August 30, 2010 – The World Bank is moving swiftly to help the Kyrgyz Republic recover from recent social unrest. It will provide funds to help keep essential government services running as well as for urgent reconstruction and energy needs of the country, before the onset of winter in just a few months.
As part of the World Bank’s overall commitment over the next 30 months, $70 million for emergency assistance will be targeted to funding essential public spending and ensuring reliable energy supply.
Protests in April 2010 toppled the government of the Central Asian country, bordered by China, Kazakhstan, Tajikistan, and Uzbekistan. These events led to the assumption of power by a group of opposition and civic figures led by Roza Otunbaeva.
On June 10, a wave of violence erupted in the southern part of the Kyrgyz Republic, provoking a sharp rise in tensions between the ethnic Uzbek and the ethnic Kyrgyz communities. Widespread arson and looting of public buildings and private residences drove people from the area. Social unrest claimed 2,000 lives (as estimated by President Otunbaeva) and caused 375,000 to flee their homes in the southern cities of Osh and Jalalabad.
On June 27, the Kyrgyz Republic held a referendum to adopt an interim constitution. According to a Joint Economic Assessment (JEA)by the World Bank, Asian Development Bank and the International Monetary Fund (IMF), about 70% of eligible voters participated, with more than 90% casting their ballots in favor of the draft that strips powers from the presidency in favor of a parliamentary democracy led by a prime minister. The new constitution came into effect on July 2, and Otunbaeva was inaugurated as interim President the following day.
A Fragile Peace
While nearly all of those who had fled have returned to what remains of their homes, an estimated 75,000 people need urgent shelter through a bitter winter, according to a Joint Economic Assessment (JEA) prepared by the Asian Development Bank, the International Monetary Fund and the World Bank. Many who returned found their homes reduced to rubble and their livelihoods destroyed, and thousands are homeless.
Weeks after the violence, “safety and security concerns are such that many affected people are afraid or unable to leave their homes, let alone travel to work,” says the report.
Adds Motoo Konishi, regional director for the World Bank’s Central Asia region, “While both ethnic Uzbek and ethnic Kyrgyz communities were affected, you could see in many parts of the town ethnic Uzbek stores targeted and ethnic Uzbek communities shattered.”
“There is no clear understanding of how the unrest was instigated,” says Konishi. “But it was highly destructive and it really tore into the inter-ethnic social fabric of Osh and Jalalabad. There still is general fear and general instability.”
Economy, Agriculture Production Threatened
Prior to the protests, the Kyrgyz Republic, assisted by the International Development Association, the Bank’s fund for the poorest countries, was beginning to recover from a series of external shocks – specifically, the food, fuel, and financial crises -- and was expected to grow at 4.6% in 2010.
Now the country’s gross domestic product (GDP) will likely decline by 3.5%, says the JEA report.
Foreign investment is also expected to fall by half to $144 million. Trade came to a virtual halt as the Kyrgyz Republic’s neighbors closed their borders.
Agriculture production, too, is expected to decline sharply in 2010, because of security problems and lack of inputs, says the JEA report. “Hotter than normal weather has worsened the situation. We are expecting quite a bit of drop-off in agricultural production. So there may be need for more assistance in food aid and cash transfers,” adds Konishi.
TheJEA provided a unified framework for donor support for the country. Donors subsequently pledged a $1.1 billion assistance package at a conference, organized by the government of the Kyrgyz Republic and the World Bank on July 27. These funds will support social reconciliation, economic recovery and reconstruction of the country over the next 30 months.
Donors have promised to deliver $671 million this calendar year to support the interim government’s budget for public services. The funds will also be used to rebuild communities, restore livelihoods, provide housing for those left homeless, build public facilities, and compensate victims of the violence and destruction.
The United Nations High Commission for Refugees (UNHCR), for instance, is leading the effort to construct transitional housing for thousands of refugees now living in tents.
“The objective is to have two rooms with a roof constructed to shelter the population before winter hits. It gets so cold that people can easily freeze to death, so reliable energy is one of the areas where we are putting money up front – to make heating available,” says Konishi.
The World Bank’s $70 million emergency recovery operation will be presented to the World Bank Board of Directors at the end of September 2010.
Another $10 million in funding for reconstruction of roads in Osh and Jalalabad will also be presented for approval. “This project will generate quick employment in the cities and surrounding areas,” says Konishi.
Weeks after the violence, the situation in the Kyrgyz Republic remains volatile and fragile, he says. Parliamentary elections, slated for October 10, are seen as an important milestone on the road to recovery and sustained economic growth.