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Economy and Sanctions Derail Russia’s Central Asian Investments

Two major hydroelectric projects planned for Kyrgyzstan’s Naryn River have been stopped after the Central Asian country agreed to pull out of agreements with Russia. Kyrgyz President Almazbek Atambayev cited Russia’s lagging economy and sliding oil prices as the reasons why Russian companies and the government are unable to fulfill their parts of the 2012 agreement. (Photo: Dean C.K. Cox)

After years of embarking on promising forays into Central Asia’s economy, Russia is being forced to pare back its ambitions.
 
The starkest retreat of Russian money is seen in Kyrgyzstan, whose parliament voted overwhelmingly last week to cancel a deal with Russian companies to build two major hydropower facilities. The decision came after MPs concluded that the projects were going nowhere.
 
President Almazbek Atambayev ruefully admitted during a press conference in December that the conditions were not right. “In the current situation, when the economy of Russia is not on the rise, let’s just say, and the trend for oil prices is only going downward, we see that these agreements… well, for objective reasons they cannot be fulfilled by the Russian side,” he said.
 
Failure to get Kambarata-1, which was to be built jointly with Inter RAO UES, and the Upper Naryn cascade, a joint project with RusHydro, off the ground comes as a major blow for Kyrgyzstan. Authorities had nourished dreams of selling excess electricity to Afghanistan and Pakistan for much-needed cash.
 

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Peter Leonard is EurasiaNet's Central Asia editor.

Economy and Sanctions Derail Russia’s Central Asian Investments

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