Foreign aid to institutional reforms and the role of technical expertise as a political resource. The case of business taxation reforms in Kyrgyzstan Completed in January 2021 Yulia Poskakukhina, MSc Political Science 2006, University of Amsterdam [email protected], https://www.linkedin.com/in/yuliaposkakukhina/ The author would like to thank everyone who contributed to and supported the research in Kyrgyzstan and the Netherlands – especially all of the respondents In dialogue with the ‘thinking and working politically’ (TWP) policy current in international development cooperation, the present study examines the leverage that foreign aid-funded technical expertise had as a resource in the legislative politics of business taxation reforms in Kyrgyzstan in 2010-2016. Specifically, it looks at how this leverage was informed by the public, decentralized and participatory dimensions of the country’s political system during that period. Thereby it explores how different national actors engaged with foreign aid-funded attempts to mobilize technical expertise for the purpose of reform advancement. The study reports that while the legislative process in Kyrgyzstan was generally associated with the primacy of informal transactions and private interests, the partakers in the policy contests treated public pressure backed by technical evidence as a significant means of influence. In particular, the country’s business leaders positioned themselves as citizen representatives who kept the government in check on its obligations to improve national wellbeing. They used the media and inter-stakeholder policy meetings to portray undesired reforms as detrimental to society, and did the same with government inaction on the reforms they favored. Thereby they sought to capitalize on the political risk that state officials and members of parliament attributed to such public criticism. As part of these attempts, business leaders drew on pro-reform technical evidence supplied with contributions from foreign aid programs. They also worked to counteract its application by the government and its foreign aid partners. Many of the policy discussion platforms where either happened were initiated or facilitated by foreign aid actors, sometimes with a concrete aspiration to influence a reform contest through the articulation of technical evidence. With these findings the study aims to contribute to the discussion about the space for foreign aid agencies to help advance positive institutional change by mobilizing technical knowhow through social stakeholder engagement. Foreword In early October 2020 parliamentary elections took place in Kyrgyzstan. Their results were annulled within two days, after protests broke out in the capital city Bishkek over alleged vote rigging.1 The rallies went on for almost a week. In the violence of these events the former MP Sadyr Japarov was released from prison by his supporters (he had been sentenced for organizing an attempt to kidnap a governor). Although initially challenged by rival groupings, Japarov soon became prime minister and acting president. Shortly after, he resigned from the second post in order to run in the presidential elections of January 2021. Meanwhile, with input from Japarov, the legislature postponed the rerun of parliamentary elections from December to June. It also approved for January a national referendum on a new constitution, which if adopted would 1 The Foreword is primarily based on articles by the online news outlets Eurasianet and Kloop. See bibliography, and e.g. https://eurasianet.org/kyrgyzstan-hundreds-rally-against-constitutional-tinkering. 1 reinstate a presidential system with enhanced presidential powers. This would overturn the constitution adopted by referendum in June 2010, whereby Kyrgyzstan became a mixed parliamentary-presidential system with a more pluralist and powerful legislature than before. Although in the past ten years this new form of government did not fundamentally change the country’s elite-centered politics, many Kyrgyzstanis have been critical of the recent plans for political recentralization. Activists and some politicians have publicly contested the procedural legality of Japarov’s ascent, and of the parliament’s constitutional drafting and elections postponement. With respect to the latter actions, so did international bodies like the Venice Commission. In November-December 2020 regular small-scale protests were held in Bishkek against the proposed new ‘khanstitution’, as it was dubbed by its opponents. Still, the presidential form of government was chosen by 81.50% of the voters in the constitutional referendum that took place on January 10th 2021, with a turnout of 39.88%. On the same day Japarov won the presidential elections with 79.23% of the vote and a 39.75 % turnout. The present study is set back in 2010-2016. It examines a time when a political decentralization had energized public lobbying by Kyrgyzstan’s business associations and their involvement in policymaking, also in the context of private sector governance reforms supported by foreign aid programs. Introduction There are various types of international development aid operations. For instance, some foreign aid programs focus on the practical side of socioeconomic development. They engage directly in providing healthcare and education, strengthening agricultural practices, improving public services, and etc. Other programs work at the community level to promote socioeconomic empowerment through advocacy and capacity building. Foreign aid programs of a further kind focus on institutional reforms. Such development aid is directed at revising laws, regulations, administrative procedures, and decision-making and working practices across the public sector and at its interface with the economy and society. The study that you are about to read probes into and explores the roles that operations of this third kind play in the politics of institutional reforms in recipient countries. It does so by examining a set of legislative reforms to business taxation that were advanced by foreign aid actors in Kyrgyzstan in 2010-2016. The analysis revolves around four case studies that address the following empirical research questions: 1. What kinds of technical work did foreign aid actors engage in to advance the reforms, and how? 2. What purposes was the technical work meant to serve in the efforts to advance the reforms through legislative politics, how, and why? 3. What can be said about the extent to which the technical work served the purposes envisioned? What do I mean by technical work and why do I focus on it? In this study ‘technical work’ stands for the various activities of research, analysis, content design and professional instruction on matters of government policy and administration: for example, the production of policy- oriented economic and legislative studies, the development of legislation, the production of 2 administrative software, the sharing of policy models, and the organizing of trainings on new administrative procedures. As I will discuss in chapter 1, the funding and operational support of such activities has been and remains central to foreign aid programs that work on institutional reforms. Despite this, a foreign aid policy movement known as ‘the thinking and working politically (TWP) community of practice’ has paid limited attention to the question of how the technical work funded and facilitated by international development agencies forms part of institutional reform politics in recipient countries.2 My research project is a response to this particular oversight.3 Since its emergence in the early 2000s, the ‘thinking and working politically’ movement has argued that institutional reform programs must undergo a change in mentality if they are to become effective at fostering development. Specifically, it has urged foreign aid organizations to replace a mindset that revolves around the funding of technical solutions to governance problems with a mindset that recognizes and approaches institutional change as politics. The TWP community sees technical work and the technical expertise behind it as indispensable components of what it takes to help and/or impel governments to promote economic and social wellbeing. However, it believes that foreign aid agencies must become much more politically-informed in supporting technical work, and that they should specialize in enabling institutional reform politics while limiting their direct technical involvement. ‘Thinking and working politically’ research has focused on documenting and analyzing foreign aid initiatives that have helped bring about meaningful institutional reforms by operating in the way promoted by the movement. Meanwhile, it has not purposefully examined whether and how the technical work supported by foreign aid agencies affected and was internalized by reform politics in recipient countries. Consequently, it has not formulated an explicit body of empirically-grounded findings and assumptions on this question. Neither has the TWP literature provided explicit references to other studies that address it. This highlights that the topic has also been overlooked by broader development aid and political science research. My view is that concrete empirical insight on the political role of foreign aid-funded technical work is necessary in order to effectively elaborate and interrogate the TWP hypotheses and advice on how development aid should reconfigure its approach to institutional reforms. Furthermore, the ways in