Saturday 11 February 2012

Kyrgyzstan looks at its gold and sees Turkey

The hearsay about Kyrgyzstan wanting to nationalise its main gold mine, Kumtor, is not new. Last year, when current president Almazbek Atambayev was still prime-minister, residents of the Issyk-Kul province held a protest and eventually closed the road leading to the mine, responsible, on its own, for about 12% of the country’s GDP. Besides complaining that the mining operations were not leading to the development of the local economy, they pointed out at the environmental impact of the enterprise. Recent reports show what exactly the problem is. In a beautiful region, home to endangered species, the level of toxic chemicals in the water have reached levels way above normal. The locals are feeling the effects in their health. The fish are disappearing from the rivers.

An environmental liability or not, it is undeniable that Kyrgyzstan needs its gold, which represents a considerable part of its exports. For some, Kumtor is a good example in Kyrgyzstan: it produces a lot and uses more advanced techniques and technology for extraction than other mines in the country. Of course, this is due to investment from abroad: since 1992, Kumtor is operated by Centerra Gold, a Canadian company in which the Kyrgyz government has a one-third stake.

Kumtor considered a largely successful enterprise, but see what is happening now – coincidently, in the short period of two month since Atambayev took the Presidency: first, as we have seen, there are new reports on the environmental impact of the mine (echoing last year’s protests). Secondly, the country is again in turmoil, showing that the dream of stability that was a clear factor on the election of Atambayev was no more than a mirage. In the Batken province, in the south, the local governor was ousted after an ethnic conflict took place between Tajiks and Kyrgyz in December. Not far away from there, in the same region in which Uzbeks and Kyrgyz clashed in 2010, new graffiti with racist remarks against the Uzbeks has appeared. Hundreds of inmates in the country’s prisons have decided to sewn their months shut in protest against the appalling conditions in their cells. Finally, Kyrgyzstan was on the verge of a breakdown this month as it had not paid its gas debts with Uzbekistan and Kazakhstan, that in turn threatened to cut the supply (and let the Kyrgyz freeze to death). So far nothing happened, but certainly the threat is to be taking seriously. All this takes us to the same conclusion, not a new one: Kyrgyzstan is a bankrupt country, needs desperately investment from abroad to survive.

Back to the nationalisation talk now. In his first trip abroad, last month, Atambayev surprised a lot of people when he decided to visit not Russia – which he himself recognises as the most important partner of the country –, but Turkey. The Turks have in the past tried to have a bigger influence in Central Asia by parading its status of “most successful” Turkic country, its links to Nato and its close relations with the EU. The “big brother” of the newly independent republics of Central Asia, however, was so far unable to have a key geopolitical importance for their Turkic counterparts in the region. In his trip to Ankara, however, Atambayev spent a lot of time complimenting the Turks, calling them an example to be followed, and throwing not subtle criticism against other countries with which Kyrgyzstan has had a closer relationship. Clearly, the main target of the attacks was Russia, but the criticism could be interpreted as being aimed at other countries, such as… Canada. “One is trying to bring Kyrgyzstan to its knees in exchange for drawing up and collection of money… But this is not absolute independence. We depend on powerful countries technically and financially… Our natural resources were exported for a trifling sum. But we never become slaves”, Atambayev said. Incidentally, in the same visit, Atambayev let it show that is not happy at all with the arrangement in the Canadian controlled goldmine, saying the in the last ten years, while the mine produced US$ 10 billion worth of gold, the Kyrgyz authorities have only received 3% of this amount. The news about its awful environment impact plays nicely into a supposed plan to adopt changes regarding Kumtor.

The trip to Ankara ended with ambitious promises of increased Turkish investment in Kyrgyzstan and a bilateral trade worth US$ 1 billion by 2015 (very hard to achieve, since all of Kyrgyzstan’s foreign trade last year was US$ 4 billion). It is clear that Kyrgyzstan is now following the steps of Uzbekistan and following a multivetorial foreign agenda. What is not clear is how successful will this strategy be. I would say that, by showing signs that is about to change the rules of the game in Kumtor, the Kyrgyz government is not starting with the right foot. In the last ten years, there have been many changes in this field – the government has increased and decreased its participation in enterprises. Investors of course don’t like to put their money in places ruled by uncertainty. No one knows exactly what Atambayev will do – will he take back Kumtor and give it to the Turks? Will he nationalise the company and hope that the Turks and other countries might be partners? Is he actually hiding something, pretending to bark at Moscow while preparing the field for more influence from Russia? By criticising other powerful countries that have a presence in Kyrgyzstan, was he only trying to appease the domestic nationalists? Does he really expect that the multivetorial approach could become the solution for the country’s woes? If so, he is really naïve, and I don’t think he is. He will probably increase links with many countries and at the same time continue to maintain strong contacts with Russia, after all, his country needs all help it can find. But what exactly he will do with his gold is unclear. Maybe nothing – and Kumtor will go on killing people, and other mines will go on producing far less than they could, and the country will go on being very poor and, sadly, a perfect stage for more violence.

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