Kazakhstan Ratifies Agreement to Modernize Four Resort Facilities on Issyk-Kul

Kazakh investors are set to modernize four resort facilities on Lake Issyk-Kul in Kyrgyzstan after the Senate ratified an intergovernmental agreement regulating property rights and project implementation, Senator Nuria Niyazova has said. On February 12, the upper house of Parliament approved the agreement between the governments of Kazakhstan and Kyrgyzstan on the settlement of Kazakhstan’s property rights to resort and recreational facilities in the Issyk-Kul region. The document had previously been endorsed by the Mazhilis. Under its terms, Kazakhstan undertakes to upgrade the facilities to the standards of three- and four-star hotels operating year-round by the end of 2029. Kyrgyzstan will lease land plots totaling 58.8 hectares to Kazakhstan for 49 years. The Kyrgyz side has guaranteed the inviolability of the facilities and committed not to initiate their seizure for state ownership. The largest project involves the reconstruction of the Kazakhstan sanatorium, overseen by the Presidential Administration of Kazakhstan. The facility is scheduled for commissioning in the fourth quarter of 2026. Plans include preserving the historic building known as Dacha No. 1 of Dinmukhamed Kunaev, who led the Kazakh SSR until 1986, as a house-museum. The Samal resort renovation is being carried out under a joint activity agreement between Satbayev University and a private investor. Initial data are being collected to prepare design and cost documentation, with construction scheduled to begin in the fourth quarter of 2026. Al-Farabi Kazakh National University is drafting technical specifications for the reconstruction of its sports and recreation camp. Once calculations are finalized, the project’s budget and projected payback period will be determined. According to the senator, alternative funding sources, including extrabudgetary funds, are being considered. The fourth facility, the Olymp Sports and Health Center, is being prepared by the Ministry of Tourism and Sports of Kazakhstan, which is developing design documentation and investment agreement parameters for the project. Following approval by both chambers of Parliament, the agreement will be submitted to President Kassym-Jomart Tokayev for signature. As previously reported by The Times of Central Asia, Kazakhstan and Kyrgyzstan have established a joint working group to explore a shorter road route from Almaty to Issyk-Kul, a project that could significantly reduce travel time between the two destinations.

Kyrgyzstan Returns Four Resorts to Uzbekistan with Additional Conditions Imposed on Kazakhstan

Shavkat Mirziyoyev, President of the Republic of Uzbekistan, has approved an agreement between the governments of Uzbekistan and Kyrgyzstan, to regulate the ownership and continued operation of four spa and recreation centers in the Issyk-Kul region. Kyrgyzstan's transfer of ownership of the four resorts to Uzbekistan determines the authorization for implementing property rights but as cited by one Uzbek publication “The recreational facilities aren’t given, they are returned!” In April 2016, the “Golden Sands of Central Asia” (formerly “Bosteri”), “Rohat-NBU” (formerly “Rakhat”), “Dilorom” (formerly “Enesay”), and the unfinished construction of “Buston", were transferred to the jurisdiction of Kyrgyzstan. Although located on the territory of Kyrgyzstan, the resorts previously belonged to JSC “Tashkent Mechanics Plant,” JSC “National Bank of Foreign Economic Activity,” JSC “Asakabank” and JSC “Uzsanoatkurilishbanki” of Uzbekistan. Back in 2016, the government of the Kyrgyz Republic, under Prime Minister Temir Sariyev, decided to seize recreational facilities from the Republic of Uzbekistan. This led to litigation in international arbitration and the facilities were immediately renamed. In September 2016, the Uzbek owners of resorts applied to the International Center for Settlement of Investment Disputes (ICSID). Uzbekistan considered that the 1992 agreement between the countries of the former Soviet Union, regulating the use of facilities left on the territory of other republics as a result of the collapse of the Union, was violated. According to this document, property belonging to one state but located on the territory of other CIS countries remains the property of its owners. Thus began a long series of arbitration discussions and efforts to settle the matter amicably, leading to the announcement of an agreement between the Kyrgyz government and the Cabinet of Ministers of Uzbekistan in December 2017, whereby the land plots of the resorts would remain the property of Kyrgyzstan whilst other properties would be returned to the ownership of the Uzbek side. After formalizing  property rights,  Uzbekistan would undertake to upgrade boarding houses to a level of three or four stars and ensure their operation throughout the year. The agreement, however, was not signed, and discussions continued. The dispute resolution review was completed in May 2023 in ICSID. Details of the deal remained confidential until Kyrgyzstan's president Sadyr Japarov, announced that the international court had decided that Kyrgyzstan should pay Uzbekistan more than $40 million. Following negotiations, the parties agreed to lease the facilities for investors from Uzbekistan for 49 years. The president then warned," We cannot invest in their renovation in the next 15-20 years because we have many other critical issues. We cannot talk about recreational facilities until we solve them." Whilst Article 2 of the agreement clearly states that the Kyrgyz side transfers the ownership of buildings and structures to the Uzbek side, the  recent agreement does not provide a fixed period for the rental of the recreational facilities. Kazakhstan and Kyrgyzstan have long-standing problems with boarding houses, including those in the former's “University”, “Olympus”, “Samal” and “Kazakhstan”sports and health resorts, in Issyk-Kul. At the end of the 1960s, the USSR declared Issyk-Kul...