Kyrgyzstan's massive loss at an arbitration court this month has encouraged speculation that the country's only significant foreign asset – its stake in a Canadian gold mining company – is up for grabs.
On July 2, a tribunal in Moscow awarded Toronto-listed Stans Energy Corp $118.2 million in damages in a dispute over the Kutessay-II heavy rare earth elements mine in Kyrgyzstan’s Talas Province. Stans acquired a 20-year license to the mine in 2009, which the Kyrgyz parliament recommended the government annul in 2012. (Stans has alleged that powerful Chinese interests in Kyrgyzstan bribed parliamentarians to revoke the license in order to help Beijing maintain control over the lucrative rare earths market.)
Canada’s National Post reports that Stans has few options because Kyrgyzstan, one of the poorest countries in Asia, does not have that kind of cash lying about. So Stans could seek to seize Kyrgyzstan’s shares in Toronto-listed Centerra Gold, which, in turn, owns Kyrgyzstan’s largest industrial asset, the Kumtor Gold Mine. From the National Post’s financial pages:
It is highly unlikely that Kyrgyzstan will respect the ruling and pay out any cash. That leaves Stans the option of securing verdicts against one or more of the state’s foreign assets. And a logical one to go after would be Kyrgyzstan’s 32.7% stake in Centerra, currently worth almost $500 million.
An exchange of fire between troops on a disputed section of the Kyrgyzstan-Tajikistan border reportedly left at least one dead and several injured on July 10. Tensions have risen sharply again in this volatile part of the Fergana Valley after negotiations over a controversial road construction project fell apart earlier this week.
According to the Kyrgyz Border Service, about 30 Tajik citizens were trying to build a water pipeline from Kyrgyz territory to the Vorukh exclave, a parcel of Tajik territory surrounded entirely by Kyrgyzstan. Kyrgyz border guards demanded they stop, the Tajiks threw stones and eventually troops from the two sides exchanged fire.
According to the Tajik-language service of Radio Liberty, citing a local doctor in Vorukh, one Tajik national (apparently a civilian) died and five were injured in the exchange of fire. Dushanbe’s Asia-Plus news agency reports seven wounded. Tajikistan's Foreign Ministry says the Kyrgyz border guards picked a fight, shot without warning, and that the Tajik border guards did not fire a single shot.
Later in the day, the Kyrgyz Border Service said Tajik border guards had opened fire on another Kyrgyz checkpoint, this time with mortars and grenades.
Tajik Foreign Minister Sirodjidin Aslov faces an awkward audience with his British counterpart, William Hague, in London today. Campaigners have pressed Hague to demand Tajikistan release a scholar working for a British university amid a sharp rise in anti-British sentiment in the Central Asian country.
It has been over two weeks since Tajikistan’s secret police, the GKNB, detained graduate student Alexander Sodiqov while he was conducting fieldwork on conflict resolution for Exeter University. Sodiqov reportedly faces up to 20 years in jail on treason charges, charges his colleagues call farcical. They and a number of MPs have pressed Hague to link Sodiqov’s freedom to any promises of British support for Tajikistan’s high-profile energy projects, such as the Rogun dam and the CASA-1000 electricity export line to South Asia.
“We hope that there will be a clear statement that British support for Tajikistan – including Rogun and CASA – is conditional on maintaining basic human rights and, specifically, releasing Alex,” said Nick Megoran, a lecturer at Newcastle University who is working with Sodiqov on the British-funded project.
Officials have said little about what they plan to do with Sodiqov. Amnesty International has labeled him a “prisoner of conscience.”
Tajik President Emomali Rakhmon has staked his legacy on the Rogun dam. From the National Museum of Tajikistan.
Two new reports should interest anyone following progress building the world’s tallest dam—Tajikistan’s 3,600-MW dream, Rogun.
The World Bank has released drafts of its long-awaited Rogun feasibility studies. They appear to give Tajikistan the green light to build Rogun, saying the dam is the best way to end the country’s crippling energy shortages. However, the economic model used to make the recommendation seems to assume a set of unlikely conditions, from financial reforms and improvements in Tajikistan’s insolvent electricity industry to a major breakthrough in relations with a prickly neighbor.
Meanwhile, in a second report, Human Rights Watch says the resettlement of 42,000 people whose homes will be destroyed or flooded by Rogun is not going as smoothly as the government has promised.
The World Bank studies look at technical, economic, environmental and social considerations for three potential heights. Overall, the Bank found the tallest Rogun option – 335 meters, the only one Tajik officials talk about – the most economical: “building a dam at the Rogun site is a lower cost solution to meeting Tajikistan’s energy needs than any of the alternatives.”
Early this year, Tajikistan’s largest industrial enterprise sent home about a fifth of its workforce and cut wages by 30 percent for the rest. According to its own figures, the state-owned aluminum plant, Talco, lost over $40 million last year and hasn’t turned a profit since 2010.
The Soviet Union built Nurek, the tallest hydropower dam in the world, and Talco, the largest factory in what is now Tajikistan, as part of a single system in the 1970s. Aluminum smelting requires vast amounts of power. The dam and the plant were to help industrialize the distant, subsidy-dependent Soviet republic.
Gazprom was supposed to end Kyrgyzstan’s gas shortages and contract disputes with its neighbors. Instead, since the Russian energy giant took control of Kyrgyzstan’s bankrupt gas company almost two months ago, the country has faced one of its worst gas crises in memory.
The immediate cause of the shortage is Uzbekistan. The Uzbek state gas supplier, Uztransgaz, closed the taps on April 14, leaving an estimated 60,000 households in southern Kyrgyzstan without gas. Kyrgyz leaders are now proposing solutions that are likely to get Uzbekistan’s attention, but could prove risky.
The problem appears to have started on a technicality: Shortly before Kyrgyzgaz handed control of its debt-ridden gas network to Gazprom, its supply contract with Uzbekistan ran out. Uztransgaz agreed to add two more weeks, to April 15, but who were they supposed to negotiate with? The now-defunct Kyrgyzgaz? Gazprom? Gazprom’s new local subsidiary Kyrgyzgazprom?
That question lingers, but after almost two months it sounds like the Uzbeks are not keen to talk.
Deputy Prime Minister Valery Dil says he has tried multiple times to reach his Uzbek counterparts, yet they ignore him. Prime Minister Djoomart Otorbaev has also complained he can't get anyone in Tashkent to take his calls.
Tajikistan, the poorest country to emerge from the Soviet Union, has one economic asset of note – Talco, an aluminum smelter that, in a good year, pulls in hundreds of millions of dollars. For years, the state-owned company has been notoriously non-transparent.
Kyrgyzstan’s largest industrial enterprise, the Canadian-operated Kumtor gold mine, says it will stop production next week if the Kyrgyz government does not approve the necessary work permits. The announcement, which sent the company’s stock plummeting to its lowest point this year, comes less than a month after a rancorous board meeting where Kyrgyz representatives complained their Canadian partners ignored their decisive vote on the company’s management structure.
Toronto-listed Centerra Gold, which is one-third owned by Kyrgyzaltyn, the Kyrgyz government’s state-owned gold company, says its has worked since late 2013 to secure the necessary mining and environmental permits and approval of its 2014 action plan.
“Unfortunately, this year, despite repeated submissions and discussions with senior officials, such approvals and permits have not been provided. The continuing absence of such approval and permits creates significant uncertainty and risks for Centerra and its employees,” the company said in a June 2 statement.
Without the permits, Kumtor will begin stopping operations on Friday, June 13. Slowing down or temporarily stopping work at Kumtor negatively impacts revenues for longer than any stoppage, because work can only be gradually resumed at the high-altitude, high-tech mine in Kyrgyzstan’s Tien Shan mountains.
The US government is apparently not happy that Kyrgyzstan is due to release an alleged criminal kingpin next month after he has served only a fraction of his sentence.
In a country where crime bosses and politicians enjoy cozy relations, Kamchi Kolbayev – whom President Obama identified as a “significant foreign narcotics trafficker” in June 2011 – has become synonymous with sleaze in the judiciary.
Kolbayev was jailed last year for extortion. But at some point his 5 1/2-year sentence was cut to three years “without explanation,” RFE/RL points out. Now, because he served part of his time in a pre-trial detention facility, where one day is the equivalent of two against a sentence, he’s almost free.
The US State Department seems to think Kyrgyzstan’s underfunded, mafia-ridden prisons, where criminals often call the shots, has done little to stop Kolbayev’s activities. In a May 29 statement, State offered a $1 million reward for “information leading to the disruption of the financial mechanisms of the criminal network of Kamchybek Kolbayev.”