Johanna Popjanevski - The Central Asia-Caucasus Analyst

Central Asia-CaucasusAnalystBI-WEEKLY BRIEFING VOL. 9 NO. 24 12 DECEMBER 2007Searchable Archives with over 1,500 articles at http://www.cacianalyst.orgANALYTICAL ARTICLES:STUDY ABROAD BECOMES A NEWPRIORITY FOR AZERBAIJANIGOVERNMENTFariz IsmailzadeOSCE DESIGNATES KAZAKHSTAN AS FIRSTCENTRAL ASIAN PRESIDENCYRichard WeitzDEALING WITH UZBEKISTAN AFTERKARIMOV’S LIKELY RE-ELECTIONAftab KaziKAZAKHSTAN’S FOREIGN INVESTMENTLAW CHANGES AGAINRobert M. CutlerFIELD REPORTS:TENSIONS IN ABKHAZIA RISE AS TBILISIPREPARES FOR PRESIDENTIAL ELECTIONSJohanna PopjanevskiBERDIMUHAMMEDOV EMBARKS ONFINANCIAL REFORMSChemen DurdiyevaPRIME MINISTER DISMISSEDIN KYRGYZSTANNurshat AbabakirovCOMPARING PRO-PRESIDENTIAL PARTIESIN CENTRAL ASIAErica MaratNEWS DIGEST

Central Asia-Caucasus AnalystContentsBI-WEEKLY BRIEFINGVOL. 9 NO. 2412 DECEMBER 2007Analytical ArticlesSTUDY ABROAD BECOMES A NEW PRIORITY FOR AZERBAIJANI GOVERNMENT 3Fariz IsmailzadeOSCE DESIGNATES KAZAKHSTAN AS FIRST CENTRAL ASIAN PRESIDENCY 5Richard WeitzDEALING WITH UZBEKISTAN AFTER KARIMOV’S LIKELY RE-ELECTION 8Aftab KaziKAZAKHSTAN’S FOREIGN INVESTMENT LAW CHANGES AGAIN 11Robert M. CutlerField ReportsTENSIONS IN ABKHAZIA RISE AS TBILISI PREPARES FOR PRESIDENTIAL ELECTIONS 14Johanna PopjanevskiBERDIMUHAMMEDOV EMBARKS ON FINANCIAL REFORMS 15Chemen DurdiyevaPRIME MINISTER DISMISSED IN KYRGYZSTAN 17Nurshat AbabakirovCOMPARING PRO-PRESIDENTIAL PARTIES IN CENTRAL ASIA 19Erica MaratNews Digest 21

THE CENTRAL ASIA-CAUCASUS ANALYSTEditorSvante E. CornellAssistant Editor, News DigestAlima BissenovaChairman, Editorial BoardS. Frederick StarrThe Central Asia-Caucasus Analyst is an English language global Web journal devoted to analysis of the current issues facing the CentralAsia-Caucasus region. It serves to link the business, governmental, journalistic and scholarly communities and is the global voice of theCentral Asia-Caucasus Institute & Silk Road Studies Program Joint Center. The Editor of the Analyst solicits most articles and fieldreports, however authors may suggest topics for future issues or submit articles and field reports for consideration. Such articles and fieldreports cannot have been previously published in any form, must be written in English, and must correspond precisely to the format andstyle of articles and field reports published in The Analyst (www.cacianalyst.org) and described below.The Analyst aims to provide our industrious and engaged audience with a singular and reliable assessment of events and trends in theregion written in an analytical tone rather than a polemical one. Analyst articles reflect the fact that we have a diverse internationalaudience. While this should not affect what author’s write about or their conclusions, this does affect the tone of articles. Analyst articlesfocus on a newsworthy topic, engage central issues of the latest breaking news from the region and are backed by solid evidence. Articlesshould normally be based on local language news sources. Each 1000-1200 word analytical article must offer a concise and authoritativestatement of the event or issue in question. An article must provide relevant, precise and authoritative background information. It also mustoffer a sober and analytical judgment of the issue as well as a clinical evaluation of the importance of the event. Authors must cite facts ofcontroversial nature to the Editor who may contact other experts to confirm claims. Since Analyst articles are based on solid evidence,rather than rumors or conjecture, they prove to be reliable sources of information on the region. By offering balanced and objective analysiswhile keeping clear of inflammatory rhetoric, The Analyst does more to inform our international readership on all sides of the issues.The Editor reserves the right to edit the article to conform to the editorial policy and specifications of The Analyst and to reject the articleshould it not be acceptable to our editorial committee for publication. On acceptance and publication of the edited version of the article, TheCentral Asia-Caucasus Institute of The Johns Hopkins University-The Nitze School of Advanced International Studies will issue anhonorarium to the author. The copyright for the article or field report will reside with the Central Asia-Caucasus Analyst. However, theauthor may use all or part of the contracted article in any book or article in any media subsequently written by the author, provided that acopyright notice appears giving reference to the contracted article’s first publication by the "Central Asia-Caucasus Analyst, Central Asia-Caucasus Institute, The Johns Hopkins University-The Nitze School of Advanced International Studies."Submission Guidelines:Analytical Articles: Analytical articles require a three to four sentence Key Issue introduction to the article based on a news hook. Ratherthan a general, overarching analysis, the article must offer considered and careful judgment supported with concrete examples. The ideallength of analytical articles is between 1,000 and 1,300 words. The articles are structured as follows:KEY ISSUE: A short 100-word statement of your conclusions about the issue or news event on which the article focuses.BACKGROUND: 300-450 words of analysis about what has led up to the event or issue and why this issue is critical to the region. Includebackground information about the views and experiences of the local population.IMPLICATIONS: 300-450 words of analysis of the ramifications of this event or issue, including where applicable, implications for thelocal people’s future.CONCLUSIONS: 100-200 words that strongly state your conclusions about the impact of the event or issue.Field Reports: Field Reports focus on a particular news event and what local people think about the event, or about the work of an NGdO.Field Reports address the implications the event or activity analyzed has for peoples’ lives and their communities. Field Reports do not havethe rigid structure of Analytical Articles, and are shorter in length, averaging ca. 700-800 words.Those interested in joining The Analyst’s pool of authors to contribute articles, field reports, or contacts of potential writers, please sendyour CV to: and suggest some topics on which you would like to write.Svante E. CornellResearch Director; Editor, Central Asia-Caucasus AnalystCentral Asia-Caucasus Institute & Silk Road Studies ProgramPaul H. Nitze School of Advanced International Studies, The Johns Hopkins University1619 Massachusetts Ave. N.W., Washington, D.C. 20036, USA.Tel. +1-202-663-5922; 1-202-663-7723; Fax. +1-202-663-7785

Central Asia-Caucasus Analyst, 12 December 2007 3STUDY ABROAD BECOMES A NEW PRIORITYFOR AZERBAIJANI GOVERNMENTFariz IsmailzadeAfter the collapse of the Soviet Union, the state of Azerbaijan’s education system reachedvery low levels. Azerbaijani students, graduating from local universities, are simply notready for the needs and requirements of the globalized market economy. The government isseeking to bridging the gap in the field of human resources in the short-term through andimpressive Study Abroad program.BACKGROUND: in October 2006, President IlhamAliyev signed a new decree on establishing ascholarship program for Azerbaijani youth to studyabroad. The program envisions sending hundreds ofAzerbaijanis to prestigious universities abroad fordegree and non-degree studies in order to fill the gap inhuman resources. For the initial year of the program,the government allocated 2,2 million manats (close toUS$2.5 million) to cover the administrative costs aswell as tuition expenses of students. It is expected thatshould all management issues of the program gosmoothly, some 20 million manats will be spent on theprogram in the next few years.This move comes as no surprise, since manyinternational organizations and domestic experts havelong advocated for the investment of oil revenues intohuman resources. The UNDP office in Baku has evenbeen promoting a slogan called “let’s turn black goldinto human gold.” And the local youth movementcalled “Alumni Network”, compromised mainly ofalumni of various exchange programs, have beenorganizing public advocacy events to promote the ideaof sending 5,000 Azerbaijani youth abroad. Thiscampaign, under the slogan “Gelecek ozu gelmeyecek”-“The future won’t come by itself” has been widelycovered in the local press. Public TV’s “Achig Ders”-“Open classroom” talk show program dedicated severaldiscussions to this issue even before the Presidentialdecree was signed.Similar programs exist in other oil-rich countries of theregion, including Kazakhstan (the Balashak or Futureprogram) and Uzbekistan (Umid or Hope) programs.Since the beginning of the 1990s, American, Europeanand Japanese exchange programs and fellowshipopportunities have flooded the country, by training anew generation of Azerbaijanis and providing qualitywork force for the booming private sector.Azerbaijan is not new to study abroad programs. Evenduring Soviet times, under the leadership of HeydarAliyev, then first secretary of the communist party ofthe Azerbaijani SSR, thousands of students were sentto universities in Russia, Ukraine and Belarus to betrained and returned home to Azerbaijan to lead theeconomy. In the post-Soviet period, the Azerbaijanigovernment has been sending youth mainly to Turkeyand Russia, but this trend was both small in numbersand poor in quality.The new program, envisioned by President Aliyev, hasbeen managed by three different state bodies, to ensuretransparency and accountability. The highly respectedState Committee for Student Exams collectsapplications and conducts necessary tests andinterviews. Then, the selected students’ list is passedon to the Ministry of Education to manage the logisticsof the travels as well as relations with the hostuniversities and financial matters. The Ministry ofEducation also acts as the primary focal point forpromotion and PR of the program in society. Finally,the list of selected students is given to the President’scommission on education, which considers a number ofissues, such as the importance of the field of study andits relevance to the priority areas of the state.In its first year of implementation, a number ofproblems emerged, such as the low awareness of thepublic regarding the existence of the program. This wasthe main reason for the small number of applicants andsuccessfully selected persons, little over 40; the lack ofpre-departure trainings and orientation for the selected

4Central Asia-Caucasus Analyst, 12 December2007students; the unclear list of universities eligible toparticipate in the program; and unclear procedural rulesfor the application process. The most difficult problem,however, remains the eligibility criteria itself: at themoment, students must individually apply and beaccepted to a foreign university before becomingeligible for the scholarship funds. This effectivelyleaves many intelligent students out of the benefits ofthe program, because they are not familiar with theadmissions rules in foreign universities and do notpossess language skills as others do. The government isalso considering to demand recipients of scholarshipfunds to sign a contract and promise to return toAzerbaijan upon the completion of the studies, to workfor the government for several years. This practice,although widely spread in other countries, such asTurkey and Kazakhstan, remains a serious concern forthe applicants.IMPLICATIONS: Despite some shortcomings, whichthe state bodies promise to address in the second yearof the Program, the Study Abroad program is a sign ofvery positive changes in the country. Foremost, itcalms down some critics of the ruling regime, whoclaim that oil revenues are not spent wisely. Everyonewill agree that spending on education will bring manydividends for the country and will allow makingAzerbaijan’s development more sustainable.Secondly, this program allows President Ilham Aliyevto show his vision and priorities. Upon election, hepromised to create 600,000 new jobs, ensure theprosperity of the country, and turn Azerbaijan into thestrongest state in the region. Without investing oilrevenues into education, Azerbaijan will not be able toachieve these goals. Thus the President’s priority areahas become education, and under his leadership thegovernment has already built more than 170 newschools, repaired another 630 secondary schools,established a Diplomatic Academy, launched a processof computerization of schools, and invested into thedevelopment of cadre in the IT sector. These initiativesshow that President Aliyev is keen to invest into socialand humanitarian programs and ensure the sustainabledevelopment of the non-oil economy.Finally, the Study abroad program is aimed at solvingthe shortage of human resources, which appeared in thelocal market since the rapid development of both theoil and non-oil economies in the mid-1990s. TheSoviet-style educational system of Azerbaijan is notable to provide the necessary highly educated cadre forthe booming economy of the country, because thecurriculums are based on old materials and the teachingmethodology is still top-down, strictly dogmatic. It isvery difficult to change the mentality of hundreds ofprofessors and shift the system into a new oneovernight. The World Bank has provided a number ofgrants and loans for the restructuring of the educationsystem, but this has yet to provide the desired results.Thus, a wide gap has emerged, where local universitiesare not able to provide the needed cadre for thebooming banking, audit, constructing, legal,management, IT and many other sectors.The study abroad program will help to alleviate thisgap and supply badly needed professionals to theeconomy of Azerbaijan. The large influx of Westerneducatedpersonnel will positively impact the overalldevelopment of the country, because their managementand governance style will be much more liberal, softerand open-minded than the one of the older generation.Western-educated cadre are more tolerant to theinitiative on the part of students and to democracy, andthus it is expected that the increase of their numbers inthe country will bring more positive societal changes aswell.CONCLUSIONS: President Ilham Aliyev has onceagain demonstrated that despite serious concerns aboutthe management of oil revenues, he is keen to investthem for the benefit of the people, and this StudyAbroad Program is one of the signs of this vision. Theprogram is expected to significantly improve theeconomy of Azerbaijan, provide it with neededprofessionals and eventually ensure the sustainabledevelopment of Azerbaijan. But more importantly, theprogram will the lay foundation for futuredemocratization as the alumni of these study programswill bring back not only skills, but also new values andnorms.AUTHOR’S BIO: Fariz Ismailzade is a Bakubasedfreelance writer.

Central Asia-Caucasus Analyst, 12 December 2007 5OSCE DESIGNATES KAZAKHSTAN AS FIRSTCENTRAL ASIAN PRESIDENCYRichard WeitzAt their November 29-30 meeting, the foreign ministers of the 56 member governments ofthe Organization for Security and Co-operation in Europe (OSCE) designatedKazakhstan as the first Central Asian country—and also the first former Soviet republic—to assume the position, in 2010, of the OSCE Presidency. Kazakh Foreign Minister MaratTazhin, who could become OSCE Chairman-in-Office, called the decision “a testament tothe transformation our country has undergone since independence and as a strong vote ofconfidence by OSCE Member States for the Central Asian region as a whole.”BACKGROUND: The Kazakh government haswaged a multi-year campaign to secure the OSCEPresidency. President Nursultan Nazarbayev, whohas long aspired for a leadership role in Eurasia,personally lobbied foreign governments to supportKazakhstan’s candidacy. The OSCE designationwill bolster his international status as well as helplegitimize his government’s domestic practices.Kazakh officials had originally hoped their countrywould become OSCE Chairman in 2009. MostEuropean members—including Russia andGermany—publicly endorsed Kazakhstan’scandidacy. But several governments—most openlyBritain, the Czech Republic, and the UnitedStates—considered 2011 a better date. Their mainargument was that Kazakhstan needed to makefurther progress in upholding democratic principlesand human rights at home before taking charge ofthe main organization tasked withpromoting these values throughoutEurasia. The dispute prevented lastyear’s Ministerial Council, an annualmeeting of all OSCE foreignministers, from reaching a decisionon the 2009 chairmanship, with themembers postponing the issue untilthis November. On this occasion, theparties evidently settled on 2010 as asuitable compromise date.Though noting some improvementssince the previous ballot, OSCEelection monitors had faultedKazakhstan’s parliamentary electionsof August 18, 2007, for failing to meetinternational standards for agenuinely free and fair vote. Nazarbayev’s NurOtan party received 88% of the votes and won allavailable seats in the legislature. All the oppositionparties fell short of the 7% threshold required toenter parliament. OSCE monitors complained aboutoverly restrictive legal provisions such as the use ofa high threshold for representation in the

6Central Asia-Caucasus Analyst, 12 December2007parliament, rules allowing parties to select after theballot which of their candidates will becomemembers of legislature, and excessive restrictions onthe Kazakhs’ rights to seek public office.Since August, Kazakh and OSCE representativeshave been exchanging views how to overcome theseelection problems. According to U.S. officials, theirKazakh counterparts have pledged to improve theircountry’s civil rights practices—especially theirelectoral laws and media freedoms—by 2010. UnderSecretary of State for Political Affairs NicholasBurns said: “These are very importantcommitments by the Government of Kazakhstan.We intend to see that these commitments areimplemented.”Nevertheless, some human rights anddemocracy advocates criticizedKazakhstan’s designation as OSCEPresident. Human Rights Watch saidthat placing Kazakhstan in charge ofthe OSCE’s human rights policies was“a singularly bad idea.” FreedomHouse—which rates Kazakhstan as“not free” and had opposed allowingKazakhstan to assume the OSCEchairmanship in 2009 —indicated theorganization would withholdjudgment pending evidence that theKazakh government would fulfill itspromises to make its domestic politicalsystem more democratic and support the OSCE’shuman rights objectives internationally.In the end, Western governments apparentlydecided that Kazakhstan was too important acountry to alienate over the Presidency issue.Europeans are counting on obtaining increasingsupplies of Kazakh oil and gas in coming years.Western countries are presently engaged in amassive project to develop Kazakhstan’s offshoreKashagan oil field. The Kazakh government hasalready expressed displeasure regarding the slowerthan expected progress at the field. RejectingKazakhstan’s OSCE bid would have added yetanother layer of tension.In addition, the United States and its allies worriedthat Russian officials might exploit their differenceswith Kazakhstan to bind Astana closer to Moscow.At Madrid, Russian Foreign Minister Sergei Lavrovopenly attacked Western countries for seeking tolink Kazakhstan’s appointment to changes in itsgovernment’s polices: “Unfortunately, during theseveral years that have preceded today’s meeting,there were absolutely unacceptable and unseemlymaneuvers concerning this bid aimed at creatingconditions on the right of a specific country—anequal member of the OSCE—to chair thisorganization by making demands on its internal andexternal policies.”IMPLICATIONS: One of the most importantissues for the Kazakhstan presidency could beresolving the dispute between Westerngovernments and Moscow and its allies over thefunctions and authority of the OSCE Organizationfor Democratic Institutions and Human Rights(ODIHR). The governments of Russia and theother former Soviet republics have called forreducing the OSCE’s democracy promotion efforts,especially in the area of election monitoring. AtMadrid, Lavrov said the OSCE was facing a“moment of truth” since, in his assessment, theorganization either had to change its ways or “thewhole European security architecture couldcollapse.” In contrast, most Western governments

Central Asia-Caucasus Analyst, 12 December 2007 7urge the OSCE to continue strong efforts topromote democracy and human rights in the formerSoviet Union, where these values are seen asgravely threatened.Foreign Minister Tazhin released a statementaffirming Kazakhstan’s support for ODIHR,including its mandate and operations. Yet, he addedthat Kazakhstan, whose next nationwide electionsare scheduled for 2012, plans to work with all OSCEmembers to achieve a clear understanding of thecriteria and standards ODIHR should use inassessing elections throughout the OSCE region.This formulation suggests an openness in principleto revising OHDIR’s activities. Russian officialslikely will perceive Kazakhstan’s chairmanship asan opportunity to advance their OSCE “reforms” ina favorable institutional environment, but theOSCE’s consensus decision-making rules wouldallow any government to veto proposed changesaffecting ODIHR.In addition, the appointment of a Central Asiancountry to the Presidency of the OSCE could helpstrengthen the organization’s currently beleagueredposition in several of the former Soviet republics.Burns applauded Kazakhstan’s appointment as“recognition by the rest of us that this organizationis more than just about West Europeans andAmericans. It’s about the people who live in CentralAsia, the Caucasus and the Balkans, as well. So,symbolically it’s important.”Another of Kazakhstan’s priority for the OSCEcould become reinforcing the organization’scommitment to developing transit andtransportation corridors linking the Central Asiancountries with one another and other OSCEmembers. Kazakhstan’s strong economicperformance in recent years, which has been partlydue to high global prices for its energy exports, hasled Astana to become one of the leading proponentsof Eurasian economic integration.Conversely, Kazakhstan may also play a role inshaping the OSCE’s new initiative, launched at theMadrid summit, to curb the trafficking of narcotics,weapons, and people across the Afghan-Tajikborder. For example, the Ministerial Councildecided to expand an OSCE project, which beganearlier in November, designed to aid Afghancounternarcotics officers by allowing agents fromAfghanistan’s Central Asian neighbors toparticipate. The OSCE’s current Chairman-in-Office, Spanish Foreign Minister Miguel AngelMoratinos, told a press conference that, “With thisnew contribution . . . we hope to bolster our securityand we acknowledge the link between OSCEcountries and the problems and challenges whichexist in Afghanistan.”The two processes of economic integration andborder security are intimately related. Central Asiangovernments will remain reluctant to relax theirborder controls, which impede regional commerce,if they fear transnational criminal organizationswould exploit the opportunity for illicit purposes.CONLUSIONS: At the end of the Madrid session,Moratinos called on the member governments toconvene a summit of their heads of state to resolvethe stark differences that have divided the membersin recent years. Some OSCE members hope thatsuch a high-level gathering might be able to achievea comprehensive settlement that would deal withthe complex interlinking issues of the future ofOHDIR, the Conventional Forces in EuropeTreaty, the Minsk process seeking a negotiatedsolution to the conflict between Azerbaijan andArmenia over Nagorno-Karabakh, and otherdisputes. Given the time required to organize such ameeting among the contentious participants, Astanacould well have the honor of hosting the first suchgathering since the 1999 OSCE summit in Istanbul.AUTHOR’S BIO: Richard Weitz is Directorfor Project Management and a Senior Fellow atthe Hudson institute.

8Central Asia-Caucasus Analyst, 12 December2007DEALING WITH UZBEKISTAN AFTERKARIMOV’S LIKELY RE-ELECTIONAftab KaziOn December 23, Uzbek President Islam Karimov will almost certainly secure a third termin office. With Karimov re-elected, the West will whether it likes it or not have to considerhow to approach relations with this pivotal country. This poses both challenges andopportunities. Karimov’s sixteenth Independence Day speech provided indications of a wishfor an opening to the West. Ahead of the election, the EU has been easing post-Andijansanctions imposed two years ago, while General Motors is negotiating the establishment ofa Chevrolet plant in Uzbekistan, indicating a possible opening for an improved relationshipwith the West.BACKGROUND: President Islam Karimov willbe contesting the presidential election on December23, nominated by his Liberal Democratic Party ofUzbekistan. Karimov is seeking a third term, inspite of legal controversies surrounding his abilityto stand for a third term. Several legal loopholesallowed Karimov to skirt the ban on a third term, adecision that he seems to have taken rather late.Offical Tashkent links the decision to the allegedinsistence of the network of local Uzbek civilassociations (Mahalla and other) around thecountry, comprising approximately 5000 localassociations nationwide that carry substantialinfluence in Uzbek civil society but are largelyignored by the West.In spite of continued executive dominance over thepolitical system, Uzbekistan has implementedseveral reforms that could provide the institutionalbasis for political development. One example is thebicameral political structure, which is in place;while the second is the gradual devolution of powersfrom the federal to the local government, as localgovernments or Hakimyat are now elected, notappointed by the executive. While it will take timefor this reform to be effectively implemented, it is apotentially important step. Other important reformsinclude the abolition of the death penalty, and thetransfer of the right to issue arrest warrants fromthe prosecutor to the courts. Uzbekistan now hasformally adapted a national integration policy fornational minorities and a program of affirmativeaction. The Oliy Majlis has enacted several newlaws of governance in various sectors includingprivatization of farms and in the health sector.Amid significant difficulties, a new railroad fromNukus in western Uzbekistan to Navai (close toBukhara) was constructed, together with an oil

Central Asia-Caucasus Analyst, 12 December 2007 9refinery in Andijan and refurbishing of severalnational monuments that provided workopportunity. The country is now self-sufficient ingrain as well as in some industrial products. Theindependent development plan also benefited fromassistance from Russia, China, South Korea, Japan,and Kazakhstan, besides the major internationalfinancial institutions. For 2008, Uzbekistan hasalready signed foreign direct investment accordsworth US$1.8 billion.For the December 23 elections, the Uzbekgovernment has invited approximately 300international observers, including 8 from the UnitedStates, to monitor the election. The government’selectoral strategy is based upon an evolutionarymodel corresponding with the operating levels ofpolitical culture and the geopolitical psychology ofthis landlocked state, which despite its internationalorientation tends to rely inward.Two recent speeches by President Karimov indicatea movement toward greater openness to restoringdamaged relations with Europe and the UnitedStates. Karimov’s Independence Day speech lastAugust sought to address Uzbekistan’s past andcurrent problems. Karimov’s speech highlighted thesignificant post-Soviet transition problems and hisgovernment’s resolve to deal with them, coupledwith his handling of international terrorism, ofwhich Uzbekistan has had a significant share. Hisspeech emphasized that his government had torecreate almost every ministry and department togovern the new nation. He also claimed a 7 percentrise in GDP over the last two years, asserting thatUzbek per capita income has increased twelve-foldsince 1991 and by a factor of 2,5 since 2000. Karimovacknowledged that the income distribution may notbe standardized nationwide, with particularly ruralareas lagging behind, but it is gradually improving.Moreover, Karimov emphasized that the Uzbekmodel of development focused on building a strongstate, “which was objectively necessary inconditions of transition period and establishing thenational statehood”, but that “the main task of thisperiod of reforming our state system must be aconsistent and step-by-step transition from a strongstate … to a strong civil society.”A December 10 speech, for the occasion of thefifteenth anniversary of the Constitution, wentfurther, focusing directly on foreign relations.President Karimov directly addressed relations withthe West, noting that “it is not a secret for anyone:there are still those who assert that today somediscord still continues between Uzbekistan, and theUnited States of America and European states. It isnot difficult to understand that they would wantsuch discord to exist from which they would draw aparticular interest.” This statement is reminiscentof Karimov’s speeches in earlier days, when theyusually referred to Moscow’s imperial agenda, andconstitutes an important break with recent trends.IMPLICATIONS: In his speech, PresidentKarimov stressed the need for Westerngovernments to invest in Uzbekistan’sinfrastructural development projects. He emphasizethat Uzbekistan will “never turn off the road” ofseeking cooperation with international partners,specifically mentioning America and Europe.So far, the West has shown interest only inpurchasing Uzbekistan’s major assets or investedinto non-infrastructural projects. Criticism on sloweconomic and political reform appears to haveisolated this Central Asian country – in spite ofbeing pivotal in terms of its location, literatepopulation and national resources – that once wasconsidered the most pro-U.S. government in theregion, something that numerous academic studieshave highlighted.The perceptual differences between Uzbekistan andthe West derive from Uzbekistan’s evolutionarymodel of economic and political development,which emphasizes the requirement of nationalstability before the democratic foundations are laidon a solid footing. Uzbek officials also complainthat the Uzbek government is often criticized in theWest, even when it does the right thing. Inparticular, the perceptual differences over the May2005 Andijan incident, in which several hundredpeople were killed, have been a serious impediment.

10Central Asia-Caucasus Analyst, 12 December2007Where Western officials accused Uzbekgovernment forces of firing on peaceful crowds, theUzbek government argues that it faced militantsand terrorists attacking government installations.Moreover, the perceptual differences resulted partlyfrom uncorroborated initial negative media coverageof the Andijan incident. At least three scholarlystudies in the United Kingdom and the UnitedStates (by Shirin Akiner, John C.K. Daly et.al., andAbdumannob Polat) have shed greater light on theincident, the latter specifically addressing the earlymedia reporting, but failed to alter the predominantWestern view. This has further prevented thenormalization of relations.However, Uzbekistan continues to participate in thedialogue against international terror, includinghosting the anti-terrorism headquarters of theShanghai Cooperation Organization. Furthermore,the geopolinomic balance in the world is in theprocess of changing, with the weakening of theWest both as a a player with clout, and as a modelin Eurasia and elsewhere. Alternative transit routesand the gradual revival of the Silk Roads, as well asnew oil and gas pipeline projects, contribute to this.This is particularly true in Eurasia where China andRussia are emerging as leading regional powers.The isolation and geopolitical psychology oflandlocked states have left Central Asian states withno alternative but to participate in the emergingregional economic and political networks.However, whereas the West has accepted countriessuch as Egypt and their political and economicsystems within the bounds of their operatingpolitical culture, this has not been the case inCentral Asia. With regard to Uzbekistan, a countryof considerable size and regional self-image, this hasmade western policies counter-productive. If theseperceptual differences continue, Western long-terminfluence in the region will be left handicapped.CONCLUSIONS: Trade and transportation routesare important potential solutions to the problems inthe regional economy in Central Asia and theCaucasus. Just as the EU has embarked on a processof trying to normalize its relationship withUzbekistan for the sake of its long-term interests, adebate is ongoing in the United States on rectifyingdifferences with Uzbekistan. Whereas westerncompanies often claim that Central Asia lacks anappropriate investment environment, GeneralMotors’ decision to establish a major Chevrolet planin Uzbekistan boldly reflects major businessconsiderations regarding the region.President Karimov is likely to be re-elected for athird term, ensuring that the United States willneed to remain engaged with his government for theforeseeable future. Considering the nature of thepolitical culture and geopolitical psychology of thisdouble landlocked state, the United States wouldbenefit by seeking a Modus Vivendi with PresidentKarimov’s third term and his evolutionary model ofdevelopment, something that in turn may helpUzbekistan to feel safer and less isolated in theworld community, something that would likelyincrease the influence of Western actors over themedium term. Uzbekistan shares our concerns onanti-terrorism and is a secular country. As is thecase in the EU, there is a need for proactive policychanges in the U.S.. In this currently deadlockedcontext, the recent conciliatory statement byPresident Karimov on relations with the UnitedStates and Europe for mutually advantageousrelations (reported by the Moscow Times onDecember 12, 2007) reflects a possible opening inforeign policy matters that could be utilized to bringWestern interests in the region forward.AUTHOR’S BIO: Professor Aftab Kazi isNonresident Senior Fellow with the Central Asia-Caucasus Institute & Silk Road Studies ProgramJoint Center, affiliated with Johns HopkinsUniversity-SAIS and the Institute for Security andDevelopment Policy, Stockholm.

Central Asia-Caucasus Analyst, 12 December 2007 11KAZAKHSTAN’S FOREIGN INVESTMENT LAWCHANGES AGAINRobert M. CutlerA little over a month ago, Kazakhstan’s President Nursultan Nazarbaev signedamendments passed several weeks previously by the Majilis (parliament) to the law “Onthe Subsurface and Subsurface Use” that would allow the government to amend or annulnatural-resource contracts if these are judged to threaten the country’s national security.This dispute indicates the changing nature of Kazakhstan’s energy sector.BACKGROUND: On August 27, the Kazakhstanigovernment, citing increasing costs and delays inthe implementation of production plans as well asviolations of ecological legislation, suspended forthree months the work of the Agip KCOconsortium, led by the Italian energy company Eni,at the offshore Kashagan oil field. Kashagan is thelargest oil field discovered in the world in over threedecades, and current estimates of recoverable oil arearound 13 billion barrels. The oil companies nowproject that costs originally estimated at US$27billion will more than double to US$60 billion; theKazakhstani government suggests that the ultimatecosts will be more than double that new estimateand reach US$136 billion.At the end of September, the country’s parliamentapproved amendments to legislation on subsoilresources that would allow the government to reviseand even to annul contracts with foreign investors.Nazarbaev did not sign them at the time. At the endof the first week of October, Italy’s Prime MinisterRomano Prodi visited the capital Astana to meetwith him, afterwards expressing confidence thatsome manner of compensation for productiondelays and cost overruns would be agreed. AfterProdi’s return to Italy, it became generallyunderstood that Kazakhstan would accept, ascompensation, an increase in the 8.33 per cent shareof the international consortium held by the state oilcompany KazMunaiGaz (KMG), which, it hinted,could also become co-operator of the project.Negotiations proceeded in view of an October 22deadline set by the government. Just before thisdeadline, the consortium agreed in principle toincrease KMG’s share, without suggesting publiclyfrom which other members this increased sharemight be taken. According to one report, theKazakhstan government rejected consortiummember ExxonMobil’s counter-demand that, inreturn, the Kashagan contract be extended beyond2041. Then at the end of the month, news reportsemerged saying that an unnamed member of theconsortium had objected to the redistribution infavor of KMG.A few days later, in early November, Nazarbaevsigned the amendments to the Law on theSubsurface and Subsurface Use that the Majilis hadapproved in late August. Nazarbaev signed theamendments only after the first round ofnegotiations over Kashagan, ending in earlyNovember, failed to reach a positive conclusion. Asecond round has since followed.As of mid-December, the situation is stillunresolved, despite earlier optimism by the Westernoilmen involved, that a resolution would be reachedby the end of the year. A joint memorandum withthe government, signed in early December, had setthe 20th of the month as the deadline for agreeingterms. On December 7, Nazarbaev publicly statedthat Kazakhstan was not seeking to have KMGreplace Eni as consortium operator. However, hepointedly did not rule out KMG becoming a jointoperator with Eni, stating rather that thedesideratum was either monetary compensation fordelays and cost overruns “or an increased stake inthe consortium”: which does not rule out KMGbecoming a joint operator with Eni.

12Central Asia-Caucasus Analyst, 12 December2007IMPLICATIONS: It is possible to outline severalphases in Kazakhstani legislation on subsurface use.The first, an initial period of legislativedevelopment, began with the declaration ofsovereignty in 1990 and lasted until 1996. The 1995Petroleum Law and 1996 Subsurface and SubsurfaceUse Law marked the beginning of the second phase,which lasted until 1999. That year saw significantamendments to these two laws, marking the start ofthe third phase, which lasted until the 2005 Law onProduction Sharing Agreements. The third phasealso saw the development of model contracts, a newLaw on Investment in 2003, and amendment of theTax Code coverage of production sharingagreements (PSAs). The 2005 Law on PSAs, whichgives special attention to offshore petroleumdeposits, may be considered to have inaugurated afourth phase of legislation, foreshadowed bychanges in 2004 in theinvestment tax regime andcomplemented in 2006 by anew Environmental Code.Western observers are of theopinion that the consortiumcould proceed to arbitration ifit really wished to do so,although its Westernindustrial leaders haveconsistently maintained thatthey expect this to beunnecessary. On the otherhand, in early October theKazakhstani energy ministerwarned the consortium that itwould face arbitration unlessit agreed to the revised contract. This seemingparadox highlights a significant ambiguity inKazakhstani legislation and legal procedure. TheJanuary 2003 Law on Investment states thatinvestment disputes may be settled by negotiation,in Kazakhstani courts, or through internationalarbitration. However, it does not provide clearmechanisms for access to international arbitrationor choice among venues.Possible judicial instances of review include theInternational Center for the Settlement ofInvestment Disputes, any tribunal applying theUnited Nations Commission on InternationalTrade Law Arbitration rules, the London Court ofInternational Arbitration, and the StockholmChamber of Commerce, as well as the ArbitrationCommission at the Kazakhstan Chamber ofCommerce. Moreover, although Kazakhstan ratifiedthe New York Convention on the Recognition andEnforcement of Foreign Arbitral Awards in 1995,judicial review of international arbitral awards byKazakhstani courts is not unknown. Indeed, theapplication of the December 2004 Law onInternational Arbitration appears to give broadauthority for judicial review of such arbitral awardsin Kazakhstan.CONCLUSIONS: Kazakhstan’s financial andbanking system is the most reformed of any CentralAsian or South Caucasus country. Until veryrecently, the country has had an excellentreputation for relative stability of the businessenvironment. However, Nazarbaev’s decision tosign the amendments passed several months ago iscausing Western observers to wonder whetherKazakhstan intends to go down the same road thatRussia has taken, hardening its dealings withinternational energy companies. His actionsthreaten investor confidence and continuing flowsof foreign direct investment. In the Kashagan case,outright expropriation is unlikely for the simple

Central Asia-Caucasus Analyst, 12 December 2007 13reason that the development is so challenging thatvirtually no other international firms have access toor experience with the necessary technology, andthe few that may are unlikely to step in.The record price of oil today, along withKazakhstan’s relatively favorable past track record,makes it unlikely that Western investors will fleethe country. New ones, however, may tread lightly,wondering whether Kazakhstan is planning aRussian-style “resource nationalism.” Probably theKazakhstani leadership does not itself know theanswer to this question, and will proceed on a caseby case basis. In the past, Western energycompanies have been able win challenges againstfines and penalties within the domestic Kazakhstanijudicial system. The law and the precedent havenow changed, however. A basic divergence of viewhas arisen. Western investors feel that the playingfield has been tilted against them, whileKazakhstani actors feel that it has only been leveled.The fines imposed by the Kazakhstani governmentagainst the operators of the Tengiz oil field forviolating ecological legislation, announced at thetime when the differences over Kashagan becamepublic, reflect such a divergence of opinion. The“sulfur mountains” (extracted from the oil before itis put into a pipeline) have been a bone ofcontention since the mid-1990s. Watching the recentRussian experience has undoubtedly given theKazakhstani leadership more confidence to be boldin such matters. Still, the new amendments do notappear to have been adopted as part of a program ofradical nationalization as seen recently inVenezuela.AUTHOR’S BIO: Dr. Robert M. Cutler isSenior Research Fellow, Institute of European,Russian and Eurasian Studies, CarletonUniversity, Canada.New Silk Road Paper:The August 6 Bombing Incident in Georgia:Implications for the Euro-Atlantic RegionThis 82-page Paper puts together mostrelevant documents – Western, Georgianand Russian – on the incident, and includesa detailed chronology and an analysis ofthe event’s implications.The Paper can be downloaded free atwww.silkroadstudies.org. Hardcopyrequests should be addressed to Alec Forssat aforss@jhu.edu.

14Central Asia-Caucasus Analyst, 12 December2007FIELD REPORTSTENSIONS IN ABKHAZIA RISE AS TBILISI PREPARES FORPRESIDENTIAL ELECTIONSJohanna PopjanevskiOnly weeks ahead of the Georgian presidentialelections, tensions are again rising in the Georgian-Abkhaz conflict zone. After a National SecurityCouncil meeting in Tbilisi on December 10, theGeorgian authorities criticized Russia’s continuingexploitation of the domestic situation in Georgiathrough stepping up its military presence inAbkhazia. Tbilisi now urges Moscow to refrainfrom taking advantage of the election periodthrough provocative actions with regard to theseparatist regions and the UN to closely observe andreact on the developments in the Abkhaz conflictzone.Georgian Minister for conflict resolution, DavitBakradze, warned of Russian mobilization inAbkhazia already on November 12, pointing at anincrease of military hardware and personnel inAbkhazia in connection with the November unrestin Tbilisi. During the past week, Tbilisi stepped upits criticism, objecting particularly to the rotation of600 CIS peacekeepers in the conflict zone which itreferred to as a cover-up for Russian mobilization inAbkhazia. The rotation took place under thedirection of CISPK commander-in-Chief, GeneralSergey Chaban, who was declared an unwantedperson by the Georgian authorities in October,following a standoff between Russian peacekeepersand Georgian Interior Ministry officers inGanmukhuri, on the Georgian side of the Line ofControl. The Georgian side has since called oninternational agencies to back Tbilisi’s plea forChaban to leave the conflict zone, but with noresult. The Russian side dismisses Tbilisi’sallegations of a military step-up in Abkhazia, andmaintains that the rotation was a routine procedurein accordance with the 1994 ceasefire agreement,involving no deployment of additional arms orservicemen.Indeed, the January 5 presidential election inGeorgia has brought the Abkhaz and SouthOssetian issues into the regional spotlight. As partof his election campaign, former president in lateNovember, Saakashvili promised the Abkhaz IDPsin Georgia a safe return to their homes in thenearest future and to resolve the South Ossetia issuewithin months. However, Moscow’s repeatedstatements in favor of Abkhaz and South Ossetianindependence indicate that the battle over theseparatist regions is far from settled. In particular,the recent statement by Boris Gryzlov, Head of theruling United Russia Party, that the Duma mayaddress the issue of independence of the separatistregions as early as January 2008 has triggered aharsh response by the Georgian side. Severalrepresentatives from the Georgian leadership havestated that such an action by the Russia may triggeran armed confrontation between Georgia andRussia. The Georgian government is also pleadingfor continuing Western support for Georgia’s

Central Asia-Caucasus Analyst, 12 December 2007 15territorial integrity, should Kosovo’s independencebe recognized by the western community.For Tbilisi, timing for attempting to regain controlover its separatist territories could not be worse.Sukhumi is unlikely to resume any negotiationswith the Georgian side before the Kosovo issue issettled, and is seemingly mobilizing its ownresources in case of a confrontation with Georgia.Aware of Tbilisi’s intentions of declaring theRussian-led peacekeeping mission illegal in a nearfuture, Abkhaz de facto President Bagapshcontinues to argue that the Abkhaz army has thecapacity to defend the Abkhaz territory againstGeorgian aggression, should the CIS mandate besuspended. On December 6, Georgian TV stationRustavi-2 reported that the Abkhaz de factoPresident had declared a state of Emergency inAbkhazia, motivated by anticipated provocationsfrom the Georgian side during the election process.These reports were however later dismissed by theAbkhaz side. Last week Georgian media reportedalso that the Abkhaz side is forcefully recruitingyoung ethnic Georgians in the Gali district to theAbkhaz separatist army. After the December 10NSC meeting, Georgian foreign minister GelaBezhuashvili accused the Abkhaz side of placingmines in the Gali district and along the border toGeorgia proper.Once again, the Georgian side is pleading withthe international community to ensure thatRussia’s actions in the conflict zones are inaccordance with international and Georgianlegislation, and once again a response is absent.While all eyes are on the Georgian electionsnext month, the situation in Abkhazia israpidly deteriorating and will, at the very least,result in a serious set-back in the Georgian-Abkhaz mediation process, which only monthsago showed prospect of progressing.BERDIMUHAMMEDOV EMBARKS ON FINANCIAL REFORMSChemen DurdiyevaOn November 12, 2007, Turkmen PresidentGurbanguly Berdimuhammedov held an extensiveplenary session of the Cabinet where the results ofthe past ten months were evaluated in all sectors ofeconomy. Amidst the issues being reviewed, themain highlights were significant cabinetreshufflings and the beginning of major financialreforms in Turkmenistan.This event constituted the first sweeping cabinetreshuffles since Berdimuhammedov was sworn in.After the ministers of all sectors of the economyreported a significant growth rate, major criticismswere issued regarding the heads of the country’s fivevelayats. H.Muhammedov, the head of the newlycreated national watchdog committee – the HigherControl Chamber – reported to the President thatthe ongoing agricultural reforms are facingsignificant obstacles due to the velayat heads’sluggish work in the fields. Particularly, criticismsinvolved the shortfalls in cotton production and thelack of financial incentive programs for agriculturalworkers. As a result, the khyakims or the heads ofthree (Ahal, Mary and Lebap) of the five regions ofTurkmenistan were sacked, and investigativemeasures were rapidly instituted.Making structural changes in the agricultural sectorhas remained one of the top priorities ofBerdimuhammedov’s most recent reforms. InMarch of this year, during the twentieth session ofthe Khalk Maslahaty, the country’s chief legislative

16Central Asia-Caucasus Analyst, 12 December2007body, the President dedicated the two-day session toworking out new ways of raising the productivitylevel in rural areas. In this connection, expeditingpayment processes for harvesting and attracting thedaikhans or agricultural workers to the creditallocation system had been set forth. But in thecabinet session on November 12,Berdimuhammedov expressed his majordissatisfaction to the heads of the agriculturalDaihanBank and the Central Bank regarding the paceof credits being allocated to agricultural workers.The DaihanBank chief, T. Mammedov, was removedfrom his post and similarly, a severe reprimand wasofficially issued to Central Bank chief G. Abylov.The head of the Turkmen Parliament was alsohighly criticized for not filing newrecommendations on purchasing cotton from cottonproducers in the fields.Speaking on the issue of removing the majorimpediments and raising productivity levels incotton production, Berdimuhammedov ordered theintroduce of new mechanisms of payments todaikhans. Particularly, he said that payments forcotton production should be issued half in Turkmenmanats and half in US dollars. He further notedthat a special trade organization should be created tooversee the purchase of cotton from agriculturalworkers at international market rates, and facilitatean immediate payment processes. Previously,daikhans all over the country would receive theirannual income from cotton harvesting with a year’sdelay. Hence introducing above-mentioned reformsis expected to create added financial incentives inthe agricultural sector. The President’s main statedobjective was to allow more self-sufficiency foragricultural workers in the near future. At theNovember 29 meeting of the Cabinet,Berdimuhammedov spoke of reforming the bankingsystem to fit international standards, and gavepersonal directives to study experiences andestablish cooperation in this regard with the world’slargest banks. It is also noteworthy that, as wasdeclared by the President in September,Turkmenistan will denominate its nationalcurrency starting from 2009.In the context of overhauling the financial system,the president also spoke of adjusting officialcurrency exchange rates. Turkmenistan has beenkeeping a fixed exchange rate officially, with thedifference with the black market rate at almost afactor of four. An official currency exchange ratehas never legally existed in practice, and hence thedifference where one dollar costs 5,200 manatsofficially, but 23,000 manats in the black market. OnNovember 12, the President gave the Central Bankchief and the Ministry of Economy and Finance aten-day time limit to work out the details ofadjusting the two exchange rates. The givendeadline has already passed, and nothing specificappears to have come out yet. The expected adjustedexchange rate also remains uncertain and a majorsubject of rumor in the country.The president’s move to set a single exchange ratecame out especially in light of the latest efforts toattract more foreign direct investment into thecountry’s opening economy. However, his televisedspeech to abolish the fixed currency rates produceda lot of mixed reaction in the population, and causedthe exchange rate to the dollar to drop by nearly 50percent within a day. Rumors over a weakeningdollar traveled fast, and caused a certain level ofpanic among the population. Caught up by fear ofcurrency devaluation, many people ironicallyexchanged their last dollar savings into the nationalcurrency at a relatively low exchange rate. Somewith relatively big savings were reported to havecaught heart diseases over the plummeting price ofthe dollar.Thus, President Berdimuhammedov appears tohave tightened his grip over the shortfalls of hisCabinet members. Considering the pace of thereforms, especially in the financial system andthe agricultural sector, it can be inferred thatTurkmenistan is not too far from modernizingits economy to a greater extent.

Central Asia-Caucasus Analyst, 12 December 2007 17PRIME MINISTER DISMISSED IN KYRGYZSTANNurshat AbabakirovWith less than a week to the parliamentaryelections and election campaigning fully underway,Kyrgyz President Kurmanbek Bakiev has dealt theopposition a series of blows and secured thecomplete servility of his supporters, by reshufflingkey government positions and sacking the actingPrime Minister, Almazbek Atambaev. Despitecautions that Kyrgyzstan has no economic andpolitical potential to follow the paths of Russia andKazakhstan, the president looks too preoccupiedwith planning the victory of the pro-presidentialparty, Ak Jol (Bright Path), while the number ofsidelined heavyweight politicians is growing.Almazbek Atambaev’s assumption of thepremiership in March 2007 came at a criticalmoment, when the United Front led by Felix Kulov,who was dismissed as Prime Minister and fell out ofhis tandem with the president, organized louddemonstrations of several thousand people todemand the resignation of President Bakiev.If it had not been for Atambaev’s step to initiatenegotiations, his supporters still believe, Kyrgyzstanwould not been able to avoid interregional clashesand bloodshed. With the support of moderateopposition politicians, who eventually became keymembers of the Social Democratic Party ofKyrgyzstan (SPDK), Atambaev in vain tried toreconcile the opposing sides to create a coalitiongovernment. He dismissed several ministers andthe First Deputy Prime Minister, Daniyar Usenov,one of the closest advisors of President Bakiev.Nevertheless, the hard-core opposition membersrefused the offer, viewing it as another “maneuver”of Bakiev’s, and pointing to the powerlessness of thegovernment.Almazbek Atambaev maintained a centrist view,and sought common ground with Bakiev. Whenprotests by the United Front lost footing and riotpolice put down an “unruly” crowd that chantedcalls for a coup, Mr. Atambaev shared thepresident’s triumph. Frequently seen as his rival,Atambaev blamed Felix Kulov for his “silent”support for the president at crucial moments whilebeing prime minister, which Kulov argued helpedBekiev restore power.Crippling inflation and pressing economic problemsin early fall again made Atambaev vital for thePresident’s image. His quick and pragmatic actionskept inflation from increasing during economicallychallenging times. But Atambaev’s term as PrimeMinister apparently did not distinguish him fromhis predecessors, especially on political matters. Heoften turned a blind eye on the national referendumin October conducted through widespreadfalsifications, but frequently appeared supportive ofthe president’s vision of constitutional reforms.On October 24, Atambaev initiated the resignationof the government after the new constitution wassigned. Atambaev also willingly opted out of theDecember 16 parliamentary elections by not leadingthe list of the SDPK, mainly seen as an attempt tocounter-balance the influence of the President andhis administration on the result of the elections.As the only key official representing the oppositionin the government, he guaranteed “impartiality”and promised to fend off the election fromadministrative leverages, already practiced in therecent referendum. However, as the electioncampaigns started, and as political parties indulgedin a in hectic struggle to win votes, Akmatbaev fellout of favor with the president. Reportedly, behindthe scene, he resisted the President’s plans to createa puppet parliament and warned of theconsequences.His dismissal on the eve of election hardly came asa surprise, as some opposition members referred toit as “predictable” and “a matter of time.” Notably,Atambaev, whose popularity soared after his

18Central Asia-Caucasus Analyst, 12 December2007voluntary resignation as the Minister of Industry,Trade and Tourism in April 2006 in protest againstthe family rule, surge of criminals, and abandonedconstitutional reforms, was one of the vociferousrally leaders in November 2006 that forced Bakievto endorse a pro-parliament Constitution. Thecrowd long remembered his harsh rhetoric, labelingBakiev as a “political corpse” for his stubbornness toadopt constitutional reforms.In the meantime, the newly appointed First DeputyPrime Minister, Iskender Aidaraliev, one of theclosest loyalists of the president, leads the cabinet.A native of Talas oblast, he was appointedgovernor of Jalalabad oblast, Bakiev’s birthplace, ayear ago and stayed close with the President’sbrother, Akmat Bakiev, who is said to have stronginfluence over administrative resources and cadrematters in the oblast. Although commandingpopular support among grassroots, previousgovernor Jusupjan Jeenbekov, now a top member ofthe SDPK, left the office, reportedly after havingstern encounters with the president’s family.Currently, a little known local government official,Koshbai Masirov, became the new governor ofJalalabad oblast.On November 27, the President also dismissed thepopular governor of Osh oblast, JantoroSatybaldiev, who was allegedly involved in“financial machinations.” Satybaldiev himselfrejects official accusations that he caused a loss ofUS$50,000 to the state budget. According to EdilBaisalov, spokesman of SDPK, “Satybaldiev wasready to resign and to be in the top list of SDPKcandidates, but the government warned him not todo it if he wanted to work as a governor until 2010.Appointed as Governor of Osh in 2006, hemaintained a more opposition-oriented outlook, andsought an expanded decision-making role forregional authorities. The new governor of Oshoblast is Aaly Karashev, who worked as an officerin the president’s administration.The Social Democrats have suffered from furtheraccusations. The Central Election Commission(CEC) accused Baysalov of disclosing secret stateinformation after he posted a picture of the ballotpaper on his website. He was taken off the electionrace. The CEC is now filing a lawsuit againstSDPK to force the party to compensate for theballots that were eventually discarded, estimatingthe damage at some US$590,000. Some members ofthe CEC demand that the SDPK be removed fromthe ballot. Baysalov in turn argues that the CEC isconduting an effort to overshadow all the flaws ofthe ballots – which were made of the lowest qualitypaper – and find a scapegoat.As Atambaev is currently technically neitherleading the government nor his party, there is apossibility that SDP, with its key members out ofrace, may enjoy lower support in the elections.Along with these strategic replacements, which helphim secure control during the elections, PresidentBakiev appointed Ishengul Boljurova as Minister ofEducation and Science. The manipulation ofstudents brings a pool of easy votes, a successfulpractice inherited by the previous regime.The president’s recent move to staff thegovernment with low-profile officials willcertainly eliminate all unpredictable outcomesand bring about desired results in the election.Election results will likely be contested, since atleast three parties are expecting to win amajority of votes in the parliament. However,as more disappointed high-profile politiciansfind themselves out of power, in contrast to AkJol party that instead harbors little knownpeople, the risk of political turbulence istangible. Therefore, Bakiev would be advised towatch his political steps, which have becameboisterous and confident, not to spark up thekind of popular anger that his predecessorAskar Akaev once did.

Central Asia-Caucasus Analyst, 12 December 2007 19COMPARING PRO-PRESIDENTIAL PARTIES IN CENTRAL ASIAErica MaratDespite obvious differences in the post-Sovietdevelopment, Central Asian states are increasinglysimilar in the way that one pro-regime partydominates the local political scenery. The process ofrapid centralization of political systems took placein Uzbekistan in the late 1990s, Tajikistan in theearly 2000s, and in Kazakhstan and Kyrgyzstan in2007.For the most part, these changes followed theextreme decentralization of the political system andthe emergence of a consolidated opposition. In thisrespect, the strongest intra-governmental andparliamentary fractions evolved in states withseveral parties where clan and family structuresenjoyed unrestricted access to political andeconomic resources.In one-party systems in Kazakhstan, Tajikistan, andTurkmenistan, members of ruling elites’ familiesare eliminated from active participation in thepolitical and economic domains. In states withseveral political parties competing for power, rulingelites’ family members, by contrast, occupiedleading positions in the political and economicdomains.At various periods in the recent history ofKazakhstan, Kyrgyzstan, and Uzbekistan,presidential family members contributed to thedecentralization of state power by participating inpolitical and economic processes on a national level.Incumbent presidents’ offspring led their ownpolitical fractions, where potential parliamentarycandidates preferred to register to increase theirchances of electoral victory. By distributing officesand economic assets, presidents’ family membersinadvertently contributed to the destabilization ofruling regimes.Uzbekistan’s five political parties were createdalready by the late 1990s. Only the LiberalDemocratic Party (LDP) was launched in December2003, and was able to acquire 34% of votes – morethan any other party – in the 2004 elections. Each ofthe five parties represented in the parliament claimsto have its own niche in the society, uniting theintelligentsia, youth, farmers, arts community andlawyers. The People’s Democratic Party (PDP), asuccessor of former Communist Party, identifiesitself as in opposition to all other political partiespresent in the government. However, as otherpolitical parties represented in the parliament, thePDP is loyal to the president.After almost three years of Kurmanbek Bakiev’sleadership in Kyrgyzstan, corruption rates surged inthe government and private sector, making statestructures more unpredictable, ineffective, andsusceptible to internal shocks. In late 2007, Bakievwas able to prevail over other political forces inKyrgyzstan by creating a powerful pro-regime bloc,“Ak Zhol”. His political bloc largely followed themodel of centralization of presidential powersmaintained by ruling regimes in Kazakhstan,Russia, and Tajikistan. Ak Zhol constitutes apolitical force that controls all state structures andenables the President to configure the domesticsituation according to his own interests. The partymay well win a majority of seats in the December 16parliamentary elections, despite Bakiyev’s lowpopularity.Although Kazakhstan and Tajikistan differ fromone another in their economic development, theyboth have a pro-presidential political party thatdominates the parliament and government.Kazakhstan’s Nur Otan and Tajikistan’s Peoples’Democratic Party (PDP) are both created andmanaged by the presidents. Both Kazakh presidentNursultan Nazarbayev and Tajik presidentEmomali Rakhmon appoint and sack partymembers, representing the single most importantsource of authority. There is a limited mobilizationof political forces outside the public domain.Kazakhstan’s largest political party, Nur Otan, wasfounded in 1999, collecting about a million members.

20Central Asia-Caucasus Analyst, 12 December2007In 2004, it received over 60% of votes, while its rivalAk Zhol won 12%. In 2006, Nur Otan merged withthe Asar political party and a number of othersmaller parties, increasing its level of support inparliament to 70%. Asar was controlled byNazarbayev’s daughter Dariga, but she wasremoved from the party’s leadership positionshortly before parliamentary elections in August2007. Nur Otan then unified with two other largepolitical parties, the Civic Party and the AgrarianParty. Nur Otan membership mostly includes civilservants from all levels of the government. Tofurther centralize the party system, Nazarbayevinitiated constitutional reforms that allowed him torun for president for an unlimited number of times.These constitutional changes in 2007 were followedby early parliamentary elections entirely based onparty lists. The elections secured Nur Otan 88% inthe parliament and made it the only political partyrepresented in the parliament, clearly transformingKazakshtan from a somewhat political pluralism toa one party system.The Tajikistan People’s Democratic Party (PDP)formed by Emomali Rakhmon in 1998 has beenrepresenting an absolute majority of the parliamentand government despite the Islamic opposition’sright for a 30% quota established in the powersharing agreement in 1997. With the 2005parliamentary elections, the PDP acquired anabsolute majority in the parliament, depriving anyother political party of forming a parliamentarybloc. Rakhmon was not able to openly suppress theIslamic Renaissance Party (IRP) due the popularityof Islam in Tajikistan. Instead, he agreed to allowthe IRP some public appearance and theparticipation of its main leaders in the economicprocess. Today, the IRP and other political partieshave the ability to gather and hold meetings, butlack access to public positions.Amid competing economic interests andpolitical power among state institutions andpresidents’ family members, Uzbek and Kyrgyzleaders lacked a vertical power structure thatwould work for the benefit of the ruling regime.Due to the confrontation between formalgovernment institutions and informal networksamong ruling elites, both Uzbek PresidentKarimov and his Kyrgyz counterparts sufferedfrom low popularity among governmentmembers and the masses.

Central Asia-Caucasus Analyst, 12 December 2007 21NEWS DIGESTAZERBAIJANI AND ARMENIAN FMS MEETIN MADRID29 NovemberForeign ministers Elmar Mammadyarov ofAzerbaijan and Vardan Oskanian of Armenia metThursday in Madrid, Spain, to discuss settlement ofthe Nagorno-Karabakh conflict. The meeting washeld in the presence of the OSCE Minsk Group cochairsas well as Russian Foreign Minister SergeyLavrov and US Under Secretary of State NicholasBurns. The meeting took place within theframework of the OSCE`s 15th Ministerial Council.(Azertag)OKRUASHVILI PLACED IN GERMANCUSTODY FOR 2 MONTHS, DENIEDPOLITICAL ASYLUM - GEORGIANAMBASSADOR29 NovemberFormer Georgian Defense Minister IraklyOkruashvili requested political asylum in Germanynearly a month before being arrested in Berlinyesterday, Georgian ambassador to Germany LevanDuchidze said.Okruashvili filed a formal request for politicalasylum on November 1, almost immediately uponhis arrival in Germany, Duchidze told GeorgianRustavi-2 television on Thursday. The Germanyauthorities cannot grant Okruashvili politicalasylum because he has not got a German visa,Duchidze said. After his arrest, Okruashvili has notasked for meetings with Georgian embassyofficials, the ambassador said. The Georgian side isin permanent contact with the Berlin Prosecutor'sOffice, he said. On Thursday, Okruashvili wastransferred to a pre-trial detention center after acourt ruled to place him in custody for two months,Duchidze said. If an upper court upholds the ruling,the Georgian authorities will have 40 days toprepare and submit extradition papers, he said.(Interfax)PRIME MINISTER OF KYRGYZSTANLEAVES OFFICE29 NovemberKyrgyzstan's president signed an order relievingPrime Minister Almazbek Atambayev of duty onWednesday, nine months after he was appointed ina move to appease opposition groups. The orderfollowed Atambayev's request to be relieved of thepost, said Nurlan Shakiyev, spokesman forPresident Kurmanbek Bakiyev. However, aspokesman for Atambayev's Social DemocraticParty, Edil Basailov, said Atambayev was fired"because he was interfering with efforts tomanipulate the upcoming elections" for Parliamentthat are set for Dec. 16. Bakiyev appointedAtambayev in February amid a political crisis inwhich opposition groups were calling for Bakiyev toresign over corruption and cronyism allegations. InMay, Atambayev lost consciousness for two daysand later claimed he had been poisoned. He said hehad received death threats connected with agovernment decision to nationalize a semiconductorplant. Politics in Kyrgyzstan _ where both Russiaand the United States have military air bases _ havebeen mired in squabbling for two years sinceBakiyev came to power in the wake of theoverthrow of longtime President Askar Akayev.(AP)“ROLE OF POLITICAL LEADERS INDEVELOPMENT OF TURKISH SPEAKINGNATIONS IN 20TH CENTURY”CONFERENCE DUE IN ALMATY30 NovemberThe second international conference “Role ofPolitical Leaders in Development of the TurkishSpeaking Nations in the 20th Century” organizedby the Bishkek-based Public Foundation in Supportof the Turkish-speaking Countries will take place inAlmaty, Kazakhstan on 12 December, AzerTAc owncorrespondent reports. The event is expected bring

22Central Asia-Caucasus Analyst, 12 December2007together political figures, parliamentarians,scientists and journalists from Azerbaijan,Kazakhstan, Kyrgyzstan and other Turkishspeakingcountries. According to the Foundation’spresident Nusrat Mammadov, participants in theconference will hear the reports on the Turkicworld’s renowned political figures including HeydarAliyev, Mustafa Kamal Ataturk, as well as thePresidents Ilham Aliyev of Azerbaijan, NursultanNazarbayev of Kazakhstan, Kurmanbek Bakiyev ofKyrgyzstan and Emomali Rahmon of Tajikistan.He added that the book “Founder and Creator ofModern Azerbaijan” dedicated to national leaderHeydar Aliyev published in Kazakh language willbe presented in the framework of the conference.The first conference on the role of political leadersin development of the Turkish speaking nations washeld in July 2007 in Kyrgyz capital Bishkek.KAZAKHSTAN WANTS $7 BILLION FORKASHAGAN DELAYS30 NovemberKazakhstan demanded $7 billion in compensationfrom an Eni-led consortium on Friday for delays indeveloping the huge Kashagan oilfield, a sourceclose to the talks said as a deadline for a settlementwas hours away. Kazakhstan has set the November30 deadline for its negotiations with the group toresolve a long-running dispute over cost overrunsand production delays at the Caspian Sea oilfield,but some officials have said talks may last longer."(We demand) more than $7 billion. That's for thedelays," said the source, who declined to beidentified. Eni had no immediate comment.Kazakhstan had previously demanded more than $10billion, according to other sources. Kazakhstanheaped further pressure on Western investors onFriday as Deputy Finance Minister DauletYergozhin announced it planned to introduce a newoil production tax to boost budget revenues,probably starting in 2009. Kashagan, with itsestimated 38 billion barrels of oil in place, lies at theheart of Kazakhstan's plans to triple its crude outputby 2017 as the former Soviet state fast emerges as anew source of non-OPEC oil. But its developmenthas been plagued by cost overruns and delays whichhave irked Kazakhstan. It is now due to startproduction in 2010, instead of 2005 originally. Itscosts have escalated from $57 billion to $136 billion.Speaking earlier in the capital Astana, Yergozhinsaid a high-profile consortium delegation was in theKazakh capital on Friday to discuss the future of theworld's biggest oil find in three decades. "We arecontinuing our talks. November 30 is not over yet,"he said. "I think we still have time. They are stillhere. ... We are discussing many issues." Officialshave said, however, that talks might continue untilthe end of the year. Sources close to the deal havetold Reuters that one of the consortium membersconsidered pulling out altogether from thecomplicated project. Yergozhin said Kazakhstanwas discussing a possible scheme to secure a share ofprofit from Kashagan earlier than planned and stillwanted Kazakh national oil firm KazMunaiGas tobe co-operator of the field, currently managed byENI. "We've said that KazMunaiGas should be cooperator,"he said. "Kazakhstan cannot choose theoperator unilaterally. The operator is chosen by allconsortium companies." Kazakhstan has accusedEni and its partners -- Royal Dutch Shell Plc, ExxonMobil Corp, Total, Conoco Phillips and Japan'sInpex Holdings Inc -- of ecological and otherviolations at the Kashagan field. Kazakhstan putfurther pressure on the Eni-led group and alarmedother investors in the oil and gas business bypassing legislation allowing the government tobreak contracts with foreign companies. (Reuters)MAN DETAINED IN DAGESTAN ONSUSPICION PLANNING ATTACK ONPOLLING DAY - POLICE SPOKESMAN30 NovemberA resident of Khasavyurt in Dagestan was detainedon Friday morning on suspicion of planning a terrorattack on the day of the elections to the Duma,December 2. A search in the suspect's home led tothe discovery of a suicide bomber's belt prepared tobe used, a spokesman for the Khasavyurt city policedepartment told Interfax. (Interfax)LEADER OF AZERBAIJANI DIASPORA INGEORGIA ARRESTED FOR TWO MONTHS1 DecemberThe Tbilisi City Court has handed down a twomonthpreliminary arrest on DashgynGulmamedov, the leader of the National Assemblyof Azerbaijanis in Georgia. Gulmamedov, who leadsthe campaign staff of Georgian presidentialcandidate Fazil Aliyev, has been charged withpropagating ethnic discrimination. Lawyer GiorgiZumbadze told journalists Gulmamedov had beenplaced in the Ortachala prison. "There is noevidence to substantiate this arrest and this ruling ispolitically motivated. An appeal will be filed on thiscase," the lawyer said. Aliyev had said earlier thatGulmamedov's arrest had been aimed at exerting

Central Asia-Caucasus Analyst, 12 December 2007 23pressure on him as a presidential candidate.Georgian law enforcement agencies detainedGulmamedov on November 27. (Interfax)KAZAKHSTAN PICKED TO CHAIR OSCE1 DecemberKazakhstan will assume the presidency of theOrganization for Security and Co-operation inEurope (OSCE) in 2010, the body's council hasdecided. The Central Asian country will be the firstex-Soviet republic to chair the human rights anddefence watchdog. The move has been criticised byHuman Rights Watch (HRW), which saysKazakhstan's human rights record is not up toscratch. The US says Kazakhstan has pledged toimprove its electoral system by 2009. "These arevery important commitments by the government ofKazakhstan. We intend to see these commitmentsare implemented," said US Under Secretary of Statefor Political Affairs Nicholas Burns.But Human Rights Watch was pessimistic aboutthe prospects for reform in Kazakhstan."Kazakhstan doesn't observe OSCE commitmentsat home. Entrusting in Kazakhstan the leadership touphold the organisation's human rightscommitments is a singularly bad idea," said HollyCartner, Europe and Central Asia director at theUS-based human rights organisation. Finland is tohold the OSCE presidency in 2008, followed byGreece in 2009. (BBC)PKK REPORTEDLY PLANNING MOVE TOAZERBAIJAN1 DecemberThe Kurdistan Workers Party may be planning amove to Azerbaijan from northern Iraq, Turkishintelligence reports say. Leaders of the party,usually known by its initials, PKK, have beendiscussing the move with Armenian officials,Today's Zaman reported. They would relocate tothe Nagorno-Karabakh region, which is underArmenian control. The Turkish parliament recentlyauthorized military operations across the borderinto Iraqi Kurdistan. In response, the United Statesand the Iraqi government have put pressure onKurdish leaders to deny the PKK a base. A formerPKK member has told Turkish intelligence thatmost of the camps in Iraqi Kurdistan have beenevacuated. (UPI)KAZAKHSTAN OIL TAX CRACKDOWN2 DecemberKazakhstan warned international oil companies atthe weekend to stop living “in ancient times” as itprepared totightenthefiscal regimeat oilfieldsand increase state ownership of its flagship CaspianSea development. Daulet Yergozhin, Kazakhstan’sdeputy finance minister, said, draft revisions to thetax code, to be debated in parliament early nextyear, would increase budget revenues, be “simple toadminister and collect and very understandable foroil and mineral producers”. There are plans tointroduce a new blanket tax covering all oilproduction to replace existing royalties and rentscharged only on oil exports.Analysts said the tough tax proposals reflectedwidespread frustration in Kazakhstan, led byPresident Nursultan Nazarbayev, about theadvantageous contracts secured by foreign oilcompanies in the 1990s when oil prices were low andthe republic was sunk in an economic recession thatfollowed the collapse of the Soviet Union. “We aretrying to catch up with the times. If investors wantto live in ancient times it may suit them, but it doesnot suit us,” Mr Yergozhin told the FinancialTimes. Foreign investors would be consulted aboutthe tax amendments, he said. His comments cameas Kazakhstan appeared close to asserting greatercontrol over the giant Kashagan field as part of asettlement of a dispute with an oil consortium ledby Eni of Italy about surging costs and productiondelays at the giant Caspian Sea project.KazMunaiGas, Kazakhstan’s state oil company, saidin a statement that four out of five members of theEni group, which includes ExxonMobil, Shell,Total, ConocoPhillips and Inpex of Japan, hadagreed in principle to dilute their shares inKashagan to allow it raise its interest to match thatof a “large participant”.Industry insiders said KazMunaiGas wasnegotiating to raise to 30 per cent its 8.33 per centinterest in Kashagan, one of the world’s biggestuntapped oilfields. Exxon is understood to havedemanded an extension of the Kashagan contractbeyond 2041 in exchange for handing shares toKazMunaiGas. Exxon could not be reached forcomment. A deadline of December 20 was set forthe finalisation of a settlement at Kashagan duringtalks last week, the Eni group said in a statement atthe weekend. (FT)TURKMENISTAN STARTS WORK ONNORTH-SOUTH RAIL LINK TOKAZAKHSTAN AND IRAN2 December

24Central Asia-Caucasus Analyst, 12 December2007Turkmenistan formally opened constructionSaturday on a north-south railroad from the borderwith Kazakhstan to Iran, a project seen as aneconomic boon for the oil- and gas-rich Caspian Searegion. President Gurbanguli Berdymukhamedovceremonially began the construction by laying asection of gilded rail in the northwestern city ofBereket. The 700-kilometer (420-mile) line willimprove Turkmenistan's connections with Russiavia Kazakhstan and to the Persian Gulf coast viaIran. Turkmenistan is the second-biggest naturalgas producer in the former Soviet Union, afterRussia. Turkmenistan's immense natural gasresources and Kazakhstan's booming oil industryplay an increasingly important role in regionalgeopolitics. The United States has long opposedplans to export Central Asian hydrocarbons via Iranand supported new export routes bypassing theexisting ones through Russia. (AP)GEORGIAN ACTING PRESIDENT WILL NOTCONGRATULATE UNITED RUSSIA3 DecemberGeorgian Acting President Nino Burjanadze hassaid she will not congratulate United Russia'sadministration on their victory in the State Dumaelections because of the Sunday statement by partyleader Boris Gryzlov. He said that the newparliament might consider the independence ofAbkhazia and South Ossetia. "I think I am not theonly one indignant at another hint by the Russianauthorities at the possible recognition ofindependent an Abkhazia and South Ossetia andtheir possible affiliation to Russia this January," shetold a Monday press briefing in Tbilisi. Theinternational community should react to Gryzlov'spronouncements appropriately, Burjanadze said."Russian citizens who live in Abkhazia and SouthOssetia were naturalized in an evasion of bilateralagreements, Georgian laws and internationalnorms," she said. (Interfax)BAKU IS CHOSEN ISLAMIC CULTURECAPITAL FOR 20093 DecemberBaku has been chosen the capital of Islamic culturefor 2009, the agency reports referring to the pressservice of the Ministry of Culture and Tourism ofAzerbaijan. The decision was accepted at the 5thconference of ministers of culture taken place inTripoli of the countries members of theOrganization of the Islamic Conference (OIC). Theparties accepted the proposal of Azerbaijan to carryout the 6th conference of ministers of culture ofOIC countries in Baku in 2009. The participants ofthe conference approved the strategy of culturalsolidarity on missions of development andcivilization of Moslems, the plan of activity onupdating cultural policy in the OIC countries, itsconformity with the international changes and thestrategy of development of informationcommunicationtechnologies in the Islamiccountries. The Azerbaijan delegation presented atthe conference the National report on application inAzerbaijan the strategy of culture for the Islamicworld prepared by the Ministry of Culture andTourism of Azerbaijan. The Azerbaijan delegationat this meeting was headed by the Minister ofCulture and Tourism Abulfas Karayev.(Kazakhstan Today)TURKMENISTAN TO BUILD CASPIANTOURIST RESORT3 DecemberTurkmenistan's leader inaugurated the constructionof a $5 billion (2.4 billion pound) tourism complexon the Caspian coast on Monday, his latest gestureto open up the reclusive nation to the world. Lockedaway during Soviet times and later under the 21-yearrule of Saparmurat Niyazov, Turkmenistan hasbeen slowly opening its doors since KurbangulyBerdymukhamedov came to power a year ago.Unlike Niyazov, who banned ballet and operaduring his rule, Berdymukhamedov has sought toattract foreign investment and turn his desert nationinto a tourist destination. On Monday, he officiallyopened construction of a complex onTurkmenistan's Caspian Sea coast, where he plansto build dozens of new hotels, fountains, roads andparks. "Any government that has such a coast wouldsee it as a huge blessing," he said after a ceremony."Turkmenistan is actively integrating into theglobal community while following its own model ofdevelopment." State media have touted the area as atourist hotspot but critics believe its long, coldwinters and remote location dent its allure as atourist destination. The Turkmen leader said thegovernment would earmark $1 billion for the project,not far from the Iranian border, while foreigncompanies including Russia's Itera and France'sBouygues have pledged to put in a further $4 billion.He vowed to introduce tax breaks for constructioncompanies and easier visa procedures for tourists --a step forward for a country which was first in theex-Soviet block to introduce a visa regime for otherformer members. Separately over the weekend,

Central Asia-Caucasus Analyst, 12 December 2007 25Berdymukhamedov opened a project to build a 560mile railway that would eventually link Iran andRussia through Central Asia. "Turkmenistan isturning into an important transport centre for thecontinent which will economically benefit thenation," the state Turkmen news agency reported.(Reuters)GEORGIA NOT TO INVITE RUSSIANELECTION OBSERVERS4 DecemberGeorgia will not invite Russian observers tomonitor the January 5 early presidential elections,Nino Burjanadze, the acting president, said in aninterview with the Russian newspaper, VremyaNovostei, published on December 4. “Russia also isnot inviting us to monitor elections [in Russia],”she said. “At the same time, I think that noteveryone who would have come to Georgia wouldbe objective. There are more and more signs thatRussia is not interested in Georgia’s stability andwelfare.” She also said that invitation to monitorGeorgia’s elections were not sent to theCommonwealth of Independent States (CIS),although Tbilisi, she said, had invited some of CISmember states, which have “friendly” relations withGeorgia.The Georgian authorities have already called onOSCE and other international organizations to send“as many observers as possible” to observe theJanuary 5 polls. (Civil Georgia)AFGHANISTAN ASKS U.S. FOR MOREWEAPONS, TRAINERS4 DecemberThe Afghanistan military needs more trainers andequipment in order to gain control of their country'ssecurity, the Afghan defense chief told Secretary ofDefense Robert Gates on Tuesday. Gen. BismillahKhan said that while "the U.S. has been more thangenerous," the Afghan army's weapons areinadequate and old, specifically its heavy artilleryand armored vehicles. Speaking through aninterpreter while sitting at a small table with Gates,Khan added that "we don't have enough mentors,enough advisers." Gates told Khan that "we knowyour interest in small arms and mortars and we arelooking for ways to expedite" the equipment. Andhe added that he also was well aware of the shortageof trainers — a shortfall U.S. military officials saidwas as many as 2,000-3,000. According to Maj. Gen.Richard Cone, the U.S. is about to begin providingM-16 rifles to the Afghans, and is poised to deliverabout 10,000 a month, up to 60,000. And he saidthere is an ongoing effort to obtain helicopters forthe Afghanistan forces, including plans for anadditional 34 in the near future. Cone said thehelicopters will be key to relieving some stress onU.S. and NATO forces, which currently have toshuttle Afghan troops around the country. (AP)EXXON REFUSED TO TRANSFER ITSKASHAGAN SHARE TO KAZMUNAYGAS5 DecemberExxon Company refused to transfer its share inKashagan project to KazMunayGas. The Ministerof Energy and Mineral Resources Sauat Mynbayevinformed on Tuesday. Earlier KazMunayGasinformed on signing new memorandum of mutualunderstanding with Kashagan consortium thatincludes solution of the issue of delay in realizationof the project and increase in expenses. "Accordingto the new memorandum all members ofconsortium, except for one, reached consent ontransfer the part of shares to the project at the rateof necessary for increase of KazMunayGasCompany share up to the level of largeparticipants," KazMunayGas press service informs.According to the document of December, 20, 2007the parties should finish negotiations on transfer ofshares and increase of KazMunayGas role inoperational activity. New memorandum of mutualunderstanding has been signed following the resultsof intensive negotiations at the level of CEO's ofthe companies." (Kazakhstan Today)PRESIDENT GUL TO TRAVEL TOTURKMENISTAN5 DecemberTurkish President Abdullah Gul will depart forTurkmenistan on Wednesday on a formal visitupon an invitation by President GurbangulyBerdimuhamedov. Gul and Berdimuhamedov willhave a tete-a-tete meeting on Thursday. During hisstay in Turkmenistan, Gul will also visitmausoleum of Saparmurad Turkmenbasi, formerpresident of Turkmenistan, who passed away lastyear. After attending a business forum between thetwo countries, Gul will return to Turkey on Friday.(Turkishpress)TURKEY PROPOSES GAS PIPELINE FROMTURKMENISTAN6 DecemberTurkey has offered to revive the idea of building apipeline to deliver gas from Turkmenistan via Iran,

26Central Asia-Caucasus Analyst, 12 December2007Turkish Energy Minister Hilmi Guler said onThursday. Guler said Turkish President AbdullahGul made the offer during talks with TurkmenPresident Kurbanguly Berdymukhamedov in theTurkmen capital, Ashgabat. "They are going todiscuss the project to build a Turkmenistan-Iran-Turkey gas pipeline with capacity of 16 billion cubicmetres per year," Guler, who is travelling with Gul'sdelegation, told reporters.Turkish government sources told Reuters onWednesday that Ankara also planned to propose ajoint venture with Turkmenistan to operate the ex-Soviet state's abundant natural gas and oil fields.Turkey, which is seeking to become a regionalenergy transit hub, has signed a natural gas supplycontract with Iran but some European Unioncountries have misgivings because Iran is subject toUnited Nations sanctions over its nuclearprogramme. Turkey is also involved in theconsortium planning to build the 31-bcm Nabuccopipeline to take Caspian gas to Europe. Theconsortium, which includes Austria's OMV ,Hungary's MOL , Bulgaria's Bulgargaz andRomania's Transgaz, has secured gas fromAzerbaijan but also sees Iran and Turkmenistan asother possible suppliers for the route. Turkmenistanand Russia are also discussing building a CaspianGas Pipeline, linking Turkmen gas with globalmarkets via Russian territory, but the project hasbeen delayed due to a pricing dispute. The Russiaproposedpipeline would have capacity of between 10billion and 20 billion cubic metres a year.Turkmenistan, which currently exports most of itsgas through Russia, is also working on a separatepipeline to China. Some analysts have questionedthe country's ability to go ahead with so manyprojects at once, but Turkmenistan says it hasenough gas reserves for everyone. (Reuters)AFGHAN, TAJIK ENTREPRENEURS MEETFOR CROSS-BORDER TRADE FORUM7 DecemberA forum supported by the OSCE Centre to promotecross-border trade between Tajikistan andAfghanistan opened in the Tajik city ofKurghonteppa on 6 December. The two-dayinternational business forum brought togetherentrepreneurs, public organizations and highrankingofficials from the two countries, includingAfghanistan's Ambassador to Tajikistan, SaydMuhammad Khayrkhon. "This forum is part of theCentre's work to strengthen business contactsbetween Afghanistan and Tajikistan and it is in linewith the decision taken by the OSCE participatingStates in Madrid at the end of November to expandthe OSCE's engagement in Afghanistan," saidAmbassador Vladimir Pryakhin, Head of the OSCECentre in his opening statement. "We also hopethat the event will contribute to the internationalcommunity's peace-building efforts inAfghanistan." (UzReport.com)BAGAPSH DENIES ALLEGATIONS OFSTATE OF EMERGENCY IMPOSED INABKHAZIA9 DecemberGeorgian media claims that a state of emergencyhas been introduced in Abkhazia have beendescribed as "stupidity" by Abkhaz President SergeiBagapsh. "All this is nothing but stupidity. Nothingof this kind has happened. All this is absoluteidiocy," Bagapsh told Interfax on Sunday, incomments on Georgian media reports claiming thata state of emergency has been introduced inAbkhazia ahead of the Georgian presidentialelections. "Peacekeepers and UN military observersare located in Abkhazia. Georgia should ask them, ifit wants to get real information," Bagapsh said.(Interfax)OPINION: GUAM INTRODUCES QUESTIONON FROZEN CONFLICTS IN RESPONSE TORUSSIA’S STATEMENTS10 DecemberA draft resolution on frozen conflicts released at theUN headquarters is a failure of the Armeniandiplomacy, Armenian political analyst HamayakHovhannisyan told a REGNUM correspondent.According to the analyst, it is absolutely clear thatthe Armenian envoy to the United Nations must beacting effectively so that he could respond to allchallenges timely and adequately. “However,Armenia failed to prevent from putting it on theagenda, despite the fact that it had managed to do soseveral times by threatening to Azerbaijan towithdraw from the current format of thenegotiations,” Hovhannisyan said. It is unclear forhim why Armenia, in particularly, its foreignministry, did not make effort to prevent fromdebating the issue at the UN and explained it by thefact that “they do not want to harm the negotiationprocess within frameworks of the OSCE MinskGroup.” However, according to Hovhannisyan,discussion of the issue at the UN coincided withincreasing prospects of declaration of independenceby Kosovo and with escalation of the tension

Central Asia-Caucasus Analyst, 12 December 2007 27between Abkhazia and South Ossetia on one sideand Georgia on the other side. As the analystbelieves, in reality, Georgia and Moldova are moreinterested in discussing the frozen conflicts at theUN than Azerbaijan is. According to him, theconflicts in Abkhazia, South Ossetia andTransdnestr are seen in the frameworks of theRussian mandate and, to avoid one-sided mediation,and taking into account the willingness to take awaythe peacekeeping mandate from Russia, thosecountries proposed the issue for discussion of theinternational community, while the NagornoKarabakh conflict was a subject of a multilateraldebate within the OSCE Minsk Group. “The keyreason for putting the question for the discussion atthe UN so fast was Russia’s statement that if theWest recognizes Kosovo, it would recognizeindependence of the republics in the post-Sovietterritory,” Hovhannisyan concluded. (Regnum)AZERBAIJAN CONVICTS 15 OF PLOTTINGIRAN-BACKED COUP10 DecemberA court in ex-Soviet Azerbaijan Monday convictedmore than a dozen people of plotting a coup withthe backing of Iranian intelligence services. SaidDadashbeyli, mastermind of the coup, wassentenced to 14 years in prison while 14 others werehanded sentences of between two and 14 years.Authorities alleged the group had been cooperatingwith Iranian special services to mount a coupagainst the government of President Ilham Aliyev.Members of the group were arrested in January andcharged with high treason, plotting a coup, being inpossession of illegal weapons and manufacturingfalse documents. No other details of the plot haveemerged. The verdict was announced after a twomonthtrial held behind closed doors for reasons ofstate security. Despite growing trade links, relationsbetween Baku and Tehran have been difficult sinceAzerbaijan broke away from the Soviet Union in1991, with disputes over oil reserves in the CaspianSea and the status of a large ethnic Azeri minorityin Iran. Azerbaijan has accused Iran of trying toexport its brand of fundamentalist Islam to thefellow Shiite Muslim country. But critics sayAzerbaijan, a key U.S. ally in the strategic Caucasusregion, also uses the potential threat of extremismas a cover for persecuting political opponents.(AFP)TAJIKISTAN ASKS FOR LARGERELECTRICITY SUPPLIES FROMTURKMENISTAN10 DecemberA three-day official visit of Tajik PresidentEmomali Rakhmon to Turkmenistan will focus onthe deliveries of Turkmen energy resources. “Mycountry has strictly limited the consumption ofelectric power, so we need the imports of electricityand fuel,” Rakhmon said. “I have asked theTurkmen president to set quotas on the deliveries ofpetroleum products, liquefied natural gas and anumber of prime commodities to Tajikistan.”“Turkmenistan will continue to develop closeeconomic cooperation with Tajikistan,” TurkmenPresident Gurbanguly Berdimuhhamedow said incomments on the first day of the visit. He saidTurkmenistan had been successfully deliveringelectric power to the neighbor.A tripartite agreement on electric power supplieswas signed in Dushanbe in early October on resultsof an official visit of the Turkmen president. “Thethree-year contract implies the Turkmen annualdeliveries of one billion kilowatt/hours of electricityto Tajikistan,” Berdimuhhamedow said. As for therequest to enlarge electricity quotas, he said, amodern power plant had been recentlycommissioned in the northern area of Dashoguz.Thus, it is possible to enlarge electricity exports, inparticularly, to Tajikistan, he said.In addition, Turkmenistan and Tajikistan willrestore air and motor traffic and set up jointventures. Agreements to that effect were signedduring the visit, the Turkmen presidential pressservice said on Sunday. The presidents signed ajoint communiquй and a convention to preventdouble taxation and capital gain tax evasion. “Ourcountries have a huge cooperation potential,”Rakhmon said. In the opinion of the presidents, thedocuments will spur on cooperation, theestablishment of joint ventures and the protection ofinvestments. A joint economic cooperationcommission will also help to attain the goals. Theforeign ministers signed an intergovernmentalagreement on the mutual protection of classifiedinformation. On Monday Rakhmon will attend theopening of a UN regional center for preventivediplomacy in Central Asia and a relatedinternational conference. On December 11 he willvisit the Turkmenbashi seaport, the Avaza nationaltourist zone and a cluster of oil refineries. (Itar-Tass)

28Central Asia-Caucasus Analyst, 12 December2007NINE UPGRADE PROJECTS COMPLETED INAFGHANISTAN11 DecemberNine projects to upgrade utilities in Afghanistanwere completed under the National SolidarityProgram (NSP) in the country's central Parwanprovince, said Mohammad Dawod, regional directorof the Habitat Organization, Monday. "Theseprojects worth about 5.5 million afghanis (US$1.1million) were completed with the support of theRural Rehabilitation and Development Ministry(RRDM)", he added. These projects include theconstruction of an 8 kilometre long road, threewater supply schemes, the digging of six wells andcleaning of one canal in Koh-i-Safi district. Some850 families of Adin Khel, Dandar, Dewana Khel,Hasan Zai, Char Ghati, Karez Gai, Khak Khor,Sanzali and Spin Chapli villages will benefit fromthese projects. (Pajhwok Afghan News)SIXTEEN DEAD OR MISSING IN AFGHANAVALANCHE: GOVERNMENT11 DecemberEight people were killed and as many others weremissing after an avalanche engulfed a village inremote northeastern Afghanistan on Tuesday, theinterior ministry said. Fifty people were initiallytrapped by the avalanche, the first this winter in theremote and mountainous northeastern province ofBadakhshan, but most were rescued by police andvillagers, it said in a statement. "Eight people werekilled, four wounded and eight others are missing,"the statement said. Badakhshan, a mountainousregion on the border with China and Tajikistan,sees frequent natural disasters such as floods andavalanches. Dozens of people were killed in suchincidents last year. (AFP)PRESIDENT OF TURKEY TO VISITKAZAKHSTAN11 DecemberThe President of Turkey Abdulla Gul will pay thestate visit to Kazakhstan on December 13-15, theagency reports referring to the press service of theMinistry of Foreign Affairs of Kazakhstan. "Thestate visit of the President of the Turkish RepublicAbdulla Gul to Kazakhstan will take place onDecember 13-15, during which Turkish Presidentwill hold negotiations with the leadership of ourcountry," the press service of foreign policydepartment informed. During the visit businessforumof the representatives of business circles oftwo countries will be held. (Kazakhstan Today)SEVEN CANDIDATES TO RUN FORGEORGIAN PRESIDENCY11 DecemberSeven candidates will participate at the presidentialelection in Georgia on January 5, 2008, the GeorgianCentral Election Commission told Interfax onTuesday. Registration of presidential candidatesends at 6 p.m. on December 11. The followingpresidential candidates have been registered:Mikheil Saakashvili of the National MovementParty; David Gamkrelidze of the New RightistsParty; Levan Gacheladze of the united opposition;Shalva Natelashvili of the Labor Party; IrinaSarishvili of the Imedi Party; Giorgy Maisashvili ofthe Future of Georgia Party; and Arkady (Badri)Patarkatsishvili of the activist group of citizens.According to the Election Code, Georgianpresidential candidates are protected by immunity.(Interfax)