Russia’s Economic Statecraft:Case Study Of "Manas" NATO Military Air Base In Kyrgyzstan

Since Kyrgyzstan (Kyrgyz Republic) gained independence in 1991, it began the starting point in finding of its place in the structure of world politics. In this regard, the particular important was the task of diversifying foreign relations. The most suitable for young and geographically small country was multi-vector foreign policy. Multi-vector or non-aligned foreign policy of Kyrgyzstan in its destructive form was a cooperation with all interested centers of power without establishing a clear foreign policy strategy and, therefore, defend their national interests. Because of this KR’s foreign policy has undergone significant changes over the twenty-five years old period of its independence, not only under the influence of the evolution of its own interests, but also transformations in approaches for collaboration with external actors. On this basis, it seems appropriate to consider the foreign policy of Kyrgyzstan under the angle of the complex interdependence and the interdependence of its relations with external actors, which the most significant in my case-the U.S.A and Russian Federation. Therefore, according to my main argument Russia has used successfully its economic instruments on Kyrgyzstan’s decision to close American airbase "Manas".In the Introduction I briefly describe important historical events in the political life of Kyrgyzstan which have caused changes in the external vector political course of the country under domestic developments and events. I explain the significance of my research, methodology, literature review and theoretical framework of my paper, my research question and my main argument.Further in Chapter 2, I am analyzing my theoretical framework-Economic statecraft theory by David Baldwin. I give explanation to the nature of Economic Statecraft. And also I analyze the classic cases of failed economic statecraft and also the cases where states managed to succeed to achieve its political or economical goals by using economic statecraft. Political and economic processes interact in the modern world on several levels. At the global level, this interaction is manifested in the attempts of leading States to reshape the global monetary and economic system to suit their needs, also in the attempts of spreading of their socio-economic model in the economically dependent countries, to strengthen its influence in global economic institutions. At the country level we observe a wide use of economic instruments. According to Baldwin negative instruments are economic sanctions, embargo, boycott, tariff increase, tariff discrimination (unfavourable), withdrawal of "most-favored-nation-treatment ", blacklist, quotas (import or export), license denial (import or export), dumping, preclusive buying, freezing assets, controls on import export of the capital, aid suspension, expropriation, taxation, withholding dues to international organisation and the positive tools which-are tariff discrimination (favourable), granting "most-favored-nation" treatment, tariff reduction, direct purchase, subsides to imports or exports, granting licences,9imort or export), providing aid, investment guarantees, encouragement of private capital exports or imports, taxation (favourable).1 Such instruments are usedby states to ensure its own political interests which will be analyzed in this paper.States conduct foreign policy and protect national interests through a variety of tools. They can be divided into several groups:informational - propaganda, timely and properly filed information; "soft power" - the attractiveness of their socio-economic model, national culture; diplomatic - negotiations, agreements and alliances; power - the threat of violence, violence; economic instruments - the goods, trade, services and money.2In the Chapter 3 of my paper I am doing analysis of the Kyrgyz Foreign policy towards the western hegemony United States of America and regional power Russian Federation and how their competition over the influence in the CA region has shaped the foreign policy of Kyrgyzstan.The changing period of Kyrgyz FP applies after announcing War on Terror by USA after 9/11 attacks on US. Kyrgyzstan became geopolitically important because of its close geographical location to Afghanistan. So North Atlantic Treaty Coalition decided to open American military airbase. "Manas" Air Base and unofficially Ganci Air Base was a United States military installation at "Manas International Airport", near the capital of Kyrgyzstan, mainly operated by the U.S. Air Force. The base was opened in December 2001 to support U.S. military operations in the War on Terror in Afghanistan. It had hosted forces from several other International Security Assistance Force member states as well. The base was a transit point for US military personnel coming and going from Afghanistan.Presence of American military airbase so close on the region has made Russia nervous. Russia suggested opening Russian military airbase in Kyrgyzstan under SCTO agreement and Bishkek agreed. The airbase in Kant, a small town 20 km away from the Kyrgyz capital Bishkek, was established as a part of the rapid deployment force under the auspices-of the Collective Security Treaty Organization. So Russia started its own political strategy trying to balance American influence in the region and later to expel US out of its "zone of influence".The Kyrgyz government established ties with the United States, while maintaining its close relations with Russia. Such ties helped Kyrgyzstan balance Russia by avoiding heavy reliance on it and thus securing Kyrgyzstan’s sovereignty. It was also economically beneficial for Kyrgyzstan, because having good relations with the United States provided a chance for new investments in the Kyrgyz economy, and the airbase became an important source of revenue for the Kyrgyz government.However, Kyrgyzstan pursued policies that make it an unusual case study of a country caught in a web of security and economic relationships between Russia and America. Kyrgyzstan became a phenomenon known as a small country which had hosted two military airbases of two competing power blocks,20 km away from each other. Many scholars wondered how long Kyrgyzstan could maintain an indeterminate foreign policy, which played the world’s major actors against each other.After referendum in 2010, Kyrgyzstan became parliamentary Republic. There were held peaceful presidential election which brought to power the current President-Almazbek Atambaev. In the following Chapter 4 I describe the historical breakthrough of the Kyrgyz government in identifying its main external and regional partner-Russia, by Kyrgyz Parliament voting for the closing American Transit Center in 2014 and joining the Eurasian Customs Union. I refer it to the abandonment of non-aligned foreign policy which Kyrgyzstan had held for many years. So Why did Kyrgyzstan choose to abandon its non-aligned foreign policy approach in favor of close alignment with Russia, particularly by closing the American airbase "Manas"?The official reason for closing American airbase was security concerns of Kyrgyz government of being attacked from one of US opposing countries. But I argue that Russia successfully used its economic statecraft by economic incentives, levers and pressure in Kyrgyz government decision. Also my conducted interview showed the additional evidence support to my argument where Kyrgyz officials agreed with my argument saying that Kyrgyzstan under Russian pressure which was expressed economically and politically to close American airbase.The obvious Russian economic statecraft started during Bakiev’s governance when the first attempts of "Manas" airbase closure were taken. In 2009 Bakiev went to Russia for meeting with Russian president Dmitriy Medvedev. After the presidential talks on press conference Russian president announced the foreign aid package in amount of 300 mln dollars to Kyrgyzstan and future investment in the construction of Kambar-Ata hydro electrical station and Kyrgyz leader announced the decision on closure of American airbase. There is an obvious link between the aid and closure of airbase. But after Bakiev’s talks with American government and rent raise from 17mln to 60mln dollars the military airbase was renamed into Transit Center. Bakiev’s trick had angered Russia and it decided to take steps through economic sanctions, such as raised oil tariffs on exports to Kyrgyzstan and propaganda by a media attack denouncing the corrupt nature of his leadership. The Bakiev’s government was overthrown due to his unrealized domestic and external promises. The members of the interim government immediately turned to Moscow for protection and economic assistance. Consequently, in return for Moscow’s economic and political support, the new government promised toclose ’Manas" Transit center from the outset to take Kyrgyzstan into the Customs Union and. A new roadmap was finally approved in May 2014 after the Kyrgyz government had managed to introduce a financial assistance package to help the country adjust and ease the initial impact of entering the Customs Union. The package included a promised Russian transfer of $200 million in grants and Kazakhstan’s $100 million grant to help Kyrgyzstan implement the roadmap as well as an agreement to set up a joint Russian-Kyrgyz Development Fund with a capital of $1 billion. Thus, the Kyrgyz government has worked hard on securing as beneficial conditions as possible. At the same time its maneuverability is limited:if the government would backtrack altogether on the promise to join, Moscow would in all likelihood respond with a very heavy hand.I chose as a framework for my analysis the concept of Economic Statecraft as most favorable theory to explain foreign policy decision process of Kyrgyz government. It presents structural and scientific explanation for target-state’s behavior and foreign policy under the pressure of power state. The concept explains how Russia uses its positive economic tools such as foreign aid, loans, credits, debt forgiveness, trade warfare and also negative economic tools such economic sanctions, migrant restrictions, oil price raise to influence the foreign policy decision of Kyrgyz government.The independent variable of this case is Russian economic statecraft and dependent variable is Kyrgyzstan’s foreign policy decision. The outcome of this case shows the success of economic statecraft where in most of cases fails to succeed in political goals.Kyrgyzstan depends on Russia on energy issues, economic issues and security issues by which Russia perfectly manages to control the small country. The economic assistance in forms of aid, loans, credits and humanitarian aid from Russian side became active after the beginning of New Big Games over the dominance in Central Asia, especially in Kyrgyzstan after the West lost another military airbase in Uzbekistan. Russian economic statecraft expresses itself in firstly in writing off the Kyrgyzstani debt to Russia in the amount of 488,9 million dollars. Secondly in the support of the state budget of KR:2009-2015 grants as financial aid as well as loans were amounted to 645 million dollars. In addition the foundation of Russian-Kyrgyz development Fund in the form of international organization with a Charter capital in the amount of 500 million dollars with borrowed funds of 500 million dollars. Thirdly, the money transfers of labor migrants which represents 31.5% of Kyrgyzstan’s GDP. The data of Central Bank of Russia shows the amount of personal financial transfers in 2013-2,113 billion dollars, in 2014-2,062 billion dollars, in the first half of 2015-600 million dollars. This is one of the levers Russia wanted to use to pressure Kyrgyzstan to make up its mind and close "Manas" airbase in Bishkek and join Customs Union which provides good future trade alternatives both for Kyrgyz economy and better conditions for migrants.In order to gain information to write my thesis I conducted a research interview from Kyrgyzstan officials, Russian international experts and experts in Central Asia from Kazakhstan and Georgia. Also I used secondary data information such as official documents, agreements, public speeches of government officials, books, articles and state organizations economic statistics.