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C O N F I D E N T I A L SECTION 01 OF 03 BISHKEK 001589 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 11/13/2016 
TAGS: PGOV PREL PREF PHUM KDEM KG
SUBJECT: TRADE AND SECURITY ISSUES REVIEWED AT KYRGYZ 
BORDER, BAZAAR 
 
BISHKEK 00001589  001.2 OF 003 
 
 
Classified By: Ambassador Marie L. Yovanovitch, Reason 1.4 (b) and (d) 
 
¶1. (C) SUMMARY:  On October 19 and 20, SCA DAS Evan 
Feigenbaum visited three border posts along the Kyrgyz-Uzbek 
border:  two closed crossings in the city of Karasuu and one 
in Osh, which is being reconstructed but remains open.  The 
lack of Uzbek-Kyrgyz information-sharing across their border 
indicates both sides may continue to restrict the flow of 
people and goods.  DAS Feigenbaum also visited the Karasuu 
bazaar, claimed to be Central Asia's largest outdoor market 
and now filled with Chinese consumer goods and Han Chinese 
merchants.  With the success of Kyrgyzstan's Karasuu market, 
the Uzbeks apparently recognize the potential economic 
benefits of gaining direct access to Chinese goods, and two 
similar markets are being constructed in Uzbekistan:  another 
open-air bazaar across the Uzbek border from Karasuu, and a 
market in Tashkent.  Some worry that this will, in effect, 
cut out the Kyrgyz by moving goods overland directly into 
Uzbekistan.  Such economic competition continues to be 
subject to the policies of the Kyrgyz and Uzbek Governments, 
however, as each determines how best to utilize the official 
border posts that vendors rely upon to move their merchandise 
from one country to another.  END SUMMARY. 
 
DOSTUK: A WORK IN PROGRESS 
-------------------------- 
 
¶2. (SBU) During a visit to the Dostuk border post in the 
southern city of Osh on October 19, SCA DAS Evan Feigenbaum, 
together with Ambassador Yovanovitch, witnessed first-hand 
the construction of new store fronts accompanying the 
renovation of the border post.  Using U.S. funds provided to 
the International Organization for Migration (IOM), the 
reconstruction of the Dostuk border post could, according to 
IOM, support the flow of over fifty thousand people each day. 
 With routes for both vehicular and pedestrian traffic, the 
renovated border, due to fully reopen by January, will 
constitute one of the largest crossings along the 
Kyrgyz-Uzbek border.  As a result of the potential influx of 
people and goods coming into Kyrgyzstan from Uzbekistan, 
investors, reportedly from China, have initiated the 
construction of a large open-air bazaar adjacent to the 
border. 
 
¶3. (C) IOM Chief of Mission Zlatko Zigic told DAS Feigenbaum 
that such an increase in traffic could increase trafficking 
in contraband merchandise, people, narcotics and weapons.  To 
track such illegal activities, the USG has provided to the 
Kyrgyz border service detection equipment, including density 
scanners, metal and radiological detectors.  While pointing 
out the large metal/radiological detector--one big enough to 
drive a truck through--on the Uzbek side of the border, Zigic 
commented that until IOM is able to erect a similar detector 
on the Kyrgyz side, it will remain impossible to tell whether 
illegal goods or weapons are being smuggled into Kyrgyzstan, 
due to Uzbekistan's refusal to share information with Kyrgyz 
counterparts.  (Note:  As part of the completed renovation, 
such a detector will be installed on the Kyrgyz side of the 
border as well.  End note.)  Given the lack of 
information-sharing and general animosity that clearly exists 
on both sides of the border, Zigic confided, Kyrgyz border 
security officials could run into difficulties as they 
attempt to control the increased traffic going in both 
directions. 
 
KARASUU: THE NEXUS OF TRADE AND REGIONAL COMPETITION 
--------------------------------------------- ------- 
 
¶4. (C) In Karasuu, DAS Feigenbaum visited what is said to be 
Central Asia's largest open-air bazaar, before inspecting two 
border posts situated near the market.  While speaking in 
Mandarin Chinese to one of the many Han Chinese vendors 
scattered throughout the bazaar, DAS Feigenbaum heard that 
despite the harassment some vendors receive from their Kyrgyz 
competitors, business has been booming.  Eighty percent of 
the Chinese merchants hail from the same province, Fujian, 
 
BISHKEK 00001589  002.2 OF 003 
 
 
along China,s eastern seaboard.  Some have brought their 
families west but have left them in Xinjiang on the Chinese 
side of the border.  As Chinese-made products continue 
flooding the market, Chinese vendors have made use of these 
family and personal contacts in China to access goods and 
capital and thus meet the Kyrgyz and Uzbek demand for 
inexpensive merchandise.  Han traders are able to tap social 
networks and commercial ties inside China that many Kyrgyz, 
Uzbek, and Uighur traders lack.  Some social tension has 
emerged between groups:  the Chinese merchants offered DAS 
Feigenbaum various examples of their distaste for life in 
Central Asia. 
 
¶5. (C) The first border post visited in Karasuu, used 
primarily for vehicular traffic, located almost directly 
across the street from the Karasuu bazaar, revealed that the 
Uzbeks are clearly attempting to control the flow of people 
and goods across the border, but also the economic benefits 
Kyrgyzstan has gained as a result of the influx of Chinese 
consumer goods brought into Kyrgyzstan.  The border, 
separated by a man-made canal that splits what used to be the 
unified city of Karasuu, was closed by the GOU in 2004 and is 
scheduled to reopen on November 1.  (IOM has verified, as of 
November 9, that the border post was, in fact, still closed. 
End note.)  With no traffic going either way, the border 
guards on both sides were left facing one another in Korean 
DMZ-like fashion, sneaking pictures of visitors on their 
respective digital cameras. 
 
¶6. (C) The absence of traffic made it easier to see the 
construction of what is supposed to be one of the largest 
bazaars in Uzbekistan, just across the border.  Clearly a 
sign that Uzbekistan is hoping to take advantage of the 
trade, mostly in Chinese-made goods currently being sold in 
Kyrgyzstan, the Uzbek bazaar could present stiff competition 
to Karasuu if the GOU is able to establish favorable trade 
arrangements directly with the Chinese that reduce Kyrgyzstan 
to a waystation on the road from China to Uzbekistan.  As the 
Osh Director of USAID's Trade Facilitation and Investment 
Project Sabir Akimbaev told DAS Feigenbaum, the GOU is hoping 
to abolish all barriers to trade, be it tariff or particular 
import restrictions, with China in order to ease the flow of 
Chinese goods into Uzbekistan.  Conversely, customs tariffs 
will be raised for Kyrgyz traders.  Should that occur, 
Chinese merchants will be able to set up shop in Uzbekistan, 
thereby limiting the amount of Chinese merchandise traded in 
Kyrgyzstan while reducing incentives for Uzbeks to cross the 
border for trade.  If this plays out as Uzbekistan appears to 
want, Akimbaev said this would be detrimental to Karasuu's 
growth, as well as to the Kyrgyz economy as a whole. 
 
¶7. (C) Karasuu's second border crossing is a pedestrian 
crossing illegally opened after the Andijon crisis by the 
people of Uzbekistan.  Used as a pressure valve by the Uzbek 
authorities, approximately 30,000 people crossed the bridge 
everyday -- now, however, the border crossing has been closed 
due to the expected opening of Karasuu's vehicular border 
crossing on November 1.  With no border posts open in 
Karasuu, people have resorted to crossing the border 
illegally at various points along the canal.  With a large 
number of private homes situated on the edge of the canal, 
many Kyrgyz and Uzbek families have allowed people to cross 
through their territory illegally, usually for a small fee. 
 
COMMENT 
------- 
 
¶8. (C) With regional trade and security at the forefront of 
Kyrgyzstan's foreign policy, border crossing issues along the 
Kyrgyz-Uzbek border will continue to be exploited by both 
sides, as both governments attempt to control and take 
advantage from the flow of people and goods.  The influence 
of Chinese products and Han Chinese traders also presents an 
interesting harbinger of things to come, as it appears that 
historic trade patterns are being restored and that 
Kyrgyzstan and Uzbekistan may try to dominate the China trade 
 
BISHKEK 00001589  003.2 OF 003 
 
 
by easing the flow of Chinese-made merchandise into their 
respective bazaars.  Given that fears of a "Chinese takeover" 
do exist on both sides of the border, however, it remains to 
be seen just how open either Kyrgyzstan or Uzbekistan will be 
to what appears to be an unstoppable influx of Chinese goods 
and Chinese merchants.  END COMMENT. 
 
¶9. (U) DAS Feigenbaum has cleared this cable. 
 
YOVANOVITCH