The external debt of Kyrgyzstan continues to grow. What are the risks? recently published an extensive review that examines the trend of the country’s external borrowing over time. The main question posed by the publication is: “Does the continued growth of external borrowing (and the increasing payments associated with it) mean a real loss of independence?”

Formally, without considering the entire history of international borrowing, the growth of debt could contribute to increased anxiety. But even nominally, Kyrgyzstan diversifies its borrowing sources quite well, which makes it unlikely that the country’s foreign policy will be swayed in one direction only using financial instruments. Considering the situation as a whole, one can conclude that loans themselves do not subject countries to dependency. More often than not, the opposite is true – the release from loans created an illusion of “realization of independent policy” among governments, which led the corresponding society into a vicious circle of destructive military adventures.

The problem cannot be solved at the level at which it was created


Historical-social analysis

If we look at the logic of the movement of societies over time more broadly, it is easy to notice what distinguishes countries in which debt growth does not have a destructive effect from those that it drags to the bottom. In “successful debt” countries, there is an independent, very powerful, and socially significant layer of commercial and financial leaders. Interestingly, and in its own way harmonious, the culture of borrowing as such originated around the typical motivations of the top tier of the society’s commercial layer, even in very remote times.”

So, should we have more oligarchs then? Yes, of course, there should be a mathematically significant number of financial bigwigs for the principle to work in relation to your society in essence:

If you owe the bank $100, it’s your problem. If you owe the bank $100 million, it’s the bank’s problem.

Jean-Paul Getty

This principle includes a kind of “saving cooperation” when it comes to the survival of the financial world as a whole – when the flooding of your financial system is guaranteed to erase the level of profitability of all major financial groups, it will be easier for them to recognize the normality of another overcrediting.

It is important that the profanation of the word “oligarch” does not overshadow the correct assessments. What we have seen for years on Rublevka – when all the “super-money bags” are concentrated in one tightly controlled geographic location by the security forces. There, twice a day, the ritual of “herding them all into the ditch with the flashing lights of the passing motorcade of the national leader” takes place, which immediately gave thinking people an understanding that we are talking about “overprivileged” nobles, not magnates. And that such a society can be turned into totalitarianism within a day as part of a “special operation”.

If a society that begins to accumulate debt is primarily led by bureaucrats, it will create stagnation with impoverishment and lagging behind of the population. The latter will create the most risks, because the backward footmen and bureaucratic secretaries will produce a new form of leadership that will be able to operate quite second-rate solutions and craftily explain to the surrounding people the expediency of such solutions.

However, when the balance of power shifted clearly towards industrialists in Germany, the Ruhr companies repeatedly “produced war” because the foundry equipment should not stand idle, “and what else should we cast from it and who will pay for it.”

Applying the understanding of development principles to Kyrgyzstan, one can notice that debts are not so risky only in the scenario where the financial figures, which can be produced by the Mossovet quarter of Bishkek, are proportional to the scale of their personalities, ambitions, and generosity to the emerging volume of debts.

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