In this issue:

* 4. Russia, Uzbekistan working on closer economic ties

1. POINT OF VIEW: Easter Revolution: A vicious circle started with the Tulip Revolution (Kyrgyzstan, April 13, 2010-issue 613) By Giorgio Fiacconi TCA publisher BISHKEK (TCA) — The Easter Revolution, as in our newspaper we have been calling the recent unrest in Kyrgyzstan, was avoidable looking to the past as well as the present.

The causes stem from an atavist attitude (placing personal and/or clan interests above national interests) and by justifying actions regardless of the means implemented. Sort of a Machiavellian paradigm which forgets the rule of law and respect for other people’s rights and opinions, going straight for the objective while ignoring the fact that many people have contrary opinions. The Kyrgyz are well known for being very peaceful and patient people, their attitude toward dialogue and negotiation is fundamental to their way of life. Today, the Kyrgyz have the culture and spirit of their forefathers in their DNA and there comes a moment when they refuse to allow the words to continue, rather demanding action. Whenever something happens, we always ask why. If the event has tragic consequences, we ask what went wrong and if they were possible to avoid. Often, we don’t learn lessons from the past which is why bad things keep happening. The protests of today are simply a continuation of the events that took place on March 24, 2005. We can say that the Tulip Revolution of 2005 was an incomplete revolution. At that time, the opposition was against former President Akayev that was the only common denominator. Having forced the President to flee the country and after targeting Akayev’s property, a coalition was formed between Bakiyev and Prime Minister Kulov. The former associates (many are the same who protested today) of the protest against Akayev’s 15-year rule felt they were deceived by Bakiyev and want to put things straight. They got only promises and when a new Parliament was elected, it was clear that Bakiyev was not prepared to share. At this stage, a new constitution appeared and after having manipulated the same several times, an early re-election of Bakiyev took place. It was practically the final act when the so called Presidential Institute was created in October 2009. With that announcement, the traditional concept of a President, Parliament and Government all exercising their duties within the limits of their competence were completely transformed and all powers practically transferred to the president or his appointees. People were told that the changes were for good, that to overcome the financial crisis, the shortage of electricity, and economic stagnation, the country needed to implement reforms. With the new structure were born also the KR Development Fund and the Central Agency for Development, Investment and Innovation. Both structures fully owned by the State and both under complete control of Bakiyev through his son Maxim. Overnight, the young Maxim became the mastermind behind future development, financial control, and foreign policy with an aggressive strategy not known before to the nation. The new strategy was seen by the people not as a genuine move but as an intention to put everything under family control. Maybe with some exaggeration, everything that was developing was seen as Maxim’s business — banks, new buildings, factories, restaurants, and night clubs. All this was done with the clear scope to monopolize Kyrgyz business and amass personal wealth forgetting about promises and the well being of the populace. Intentions are words, whereas facts are deeds that need to be performed and it takes time and experience to accomplish certain goals that need not just vision, but credibility and implementation at all levels. Everything happened very quickly, and the “expertise” which Bakiyev had selected for high level posts did not appeal to investors, did not create new jobs, or ease the chronic unemployment situation. In such conditions, the only real money was that obtained from the Russians and the Americans in Bakiyev’s geopolitical play. Then came large increases in utility rates that were really unbearable for some families, leading to mounting protests. People realized that many promises of the Tulip Revolution were not fulfilled, and that overall the population was going through a much more difficult test. The last drop appears to have been the complaints by Russia regarding the $300 million loan which was not used on Kambarata as it was meant to, but rather for lending. It was at this stage that the Russians orchestrated a large media campaign against Kyrgyzstan. In the last two weeks, there was not a single day when the Russian press did not accuse Kyrgyzstan of playing dirty tricks and Bakiyev’s government had to explain and apologize, but relations had become tense. In the meantime, the money received from Russia moved in a carousel of bank transfers from the Ministry of Finance to the National Bank of Kyrgyzstan, then to the Development Fund and finally to a commercial bank. Of course, each transfer came with an interest charge. After the MGN case came to light, the money apparently was returned to NBKR and if it is still there, at least that case can be considered closed. Having upset the Russians, Maxim Bakiyev started searching for new sponsors and having already exploited the Chinese and Russians, the only alternative were the Americans. A meeting was set in Washington for April 8th, but with the Easter Revolution and its toll in human lives, the Americans wisely cancelled the meeting. Although he is in hiding, Kurmanbek Bakiyev still is the elected President, but a new provisional government has been formed at the people’s request, and for the sake of Kyrgyz people, a dialogue between the parties must commence and an end be placed to this unacceptable situation. With the Easter Revolution, the power of the Kyrgyz people has come full circle, having started in 2005 with the Tulip Revolution. We can only hope that this is the last step in a series of tragic events where we have not yet seen the end.

2. Kyrgyz president ousted (Kyrgyzstan, April 13, 2010-issue 611) Opposition form interim government, try to stabilize situation

BISHKEK (TCA) — The five-year-old government of Kyrgyz President Kurmanbek Bakiyev has been ousted by opposition forces following two days of clashes between anti-government protesters and police on April 6 and 7.

The unrest followed weeks of tension between the opposition and the government led by Bakiyev, who opponents said had cracked down on independent media and fostered corruption. The riots erupted in the northwestern city of Talas on April 6 when thousands took to the streets to protest corruption, authoritarianism and energy tariffs hikes. Protesters seized the Talas provincial administration building and appointed their own governor. On April 7, riots broke out in the capital, Bishkek, when the authorities tried to prevent opposition-organized meetings (kurultais) and detained key opposition leaders, who were released later that day. Crowds of opposition supporters marched through the main city streets toward the Government House (the residence of the President and Government) and clashed with riot police defending it. Police used tear gas and firearms to disperse the crowd storming the Government House. By the end of the day, opposition supporters seized control of national security headquarters, the state television, and finally the Government House and other government buildings. President Bakiyev fled Bishkek and Prime Minister Daniyar Usenov was forced to resign. Clashes in Bishkek and other towns left at least 81 dead and more than 1,600 injured. Later on April 7 the opposition created an interim government for six months, until a new constitution is drafted, and dissolved parliament. Roza Otunbaeva, a former foreign minister and member of parliament, has become head of the interim government. Her four deputies are Almazbek Atambayev (in charge of economy), Temir Sariev (finance), Omurbek Tekebayev (constitutional reform), and Azimbek Beknazarov (law enforcement agencies). On the same day opposition supporters released Ismail Isakov, a former defense minister jailed on what opposition said were politically motivated charges of abuse of power. Isakov was named by Otunbaeva as interim defense minister. Otunbaeva said she would coordinate an interim administration for at least six months until a new constitution is drafted that would pave the way for "fair" presidential and parliamentary elections. Between April 7 and 8 Bishkek survived a tense night as crowds looted many stores and shops in some parts of the city. Looters ransacked and set ablaze a house belonging to Bakiyev’s family. The next day militia formed by youth activists and owners of shops stopped looting. They were supported by police who, together with the armed forces, switched to the side of the interim government.

Bakiyev defiant

President Bakiyev is in hiding in his stronghold in the south of the country, from where he repeated his vow not to step down. Bakiyev has warned the new Kyrgyz administration not to make any attempts to arrest him. "If they try to do so, blood will be shed," Bakiyev said at a rally in his native village in southern Kyrgyzstan on Monday. The rally is the first place Bakiyev has been seen in public since leaving Bishkek on April 7. Among the people accompanying Bakiyev at the rally were his close relatives, including brother Janybek Bakiyev, who leads the presidential security service. Earlier President Bakiyev told Reuters he wouldn’t step down, but that he’s ready for negotiations with the provisional government "in the interests of the country". "I’m not going to strike a pose that I’m a president, I’m not giving up my credentials despite such casualties and you can do whatever you want, let the country fall into chaos," he said. "That’s not my position. Although they are indeed an illegitimate government, let’s sit at the negotiating table and try and get to a legitimate level [of discussion]." Bakiyev said he hasn’t fled the country because he’s not to blame for the protesters’ deaths. He said he’d been targeted in his office during the demonstrations by a sniper, who missed only because Bakiyev had left the room to stretch his legs. He said he didn’t order troops to shoot at civilians, but that his guards had retaliated by themselves. Interim government chief of staff Edil Baisalov told RFE/RL’s Kyrgyz Service the government would not negotiate with the deposed president. "I would like to emphasize very clearly that we haven’t held any negotiations with Kurmanbek Bakiyev," he said, "and we will never make such decision [to talk to him]." Baisalov said the government was acting to protect Bakiyev’s life, although he didn’t specify what measures are being taken. "Every day some groups of self-organized people are coming to us," he said, "asking for arms, saying ’We’ll find him ourselves, we have to take revenge, we’ll kill him,’ and so on. That’s why we’re taking action to protect Bakiyev’s life. Our actions shouldn’t be considered an attempt to arrest him, but to protect him." Almazbek Atambayev, first deputy prime minister in the provisional government, said the new administration is preparing a special operation against Bakiyev. However, he said the new administration wants firstly to find a ’bloodless’ solution.

U.S. says Kyrgyzstan to honor base agreements The interim leader of Kyrgyzstan has agreed to abide by previous agreements on the U.S. Transit Center at Bishkek’s Manas airport, a key supply base for U.S. war efforts in Afghanistan, the U.S. State Department said.

Secretary of State Hillary Clinton spoke with Kyrgyzstan’s Roza Otunbaeva by phone, Reuters quoted Assistant Secretary P.J. Crowley as saying.

"Ms. Otunbaeva confirmed the Kyrgyz administration will abide by previous agreements regarding the [airport]," Crowley said. "The Secretary is dispatching Assistant Secretary Robert Blake out to Kyrgyzstan to follow up on her discussion."

The call came after the United States stopped all troops flying to Afghanistan via the base as security concerns persisted following the uprising in the Central Asian republic.

The Manas base is key to the U.S.-led war effort in Afghanistan, but a thorn in the side of Russia, which has given its support to the overthrow of President Bakiyev in a poor ex-Soviet state that it sees as part of its back yard.

Kyrgyzstan buries victims as nation mourns Kyrgyzstan held funerals on Saturday for 16 victims of last week’s bloody riots. Some 7,000 people gathered in a sea of flowers at a cemetery outside the capital for Saturday’s mass burials, as the country mourned people who died in the uprising during which security forces opened fired on protesters. The victims’ coffins, swathed in bright red Kyrgyz flags, were laid out as the crowd sang traditional songs and chanted prayers. Key figures of the new government were dotted among the throng of mourners at the mountain Ata-Beit cemetery some 40 kilometres from Bishkek. Interim chief Roza Otunbayeva promised the weeping families of the victims justice for their loss. "The regime became the enemy of the people when it opened fire on its patriots, the best sons of the nation, and we — we will do our best to install a just power in Kyrgyzstan," she told the crowd. Her deputy prime minister Omurbek Tekebayev also renewed opposition pledges for a "true democracy" in the ex-Soviet state. "We will build a true democracy or else the souls of those dead will never forgive us," he told the crowd. (With RFE/RL, Interfax, Reuters, AFP)

3. Is Kyrgyzstan bankrupt? (Kyrgyzstan, April 13, 2010-issue 611)

BISHKEK (TCA) — From various sources, it has been hinted that the country is bankrupt and that the entire economy is in ruins. This is certainly a different scenario from what was depicted very recently by former Vice Prime Minister, Akylbek Japarov.

Before the restructuring of the entire governance system and the creation of the Presidential Institute by President Bakiyev last October, Mr. Japarov was Minister of Economy and therefore, should be a reliable source. According to him, the budget income has quadrupled in about two years. Reforms were bringing about good results and the country had sufficient reserves to implement new development programs. Within the last week, five banks have been frozen and special administrators have been appointed by the National Bank of the Kyrgyz Republic. It may be because these banks might have had links with the Bakiyev family, but certainly not because the economy is in ruins. The fact that the first deputy head of the provisional Government Mr. Almazbek Atambaev rushed to Moscow to discuss humanitarian and financial help is not synonymous with bankruptcy. Certainly the finances of the country could be better, but given the international financial crisis, Kyrgyzstan has been able to weather the situation better than others. After recent events, several buildings have been seriously damaged (the Government House, the general prosecutor’s building, the Pervomaiski district tax department), not to mention the many private buildings and businesses. Reports also indicate that 80 buses have been damaged and a large medical cost will have to be incurred to provide medical support to the more than 1,500 wounded people. In addition, the new government has promised 250,000 som compensations to the relatives of those who lost their lives in the protest. According to Roza Otunbaeva’s chief of staff Edil Baisalov, the National Bank is holding only 986 million soms (about $22 million), while the new acting National Bank Chairman, Mr. Zair Chokoev told the press that all budget funds are secured and nothing can happen to them. Now, where are the $300 million of the Russian loan that was returned to the National Bank following the withdrawal by the Development Fund of the consulting agreement signed with MGN? Where are the many millions of recent budget income? Some accuse President Bakiyev of fleeing Bishkek after emptying the state coffers. A European newspaper indicates that the amount pillaged is around one billion euros. Is this true? It will be important for the new acting Chairman of the National Bank not simply to give assurance but above all to provide figures. Kyrgyzstan has a difficult time ahead of it with a shortage of oil products and limited funds. Such shortage can only be covered by financial support received from various foreign countries. In such circumstances, the agreement signed last February for Russian financial help and the income from leasing the airport to the Americans are all very important elements that the new Provisional Government should keep in mind before making declarations that show discrepancy of opinions between its members. Abdybaly tegin Suerkul, a National Bank deputy chairman, said, "Kyrgyzstan is not bankrupt, but there are going to be difficulties."

4. Russia, Uzbekistan working on closer economic ties (Uzbekistan, April 13, 2010-issue 611) Karimov’s visit to Moscow to address major bilateral issues By Dilshod Ashurmatov

TASHKENT (TCA) — The fuel and energy complex (FEC) remains the priority field for economic cooperation between Russia and Uzbekistan. FEC was the main topic of discussion at the recent 12th session of the Inter-governmental Commission on Economic Cooperation between the two countries.

Opening the meeting, Uzbek Prime Minister Shavkat Mirzieev said that Russia remains Uzbekistan’s most important trade partner, and that last year, trade between the countries increased by 9.4 percent, totaling over $4.5 billion (21 percent in Uzbekistan’s foreign trade). Mirzieev noted that in the difficult conditions of the global crisis, the two countries have managed to maintain the same high rates of economic cooperation. However, Mirzieev did not mention that positive dynamics have been maintained in the gas sector, which totaled about 90 percent of Uzbek exports to Russia, and contracts for the import of equipment for Russian companies working in the Uzbek oil and gas sector. Russian co-chairman of the committee, Deputy Prime Minister Sergey Ivanov, said that the fuel and energy complex is the main field of cooperation between the two countries. “I would not wish for Russian-Uzbek cooperation concern only FEC, but I am a realist,” said Ivanov in an interview. This year, Russia’s Gazprom has contracted 15.5 billion cubic meters of Uzbek gas in comparison to 15.3 billion cubic meters in 2009, including up to three billion cubic meters from LUKOIL, which has increased gas production in Uzbekistan within the two projects implemented on the basis of a product sharing agreement. The designed capacity of fields developed by LUKOIL will reach about 12 billion cubic meters by 2013. This year, the company will invest approximately $480 million in Uzbekistan’s projects. The only thing that the Russian side was complaining about was the lack of medium-term contracts (5-6 years) for gas supply and transit. “Russia stands for long-term relationships. This increases the reliability of relations and reduces intermediaries,” said Ivanov.

The Uzbek side did not give any official comment on this issue. “This is quite understandable,” said Ilkhat Tushev, analyst at Central Asia Investments. “Tashkent is quite satisfied with the system of annual bargaining with Moscow on the terms of gas supply and transit. Moreover, Uzbekistan can also export gas to China.”

Late last year, the first stage of a Central Asia-China pipeline with an annual capacity of 40 billion cubic meters of gas was launched. The pipeline was built to export Turkmen and Uzbek gas to China. “For the sake of friendship and development of energy cooperation, Russia goes to various concessions over and over again,” believes Dilmurad Kholmatov, an expert. “During the committee’s meeting in Tashkent, both parties decided to postpone the discussion of other important issues concerning other economic sectors to a later date.” The meeting of the inter-governmental commission in Tashkent, according to its provisional agenda, should be devoted to solve accumulated issues and mutual claims. However, the parties managed to discuss only “the barriers to mutual trade and non-diversified investments”.

Apparently, a forthcoming visit by Uzbek President Islam Karimov to Moscow on April 19-20 somehow hindered a more constructive and open dialogue. According to a representative of the Russian delegation, “it was decided not to include controversial issues in the agenda to escape tension before the meeting between the two presidents”. In particular, the issue concerning Wimm-Bill-Dann Tashkent was removed from the agenda. The situation in the dairy plant, owned by the Russian company Wimm-Bill-Dann, still remains unresolved after it was closed in December last year. “Even if we allow the plant to begin operation within the next few days, it would be impossible for technological reasons,” representatives of the Russian company believe. “The plant has lost its workers, and it needs new investments.” The parties did not discuss tax issues, concerning mostly Russian car makers. Last November, Russian car manufacturers sent a letter to Prime Minister Vladimir Putin, in which they complained about the protectionist measures imposed by the Uzbek government against them. In particular, these measures included: the complete refusal to convert currencies for companies proposing Russian automobiles in Uzbekistan, an introduction of a ban on consumer lending for foreign car purchases, and the introduction of a tax on imported cars. The Uzbek side has proposed to revisit the issue in the fall. “Apparently, a solution to this issue will depend on negotiations to unify Uzbekistan’s trade regime with the countries in the Customs Union,” believes Anvar Jumayev, an analyst. The terms of the negotiations will apparently be discussed during Karimov’s visit to Moscow. Aircraft building — another field of cooperation — was touched only through discussing the UzRosAvia joint venture project, which will repair helicopters in the city of Chirchik near Tashkent. However, the project to integrate the Tashkent Aircraft Production Association named after Chkalov (TAPOICH JSC) into Russian United Aircraft Building Corporation (UABC) will probably never be implemented, since this topic was not even on the agenda.

Last fall, the UABC Board of Directors decided to include the Aviakor Aircraft Plant in the Russian city of Samara into UABC. The plant specializes in building An-140 airplanes, and was the main competitor of TAPOICH, which produces similar Il-114 airplane models. As for one of the topics on the agenda – the long-term agreement on direct supplies of cotton fiber to be signed by the end of 2010, it wasn’t fully successful either. In order to supply cotton fiber to Russia, exchange structures between the two countries would be involved; namely the Uzbek Republican Commodity Exchange and the Moscow Stock Exchange. However, the issue of admitting Uzbek companies into the Russian market is rather controversial, considering the absence of the legal framework. “Russian textile companies can not afford direct bulk purchases of cotton fiber,” said Dmitry Chumakov, a representative of Russian company Seltex. “They are ready to buy only 3,000 to 5,000 tons, which is unprofitable for Uzbek partners.” Direct contact is difficult also because of the increasing supplies of cheaper and low quality raw materials from other Central Asian countries, as well as through the Baltics.

For further information: The Times of Central Asia