The following article is the first of three examining the recent unrest in Kyrgyzstan and its implications.  Part 2 tomorrow will deal with the regional fallout from the “Tulip Revolution V2.0” and Part 3 will examine in detail Washington’s highest priority in Kyrgyzstan -  its ongoing access to the Manas Transit Center airbase.

 

The extraordinary events of last week in Kyrgyzstan, which saw the overthrow of President Kurmanbek Bakiyev’s administration by a popular uprising and its replacement by a provisional government have been portrayed by many in the "Beltway-istan" (Washington DC) as the latest tussle betwixt Russia and the U.S. in the ‘Great Game” for influence in the post-Soviet space.

 

The truth is considerably more complex, however, and like a set of Russian matruishka nesting dolls, the further one digs, the more the complex realities of the situation emerge. While Moscow and Washington’s rivalry for influence with the interim leader, 59-year-old former diplomat Rosa Otambaeyva’s administration is indeed paramount, there are other players watching the debacle, from local superpowers China and India to neighboring “Stans” Tajikistan, Kazakhstan and Uzbekistan.  Any final disposition of the problems emerging from the “Tulip Revolution - Part Two” will have to include consideration of these factors beyond the U.S.-Russian struggle for influence in the post-Soviet space.

 

NO APPARENT FUNDAMENTALIST INVOLVMENT IN DISTURBANCES

 

Perhaps the biggest surprise and source of relief to both regional onlookers and the U.S. and Russia in particular is that the demonstrations which erupted in Talas on 6 April and quickly spread to the capital, Bishkek, and other cities has been the absence of Islamic militant involvement in the disturbances despite the fact that Kyrgyzstan has suffered from militant actions for years. Locally-based fundamentalist groups include elements of the Islamic Movement of Uzbekistan (IMU), and the Hizb ut-Tahrir (Party of Liberation - HuT) movement, which seeks to establish a Central Asian Islamic caliphate, have had a long-term and growing presence there. However, unlike the 2004 "color revolutions" in Ukraine and Georgia, which were relatively nonviolent, the events last week in Kyrgyzstan were accompanied by a tragic loss of life. According to the provisional government’s security chief Keneshbek Dushebaev, more than 80 died in the unrest, while the number of wounded exceeded 400. At a 10 April ceremony burying the dead from the disturbances, Otunbayeva said that 7 April would be commemorated in the future as an official Day of Remembrance.

 

FINANCIAL CAUSES OF THE UNREST

 

If there is a surprise in last week’s events, perhaps it is that they were so long in coming. Nineteen years after the collapse of the USSR, 40 percent of the Kyrgyz population lives below the poverty line, with unemployment at a staggering 18 percent, the world’s 16th highest rating, along with a 10 percent inflation rate. The dire economic situation has forced many Kyrgyz to seek work outside the country, most notably in the Russian Federation; in 2007, 27 percent of its GDP, $322 million, was sent as remittances from Kyrgyz working abroad; In the fourth quarter of 2008 Kyrgyz banks reported remittances dropping almost by half, while in the third quarter of last year funds sent back from overseas by Kyrgyz émigrés had recovered slightly to $283 million. After the March 2005 Tulip Revolution, many Kyrgyz expected life to improve under Bakiyev, but soon he fell out with his allies as his regime drifted into cronyism, graft and authoritarianism, and many of today's opposition leaders were originally in his government.

 

Worsening the financial situation, the global recession saw Russian Prime Minister Vladimir Putin In December 2008 argue that Russia's migrant quota should be cut by up to 50 percent of the total of 3.9 million legally registered guest workers to protect Russian jobs.

 

RIGGED ELECTIONS AND NEPOTISM

 

In July 2009, an election that was harshly criticized by opposition figures and international monitors as undemocratic returned Bakiyev to power with a landslide 89 percent of the vote. Having won another five year term Bakiyev increasingly turned the country into his personal fiefdom, increasingly concentrating power in his hands. Last year Kyrgyzstan’s Foreign, Interior, Defense and National Security Service ministries were subordinated to the president and last November Otunbaeva, then a leader in the opposition Social Democrat Party and now leader of the provisional government observed, "Right now, in the (Kyrgyz governmental) White House there are five Bakiyevs working in the upper echelons of power, and that is not even mentioning the many relatives who have occupied every floor of the White House."

 

In a telling international rebuke to his increasingly autocratic style, on 3 April U.N. Secretary-General Ban Ki-moon said during a speech to the Kyrgyz Parliament, "For the United Nations, the protection of human rights is a bedrock principle if a country is to prosper. Quite frankly, ladies and gentlemen, recent events have been troubling, including the past few days. I repeat: all human rights must be protected, including free speech and freedom of the media."

 

ALL IN THE FAMILY

 

Cronyism and corruption also clouded the picture; Kyrgyzstan is now amongst the top 20 in the world for the latter. Bakiyev’s son Maksim, a part owner of the British Blackpool Football Club, in November last year was appointed to head Kyrgyzstan’s Central Agency for Development, Investment and Innovation, which gathered the country’s economic crown jewels under its umbrella, including recently becoming the main shareholder in the country’s Kyrgyzalten gold concern, whose Kumtor mine, The Kumtor gold mine, run by Canada's Centerra Gold, contributes 10 percent of GDP accounts for 40 percent of the country's industrial production and 10 percent of the nation’s GDP. Rumors swirled around Bishkek that Maksim was appointed to groom him for the 2014 presidential elections, as Bakiyev stated that intends to step down from office in 2014 commenting only that "he intends to hand over power to trustworthy hands."

 

Maksim was scheduled on 8 April in Washington to present “Kyrgyzstan: Creating an Innovation-Focused Economy” at the “Kyrgyz Opportunities Forum II: Creating an Innovation-Focused Economy” economic forum, co-hosted by the U.S. Department of Commerce and the Kyrgyz-North America Trade Council. The presenters promised, “How will you benefit by attending?” by promising, “Meet Kyrgyz/U.S. government officials,” “ Understand the market direction, investment climate and opportunities in Kyrgyzstan” and “Discuss the financing and legal issues with the officials from U.S. government financing agencies, aid organizations and advisory firms.” The proposed “Who should attend?” client list included “ Investors, including banks, private equity concerns, infrastructure developers; mining companies; energy companies (especially hydroelectric/renewable, power grid); construction companies; technical assistance contractors (US AID, EBRD, ADB, World Bank); and advisors (accounting/consulting and law firms).”

 

Needless to say, the event was suspended, and the U.S. Embassy in Kyrgyzstan and the State Department in Washington refused to comment on Maxim’s whereabouts even though on 9 April Deputy Secretary of State Philip J. Crowley said that State Department personnel still planned to meet Kyrgyz Foreign Minister Kadyrbek Sarbayev and Maksim.

U.S. officials likewise are declining to say if they will cooperate with Kyrgyzstan’s provisional government, if Otumbayeva’s administration seeks Maksim’s extradition.

 

 

According to a Voice of America 12 April report, Assistant Secretary of State for South and Central Asian Affairs Robert Blake, being sent to Bishkek, stated that Maskim has since left the country and that he had no contact with U.S. officials.

The next day Latvia’s rus.DELFI.lv website reported that Maksim Bakiyev is now in Latvia, where he co-owns several businesses. Maksim’s arrival was reported in the Latvian media to have been agreed with state authorities, including the Ministry of Foreign Affairs. Foreign Minister Maris Riekstins neither confirmed nor denied the report, saying only that the consular authorities of Latvia did not grant a visa to Bakiyev but that he can stay in Latvia, if his visa he was issued by another Schengen country. Bakiyev is a business partner of Latvian banker Valery Belokon, with whom he co-owns the "Maval aktivi" Ltd.. Additionally, Bakiyev is the sole owner of “Who is Who,” formerly owned by Belokon and is also deputy chairman of the board of "Kimmels Riga” joint stock company.

 

RISING PRICES FOR AN IMPOVERISHED PEOPLE

While in late 2009 Bakiyev sharply increased taxes for small and medium businesses, resentment against the Bakiyev regime began to simmer when on 1 January it imposed new tariffs on telecoms, electricity and hot water, effectively doubling prices on electricity and increasing heating costs by an eye-watering 500-1,000 percent. Otumbayeva remarked that the country's leading telecoms firm had been sold to an offshore company in the Canary Islands, belonging to a friend of Maksim, adding, “We had an absolutely scandalous situation where Kyrgyzstan had become a family-run regime.” The graft and price rises combined with the shuttering of Internet sites, the Stan TV internet portal and bans on protests and arrests of opposition leaders to bring the populace onto the streets. In retrospect, the main question is what took so long.

 

THE U.S. - BUSINESS AS USUAL – SAVE THE MANAS TRANSIT CENTER

 

In February U.S. special envoy Richard Holbrooke visited Kyrgyzstan, seeking assurances on Manas Transit Center. The following month, on 17 March United States Central Command head General David Petraeus met Bakiyev in Bishkek to discuss bilateral cooperation and the situation in Afghanistan. Always pushing the envelope for increased military privileges, the visit came the day after the Obama administration had confirmed the provision of $5.5 million to the Bakiyev regime for the construction of a counter-terrorism training center in southern Kyrgyzstan, which would provide the Pentagon with its second military outpost in the country. The project dovetailed nicely with Bakiyev’s anxieties about fundamentalism emanating from Afghanistan. The terrorist center would complement the U.S. Manas Transit Center airbase, 20 miles outside the capital, established in late 2001, which had proven, despite rising controversy, increasingly important to the Pentagon’s Operation Enduring Freedom in Afghanistan.

 

RUSSIA – FIRST TO ASSIST THE REVOLUTION

 

Russian Prime Minister Vladimir Putin spoke on the phone on April 8 with Roza Otunbaeva, becoming the first known foreign leader to call her once she claimed to be in charge and Kremlin spokesman Dmitrii Peskov stated that Russia stood ready to offer humanitarian aid to Kyrgyzstan. More prudently Russia dispatched two battalions of totaling paratroopers to its Kant air base outside Bishkek, ostensibly to assure the safety of Russian citizens stationed there.

 

Russia was the first country to recognize the new regime amid speculation that it continues to press for the closure of Manas Transit Center. Russia certainly shed no tears over Bakiyev’s fate, as last year he infuriated the Russian government by reneging on a quid pro quo pledge to close Manas despite having earlier received $2.15 billion in Russian loan pledges.

 

On 8 April Almazbek Atambayev, the provisional government’s acting minister for economic affairs, was dispatched to Moscow to negotiate a reduction in fuel tariffs and other economic aid. Russia has already moved to render fiscal assistance, According to the National Bank’s Acting Chairman Zair Chokoev, on 10 April the next tranche of Russia’s $300 million credit to Kyrgyzstan of the $2.15 billion loan was transferred to Kyrgyz National Bank accounts.

 

In perhaps the most telling sign of Russia’s new ascendancy and surely the element certain to unsettle Washington, Russian Federation Council defense and security committee head Viktor Ozerov said that Moscow might consider sending peacekeepers to Kyrgyzstan if asked, perhaps as part of an OSCE or UN mission. Because Kyrgyzstan along with Russia are also part of both the Shanghai Cooperation Organization (SCO) and the Collective Security Treaty Organization (CSTO), Russian peacekeepers could be dispatched there as part of either a SCO or CSTO mission as well.

 

U.S. – SLEEPWALKING WITH FINGERS CROSSED

 

In late 2001 the U.S. had established an air base at Manas international airport 20 miles from Bishkek to support its military operations in Afghanistan. Cozying up to the presidential administration Washington quickly allowed the administration of President Askar Akayev and its cronies to take over the lucrative refueling and provisioning rights for the bases, paying inflated prices for landing rights and fuel provided by companies under the presidential family’s control.

 

Akayev’s troubles with Washington began when a bilateral agreement between Russia and Kyrgyzstan signed on 22 September 2003 established a Russian military airbase at Kant near Bishkek.

 

In March 2005 Kyrgyzstan’s so-called Tulip Revolution, triggered by allegations of government meddling in parliamentary elections and given momentum by popular anger over endemic poverty, corruption and cronyism, succeeded in ousting Akayev, who had led the country since independence.

 

But the unpalatable truth is, even as Washington delivered homilies on human rights and democracy, the contracts for the US military base became a direct source of corruption, with first Akayev’s and then Bakiyev's families profiting, by owning the companies with exclusive rights to refuel NATO aircraft.

 

Washington’s initial response to the recent unrest was limited to general statements from the State Department. On 7 April as the unrest broke out U.S. Assistant Secretary of State for Public Affairs P.J. Crowley told journalists, “We have concerns about issues, you know, intimidation by the government, corruption within the government. We want to see Kyrgyzstan evolve, just as we do other countries in -- in the region. But, that said, there is a sitting government. We work closely with that government. We are allied with that government in terms of its support, you know, for international operations in -- in Afghanistan.” 

 

At the same time flights at Manas Transit Center were halted for 12 hours, but not before an eyewitnesses reported that Bakiyev’s Air Force Jet No. 1 took off from Manas Transit Center, an image few Kyrgyz are likely to forget anytime soon as rumors swept Bishkek that Bakiyev's family had been under the protection of the Americans at Manus after fleeing the capital.

 

Jala-Abad, in the Ferghana valley, to which Bakiyev has fled, is among Central Asia’s most volatile regions. Split between Uzbekistan, Kyrgyzstan and Tajikistan, it is home to different ethnicities and is seen as a HuT hotbed of Islamic extremists pursuing a single Islamic caliphate state. Bakyev, a southerner from the poorer part of the country, is playing upon divisions between the more prosperous northern regions, closer to Russia, and the predominantly rural southern regions.

 

On 10 April the US military in Kyrgyzstan, giving no explanation, indefinitely suspended all troop flights from the Manas airbase, stranding 1,300 U.S. troops there.  According to U.S. Central Command spokesman Maj John Redfield troop flights would resume once conditions in Kyrgyzstan allow, with the U.S. in the interim transporting all forces to Afghanistan via Kuwait. Flights were subsequently resumed on 12 April.

 

THE ZERO-SUM GAME

 

Kyrgyzstan is the only country in the world hosting both U.S. and Russian bases. While both sides vie for position with the new administration and the Western press in particular focuses on the Manas Transit Base and the proposed new anti-terrorist center, the Russian picture is also rather more complex than reported by the press.

 

In October 2003 during Akayev’s regime the Russian Federation established its airbase at Kant near Bishkek, ostensibly to provide immediate air support for CSTO ground units. The Kant airbase, less than one quarter the size of the Manas Transit Center, was Russia's first foreign military facility established since 1991, and less than 30 miles away from Manas.

 

Kant was not the whole story.

 

Dating from the Soviet era, the Soviet/Russian Navy operated an extensive facility at eastern Lake Issyk-Kul’s eastern end, where submarine and torpedo technology was evaluated. Among the projects tested there was the super-cavitating VA-111 Shkval torpedo, designed originally to sink U.S. carriers, with a speed in excess of 200 knots. In March 2008 the Kyrgyz press reported that 2,140 acres surrounding the Karabulan peninsula on Issyk-Kul would be leased for an indefinite period to the Russian Federation Navy, which is planning to establish new naval testing facilities as part of the 2007 bilateral Agreement on Friendship, Cooperation, Mutual Help, and Protection of Secret Materials, under 2hose terms the Kremlin would pay and annual lease rent of $4.5 million.

 

Bakiyev in early 2009 ignited a bidding war between Moscow and Washington for access to Kyrgyz space. In February Russia promised its $2.15 billion in loans; five months later, Bakiyev announced his new deal over Manas Transit Center with Washington, effectively earning money from both sides.

 

And now? On 13 April U.S. Defense Secretary Robert Gates said that the U.S. has other options to its air base in Kyrgyzstan, noting that Washington explored alternatives last year when it was negotiating a deal to use the base with the Kyrgyz government, but that those alternatives are "more expensive and more challenging."

 

It remains to be seen, given the ineptitude of Washington’s Kyrgyz policies, how “expensive” those options might be. For the moment, Moscow has trumped the U.S., purveyor of democratic values, by aiding the provisional government at a critical time when it overthrew an authoritarian regime allied to Washington, which despite its rhetoric remained consistently committed to muting its human rights agenda in return for quiescent ongoing access to its airbase.

The next few days will be interesting indeed.

 

To be continued.....Part 2 on Wednesday

 

by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude oil, Geopolitics, Gold and most other <a href="http://www.oilprice.com/articles-commodities.php" target="new">Commodities</a>. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

 

April 14, 2010