Kyrgyzstan’s government has suspended work at a brand new Chinese-built oil refinery, the prime minister has announced, after local protestors demanded the polluting plant clean up its act. A lack of coordination with the community, and suspicion about Chinese intentions, are likely to turn the dispute into another cautionary tale about doing business in the protest-prone Central Asian country.
Residents in the northern town of Kara-Balta have rallied several times in the past month, complaining of fetid smoke from the $300 million Junda facility, which opened on January 17. Initial work stopped on January 27 after a trial run, the company says, promising that future activity at the refinery will be cleaner.
The Junda refinery (sometimes written Zhongda) is designed to process crude oil imported by rail from nearby Kazakhstan. Bishkek has eagerly embraced the project, set to employ over 2,000 locals, making it one of impoverished Kyrgyzstan’s largest employers. No less significantly, it would help Kyrgyzstan break Russia’s fuel-supply monopoly by producing an estimated 600,000 tons of fuel annually, about half domestic need, thus lowering petrol prices at the pump.
But what’s happening in the once-industrial town two hours west of Bishkek seems to be following a familiar pattern.
Four days after the mysterious, violent deaths of 11 men near Kyrgyzstan’s border with China, key questions remain unanswered – like why none of the men, whom Kyrgyz officials suspect of decapitating a local hunter and plotting terrorism, could be taken alive. In a country where conspiracy theories flourish and distrust of authorities abounds, many Kyrgyz, including some lawmakers, seem to doubt official explanations.
"There's a lot that's not clear. There are no witnesses. We don't know whom to believe. Some people say one thing, others say something completely different,” Kyrgyz lawmaker Nurlan Torbekov, an Afghan war vet, was quoted as saying by Kloop.kg on January 27.
Kyrgyzstan’s State Border Service says the men, tentatively identified as ethnic Uighurs, crossed over from China’s Xinjiang Province and were carrying belongings that indicate they harbored “extremist” views – prayer rugs, a Koran, knives, masks, a compass, and more.
The group, described initially as “armed,” had one gun. They had stolen it from the Kyrgyz hunter, Alexander Barykin, whom they allegedly killed early on January 23 about 40 kilometers inside Kyrgyz territory after he killed two of them. Later that day, the remaining nine suspects in Barykin’s murder were “liquidated” by border troops, the only witnesses.
Officials in Kyrgyzstan say they have killed 11 unidentified attackers in a remote mountain valley near China, sparking a storm of speculation but providing very little concrete information about what happened or how.
The State Border Service said in a statement that the members of a “criminal gang” had been killed while putting up resistance on January 23 at an isolated frontier post, some 40 kilometers from the Chinese border, after they had killed a hunter and used his gun against border troops.
It’s unclear what the alleged attackers, nationality unknown, were doing running around in the dead of winter in a remote region where mountain valleys average above 3,500 meters (11,500 feet), but Kyrgyz media, officials and talking heads were happy to spend the day speculating, pontificating, and criticizing the bizarre situation.
Governor Emil Kaptagaev of Issyk-Kul Province, where the incident took place, started the guesswork off provocatively when he suggested the group could be Uighur militants from China. (No stranger to drama, Kaptagaev made headlines last autumn when he was kidnapped and doused with petrol by match-wielding constituents demanding the nationalization of a Canadian-run gold mine not far from Thursday’s shootout.)
Street crime, often the violent sort, is not unusual in Bishkek. Nor are accusations of police involvement. But complaints from the reticent Chinese Embassy are.
In a one-month period ending in late November, at least 20 Chinese citizens were robbed in Bishkek, reported The Global Times, a state-run English-language newspaper in Beijing, on December 17. One suffered a head injury. The Chinese Embassy has taken the unusual step of issuing an “emergency safety alert” warning its citizens to exercise caution and, in another statement, rebuking Kyrgyz authorities for failing to stop the attacks.
The surge in apparently targeted robberies follows the July murder of Chinese businessman Guan Joon Chan (name transliterated from the Russian), who was beaten to death shortly after reportedly arguing with local police over the protection money they demanded, Vechernii Bishkek reported at the time.
The Global Times estimates there are 80,000 Chinese citizens in Kyrgyzstan. Many work as traders in Bishkek’s Zhonghai market, part of the sprawling Dordoi complex.
Chinese businesspeople at Zhonghai told the paper that the number of actual robberies is likely much higher than is reported because victims are afraid to contact police. Some fear police are involved – a conclusion that will come as no surprise to anyone living in Bishkek, where police are known more as predators than crime fighters.
Turkey's choice of a Chinese air defense system continues to dominate the agenda between Turkey and its Western partners in NATO. Turkey's foreign minister, Ahmet Davotoglu, is in Washington this week and that issue is on the agenda. And the deal was also the hot topic at a NATO Industry Forum last week, organized by NATO and Turkey's Undersecretariat for Defense Industries, which your Bug Pit was able to attend.
If you haven't been following, the controversy began in September, when after a drawn-out competition, Turkey announced that it had chosen the Chinese HQ-9 air and missile defense system. The Chinese system was competing against ones from Russia, the U.S., and Europe, so the competition appeared to have -- rightly or wrongly -- a geopolitical component. So the pick of the Chinese system renewed fears that Turkey, under the leadership of Prime Minister Recep Tayyip Erdogan, was drifting away from the West toward the East. More specifically, NATO partners are concerned that the system won't be able to be securely integrated into the NATO air defense system in which Turkey already participates (though many in Turkey claim that is merely a pretext by Western companies and governments who resent losing business and influence to China).
The launch of commercial production at Kashagan, Kazakhstan’s supergiant Caspian Sea oilfield, has been delayed again and will not begin until 2014.
Christophe de Margerie, chief executive of France's Total, one of the consortium partners, made the unwelcome announcement that the storied project would miss its latest target of starting commercial production in 2013. He said Kashagan “will not restart before the end of the year” following the suspension of production in October to deal with a gas leak. “It's more than simply repairing pipes,” Reuters quoted him as saying this week.
The North Caspian Operating Company (NCOC) – which also includes Kazakhstan’s state energy firm KazMunayGaz; oil majors ExxonMobil, Shell, and Eni; China’s CNPC; and Japan’s INPEX – has not confirmed that production will not re-start this year, but Hans Wenck, NCOC’s external communications manager, told EurasiaNet.org that “inspections and investigations will take some weeks to conclude.”
“The Kashagan oil and gas production remains shut in until the inspections are completed and results of the expert studies are available, and restart of the facilities can be carried out safely,” he said in an emailed statement on November 12. “Until such investigations are completed it will be too early to discuss any possible remedial actions and time required to implement them.”
Reuters quoted an unidentified industry source on November 11 as saying that Kashagan exports would restart in March “in a best-case scenario.”
As criticism from NATO allies continues to pour in, Turkey appears to be reconsidering its decision to buy a Chinese air defense system. Last week, Prime Minister Recep Tayyip Erdogan, who made the final call to buy the Chinese system over American, European and Russian competitors, suggested there were some conditions under which Turkey would change its mind:
Despite criticism from its NATO allies, Turkey would only give up co-producing a long-range air and missile defense system with a Chinese firm currently under US sanctions if the company were to decide to pull out of the deal, leading Turkey to talk to other bidders, Prime Minister Recep Tayyip Erdoğan said...
"The Chinese system will be checked to see if it fits NATO standards,” Erdoğan said.
And on Tuesday, Reuters reported that Turkey has asked the American bidder, Raytheon, to not give up quite yet.
The sources familiar with the US proposal to supply a Raytheon-built Patriot missile defense system said Turkish officials had requested an extension of the pricing included in the bid while their talks continued with China.
"It's clear that they are trying to hedge their bets," said one of the sources.
U.S. Navy Adm. Samuel J. Locklear, commander of U.S. Pacific Command, returns a salute to Mongolian service members during Khaan Quest 2013 in Ulaanbaatar, Mongolia. ((U.S. Navy photo by Mass Communication Specialist 1st Class Danny Hayes)
Chinese hackers have been planting malware in documents associated with U.S.-Mongolia military exercises in an apparent attempt to interfere with Mongolia's ties to the West, a private American cybersecurity company claims.
According to a recent report by the company ThreatConnect, Chinese hackers created a decoy "weaponized Microsoft Word document" appearing to be an official U.S. Army announcement related to the annual Khaan Quest exercise that Mongolia hosts, and the U.S. supports.
This activity represents Chinese Computer Network Exploitation (CNE) activity against organizations that China perceives to be jeopardizing its interests in Mongolia. As evidenced in the weaponized Khaan Quest document described above, Chinese APT groups will likely continue targeting US military entities involved in cooperation activities with the Mongolian military. Also, western European and other governments that engage with Mongolia diplomatically will be considered CNE targets as well.
Another document, in Mongolian and discussing a joint military exercise with Vietnam, was also found with the same bit of code. ThreatConnect suggests some sort of connection between this operation and the famous Chinese People's Liberation Army hacking operation, Unit 61398. It's hard to tell how seriously to take this -- threat inflation is endemic in the cybersecurity world -- but it's an interesting little look into how Washington and Beijing might be looking at this.
Turkey's American and NATO allies have not responded well to the announcement that Turkey plans to buy an air defense system from China, bypassing American and European systems.
State Department spokeswoman Jen Psaki told reporters: "We, of course, have conveyed our serious concerns about the Turkish government’s contract discussions with a U.S. sanctioned company for a missile defense system that will not be interoperable with NATO systems or collective defense capabilities. Our discussions will continue." (The Chinese manufacturer of the winning system, China Precision Machinery Import and Export Corp., is under U.S. sanctions for doing business with Iran, but it seems unlikely that is Washington's real issue with the deal.) And the U.S. ambassador to Turkey added: "Turkey is a NATO ally. When we see the need for its defense we act as an ally and we are going to do that for as long as we are allies... We hope you will choose a NATO compatible system so that you will have the best air defense system in the world.”
And officials who spoke anonymously were significantly more negative. From Defense News:
“How could Turkey, protected by NATO assets, ignore the alliance’s concerns and opt for an air defense system to be built by a non-friendly country?” asked a NATO defense attaché in Ankara....
The Chinese HQ-9 air defense system, just chosen by Turkey. (photo: Jian Kang, Wikimedia Commons)
Turkey has chosen a Chinese air defense system over Russian, American, and European competitors, apparently prioritizing business concerns over the wishes of its allies. Reports Hurriyet Daily News:
Ankara has granted a long-awaited tender for long-range missile and air defense systems to Chinese contenders, dismissing bids from major NATO allies as the United States, France and Italy.
With the decision, announced today following a meeting of the Undersecretariat for Defense Industries' executive council, which is headed by Prime Minister Recep Tayyip Erdoğan, Ankara has approved the lowest offer despite worries about the Chinese system’s ultimate compatibility with NATO-owned early warning assets.
The Chinese offer of the HQ-9, at $3 billion, was significantly cheaper than the competing U.S. Patriot, Russian S-400, and French-Italian Eurosam Samp-T systems. And perhaps more importantly, China was willing to co-produce the HQ-9 together with Turkey, a key factor for Ankara, which places a high priority on building up its own defense industry.