Civil unrest gives way to fragile peace 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 the central Asian state’s parliament, the country is still a long way off from establishing itself as a stable place for foreign investment.

With tensions 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 on Nov. 8 that limits his powers.

The move came after some 10,000 opposition supporters pitched tents in the central square in front of parliament and led protests over the course of a week in early November.

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.

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.

While Bakiyev called the signing “a new step to perfect the foundations of the state,” and “the result of good sense and wisdom,” doubts that the reforms can bring stability to the troubled country persist.

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

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.

Some foreign miners have run into trouble with the new government, including TSX-listed Central Asia Gold (CGA-T, CGXAF-O), which recently announced it had sold its interest in the Taldy Bulak project. Central Asia’s joint-venture partner, state-owned Kyrgyzaltyn, had earlier withdrawn from the project with the government also annulling the company’s mineral licence late in 2005.

London-based Oxus Gold (OXUSF-O, OXS-L) has also had issues in the former Soviet satellite. One of its consultants was shot this summer after receiving death threats. The consultant, who survived, was representing Oxus in negotiations with the government after the company had its mineral licence for the Jerooy gold deposit revoked in 2005.

The government said it pulled the licences of both Central Asia and Oxus because the companies were not developing their respective projects quickly enough.

Kyrgyzstan — with a population of roughly 5 million people — is considered to have strategic geopolitical importance, as it stands as a secular democracy in a region where autocratic regimes and Islamic militancy are prevalent.

The United States backs up missions in Afghanistan with an airbase 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 deep clan rivalries, which 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 grassroots discontent with Bakiyev. After promising constitutional reforms shortly after winning office, the new president back-pedalled, saying he wanted to postpone any changes until 2009.

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

Other companies with operations in Kyrgyzstan include: Centerra Gold (CG-T, CAGDF-O), Eurasian Minerals (EMX-V, ESMNF-O) and UrAsia Energy (UUU-V, UAEYF-O, UUU-L).

In Toronto, shortly after the news, 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.