The Times of Central Asia - update of 28 May 2010

In this issue:

1. POINT OF VIEW: Telephone recording discrediting members of Kyrgyz provisional government

4. Tashkent seeking to diversify oil production in face of changing demands

1. POINT OF VIEW: Telephone recording discrediting members of Kyrgyz provisional government (Kyrgyzstan, May 28, 2010-issue 618) By Giorgio Fiacconi TCA publisher

BISHKEK (TCA) – The wire-tapping case disclosing corruption and private interest involving various senior members of the Kyrgyz provisional government is the talk of the day in Kyrgyzstan. It is all about money, who took this or who demanded that. Irrespective of their content and the alleged fraud, what is really surprising is that so far, nobody has denied to have taken part in the taped conversations. So we can easily assume that the conversations took place, but whether or not the recordings have been edited is not yet clear.

Whatever action the prosecutor general will take and whatever embarrassment for those leaders (First Deputy Head of the Interim Government Almazbek Atambayev, Interim Finance Minister Temir Sariev, and Interim Government Deputy Head Azimbek Beknazarov) it may cause is guaranteed. In a period when new elections are being prepared, it will take each of them considerable effort (and money) to restore their own image. The first wire-tapping appeared on the internet on May 20th, followed by a publication of the transcript in several newspapers. There were in fact three separate tape recordings: two involving some members of the provisional government are all about money, and the third involves Janysh and Maxim Bakiyev plotting further unrest. An honest judiciary, yet to be established, will have to determine whether the tapes were edited or are genuine. In the end, it should be the public which evaluates their leaders. The present government has pledged a strong campaign against corruption in favor of transparency and reform, but now their credibility is really at stake. Although Atambayev in his press conference has accused several foreign countries such as Kazakhstan, Uzbekistan, Russia and the United States of "listening in", there is no proof as to the origin of that recording. Credibility, honesty and transparency are all at stake. We are now starting a new political campaign that will see each leader try to prevail over others. Parliamentary elections, expected in mid-October, are not that far away. The forthcoming referendum on the Constitution and the Interim President, set for June 27th, will certainly determine new alliances. The result of the referendum is more or less granted (requiring participation by only 30 percent of the total electorate, and approval by a simple majority), but after the referendum the game is beginning. With the economy deep in the red, this revolution has added problems to those who have surfaced due to the international financial crisis. The election will expose a lot and will use all means including personal life and private interest of each side. At the election, the situation may change again and those that are accusing each other today may join together on a specific target and a specific interest tomorrow. We can say that the internal game, the Kyrgyz version, has already started and leaders will not fail to accuse and insult each other. Now we should ask what drives the present political leaders. Not the interest of the country, not the need to reform the state machine and to implement a new economic policy capable of creating jobs, but their interest and money sharing and the discrediting of the opposition. In this internal game, each political leader seems to have kept his own score. The entire issue will probably go underground, and given a few months, everybody will likely forget. Then, if we have to mend a wound or two, there is still Issyk-Kul in July and August to take care of everything. As for the recording between Janysh and Maxim Bakiyev, plotting an extensive protest and creating further victims, we can only say that this is the result of an ill-minded focus on a mad strategy. Such can only escalate a situation that is already very unstable. These people do not seem to have Kyrgyzstan and its people at heart, only self-interest. No ethic, no ideal, no economic and clear political plan. It will be in the interest of the country to work together, to create a government of national unity, to introduce much needed reforms and proper accountability to a fair judiciary system. Now a common refrain prevails in public opinion: everything will be changed but nothing will really change. People watch and swallow a situation without a serious diagnosis, knowing already that a new government and a new parliament will not necessarily mean a new path. They likely will, however, think that there is always the possibility of another revolution.

2. Draft constitution published in Kyrgyzstan (Kyrgyzstan, May 28, 2010-issue 618) Otunbayeva will serve as Kyrgyzstan’s interim president until December 31, 2011

BISHKEK — After a month-and-a-half of preparation, Kyrgyzstan’s interim government approved a draft constitution on May 20. But the Kyrgyz people will still have the last word when the draft goes to voters in a June 27 referendum.

Last Friday the interim government published the final draft of the Kyrgyz Constitution, which was finalized by the government after going through a nationwide debate and a debate at the 75-member Constitutional Conference, which was made up largely of representatives from non-governmental organizations. Under the proposed constitution, Kyrgyzstan will become a parliamentary republic with 120 legislators (up from 90) who will choose the nation’s prime minister. The president, while remaining the head of state and the commander-in-chief, has limited powers. The president will be elected for six years, although initially a five-year term was suggested, and will be allowed to serve one term only. The future Kyrgyz president has no absolute immunity and can be prosecuted "for a crime only on the basis of an accusation brought by the parliament and approved by the prosecutor general". "The party winning the most votes in the election will get 65 seats. The remaining 55 seats will go to the remaining parties that cleared the 5% threshold (for having any seats in parliament)," Constitutional Conference Chairman Daniyar Narymbayev said. The definition "secular state" remained in the final draft. The draft constitution bans the formation of parties on a religious or ethnic basis, bans torture, the death penalty, experiments on human beings, as well as criminal prosecution for defamation. The new constitution also preserves the current status of Russian as the second official language in Kyrgyzstan. Interim president A nationwide referendum on the draft constitution will be held on June 27. Kyrgyz voters will also be asked on that day to approve current interim government leader Roza Otunbayeva as interim president until December 31, 2011. The interim government on May 19 appointed Otunbayeva as Kyrgyzstan’s interim president holding the office until December 31, 2011. The planned election of the next parliament on October 10, 2010, will be based on the new Kyrgyz constitution, but Otunbayeva’s tenure as interim president will be based on the current constitution until the day the new legislature convenes. "The presidential elections will be held in October 2011," said Omurbek Tekebayev, a deputy prime minister at the interim government. "A president to be elected in them will take office on January 1, 2012," he said. Transitional period One article — "On the Transitional Period" — was added to the draft constitution at the last minute. The transition period will continue until January 1, 2012, Tekebayev said. Though the interim government and Constitutional Conference devoted much attention to activists’ concerns in drafting the new constitution, the activists were critical of the final version. Their biggest grievance was the article on the transition period. "A well-intentioned draft (constitution) has been deformed and mutilated," said Toktaiym Umetaliyeva, leader of the nation’s association of NGOs. "It was destroyed by the willfulness of the interim government’s members! The Constitutional Conference didn’t approve any such amendments concerning a ’transitional period’. This point didn’t exist and can’t exist". Ajibai Kalmamatov, former chairman of the committee for constitutional legislation in the disbanded previous parliament, said the declaration of a transitional period and naming Otunbayeva interim president are baseless. "It isn’t 1917, when you could run the country by decrees," he said. "If you declare a transitional period, you need a reason to do it. There isn’t any." "Otunbayeva will be president (subject to voter approval in June) during the transitional period, which ends on January 1, 2012," said Tekebayev. "The presidential election takes place in October 2011. She can’t run in it — that’s written into the decree. She is making a major political sacrifice for the sake of the country’s stability." (RFE/RL, CentralAsiaOnline, Interfax)

3. Changes coming to Tajik marriage law (Tajikistan, May 28, 2010-issue 618) By Rakhim Nazarov

DUSHANBE (TCA) — The legal age for girls in Tajikistan to marry has been increased to 18. Changes to the Family Code were made last week by the Tajik parliament.

Introducing the bill with amendments, MP Hayriniso Yusufi noted that the marriage age was increased to ensure girls’ rights to an education, an independent life, and to implement certain articles of UN Convention on Children’s Rights. Yusufi added that the amendment was suggested by Tajik President Emomali Rakhmon in his message to the parliament on April 24th. Mukhiddin Kabiri, chairman of the Islamic Renaissance Party, asked Yusufi, who before the last parliamentary elections headed the Committee on Women and Family Affairs under the Tajik government, why her previous initiatives had not been implemented. In particular, Yusufi suggested introducing to the Family Code a compulsory marriage agreement between married couples to protect women’s rights in case of divorce. However, these proposals were not included in the suggested changes.

Yusufi said that the proposal is still being reviewed by relevant agencies and she believes that soon changes will be introduced to the Family Code. Shukurjon Zukhurov, speaker of the lower house of the Tajik parliament, noted that the changes introduced complement Tajikistan’s Law ‘On Education’, which includes the country’s transition to a twelve-year education system. According to statistics, presented by Zukhurov, last year 38,000 marriages were registered in Tajikistan, of which only 1,300 marriages were contracted with 17-year old girls. In order not to disturb families who are now preparing for new weddings with participation of 17-year-old girls, the draft of amendments, according to the parliament speaker, says that the new rules will come into effect from January 1, 2011. According to sociologist Munira Abrorova, one of the reasons to increase the marriage age was the need for girls to complete secondary education and obtain a profession. “There have been frequent cases when young girls got married right after graduating from secondary school as their parents wished. However, after a relatively short time, their marriages break up and they find themselves on the street with children and no money or job. Moreover, early marriages and childbearing at a young age also adversely affects girls’ health, and ignorance of the childcare rules sometimes cause divorces. There are many such examples,” Abrorova said. According to Tajikistan’s Statistics Agency, the number of marriages registered in the country in the first three months of this year decreased by 8.1 percent compared to the same period in 2009, totaling 22,300 marriages. The number of registered divorces over this period was 1,631, an increase of 11.9 percent compared to the same period last year. According to specialists, even now many rural residents do not register their marriages. Taking advantage of this, some men choose young girls as second wives, even though polygamy is prohibited by Tajik law. Thus, it is impossible to count the actual number of marriages and divorces. Recently, some NGOs have suggested allowing polygamy. They state that in the case of divorce, the second wife will have constitutional rights.

4. Tashkent seeking to diversify oil production in face of changing demands (Uzbekistan, May 28, 2010-issue 618) By Dilshod Ashurmatov

TASHKENT (TCA) — With limited growth in gas exports, reduced domestic oil production and volatile energy prices, Uzbekistan must introduce significant adjustments to promising projects within the oil and gas sector.

At the OGU-2010 oil and gas exhibition held in Tashkent in mid-May, participants discussed mainly the issue of hydrocarbon processing, rather than projects in production. The issue of expanding the Uzbek gas routes was among the last topics discussed at the conference entitled ‘Innovations and Investment in Uzbekistan’s Oil and Gas Sector’. Moreover, current (Russia) and potential (China, Korea) buyers of Uzbek gas did not participate in the conference. Though heads of the Uzbekneftegaz (UNG) national oil and gas company pointed to the growth in gas exports from 15 billion cubic meters in 2008 to 16.2 billion cubic meters in 2009, they understand that this growth still has to surpass the 20 billion mark, and Russian Gazprom’s position as the largest buyer and monopoly transporter of Uzbek gas. The increase in export flows with a decline in domestic demand suggests that Uzbekistan is not quite sure if it is able to increase its gas production. This is proven by a significant slowdown in gas production last year, when gas production in Uzbekistan reduced by 3.8 percent from 2008, totaling 61.4 billion cubic meters, and for the first three months of this year, gas production fell by 2.3 percent. Moreover, with the falling demand (in the first quarter of this year, export of Uzbek gas to Russia decreased by almost one-third), Russian companies pointed to the reduction of gas production in Uzbekistan. According to Andrey Kuzyayev, president of Lukoil Overseas, the company will postpone the launch of its gas processing plant in Uzbekistan due to the situation in the gas market.

Currently, Lukoil is developing gas fields in the Bukhara region and is exploring the Ustyurt Plateau under the 35 year Product Sharing Agreement signed in the summer of 2004. By 2012-2013, Lukoil will produce 16 billion cubic meters of gas in Uzbekistan, and will invest approximately $5.5 billion into those projects. The company is optimistic about the development of its projects and even considering expanding its contractual territories. However, Lukoil has not yet begun construction on the Kandym gas processing plant, which was supposed to process up to 8 billion cubic meters of gas beginning next year.

Another possibility for export is the Uzbekistan-China gas pipeline, which is now under construction and which is part of the common network, supplying Turkmen gas to China. At the exhibition in Tashkent, UNG confirmed the possibility of exporting around ten billion cubic meters of Uzbek gas to China.

However, they meant potential gas which could be produced by the Chinese CNPC. Now, the company is exploring five contract areas and it is difficult to say anything definite about gas production volumes through 2012. According to Tashkent, beginning this year, export growth will be achieved through the commissioning of new fields in the Ustyurt region (estimated reserves total 1.7 trillion cubic meters of natural gas, of which only 12 percent has been explored). Speaking at the conference, Gaibulla Abdullayev, director of the Institute for Geology and Oil and Gas Fields Exploration, UNG and foreign companies will invest over $1.9 billion in oil and gas exploration in Uzbekistan through 2015. Abdullayev said that the industrial growth of hydrocarbon reserves due to exploration conducted by foreign investors by 2016 may increase to 50 percent against 39 percent last year. Thus, according to analysts, investors want to make sure there is truth in these optimistic figures claimed by Tashkent.

In particular, early in 2009, Gazprom returned three investment blocks at the Ustyurt to UNG, considering them ineffective. The company decided to focus on the exploration of other areas and begin to develop them according to exploration results no earlier than 2012. Other foreign investors like Korean KOGAS and KNOC, Chinese CNPC and Malaysian Petronas are following the same tactics. The situation with the Uzbek section of the Aral Sea, adjacent to Ustyurt, remains unclear. In 2005, the Uzbek government signed a PSA with an international consortium to develop this field. The consortium included UNG, KNOC, CNPC, Petronas and Lukoil. At the OGU-2010 exhibition, UNG announced the opening of the first field on this contract area. However, geologists believe that it will be possible to make a prognosis by 2012, when the consortium completes the drilling of exploratory wells at these locations. Analyst Anvar Jumayev believes that “resources at Ustyurt were initially overestimated, and now companies have to revise their forecasts”.

“It is necessary to review the state program on the Ustyurt region development, find other opportunities to fill the export pipelines (existing and those under construction), and reconsider gas processing projects,” stated Ilkhat Tushev, analyst at Central Asia Investments. Particularly, it concerns the $8 billion project at the Ustyurt Gas and Chemical Complex, including Korea’s KOGAS, and two plants producing synthetic liquid fuel using gas-to-liquid (GTL) technology. Petronas, UNG and South Africa’s Sasol will build one of the GTL-plants in the Kashkadarya region. Another plant will be built at the Ustyurt Gas and Chemical Complex with financial support from the United Arab Emirates. The production capacity of facilities to be launched in 2014 and 2016 will total 3.4 million tons of oil products (diesel, gasoline, and naphtha). To ensure uninterrupted production, up to 12 billion cubic meters of gas will be required annually. Thus, the opening of new hydrocarbon deposits in the next five to seven years may confront the interests of investors seeking to export primary resources from Uzbekistan with the government’s strategy to diversify the national economy with innovative projects.

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