The Last Year – Implications for Development The View of the Donors

1. The Last Year – Implications for DevelopmentThe View of the Donors Jason Lane Head of DFID in the Kyrgyz Republic

2. What Happened in March 2005? • A (Tulip) Revolution • A Coup • A Putsch • March Events • Political Change Or, as I heard recently: • Well, the President ran away but nothing has really changed

3. Was the revolution a good thing? • Positives A statement of national identity Part of a genuine process of democratisation (elections) • Neutral Freedom of expression and independent media Human Rights (Refugees - UN reflections) • Negatives Reduced sense of security No clear vision and policy-making inertia Expectations unfulfilled e.g. on corruption Inter-Ethnic Relations Worsen

4. Before the Revolution • Relatively good reputation with the donors – reformist and with a reasonably developed civil society • Low-income country. Poverty Reduction Strategy in place and progress on poverty reduction (55 – 41% over 4 years), but mixed progress on Millennium Development Goals • OECD-DAC pilot country on harmonisation. Mainly technical assistance programmes. Macro-economic stability.

5. Before the Revolution November 2004 – Landmark Consultative Group Meeting • Donor advice to President and Government focuses on high-level corruption, governance and the implementation gap February 2005 – Parliamentary Elections • OSCE / ODHIR report on the Parliamentary elections - judged to be flawed in terms of the build up (access to the media; registration process), some incidences, but improving and generally free and fair on the day • CIS – Positive Report

6. The Revolution • March 24 - Sudden and unexpected with events unfolding on television • Unofficial meetings – night of revolution • Property under attack • UN evacuation (relocation) – 1 day after • Official meetings – 2 days after • Donor Council meeting and with MOEF

7. After the Revolution - April Meeting with interim President and Donors speak with one voice, confirming our support and asking the government to: • Honour commitments made to donors • Ensure macro-economic and political stability • Security of person and property • Encourage Social Cohesion And some more specific advice

8. After the Revolution - July • Presidential elections – positive reports, Key current issues: • Security and Law and order • Corruption – Claimed increases in tax and customs revenue, but reports of increased rent extraction down the chain • Need for greater clarity of vision for economic, political and governance reform

9. The Year - The Expectation Gap • The donors are supportive but want quick progress, particularly where the previous government had failed • The government wanted funds to be able to deliver in the first year: BUT • The first year became taken up by implications of internal divisions, and redistribution of power and money • Macro-economic stability but no serious commitment to reform or reducing corruption

10. Continued… • There have been significant delays with the second National Poverty Reduction Strategy – due, in part, to lack of capacity, but mainly due to lack of will, commitment and clear high-level vision and direction • The government has expressed quick interest in new (easier) forms of money – Millennium Challenge Account, HIPC – but appear not prepared to commit to the necessary reforms

11. How has the International Community Responded? • Coordination; Joint Messages; Focus on key issues • Harmonisation (?) Alignment (?) • Had difficulty deciding how to best support stability and security • Have found ourselves being increasingly (more obviously) drawn into politics and the speculation and rumour surrounding this • Recognition of the need for greater knowledge of the political economy and drivers of change to inform our work • The Joint Country Support Strategy

12. The Government - Donor Relationship - Comparison • There is a similar level of access, but lower quality of dialogue and a reduced response to written letters • Apparent decrease in the overall capacity of the government and a narrower international perspective • The President appears to be more comfortable talking about ‘soviet-style’ planning, and seeking regional (neighbor) investment – less connection with donors • Aspirations for national ownership more apparent but a constructive debate on national vision, economic and social reform and how the donors can help the government implement this is lacking • Implementation gap remains

13. Donor Investments Projects and programmes have continued, in a more complex environment and there have been some successes • Public Financial Management • Health Sector Reforms • ARIS – Village Investment Programme • IMF programme – on track However, there has been little progress where we have supported major structural reforms (energy, mining sector, civil service reform) and signs of increased political interference in the activities of commercial entities

14. The way forward • No progress for 12 months on NPRS II and recent statements indicating a change of title and a change of substance • Where does this leave the donors and how should we proceed and align? • The Joint Country Support Strategy • In this context we see this meeting as an exciting opportunity to seek, and feedback, your views on these issues