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Grigory Pasko: Kyrgyzstan’s Fuel Supply Politics

manas021311.jpgA not-young Kyrgyz came up to me on Chui prospect in Bishkek and asked: “Brother, how do I get to the Alamedin market?” I didn’t know yet how to get to the market, but I did already know that in Bishkek – I’m a brother. At this time, in my Moscow, a group of young thugs was in the process of killing its Kyrgyz counterpart. (There’s a peculiarity of Russian nationalism for you: a Chechen goes and kills a Russian, so Russians go and kill a Kyrgyz in revenge). There are very many youth on the streets of Bishkek. And they gather in the center of the city often for lack of anything else to do. According to official statistics, for October of the year 2010 the unemployed in the Republic reached nearly 300,000. For a country with a population of 5 million, that is a very large number.

Unemployment, a variety of political opinions, the absence of clear-cut work of state institutions – all this creates favorable soil for various kinds of unrest in society, including among the youth. And who knows how much time still needs to pass for the youth to understand: this is for them, and not for the elderly politicians, to create the future of Kyrgyzstan- one of the poorest countries in Central Asia, torn apart by contradictions, only just having stepped onto the road of transformations.It was just in those days that I was in Bishkek that a new speaker of the parliament – the Zhogorku Kenesh was elected, and a new government. The most important institutions of state had finally appeared.If you find the way to start the fire, even snow will burnOf course, there are many difficulties ahead. And one of them – to figure things out with the choice of the direction of movement. When after the April events of the year 2010, which led to the overthrow of former president Bakiyev, the new leader of the country Roza Otunbayeva said words about friendship with Russia, everybody understood that such words – are a nod to tradition, a stock phrase. But when that same Otunbayeva hiccupped something about claims against the USAF base in Manas, this was already something concrete. By the way, there are analysts who consider that Otunbayeva’s phrase could have been not from the number of stock political phrases about the removal of the USAF base completely. What may be being spoken of, as it seems, is a redistribution in favor of representatives of the new Kyrgyz power of the lucrative Pentagon contract for the delivery of fuel to the base.Otunbayeva herself has already declared that big business is being conducted around the deliveries of fuel for the USA’s “Manas” Transit Center (MTC). In her interview with radio “Kabarlar” on 7 November of the year 2010 she reported that the government of Kyrgyzstan stands against the USA’s new contract with the Mina Corp company, since criminal cases have been initiated against the given company by the procuracy-general of the KR.In the opinion of Roza Otunbayeva the funds from the MTC are not received into the budget of Kyrgyzstan, but rather go to individual virtual companies, which do not belong to a single country. The head of state brought as an example an article in the “Washington Post” newspaper, in which a journalist, conducting investigations, never was able to clarify just who this company belongs to.In conclusion Roza Otunbayeva said that the state enterprise “Manas”, which can implement deliveries of fuel to the base, has been created in the country.Several commentaries in the wake of these words. The fact of the matter is that they were said not by a little old lady at the Alamedin market, but the first person of the state. And also the fact of the matter is that at such a level arguments, in principle, must be more measured and, well, at any rate, grounded not on publications in the mass information media, but on the hard evidence of the law-enforcement organs. But okay.Since Roza Isakovna doesn’t have any other sources for the accusations, let us go ahead and try to understand just what exactly she doesn’t like about the existence of the fuel supply company. For example, in the part concerning the belonging of the Mina Corp company to some kind of country. Several journalists managed without particular difficulty to find out right away that the Mina Corp company is registered in Gibraltar and that such a registration is not prohibited by any law.However, let us return to the USAF base. The American base, as is known, has been functioning in Kyrgyzstan since 2001. It is stationed on the territory of “Manas” international airport and is used to support coalition forces in Afghanistan. At the beginning of the year 2009 the Kyrgyz authorities had already spoken about their intentions to kick it out of the country. However, later it was decided that the base with a somewhat changed status would nevertheless remain in the previous place. The new price of the question – 60 million dollars a year in the form of a lease payment into Kyrgyzstan’s coffers. (Today this, by the way, is 10% of the entire budget of the country).It is entirely possible that in new times a new government will announce new claims for the new lease payment. Or, at any rate, new spirals of intrigues and speculations on this topic will begin.Nor is it by chance that no sooner had Prime Minister Almazbek Atambayev been elected by the parliament, he was forced right away to make a statement with respect to the base. On 17 December 2010 at a session of the Zhogorku Kenesh he, answering the questions of deputies, said: “”The USA is a great country, and we will not be damaging relations with her. I think, the corresponding committees of parliament will examine this question (on account of the introduction of an excise tax on jet fuel – G.P. note) and will give their conclusion. One must not wave a saber around”.Politicians from opposition parties immediately objected to him, saying if the government doesn’t decide, we’ll decide with the parliament.In his speech, Atambayev said the following: in this question there are underwater “mines” [Translator’s note: This is an intentional play on words, since the Russian word for “mine” is “mina”.].It goes without saying, everybody understood the allusion right away: for a long time already the question is being bandied about in certain circles of Kyrgyzstan about how the Mina Corp company, registered in Gibraltar and delivering jet fuel to the USAF base in Manas, was connected with corruption threads to the family of former president of the KR Bakiyev, in particular, with his son Maxim. The kind of rumors that are going around are that representatives of Mina Corp had virtually been bringing money in suitcases into the family clan.Inasmuch as the rumors had been emanating among others from the Head of the Interim Government, Otunbayeva, as well, it comes as no surprise that the U.S. Congress was forced to conduct a special investigation with respect to this question. As a result it was announced that no traces of corruption had been found. Furthermore, the Pentagon entered into a new contract for the delivery of fuel specifically with Mina Corp. The contract was entered into based on the results of a tender, conducted by the Defense Logistics Agency of the U.S. Department of Defense. The National Security and Foreign Affairs Subcommittee of the Committee of the House of Representatives for Oversight and Government Reform of the U.S. Congress noted in a statement disseminated in connection with entering into the contract with Mina: “The Department of Defense has devoted significant high-level attention to improving transparency in contracting at Manas. Today’s contract award, after an open and competitive solicitation, is an important step forward.” In its turn Mina Corp and its affiliated company Red Star welcomed the Subcommittee’s conclusion about how it “had not uncovered any reliable evidence in support of the assertion that Bakiyev’s family or his affiliated persons possessed material benefits or received material advantage from the fuel contractors”.US ambassador in Kyrgyzstan Tatiana Gfoeller during an appearance on Kyrgyz state television on 11 November of the year 2010 declared: “The investigation that they conducted in the USA is ended, and it did not uncover any evidence in support of such a kind of assertions”.Of course, in such an unstable situation as is now in Kyrgyzstan, this does not at all signify that the question has been resolved conclusively. Leader of the “Ata Meken” faction Omurbek Tekebayev said at the end of last year that parliament can and should return to a discussion of the agreement according to which the AF base is exempt from the payment of the excise tax on fuel. In the opinion of Tekebayev and his colleagues, because of the release from the tax the country is losing an additional 30 million dollars annually. Tekebayev even declared that parliament may denounce the agreement with the American side.In response to this new premier Atambayev reported that when in the summer in the Interim Government they raised a question about the introduction of an excise on fuel, the airplanes of international airlines started to do refueling in other countries.The following picture has formed from conversations with a multitude of experts. In Kyrgyzstan in certain circles, which have come to power, there has appeared the desire to attach themselves to the fuel pipe and to deliver fuel with the help of another company, their own, instead of Mina Corp, having wrangled an advantageous contract with the Pentagon. In connection with this a state corporation has already been created Re-fuelling Complex “Manas” (RFCM). And there has already appeared an intermediary between it and the principal supplier of the fuel from Russia – the Mega Oil company.In other words, the new administration, despite assurances of getting rid of intermediaries, is acting in tried and tested ways. With the only difference that the professionalism and competence of Mina Corp have been checked by all business partners and an eight-year term of work, while the experience of Mega Oil is not known to anybody. (According to information that has become accessible to me, at the present time a representative of the Pentagon is studying all the possibilities that RFCM has at its disposal. Will the state enterprise be able to lay claim to at least 20% of the overall quantity of deliveries for the needs of the AF base – this is still a question).The future of deliveries of fuel to the USAF base is again at the discussion stage. Once again negotiations are being conducted between various agencies. Once again the question has been raised about increasing the dependence of the military company [sic, probably meant “campaign”] in Afghanistan on Russian deliveries of fuel.Everybody pulls ash to his flatbreadIn the opinion of deputy head of the “Kalys” civic-patriotic movement Talas Akylbekov, they proposed such a scheme to Otunbayeva. A contract is entered into between ZAO “Gazprom Neft Aero” and the Kyrgyz OsOO “Mega Oil” for the delivery to the latter of aviation fuel under FCA st. Kombinatskaya conditions (sale at the plant’s station) at a price of $670 for one metric ton. In its turn, “Mega Oil” sells this fuel to GK TZK “Manas” already on DAF st. Lugovoy conditions (sale at the border) at a price of $850 per metric ton. The cost of the services of conveyance along the territory of the RF and Kazakhstan will comprise ~$90. And $90 “Mega Oil” has left itself. It is asked: why is RFCM buying the fuel from some “Mega Oil” at an overstated price, at the same time as the new power has been beating its breast promising to exclude all intermediaries?Maybe, Akylbekov was wrong or is telling nasty stories about respected businessmen? Let’s take a peek at certain documents. From Attachment № 14 to “Contract № 08/A/0007/6 of 29.04.2008” of 19 August 2010: “ZAO “Gazpromneft-Aero”, hereinafter referred to as “Seller”,….as one party and OsOO “Mega Oil”, hereinafter referred to as “Purchaser”… as the other, have entered into the present Attachment to the Contract….Seller shall obligate itself to deliver a good – TS-1 fuel for jet engines to Kirgizia on FCA st. Kombinatskaya conditions…at a price of 670 US dollars per metric ton…”.From supplementary agreement № 2 to Agreement for the purchase-sale of oil products № 10-08-05 of 5 August of the year 2010 between OsOO “Mega Oil” and RFCM of 20 September 2010: “Mega Oil”, referred to as Seller, and… GP “Manas”,… Purchaser,…have agreed on the following…Prices for oil products (hereinafter “the good”) shall comprise: fuel of the TS-1 marque, conditions of delivery DAF Lugovaya, price 890 US dollars per metric ton”.It turns out that, the deputy head of the “Kalys” civic-patriotic movement is right in his conclusions?While we’re on the subject: the RFCM state enterprise is headed by Marat Malatayev. In the mass media they are writing that before this he had been deputy director for wholesale sales of the “Gazpromneft-Azia” company, and even earlier – second secretary of the embassy in London – at the time when the ambassador there was Roza Otunbayeva.Lies have short legsThey say that the motor of the accusations to the address of Mina Corp became former Prosecutor-General Azimbek Beknazarov. That same one who once said the phrase : “Everyone has gone away to criticize and has not come back”. That same one about whom new premier Atambayev said “Azimbek Arnakulovich first “blurts” something out, and then thinks about what it is that he said”.After Mina Corp lawyers on 20 December of the year 2010 had made public their press release with an assessment of the unlawful actions of the Prosecutor-General’s Office in relation to Mina Corp and commented on it, on one of the local television channels they gave Mr. Beknazarov the opportunity to speak as well. My impression: it would have been better if they hadn’t. Because the words of Prime Minister Atambayev were unwittingly recalled. Azimbek Arnakulovich once again blurted something out (it is indeed hard to come up with another word) on account of corruption schemes, once again not citing a single concrete fact.I’ll repeat myself: I have never once seen anywhere a setting forth of CONCRETE facts showing how Mina Corp had violated some kind of laws. It may be that it did violate them – I don’t know about this. I can even imagine to myself a picture (I saw something like this in films about the mafia), how one of the Mina Corp executives is carrying a suitcase stuffed with money in an SUV, and subsequently solemnly hands it over to the son of the former president.The words of Otunbayeva and Beknazarov about the presumed guilt of Mina Corp are good precisely for such films. It may be that they’re good for politicians as well. But they are bad for the bringing of concrete charges within the framework of a criminal case that has already been started up. As the saying goes, you won’t stick rumors to a case file. Although upon the closest examination (were there the desire to examine them) the rumors too turn out to be untenable. Let’s take as an example the rumor about how Mina Corp under Bakiyev was exempt from the payment of the excise tax. First, not under Bakiyev, but way back under Akayev. Second, the exemption was spelled out in the agreement of two parties – the governments of Kyrgyzstan and the USA, and, this means, this was not some kind of bought preferential release, but the fulfillment of an agreement.The charges of intermediation are simply laughable. Probably precisely for this reason, creating Re-fuelling Complex “Manas”, the new powers were not able to get by without Mega Oil. All the more so given that intermediation – [is] within the framework of the law and the bilateral agreement. And also: if the Americans had considered it necessary and possible to deliver fuel directly from Russia (for example, from the Omsk Oil Refinery), they would certainly have been able to get by without intermediaries. And yet for some reason they did not get by! Maybe, the whole matter is in the fact that they were not able to get by? After all, then the deliveries of fuel would completely depend on Russia and her Gazprom. And this is already a question of state security for the USA. (While we’re on the subject, when Mina Corp had certain problems with deliveries of fuel from Russia, this did not affect deliveries of fuel to the base: fuel was procured through other channels in other countries. To say it another way, the deliveries were diversified. Mina Corp confirmed its reputation as a reliable supplier. It is precisely for these purposes that an intermediary is needed. A reliable intermediary. And one whose work with respect to deliveries of fuel is not going to depend on the ambitions and declarations of politicians, on the whims of state figures and other speculations).We will look at a loudmouthed peasant woman when she will be giving a daughter to marriageIn one of the local newspapers I read such words by director of the “Adilet” legal clinic Cholpon Dzhakupova: ” The Interim Government had an opportunity to demonstrate here and now how it differs from the power of Bakiyev. That these people are not going to make life miserable for others, as Bakiyev did this, that they won’t take away property without a trial and an investigation…But the same thing is taking place now after all. What is the difference between the policy that Bakiyev conducted, taking away property without a trial and an investigation, and what is being done by the new power under the guise of nationalization”?There is a difference: the new power is promising both an investigation, and a trial. So it’s apparently conducting an investigation in relation to Mina Corp. It must be assumed that the case will get to trial as well. (If, of course, the case turns out to be within the confines of Kyrgyzstan’s jurisdiction). And it must be assumed, there are independent courts and judges.It would be good if it were so, but here is the opinion of another respected person -Prosecutor-General of the republic Kubatbek Baibolov, from an interview with the “Delo №” newspaper on 15.12.2010: “It needs to be admitted: the nature of our courts after the April shakeup has changed for the worse. Striving to ensure the independence of the courts, we have made them independent of conscience, honor and the laws. They now do whatever they want”.I think, the judges themselves could respond the same way to these reproaches of the procurator: in the Prosecutor-General’s office they do whatever they want. While we’re on the subject, many experts in conversations with me also pointed out the low quality of investigative work in the republic.And so, tell me, in this whole situation will the lawyers of the Mina Corp company and other companies be able to hope for an honest and impartial attitude toward them on the part of an investigation and a court?The head of the rooster who cries will fly off earlierAll of the journalists who wrote on the topic of deliveries of fuel to the Manas base through the efforts of the Mina Corp company pointed out the fact that this company is just too mysterious and therefore it is not comprehensible on what basis the Pentagon selected specifically this company as its supplier. In the meantime in Kyrgyzstan it is well known that the Mina Corp and Red Star companies were engaged in deliveries of fuel to the civilian airport in Kyrgyzstan even before the “Manas” airport started to be used as a USAF base. Until 2001 they traded in fuel in Kyrgyzstan and Central Asia and had business relations with the “Manas” airport. In this way, it is completely natural that they became claimants to getting the Pentagon contract. And having gotten it, they turned out to be so reliable that the Pentagon continued to give them preference. The reputation of being reliable partners has been put to the test in many corners of the world: Liberia, Djibouti, Afghanistan and Iraq.Nor does the reproach about how the businessmen did not shout out loudly to one and all about their business withstand criticism. “Keeping a low profile, – said one of the heads of the company, Erkin Bekbolotov, in an interview, – is the key to success in countries where there is hostility to the U.S”.To me, as an example, the desire of the executives of Mina Corp company to keep in the shadows is understandable: in such a manner they no doubt wanted to distance themselves, among others from corruption as well. My Russian businessman acquaintance used to speak like this to me: “I don’t stick out, because [if] they notice – they’ll burn [me] down right away”. Many businessmen in countries with an unstable political arrangement know: the less someone’s successful business in uneasy times flashes before the eyes, the more chances there are to survive and not be swallowed up or annihilated. If they know [you] little – they won’t find [you] right away. Some have considered that Mina Corp is connected with the CIA. The opinion, of course, is absurd, but Mina Corp executives did not rush to dispel it: it seemed to them to be useful; it was a sort of signal to certain forces – hands off. That is how they survived and successfully at that. Journalists began to write that everything looks strange. In reality, they were not hiding, but simply distancing themselves. This is logical. Perhaps, they overdid it, but nothing more than that.”Mina and Red Star have little of the visible infrastructure usually associated with an enterprise handling billions of dollars of business”, it says in a Washington Post publication.I have been at several Mina Corp installations, including a tank farm, and I can note: the infrastructure for the company and its contractors is quite visible. If one looks at these installations, then one can understand that the assertion of the respected “Washington Post” about total secrecy is nothing more than words. It is precisely at these and similar operations sites that a significant portion of the workforce of the company and its subcontractors is concentrated – up to 500 people.On 3 November of the year 2010 member of the House of Representatives John Tierney, a democrat from Massachusetts and chairman of the Subcommittee for national security and foreign affairs of the U.S. Congress, said that the Subcommittee had not found “any credible evidence to support the allegations that the Bakiyev family or their affiliates owned or received financial benefits from the fuel contractors or subcontractors.”The company’s press secretary John Lough said: “No member of the Bakiyev family, including Maxim Bakiyev, has ever owned, controlled, or had any involvement at all in Mina Corp or Red Star Enterprises.”What has fallen on the floor, that is for the orphansKyrgyzstan is probably the only country in the world on the territory of which are found two bases at the same time: an American one and a Russian one.Opponents of the base without fail advance the argument: the 60 million dollars a year that the Americans pay Kyrgyzstan, this is little. In actuality, most likely, the sum all in all turns out to be bigger, because there are also indirect payouts; charitable contributions etc. Besides that, on top of that, the United States are giving Kyrgyzstan economic assistance worth 110 million dollars. In so doing for some reason nobody remembers about how Russia isn’t paying one red cent for its base in Kant. The constant speculations and double standards, in the opinion of analysts, could lead to a situation where the USA will redeploy their base onto the territories of more amenable republics, for example, to Tajikistan or Uzbekistan. And then Kyrgyzstan is going to be left with ambitions and without money.By the way, about the 60 million. In the opinion of my interlocutor, the journalist Turat Akimov, editor of a Bishkek newspaper, he never did manage to seek out the official announcements of the government of the KR on the expenditure of these funds. If Tekebayev and others are calling to introduce an excise tax on fuel and to screw the Americans out of an additional 30 million dollars, then for starters why not find out just where the 60 million already being paid out are going?The question seems completely relevant. Especially, if one takes into account that the deficit of Kyrgyzstan’s budget comprises nearly $700 million, and the external debt – $ 2 billion. (in 2001, according to the assessments of financial analysts, it will be 3 billion dollars).A lost knife has a handle of goldOn 2 December U.S. Secretary of State Hillary Clinton visited Kyrgyzstan. At a press conference she expressed confidence that the situation in the republic will become more stable, if allies succeed in creating a peaceful society in Afghanistan. Roza Otunbayeva declared that the question of retaining a Transit Center on the territory of Kyrgyzstan will be the prerogative of the new Kyrgyz government. The Kyrgyz President underscored the special role of the Manas base in the struggle against terrorism, having expressed concerns that terrorism might also cross the borders of Afghanistan.Another thing too is understandable: as long as there is a base in Kyrgyzstan, it is advantageous for the USA to have a tried and tested and reliable supplier – one like Mina Corp. Yes, the scheme of the deliveries must become transparent for everybody. And I have somehow not heard representatives of Mina Corp object to this in any way.Of course, intrigues around the base will still continue to be woven. First, certain political parties in Kyrgyzstan have made the closure of the American “Manas” Transit Center the principal plank of their pre-election campaign.Second, in an unstable transition phase in any country, not just today’s Kyrgyzstan, newly appointed leaders inevitably gain the desire to find “people guilty of everything”, that is, scapegoats. And under the noise of this “struggle” to redistribute someone’s business for their own benefit.Third, certain observers are probably wrong if they think that Russian energy diplomacy does not extend to Kyrgyzstan as well. In the west they do not understand this, they think that Russia implements such an approach only in relation to Ukraine and Belarus’, and partially – Turkmenistan. But after all few think about the fact that in Kyrgyzstan, Russia is playing with the same levers as well.Fourth, nor should we write off Kyrgyzstan’s southern neighbor – China. It too has its opinion relative to the presence of the U.S. base in Kyrgyzstan, in particular, and the existence of the U.S in the region as a whole.But no matter what kinds of intrigues one weaves, one must remember that the reason for the appearance of a base in Manas was the events in Afghanistan. Until an accountable power is established there, the airplanes in Manas are going to be needed by everybody – be it Kyrgyzstan, Russia, or America.