A nodding donkey in Kyrgyzstan’s Batken Province, near Uzbekistan’s Sokh enclave.
Azerbaijan’s state oil company, SOCAR, is negotiating with authorities in Kyrgyzstan to set up a refinery in the country. While the project may help the Kyrgyz economy, it remains unclear whether it will help wean Bishkek off Russian energy supplies or force Kyrgyzstan simply to swap its dependence on Russian refined fuel for a dependence on Russian crude oil.
A delegation from SOCAR visited Bishkek in early March. According to Kyrgyzstan’s Ministry of Energy, the group was in Kyrgyzstan to survey locations in Chui Province, and discuss investment, tax, and trade regulations. Negotiations also touched on the country’s shaky electricity supply and its modest oil and gas reserves. The visit follows a January meeting between Kyrgyz President Almazbek Atambayev and SOCAR President Rovnag Abdullayev in Bishkek.
Under the proposed deal, SOCAR would complete construction by the end of 2013, at a cost of $100 million. The facility would have an annual output of 2 million tons of refined products. At least 40 percent of this would exceed Kyrgyzstan’s domestic demand and be designated for foreign markets. Tajikistan would be an obvious destination, as it, like Kyrgyzstan, is dependent on Russia for refined oil products, but the Azeri-Press Agency (APA) has said that China is also a likely market.
On a recent, cool March morning in a village near Bishkek, 20 Austrian tourists boarded an aging helicopter for the 30-minute flight to 4,000-meter-high peaks. Over the course of a week, they each pay over $4,800 for 12 hours of flight time in the Kyrgyz Air Force Mi-8MTV, giving them access to some of the world’s best heli-skiing.
Officials in Kyrgyzstan appear to be of two minds about the country’s gambling industry.
Until a ban came into force on January 1, the sector was booming, relatively speaking. The injunction, drawn up under former Prime Minister Almazbek Atambayev (now president) and his deputy prime minister, Omurbek Babanov (now prime minister), was, they said until a few weeks ago, necessary to crack down on organized crime. Now the Atambayev-Babanov tandem seems to think allowing some gambling could burnish their pro-business credentials.
Speaking before reporters on January 30, Babanov demonstrated just how muddy his government’s policy is, first by lamenting government regulations:
“The gambling sector is sick enough,” he said. “Many times the government tried to impose strict rules to regulate the sector. All this led to the parliament’s cardinal decision to ban casinos.”
Then, by lamenting the undesired consequences of those regulations, which are difficult to enforce and have prompted street protests (ostensibly supporting casino workers put out of their jobs):
“Now, much has gone into the shadows ... Of course its wrong when the people working in the casinos were left without jobs.”
Then, by promising to resurrect the sector under a new, more regulated regime:
The prime minister said that the government would submit to parliament a proposal for the development of an isolated area near the village of Tamchy [on Lake Issyk-Kul] where gaming centers and casinos would be located.
Tajikistan has joined the list of Central Asian countries rumored to be planning to relocate its capital.
The construction of a new international airport in tiny Dangara, 100 kilometers southeast of Dushanbe, has invited speculation that President Emomali Rakhmon plans to relocate the seat of government there, RFE/RL reports.
That speculation began in earnest back in July, when Rakhmon’s advisor, semi-official policy weathervane, and then-director of the state-run Strategic Research Center, Sukhrob Sharipov said, “it is necessary to say goodbye to the Soviet past in all things, including the capital, Dushanbe.” Sharipov posited that Dushanbe is a “small town, not designed to handle the overloading it now experiences,” proposing three still smaller towns as possible replacements -- Dangara, Kulyab, and Penjikent. Journalists and analysts uniformly dismissed the latter two, particularly Penjikent, which is often cut off from the rest of the country in winter. But Dangara, interestingly, is Rakhmon’s hometown.
In recent years, the Tajik government has invested millions in Dangara’s infrastructure, improving the main west-east highway that runs through and linking it to the nearby railway that once bypassed it. Other cosmetic improvements have been conspicuous, particularly in comparison to neglected regions of the country further afield.
In an information-starved and arbitrarily governed part of the world, such speculation spreads easily.
As our sister blog The Bug Pit reported this week, speculation is mounting that a November 17 “terrorist attack” that knocked out a rail line connecting Uzbekistan with southern Tajikistan may not be all the Uzbeks say it was. One doesn’t have to look hard to find a motive for sabotage. Certainly, the episode seems to have limited archrival Tajikistan’s ability to supply NATO troops in neighboring Afghanistan.
For Uzbekistan, perhaps the most significant aspect of the rail line in question is its complete irrelevance to its own economy, and to its role as the hub of the Northern Distribution Network that is essential for supplying NATO troops. The damage occurred on a section of track after the NDN freight turns off to Afghanistan, in the desert before crossing into Tajikistan. Uzbekistan has no other use for this line and appears in no hurry to see it repaired.
On the southern bank of a tiny river lined with concertina wire, half a dozen empty freight trucks are idling, waiting to enter Kazakhstan. Ken-Bulun may look like a minor border crossing between Kazakhstan and Kyrgyzstan, but it is a doorway to a market of almost 165 million people – the new Moscow-led Customs Union of Russia, Belarus and Kazakhstan. And the truckers are growing impatient.
At the main border crossing heading from Kyrgyzstan to Kazakhstan, freight trucks line the road for hundreds of meters for a days-long wait. Cars, taxis and minibuses jostle for the remaining road. The modest bridge spanning the Chui River has been largely gridlocked throughout 2010.
Cross into Kazakhstan, and there are no queues. A crowd loiters around the gates, looking for passengers, family members, business partners. The whole scene is reminiscent more of a prison gate than an international border crossing.
Just twenty years ago, the Chui River was the trivial line between two brotherly republics of the Soviet Union. Now, a new Customs Union of Belarus-Kazakhstan and Russia (CU) intends to secure those countries from cheap transit goods, criminal activity, smuggling, and even anti-government unrest perceived, across this newly strengthened frontier, as emanating from Kyrgyzstan.
Of the 11 border crossings between Kyrgyzstan and Kazakhstan, six are currently closed, Kyrgyz customs agents say, and Kazakhstan has imposed tightened restrictions at two more.
Fifteen kilometers east at Ak-Tilek, a simple printed sign taped to a shuttered gate indicates that this key freight crossing is closed. In addition to locally produced goods, huge amounts of consumer products transiting Kyrgyzstan from China were once transited here, feeding local economies on both sides of the border.
“All that traffic is now diverted to Kordai and is completely backed up,” reports the lone Kyrgyz customs officer at Ak-Tilek. Relief probably will not come soon. “The Kazakhs say they are reconstructing their facilities, and they say they won’t open again for a long time. Probably a year.”
One commonly held misbelief is that the WTO and a customs union are mutually exclusive - actually there are several customs unions that function within the WTO (such as the EU). However, WTO rules do not clearly provide for customs unions between WTO members and non-members.
Kyrgyzstan's dilemma is simple. When the country agreed to join the WTO in 1998, it adopted a relatively open trade regime. This is common among small, import-reliant countries. Kyrgyzstan committed to an average tariff on imports of 5.1 percent.
In contrast, the Customs Union's tariff on imports will be significantly higher -- it is currently over 10.5 percent. For Kyrgyzstan to adopt the CU's tariff regime, Bishkek would effectively have to double the rates on imports from other WTO members.
(Bishkek is in a tough spot: Moscow recently slapped a 100 percent tariff increase on CU petroleum products exported to Kyrgyzstan. Petrol prices have risen sharply in recent weeks and some experts predict a pump price increase of up to 30 percent will trigger comparable inflation.)
The question of whether Russia will try to draw more of Central Asia into the recently christened Customs Union of Russia, Kazakhstan and Belarus (CU) was put to rest on May 21. At a meeting of the heads of the Eurasian Economic Community (EurAsEC) member states, Russian Prime Minister Vladimir Putin made clear his intentions to expand the CU further south:
“As far as I know, there is not a single member of EurAsEC which would not like to join the work of the Customs Union. We will work with you in this direction.”
EurAsEC consists of the CU members, plus Kyrgyzstan and Tajikistan. Armenia, Moldova and Ukraine are observers. Uzbekistan suspended its membership in 2008.
