18, DAS Feigenbaum met with a group of Kyrgyz and American political observers. The group generally agreed there were serious governance problems in Kyrgyzstan, and they were concerned about the opposition's upcoming mass protest on November 2, though several thought the government and opposition might reach some sort of compromise ahead of the protest. Describing the current political struggle, former Foreign Minister Muratbek Imanaliyev said that the problem was not with the system of government, but stemmed from the current government lacking any policy or "sense of national interest." The current leadership operated from an outdated point of view; it had no understanding of the West, and an even "worse conception" of the East. As a result, foreign partners did not take Kyrgyzstan seriously as a country. Lamenting a change from previous eras, Imanaliyev said the absence of an educated "elite" with a shared sense of nationhood and national interest hurt Kyrgyzstan today. Where there is such an elite, power is just a means to achieve goals; where there is no elite, there is just a struggle for power. Imanaliyev said the current crisis was merely a fight to replace Bakiyev. ¶3. (SBU) Several in the group thought that the November 2 protest would last as long as there was money to support the protesters but that nothing would change in the end. Former Director of the International Institute for Strategic Research Valentin Bogatyrev jokingly did the math on how much it would cost to put a protestor on the street and how many days a crowd would need to remain on the street to threaten the government. Nursuluu Akhmetova, from the Business Environment Improvement Project, thought that the government would stay in power. She agreed that the opposition had no goal beyond seizing power for themselves, but she also criticized the government's meager attempts to make policy. Bogatyrev, however, said he thought Bakiyev was underestimating the capacity of the opposition to rally support in Bishkek and in the regions, but that the "fate of November 2" would be resolved beforehand through compromise and offering new positions to the opposition. Bakiyev, he said, was more flexible than Akayev, and could "adopt new views." ¶4. (SBU) Nurlan Sadykov, of the Institute for Constitutional Policy, warned that a provocation from either side was possible on November 2. He said the opposition leaders were trying to "calm down" their most extreme members, but they were not strong enough to control all elements that would be in the crowd on November 2. He hoped the President would "find the strength" to reach out to the opposition, though Imanaliyev cracked that the opposition would see that as BISHKEK 00001521 002.2 OF 004 weakness. Erkina Ubysheva, of the Association of Civil Society Support Centers, said civil society viewed the current situation as a "crisis." She said that civil society ideally should be able to play a mediating role, but Kyrgyz civil society was now seen as "the opposition," because some civil society leaders had joined the opposition. ¶5. (SBU) DAS Feigenbaum was asked about an AKIpress report, based on a press release from the Kyrgyz Foreign Ministry, that he had told FM Jekshenkulov major U.S. firms are ready to invest in Kyrgyzstan, especially in the energy sector. Feigenbaum explained that the press report was half right: American firms are interested to invest in Kyrgyzstan, but, he noted, what he actually said to Jekshenkulov was that this only would be possible if the Kyrgyz government took significant steps to improve the business climate, move forward on privatization in the energy sector, and tackle corruption. DAS Feigenbaum noted that Kyrgyzstan had excellent natural resources and great potential in hydro- power, and there were eager markets for electric power in the south, as far away as Pakistan, but the necessary investment would only come when there was rule of law, transparency, and a better atmosphere for private investors. The group agreed that Kyrgyzstan needed to take further steps to reduce barriers to trade. Democracy NGOs: No Leaps Forward or Backward -------------- ¶6. (SBU) On October 17, DAS Feigenbaum and the Ambassador held a democracy roundtable with Edil Baisolov of the Coalition for Democracy, Azamat Kerimbekov of ABA/CEELI, Marat Tazabekov of AKIpress, Elvira Sarieva from Internews, Natalie Losekoot of the Eurasia Foundation, and Cholpon Jakupova, Adilet Legal Clinic. DAS Feigenbaum asked the group about constitutional reform. The general consensus was that President Bakiyev had co-opted the constitutional reform process and that the timing of reform was unpredictable. The group generally believed that the public would not really have a choice in the matter, and that ordinary people were not terribly interested in constitutional reform, anyway. Baisolov went as far to describe the process as "theater of the absurd." But according to Jakoupova, there was a serious need for constitutional reform because of the lack of justice, due to the corrupt dependence of judges on the president and parliament. In addition, there was a lot of fear in Kyrgyzstan today. ¶7. (SBU) There was no consensus in the group as to what would happen in the current political struggle, as it was unclear who was in the stongest relative position. On the one hand, the group seemed to feel that the President was weak. Bakiyev had taken steps to stall constitutional reform, had reorganized the security services, and had attempted to gain some support by bringing the north-south divide out into the open. But on the other hand, the group conceded that the steps he had taken had given him more control and helped him to be more effective at clamping down on free speech. According to Baisolov, the window of opportunity for reform was very small. The bottom line for the group appeared to be that this fall will not represent any great leaps forward or backwards and that there was wide scope for compromise. Economic Development NGOs: Judicial Reform Needed -------------- -------------- ¶8. (SBU) On October 18, DAS Feigenbaum met with a group of individuals representing economic and enterprise development BISHKEK 00001521 003.2 OF 004 NGOs. Margarita Cherikbaeva of the EBRD Micro and Small Enterprise Finance Facility described the success of her program's work with banks to expand loans to small and medium enterprises. The program had placed over USD 80,000,000 in loans with an average size of less than USD 2400 through lenders who had been trained by USAID technical assistance to evaluate cash flow instead of traditional land or equipment collateral. The program had grown rapidly and was evidence of the strength of the small/micro sector in this country. Tatiana Kim of the Chamber of Tax Accountants spoke passionately about the drastic need for civil service reform in Kyrgyzstan. According to her, the number of civil servants had increased five-fold since Soviet times, but the level of compensation was now absurdly low, creating incentives for corruption. Tax reform also was an urgent need, and she believed the size of the shadow economy was far greater than the government estimates. Umar Shavarov of the International Business Council, a lobbying group for Kyrgyz and foreign companies, agreed with Kim that judicial reform was the number one concern of business. He said "everything in Kyrgyzstan is possible; everything is impossible. It just depends on how you play the [corruption] game." Christine Smith, AmCham's Executive Director, also shared concerns about the need for judicial reform, and said her organization was looking to do more to coordinate with her counterparts in the region. Isaac Swartsman, an advisor to the USAID-funded economic policy reform project, spoke about the continued need to respect the independence of the Central Bank, and agreed with comments that the drug economy and money laundering both may be vastly underestimated in the Kyrgyz Republic because of the open foreign exchange regime. Condominium Association: Tangible Benefits -------------- ¶9. (U) On October 18, DAS Feigenbaum visited a USAID-funded project to develop local condominium associations. Under the Local Government Initiative (LGI),USAID has helped to bring 59,000 units into such associations, and a National Condominium Association, representing condominium associations from across the country, was formed in July ¶2006. Ludmila Salyakaeva, Chair of Svobodny Dom Condominium, gave an overview of the assistance provided by USAID, including co-funding roof repairs, help with registration, and training for the association. The benefits of condominium ownership of the common areas of the building were readily apparent. The condominium association's building had a well-kept garden with a new fence, a repaved entrance path, freshly painted hallways and a new roof. Standing in contrast across the yard, an identical building -- but without a condominium association -- had a poorly kept yard surrounded by an old wooden fence, an entrance path that was in poor shape, and dark, smelly hallways. ¶10. (U) Having a condominium association also encouraged residents to make improvements to their own apartments. Salyakaeva showed the top floor apartment that had recently renovated. She noted that she would have never purchased, much less renovated, a top floor apartment if it wasn't for the association. Without an association, any roof leak ended up being the problem of the apartment owners on the top floor. But with the association, roof repairs were the responsibility of all members. There are 33 units in the apartment building, and most of the owners made improvements after the association was formed. Forming the association also had a significant impact on property values. According to Salyakaeva, the value of a three-room apartment in her building was USD 27,000. The identical apartment in the other building had an asking price of only USD 18,000. She BISHKEK 00001521 004.2 OF 004 also noted that there was a mortgage market in Kyrgyzstan, but most people used their own savings and loans from family or friends to purchase a home ¶11. (U) Despite the benefits, not all buildings have formed condo associations, according to Salyakaeva. The City Housing Management Company still exists, and some people just prefer to keep things as they are. Salyakaeva said it was a matter of attitude; someone has to want to organize it, manage it and collect dues. Finally, the USAID project was established as a way of introducing grass-roots democracy. When asked whether people in housing associations tend to become more active, her reply was no. She believed that active people form and are in housing associations. Hence, associations probably don't make people more active, but provide those who are with an outlet and the tools to make meaningful change. ¶12. (U) DAS Feigenbaum has cleared this cable. YOVANOVITCH