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UNCLAS SECTION 01 OF 03 BISHKEK 001339 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (GEHRENBECK) 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KG
SUBJECT: POOR KYRGYZ OBLAST HIT HARD BY GROWING INFLATION 
 
REF: BISHKEK 1200 
 
BISHKEK 00001339  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET DISTRIBUTION 
 
¶1. (SBU) Summary: On October 24 ) 26, Ambassador Yovanovitch 
visited Naryn Oblast.  Everyone she met, from local 
government representatives in Naryn City to farmers in remote 
villages, reported that the economic situation in the oblast 
is dire.  The region, already poor, has been especially hard 
hit by growing inflation.  End Summary. 
 
Is this the "real Kyrgyzstan?" 
------------------------------ 
 
¶2. (SBU) On October 24 ) 26 Ambassador Yovanovitch visited 
Naryn Oblast, including the Oblast capital, Naryn City, which 
lies 185 miles southeast of Bishkek.  Naryn Oblast is mostly 
covered by treeless rocks and mountains and possesses a 
rugged beauty that resembles the American West.  The Oblast 
lacks industry and the primary product of the region is meat 
and animal byproducts.  The climate of Naryn Oblast is harsh 
) hot in the summertime and bitterly cold in the wintertime. 
 The Deputy Governor reports that there are no transplants to 
Naryn ) only natives of Naryn can survive the harsh, 
unwelcoming climate and long winters.  The Deputy Governor 
characterizes natives of Naryn as "gorniye i gordiye," or 
"mountainous and proud." 
 
¶3. (SBU) Perhaps because of the isolation and desolation, the 
oblast is composed almost entirely of ethnic Kyrgyz; official 
statistics put the ethnic Kyrgyz population of Naryn Oblast 
at ninety-eight percent.  Unlike in Bishkek, Kyrgyz is the 
primary language, and one can easily get by with no Russian. 
Naryn residents take pride in being the "real Kyrgyz." 
 
Globalization: A Near Miss in Naryn 
----------------------------------- 
 
¶4. (SBU) With the exception of meat and a few crops 
(potatoes, wheat, carrots, and cabbage), there is no local 
production in Naryn Oblast.  Nearly all clothing, household 
supplies, and food are imported to the region from other 
regions of Kyrgyzstan or from abroad.  Despite Naryn's 
strategic location on the border with China and despite heavy 
truck traffic by Chinese trucks carrying goods to Bishkek, 
most goods are more expensive in Naryn than in the capital. 
This is because the central government mandates all goods 
must first go to Bishkek, where they are customs processed, 
before being released for sale and shipped back to Naryn 
Oblast.  Locals, such as the Mayor of Naryn and the Deputy 
Governor of Naryn Oblast, complain that they get no benefit 
from trade with China, and to the contrary, they bear the 
burden of repairing roads which sustain considerable damage 
from the 80-ton Chinese trucks. 
 
Bread Crisis: Buying Wheat by the Ton 
------------------------------------- 
 
¶5. (SBU) Naryn residents resoundingly report that the 
so-called "bread crisis" has hit their oblast, already poor, 
very hard.  Although some farmers in Naryn Oblast, namely 
those who raise wheat, actually made a profit this year for 
the first time ever, the wheat produced in the region is 
still insufficient to meet the needs of the population.  In 
fact, the region received 200 tons of wheat from the central 
government to cover the emergency needs of the region's 
poorest residents.  On October 25th, President Bakiyev's 
office reported that the Akim of Naryn Rayon, was fired for 
attempting to embezzle 30 tons of wheat. 
 
¶6. (SBU) A Peace Corps Volunteer reported that when the price 
of bread hit 10 soms (almost 30 cents), his host-family 
 
BISHKEK 00001339  002.2 OF 003 
 
 
literally bought a ton of raw wheat, which they plan to mill 
into flour to bake homemade bread.  He added that they were 
among of the lucky ones who could actually afford to buy 
wheat in bulk because his family has benefited from the 
emerging business of community-based tourism.  Other Naryn 
residents confirm that store-bought bread is a luxury few can 
afford. 
 
Baby Boom Despite Tough Times 
------------------------------------- 
 
¶7. (SBU) Naryn authorities, NGO's, and political party 
representatives cite internal migration, due to lack of 
economic opportunity in the region, as a problem.  There is 
not as much external migration to Russia or Kazakhstan as 
there is from other regions of Kyrgyzstan, but sources report 
that nearly every family has a relative in Bishkek who sends 
remittances.  Despite internal migration to the capital, the 
population of Naryn Oblast continues to grow due to a 
relatively high birthrate (there are about 6,000 births per 
year, in an oblast with a population of 35,000 adults).  One 
journalist explained that women keep having babies despite 
hard economic times because of family pressure and Kyrgyz 
tradition.  She said, "Even a hungry mother will feel joy 
looking at her newborn baby."  However, statistics indicate 
that some young families are exactly that ) hungry - and 
having a hard time surviving in an economy with 80 percent 
unemployment and where the average family income is 1,500 som 
(approximately $42) per month. 
 
¶8. (SBU) The Ambassador witnessed firsthand the baby boom in 
Naryn when she visited the Naryn Oblast Hospital.  There, she 
saw the results of a USAID-funded program to reduce infant 
and mother postnatal mortality and morbidity.  In just six 
months, and through small changes, such as encouraging women 
to move freely during labor, allowing husbands and partners 
to be present during birth, using new techniques to deliver 
the placenta, and applying antibiotic ointment to a newborn 
baby's eyes, the USAID-funded project has cut infant 
mortality at Naryn Oblast Hospital by half and reduced 
mothers' complications. 
 
Not All is Lost 
--------------- 
 
¶9. (SBU) Despite the dire economic situation of Naryn Oblast, 
there are several opportunities for development and, 
possibly, foreign investment.  The Aga Khan Development 
Network is constructing a new branch of the University of 
Central Asia and is doing humanitarian work in Naryn.  There 
is a coal mine in Naryn Oblast, and local authorities point 
to other natural resources, such as aluminum, gold, and 
bronze.  The Deputy Governor estimates that the village of 
Jaltyn Jol has 10 billion tons of iron ore, which would make 
it the largest deposit of iron ore in the world.  The 
extraction of Naryn's iron ore deposits is complicated by 
lack of capital and lack of rail transportation to the 
region.  During Soviet times, there was a large horse farm in 
Naryn Oblast, and with the average price for a horse at 
nearly $1,000, there is potential in horse farming. 
Likewise, alpine pastures could be exploited to raise 
livestock, including beef, sheep, and yak.  There was Chinese 
investment in tanneries, but those ventures failed.  Local 
authorities complain that most meat is processed outside of 
the region and suggest that one potential business could be 
meat-processing and meat-packing. 
 
¶10. (SBU) One USAID-funded project that is helping encourage 
the development of agriculture in Naryn Oblast is the Land 
Reform and Market Development Project, which works with local 
government (Ayil Okmoty) to implement auctions for the use of 
public land, making the leasing of public land transparent 
 
BISHKEK 00001339  003.2 OF 003 
 
 
and providing a much-needed source of revenue for the local 
government.  The Ambassador's visit to one such site in the 
village of Kazan Kuigan provoked lively discussions from 
village residents, who were eager to explain the program's 
successes.  The Ambassador also attended a public hearing on 
land distribution, which had a standing-room-only audience. 
 
¶11. (SBU) The Ambassador also visited an EBRD-sponsored bank 
that issues microcredit loans to small businesses.  In five 
months, the bank had already issued 107 loans which averaged 
$1500.  The Ambassador spoke with three entrepreneurs who had 
recently received loans and visited a small business that 
benefited from a microcredit loan.  She met with journalists, 
NGO representatives, political party representatives, and the 
Naryn Mullah (septel).  She dedicated a mentor program for 
women, the third such program the Embassy has begun in 
Kyrgyzstan.  She was met with enthusiasm as the keynote 
speaker at a women's conference, which was organized by Peace 
Corps volunteers and covered such topics as women's 
leadership, women's health, women in Islam, and balancing 
career versus family. 
 
¶12. (SBU) Comment: The economic situation, combined with a 
general feeling of political disenfranchisement (septel), has 
given residents of Naryn much cause for pessimism.  However, 
taking to heart the Deputy Governor's characterization of 
Naryn residents as hardy and stalwart, there is hope for 
Naryn.  Thanks to remittances from abroad and maybe in part 
thanks to the character of Naryn residents, Naryn is holding 
on, albeit under dire circumstances. 
YOVANOVITCH