VZCZCXRO2251
OO RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHEK #0542/01 1311036
ZNR UUUUU ZZH
O 111036Z MAY 07
FM AMEMBASSY BISHKEK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9544
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 0725
RUEHBUL/AMEMBASSY KABUL PRIORITY 0533
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0402
RUEHLMC/MILLENNIUM CHALLENGE CORP PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEHVEN/USMISSION USOSCE PRIORITY 2541
RUEHNO/USMISSION USNATO BRUSSELS BE PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
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UNCLAS SECTION 01 OF 03 BISHKEK 000542 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR SCA/CEN (GEHRENBECK) 
NSC FOR SENIOR DIRECTOR KOZAK 
MCC FOR VP HARRINGTON 
MCC FOR KLADAKIS AND LONGI 
 
E.O. 12958: N/A 
TAGS: KCRM KJUS PGOV KMDR KG
SUBJECT: DECENTRALIZATION SUCCESSES IN KYRGYZSTAN 
 
BISHKEK 00000542  001.2 OF 003 
 
 
¶1.  Summary:  Since 1998 USAID has been helping Kyrgyz cities 
to become more transparent and accountable to their citizens 
and more effective leaders with skills in municipal property 
management, financial management, and service delivery.  As a 
result, local leaders have accomplished many firsts, 
including writing business plans and organizing local 
hearings.  Not only have local governments gained the skills 
necessary to improve the lives of their citizens, they have 
empowered their citizens to become a part of the process. 
Kyrgyzstan's increasingly effective local self-government is 
not only the basic building block for democracy, but it is an 
example for the region.  In 2006, USAID awarded a follow-on 
3-year contract to its implementing partner Urban Institute 
to extend this assistance to 136 rural municipalities, while 
at the same time deepening assistance to all 25 cities.  END 
SUMMARY 
 
Legal Framework 
------------------------ 
 
¶2.  With USAID assistance, the Kyrgyz Republic has put 
together a comprehensive legal framework that increases local 
autonomy.  This framework includes amendments to election 
legislation mandating direct elections of mayors of some 
cities and all rural municipalities (2001), the Municipal 
Property Law (2002), the National Decentralization Strategy 
to 2010 (2002), the Law on Financial and Economic Basis of 
Local Self-Government (2003), and Amendments to the Law on 
Basic Principles of Budgeting (2004).  USAID helped 
counterparts draft model local ordinances for municipal 
property management, budgeting procedures, budget hearings, 
and service agreements for utilities. 
 
Early Success 
------------------- 
 
¶3.  An early success of the new USAID project, the 
Decentralization and Local Government Program (DLGP), is 
Parliament's passage in April 2007 of the new annual budget 
law that will realize intergovernmental fiscal reform 
envisioned in earlier legislation by eliminating intermediary 
layers of government involvement budgetary control.  To 
ensure that this is correctly implemented, DLGP provided a 
weeklong training for partner municipalities on the new 
budget system. Financial staff from the city of Kara-Balta 
returned home from USAID training and organized a 
mini-seminar for other municipal staff so they would 
understand the significance of the new budget law in terms of 
new local tax collection authority, predictable transfers 
from the Ministry of Finance, and ability to prioritize 
expenditures.  The USAID training manual is left out on the 
desks of the finance specialists so they can constantly refer 
to it, write notes, and bookmark certain pages. 
 
Public Budget Hearings 
--------------------------------- 
 
¶4.  With USAID assistance, all cities and many villages 
throughout Kyrgyzstan have held public budget hearings, with 
the cities already institutionalizing this as an annual 
event.  Fourteen cities adopted procedures for transparent 
and effective use of municipal property with open, 
competitive sales, leases and concessions of assets.  Most 
cities developed participatory strategic plans, and under the 
new project they are updating the plans with a greater focus 
on local economic development.  Seven cities created business 
plans to improve water utility operations, and subsequently 
received investment funding from the World Bank.  Housing 
associations representing more than a hundred thousand 
residents of multi-unit buildings were formed, building 
democracy at its most simple level.  Residents agreed to 
"tax" themselves to fund capital improvements resulting in 
the tripling of the value of their units.   The result is the 
empowerment of local governments to improve the lives of 
ordinary citizens. 
 
BISHKEK 00000542  002.2 OF 003 
 
 
 
Opening Minds 
--------------------- 
 
¶5.  The real successes of this USAID assistance are the 
initiatives developed by Kyrgyz local governments once they 
are empowered and have opened their minds to different 
possibilities.  The city of Uzgen lies in the 
poverty-stricken south of Kyrgyzstan where Kyrgyz and Uzbeks 
have segregated after several bloody conflicts in the 1990s. 
Having learned from USAID training about citizen information 
exchanges, the mayor of Uzgen established an advisory group 
of 25 representatives of all local ethnic groups to address 
inter-ethnic issues and serve as "people,s diplomats."  With 
this proactive measure, the local leadership now has a 
mechanism in place to learn about emerging conflicts and nip 
them in the bud early on, thus strengthening inter-ethnic 
stability in the region. 
 
¶6.  In the city of Karakol, a similar group of business and 
civic leaders regularly meets to advise the city leadership 
not only on what citizens' priority issues are, but also how 
to resolve them in a systemic and sustainable way.  For 
example, on the initiative of the citizen advisory group the 
city established a sanitation inspectorate to ensure garbage 
removal.  Another citizen concern was the lack of public 
transport from the city center to the inter-city bus station. 
 The citizen advisory group ascertained the most needed 
routes and then brokered a deal with a private company to 
service those routes, with the city government providing all 
necessary permits.  With donor and private sector funding, 
the advisory group helped establish a social development bank 
that provides loans to local small businessmen, and with the 
proceeds, provides small grants to citizen groups to address 
their needs.  These initiatives have tangibly demonstrated 
the power of public-private partnerships, which are still a 
novel concept in Kyrgyzstan. 
 
Donor Coordination 
---------------------------- 
 
¶7.  USAID's technical assistance has effectively leveraged 
large amounts of other donor funding for infrastructure 
investment.  The World Bank provided $685,000 to the City of 
Uzgen to fix its water system, but the city was having 
trouble collecting from residents their matching contribution 
of $32,000 so the mayor utilized the principles of a USAID 
training session to design a public information campaign. 
More than 500 citizens in groups representing different parts 
of the community - elder respected men (aksakals), women, 
youth, business leaders, teachers, healthcare workers, and 
city council deputies - were given a tour of the works 
completed so far.  City staff had neighborhood meetings 
explaining to residents how their contributions would be 
spent.   Parents learned about it through essays written by 
their children at school, and billboards with before and 
after photos of the improvements could not be ignored.  The 
public response was impressive, as contributions poured in. 
Now, with completion of the rehabilitation to the water 
network, several thousand people have potable water.  And the 
residents proudly boast to their guests that they made it 
happen. 
 
New Direction - Reaching Down 
--------------------------------------------- 
 
¶8.  USAID,s new partners ) rural municipalities ) are also 
eager to implement new practices.  In between training 
sessions, partners are expected to implement &homework8 
assignments.  The rural municipality Janynookat proposed that 
for the final round of training the participants visit their 
community to see how they have successfully disseminated 
information to citizens in low-cost, low-tech ways.  Examples 
from Janynookat include information boards that show results 
of the competitive lease auctions for agricultural land; 
 
BISHKEK 00000542  003.2 OF 003 
 
 
lists of what documents are needed to get a passport; 
information on cattle diseases; and a map of the 
municipality. 
 
USAID Taking the Lead 
---------------------------------- 
 
¶9.  USAID,s project is the definitive source for what is 
happening with local governments in Kyrgyzstan.  High-level 
staff of the Academy of Management and the Agency for Local 
Self-Government carefully read the project,s bi-monthly 20 
to 30 page newsletter, and local government partners 
regularly express the usefulness of the information.  The 
project also extends its impact by wide dissemination of its 
training materials, which have been used by other donors. 
Experience exchanges and detailed written case studies have 
been very effective in sharing best practices. 
 
Continuing Challenges 
------------------------------- 
 
¶10.  The major challenge to continued progress on local 
government reform consists of those remaining high-level 
political appointees who would prefer to control local 
government rather than grant more autonomy.  For example, the 
centralized State Agency for Local Self-Government recently 
created an Association of Municipalities, both of which are 
headed by the same person (Bolotbekov), in an effort to 
emasculate the existing independent Association of Cities and 
Association of Towns and Villages.  Reaction from the 
independent associations was strong, and included a flurry of 
appeals through the press and international donors that the 
creation of the Association of Municipalities was a step in 
the wrong direction.  However, maintaining good relations 
with both entities is a necessity and the associations are 
going about their business and hoping for a positive change 
) either the abandonment of the Association of 
Municipalities or its re-creation as an independent 
association with an elected head who represents local 
government interests, not the central government's interests. 
 
¶11.  Resistance to reform also complicates efforts to form 
consensus on issues such as the relationship of the state to 
local government, how to carry out state functions at the 
local level, and which functions should be considered own 
local government functions.  To help address these issues, 
USAID is actively participating in a working group of the 
National Decentralization Strategy to draft legislation that 
would grant greater autonomy to local governments, and is 
educating Parliamentary deputies about the benefits of 
decentralization and empowerment of local government.  This 
much seems sure, that regardless of the challenges that lay 
ahead, the movement toward increased local self-governance is 
irreversible. 
 
YOVANOVITCH