DECENTRALIZATION SUCCESSES IN KYRGYZSTAN

UNCLAS SECTION 01 OF 03 BISHKEK 000542

SIPDIS

SIPDIS

DEPT FOR SCA/CEN (GEHRENBECK)
NSC FOR SENIOR DIRECTOR KOZAK
MCC FOR VP HARRINGTON
MCC FOR KLADAKIS AND LONGI

E.O. 12958: N/A
TAGS: KCRM KJUS PGOV KMDR KG
SUBJECT: DECENTRALIZATION SUCCESSES IN KYRGYZSTAN

BISHKEK 00000542 001.2 OF 003



1. Summary: Since 1998 USAID has been helping Kyrgyz cities
to become more transparent and accountable to their citizens
and more effective leaders with skills in municipal property
management, financial management, and service delivery. As a
result, local leaders have accomplished many firsts,
including writing business plans and organizing local
hearings. Not only have local governments gained the skills
necessary to improve the lives of their citizens, they have
empowered their citizens to become a part of the process.
Kyrgyzstan's increasingly effective local self-government is
not only the basic building block for democracy, but it is an
example for the region. In 2006, USAID awarded a follow-on
3-year contract to its implementing partner Urban Institute
to extend this assistance to 136 rural municipalities, while
at the same time deepening assistance to all 25 cities. END
SUMMARY

Legal Framework
--------------


2. With USAID assistance, the Kyrgyz Republic has put
together a comprehensive legal framework that increases local
autonomy. This framework includes amendments to election
legislation mandating direct elections of mayors of some
cities and all rural municipalities (2001),the Municipal
Property Law (2002),the National Decentralization Strategy
to 2010 (2002),the Law on Financial and Economic Basis of
Local Self-Government (2003),and Amendments to the Law on
Basic Principles of Budgeting (2004). USAID helped
counterparts draft model local ordinances for municipal
property management, budgeting procedures, budget hearings,
and service agreements for utilities.

Early Success
--------------


3. An early success of the new USAID project, the
Decentralization and Local Government Program (DLGP),is
Parliament's passage in April 2007 of the new annual budget
law that will realize intergovernmental fiscal reform
envisioned in earlier legislation by eliminating intermediary
layers of government involvement budgetary control. To
ensure that this is correctly implemented, DLGP provided a
weeklong training for partner municipalities on the new
budget system. Financial staff from the city of Kara-Balta
returned home from USAID training and organized a
mini-seminar for other municipal staff so they would
understand the significance of the new budget law in terms of
new local tax collection authority, predictable transfers
from the Ministry of Finance, and ability to prioritize
expenditures. The USAID training manual is left out on the
desks of the finance specialists so they can constantly refer
to it, write notes, and bookmark certain pages.

Public Budget Hearings
--------------


4. With USAID assistance, all cities and many villages
throughout Kyrgyzstan have held public budget hearings, with
the cities already institutionalizing this as an annual
event. Fourteen cities adopted procedures for transparent
and effective use of municipal property with open,
competitive sales, leases and concessions of assets. Most
cities developed participatory strategic plans, and under the
new project they are updating the plans with a greater focus
on local economic development. Seven cities created business
plans to improve water utility operations, and subsequently
received investment funding from the World Bank. Housing
associations representing more than a hundred thousand
residents of multi-unit buildings were formed, building
democracy at its most simple level. Residents agreed to
"tax" themselves to fund capital improvements resulting in
the tripling of the value of their units. The result is the
empowerment of local governments to improve the lives of
ordinary citizens.

BISHKEK 00000542 002.2 OF 003



Opening Minds
--------------


5. The real successes of this USAID assistance are the
initiatives developed by Kyrgyz local governments once they
are empowered and have opened their minds to different
possibilities. The city of Uzgen lies in the
poverty-stricken south of Kyrgyzstan where Kyrgyz and Uzbeks
have segregated after several bloody conflicts in the 1990s.
Having learned from USAID training about citizen information
exchanges, the mayor of Uzgen established an advisory group
of 25 representatives of all local ethnic groups to address
inter-ethnic issues and serve as "people,s diplomats." With
this proactive measure, the local leadership now has a
mechanism in place to learn about emerging conflicts and nip
them in the bud early on, thus strengthening inter-ethnic
stability in the region.


6. In the city of Karakol, a similar group of business and
civic leaders regularly meets to advise the city leadership
not only on what citizens' priority issues are, but also how
to resolve them in a systemic and sustainable way. For
example, on the initiative of the citizen advisory group the
city established a sanitation inspectorate to ensure garbage
removal. Another citizen concern was the lack of public
transport from the city center to the inter-city bus station.
The citizen advisory group ascertained the most needed
routes and then brokered a deal with a private company to
service those routes, with the city government providing all
necessary permits. With donor and private sector funding,
the advisory group helped establish a social development bank
that provides loans to local small businessmen, and with the
proceeds, provides small grants to citizen groups to address
their needs. These initiatives have tangibly demonstrated
the power of public-private partnerships, which are still a
novel concept in Kyrgyzstan.

Donor Coordination
--------------


7. USAID's technical assistance has effectively leveraged
large amounts of other donor funding for infrastructure
investment. The World Bank provided $685,000 to the City of
Uzgen to fix its water system, but the city was having
trouble collecting from residents their matching contribution
of $32,000 so the mayor utilized the principles of a USAID
training session to design a public information campaign.
More than 500 citizens in groups representing different parts
of the community - elder respected men (aksakals),women,
youth, business leaders, teachers, healthcare workers, and
city council deputies - were given a tour of the works
completed so far. City staff had neighborhood meetings
explaining to residents how their contributions would be
spent. Parents learned about it through essays written by
their children at school, and billboards with before and
after photos of the improvements could not be ignored. The
public response was impressive, as contributions poured in.
Now, with completion of the rehabilitation to the water
network, several thousand people have potable water. And the
residents proudly boast to their guests that they made it
happen.

New Direction - Reaching Down
--------------


8. USAID,s new partners ) rural municipalities ) are also
eager to implement new practices. In between training
sessions, partners are expected to implement &homework8
assignments. The rural municipality Janynookat proposed that
for the final round of training the participants visit their
community to see how they have successfully disseminated
information to citizens in low-cost, low-tech ways. Examples
from Janynookat include information boards that show results
of the competitive lease auctions for agricultural land;

BISHKEK 00000542 003.2 OF 003


lists of what documents are needed to get a passport;
information on cattle diseases; and a map of the
municipality.

USAID Taking the Lead
--------------


9. USAID,s project is the definitive source for what is
happening with local governments in Kyrgyzstan. High-level
staff of the Academy of Management and the Agency for Local
Self-Government carefully read the project,s bi-monthly 20
to 30 page newsletter, and local government partners
regularly express the usefulness of the information. The
project also extends its impact by wide dissemination of its
training materials, which have been used by other donors.
Experience exchanges and detailed written case studies have
been very effective in sharing best practices.

Continuing Challenges
--------------


10. The major challenge to continued progress on local
government reform consists of those remaining high-level
political appointees who would prefer to control local
government rather than grant more autonomy. For example, the
centralized State Agency for Local Self-Government recently
created an Association of Municipalities, both of which are
headed by the same person (Bolotbekov),in an effort to
emasculate the existing independent Association of Cities and
Association of Towns and Villages. Reaction from the
independent associations was strong, and included a flurry of
appeals through the press and international donors that the
creation of the Association of Municipalities was a step in
the wrong direction. However, maintaining good relations
with both entities is a necessity and the associations are
going about their business and hoping for a positive change
) either the abandonment of the Association of
Municipalities or its re-creation as an independent
association with an elected head who represents local
government interests, not the central government's interests.


11. Resistance to reform also complicates efforts to form
consensus on issues such as the relationship of the state to
local government, how to carry out state functions at the
local level, and which functions should be considered own
local government functions. To help address these issues,
USAID is actively participating in a working group of the
National Decentralization Strategy to draft legislation that
would grant greater autonomy to local governments, and is
educating Parliamentary deputies about the benefits of
decentralization and empowerment of local government. This
much seems sure, that regardless of the challenges that lay
ahead, the movement toward increased local self-governance is
irreversible.

YOVANOVITCH