- The Washington Times - Tuesday, September 24, 2002

This week's hosting of Kyrgyz President Askar Akayev at the White House and at sister executive branch power centers presents an early test of President George Bush's National Security Strategy (NSS) announced last Friday.
The strategy pledges to bring "free markets and free trade to every corner of the world." It adds that, "Free trade and free markets have proven their ability to lift whole societies out of poverty so the United States will work with individual nations, entire regions, and the entire global trading community to build a world that trades in freedom and therefore grows in prosperity. The United States will deliver greater development assistance through the New Millennium Challenge Account to nations that govern justly, invest in their people, and encourage economic freedom."
President Akayev flagrantly flunks the economic dimension of Mr. Bush's NSS. The Krygyz President deserves ostracism, rather than embrace, until he substitutes Adam Smith's "Wealth of Nations" for Ferdinand Marcos' crony capitalism as his economic bible. The malodorous tale of KATEL Telecommunications Co., a plucky American business, speaks volumes. In 1992, KATEL was licensed by the Communications Ministry of the Kyrgyz Republic to offer cellular and long-distance international services to its Kyrgyz subscribers. KATEL had responded to a Kyrgyz government's plea to leapfrog the Republic from the Stone Age to the Cyberspace Age in telecommunications.
In 1994, KATEL inaugurated direct international satellite services as it had pledged, a basic building block of a modern economy. But KATEL was no ingenue about investing in fragile nations like the Kryghz Republic where the rules of the economic are as changeable as the weather. Thus, it procured insurance for its investment underwritten by the Overseas Private Investment Corp., a United States subsidized entity.
KATEL's flourishing enterprise transfixed President Akayev, his family, and cronies like gold mesmerized King Midas. Circumstantial evidence is overwhelming that the president himself acquiesced in the termination of KATEL's satellite service and its replacement by state-controlled Kyrghz Telecom, presumably to reap personal benefit. The latter would support the opulence and ostentation uniformly craved by petty potentates and their kin.
Thus, in 1997, Kyrghz Telecom initiated its new Earth-station, satellite-link operations while the Kyrghz Ministry of Communications summarily revoked KATEL's international telecommunications license. No uncontrived reasons were elaborated for the revocation. Indeed, virtually the entire Kyrghz government, sans President Akayev, demanded KATEL's reinstatement.
Prime Minister Amangeldy Muraliyev issued an edict directing the National Agency on Communications to restore KATEL's satellite link. The Kyrghz Legislative Assembly passed binding resolutions to the same effect. U.S. Ambassador Anne M. Sigmund protested the confiscation of KATEL's license in a June 6, 2000, letter to President Akayev's foreign policy adviser without result. More than two years later, nothing has changed.
As the most recent State Department Human Rights report highlights, President Akayev "dominates the [Kyrghz] government" on matters that count like Josef Stalin dominated V.M. Molotov. Sherlock Holmes-like shrewdness is thus no prerequisite to deducing that Mr. Akayev himself is blocking KATEL's reinstatement and protecting Kryghz Telecom's easily plundered monopoly profits. His self-enrichment motivation is equally self-evident. As a meticulously researched story in The Washington Post by Robert Kaiser exposed, President Akayev has bettered the instruction of Napoleon in providing cushy lives for his extended family circle.
But what enriches Mr. Akayev through corruption impoverishes the 4.75 million Kyrghz people. After KATEL's confiscation, foreign investors will avoid the Kyrghz Republic like the plague. And domestic savings will flee abroad searching for safer investment opportunities. Economic wretchedness will ensue.
The most convincing recognition of such inexorable downward spirals triggered by government corruption is the month-old $200 million insurance scheme offered by the Russian government to protect against the risk of business interference by inept or corrupt officials. The plan, formed in collaboration with the World Bank, is aimed at encouraging foreign loans to fledgling enterprises in Russia's timber and coal industries by removing the risk of a bureaucrat's thwarting commercial success. If the government fails to pay a valid claim for damages in 15 days, the World Bank will do so, and then seek indemnification from the Russian government. If indemnity is not forthcoming, then Russia will forfeit international borrowing privileges.
President Akayev is not following the Russian model. He prefers consigning Kyrghz citizens to bleak subsistence to underwrite a corrupted luxury for a squalid elite. He keenly relishes a government of men over a government of laws, and an economy subservient to his avaricious whims. Both are gross insults to Mr. Bush's NSS.
The Bush administration should insist on Mr. Akayev's reinstatement of KATEL's confiscated license and a copycat of the Russian-World Bank scheme for ensuring against a corrupt officialdom. Otherwise, all bilateral and multilateral economic assistance should terminate.
President Akayev may retaliate by threatening removal of a U.S. base in Kyrghzstan installed to fight international terrorism. But if we tolerate such blackmailing by Mr. Akayev, the disease will spread like wildfire throughout the globe. The economic component of Mr. Bush's NSS will be dead on arrival.

Bruce Fein is founding partner of Fein & Fein law firm in Washington.


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