CHARGE PROTESTS BISHKEK MAYOR'S ACTIONS AGAINST

C O N F I D E N T I A L SECTION 01 OF 02 BISHKEK 000766

SIPDIS

DEPT FOR SCA/CEN

E.O. 12958: DECL: 07/25/2018
TAGS: PGOV PREL EINV KIDE OPIC KG
SUBJECT: CHARGE PROTESTS BISHKEK MAYOR'S ACTIONS AGAINST
HYATT

REF: BISHKEK 760

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Classified By: CDA Lee Litzenberger for Reasons 1.4 (b) and (d).


1. (C) Summary: Charge called on presidential foreign policy
advisor Islan Ryskulov July 25 to protest the actions of the
City of Bishkek against the Hyatt Regency Hotel. Charge
pointed out that the city's unilateral actions to shut off
the hotel's water supply and tear down the hotel's perimeter
security fence violated Kyrgyz law, broke the terms of the
Hyatt's leases and contracts, and threatened the security of
the hotel. Charge said that we see these actions as an
attack on the largest U.S. investment in Kyrgyzstan, and, if
not resolved, these actions would have serious consequences
for the bilateral relationship. Ryskulov agreed that the
incidents were unfortunate, but assured Charge that it was
solely the work of the mayor of Bishkek and did not reflect
administration policy. Ryskulov was hopeful that the
"economic dispute" between the Hyatt and the city could be
"resolved" in a few days. Separately, the Embassy sent a
diplomatic note to the MFA protesting the city's actions and
requesting that the government provide security to secure the
perimeter of the Hyatt. End summary.


2. (SBU) Charge met with presidential foreign policy advisor
Islan Ryskulov to protest the actions by the Bishkek Mayor's
Office against the Hyatt Regency Hotel in Bishkek. The
Hyatt, which represents the largest American investment in
Kyrgyzstan, leases approximately 2 hectares in central
Bishkek from the City of Bishkek. On the grounds stands a
statue of a famous Kyrgyz ballerina. The City of Bishkek
contends that the Hyatt's fence blocks "public access" to the
statue, and has demanded that the Hyatt remove its perimeter
fence. On July 16 municipal authorities shut off the water
supply to the hotel, and on July 24 city workers tore down
the security fence surrounding the hotel (Reftel).


3. (C) Charge told Ryskulov that the City of Bishkek's
unilateral actions against the Hyatt constitute a violation
of Kyrgyz law, break the terms of the Hyatt's leases and
contracts, and threaten the security of the Hyatt. Charge
noted that senior Hyatt officials in the United States had
raised the case with A/S Boucher. Charge said that we see
the city's actions as an attack on the largest American
investment in Kyrgyzstan, and if the situation is not
resolved quickly, this would have consequences for the
bilateral relationship. Charge said that the actions against
the Hyatt send an extremely negative signal about the
environment for foreign investment in Kyrgyzstan, contrary to
the expressed policy of President Bakiyev and the Kyrgyz
government. Charge said that the U.S. expects that the City
of Bishkek will compensate the Hyatt for the damages and
restore the security fence. Charge added that we were
requesting the Ministry of Internal Affairs to provide
perimeter security for the Hyatt until the fence is rebuilt.


4. (C) Ryskulov said that the situation was unfortunate, and
he assured Charge that the action was solely that of the
Mayor of Bishkek and did not reflect the administration's
policy. He characterized the situation as an "economic
dispute" between a "private party" and the City of Bishkek,
and he hoped that this would not become a "political"
dispute. He said that he had spoken earlier in the day to
presidential chief of staff Sadyrkulov, and they thought that
one possible solution could be for the Hyatt to agree to move
the statue to another location, and then the City to rebuild
the fence. Charge pointed out that the Hyatt had previously
offered to move the statue, but the City had refused the
idea.


5. (C) Ryskulov acknowledged that the actions had been a "big
mistake", but he said that the administration would take

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steps to resolve the situation. He said he and Sadyrkulov
would speak to the Mayor of Bishkek, and he was hopeful that
the situation could be resolved in the next few days by
Sadyrkulov, the Prime Minister, or the President.


6. (C) Separately, the Embassy sent a diplomatic note
protesting the actions taken against the Hyatt Hotel by the
City of Bishkek and requesting that the government provide
additional security around the perimeter of the Hyatt
property until the fence is restored.


7. (C) Hyatt's U.S. Director for the Bishkek project wrote
directly to President Bakiyev to protest the City's actions.
The letter points out that the terms of the land leases
offered by the City of Bishkek were crucial to the Hyatt's
decision to invest to invest in the Bishkek project.


8. (U) The water supply to the Hyatt was restored on July 25.
The Mayor's Office also released a press statement noting
that the Hyatt pays $2600 per year to lease its land.


9. (C) Comment: Ryskulov was concerned about the incident
and seemed to understand the seriousness of the possible
consequences to the bilateral relationship, as well as to the
investment climate. While we are encouraged that Ryskulov
thought the situation could be resolved "in the next few
days," we are not as confident that this situation can be
resolved quickly or easily, because the Mayor's ultimate goal
appears to be to force the Hyatt to pay more for the land it
leases from the city.
LITZENBERGER