Russia abandons agreement to help fund key Kyrgyz economic sector

BISHKEK -- Russia is refusing to allow the release of $260 million (19.9 billion KGS) to Kyrgyzstan from the joint Russian-Kyrgyz Development Fund (RKFR), putting a key Kyrgyz economic sector in jeopardy.

The fund, established in 2014 by the two countries, is "the most important mechanism of the integration of the Kyrgyz Republic into the Eurasian Economic Union [EEU]," according to its website.

Its supposed purpose is to finance sectors of Kyrgyzstan's economy that are essential and in need of support.

However, Russia is refusing to transfer the remaining $260 million of the Russian-Kyrgyz Development Fund to Kyrgyzstan, Kyrgyz Deputy Prime Minister Erkin Asrandiyev said at a parliamentary session on May 12, 24.kg reported.

Those funds instead were placed in securities in the Russian market.

"We sent a letter at the end of March. At the end of April, we had an RKFR session. Our two ministers participated and raised the question," said Asrandiyev.

"On May 8, they raised the question pointedly. There is an intergovernmental commission there [in the RKFR]. Unfortunately, our colleagues from Russia oppose it. We are now preparing additional justification for receiving the funds," he said.

Those funds could become loans to Kyrgyz farmers with 4 or 5% annual interest, said Ziyadin Jamaldinov, a member of parliament, at the May 12 session.

"Currently, only 7,000 farmers are receiving loans," he said, without giving the total number of eligible farmers.

Russia's decision angers Bishkek

The Russian refusal comes as Kyrgyzstan is in dire need of financing for vital sectors such as agriculture to ensure food security amid the coronavirus pandemic.

"This is another indication of Russia's unfriendly policy," said Ayan Ryskulov, a producer of dried fruits from Bishkek. "Russia, at an official level within the Eurasian Economic Union that it co-ordinates, makes statements about a beneficial partnership between member states, including our country."

"But in practice it violates our interests in order to benefit its own people."

A few years ago he ran up against the bureaucratic machine in Russia and was unable to export anything there, said Ryskulov.

Russia returns tonnes of produce to Kyrgyzstan every year, citing alleged non-compliance with EEU food safety requirements.

Even before the pandemic, Russia took advantage of EEU countries' open borders and expanded its markets while simultaneously pursuing a strict protectionist policy.

The blatant unfairness has led some Kyrgyz officials to argue that it is time to leave the organisation.

On May 13 at a meeting with members of the cabinet, Kyrgyz lawmaker Ruslan Choibekov suggested leaving the EEU.

Kyrgyz interests receive no protection within the EEU, he said, according to Akchabar.kg.