Kyrgyzstan: Is Re-Nationalisation the Answer?

One of the first decisions announced by the interim administration which came to power after mass protests in early April was the re-nationalisation of large concerns privatised under former president Kurmanbek Bakiev. So far it has named three – the Severelektro and Vostokelektro power companies and the telecoms provider Kyrgyztelekom.

IWPR radio editor Nurlan Abdaliev asked Serge Morrell, an investment expert at the Wharton School, a business and economics institute at the University of Pennsylvania, and Seyitbek Usmanov a researcher at the Central Asian Free Market Institute, their views on whether the plan makes economic sense.

Usmanov believe nationalisation would set a dangerous precedent. The three companies were privatised legally at the time, and undoing this could lead to many other former state companies coming under similar scrutiny.

Morrell said he understood the popular demand that had forced the new government’s hand on these three strategic assets, but agreed that prospective investors might be put off if they felt their ownership rights were liable to be questioned later on.

He welcomed another government move, to place a moratorium on sales of property lasting until until June, saying it should calm market fears driven by reports of a wave of corporate raiding in the wake of the unrest.

Usmanov disagreed, arguing that any kind of government interventionism would merely lead to transactions being conducted in the shadow economy, beyond the reach of state regulation.

The audio programme, in Russian, went out on national radio stations in Kyrgyzstan, as part of IWPR project work funded by the Norwegian Ministry of Foreign Affairs.