All in the Family? Property Struggles and Patronage Politics in Contemporary Kyrgyzstan

By
Amy Liedy

"In the developing world, business and property owners face significant challenges in securing their property… the post-Soviet region is no exception," observed Regine Spector, Title VIII-Supported Research Scholar, Kennan Institute. At a 22 February 2011 Kennan Institute discussion, Spector explored the current political situation in Kyrgyzstan's economic sector, particularly in terms of property struggles in the country's bazaars.

Upon the collapse of the Soviet Union in 1991,many newly independent states undertook major economic reforms that rapidly transferred formal ownership rights from the state to the private sector, Spector explained. During this process, some assets underwent unwilling redistribution or expropriation. The situation in Kyrgyzstan was no exception; according to Spector, in the past twenty years, major changes in the political and economic environment have contributed to ongoing struggles over property rights.

Kyrgyzstan—which Spector described as possessing an "oligarchic, patrimonial system" of government—has experienced two major waves of political change in the last decade. The first occurred in 2005, when Askar Akaev, the country's first president, was overthrown. The second wave has transpired over the past twelve months: in April 2010, Kyrgyzstan's second president, Kurmanbek Bakiev, was similarly deposed amidst violence in the streets. In addition to the recent coup against the Kyrgyz presidency, ethnic riots in the country's southern region and escalated ethnic tensions within its population helped complicate Kyrgyzstan's business environment.

These bouts of political unrest contributed to the struggles over property in the country today. In addition, over the course of the 1990s, the Akaev presidential family increasingly spread its tentacles in businesses … ultimately gaining control over a significant range of economic assets." By the time Akaev was overthrown in 2005, Spector explained, "everyone knew about ‘Akaev's Family Business'," which was involved in a wide range of activities, including a grocery chain, a raw materials factory, and a cell phone company.

Among the assets and property struggles that have been most contentious are those found in the country's bazaars, which Spector explained was the reason she chose to do her research on Kyrgyz marketplaces. After the collapse of the Soviet Union, the manufacturing and cattle rearing sectors of the Kyrgyz economy declined, while the trade sector mushroomed. Much of the trade sector's business takes place at bazaars, Spector added. There were over 400 bazaars as of 2005, with annual sales turnover in the billions of dollars. Kyrgyzstan's location in the heart of Central Asia – in addition to the economic policies the country has pursued – has allowed these bazaars to serve as hubs for regional and international commerce.

The delineation between "those who control bazaars" and those who trade in bazaars, according to Spector, is critical to understanding the politics of the country's property struggles. Although Kyrgyz traders may see a large turnover of revenue while doing business in bazaars, those who own the bazaars have the most power; in addition to collecting rent for the stalls and containers within the market, they also collect moneys for the land on which the markets rest. Moreover, many are also involved in politics as Members of Parliament (MPs). Interestingly, Spector noted that unlike other assets in the country, bazaars have not managed to come under the direct control of the presidential family. Spector concluded that the liberalization of trade in consumer goods, as well as the increasing importance of bazaars to the Kyrgyz economy, has been one of the crucial sources of independent wealth among the population.

Spector also investigated the ways in which these bazaar owners and other businessmen secure their property in the absence of reliable rule-of-law institutions and predatory presidential families. She found that the answer lies in informal social and political networks between business and the state. In the Kyrgyz context, these informal patronage-based relationships are more important than more formal rule-of-law institutions.

Spector concluded by outlining several implications of her analysis. In terms of the way we study Kyrgyzstan, the speaker explained that her political economy research approach sheds light on political conflicts in the country, "which are often driven by personalized and informal disputes over economic assets, yet manifest themselves in struggles over and among both formal and informal institutions." With regards to the implications for property and property conflicts in Kyrgyzstan, Spector argued that "political crises and property redistributions are intimately connected, as are economic and political power."

Kyrgyzstani politics remain in a state of flux, as it is unclear whether the new government will be able to stabilize the situation. "… [T]here are reasons to believe that the oligarchic, patronage-based politics established under Akaev and Bakiev will continue to dominate under the guise of a new formal institutional political structure," Spector noted. Assuming this is true, the continued entrenchment of these oligarchic elites portends a "neo-feudal" future for the country, and suggests that "understanding who seeks power and why they do so leads to greater insights into the informal or unwritten logic of political power in Kyrgyzstan." Finally, Spector expounded on the implications for the study of property rights and political economy, and more generally, capitalism overall, suggesting that Kyrgyzstan be analyzed in comparative perspective with other developing countries.

Blair Ruble, Director, Kennan Institute

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