As EU imposes new sanctions on state-owned companies, Gazprom and Rosneft invest heavily in Central Asian state.
Stephanie Ott in Bishkek, Thursday 18 September 2014 05.00 BST
While Russia’s relationship with Ukraine has been grabbing the headlines, Moscow has been steadily strengthening its foothold in another of the post-Soviet states – Kyrgyzstan.
In the past few years Russia has written off half a billion dollars of the impoverished Central Asian country’s debt, pledged to supply the government with weapons and military equipment and taken over its gas network.
The state-run oil giants Rosneft and Gazprom, the subject of new EU sanctions announced last week, have both invested heavily in new energy projects in Kyrgyzstan over recent years.
Significantly, Russian influence resulted in the recent closure of themassive US air base Manas outside the capital Bishkek, marking the end of American military presence in the region.
“In essence, the closing of Manas marks Kyrgyzstan’s new era as a Russian client state,” said Central Asia specialist Alexander Cooley, professor of political science at Barnard College at Columbia University.
Manas was built in 2001 after the 9/11 attacks and served as a base for more than 5.3 million Nato troops serving in Afghanistan. It officially closed in July 2014.
“The Kyrgyz side faced significant pressure from Moscow to close the facility,” Cooley said.
Acting under a mix of pressure and economic incentives from Russia, the Kyrgyz government first tried to evict the US from Manas in 2009. The Americans agreed to raise the annual rent from $17.4m to $60m, and the base was allowed stay.
But Russia grew increasingly wary of foreign military presence in the region, and upped the ante.
“This time Moscow has effectively used a number of instruments of influence to assert itself as Kyrgyzstan’s primary foreign policy and security partner,” Cooley said.
In August, Russia pledged $500m in financial assistance to Kyrgyzstan to speed up Kyrgyzstan’s integration into the Moscow-led Eurasian Economic Union, an economic bloc that currently includes Belarus and Kazakhstan. Russia’s Foreign Minister Sergei Lavrov said the funds will ensure “maximum comfort” for Bishkek, but did not disclose details what the money will be spent on. Kyrgyz President Almazbek Atambayev said his country would join the Eurasian Economic Union by the end of the year.
Now that the foreign military presence is gone from Kyrgyzstan, “Russia will now assert itself as the country’s exclusive security patron,” Cooley said.
In 2012 Russia agreed to write off almost $500m of Kyrgyz debt in exchange for a 15-year extension of the lease for a Russian military air base.
Moscow operates four military installations in Kyrgyzstan, including the Kant Air Base near Bishkek where 600 Russian servicemen and a number of warplanes are based, and a naval test site at Lake Issyk Kul in the Tien Shan mountains.
Russia also pledged to supply weapons and other military equipment worth $1.1bn to Kyrgyzstan as part of a bilateral armed forces assistance programme, according to the Russian news agency RIA Novosti.
Experts say that with these measures Putin is trying to restore influence in the region that Russia lost when the Soviet Union disintegrated.
According to Alexei Malashenko, a Central Asia scholar and chair of the Carnegie Moscow Center, Russia exerts a lot of power over Kyrgyzstan. “To my mind, Kyrgyzstan is more controlled by Moscow than other Central Asian states,” he said. Kyrgyzstan’s current president Almazbeck Atambaev “sees no alternative to Russian economic and political presence,” he added.
Kyrgyzstan’s gas infrastructure was put entirely under Russian control this year. Russia’s Gazprom paid a symbolic $1 to take over the Kyrgyzgaz natural gas network in July, and vowed to invest 20bn roubles ($521m) to upgrade its infrastructure in the first five years. With this deal, the Russian gas giant also assumed Kyrgyzgaz’s debts of around $40m.
This month Bishkek announced that Gazprom would start exploration of gas fields in Kyrgyzstan by late September. Other recent deals include RusHydro, a Russian state-owned energy company, which began construction on a series of hydroelectric dams in Kyrgyzstan.
Rosneft, the Russian state-owned oil company, also signed a deal in February this year to invest up to $1bn for a stake of at least 51% in Manas International Airport.
Last week the EU announced new sanctions against Russia over the Ukraine crisis, including restrictions on the Rosneft and Gazprom, which will now be prevented from raising capital on EU markets.
Kyrgyzstan has many ethnic and cultural similarities with Russia. Almost one million Kyrgyz people are said to work abroad, most of them in Russia. Their remittances, according to the World Bank, make up 30% of Kyrgyzstan’s GDP.
Kyrgyzstan is the only multi-party parliamentary democracy in Central Asia, but the political system is under pressure. Two presidents have been deposed by violent revolts since 2005.
[plain]Mirsuljan Namazaaly, a political economist in Bishkek and the co-founder of the Central Asian Free Market Institute, said: “I wouldn’t say that Kyrgyzstan is politically independent from Russia, as many laws are just copying the laws from Russia, presidents and members of parliament always look at Russia and do what Russia can approve.” However he stressed that Kyrgyz people are generally not opposed to Russia’s influence, and that most favour the Russian presence and support in their country.[/plain]