Both Kyrgyzstan and Turkmenistan were part of the former Soviet Union and were integrated into its political, economic and governance systems. As Union republics, they remained isolated from the outside world, with little direct interaction with external actors. Following the collapse of the Soviet Union in 1991, both Kyrgyzstan and Turkmenistan established relations with a number of bilateral donors and multilateral development agencies. Despite their many similarities (e.g., social, cultural, religious, linguistic, geographic) and a shared history, the two countries’ post-Soviet development trajectories diverged dramatically. While Kyrgyzstan quickly launched transition reforms, liberalizing its economy and polity with support from external donors, Turkmenistan adopted a more gradual approach to political and economic reform and managed to minimize the influence of external actors in domestic affairs. This thesis analyzes the donor-recipient interaction in Kyrgyzstan and Turkmenistan across three sectors: governance, rural development, and environment. The analysis focuses on the management of aid through an anthropological, political economy-directed inquiry of relations between foreign donors and aid recipients at the micro level (daily interactions in managing aid). Collective action theory, evolutionary theory and adaptive behavior approaches are utilized to analyze the interaction on micro-level. However, the analysis is also situated in a broader, macro-level context of development and security priorities of the two states, for which the realist branch of the international relations theories is applied. Methodologically, the study is based on the triangulation of findings from various sources, including the content analysis of primary and secondary sources as well as the analysis of over 60 semi-structured interviews involving government and donor officials from the two countries. The thesis does not attempt to analyze whether development aid was effective. Instead, using similar analyses of aid interactions (Mosse, 2005; Swedlund, 2017), this thesis aims to investigate how aid interactions ‘happen’ (Wedel, 1998). While I agree that the sustainability of development aid is hampered by the inability of both donors and recipients to ‘make credible commitments’ (Swedlund, 2017), in this thesis I argue that aid interactions are also influenced by other factors, namely the political sensitivity of the sectors to which the aid is given (governance, rural development, environment), regime characteristics, availability or absence of natural resource-based revenues, and geopolitics. These factors, taken together, affect the aid bargaining process in important ways. The thesis makes a three-fold contribution to the existing knowledge on aid relations. First, it expands the knowledge on the agency of recipient governments by putting them at the core of the analysis. Second, it contributes to the very limited number of cross-sectoral and cross-country comparative studies on both aid management and on public policy making in general and in Central Asia in particular. Thirdly, it provides a detailed account of how development aid has been managed in Turkmenistan, a country on which no serious academic literature related to aid management has been produced to date.