“Possible solution”: Dubovsky comments on transfer of three facilities in Kyrgyzstan to China

The political scientist commented on Bishkek’s plans to solve the problem of paying off debt to Beijing.

The problem of paying off foreign debt could become daunting for Kyrgyzstan. The authorities of the Republic admit the situation with payments is tight. Speaking at the Jogorku Kenesh meeting, Prime Minister Akylbek Japarov listed the facilities in Kyrgyzstan that could come under the control of the PRC if Bishkek failed to pay its debt.

These include the thermal power plant in Bishkek, the Datka-Kemin power line and the north-south highway under construction. Certainly, no one ever has specified the rights to use the facilities to be transferred to the PRC. However, it is well known how deep Kyrgyzstan has been going into its debt dependence on China over the years. Political scientist Igor Dubovsky commented on the aspects of the financial policy of the global players and the consequences of Bishkek’s debt burden to the editorial staff of CentralAsia.news.

A fundamental principle

The expert noted that foreign investment is a fine thing, on the one hand. The influx of money from large and wealthy countries into any economy boosts technological development and the advent of modern equipment. However, it cannot be forgotten that that foreign capital, which is also supported by the state, will run no risk of losing profits.

Igor Dubovsky emphasised that investment often goes hand in hand with colonial policies.

“Investment activity in the Western economic model has been and remains the basis of the colonial policy of states and corporations. Not only by private multinational companies and state corporations, but also by the IMF and other international financial institutions of the so-called development are promoting such an investment policy. Those burdens for the financed economies, imposed along with investment, often cost more than the facilities constructed, the interlocutor believes.

Kyrgyzstan and other debtors

The political scientist noted that Beijing has invested $8 trillion in 68 states in various ways. According to official data, several debtors have had to put their facilities into receivership. Moreover, it is about assets that are essential for the economy.

In so doing, the Celestial Empire is seeking to strengthen its energy security, Dubovsky explained. Bishkek can also become one of those through which China will implement its strategic plans.

“Over the past 10 years, Kyrgyzstan’s external debt to China has grown 200 times and amounted to about $1.8 billion. Kyrgyzstan’s GDP is estimated at almost $9 billion. China has already learned to “use” its debt traps,” Dubovsky said.

How to pay

The expert said the ratio of Kyrgyzstan’s debt to its GDP makes settlements with China problematic. Dubovsky stated that the authorities of the Republic have two ways to pay its debts.

“Certainly, such a small economy makes it too onerous to pay the debt to China.  Kyrgyzstan will not just have to cut costs, but it will have to reduce all social programmes and stop financing many of national infrastructure projects. The Government of Kyrgyzstan is unlikely to take such steps. Therefore, officials see the only possible solution to the problem in putting their facilities into receivership,” the interlocutor said.

The political scientist stressed that it is not about the transfer of ownership right to the facilities listed by the Prime Minister to China. As a rule, the asset is offered for the use to get a faster return on investment. Under which terms China will have it is unknown, but the expert made an assumption.

“China can safely raise on electricity tariffs. That is a whole other story, this is the story of influence on the state policy and social programmes of the Government of Kyrgyzstan,” Dubovsky assumed.

15 07 2022, 12:35
Photo source: CentralAsia.news

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