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Central Asia Report: September 26, 2002


26 September 2002, Volume 2, Number 37

MISSING MILLIONS OPEN WINDOW ONTO CENTRAL BANK CORRUPTION IN TURKMENISTAN. On 20 September, Turkmen President Saparmurat Niyazov issued a decree sacking the chairman of the central bank, Imamdurdy Gandymov, "for grave shortcomings in his work, for abuse of his official position, and in connection with criminal proceedings against him," Turkmen radio and Interfax reported. As has become presidential practice when firing top officials, the decree was followed by a televised cabinet meeting at which the president publicly chided the disgraced man. Niyazov accused Gandymov of looking the other way while a bank official, Arslan Kakaev, illegally transferred $41.5 million from the country's foreign-currency reserves. "In other words, [Kakaev] has simply stolen it," the president said. Moreover, he maintained that Kakaev had done so "not without help from senior persons," Turkmen television reported.

It was unclear whether Niyazov regarded Gandymov as an active participant in a criminal conspiracy or merely grossly negligent in failing to prevent the theft. When appointing him central bank chairman, Niyazov said he had warned him that the bank was rife with corruption and needed "some measures to clean it out." But instead, Gandymov had made it "an even dirtier place" and allowed conditions to flourish that made the thefts possible. "You will get at least 20 years [in prison].... I can't help you with it," the president said at the 20 September cabinet meeting, incidentally neglecting to mention the requirements of due process or a fair trial. Meanwhile, Kakaev has disappeared and was being tracked down by the National Security Ministry, RFE/RL reported the same day. The head of Halqbank, Shekersoltan Muhammedova, was appointed acting central bank chairman with the usual six-month probation period.

Niyazov revealed that roughly $20 million had been transferred to a bank in Moscow, and the same amount had gone to the Latvian capital Riga. On 20 September, he gave the National Security Ministry, police, and Prosecutor-General's Office 10 days to recover the stolen money and ordered them to cooperate closely with their Russian counterparts. (No mention was made of working with the Latvian authorities.) On 23 September, Turkmen radio reported that Niyazov had telephoned Russian President Vladimir Putin to appeal for help in the investigation. Putin promised full cooperation in capturing "the thieves" and returning the stolen cash, according to the radio.

Niyazov was not clear if the lost money had been cleared in two large tranches or embezzled over time in smaller amounts. He implied a pattern of corruption when he revealed to the cabinet, "money has been stolen consistently at the central bank since June." He later railed against "offshore zones and similar dirty places" where officials were illegally transferring foreign currency, making it sound like a long-standing practice. But other remarks he made, broadcast by Turkmen television on 20 September, indicated that most, if not all, of the $41.5 million had disappeared from a single account in Frankfurt, Germany. He said it was an account where revenues from Turkmen oil and gas sales were deposited. He also asserted that these funds were then sent to Turkmenistan's central bank, converted into manats, and pumped into the national economy. However, those familiar with Niyazov's autocracy may wonder how much of the money in Frankfurt actually made its way to Ashgabat. By way of comparison, they may also remember that Kazakh President Nursultan Nazarbaev is said to have siphoned off more than $1 billion of state hydrocarbon revenues into private bank accounts in Switzerland. Consequently, the intriguing possibility arises that the Gandymov scandal has inadvertently shone light on state funds that the Turkmen president has stashed in private accounts in Germany. In fact, one of his major political opponents, former Turkmen Ambassador to Turkey Nurmuhammed Hanamov, claimed last week to have inside information that the money had been taken from one of Niyazov's own accounts with Deutsche Bank on 12 September (see "RFE/RL Newsline," 23 September 2002).

Some of Niyazov's remarks in connection with the scandal have also illuminated aspects of the government's banking system. He mentioned that all electronic transactions had been abolished a year ago. Since autumn 2001, the use of all state resources has required written authorization by one of three people: the president, the chairman of the central bank, and the presidential staff's chief accountant. As of 20 September, however, Niyazov said that nobody, except presumably himself, would enjoy such authority anymore. He also said that he was now setting up a financial-monitoring team within the presidential staff to supervise monetary circulation within the country and the inflow and outflow of hard currency, Turkmen television reported on 20 September.

Meanwhile, Niyazov expressed concern about some $400 million in gas debts owed by Ukraine and Armenia. He said that the funds should not go directly to the Ministry of Economics, as usual, but rather a special account should be opened to receive them. The change may be connected with the fact that the minister of economics and finance, Enebay Ataeva, got a warning from Niyazov at the cabinet meeting because one of her close relatives was allegedly involved in the loss of the $41.5 million. However, other possibilities also suggest themselves. For instance, given the well-publicized untrustworthiness of his financial stewards, Niyazov has a golden opportunity to assume complete and personalized control of a $400 million bank account, citing the public good.

ANOTHER GLOOMY WEEK FOR KAZAKH MEDIA. Kazakhstan's embattled independent media enjoyed a small victory last week with the acquittal of a print journalist in the western Kazakh town of Atyrau. After a one-day court hearing on 18 September, Saghynghaliy Khafizov, an editor of the local newspaper "Altyn ghasyr," was found not guilty of insulting the personal dignity and honor of President Nazarbaev. Earlier this year, Khafizov turned down a presidential award, saying he could not accept a prize from "a corrupt person," RFE/RL reported on 19 September (see "RFE/RL Media Matters," 20 September 2002). On the same day, the newspaper's chief editor, Zhumabay Dospanov, who is also a regional leader of the opposition Republican People's Party of Kazakhstan, told RFE/RL that his colleague's acquittal represented a significant win for opposition forces.

Kazakh journalists could find further encouragement in promises made on 19 September by Deputy Minister for Culture, Information, and Public Accord Ardaq Doszhan. Addressing a meeting of government officials and print editors at the Ministry of Transportation and Communications -- a meeting that played like an attempt at building trust between the first and fourth estates -- Doszhan pledged that in the future, government officials would be "very open and eager" to provide information to journalists and grant interviews, RFE/RL's Kazakh bureau reported. Furthermore, he said that the procedure to accredit correspondents to government summits and conferences would soon be simplified.

But subsequent events quickly dashed any optimism that the atmosphere for independent journalists in Kazakhstan was lightening. On 23 September, police in Almaty raided a publishing house that prints opposition newspapers such as "SolDat" and "Qazaqstan." As Channel 31 television reported, police officers searched the New Press Almaty publishing house and confiscated 2,500 copies of the business review "Ekonomika. Finansy. Rynki." The order suspending the paper had been issued two weeks prior by the city's deputy prosecutor-general. The newspaper's lawyers said the ruling was under appeal and not currently actionable, and that in any case, the police had no business shutting down the paper, which legally was something only special executors could do. Suspiciously, electricity at the publishing house had been shut off several hours before the police raid. All in all, New Press Almaty's managers reckoned they were being pressured and punished because they printed opposition newspapers, the television said on 23 September.

Meanwhile, press-freedom activists were warning that Kazakhstan's new media law, currently being drafted by a working group, and ballyhooed by the government as a fresh departure for the country's press, would actually change very little. On 19 September, Tamara Kaleeva, the chairwoman of Adil Soz (Just Word), a nongovernmental organization for the defense of free media, told a news conference at the National Press Club in Almaty that the new media law would not ameliorate conditions for independent journalists, RFE/RL's Kazakh bureau and Interfax reported. She said the government was not taking the drafting process seriously, since the working group -- put together by the Ministry of Culture, Information, and Public Accord -- included no lawyers who were specialists in media or information. Instead of an open process with public debate and input reflecting best practices, Kaleeva predicted that, in time-honored fashion, the ministry would compose the draft; the Interior Ministry, National Security Committee, and Prosecutor-General's Office would add their proposals; and the government would get another restrictive law to protect its own interests. "Even the best version of the law doesn't remove unjustified legal restrictions from journalists' activities, because their work is regulated by a complex system of norms and rules," said Kaleeva, as cited by Interfax. Her colleague Illiodor Kalsin told the same press conference that genuine freedom of speech in Kazakhstan would require the revision of a host of regulatory documents and licensing laws, the Administrative-Violations Code, and the country's Criminal and Civil codes. He compared a journalist to a sapper in a minefield: "A step to the right or a step to the left and you are blown up," Kalsin said, according to Interfax-Kazakhstan on 19 September. Finally, the Adil Soz activists offered, through numbers, a snapshot of the situation for Kazakh journalists. In 2002, there had been 23 attacks on journalists and media offices. Five journalists have been prosecuted this year for insulting the dignity and honor of the president. Four have been murdered.

On 20 September, Nazarbaev, during an appearance on national television to take questions from viewers, called assaults on journalists "outrageous." "We will fight against this and other types of crime, and [investigations] into all these cases will definitely be brought to a conclusion," the president said.

KYRGYZ PRESIDENT AT THE WHITE HOUSE. President Askar Akaev was received by U.S. George Bush at the White House on 23 September. The 45-minute meeting was the culmination of a six-day trip to the United States by the Kyrgyz leader. Akaev declared that he was "greatly satisfied" by the discussion with his American counterpart, which focused on the war against terrorism, poverty-reduction strategies, and Kyrgyzstan's human rights and democratization record, RFE/RL reported.

With regard to the war against terrorism, the essential points about U.S.-Kyrgyz military and security cooperation were included in a joint statement issued after the talks. The signatories declared they would collaborate to ensure stability in Central Asia, warning that the "threats of terrorism, trafficking of narcotics, and proliferation of weapons of mass destruction endanger the security not only of the United States and the Kyrgyz Republic." The two sides committed to strengthening a long-term strategic partnership between their countries, and Bush thanked Akaev for "Kyrgyzstan's support in the war on terror, especially for allowing use of Manas air base by coalition forces," according to a White House spokesman quoted by AFP on 23 September. About 1,900 troops from nine countries in the antiterrorism coalition are presently stationed at the Manas air base outside the Kyrgyz capital, RFE/RL's Bishkek bureau noted the same day. It seems certain that Bush secured a guarantee that the Pentagon will continue to use the base next year; Akaev has threatened not to renew the Americans' lease on Manas after it expires at the end of this year. It is less clear whether Bush pressed his guest to expand the U.S. mandate over the facility. Kyrgyz officials have said it can only be utilized for missions involving Afghanistan. But as the Institute of War and Peace Reporting (IWPR) commented on 23 September, the Bush administration may want Kyrgyz permission to use the base for potential strikes against Iraq.

In the joint statement, Washington also affirmed its intention of continuing support for Kyrgyzstan aimed at strengthening the country's borders and improving the defense potential of its armed forces (see "RFE/RL Newsline," 24 September 2002). U.S. Ambassador to Kyrgyzstan John O'Keefe told Kabar news agency on 17 September that about $3 million had been already been given to bolster frontier defense and to stage military exercises, and he promised that such aid would continue. The newspaper "Slovo Kyrgyzstan" reported on 19 September that for some years, Washington had been allocating funds to the Kyrgyz military to purchase ammunition, radios, spare parts for helicopters, and more recently a number of secondhand Mi-8 helicopters from Ukraine.

With regard to poverty reduction, Akaev secured Bush's approval for an economic-recovery plan to be presented to a council of prospective donor countries when it meets early next month in Bishkek, AP reported. Akaev said that the goals of his medium-term poverty-reduction strategy coincided with those of the Challenges for the New Millennium fund, recently created at Bush's instigation, Kabar news agency reported on 24 September. The agency added that the fund has more than $1 billion and that U.S. Ambassador O'Keefe had said that Kyrgyzstan would be one of the first countries to get assistance from its coffers. The newspaper "Vechernii Bishkek" noted on 18 September that Kyrgyzstan had received $80 million in American aid this year for various economic and social programs. Moreover, it reported that O'Keefe said that sum would double in 2003. Yet, while Bush supported the continuation of assistance to Kyrgyzstan, he also emphasized to Akaev the importance of free-market reforms for the country's long-term development, AFP reported.

(Eradicating poverty was also a major theme of Akaev's address to the 57th session of the United Nations General Assembly in New York on 20 September. He said that poverty was a major obstacle to the democratization process, lowered the country's morale, and was a fertile breeding ground for extremism and international terrorism, AKIpress reported.)

Kyrgyzstan's human rights and democratization record was the third key topic of the presidents' summit. RFE/RL reported on 24 September that human rights had in fact dominated their talks. Many watchdog organizations have noted with dismay that U.S. criticism of political repression in Kyrgyzstan, a crucial ally in the antiterrorism campaign, has become more restrained since the start of the Afghan operation -- in sharp contrast, for example, to Washington's harsh rebukes when Akaev rigged presidential elections in 2000. According to IWPR on 23 September, that same dismay is felt by many ordinary Kyrgyz citizens, in whose eyes U.S. reluctance to criticize Akaev over the March clashes that left five dead has tarnished Washington's image and caused it to be regarded as a supporter of Akaev's growing authoritarianism. The New York-based organization Human Rights Watch addressed a strongly worded letter to Bush on 19 September in which it deplored the "dramatic disintegration of basic freedoms" in Kyrgyzstan and urged him to bring up human rights violations during discussions with Akaev (see "RFE/RL Newsline," 20 September 2002). Kyrgyzstan has been harshly criticized by many human rights organizations for trying to control the media, repressing civic organizations, and jailing opposition politicians on what many say are trumped-up charges.

In any event, the administration apparently did not skirt the issue, as many had feared. On 23 September, before meeting Bush, Akaev held talks with U.S. Secretary of State Colin Powell. Spokesman Richard Boucher said that human rights in Kyrgyzstan topped the agenda, AP reported. Akaev gave Powell a lengthy brief on domestic developments in his country, pointing out steps his government had taken toward a liberal society. But Powell warned Akaev that his active support for Operation Enduring Freedom did not give him a green light to undermine democracy or absolve him of his obligations to protect human rights, the news agency said. This message was reiterated by Bush. Its importance was reflected in the prominence it assumed in the parties' joint statement. They referred to the necessity to promote human rights and "our desire to strengthen democratic institutions and processes, such as a civil society, independent media, local government, political pluralism, and free and fair elections." Furthermore, they affirmed that strengthening democracy and free-market economic reforms "[is] a necessary condition to ensure political, social, and economic stability; sustainable development; prosperity; and national security."

Rights watchdogs, while surely glad to see that these truths got an airing during the Bush-Akaev talks, are still likely to ask what Bush did -- what incentives he offered, what sticks he flourished, what conditions he laid down -- to induce Akaev to abandon his autocratic ways and actually apply them. Since Washington has apparently already committed itself to military aid, financial assistance, and political support for Kyrgyzstan without provisos or conditions, what instruments did the Bush administration have to use to induce Akaev to modify his behavior beyond platitudes about democracy and moral suasion? On this subject, the reports of the Kyrgyz leader's visit to Washington are silent.

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