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Kyrgyzstan: Is Purported Extortion Video a Bid to Boost Foreign Investor Confidence?

For years industry observers have asserted that environmental protests outside the Canadian-run Kumtor Gold Mine in Kyrgyzstan’s eastern mountains were part of an elaborate shakedown scheme. Now a video has emerged that appears to substantiate this view.

Kyrgyzstan’s State Committee on National Security (GKNB) announced the opening of a criminal investigation after the video appeared on state television August 28, purporting to show two men who had previously voiced environmental concerns demanding $3 million from a Kumtor representative in exchange for an apparent guarantee not to orchestrate protests. The video purportedly has a time stamp of July 31.

The video’s appearance on state television suggests that central government officials in Bishkek are intent not only on solidifying their hold on power, but want to forge a stronger working relationship with Kumtor’s operators, and, more broadly, boost foreign-investor confidence shaken by regular mining-related riots. GKNB representatives declined to address the video’s provenance.

Speaking in broken Russian in the video, the two men, identified as Bakhtiar Kurmanov and Ermek Dzhunushbaev, tell Douglas Grier, Kumtor’s director of sustainable development, that if their demands were not met, the mine would suffer dire consequences. “We will close Kumtor,” one claims. They go on to threaten they are ready to “declare war, there will be a civil war, there will be a revolution,” if Kumtor does not give them what they want.

The two claim in the video to have the support of nationalist politicians Kamchybek Tashiev and Sadyr Japarov. Those two recently lost their seats in parliament when the Supreme Court found them, along with another Ata-Jurt MP, guilty of attempting to seize power in connection with an October 2012 incident, in which an anti-Kumtor demonstration erupted into a riot.

In late May of this year, another riot and roadblock outside Kumtor -- related to the then-pending case against Tashiev and Japarov -- caused a shutdown at the mine. Disturbances also resulted in at least 55 injuries before police restored order.

Dzhunushbaev and Kurmanov, the two men appearing in the video, contend it is fake. Adding muscle to their claim, several hundred supporters blocked the road near the mine overnight on August 28, local news agencies reported. Throughout August 29 there have been scattered reports of other attempts to block the road near the mine.

Grier confirmed to EurasiaNet.org that the demands, and the meeting seen in the video, are genuine. In an August 29 statement, Kumtor Operating Company, which is owned by Toronto-listed Centerra Gold, said the company has been “constantly receiving threats of possible road blocks in the event of non-compliance with various kinds of demands.” The statement added that Kumtor representatives are cooperating with the official investigation.

Kumtor executives have regularly complained about shakedowns and threats from locals purporting to represent villagers’ environmental concerns. The men in the video, one Kumtor executive told EurasiaNet.org, had continued to threaten the company throughout August.

The video scandal follows on the heels of reports that Bishkek and Centerra are close to agreeing on a new operating arrangement after months of wrangling. Prime Minister Jantoro Satybaldiyev said on August 22 that the two sides had agreed to operate Kumtor through a joint venture, and that he hoped to submit the deal for parliamentary approval in September.

Centerra announced on August 23 that, under the terms of the proposal, the state-run Kyrgyzaltyn gold company “would exchange its 32.7 percent equity interest in Centerra for an interest of equivalent value in a joint venture company that would own the Kumtor project.” Company representatives went on to stress that “while Centerra believes that progress has been made in those discussions, no final agreement has yet been reached.”

As news of progress trickled out this month, many industry insiders expected that opposition leaders would again use environmental concerns and local protests in an attempt to thwart the deal – and undermine the fragile ruling coalition – when parliament convened next month.

In this context, the video is such a boon to the government that some are calling it a blatant setup: “This is PR to discredit these guys … so that the protests that were planned for autumn will be discredited. These guys fell for the bait,” said Turat Akimov, editor of Dengi i Vlast (“Money and Power”), a magazine in Bishkek.

Kumtor is Kyrgyzstan’s most significant economic asset. In a good year, it accounts for about 12 percent of the country’s GDP. Authorities in Bishkek have been engaged in a tussle for control over the mine all year, claiming that the previous operating deal, signed in 2009, was invalid because it was negotiated with former president Kurmanbek Bakiyev, who was overthrown the following year amid widespread corruption allegations. Opposition figures such as Tashiev and Japarov had latched onto the Kumtor negotiations in what many observers felt was a populist attempt to discredit the government using unsubstantiated claims of environmental damage caused by mining operations. Raising environmental concerns has traditionally been an effective way to mobilize protesters in Kyrgyzstan.

While almost no one doubts the mine has a detrimental environmental impact, several recent, independent audits have determined that the company’s operations are not breaking any Kyrgyz or European regulations.

Some industry observers contend the video exposes a problem related to good governance. Orozbek Duisheev, chairman of the Association of Miners and Geologists, said the video shows that Kyrgyzstan’s mining industry operates in a state of “anarchy.” He continued that the government, with its “absence of clear policy,” isn’t addressing problems.

“These men are just looking to benefit themselves,” Duisheev told EurasiaNet.org, adding that the video undermines the regular environmental charges leveled against Kumtor.

David Trilling is EurasiaNet's Central Asia editor.

Kyrgyzstan: Is Purported Extortion Video a Bid to Boost Foreign Investor Confidence?

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