AKIPRESS.COM - This year, National Institute for Strategic Studies (NISS), the pacemaker among research centers of Kyrgyzstan celebrates its 50th anniversary. Half century ago, by decree of the Council of Ministers of the Kyrgyz SSR Computing Center under the State Planning Committee (Gosplan) – prototype of NISS was established. During this time, the Institute has been repeatedly reorganized, but its essence remained unchanged - research commissioned by the state in the interests of the country. This was done in order to increase the effectiveness of government decisions on the basis of a comprehensive analysis of the state of affairs in one or another area of life, by linking together the practice with theory.

Institute was headed by recognized Soviet and Kyrgyz scientists as academicians Otorbayev, Koichuyev, prominent economists Musakojoyev, Soodanbekov, Termechikov, Umurzakov, who made a huge contribution to the development of the Kyrgyz economic science and practice.

In the run-up to anniversary, we publish interview with Talant Sultanov, Director of NISS KR.

First of all, let us congratulate you with 50th Anniversary of NISS KR. We wish the Institute every success and great achievements. Please, tell us who and how assigns research topics. In your opinion, how actual and necessary are they?

Thank you for your congratulations. In 1965, the Institute conducting systematic applied research was established for the first time in Kyrgyzstan. Since then and up to now, almost every large and medium scale projects have a share of contribution of my colleagues, researchers of NISS - their calculations, research, recommendations. Originally, it concerned such issues as efficient allocation of production capacities in accordance with the human resources, taking into account climatic and other features, need to transition from extensive to intensive production, etc.

Today, the vast majority of research topics is proposed by the Government, it acts as a customer using our products in their daily work.

Some of research topics we offer ourselves. Exact information on how many research works are conducted by our staff is not available, but, last year about 40 research works on topical issues are done. Research works include such issues as optimization of tariff policy in the energy sector, ways to improve the situation in the sector by reducing the corruption and energy loss saving; migration; receiving sovereign credit rating; religious and ethnic situation; situation on the roads of the country; various aspects of Kyrgyzstan’s joining to the Customs Union (EEU), etc. Some research works are nonpublic due to their confidential nature.

So, responding to the last part of the question, I want to say that we wanted to perform a task impartially, with high quality, within a short space of time in order to make our research works and recommendations practically useful and timely.

Please, tell us about key areas of NISS activities and most interesting research works within last years.

NISS is focused on providing the Government with analytical information to support it on key issues of socio-economic and socio-political development of the country.

Our staff prepares analytical notes, conducts research works and draws up recommendations which are sent to the leadership of the country. NISS takes part in elaborating of country socio-economic development programs and strategies, projects monitoring and evaluation as well as short-term forecasting of probable risks and scenarios.

As you know, there was a very critical situation in the energy sector last year. In this regard, our Institute has prepared report on this issue and forecasts for probable developments in this sector –what awaits us in five or ten years. This report was actively discussed and used on practice by relevant authorities, who formulate policies on recovery from the crisis situation.

According to research data, we can see paradoxical picture: prices for electricity has grown lately worldwide or they tended to it, but in our country, quite the contrary, prices came down for 40% - in $ cents compared to the period from 2008. Our consumers think that electricity should be sold below cost price; consequently, they are against price increase even during inflation. They prefer never to think about compensations paid from state budget since 2009 for price growth which is, by the way, didn’t take place. One could use these financial means for building new generating facilities and we wouldn’t have to persuade our neighbors to sell us electric energy.

Why low prices are not good? Firstly, low prices lead to wastefulness. Secondly, no investor will ever invest when prices are below cost. If we look at energy intensity of our economy, we can see that we expend six times more energy for manufacture of any product compared to developed countries. At the same time, we don’t have energy-intensive industries. What is interesting that latest price changes gave significant saving of electric energy (up to 30 % according to some calculations).

Concerning investments, we have to build new generating facilities. For the first time in history, this year Kyrgyzstan has transformed into importer of electricity. Business hardly manages to get permission for electricity use. Difficulties in access to electricity already have led to decrease of positions of our country in the Doing Business Index. Because, prices for electricity in other countries are ten times higher than here, i.e. if prices are appropriate, private investor is ready to develop energy sector. But in our case, nobody ready to invest yet, just because investments wouldn’t worth it. I want to say that issue is so politicized and used as manipulating mean. This is economic issue and should be solved by market-based instruments. Transfer it into a political and populist area may simply lead to the fact that we will have cheap electricity, but on paper, in reality we will feel lack of it and be forced to sit without light. One of significant steps our country took this year is joining to Eurasian Economic Union (EAEU). Last year NISS conducted large-scale research – SWOT-analysis in economic, political and social-cultural dimensions, where all pros and cons were noted in case of joining/not joining.

I want to note that Kyrgyzstan’s joining to EEU opens up new opportunities for the country including mutually beneficial cooperation with neighbour countries. Favorable conditions for foreign investors to be created in the country: access to large market (180 millions of consumers within EEU), liberal political and economic climate, low tax rates, high quality labor force and cheap energy.

We brainstormed on receiving sovereign credit rating. Today, Kyrgyzstan is the only country in CIS and one of few countries including Africa and Oceania which doesn’t have this rating.

In the last two years NISS actively negotiated with the major rating agencies in the world, worked a lot to convince on the need to obtain this rating. Today, the country is at the stage of assessment, and we hope that this year we will receive first country rating, which will attract more investment into the country. I want to clarify that obtaining of sovereign credit rating is an important prerequisite for attracting long-term foreign investment on attractive terms. It is especially important in Kyrgyzstan due to the fact that currently the investment situation in the country is characterized by low levels of investment, high cost of borrowing. Among other things, absence of a sovereign credit rating leads to that foreign investors are laying the best possible default risk in the country risk premium, thereby maximizing the interest rate, which entails getting banks and further business and public loans at high interest rates. To reduce the interest rates on foreign investment, it is necessary to obtain Kyrgyzstan's sovereign credit rating. Sovereign credit rating enables Kyrgyzstan to get following advantages: easy attracting resources; reducing the cost of borrowing, expanding the range of investors, creating a positive image of the country, an independent evaluation of the country's development, ability to track the progress of reforms and the overall creation of additional conditions for the development of the country.

Confidential credit rating might be the first step of Kyrgyzstan in taking sovereign credit rating. Confidential credit rating is given by international rating agencies and is not made public, reported only for customer government. Hence, this option is preferable for developing countries that do not have a sovereign credit rating and want to assess how attractive are the obligations of the country to investors.

Leading banks, mining sector, communication, energy and transportation companies in Kyrgyzstan might be potentially interested in this rating.

Also, last year in cooperation with ISOC we held first Internet-symposium in Central Asia; attended Global Summit for prevention of violent extremism; developed concept of Kyrgyz-German High Technical School.

At the moment, Kyrgyz Republic intends to achieve GSP+ status. What activities are undertaken by NISS in that direction?

Generalized System of Preferences (GSP+) will allow our country to supply its goods to markets of European Union with low or zero tariff rates. NISS together with Ministry of Economy and other ministries made an analysis, held meetings with representatives of EU, Kyrgyz state authorities and business community, where necessity of achieving GSP+ status was discussed. Recently, before the visit of the President of the Kyrgyz Republic Almazbek Atambaev to European countries Kyrgyzstan submitted application to join GSP+. Only 14 or 15 countries in the world have such possibility, i.e. we are able to maximize opportunities and set manufacture in Kyrgyzstan to supply products to Europe.

Main advantage of GSP+ membership is price advantage. Goods produced in Kyrgyzstan, arriving to the EU market under the scheme of GSP +, would be cheaper than the same product produced in Russia, in China (or any other country outside the GSP +), primarily due to lack of customs duties. Opening the EU market on favorable terms, this agreement is attractive for potential investors and foreign companies who want not just to be registered, but produce in Kyrgyzstan for subsequent export to EU.

Dried fruits, processed agricultural production, tobacco, clothes, decorative and other goods of wood, stone, etc, are most likely products ready to be exported to EU. Processed, finished and packaged products have easiest access to certification and export licenses to EU.

No less interesting concept we are working on is the Silk Road Economic Belt suggested by the People’s Republic of China. This initiative allows establishing trade, economic and cultural links between countries which are on the route of historic Great Silk Road. Key areas for cooperation within the network of Silk Road Economic Belt might be assistance in developing confidence measures and international legal framework, promoting public-private partnership, improving safety of containerized shipping and goods supply chains, provision of passport and other travel document reliability. In case of successful implementation of this project there is a plan to create container corridor linking Kyrgyzstan directly with China. This reduces dependence on transit through neighbouring countries and reinforces transportation security of Kyrgyz Republic. As a result, this gives the ability to save transit payments for Kazakhstan, Uzbekistan and Tajikistan, with amount about $ 72 million per year; additional jobs will be created; revenues from customs duties levied on the transportation of goods and transportation of cargo transit traffic will increase. If we maximum prepare for this concept, I think, our country will have great opportunities for economic development.

Who are your international partners and how do you communicate with them?

We actively cooperate with our colleagues from think tanks (analytic centers), strategic institutes from other countries. We are well known now and recognized as one of the leading think tanks in Central Asia. NISS has permanent collaboration with partners from Russia, China, Turkey, Afghanistan, Iran and Central Asia. We have established partnership with American and European think tanks. This allows us; firstly, to jointly work out paths for cooperation between our countries, i.e. on our level we can find opportunities that we then raise to the attention of our leadership. Secondly, it adds up good opportunities for joint research and activities.

Last year NISS invited ABC, one of the leading TV-channels in USA, to prepare positive material about developments in Kyrgyzstan for million American television audience. Besides, we prepare an article for highly influential British journal “The Economist” and expressed our positions on key issues on the agenda in the world and the region.

One of the biggest events held by NISS last year was IX Shanghai Cooperation Organization (SCO) Forum in Bishkek, which was attended by delegations from 11 countries at the level of directors of think tanks from across the Eurasian continent and representatives of the ministries of foreign affairs of many countries in the region. The forum participants discussed the issues of SCO and formation of a new geo-economic reality, economic, cultural and educational cooperation between the SCO countries.

Also, NISS is a member of SCO think tanks forum, Asian Development Bank (ADB) think tanks forum and Collective Security Treaty Organization (CSTO) think tanks association.

I want to note that recently research centers of Turkic Council countries (Azerbaijan, Kazakhstan, Kyrgyzstan and Turkey) signed memorandum of cooperation. I think research centers have to develop collaboration between each other. I hope this document symbolizes new stage of collaboration between research centers of Turkic-speaking states and is destined to increase efficiency of their activities.

I can show the example of cooperation with russian research centers - Russian International Affairs Council (RIAC) headed by former foreign affairs minister of the Russian Federation and current ministers are members of the Council. At the moment, NISS works together with RIAC on preparation of workbook entitled “Kyrgyz Republic’s joining to Customs Union: influence on migration processes”, which is to be completed by the end of May 2015.

Description of migration processes, causes of migration, situation with migration, migration policies of two countries in the light of Kyrgyzstan’s joining to EEU – these topics are to be considered in the workbook.

Key role of this work is in giving practical recommendations on these issues to the Governments of the Kyrgyz Republic and Russian Federation.

Besides that NISS is full member of research centers of EEU and Silk Road Economic Belt.

On the whole, NISS works very actively in international direction. We strive to become one of the leading research centers in the Central Asian region and set more and more ambitious goals.

What concrete developments of the Institute are realized and made positive contribution?

We took active part in developing program and plan of the Government on implementation of National Strategy for Sustainable Development; our recommendations were accepted as one of the basis of this program. As mentioned above, receiving sovereign credit rating is one of the practical results of our work.

We were active in working out Concept of religious policy in Kyrgyzstan, migration policy; currently together with UNDP we are working on Concept of interethnic relations in the country.

Also, NISS worked out index methodology of population confidence to state authorities’ activities. NISS jointly with National Statistics Committee regularly monitors how population is satisfied or unsatisfied with authorities work.

Another interesting project we conduct on a regular basis is definition of Kyrgyzstan’s positions in international indexes and ratings. We track more than 50 international ratings where following positions are indicated: corruption level, ease of doing business, access to social services. This report is annually updated. On its base our state authorities and community can see how reforms, being undertaken by Kyrgyzstan, are effective.

NISS is one of the few state think tanks in Kyrgyzstan, while other countries have a lot of similar centers specialized on economic or only political issues.

Since 2013 we publish two quarterly journals - popular scientific “Orientir”, where our staff has the opportunity to speak on their topics of research, “Strategy” - reviewed science journal. All our research works and analytics are available on the NISS website.

Our goal is to be as much as possible objective in our research works and useful in our recommendations. Government’s mandate is that we must provide the Government with independent evaluation on particular issues. Truth reveals only in competition of ideas. There is no single correct decision. Decision-makers should see a wide spectrum of ideas, because any decision has its strengths and weaknesses.

How do you provide objectivity and independence of research works?

Participation of external independent experts provides objectivity and independence. We even don’t know what results we will have. We haven’t been told like that: do research to highlight only advantages. Our independent experts can tell the whole truth and it may be unpleasant. Sometimes, we have to defend our point of view, because there is an opposing side. But, ultimately, it is for the best, when you see the whole picture. Moreover,Kyrgyzstan is a free country; experts will not agree to work, if we will put pressure on them, make them write what we want.

Therefore, our task is to make reports and recommendations of NISS as much as possible useful and objective for the country.

Our goal is to remain one of the leading think tanks both in Kyrgyzstan and in the whole region.

In conclusion, please, tell us about future plans of NISS.

The list of NISS prospective research includes such key issues as:

in the economy: development of information and communication technologies (ICT) and Internet in the Kyrgyz Republic (together with ISOC), effective management of state property and state-owned companies (with State Property Management Fund), prevention of corruption (with Defense Council), energy, improving Kyrgyz Republic’s positions in international ratings, labor relationship - measures to withdraw from the shadow (with Ministry of Economy), study of the Silk Road Economic Belt concept.

In the social sphere: monitoring of socio-economic situation in the regions (interethnic relations, youth, together with the UNDP), migration (emigration, immigration and internal migration, together with the International Organization for Migration, International Labour Organization, ministries of the Kyrgyz Republic), public health and popularization of healthy lifestyle (reducing of demand for tobacco, alcohol and drugs), reforms in the education system.

In the political sphere: preventing violent extremism, water issues.