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Central Asia Report: October 19, 2007

Uzbekistan: President Makes Landmark Visit To Turkmenistan

By Bruce Pannier

Uzbek President Islam Karimov

October 18, 2007 (RFE/RL) -- Relations between Turkmenistan and Uzbekistan have long been characterized as strained, aggravated -- even icy. But such terms seemed to be understatements after Ashgabat, in 2002, accused Tashkent of abetting an alleged assassination plot against the president of Turkmenistan.

Now, what is arguably Central Asia’s worst bilateral relationship looks set to take a positive leap forward as Uzbek President Islam Karimov begins his first official visit to Turkmenistan in more than seven years. While it’s unclear where relations will go, any rapprochement will be followed closely in Moscow and Washington, as both Central Asian nations play key roles in producing and transporting energy resources, particularly gas.

Under Saparmurat Niyazov, who died in December, Turkmenistan had become one of the world’s most repressive states, centered around a bizarre, Stalinist cult of the personality of the president who called himself “Turkmenbashi” -- the father of all Turkmen.

But Karimov’s arrival today in Ashgabat is the latest sign that Turkmenistan has embarked on a very different foreign policy under new President Gurbanguly Berdymukhammedov. RFE/RL's Turkmen Service reported that a newscast on Turkmen state television today spoke of hopes that the meeting "will deeply change the goal of bilateral cooperation,” adding: “It’s believed that a new stage of Turkmen-Uzbek relations started.”

The summit agenda itself remains unclear, but the fact that it is happening at all is remarkable. “It certainly would have been [unimaginable] a couple of years ago,” said John MacLeod, a regional expert and senior editor at the London-based Institute for War and Peace Reporting.

In November 2002, relations hit a nadir. Turkmenistan accused Uzbekistan of complicity in an alleged attempt to assassinate Niyazov. Turkmen forces later raided Tashkent’s embassy in Ashgabat and expelled the Uzbek ambassador. Ashgabat also sent troops to the border with Uzbekistan and closed checkpoints there for almost a month.

Killing Friendship

Turkmen security forces eventually apprehended Boris Shikhmuradov, a former foreign minister who had defected to the opposition-in-exile the previous year. Turkmen authorities accused their former top diplomat of leading the assassination plot, and accused Tashkent of having helped Shikhmuradov to reenter the country across their shared border. Uzbek authorities denied any involvement.

The incident was a crushing blow to an already chilly relationship. "You had two authoritarian presidents with quite strong personalities and views on life and also on how regional affairs should be run,” MacLeod said. “They really didn't coincide in many matters. So you had a long period of fairly frosty relationship ... and all of these rather frosty relations culminated in the assassination attempt against President Niyazov.”

And yet, Niyazov and Karimov had much in common. They were both the leaders of their republics when the Soviet Union collapsed. And the internal security networks they set up to stay in power were highly efficient. Both were the source of numerous complaints from international human rights groups.

Nonetheless, relations were never good. Issues dogging them included the sharing of resources from the Amu-Darya River, which is a crucial source of water for both countries intensive cotton industries. Despite a 1996 deal on equitable water use, Uzbek concerns have been high given Turkmen moves to withdraw some water and build an artificial lake in the Karakum desert. Also of key importance to Uzbek trade is access to Turkmenistan’s Caspian Sea ports.

Then there are minorities. Ethnic Uzbeks constitute approximately 10 percent of the population in Turkmenistan, while tensions remain high along the Uzbek-Turkmen border in Khorezm Oblast. Historically, that area in both countries has formed a single ethno-cultural region. But its current division is headache for residents of both states, particularly Uzbeks, who have had to pay a visa fee to visit relatives in Turkmenistan.

When Niyazov and Karimov last met in Bukhara, a city in western Uzbekistan chosen as the midway point between the two capitals, they agreed to make it easier and cheaper for citizens of both nations to visit the other. Yet those declarations were never really put in practice. Cross-border transit remains difficult.

Beyond these issues, there were problems on the personal level -- an intense dislike between the two longtime leaders evident from the early years of post-Soviet independence.

Personal Dislike

For example, shortly after statues of Niyazov began popping up across his country, Karimov had a law passed banning the erection of any statue in honor of a living person. That slight, however, was soon returned: when Karimov's new presidential jet was en route to an economic forum in the Turkmen capital in 1996, the Boeing was diverted to a much more modest Turkmen airport -- ostensibly so that preparations could be completed in Ashgabat ahead of the expected arrival of other dignitaries.

Turkmen President Berdymukhammedov (epa file photo)

But Niyazov’s sudden death appears to have thrown open a window to improving relations. The countries can now pursue matters that are in both their interests and are likely to dominate the official portion of Karimov’s two-day visit.

"You have a new president in Turkmenistan who is taking a fresh look at the outside world and who is genuinely interested in having some kind of diplomatic and economic relationship with all comers -- and that includes Uzbekistan,” McLeod said. “And to the Uzbeks, it's an opportunity to mend fences -- and they do have a very long border. There are common economic interests. Both countries are gas producers and will export northwards to Russia, principally. Obviously it makes sense for both countries to work together instead of against one another in making that happen."

Karimov and Berdymukhammedov met earlier this year but only at multilateral meetings, such as at a summit of Commonwealth of Independent States in Dushanbe and a Shanghai Cooperation Organization gathering in Bishkek.

Now, they meet one-on-one. Their biggest challenge, in moving relations forward, may simply be to leave the past behind.

Ashgabat Presses Cautiously Forward On Foreign Investment

By Farangis Najibullah

Turkmenistan's Korpeje oil and gas field. President Berdymukhammedov is seeking foreign partners in the energy industry

October 18, 2007 (RFE/RL) -- Earlier this month, Turkmen President Gurbanguly Berdymukhammedov signed a package of amendments to spell out investor safeguards and extend them to a number of existing laws, in Turkmenistan's latest move to lure investors to the energy-rich country.

The amendments don't appear to represent major changes, and are in fact focused on a "national tourism zone" with special legal, tax, and customs regimes. The package was signed on October 1, but only announced nearly two weeks later, on October 12. But once the news was out, both Western and Russian media were quick to assess the move as a serious attempt to attract investment.

The changes purport to strengthen investors' hands by harmonizing a handful of laws that apply to foreign investment -- including on land use, tourism, a free economic zone -- and it allows them to rent land for long-term use. To protect Turkmenistan's natural resources -- including vast fossil-fuel deposits -- foreign entities are banned from owning land with sizable mineral deposits.

Insufficient Changes?

According to Anna Walker, a senior editor with the Economic Intelligence Unit (EIU) in London, there are other long-standing obstacles to investment in Turkmenistan, and she says the amended law does not go far enough to make the business climate truly attractive to potential Western investors.

"Although they allowed foreigners, for example, to start up ventures on their own without the need to form joint ventures with government companies, they don't relax a lot of the other restrictions," Walker says. "I mean, it has always been difficult to invest in Turkmenistan. For example, the restrictions on the access to the foreign exchange -- there is no mention it would be easier for foreigners to gain access to the foreign exchange. There is also no mention that the official exchange rate will be made more realistic."

Walker says the official exchange rate inside the country of the Turkmen currency, the manat, is about five times the black-market rate. Last week, the government announced its plan to redenominate the manat in 2009, removing three zeros. News agencies quoted analysts as saying the move could facilitate foreign investment.

Walker and other experts suggest that the recent amendments appear to demonstrate an eagerness to usher in foreign capital to boost the Turkmen economy. Turkmen state media quoted President Berdymukhammedov as saying that development of the country's energy sector requires foreign investment and new technology.

During his trip to New York in September, Berdymukhammedov said he wanted to accelerate economic reforms and his country's transition to a market economy, in part to stimulate economic growth and boost living standards. "Turkmenistan supports the concept of mutually beneficial exploitation of raw energy resources by energy providers, as well as by end consumers," he said. "In this context, we believe that the development of Turkmenistan's energy-resource projects for international markets will add an extra impulse to invigorate intergovernmental and interregional trade and economic relations."

Courting Investors

Turkmen state media reported that Berdymukhammedov met in New York with representatives of top U.S. businesses and the heads of several international companies, including oil companies BP and Shell, to discuss potential cooperation opportunities. State media has quoted Berdymukhammedov as saying Turkmen gas production will reach 250 million cubic meters and oil production 100 million tons a year by 2030. International oil giants -- including Chevron, BP, and Total -- have reportedly expressed interest in investing in Turkmenistan's energy sector.

The EU, in particular, has been eager for Turkmen gas as part of an effort to reduce its dependency on Russia. Britain's minister of state for energy, Malcolm Wicks, visited Ashgabat last month, and potential Western investments in the Turkmen gas sector reportedly dominated his meeting with the Turkmen leaders. Wicks said afterward that he has been "impressed by how Turkmenistan is considering the many options available to it, including the opportunities for energy trade with the EU." He expressed Britain's willingness to cooperate with Turkmenistan, and -- drawing a sharp contrast with Russia -- he offered to pay market price for the Turkmen gas.

But experts say that despite Turkmenistan's clear desire to attract Western investors -- in addition to existing deals with Russia and China -- and the West's willingness to cooperate with Ashgabat, they doubt that cooperation will happen anytime soon. There are currently no export pipelines that transport Turkmen gas to Europe without crossing Russian territory. But plans have been proposed for trans-Caspian projects that would transfer Turkmen and Kazakh hydrocarbons through Azerbaijan, Georgia, and Turkey to the European market. Another proposal envisions piping gas through Iran, but that plan would face strong opposition from Washington.

Mathew Clements, Eurasia editor in the country-risk department for Jane's Information Group in Britain, says that Western representatives like Wicks have their eyes fixed squarely on longer-term plans and cooperation with Turkmenistan. "I think one of the reasons why they'd make statements like this is to try and encourage Turkmenistan to agree to the construction of a pipeline across the Caspian, to try and focus its energy on supplying its gas through this method, and try to give it beneficial market prices, make it beneficial for them economically to do this," Clements says.

Many observers say Turkmenistan needs to do much more than simply lift a few restrictions to bring Western investment to the country. They say Ashgabat should create a better business environment, which requires a wider range of reforms -- both economic and political. Walker says reform of the Turkmen judicial system should be part of a broader process.

Russia is currently Turkmenistan's main partner in the energy sector, with more than 50 billion cubic meters of Turkmen gas flowing annually to Russia. Beijing's landmark deal with Ashgabat in July earmarked some 30 billion cubic meters of gas a year for 30 years through a planned pipeline. So Russia and China appear poised to remain Turkmenistan's primary business partners in the energy sector in the immediate future, regardless of any tentative steps to reform economically or establish firm ground rules for would-be investors.

Kyrgyz President Aims To Build Ruling Party

By Bruce Pannier

President Kurmanbek Bakiev speaks at the founding of his political party

October 17, 2007 (RFE/RL) -- Kyrgyz President Kurmanbek Bakiev on October 15 announced the creation of a new political party -- the Best Path Popular Party (Ak Jol Eldik Partiyasi).

Announcing the party's establishment, Bakiev said it will be a party "of the people [and] for the people." "We are not a party of power. We are not a party of bosses. We are the party of working people. We are the party of people of action," Bakiev said.

President Bakiev vowed in September that he would help form a new political party. But he also said that he wanted the new party to win a majority of seats in parliament -- something that has not happened since Kyrgyzstan gained independence in 1991.

"You know, we have many various parties, more than 100, but what kind of parties are these?" Bakiev asked. "Among them there are few that are willing to assume responsibility for the affairs of the country. In the best cases, they simply criticize the authorities for their mistakes. But who will, who should, take care of affairs? Which political forces [or] political parties have done real work, have made progress toward those goals that stand before the country? Up until today, there haven't been any."

Before the next parliamentary vote takes place, though, Kyrgyzstan is expected to approve a new constitution in a national referendum on October 21. The many changes include an increase in the number of seats in parliament and a new party-list system that will strengthen the role of political parties. Compliance with the new constitution will require new parliamentary elections that could come within two months of the referendum -- as soon as December.

On October 16, a day after Bakiev was elected party chairman, he suspended his activities as leader of the Best Path Popular Party, saying that as president he could not participate in party politics. But his goal remains seeing the party dominate parliament.

The Best Path Popular Party became the 102nd registered political party or movement in Kyrgyzstan. About half of those groups are no longer active, and many of the remaining parties and movements have just a handful of members. Few can claim more than 10,000 members in a country of more than 5 million.

A Ruling Party?

If the Best Path Popular Party achieves an outright majority in parliament, it would be a first. But that might not be cause for celebration.

Kyrgyzstan's Central Asian neighbors all have ruling parties. Through more than 16 years of independence, it is Kyrgyzstan that has been widely viewed as the most democratic in the region -- as well as the country that most respects human rights and basic freedoms.

In Kazakhstan, President Nursultan Nazarbaev's Nur-Otan party claimed every seat in the lower house of parliament in elections this year.

In Tajikistan, the People's Democratic Party of President Emomali Rahmon controls more than 90 percent of the seats in parliament.

Turkmenistan has a single registered political party, the Democratic Party, which is headed by President Gurbanguly Berdymukhammedov.

In Uzbekistan, there are effectively five ruling parties -- the People's Democratic Party, the Fidokorlar (Self-Sacrificers) Party, the Adolat Social Democratic Party, the Liberal-Democratic Party, and the Milli Tiklanish (National Renaissance) party -- all of which steadfastly support President Islam Karimov.

If the new Kyrgyz party wins a majority in parliament, many will question whether the country is better off with what could be a rubberstamp parliament that would legitimize any decision by Bakiev.

That is especially relevant since Kyrgyz voters are being asked to approve a new constitution that alters the balance of power among branches of government. Referendums in the 1990s and in 2003 consolidated power into the hands of the presidency. Now, with the legislative branch set to receive a greater voice in the affairs of government, parliament could be packed with members of the party that the president created.

Negotiations Begin

Kyrgyzstan's opposition is aware of that possibility, and some groups are already working to join forces ahead of the elections to compete against the Best Path Popular Party.

But among the propresidential parties, some members are ready to join Bakiev's new group, as Akmatbek Keldibekov, a lawmaker from the pro-presidential Atazhurt (Fatherland), told RFE/RL's Kyrgyz Service.

"The negotiations and consultations are going on. Now, because the president has established a party, I suppose, we, the four or five lawmakers from the Atazhurt party who have supported the president's policies, will join the Best Path Popular Party and we will continue to support presidential policy," Keldibekov said.

But there are also signs that some of the more established parties will work hard to maintain their hard-won identities -- and instead see the elections as a chance to consolidate their own positions.

Edil Baisalov, executive secretary of Prime Minister Almaz Atambaev's Social Democratic Party, told RFE/RL that his party would not join with any other bloc, and would even avoid any association with certain politicians.

"We, the Social Democratic Party of Kyrgyzstan, are ready for elections even now. There are people whom we would like to invite into the party. However, we will not merge with those parties that consist of formerly corrupt people or currently corrupt people, pro-governmental people, [or] those who would use state power to pursue their personal interests," Baisalov said.

Some of the newer, personality-driven parties might resist the temptation to merge as well -- like that of former Prime Minister Feliks Kulov. Kulov's Ar-Namys (Dignity) party has vowed not to merge with any other groups, and also invited new members to join with them, including members of existing political organizations.

(RFE/RL's Kyrgyz Service director, Tynchtykbek Tchoroev, contributed to this report.)

Uzbekistan: Alisher Usmanov -- Billionaire With Presidential Ambitions?

By Farangis Najibullah

Alisher Usmanov

October 16, 2007 (RFE/RL) -- He’s one of Russia’s richest men, an oligarch whose industrial empire stretches from mining and media to a stake in London’s famed Arsenal football club. But if Alisher Usmanov seems to have everything he could want, appearances may be deceiving. After all, the Uzbek-born billionaire is widely seen as a possible political heir to Islam Karimov, Uzbekistan’s authoritarian president.

Over the past two decades, the Russian tycoon, who hails from one of the Uzbek capital’s most prominent legal families, has amassed a fortune that is estimated at more than $5.5 billion. Yet outside the former Soviet Union, little was known of the portly 54-year-old until last summer, when Usmanov suddenly seized headlines in Britain and elsewhere with a series of sensational stories -- not all to his liking.

In Britain, Usmanov seemingly took the easy route to instant notoriety: In August, he went on a buying spree of shares in former English Premier League champion Arsenal, raising his stake in the team to 23 percent. In doing so, Usmanov put himself in a position to launch a takeover of the storied club, and became an instant target of criticism by English fans concerned about the future of the “Gunners.”

Currying Favor

Around the same time in Russia, Usmanov was winning praise for donating the entire collection of artwork of the late cellist Mstislav Rostropovich to the Constantine Palace in St. Petersburg, a presidential residence and venue for international summits. The works, which carried a reported price tag of $40 million, seemed to signal a desire to please President Vladimir Putin, whom Usmanov has called “a blessing” for Russia.

But back in Britain, more bad press beckoned. On his Internet blog, Craig Murray, an outspoken former British ambassador to Uzbekistan, made a series of allegations about Usmanov's business affairs and his alleged financial ties to Gulnara Karimova, Karimov’s eldest daughter. Murray also called Usmanov a convicted criminal in reference to his 1980 imprisonment for fraud, extortion, and rape. Usmanov, who says he was framed, calls himself a "political prisoner" who was later pardoned by Soviet leader Mikhail Gorbachev.

Murray’s blog sparked a legal storm in Britain, which boasts some of the world’s toughest libel laws. Usmanov's lawyers succeeded in having Murray's post taken down, citing libelous charges. Then, Usmanov launched a charm counterattack, flying several British reporters on his private jet for interviews at his retreat outside Moscow. The result was a series of profiles in the British press that portrayed Usmanov as an enlightened tycoon hard done by both the Western media and the Soviet system. “All my life I’ve been confronted with prejudiced people who are determined to turn me into a stereotype -- a Central Asian thief,” he told "The Times” of London.

The billionaire, however, perhaps didn’t anticipate the unintended consequences of his legal and media offensive. In recent weeks, a flurry of blogs and websites has popped up to post Murray’s original criticisms as well as other scathing remarks about the Uzbek-born billionaire. If Usmanov had sought to silence his critics, the effect of his actions has been to shine an even brighter light on his controversial story.

Checkered Past

Which is what Murray continues to do. "It's true that Russia is something of a gangster state now where the mafia in alliance with the KGB and former KGB operators really control the state,” Murray later told RFE/RL. “And this has enabled a small number of people to become ridiculously wealthy billionaires through seizure of state assets -- like the state's mineral resources -- for which they did not, in fact, pay a single penny. They simply, effectively, stole them. And Usmanov is one of that class of oligarchs."

Not that any of this has mattered back home. In fact, Usmanov's London buying spree as well as the latest brouhaha surrounding his alleged conduct have largely been ignored by the media in Russia or in his native Uzbekistan.

The tycoon himself says he has little to do with Uzbekistan. A Russian citizen, Usmanov says his ties to his native land are limited to annual pilgrimages home to visit his parents’ grave. Yet many people, including Murray, are convinced that Usmanov harbors significant ambitions regarding his Central Asian homeland.

Murray says Karimov and his family would like Usmanov to succeed the president, who is largely reviled in the West as one of the most oppressive leaders in the former Soviet sphere. Of course, any such move does not appear imminent, even if Uzbekistan is set to hold presidential polls in December. That’s because while Karimov is barred by the constitution from running for a third term, he is widely expected to change the law or hold a referendum to stay in office -- a common practice in the neighborhood.

"I've been aware for at least the last three years that Alisher Usmanov was looked on favorably by the Karimov family as a possible, eventual successor when President Karimov decides to give up in -- what Karimov hopes -- won't be for several years,” Murray says. “But the Karimov family has been very keen to find a successor who they trust will not take all the money and all the industries and properties away from the Karimov family."

Yevgeny Volk, who heads the Nasledie think tank in Moscow, says it is too early to speculate about a possible successor to Karimov. But he agrees that Usmanov would be a likely contender to take over when the 71-year-old strongman passes on. "I think [Usmanov] needs power because -- first of all -- he still is a stranger in Russia to some extent,” Volk says. “With his [ethnic] origin and roots, he belongs to the Uzbek nation. I think his political ambitions could be realized in Uzbekistan."

But it’s not just his native roots, as displayed in the gilded Central Asian vases that line the halls of his retreat on the Moscow river, that would make Usmanov the right man for the job. Usmanov, a senior adviser to Gazprom and president of one its subsidiaries, is arguably part and parcel of the Kremlin’s inner circle.

Kremlin Man?

Because Russia and its energy firms still play a significant role in Tashkent’s affairs, Usmanov could be uniquely poised to eventually take over in the Uzbek capital with pivotal backing from Moscow. "Usmanov's latest steps show his efforts to create a rapport with Russian leaders and demonstrate his loyalty,” Volk says. “His purchase of Rostropovich's collection for a significant amount of money is a kind of investment in exchange for the Russian elite's support for his future ambitions."

Like British-based Russian oligarch Roman Abramovich, who also owns an English soccer club, Usmanov is believed to operate freely in large part due to his support for Putin. In 2006, Usmanov bought the Russian newspaper "Kommersant," which once belonged to Putin's staunch critic and London exile, Boris Berezovsky. The newspaper can be relied on by Kremlin leaders for a steady stream of positive spin.

Usmanov has never said publicly that he would consider entering politics. Nor has he made any political comments about Uzbekistan. There could also be official and legal barriers for Usmanov to run for the Uzbek presidency. His Russian citizenship and years abroad could work against his candidacy. But with Russia using energy clout to reassert hegemony over the lands of Moscow’s former empire, few profiles might better fit the bill to lead Central Asia’s most populous nation than that of Alisher Usmanov.

(RFE/RL's Uzbek Service contributed to this report.)

Caspian: Summit Fails To Resolve Key Question

By Bruce Pannier

The five leaders failed to make much progress toward a new legal regime in the Caspian

October 16, 2007 (RFE/RL) -- Sea or lake? Hopes were high that the leaders of the five Caspian littoral states, who met today in Tehran, would finally resolve their long-standing dispute over the definition of the world’s largest inland body of water. The answer to that question is key to clarifying the Caspian’s legal status -- and establishing how to exploit, and export, the vast energy reserves beneath its seabed.

Alas, it wasn’t to be. In their declaration after the summit, the leaders of Azerbaijan, Kazakhstan, Iran, Russia, and Turkmenistan dodged the key question of legal status. Instead, they called for rational use of Caspian biological resources, and also pledged not to be involved in an attack on any of the other littoral states.

The declaration stated that "the parties underline that under no circumstances would they allow other nations to use their territory for waging aggression or other military action against any of the parties." Analysts said that clause could be aimed at easing concerns in Tehran over possible attempts by the United States to use Azerbaijani territory for a military attack on Iran, which has defied Western calls to cooperate on its nuclear program.

"It is also important that we talk about the impossibility of providing our own territory for other countries in case of aggression or some other military actions against one of the Caspian Sea states," Russian President Vladimir Putin said.

Pipeline Restriction

Another point of the declaration raised eyebrows. Seemingly at the request of Russia and Iran, one section requires consent from all five nations before any of them can build a pipeline under the Caspian. Western countries led by the United States currently back such projects as way to bypass both Russian and Iranian territory.

Another point specifies that only vessels flying the flag of one of the five littoral states are allowed to ply Caspian waters. Putin suggested such wording confirms the "sovereignty over the Caspian of only the Caspian states, including the use of subsoil resources."

Nonetheless, it was the status of the hydrocarbon-rich Caspian Sea that brought the leaders to Tehran. That question has aggravated relations among the five states since the collapse of the Soviet Union in 1991 -- when Caspian waters were suddenly washing the shores of five countries, not two.

In the absence of any new deal, relations and cooperation is still guided by treaties signed in 1921 and 1940. Moscow was essentially able to call all the shots in both of those treaties, and little attention was devoted to any eventual exploitation of fossil fuels such as natural gas and oil.

The central question -- whether sea or lake -- quashed any progress at the first Caspian summit more than five years ago. Likewise, today’s summit did not produce any specific solution to the key dispute among the littoral five.

If the Caspian is classified as a sea, then the bigger a country's coastal area, the greater the share it can expect to control and develop. Such a deal would greatly favor Kazakhstan -- not simply because it has the longest Caspian coastline but also because the rich Kashagan oil field and other potentially lucrative fields would presumably lie within its territorial waters. Kashagan is regarded as the largest oil field to have been discovered in decades.

Lakeside Iran

Iran would be the biggest loser if the Caspian is defined as a sea, because its sector in the southern Caspian would be among the smallest and -- according to exploratory work -- its most energy-poor. Not surprisingly, Tehran favors its definition as an inland lake. That would leave all littoral states sharing equally in the riches of the Caspian. As a result, profits from Kazakhstan's multibillion-dollar Kashagan oil field would be distributed equally among all five countries.

Moscow has traditionally favored labeling the Caspian a sea -- not merely because Russia's sector is the largest after Kazakhstan but also because Russian businesses are active on Kazakhstan's Caspian shore. Putin said today that the Caspian's "territory should not be covered with state borders, sectors, and exclusive zones. The less area they occupy, and the more the waters and the surface remain for common use by the Caspian states, the better."

Putin said that he and the other leaders welcomed a proposal by Iranian President Mahmud Ahmadinejad to establish a Caspian economic grouping. Putin said that as a first step toward its creation, Russia would host an economic conference of Caspian states next year.

The summit declaration also repeats previous calls for regular meetings between the leaders of Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan -- something called for at the first summit in 2002 but never realized. An announcement that the next Caspian summit will be held next year in the Azerbaijani capital, Baku, could be an indication that the five parties are more serious about holding such regular meetings.

Uzbekistan: Rights Groups Condemn Easing Of EU Sanctions

An Uzbek refugee from Andijon

BRUSSELS, October 16, 2007 (RFE/RL) -- Rights groups and other critics have reacted with anger and dismay to a European Union decision to ease sanctions on Uzbekistan. The penalties were imposed two years ago in the wake of the killings of protesters in the Uzbek city of Andijon. But on October 15, EU foreign ministers decided to suspend for six months the bloc's visa ban on eight top Uzbek officials.

Explaining the EU decision, the bloc's external relations commissioner, Benita Ferrero-Waldner said the EU remained "very concerned" about the human rights situation in Uzbekistan. But she highlighted Uzbek participation with the EU over the last year in two discussions on the Andijon events, one round of human rights talks, as well as the conditional release of some political prisoners and the abolition of the death penalty.

She said all of this was enough for the EU to offer Tashkent a gesture of goodwill. "Whether this will take us somewhere, we will have to see,” Ferrero-Waldner said. “But I think we have to at least try, very, very clearly. And as I said it's the most populous country [in the region], it is a country in our Central Asian Strategy; I don't think we should just leave it out. I think we should engage with them and clearly try to work step by step in order to improve the situation of human rights."

Reacting To Bloodshed

The EU slapped sanctions on Tashkent amid an international outcry after Uzbek authorities forcefully ended an uprising in Andijon in May 2005. The Uzbek government blamed Islamic militants for instigating the Andijon violence and says some 190 people died there, but rights groups say hundreds of mainly unarmed demonstrators were killed.

The EU sanctions had already been eased when the bloc took some officials off the visa ban list earlier this year. Now rights groups say the EU has given up what leverage it had. Human Rights Watch called the move a travesty and an inappropriate reward for Tashkent.

Others were even harsher. "They're forgetting Andijon, they're giving up on all the victims who were shot on the square on that day and all the people who were subsequently rounded up and tortured," said Andrew Stroehlein, the media director for the International Crisis Group.

But Stroehlein said it wasn’t just what happened in May 2005 – it’s everything that has gone on since then in Uzbekistan, such as show trials, the arrest of activists, and torture. “We've had two UN rapporteurs on torture go to the country in the last few years and say that torture is systematic, it's part of the entire system, the entire apparat in the country,” he said. “It's a brutal torturing regime, and this is the regime that you lift your sanctions on and get rid of them? For what? What did they do? They've done nothing."

There are worries, too, that the move could undercut European Union efforts elsewhere. "My concern is, what message do you then send to countries like Kyrgyzstan, which have chosen a tougher way with promoting democracy?" says Cem Oezdemir, a German member of the European Parliament and co-author of a parliamentary report on Central Asia. "Because if your message is, 'Well, you can do such a massacre and more or less nothing will happen afterwards,' it is tough to tell the Kyrgyz people they should continue with having a moderate constitution, with having a parliamentarian system and so on. So I believe there should be consistency in the policies we are doing."

The decision represents a reverse for those EU member states that argued for a tougher line and would have rather seen the sanctions toughened. Represented most consistently by Britain, the Netherlands, Ireland and Sweden, this group argued the Uzbek concessions are not backed up by substantive changes in Tashkent's human rights policy.

German Policy Wins

The day was carried by those member states, led by Germany -- the author of the EU's Central Asia Strategy -- and the current holder of the EU's rotating presidency, Portugal. They argued that continued isolation of Uzbekistan would only cost the EU influence in the strategically important, energy-rich region, contested by Russia and China.

Tolib Yoqubov, who heads the Human Rights Society of Uzbekistan from exile, says human rights have lost out to practical concerns. "The government of Uzbekistan has played this game with the world community and with its own people for 18 years. The European Union got involved in this game,” Yoqubov said. “They either do not see the Uzbek government's lies or pretend not to see them. Unfortunately, double standards seem to dominate. Some EU countries do not seem to understand the nature of dictatorships or they rather pretend to not see it because of certain interests. It is a pity."

In six months, the EU must decide whether Uzbekistan has done enough to meet the conditions attached to the October 15 decision. These include the demand for full cooperation with UN representatives, the honoring of the country's international obligations relating to fundamental rights and the rule of law, the granting of access to political prisoners to international relief organizations, the accreditation for work in Uzbekistan of international nongovernmental organizations, the release of all jailed human rights defenders, and an undertaking to put a stop to their harassment.

EU officials say it is understood that the visa ban is highly unlikely to be reimposed. There is no precedent for an EU suspension of sanctions being overturned. "It would take another Andijon," one official told RFE/RL.

(with Ahto Lobjakas in Brussels, and Jeremy Bransten, Khurmat Babadjanov, Kathleen Moore, and Gulnoza Saidazimova in Prague)

Reader Comments Removed From Turkmen Government Website

Turkmenistan's first Internet cafes opened in February (file)

October 15, 2007 (RFE/RL) -- The Turkmen government's official website, Altyn Asyr (The Golden Age), has removed a feature that allows comments to be posted by readers.

On October 12 -- just two days after initiating the new feature -- it vanished from the Turkmen, Russian, and English versions of the website.

There was no explanation on the website about the removal of the responses by readers. Some 15 comments had been posted to the site before the feature disappeared.

Several of the comments offered mild criticism of former President Saparmurat Niyazov and one of them called on President Gurbanguly Berdymukhammedov to release all political prisoners held in Turkmen prisons.

The new feature was a big change in a country where the government strictly controls all media and public dissent is not allowed. Its removal will raise questions about the government's commitment to opening up the media situation in Turkmenistan.

The government website, which was launched about two years ago, features articles about the national and local governments, political and social events, and the meetings and foreign trips made by the president.

It can be found at

Iran: Politicians Stake Out Territory Ahead Of Caspian Summit

By Vahid Sepehri

Caspian Sea shoreline (file)

October 15, 2007 (RFE/RL) -- Tehran is set to host a Caspian Sea summit at which the leaders of Iran, Azerbaijan, Russia, Kazakhstan, and Turkmenistan will try to hammer out a legal framework for use of the sea and its resources, including significant energy deposits.

There was a flurry of diplomacy ahead of the October 16 meeting after unsourced reports claimed a plot had been uncovered to assassinate Russian President Vladimir Putin after his arrival in Tehran. That commotion, and Iran's official reaction to the reports, highlighted the potentially momentous nature of the summit.

The five states that border the Caspian are still seeking a framework to replace the 1921 treaty dividing the sea between Iran and the Soviet Union, and two subsequent agreements on fishing and trade.

This week's summit will be just the second conference to bring together those littoral countries' heads of state -- the first one took place five years ago in Turkmenistan.

Iranian government spokesman Gholamhossein Elham told reporters on October 14 that the leaders are expected to sign a joint declaration at the end of the summit.

Comments by Iranian politicians and commentators indicate concerns that Tehran might find it difficult -- at this and future conferences -- to hang on to what it regards as its fair share of the Caspian. Most estimates of what represents a "fair share" vary anywhere between one-fifth and one-half of the sea.

Distrust Of Russia

Broadly, the coverage appears to reflect a latent distrust of Russia, which is regarded as a key player on a number of international issues of crucial importance to Iran -- including its nuclear program. Iranians are not entirely convinced by Russia's official posture as Iran's friend and partner, given what some in Tehran perceive as surreptitious bargaining and last-minute agreements with the West against Iran, a history of diplomatic bullying and territorial encroachments under the tsars, and subversion through political proxies under the Soviets.

Independent observers in Iran have focused on the legal issues at stake, while virtually all have commented on the Caspian Sea's lamentable ecological state. A former diplomat and head of the private Caspian Studies Institute in Tehran, Abbas Maleki, set out certain legal issues. He said the Caspian legal framework has become a "wearisome" issue unlikely to be resolved at this week's summit. Maleki said Iran does not in principle oppose the shared use of the sea's surface and division of the seabed, which he said is the position favored by Russia. He said Iran is essentially willing to agree to a shared-use or a divided framework. But he also cited Iran's share as 20 percent in that case, which was the percentage for which Iran bargained under reformist President Mohammad Khatami earlier this decade.

Maleki also cited some of the potential disadvantages of a divided regime for Iran. Firstly, he said the absence of a cooperative management regime would harm the sea environmentally and added that the Caspian would soon be unfit for swimming. Maleki also observed a strategic danger to Iran in dividing up the Caspian. He said his country is "threatened by America" and needs access to the world's waters. A jointly administered lake would allow Iran to sail its ships north, into the Volga and beyond. A framework of division would separate Iran from the Russian side with the territorial waters of Azerbaijan and Kazakhstan. Maleki said participants have "concluded" that an agreement is necessary, and he said Iran's current government appears able to take "difficult and revolutionary decisions."

Tehran-based analyst Rasul Musavi has said that to be effective in pursuit of a framework if they manage to agree at this summit -- or soon -- on issues like the environment, shipping, fishing, and underground resources. He told ISNA that he has seen increasing realism among participants, and he pointed out that a strict division or sharing framework does not meet the various states' interests. He said the 50 percent share that some Iranian politicians have touted applied to the Soviet period, and indicated that previous ministerial meetings on the Caspian have to some extent brought the countries' positions closer. Musavi cited some agreements that states have reached in principle -- on ships navigating only under the flag of a littoral state, on restricting military forces on the Caspian, or on exclusive territorial strips for each state although with no agreement yet on its width.

Iranian politicians have taken a broader view of the summit, citing its significance for their country. The head of the Iranian parliament's National Security and Foreign Policy Committee, Alaeddin Borujerdi, said that the summit was important in raising Iran's international profile and providing a model of regional cooperation. Borujerdi expressed hope that the parties might reach a mutually satisfactory agreement.

A fellow committee member, Reza Talai-Nik, called the summit an opportunity to reach an agreement that is crucial to the Caspian environment and trade, and an occasion to hold consultations with the Russians on key issues like the nuclear issue and the stalled construction of the Bushehr power plant.

Another committee member, Heshmatollah Falahatpisheh, suggested that Tehran and Moscow can play a decisive role in shaping a framework for the Caspian. Falahatpisheh said Iran's share is "at least 20 percent," and added that Iran and Russia could agree to ensure that figure does not decrease. He also cited a need to demilitarize the Caspian and curb pollution.

An oil terminal at Mazandaran on Iran's Caspian coast (epa)

Expediency Council Secretary Mohsen Rezai said the summit would give Iran an opportunity to press its claims with Russia. Rezai told a gathering that President Putin's visit provides an opportunity for Tehran to state in a "friendly but firm manner" its claims of "several years," presumably on the nuclear issue, Bushehr, and the Caspian. Rezai said his country has to "make the Russians understand that we are not prepared to overlook our evident rights," adding that "if the Russians continue their friendship and cooperation with us, we too will continue."

Rezai's comments reflect the ongoing concerns of a number of Iranian politicians, although the candor with which those worries are expressed increases with the distance of those politicians from official posts. The concerns include Iran's need for allies in an increasingly hostile international environment, Russia's increasing significance in that context, and fears that Moscow will abuse its position to the detriment of Iran.

In contrast with the vigorous and polemical language that Iranian officials and even diplomats use when discussing domestic politics or Middle Eastern affairs, senior Iranian officials have been loathe to make dramatic statements concerning Russia. Moscow cuts a murky and sinister profile in the discourse of some Iranian politicians and papers. One daily, "Aftab-i Yazd," commented that Moscow's portrayal might lie at the heart of certain right-wing legislators' recent tendency to blame Khatami's former government for a purportedly soft approach to the Caspian. The daily suggested that reformists are regarded as an easier target than Russia, and it urged those same parliamentary critics to press the current government to defend Iran's rights -- if they are firm in their views. Beneath these exchanges, there could be a collective concern that there is little that Iran can do to impose its views on -- or even persuade -- increasingly assertive and seemingly unscrupulous states like Russia.

Kazakhstan: Global Financial Turmoil Hits Credit Rating

By Gulnoza Saidazimova

October 13, 2007 (RFE/RL) -- Kazakhstan, thriving on oil and gas exports, has long boasted one of Eurasia's most dynamic economies. But it seems that not even the towering Altai Mountains can shield Central Asia's economic giant from the turmoil swirling on international credit markets.

On October 8, the international ratings agency Standard and Poor's (S&P) downgraded Astana’s sovereign credit rating to BBB-, the lowest investment grade category, due to funding problems in the country’s financial system.

S&P blamed the downgrade on a rapid rate of borrowing by Kazakh banks, citing signs of an economic slowdown and potential obstacles to new borrowing due in part to the U.S. subprime mortgage crisis. With the downgrade, Kazakhstan has become the only country so far to see its S&P rating fall since major turbulence over the U.S. mortgage crisis shook world capital markets last summer.

An Extreme Case

"Kazakhstan's case is arguably more extreme than most,” Ben Faulks, a London-based S&P sovereign-ratings analyst, told RFE/RL. “What you have had in Kazakhstan is that the rate of increase of the borrowing of the banks has been really exceptionally fast -- much faster than in most countries."

The Kazakh economy has grown at an annual rate of nearly 10 percent in recent years -- mostly due to oil revenues. To further accelerate growth, the country borrowed heavily on international capital markets when loans were relatively cheap. According to the "Financial Times," Kazakh banks' international borrowings total $40 billion -- more than half of their total non-equity funding.

Now, Kazakhstan appears set for a double credit blow. The U.S. mortgage scare has already raised the global cost of credit, but the downgrade is likely to make it even more expensive for Astana to borrow. And the Kazakh credit crunch could end up sending an economic shockwave across Central Asia.

Moreover, with their fortunes so closely tied to the country’s overall economy, Kazakhstan’s main wholly state-owned firms have also seen their ratings downgraded. The companies include the Kazakhstan Development Bank, postal and financial-services firm KazPochta, and Agrarian Credit Corporation.

Nonetheless, while “"slightly less creditworthy" than before, Kazakhstan is "still relatively safe" to lend to, according to Faulks. "We have taken this step of moving Kazakhstan down by one rating but we still keep it within the 'investment' grade,” Faulks said. “In other words, we still consider it a solid country from the point of view of commercial debt repayment and we have a stable outlook, so we expect the difficulties to be managed."

Russia and Kazakhstan are the only two former Soviet nations that S&P rates to "investment" grade. Russia's current rating of BBB+ is two notches higher than Kazakhstan's. Ukraine is rated BB-, three notches below Kazakhstan, while Belarus and Georgia are rated B+, four notches below Kazakhstan.

Kazakh banks are generally more dependent on foreign borrowing than are most banks across the former Soviet Union.

Russian banks have also increased international borrowing in recent years, but their share of borrowing is much lower than Kazakhstan's, while Moscow has far more international reserves than does Astana. Growth of the Azerbaijani and Belarusian banking sectors has been fueled mainly by customer deposits. In Ukraine, a lot of bank debt is structured so that there are no significant repayments falling due this year or next.

Kazakh banks are also highly exposed to the country's booming property market, with some 70 percent of loans reported to be directly or indirectly connected to real estate, compared to about 25 percent in Russia.

Property Impact

Russia's "Kommersant" daily wrote on October 10 that the impact of the global liquidity crisis on Kazakhstan might be moderate, but that the secondary effects on real estate and construction might be difficult to predict.

On October 8, another top credit rating agency, Fitch, maintained its Kazakh rating but changed its outlook from "positive" to "stable."

Kazakh economist Kanat Berentaev calls the downgrades "undoubtedly unpleasant." But he sees a silver lining as well. "Thanks to the mortgage crisis in the U.S., attention was focused on housing construction, and a correction of prices began,” Berentaev said. “One more positive impact of the downgrade is that second-tier banks will borrow less, which will lead to a correction of [Kazakhstan's] external debt."

Ratings decisions had an immediate impact on the trading of Kazakh bank bonds and hedging instruments, which investors use to protect themselves against default. Faulks describes the initial reaction to S&P's move as "quite extreme," although he says the situation "calmed down a bit" a day later.

S&P forecasts 6 to 8 percent economic growth in Kazakhstan over the next two years, compared to growth of around 10 percent in the past few years. Faulks says it is too early to tell, but Kazakh bank activities abroad are likely to slow, at least in the near term.

The key question will be the price at which Astana will be forced to refinance maturing bonds and other debt on international markets.

“The important thing will be what kind of price they'll have to pay to renew (debt), whether that price rises,” the S&P analyst said. “It is likely to rise because of conditions on international markets apart from anything else. And, obviously, the downgrade of the sovereign will have an impact as well."

Uzbekistan: EU Unable To Choose Between Carrot, Stick

By Ahto Lobjakas

EU headquarters in Brussels (file photo)

BRUSSELS, October 12, 2007 (RFE/RL) -- A review of European Union sanctions on Uzbekistan, scheduled for October 15, has embroiled the bloc in a bitter dispute over its aims in Central Asia and the role of sanctions more generally.

Uzbek security force's bloody crackdown on demonstrators in the eastern city of Andijon in May 2005 prompted the EU to impose a visa ban on some top officials and an arms embargo later that year.

Some EU member states want to ease the sanctions in hope of coaxing more cooperation from Uzbekistan, while others vehemently oppose any such move before there is evidence of improvement in the country's human-rights situation. At stake are the EU's ties with Central Asia's most populous country. Equally important is the future shape of the bloc's policy on sanctions.

Uzbekistan is quickly turning into a test case. The country is important strategically, located as it is in the heart of the energy-rich region, where the EU is looking for an alternative to Russia for its energy needs. Uzbekistan is, on the other hand, largely unrepentant in its rejection of EU human- rights standards.

Strategy For Central Asia

Following Tashkent's acceptance in late 2006 to hold expert-level talks on human rights and on the events in Andijon, the EU rolled back its sanctions slightly and shortened the review period. That move coincided with the adoption of the EU's first-ever "Strategy For Central Asia" in June under the then-EU Presidency of Germany.

Germany, which has taken the lead in shaping the EU's Central Asian policy, has teamed up with current EU chair Portugal to lead a coalition of member states supporting a six-month "freeze" on the EU visa ban. According to internal EU documents seen by RFE/RL, this group of countries also includes France, Spain, Italy, Greece, Cyprus, Hungary, and Poland. Collectively, they present a series of arguments in support of a goodwill gesture on the part of the EU.

They point to the bloc's broader strategic aims in Central Asia, to Uzbekistan's central location, its energy reserves, and to its 25 million people. They also note that to build up energy cooperation with Central Asia, the EU needs to stave off competition from others, mainly Russia and China. To do that, Uzbekistan's cooperation as a regional leader is vital.

'An Opening Up Of Sorts'

More specifically, Germany, Portugal, and their allies point to Tashkent's apparent willingness to address human-rights issues, as well as to the recent releases of some political prisoners. As one EU official told RFE/RL, these countries argue that "an opening up of sorts" is in progress in Uzbekistan, and that an easing of the sanctions is needed for the limited contacts with Tashkent to continue.

The supporters of a harsh EU line...also fear that by backing down on sanctions, the EU would set a dangerous precedent for other countries in the region, and beyond.

This group is vehemently opposed by a hardcore group comprising Britain, the Netherlands, Sweden, and Ireland. They argue that the human-rights situation in Uzbekistan has not improved and that sporadic meetings of low-level Uzbek officials with EU counterparts do not constitute evidence of any serious intent on the part of Tashkent to improve its behavior.

They also note that political prisoners are selectively pardoned without their convictions being removed. The one round of talks on Andijon earlier this year also was the last, and Tashkent is trying to limit the "human-rights dialogue" with the EU to one low-level meeting a year.

The supporters of a harsh EU line also note that the visa ban is viewed by Tashkent as particularly irksome, and forms one of the most powerful levers in the EU's otherwise anemic arsenal of sanctions. They also fear that by backing down on sanctions, the EU would set a dangerous precedent for other countries in the region, and beyond.

Attempts At Compromise

Even the backers of more lenient EU sanctions admit that if there was another Andijon-style backlash in Uzbekistan -- during the presidential election in December, for example -- the EU would have no choice but to introduce even harsher sanctions. These may then come to include the freezing of assets.

An EU diplomat told RFE/RL this week that no one within the bloc expects the election to result in anything but a victory for incumbent Islam Karimov. The official noted that "the maximum we can hope for is that nothing [bad] will happen." He added that "there are many different ways of not allowing free and fair elections to take place."

Attempts at finding a compromise have thus far failed. The issue has been discussed by three sets of EU officials in Brussels this week. It will be raised again by the bloc's top foreign policy-making ambassadors in Luxembourg on October 15. Officials say it is very likely that EU foreign ministers meeting in Luxembourg on the same day will have to try to hammer out a deal among themselves. Some do not rule out that the meeting will end in an impasse.

The EU must decide by November 14 whether to extend, drop, or modify the sanctions, and it is theoretically possible on October 15 that the matter will be referred back to the ambassadors. Although there is no EU foreign ministers' meeting scheduled for the period between October 15 and November 14, other ministerial meetings are also empowered to rubber-stamp ambassadorial decisions in exceptional circumstances.