Peace but still worry in Kyrgyzstan

While the signature of Kyrgyzstan’s president on constitutional reforms has — at least for the moment — quelled the raucous opposition gathering at the gates of parliament, the country is still a long way off from establishing itself as a stable country for foreign investors.

With tension escalating between presidential supporters and protesters favouring a parliamentary system with a weakened presidency, Kyrgyz president Kurmanbek Bakiyev agreed to many concessions and signed off on a hastily voted-in new constitution that will limit his own powers.

The move came after some 10,000 opposition supporters had pitched tents and led protests over the course of the week.

Tension between Bakiyev supporters and dissenters some of whom were former allies of Bakiyev boiled over on Nov. 7 when violence between the two sides left six people injured.

Bakiyev was first appointed and then elected president after former president Askar Akayev was ousted in March 2005. Like Akayev, Bakiyev has been accused of corruption and blamed for the country’s weak economy by some.

The new constitution takes away the president’s power to name the prime minister giving that power instead to the majority party in a new 90-member parliament, and calls for the national security agency to report to the government instead of the president.

The state controlled TV station will remain under government control despite protesters demanding that it be turned into a public entity. The station has been accused of being a promotional tool for the president.

And while Bakiyev called the signing, “a new step to perfect the foundations of the state,” and “the result of good sense and wisdom,” doubts about its ability to bring stability to the troubled country persist.

NGO International Crisis Group, an organization active in the country, says confrontation between government and protestors could yet spread into a wider conflict. The group said the situation “remains fragile.”

The underlying tensions that feed that fragility lead one TSX listed company, Central Asia Gold (CGA-T), to pack its bags and leave recently. The company announced it had sold off its interest in the Taldy Bulak Project on Oct. 12.

London-based Oxus Gold (OXS-L) has also had issues in the former Soviet country. One of its consultants was shot this past summer after receiving death threats. The consultant, who survived, was negotiating for Oxus after the company had its licence for its Jerooy gold deposit revoked in 2005.

Kyrgyzstan with a population of roughly 5 million is considered strategically important in geo-political terms, as it stands as a secular democracy in a region where autocratic regimes and Islamic militancy are still prevalent.

The United States backs up missions in Afghanistan with an air base in the country — its only military base in Central Asia.

Bakiyev and his supporters have argued that protests were being fuelled by political opportunists looking for personal gain. The country is known for its severe clan rivalries that are roughly drawn along a north south divide.

Onlookers speculate that Bakiyev underestimated the opposition, not realizing the extent to which it had tapped into grass roots discontent with Bakiyev’s reneging on making the constitutional changes he said he would after initially winning office he had gone on the record as saying he wanted to postpone reforms until 2009.

Despite moving to a more parliamentary system, Bakiyev still will be able to chose the prime minister if no party wins a majority in the parliament.

TSX listed company’s with operations in Kyrgyzstan include: Centerra Gold (CG-T), Eurasian Minerals (EMX-V), and UrAsia Energy (UUU-V, UUU-L).

In Toronto on Nov. 10 Centerra’s shares were up 9 to $12.75 on roughly 170,000 shares, Eurasian was off 6 to 95 on 650 shares, and UrAsia was off 7 to $3.75 on roughly 915,000 shares.