Can Kyrgyzstan Be Turkey’s Backdoor to the EEU?

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In the closing months of 2015, Turkey-Russia relations tanked. Anger over the shooting down of a Russian jet over the Turkish-Syrian border led to harsh words and recriminations, which then led to sanctions on Turkish businesses in Russia. Meanwhile, Central Asia watched carefully and kept noticeably ambivalent about taking sides too strongly. Kyrgyz President Almazbek Atambayev called the shooting down “a huge mistake” and Kazakh President Nursultant Nazarbayev said that although the details were not know “the fact is that the Russian bomber didn’t attack Turkey.” But even these statements were light and delayed, regional leaders holding back from quickly picking sides.

The careful balancing has continued as it became clear relations between Russia and Turley wouldn’t quickly recover. But Kyrgyzstan might be looking to capitalize on the unfortunate fall-out by scooping up construction projects Turkish companies can no longer complete in Russia due to the sanctions and providing a backdoor into the EEU for Turkish producers.

Several Kyrgyz and Turkish entities signed a memorandum of understanding on the construction of an industrial zone in Kyrgyzstan at a Kyrgyz-Turkish business forum held in Ankara last week. According to a 24.kg report, among the forum’s guests were the Kyrgyz Minister of Economy, Arzybek Kozhoshev, the Kyrgyz Ambassador to Turkey, Ibragim Zhunusov, the Turkish Prime Minister, Ahmed Davotoglu, and the Turkish trade and customs minister, Bulent Tyufenkchi. In addition, Kabar reported that more than 150 businessmen from Kyrgyzstan, Russia, Kazakhstan attended along with members of the Turkish business community.

As reported by 24.kg, Kozhoshev said Kyrgyzstan was ready to cut taxes to entice Turkish businesses. A Turkish delegation is scheduled to visit Kyrgyzstan in the Spring to figure out the particulars of setting up the industrial zone mentioned in the MoU. “Meanwhile,” 24.kg writes, “the Ministry of Economy in cooperation with Business Association will develop a draft law on industrial zones.”

Kyrgyzstan’s vice prime minister Oleg Pankratov is happy about the agreement, per another 24.kg report. First, Kyrgyzstan can play host to the production of goods by Turkish companies no longer able to easily conduct business in Russia. In addition, opportunities in the construction sector in Russia have opened up for the same reason, meaning possible openings for Kyrgyz companies. The first point is the most interesting, as the minister’s comments seem to suggest Kyrgyzstan will help Turkish businesses circumvent both Russian sanctions and the trade barriers erected around the Eurasian Economic Union. Speaking about a Turkish investor already probing opportunities to open up production of fabrics in Kyrgyzstan in the near future, Pankratov said:

“This Turkish company has long been working in Uzbekistan, where the government provides free land to investors and some other preferential preferences. However, the investor decided to come to us, because now we are part of a large consumer market. Now, the Turkish investors will supply products produced in Kyrgyzstan in the EEU countries duty-free.”

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