WHAT DOES BAKIYEV REALLY WANT FOR THE BASE? MAYBE

C O N F I D E N T I A L SECTION 01 OF 02 BISHKEK 000108 SIPDIS DEPT FOR SCA/CEN E.O. 12958: DECL: 02/05/2019 TAGS: PGOV PREL PINR MARR KG SUBJECT: WHAT DOES BAKIYEV REALLY WANT FOR THE BASE? MAYBE "ONLY" $450 MILLION REF: A. BISHKEK 96 ¶B. BISHKEK 88 ¶C. BISHKEK 80 ¶D. BISHKEK 44 BISHKEK 00000108 001.2 OF 002 Classified By: Ambassador Tatiana C. Gfoeller, Reasons 1.4 (b) and (d). ¶1. (C) Summary. Initial conversations with Embassy contacts have provided a plausible context to President Bakiyev's decision to close Manas. Piecing together information from different sources, our initial analysis is that Bakiyev's actions have been driven by the need to secure a war chest for early presidential elections, and the key components of the Russian offer are the $150 million grant, and the $300 million concessional loan, both of which Russia has reportedly pledged to provide by April 30. With a $450 million slush fund in hand, Bakiyev can raise salaries, fund social housing, ensure there will be no shortages of food in the markets, buy off local officials, and buy the votes needed to engineer a successful re-election. The recent government changes have put in place a strong-arm team to manage the election campaign and stamp out any opposition that may emerge. While the Embassy is not advocating that we try to top the Russian financial package at this time, we do note that if the decision to do so is taken in Washington, it appears that realistically, we may not be competing against over $2 billion but a far more modest $450 million. We have received one indirect indication that the Kyrgyz are waiting for a counter offer from the U.S. on Manas Air Base. End Summary. Looking to Early Elections -------------- ¶2. (C) Recent conversations with Embassy contacts have begun to shed light on the domestic political reasons associated with the decision by President Bakiyev to close Manas Air Base. Although Presidential elections are not due until 2010, Bakiyev and his new Chief of Staff, Daniyar Usenov, have apparently decided to move them up to 2009. Their calculation is that they will successfully weather the energy crisis this year -- the winter has been unseasonably mild so far -- but next year will likely be worse, given the still low water levels in the Toktogul reservoir, and the additional wear and tear on the generation and distribution network from this year's frequent power cutoffs to conserve energy. In January, Bakiyev cleaned house, installing loyal and seasoned cronies who can be relied on to engineer an election victory. (Refs C and D) ¶3. (C) Bakiyev is also seeking to secure a campaign chest to fund his re-election. The current energy crisis and resulting $300 million budget shortfall set him looking for a major infusion of cash. This was the genesis of the financial assistance package with Russia. The key to the Russian package, according to this version, was the $450 million in cash up front in the form of grants and concessional loans, that Bakiyev is to receive by April 30. Essentially, this will be used to secure Bakiyev's re-election this year. The rest of the deal, which consists of $1.7 billion in loans to a Russian-Kyrgyz joint venture to complete the huge Soviet-era Kambarata 1 hydroelectric dam, is irrelevant to Bakiyev's short-term need for campaign cash. Back to the USSR -------------- ¶4. (C) Two of those who lost their jobs in January, former Presidency Chief of Staff Sadyrkulov and former First Vice Prime Minister Ibraimova are, according to a contact of Ibraimova's, considering moving into open opposition to Bakiyev. According to the contact, Sadyrkulov was eased out of his post after a falling out with Bakiyev's son, Maxim, BISHKEK 00000108 002.2 OF 002 over how far Bakiyev would go to engineer his re-election. Sadyrkulov favored a more moderate approach. Ibraimova was fired because she is a protege of Sadyrkulov's. In a scenario reminiscent of the Soviet era, both Ibraimova and Sadyrkulov believe they are under government surveillance, and change cell phones daily. Ibraimova, through an intermediary, yesterday requested to meet with the DCM; today the Embassy learned she has reconsidered, due to her concerns about being observed meeting with an Embassy official. Sadyrkulov, on the other hand, nevertheless plans to meet the Ambassador tomorrow, February 6. (Note: It is interesting to note that Kyrgyz Ambassador to the U.S. Sydykova warned the Ambassador already last week that if Bakiyev moves to close the Base, Kyrgyz people will become afraid to have contact with the Embassy, Ref B. End Note.) A View from the Administration -------------- ¶5. (C) A Western diplomat and close friend of the Embassy informed us today that he met yesterday with a low level Presidency official. The official had several comments concerning the current situation regarding Manas. According to the official, (corroborating what we have been told ourselves by a number of Kyrgyz officials and laymen),the Kyrgyz side never felt that it received the promised $150 million from the U.S. side at the time of the 2006 base re-negotiations. He said that the Kyrgyz side had expected additional support to the government, and they completely rejected counting USAID democracy assistance and other social programming toward that total. This fostered anger toward the Americans, whom they viewed as not keeping their part of the deal. ¶6. (C) The official also said that Bakiyev's (final) decision to announce the Base closure was not made until he got to Moscow. There had been long negotiations with the Russians over the financial package, and he thinks that Bakiyev would not have made the announcement unless he had received assurances from Medvedev. Still, he said, there are doubts within the Kyrgyz administration that the Russians will come through with the money by April as promised, or at all. There is a history of broken promises with Moscow. He said that their main concern was that the Duma had not appropriated the money for this deal, and it was possible that the Duma might delay -- or reject -- the deal. ¶7. (C) The official said that the up-front money -- the $150 million grant and $300 million loan -- was the most important, as this would be a war chest for Bakiyev's election campaign. The official claimed that the Russians were making similar financial offers to the Tajiks, in case we were thinking to relocate the Base there, in order to deny the U.S. a military presence in Central Asia. Finally, the official stressed that the Kyrgyz administration was expecting the U.S. side to come back with an offer, taking into consideration the size of the Russian financial package. Comment -------------- ¶8. (C) This is just the initial snapshot that is emerging, but it contains some important new details. First, as Washington considers how to respond to the Kyrgyz, it is important to note that, from Bakiyev's perspective, the essence of the Russian proposal is $450 million in cash, not $2.5 billion. Second, even the Kyrygz have doubts whether the Russians will deliver in April as promised. Should they fail to do so, the Kyrgyz would likely be more receptive to reaching agreement with us. Finally, we have another indication that the Kyrgyz are expecting us to make a counter offer. GFOELLER