Kyrgyzstan renounced a bilateral agreement with the United States signed in 1993, which provided the legal framework for US assistance in the country on Thursday, after a row over an award to a jailed activist.
The decision will come into effect on August 20 and will halt the operations of the US Agency for International Development (USAID) in the country. USAID will lose its privileged status as the agreement has given diplomatic immunity to aid workers and full exemption from all taxes and other dues in Kyrgyzstan.
The row between Kyrgyzstan and the US heightened after Washington awarded a US State Department human rights prize to Kyrgyz journalist and activist Azimjon Askarov, who is imprisoned for life on charges of inciting ethnic hatred in the Central Asian nation.
Kyrgyzstan's foreign ministry protested the decision, and Kyrgyz Prime Minister Temir Sariyev formally terminated the treaty by signing a government decree.
“After the resolution comes into effect, according to established procedure the Foreign Ministry of the republic must notify the government of the United States on denunciation of the agreement,” government sources told Russia's Tass news agency.
Washington said "it was disappointed" by the decision but will continue to send aid to Kyrgyzstan.
Kyrgyz Deputy Foreign Minister Emil Kaikiyev told Reuters that much of nearly $2 billion assistance "to support and strengthen Kyrgyzstan’s democratic transition" has been channeled through USAID.
"Accordingly, the renouncement of this treaty will directly affect USAID and other organizations working on other projects. We don't exclude that after the renouncement of this treaty the American side will wind up or reduce its aid," he said.
Askarov, an ethnic Uzbek, was convicted of of "organising mass disturbances" during the clashes between Uzbeks and Kyrgyz in the country's south in June 2010, in which more than 400 people were killed. He is accused of taking part in the killing of a policeman in the city of Osh.
The relations between Kyrgyzstan and the US got sour after Bishkek decided to close a US military air base in Manas, as the country has been forming closer ties with Russia.
Kyrgyzstan recently joined the Moscow-led Eurasian Economic Union, and Russia has a military air base near the Kyrgyz capital.
The decision is also the latest example of an ongoing crackdown on NGOs in world-wide . The Indian government decided to cancel the licenses of nearly 9,000 charity organisations that receive foreign founding last May.
Countries such as Uzbekistan, China, Russia, Egypt, Pakistan and Venezuela have also restrict the activities of foreign funded NGOs, accusing them of plotting an uprising among their societies and fuelling civil unrest.