“Successful examples of other countries that are geographically remote from the EU but have dynamic trade relations with the countries of the union demonstrate that geographic distance is not an obstacle. Business environment is more important for the expansion of economic cooperation, namely predictability, rule of law, unified rules of game,” Ambassador of the European Union to Kyrgyzstan Eduard Auer said in the interview to CABAR.asia.
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CABAR.asia The European Union supports the Kyrgyz democracy via different projects that cost tens of millions of euros every year. However, the civil society and journalists often express their skepticism regarding the outcomes. What measures are being taken to make the projects effective? In particular, such talks are going about projects related to judicial reform and human rights, where key issues remain unsolved.
Ambassador Eduard Auer: This question is not only important for the Kyrgyz public, but also for the public in the EU because European taxpayers want to make sure that their tax money is used effectively. We make every effort to ensure a successful outcome. For example, we coordinate closely with national development plans to ensure that our support addresses the most important needs of the country. We monitor and evaluate ongoing and completed projects and when we see shortcoming we try to address them and learn lessons for future programmes.
But does the EU Delegation has mechanism, when EU Delegation’s specialists witness that local projects are not implemented effectively by government or local NGOs, to remind that the EU wants the provided assistance to be effective for the people and country…
Evaluation, audit, monitoring are part of every project activity the European Union does around the world and also in Kyrgyzstan. We have evaluations, we have outside auditors who look at the project’s implementation, we have people who look at results and if we discover that things do not work as they should, we go, of course, back to our implementing partners be NGOs or the government. If the evaluators and auditors find shortcomings, we address them with our partners.
Next year, it is planned to sign an updated cooperation agreement between the Kyrgyz Republic and the EU. What will be its features compared to the previous one? How are these goals to be achieved?
We concluded the negotiations on the agreement in 2019. It was initialed in July last year after the conclusion of negotiations, in the presence of former High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini and the Kyrgyz Foreign Minister Chingiz Aidarbekov. The text is now being checked by lawyers and linguists and then we intend to sign the agreement in the course of 2020.
Why did Kyrgyzstan and the EU decide to have a new agreement? There is an existing agreement which dates back to 1999. But in the meantime, there have been many significant developments in Kyrgyzstan and in the EU as well as international ones and therefore there was a need for updating the agreement. So, Kyrgyzstan and the EU decided to negotiate a new agreement in order to take stock of developments of the last 20 years and to have a more comprehensive basis for closer cooperation in many sectors like economic and financial cooperation, energy, transport, environment, climate change, digital economy, etc. Regular high-level political contacts are already foreseen in the current agreement, but will be intensified with the new agreement. There is also a lot on trade in the agreement. These provisions should make it easier for Kyrgyz operators to export to the EU and vice versa, for EU companies to come to Kyrgyzstan. So, in general I think the new agreement will really cover significantly more areas than the old agreement. It was worth the effort to negotiate the new agreement.
Finally, I want to say that the negotiations were relatively short; frequently international agreements take years and years to negotiate. This one we started discussing in 2017, and the negotiations were already completed in the first half of 2019, in roughly 18 months. The speed of the negotiations was a demonstration of the mutual interest of both sides.
How do you think, the goals that are in the new agreement are realistic? Can they be achieved in a shorter amount of time?
I have no doubt that they are realistic. If you talk about cooperation, political discussions, international political issues of common interest, if you talk about implementing trade provisions, they are, of course, realistic.
We plan to sign the agreement in the course of 2020 and then the trade part of the agreement will enter in force provisionally, but the ratification requires the approval of all 27 EU member states and that can take a bit of time. So, that is the reference to your question about the time.
The local media noted and emphasized that the new agreement will focus on trade and economic ties between Kyrgyzstan and EU, increasing investment from the EU in the Kyrgyz Republic. Could you tell us more about it?
The EPCA (Enhanced Partnership and Cooperation Agreement) has many provisions on trade. Out of 360 pages in total, about 300 concern trade issues. These new trade provisions will make it easier for companies to trade and invest and will give more legal security for companies that want to engage in bilateral trade or investment, be it Kyrgyz companies in EU or EU companies in Kyrgyzstan. That is certainly a very important element of the agreement.
The business environment – and therefore the development of trade and investment – depends, of course, not only on the provisions of the agreement, but also on many other factors. For instance, as you mentioned, the reliability of the court system is very important, so that companies have the confidence to operate in the country.
Talking about investment, which sectors of Kyrgyz economy would be interesting to the European business?
This depends on individual businesses. It is difficult for me as a civil servant to say which sectors could be affected – this is up to each company to decide. But, for example, tourism is an area where Kyrgyzstan seems to be attractive. Agriculture could be an interesting sector, maybe also light industry. There are already some direct investments from the EU to Kyrgyzstan.
Kyrgyzstan and the European Union, unfortunately, geographically are located far from each other. If Kyrgyzstan makes the favourable business environment, court reform and other things, will all this work impact European investment and European business ties with Kyrgyzstan? Because we have geographical and language barriers as well as other problems, it might not give opportunities to improve investments and economic cooperation.
The geographic distance plays a role. For example, it is difficult to transport perishable goods, including foodstuff over such a long distance. EU is five thousand kilometers away, so transporting such goods is not straightforward.
The distance is a challenge, but there is potential for developing trade. Since the EU gave Kyrgyzstan GSP+ status and abolished all customs duties on a few thousand products in 2016, trade has increased a lot in the concerned categories of goods. Bilateral trade has been very dynamic in recent years. And local companies learn increasingly, how to use the scheme, how to enter European market with their products, how to make products that might take a niche at market in Europe.
And successful examples of other countries far away from the EU in geographical terms, but enjoying impressive trade with the EU demonstrate that geography can be overcome. What is perhaps more important for enhanced economic cooperation is indeed the business environment – predictability, rule of law, level playing field. I am sure that seeing positive stories from the existing EU businesses in Kyrgyzstan will best attract new investors.
When the program GSP+ started working, for how many millions the trade turnover between two sides increased?
So between 2017 and 2018, it has increased 30 percent for the areas covered by the GSP+. For example, fruits and nuts to the EU is one of the sectors covered by GSP+. Exports of fruit and nuts rose by 100 percent between 2017 and 2018 and totaled 3 million euros. GSP+ might only cover a small part of the bilateral trade, but it is a dynamic part of the trade volume.
Let’s also not forget the important signal that having the GSP+ status demonstrates that Kyrgyzstan implements 27 core International conventions on human rights, environmental protection, labour rights, anti-corruption etc. In addition to the trade effects of the GSP+, it is very good for the reputation of the country.
But what could be maximum potential of the GSP+?
It is impossible to say. The EU market is very big – 450 million consumers after the departure of the UK. It will all depend on how well Kyrgyz companies can make use of the market potential, develop products which are demanded in the European market and establish contacts with EU importers. And, as discussed, how good they will be in overcoming challenges like the geographic distance.
Speaking on the investment from the EU to Kyrgyzstan, Mrs Mogherini in her last year’s article noted that the EU can bring private investments to the region, given the healthy business environment. If such environment occurs in Kyrgyzstan, which sectors of economy could be attractive for the European business (from which countries) in terms of investment? What is the volume of private investments from the European Union to Kyrgyzstan? In your opinion, how close is Kyrgyzstan to the creation of the appropriate business environment?
As you know, this year we plan to hold the first EU – Central Asia business forum in Bishkek. That was an initiative by the Kyrgyz government at the last EU-Central Asia Ministerial Meeting which took place in Bishkek in July 2019. All the participating foreign ministers supported it. This is an example of a concrete initiative we want to implement to promote business links. We also have projects on development and budget for training about GSP+. Using it, we organized a series of trainings for business people and officials on how to use the scheme. The last such mission was in Bishkek in September 2019. These are two examples of what we can do as a public sector institution. It is up to private companies to decide into which region or sector they want to go.
Continuing the question about new cooperation between the EU and Kyrgyzstan: you know that Russia and China have interests in Kyrgyzstan for different projects. US somehow is working here. The European Union, what kind of role it is seeing in Kyrgyzstan? What kind of niche it has?
I think, it is well described in the EU-Central Asia strategy that we adopted in summer 2019. We want to be partners with all the countries of Central Asia, including Kyrgyzstan, on resilience and prosperity. So, we want to work on the issues that you have already mentioned: rule of law, developing democratic societies, we can offer trade cooperation, we can do development cooperation. Nothing of this is directed against anybody else, this all is compatible with relations that Central Asian countries will want to have with other countries. Moreover, the EU has declared its interest to work together with any third party who shares the same goals, namely to support further sustainable development and prosperity of Kyrgyzstan.
Our readers, except experts and diplomats, so called ordinary readers, might be interested why the European Union spends so much money on Kyrgyzstan. Why the European countries and the EU are doing this because they have a lot of problems and the funds could be helpful and effective for them as well, but they are taking the money to Kyrgyzstan.
The European Union and the members of the European Union combined are, at the global level, the biggest providers of development assistance. The work with Kyrgyzstan on development cooperation is part of this global picture. We feel that we have an obligation to contribute to the development of other countries, work with them to bring up the standards of living and help societies to progress. There is, of course, also the consideration that more and shared prosperity brings more stability around the globe and better global economic development. This in return benefits also EU citizens.
In Kyrgyzstan, there are different diplomatic missions of the European Union countries as well? How do you, actually, coordinate your activities? Are there some problems, for example, maybe German Embassy could implement some projects that are very similar to the European Union’s Delegation.
Indeed, there are other embassies of the European member states here in Bishkek – currently two, France and Germany. We also are in a regular contact with non-resident Embassies, which are mostly present in Nur-Sultan and Moscow. This is great, because it extends the coverage and network of European activities. We coordinate very closely with them. Since my arrival more than one year ago, in my opinion, we have not had a situation where the activities of the Delegation were incompatible with those of the Embassies. On the contrary, the activities of the Member State Embassies and the Delegation reinforce each other.
When the European Union actually puts on some, what kind of projects it can support in Kyrgyzstan? How do you they actually choose what kind of project you have to implement? For example, there are border issues, drugs, education, etc. What is the formula of understanding what kind of projects the EU wants to support and what kind of projects are not backed?
The priority areas for our projects emerge from the dialogue with the authorities. A good example: the budget period of the EU comes to an end in 2020. Now we have to think about how we want to program our activities from 2021 onwards. We have started to discuss with the government and civil society what they think we should do: whether we should continue the same sectors as now – mostly education, rural development and water management and rule of law. Or if or select new ones. And for some of the regional projects that you mentioned, for example border management, we, of course, need to get the agreement of more than one country by definition. In short, the answer to your question on how we decide on the sectors is the close consultation with local stakeholders and interlocutors.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project.