Kumtor Mine Protests: A Threat to Stability or Democratic Expression?

In May, 2013, thousands of protesters in the Kyrgyz Republic's Jety-Oguz district blocked access to the Canadian-owned Kumtor goldmine, the largest such mine in the country. According to Radio Free Europe/Radio Liberty, the protesters were there to demand the nationalization of the mine over allegations that Centerra, the company that owns the mine, was turning a blind eye to environmental damage and paying too little in taxes. The protests, however, quickly turned violent, and some 55 people were injured in clashes with police. Although the state of emergency was lifted after several days, further protests broke out at the end of June, with protesters once again demanding nationalization of the mine. 

This is not the first time that the Kyrgyz have protested against foreign-owned mining ventures. The latest protests come on the heels of similar protests against a Chinese mining concern in May. Kumtor itself has been the subject of heated controversy in the past, with some Kyrgyz lawmakers alleging that Centerra was not paying its fair share -- a mere $114 million for $941 million worth of gold, according to one source. Although the Kyrgyz government reportedly gained a 33% stake in operations at Kumtor, unrest surrounding the mine has not ceased. Considering that the Kyrgyz economy is heavily dependent on the export of raw materials, and gold in particular – Kumtor itself accounts for roughly 12% of the entire economy – the mine protests can be interpreted as democratic, populist reactions to the perception that the republic's most valuable assets are being bought up by foreign corporations whose only interest is extracting the country's natural resources. Many people see little benefit accruing to the Kyrgyz people from such operations, which frequently employ foreigners rather than locals:

"People are frustrated with a lack of jobs and with poverty, when a lucrative source of income right under their noses goes to foreigners," says Berdibek Dairov, a resident of Emgegchil [where a mine is located] who is critical of the fact that the mine's owners have hired Chinese instead of locals to work for them.

"Why should only the Chinese come and work here?" he asks. "Why can't Kyrgyz get that job? Our demand is that the Chinese must go. Kyrgyz guys have to work here. If the Chinese must work here, then [authorities] have to hand over the mine to local companies for developing. Then Chinese workers can work for us."

However, the demonstrations also point to the ongoing development of a culture of mass protest in the Kyrgyz Republic. Although the mass mobilizations against the governments of Askar Akaev in 2005, and Kurmanbek Bakiev in 2010 were expressions of popular discontent with the corruption and venality of increasingly authoritarian governments, as Kevin Jones has argued, the institutionalization of mass demonstrations is potentially problematic:

The Kyrgyz pattern of protest is so deeply rooted that the most effective threat used by political entrepreneurs is that they will call out their supporters to protest or demonstrate on a particular issue. This represents a failure of the Kyrgyz democratic process. A functioning democracy depends on a functioning legal process. If leaders can be chosen by mass protests, courts overthrown by the most vocal opponent, and presidents removed by a crowd of a few hundred, democracy does not exist. Until the Kyrgyz Republic can establish institutions through which political entrepreneurs can address legitimate concerns and grievances, street protests will continue to serve as the solution to all political, social, and economic problems.

Moreover, the Institute for War and Peace Reporting has repeatedly noted the existence of so-called "rent-a-mobs" in Kyrgyzstan – essentially paid activists who will take part in any protest that promises monetary compensation, regardless of what the protest is about. Marcin Szymanek writes that

[t]his phenomenon is called OBON: an umbrella name for the informal groups organised into rent-a-mob structures, who offer services such as staging protests, breaking them up or heckling and harassing opponents of their clients. The last two revolutions in Kyrgyzstan which overthrew regimes in 2005 and 2010, as well as manifestations and other public gatherings which entailed the clashes in the city of Osh, were battlegrounds in which OBON “activists” actively took part.

The institutionalization of mass protest means that direct actions of this nature are increasingly becoming a default tactic, and the monetarization of protest guarantees that large numbers of people can be counted upon to attend any given demonstration. This combination sets the stage for such actions to spiral out of control, as happened in October, 2012, when around 1000 people gathered in Bishkek, ostensibly to protest against the Kumtor mine. However, incited by the nationalist politician Kamchybek Tashiev, the mob stormed the Kyrgyz parliamentary building and attempted to overthrow the government of President Almazbek Atambaev. Tashiev and three other leaders of the nationalist Ata-Jurt (Homeland) party were arrested, prompting Ata-Jurt supporters in Jalal-Abad to protest and demand that they be released. When the judge presiding over the case was attacked by Ata-Jurt partisans, Tashiev and his cohorts were acquitted of all charges and set free.

The very possibility of the Kumtor protests, and the government's measured reaction to them, clearly demonstrate that the Kyrgyz Republic remains the most politically open society in Central Asia -- despite the violence that broke out between police and protesters, it is nevertheless instructive to compare the Kumtor demonstrations to the Kazakh government's handling of the Zhanaozen protests, to say nothing of the events in Andijon. That being said, there are also worrisome aspects that should not be ignored. The potential for any popular demonstration to be exploited by what Jones calls "political entrepreneurs" is amplified by a burgeoning "culture of protest" in Kyrgyzstan, which itself is fed by the monetarization of direct action. As in October 2012, such mass mobilizations can serve as pretexts for coup attempts in the mould of the 2005 and 2010 revolutions. 

Moreover, as in the case of the 2012 and 2013 Kumtor mine protests, demonstrations also have the potential to become the venue for regional rivalries. Both in 2012 and during the most recent protests, supporters of opposition parties based in the south have featured prominently. Tashiev's nationalist Ata-Jurt party has its strongest base of support in southern regions, such as Jalal-Abad, and populist protests like those at Kumtor present perfect opportunities to destabilize or replace the government of President Atambaev, whose power base is in the north.

In the final analysis, then, the protests over the Kumtor mine, and others like them, cannot be neatly categorized. On the one hand, the anger over the perception that foreign companies are despoiling the country's environment and profiting from Kyrgyzstan's natural resources, with few appreciable benefits to most Kyrgyz citizens, appears genuine. Kyrgyzstan's relatively open society and tradition of protest means that these citizens have the opportunity to express their discontent in a forum that does not exist to any appreciable degree in neighboring states. On the other hand, this same tradition of protest, combined with the success of mass mobilizations against the Akaev and Bakiyev regimes and the fact that many protesters are revenue-seeking opportunists, means that political entrepreneurs have both incentive and means to try to leverage popular unrest to achieve local and regional geopolitical aims.

Kyrgyz Perceptions of the American Transit Center at Manas Airport

Named after the eponymous hero of the “Manas Epos,” the Kyrgyz national epic, the American Transit Center at the Manas airport near Bishkek, the capital of Kyrgyzstan was originally opened through an agreement with Kyrgyzstan’s former President, Askar Akayev, in December of 2001 to support operations in Afghanistan. The siting of the base in Kyrgyzstan was a political coup for Akayev -- the government of Tajikistan had also hoped to negotiate a deal to open an airbase, but Manas was ultimately chosen instead – and brought much-needed money into the sagging Kyrgyz economy, factors that both helped to shore up Akayev’s legitimacy during a period in which his government was becoming increasingly unpopular.

From the very beginning, however, the Transit Center has been mired in controversy. During the Akayev era, much of the money that was flowing into Kyrgyzstan through Manas ended up in the hands of corrupt government insiders, including members of Akayev’s family. As Alexander Cooley has noted, “[t]he lion’s share of base-related funds flowed not to national agencies… but to private Kyrgyz entities closely tied to the ruling regime.” When Akayev was ousted in the 2005 Tulip Revolution, his successor, Kurmanbek Bakiyev, took a harder line on the base, and demanded more money from the U.S. government to continue operating the base. Although Bakiyev was only able to extract limited concessions from the United States, he was successful in exploiting the popular association of the Manas Transit Center with the corruption of the Akayev regime. This perception has only continued to grow, since successive Kyrgyz governments have enriched themselves through Manas. Indeed, one analyst has written that Manas “has become a milling method for the ruling elite.” Many local businessmen, moreover, have begun to complain that lobster, choice cuts of meat, and other gourmet food is being smuggled off the base by figures associated with organized crime and being sold at below-market prices in Bishkek, effectively undercutting their business. Decades of corruption and criminal activity have thus bred no small amount of resentment towards the presence of the Transit Center.

Another factor that contributes to bitterness vis-à-vis Manas is the widespread perception that the United States is an arrogant, imperialist power. Noise from the airbase, as well as jettisoning of fuel by American aircraft have enraged locals, as have incidents, such as a 2006 collision involving an American KC-135 Stratotanker and a civilian Tu-154. The handling of the 2006 shooting of Aleksandr Ivanov, a Kyrgyzstani driver who worked on the base, by Zachary Hatfield, an Air Force serviceman, only added to the perception that the United States has little regard for Kyrgyzstan beyond its utility as an airbase. Hatfield was never charged, and Ivanov’s family was offered $2000 in recompense, which Harper’s notes was “an act widely viewed in Kyrgyzstan as a calculated insult.” Harper's goes on to note that “The American management of the incident was totally bungled, leaving the local population with the idea that the Americans on the base were arrogant and not accountable to the law. The public’s view of Americans underwent a radical and sudden transformation. A nation once seen as generous benefactors now were seen as arrogant bullies.”

In the wake of the May, 2013 crash of another KC-135 at Manas, similar concerns are once again being voiced. There have been complaints that the Americans have been “obstructing” the examination by Kyrgyz authorities of the bodies of the servicemen killed in the crash. Although the United States is within its right to do so, such actions nevertheless contribute to the widespread view that the U.S. is supercilious and condescending towards its Kyrgyz counterparts. Others have gone so far as to say the way the United States handled the crash site effectively denied Kyrgyzstan’s sovereignty over parts of its own territory. In early May, a youth group, Zhon Ele, which has previously called for investigations into possible human rights violations, human trafficking, and drug smuggling at Manas, as well as into allegations that nuclear weapons targeted at Iran were located there (allegations that have been strenuously denied), held a protest against the base in Bishkek, shouting slogans like “Yankees, get out of Kyrgyzstan,” “Yankees, go home,” and “No to transit of NATO weapons.” They argued that military equipment had “no place adjacent to a civilian and international airport” and warned of the possibility that a fuel laden tanker jet could crash into a nearby city. Others in the Kyrgyz government have raised the spectre of American military aircraft crashing into the Chavlodar power plant, which is in the region. In an interview with Eurasianet, Roza Otunbayeva, the former President of Kyrgyzstan, claimed that the “whole [Kyrgyz] nation” worries of the possibility that the military base could become a target for terrorists. The base’s very proximity to Bishkek is therefore a major concern, at least from a security standpoint. 

Pressure from Russia is another major driver of Kyrgyz concerns vis-à-vis the Transit Center at Manas. Kyrgyzstan remains largely dependent on Russia for its military, economic, and energy needs, and so cannot afford to ignore Moscow. As Josh Kucera at Eurasianet has pointed out, “the Kremlin has offered a huge military aid package to Kyrgyzstan, which Russian officials have said is intended to shore up their geopolitical position in Central Asia, at the expense of the U.S.’s.” Kyrgyzstan is part of the Russian-led Collective Security Treaty Organization, and a Russian airbase in the city of Kant was established shortly after the U.S. began operating out of Manas. President Atambayev, moreover, appears to value closer ties with Russia than did his predecessors. Although he has declared that there will be “no military equipment” at Manas after 2014 and advocated turning the airport into a civilian hub, there have nevertheless been talks regarding the potential for developing a “joint Kyrgyzstan-Russian logistics center” at the base.

As of May 21, 2013, Kyrgyzstan has declared that the American Transit Center at Manas will indeed be closed by the end of 2014, as previously announced. Although some worry that the Americans’ departure will leave a deep hole in the Kyrgyz economy, President Atambayev has assured the public that the roughly 60 million dollars that will leave the country will be compensated by revenue from “other projects.” Barring any major developments, then, it would appear that Manas will indeed close according to the schedule dictated by the Kyrgyz government. Due to ongoing corruption associated with the base, perceptions that the Transit Center is an outpost for an arrogant and dismissive American empire, and continuing pressure from Kyrgyzstan's most important ally, Russia, local views of the American presence at Manas are not positive. Aside from those deriving direct benefit from the base’s continued operation – corrupt officials, organized crime, and regular employees who work at the base – it would appear that few in Kyrgyzstan will mourn its demise.

Russia Buys Production Rights for Ukrainian Transport Planes (commentary originally published in the April issue of Operational Watch)

          Exerting influence over the operations of Kyiv aircraft plant Construction Bureau (CB) Antonov has been a long-term goal of Russia because CB Antonov is one of the two fully functional plants on the post-Soviet territory in which the entire chain of aircraft development and production can be found under a single roof. While the other similar plant, CB Sukhoy, is capable of producing military airplanes, CB Antonov produces military, cargo, and passenger aircraft. Thus, CB Antonov is strategically important to Russia. The excerpt from the accompanying article discusses the recent agreement between the Samara aircraft plant Aviakor and CB Antonov for the transfer of intellectual property rights relating to the transport versions of passenger aircrafts AN-140S and AN-140T. This means that Aviakor will obtain proprietary maintenance rights for these aircraft, to extend its resources, and to alter the design without the Antonov design bureau’s involvement. These aircraft will replace the Russian Air Force’s AN-24 and AN-26 – the light military transport planes of which the Russian military owns around 300.  A contract with CB Antonov will enable the Russian Air Force to buy AN-140s from a Russian company, thus bypassing Ukraine.  It will also allow Russia to build a fleet of domestic aircraft. 

         Earlier, Russian Aviakor had complained about having to deal with the Ukrainian design bureau, which owned the relevant intellectual property and proprietary inspection rights, in order to eliminate defects discovered while using AN-140 aircraft purchased from CB Antonov. Aviakor was dissatisfied with the lengthy procedures and the nuisance of having to wait for Ukrainian approval before making alterations to the plane’s design. With the transfer of intellectual property rights to Russian Aviakor, which cost Russia several hundreds of millions of dollars, the situation has changed.  The main benefit of this deal is that it gives Russia full control over the purchase of aircraft from a Russian company Aviakor, thus assuring independence from political factors arising from dealing with foreign corporations.  Aviation expert Anton Lavrov, cited in the excerpt from the accompanying article, said that it is a common practice for other countries such as China to purchase property rights over foreign airplanes; however, this is the first time Russia has made such an agreement with a foreign company. 

         Collaboration in the airplane construction industry has thus been used by Russia to further its political agenda. For example, Mikhail Zubarov, the Russian ambassador to Ukraine, recently announced that Russia is ending its collaboration with Ukraine to produce AN-70 military and cargo aircraft. The status of projects related to the modernization of AN-140 and AN-124 fleets is currently in question as well. In fact, some experts believe that Russian plans to modernize Ukrainian airplanes without Ukraine’s participation are evidence of a direct attack against Ukrainian aircraft construction industry. This may be intended to pressure Ukraine into joining the Russian-dominated Customs Union, which would jeopardize Ukraine’s participation in the World Trade Organization. 

         There are no legal barriers excluding Russia from modernizing its fleet now that Russia owns the intellectual property rights to several Ukrainian aircraft. However, Russia may lack the expertise to conduct its own modernizations, and may therefore attempt to outsource Ukrainian engineers and experts. Although this situation has obvious negative consequences for Ukraine, it also has the potential to open up additional opportunities for Ukraine’s collaboration with the West and South-East Asia. Ukraine would be forced to search for partners other than Russia to ensure the long-term sustainability of its strategically important aircraft building industry.

Source:  Aleksey Mikhaylov, “Russia Is Purchasing the Rights to the Ukrainian An-140T Airplane. The Air Force Will Not Have To Depend on Foreign Suppliers,” Izvestiya Online, 27 March 2013. 

Sea-Breeze Ukraine: the Change of Popular Perceptions Over Time

The annual Sea Breeze exercise is the largest naval, air, and land multinational military exercise hosted by Ukraine since 1997 and held in the Black Sea region in collaboration with the U.S. Navy. The purpose of the Sea Breeze exercise is to address a number of maritime security issues including counter-piracy, humanitarian relief operations, search and rescue, live fire, among other tasks. The results of media analysis of popular perception of the Sea Breeze exercise in Ukraine, based on a sample of five Ukrainian regional and national newspaper publications from 2001 until 2013, uncover several underlying themes describing the nature of public resistance to these exercises. The study affirms that Ukraine is not a uniform country, and any kind of successful public information campaign regarding the Euro-Atlantic prospects of Ukraine would have to address multiple security and non-security issues, as well as the region-specific concerns.

         When examining the change of the public perception over time, it turns out that although the generally negative public perception of foreign military exercises on Ukrainian territory did not change significantly, the reporting of the issue in the Southern and Eastern regional newspapers became more moderate after the change of the post-Orange Revolution government. More in-depth content analysis of particular newspaper publications offers some insights regarding the changes in public perception. Thus, President Victor Yuschenko made foreign policy one of his top priorities in office, attempting to bring Ukraine closer to the Euro-Atlantic community, foster the process of Ukraine’s accession to NATO, and pursue a larger pro-European Union agenda. At the level of public perceptions, however, such an assertive pro-western foreign policy agenda was not well-received by the public, especially in relation to NATO. As the example of the Sea Breeze exercises demonstrate, since the Ukrainian public was not adequately prepared for the presence of foreign military forces on its territory, the Sea Breeze exercises caused massive protests in Crimea and other regions of Ukraine. In fact, during the post-Orange Revolution period, most of the governmental critique about Sea Breeze in local papers is directed against the President himself and his policies. Hence, the  perceived assertive pro-western objectives of the Sea Breeze exercise resulted in the greater public resistance against  this training, particularly in the Southern and Eastern regions of Ukraine.  

 Yuschenko’s successor President Victor Yanukovych employed a more moderate position that included re-framing Ukraine’s military doctrine and adopting a non-alignment policy towards NATO.  He has attempted to redevelop and improve relations with Russia, and to establish Ukraine as a neutral country with many friends rather than one main strategic ally. Consequently, although this more moderate governmental policy slowed Ukraine several steps back on its Euro-Atlantic path, it also reduced many of the common public fears associated with NATO and, in some ways, created a more conducive environment for the Sea Breeze exercises. Although anti-Sea Breeze protests did not stop completely and the public did not change their overall views, people became more accepting of this training, and media reporting became more constructive and more factual, as illustrated by the following quotes:

           "Only the toughest optimists believed that the end of the “orange” period in the new Ukrainian history will immediately make things better. In reality, not everything changed for better, and not everything changed immediately. We already learned that… The Parliament Deputies all together supported conducting in Crimea those sadly remembered drills “Sea Breeze”. As if there was no large-scale Crimean public protests against the presence of the American military in the Peninsular, and there was no appeal of the Crimean Parliament to their national colleagues and the President asking, to cancel the drills right in the middle of a tourism season. Now, the new government, similar to Yuschenko and Tymoschenko, is in a hurry to make an agreement with Crimean Tatar radicals… trying to gain their loyalty in the land issues"…Krymskaia pravda,  No. 89, May  22, 2010

          "As part of the preparation for the international educational exercises “Sea Breeze”, the navy forces of the border patrol unit of the Military-Naval Complex of Ukraine have completed their training in the Western Crimea and are heading to the main area to continue the drills… The military equipment and personnel are stationed on the ships “Konstantin Olshanskyy” and “Kirovohrad”. The series of civil tactical exercises preceded the main training program. Today the ships with the soldiers will arrive to the final training destination". Krymskaia pravda,  No. 121, July  09, 2010

 One lesson that could be drawn from this is that pursuing a one-sided and foreign policy agenda in a geopolitically divided country like Ukraine might not be the right path to achieving the desired outcome. The Sea Breeze lessons are applicable to other important foreign policy issues, including Ukraine’s relations with NATO. The example of Sea Breeze demonstrates that before the question of NATO membership reaches the point of a national referendum, a much more serious and long-term public information campaign needs to be conducted in Ukraine, to raise the level of public awareness regarding NATO and collaborative international security in general. Perhaps, such a campaign could also address the issues of military and institutional reform, and popularize the idea of  transparent and effective public institutions and the value of international collaboration more generally, thus informing the Ukrainian public about the broader implications of the Euro-Atlantic path.

Enforcement of judicial awards in russia

When disputes between shareholders and other business partners do arise, the Russian judicial system may not always be the most effective venue to resolve the matter.[i] The development of corporate law has been a recent development in the country and as a civil law system, courts are bound to rely solely on the Civil code for direction.[ii] This has caused unpredictable results because different courts have interpreted the law in varying ways, further contributing to an unstable investor market.[iii] This has been particularly concerning in regards to shareholder agreements, typically used to protect minority shareholder interests.  The reluctances of enforcement of stockholder agreements was exemplified by the 2006 West-Siberian District Commercial Court’s appellant holding in the Megafon case where the Court invalidated an agreement that anointed Swedish law as controlling.[iv] Russia’s Ministry of Economic Development realized this issue and responded by drafting the 2009 amendment to the Law on Joint Stock Companies.[v] This law recognized shareholder agreements and eliminated the possibility that courts would invalidate such agreements statutory grounds. Though the statutes expressly authorized shareholder agreements it failed to explain whether choice-of-law provisions were applicable to shareholder agreements.[vi] This lack of appreciation for freedom of contract provisions have discouraged many foreign investors and has been the rationale for Russian courts who have invalidated investor agreements.[vii] The 2010 Verny Zank case is one of the more recent examples of judicial reluctance to recognize shareholder agreements.[viii] There, the court found that the agreement violated required provisions of current legislation.[ix]

            The development of corporate law has been a rather recent development in Russian law. Moreover, the country is apart of the civil law tradition which requires courts to apply the law exclusively through their statutory interpretation. While this seems like it may provide for a simple result the opposite has generally been true. Courts interpret statues in a fashion that they deem fit, this creates a general lack of uniformity in the application of the law, discouraging investors from entering the market. Russian leadership has recently been advocating the promotion of measure that will increase investor confidence when investing in the country. Ensuring consistent and uniform judicial rulings will go a long was to luring foreign investment into the country.      

---

[i]. Glusker, supra note 49, at 598.  

[ii]. Karina L. Pulec, Legal Restraints on the Use of Shareholders’ Agreements for Structuring Foreign Investment Deals in Russia, 45 Cornell Int’l L.J. 487, 488 (2012).  

[iii] Id. at 509.

[iv] Id. at 503.

[v] Federal’ nyi Zakon RF o vnesenii izmenenii v Federal’ nyi zakon “Ob aktsionernikh obshchestvakh” I Stat’iu 30 federal’ nago zakon “O rynke tsennikh bumag” [ Federal Law of the Russian Federation on amendments to the Federal Law “On Joint Stock Companies” and Article 30 of the Federal Law “On the Securities Market”], Rossiiskaia Gazeta [Ros. Gaz.], June 10, 2009, available at http://www.rg.ru/2009/06/10/akcionernys-obshestva-dok.html [hereinafter 2009 Amendment].

[vi]. See Oda, Supra note 65(Check at the end), at 360.

[vii]. Id. at 361.

[viii]. See Postanovlenie FAS Moskovskogo Okruga “Verniy Znak” ît 25 maia 2011, No. À40-140918/09-132-894 [Resolution of the Moscow District Commercial Court of the case “Verniy Znak” on May 25, 2011, No. À40-140918/09-132-894], available at http://kad.arbitr.ru/PdfDocument/fe377b20-ebf5-4e28-88e5-be5adfd1bb88/A40-140918-2009_20110530_Reshenija%20i% 20postanovlenija.pdf [hereinafter Verniy Znak Case].

[ix]. Pulec, supra note 68, at 512.