May 4, 2010 / 12:38 PM / 10 years ago

Factbox-Key political lrisks to watch after Kyrgyzstan's revolt

BISHKEK/MOSCOW (Reuters) - Kyrgyzstan remains volatile after a bloody revolt deposed President Kurmanbek Bakiyev on April 7, with key regional players — the United States, Russia and China — worried by political uncertainty.

The United States leases the Manas air base, which provides significant support for U.S. and NATO operations in Afghanistan. Washington’s erstwhile Cold War foe Russia, which has long dreamed of evicting the United States from ex-Soviet Central Asia, also leases a local base, in Kant.

Bakiyev, who fled and ended up in Belarus, has said his decision in 2009 to extend the Manas lease — months after announcing the U.S. military would have to leave — unnerved the Kremlin and was a factor in his overthrow.

He has also said Russian special forces may not have been directly involved in the revolt, but accused Moscow of meddling in the strategically located Central Asian nation’s affairs.

China has a long border with Kyrgyzstan and a sizeable share in the republic’s retail trade and services sector. Chinese shops and other businesses in Bishkek were looted and torched during the April 7-8 violence.

VAGUE FUTURE AFTER BLOODSHED

At least 85 people were killed in the uprising when security forces shot into crowds of protesters, some of whom seized arms and returned fire.

Bakiyev’s opponents say the revolt was sparked by anger with his five-year rule, which they say was marked by deep-rooted corruption, nepotism and poverty.

The opposition was fast to form an “interim government” and declare that it was in full control. But a day of violence in which crowds of looters robbed and burnt down homes in mainly Russian-speaking villages outside Bishkek, killing at least four, underscored the persistent volatility.

Bakiyev — who initially fled to southern Kyrgyzstan but then moved on to Kazakhstan and finally Belarus — says he is still president and remains a strong irritant for Roza Otunbayeva’s interim government.

The interim government has charged him in absentia with “mass killing” and is preparing an extradition request. [ID:nLDE63Q0NJ]. It has also placed handsome rewards of up to $100,000 (65,898 pounds) on Bakiyev’s son and three brothers.

What to watch:

— It remains unclear to what extent the interim government is actually in control of the situation. Outbursts of unrest, lootings and violence appear likely at a time when police and security forces remain largely demoralised.

During the unrest, Kyrgyzstan’s small army proclaimed “neutrality” and locked itself up in its barracks.

Groups of civilian vigilantes can provide some protection to shops and property, but are unlikely to rebuff large crowds.

— Bakiyev remains a potential source of instability. Will he manage to rally supporters in southern Kyrgyzstan?

— The Ferghana Valley, where Bakiyev has his power base, is prone to ethnic tension between almost equally populous Kyrgyz and Uzbek communities. Before the Soviet Union’s collapse, hundreds of people were killed in clashes between Uzbeks and Kyrgyz near Osh, southern Kyrgyzstan’s main city, in 1990.

SUPERPOWER POLITICS

The United States and Russia are at loggerheads over Kyrgyzstan, although their leaders do not publicly say so.

Washington’s priority will be keeping the Manas transit centre base open but Russia wants it closed.

Some 50,000 troops travelled into or out of Afghanistan via Manas in March. Manas is also a hub for in-flight refuelling.

Pentagon officials say they have other options but they would be more expensive.

Both Moscow and Washington promptly offered support for Otunbayeva’s interim government and have promised assistance.

What to watch:

— Whether the lease will be renewed. Otunbayeva has said it will be renewed in July, but other interim officials have said it will have to wait until after elections in October.

— Will Russia use Kyrgyzstan’s volatility as an excuse to beef up its military presence? If so, how will China react?

— Belarus’s already chilly ties with ally Russia soured further after Kyrgyzstan’s turmoil. President Alexander Lukashenko, which dubbed the uprising a “bloody coup d’etat,” threatened to snub a summit of a Moscow-dominated security pact in May unless Kyrgyzstan is included in its agenda. It also took in Bakiyev.

POLITICAL REFORM

The interim government has pledged to overhaul Kyrgyzstan’s political system to decrease the president’s powers, saying that will help prevent any leader from amassing power by placing family and clan members in influential positions.

A referendum on constitutional change is to be held on June 27, with proposed amendments aiming to reduce the power of the president and create a parliamentary republic with strong checks and balances.

Parliamentary elections will follow on October 10, with a presidential election possibly held the same day.

What to watch:

— How stable and sustainable will any new system be? Diplomats say the new leaders will face an uphill battle fostering democracy in Central Asia, which is dominated by authoritarian leaders.

— Elections raise the prospect of heightened tension among the former opposition leaders now in power. Opposition forces that came to power after former longtime president Askar Akayev’s ouster in 2005 were quickly fragmented, and there are differences of opinion among the current interim leaders on issues including the U.S. air base.

ECONOMY AND INVESTMENT

Kyrgyzstan’s economy is dependent on remittances from its citizens working abroad, most of whom are in Russia, which make up as much as 40 percent of its gross domestic product, as well as the country’s mining sector.

The mountainous nation has attracted few major private foreign investors, with Canada’s miner Centerra Gold alone accounting for 7.3 percent of the nation’s GDP, a quarter of its industrial output and a third of all exports last year.

Centerra has said its operations were not affected by the unrest.

With very little foreign investment coming in, the country has in the past been reliant on loans from the World Bank, the International Monetary Fund and the Asian Development Bank.

The country’s economic woes were seen as a major factor in the uprising. Recent utility rate increases were unpopular and many people are now angry about alleged government corruption and recent privatisation deals.

In response, the interim government has lowered electricity, heating and hot water rates and cancelled some sell-offs in telecoms and energy sectors that appear to have involved the business interests of Bakiyev’s clan. Proceeds from these deals are due to replenish state coffers.

Kyrgyzstan’s GDP was expected to expand by about 5.5 percent in 2010, but economists say the growth is from a very low base, and the size of the economy is still far below its Soviet-era level. Wages average some $130 a month.

What to watch:

— Are potential foreign investors feeling confident about the government’s ability to control the unrest?

— How will the government’s anti-corruption drive affect investor sentiment?

— Kyrgyzstan has ample hydropower resources but no cash to develop them. Will the new government attract investors?

Writing by Dmitry Solovyov; Editing by Sonya Hepinstall and Peter Apps

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