Moscow’s Inability to Fund Planned Investments Sparks Discontent in Central Asia

Paul Goble

            Staunton, January 2 – Businesses and governments in Kazakhstan and Kyrgyzstan are angry at the failure of some Russian firms to pay their bills and at the decision of the Russian authorities to suspend long-planned investment projects, including some likely to have important environmental consequences, in those two Central Asian countries.

            The situation in Kazakhstan appears particularly serious, according to media reports, given that many of the projects had been agreed to long ago and confirmed only a few months back and given that some of them involve suspension of plans to work together to save the Ural River (rus.azattyk.kg/content/rossia-priostanovlennye-proekty-v-kazakhstane/27458866.html  and regnum.ru/news/economy/2047912.html).

            Reports that Russian firms were leaving Kazakhstan began to spread last summer, RFE/RL’s Kazakh Service says, when it was announced that Russia’s Lukoil had sold a major portion of its share in Caspian Investment Resources, Ltd, to Beijing’s Sinoec. That firm has five projects in Kazakhstan.

            More critically, on December 8, Moscow announced it wasn’t going to participate in a project it had agreed to with Astana in 2009 to save the Ural River.  While Kazakhstan officials have been worried about that river, Russian ones now say that “no one in Russia is beating concern about the status of the Ural since there is no threat.”

            And five days ago, a Russian construction firm that had been building an airport in Uralsk stopped paying its Kazakhstan partners. The latter have appealed to the Kazakhstan government to take measures to force the Russian firms to pay what they owe, “Uralskaya nedelya” reported on December 28.

            Officials in Kyrgyzstan are also angry at Russia’s decision not to go forward with investment projects it had earlier agreed to. On December 25, President Almazbek Atambayev said that Moscow was now refusing to invest in a project that Vladimir Putin had recently told him would continue.

            “It is obvious,” the Kyrgyzstan leader said, that “in a situation when the Russian economy isn’t growing, these agreements will not be fulfilled.” Putin’s spokesman confirmed that “commercial difficulties and others of a conjunction nature” now require the bilateral discussion of “various” other possibilities.