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BISHKEK (TCA) — Amid the ongoing economic stagnation in the world, decreasing international trade and rising inflation, Kyrgyzstan is facing the pressing issue of its foreign debt repayment, with most of the debt owed to China. Bishkek will have to pay sooner or later; the question is what the cash-strapped nation will offer to Beijing — national assets or territory. Either way, it means a blow on the Central Asian country’s sovereignty.

Historically, China has been eager to credit the economies of countries with high corruption levels, unstable political systems, and non-transparent economies. As an example, Brunei, Namibia, Congo, and Papua New Guinea all have “hidden” debts to China exceeding 10 percent of their GDP. Kyrgyzstan is no exception. Today, the country’s foreign debt totals US $5 billion, including $4 billion owed to China. For comparison, in 2008 Kyrgyzstan’s debt to China was as small as $10 million.

Unlike international financial organizations, such as the IMF and World Bank, China gives loans on commercial conditions which are never disclosed. So, it is unknown how much does Kyrgyzstan really owe the “good neighbor” and what are the commitments with respect to debt repayment.

However, the existing debts do not prevent the government from taking new ones, which is driving Kyrgyzstan into a debt trap. Mostly financing infrastructure projects in Kyrgyzstan, China shows more interest in the water and energy sector, which is one of the country’s main economic and strategic resources. A potential project in this sector could be construction of a second phase of Bypass Chui Canal and Buruldai reservoir, with a total cost of some $140 million. The project looks rather questionable from the economic point of view, given the current economic crisis in the time of the Covid pandemic.

Such projects are not only a matter of money, debts and commitments, but also social wellbeing. There is a persistent anti-China sentiment in Kyrgyzstan, which in the past spilled over into several conflicts between local Kyrgyz population and Chinese mining companies developing mineral deposits in Kyrgyzstan. And such incidents may again occur in the future.

A good example of China’s “soft power” in action is neighboring Tajikistan, 40 percent of whose $3.2 billion foreign debt belongs to China. Beijing from time to time grants loan deferrals in exchange for Tajikistan's “grateful” behavior — after a 2011 border demarcation China received 1.1 thousand square kilometers of Tajik territory (0.77 percent of the country’s total area), Dushanbe supports China in various UN votes, and the fact that Chinese companies develop about 80 percent of Tajikistan’s gold deposits.

With the above in mind, Kyrgyzstan should think twice before taking more (Chinese) loans.

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