Identifier
Created
Classification
Origin
07BISHKEK1368
2007-11-15 11:56:00
CONFIDENTIAL
Embassy Bishkek
Cable title:  

RESOURCE NATIONALISM IN THE KYRGYZ REPUBLIC

Tags:  EPET PGOV EMIN KG 
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C O N F I D E N T I A L BISHKEK 001368 

SIPDIS

SIPDIS

DEPT FOR SCA/CEN (GEHRENBECK)
DEPT FOR EEB/ESC/IEC/EPC (GRIFFIN)

E.O. 12958: DECL: 11/15/2017
TAGS: EPET PGOV EMIN KG
SUBJECT: RESOURCE NATIONALISM IN THE KYRGYZ REPUBLIC

REF: STATE 150999

Classified By: Deputy Chief of Mission Lee Litzenberger for Reasons 1.4
(b) and (d)

C O N F I D E N T I A L BISHKEK 001368

SIPDIS

SIPDIS

DEPT FOR SCA/CEN (GEHRENBECK)
DEPT FOR EEB/ESC/IEC/EPC (GRIFFIN)

E.O. 12958: DECL: 11/15/2017
TAGS: EPET PGOV EMIN KG
SUBJECT: RESOURCE NATIONALISM IN THE KYRGYZ REPUBLIC

REF: STATE 150999

Classified By: Deputy Chief of Mission Lee Litzenberger for Reasons 1.4
(b) and (d)


1. (C) Summary: To the extent it exists here, resource
nationalism in the Kyrgyz Republic has focused on gold mining
operations. Political grievances over the Canadian-run
Kumtor gold mine concession have generated demands for
greater Kyrgyz ownership, additional tax assessments,
environmental damage claims and other obstacles. A recent
agreement between the Canadian firm and Kyrgyz officials,
which resulted in an increased Kyrgyz share in the Canadian
operator's parent company, could mark the end of this
prolonged dispute. However, such disputes may often benefit
individual, rather than national, interests. Although more
egregious instances of resource nationalism in neighboring
countries provide possible models to Kyrgyz officials, there
is no overt concern about western investment in the Kyrgyz
natural resources sector. End summary.

The Luster of Gold
--------------


2. (C) With limited proven deposits of natural gas and oil,
resource nationalism in the Kyrgyz Republic focuses mainly on
gold. Eyeing the enhanced revenues obtained by
hydrocarbon-rich neighbors, as well as questioning the
legitimacy of mining concessions granted by former President
Askar Akayev's government, Kyrgyz government officials and
parliamentarians have challenged the incumbent Canadian
concession holder to cede more control and revenue over its
operations at the Kumtor mine in eastern Kyrgyzstan.


3. (C) Political grievances have been manifested in pressure
to increase the Kyrgyz government stake in the Canadian
mining operator's parent company, claims of environmental
damage, additional tax assessments and other obstacles. The
Kyrgyz parliament prepared draft legislation on the Canadian
company's operations which threatened nationalization. The
Canadian firm and Kyrgyz officials subsequently agreed on an
arrangement which doubled the Kyrgyz government's share in
the Canadian company in return for the affirmation of the
concession and resolution of other issues. However, the
dissolution of the Kyrgyz parliament in advance of upcoming
elections has prevented the requested parliamentary
ratification of this agreement.


4. (C) While there have been disputes involving other mining
concessions in the Kyrgyz Republic, some outside observers
consider these disputes to be attempts by incumbent political
forces to squeeze investors for the benefit of individual,
rather than national, interests. Although the government has
gained assets in the Kumtor dispute, no state-owned
enterprises have derived particular benefit from recent
actions. The results of these disputes have simply empowered
politicians and generated more assets for disbursement. In
the midst of efforts by Russian and Kazakh interests to
exercise greater influence over Kyrgyz natural resources,
Kyrgyz officials occasionally express concerns about the
potential excessive influence on and ownership by Chinese
interests of Kyrgyz natural resources. Meanwhile, Kyrgyz
officials continue to express the country's openness to
western investment.

YOVANOVITCH