Kyrgyz question Russian involvement in Jerooy gold mine

BISHKEK -- Kyrgyz are questioning Moscow's investment in the Jerooy gold mine in Talas province and whether the deal favours the interests of Kyrgyzstan or the Russian oligarchs backing the project.

As an indication of the Kremlin's interest in the project, Russian President Vladimir Putin oversaw the opening of the gold refining plant via video-link on March 17.

The project at Jerooy, the country's second largest mine, represents "record-breaking Russian investment in Kyrgyzstan", which will total $600 million by the end of its lifetime, pledged Putin.

The plant, operated by Russia's Alliance Group, had been expected to go on line last year but came under attack during political unrest that toppled the previous administration and saw Kyrgyz President Sadyr Japarov emerge as leader.

The arson attack cost the company more than $10 million in damage, delaying production at Jerooy, which is estimated to hold almost 90 tonnes of gold and 25 tonnes of silver, said the group.

Annual gold output is expected to eventually reach 5.5 tonnes.

In contrast, the country's largest gold mine, Canadian-operated Kumtor, is expected to produce 16 tonnes of gold this year.

Gold and other natural resources are essential to Kyrgyzstan's struggling economy.

Political football

While Putin extolled the project, saying it "will strengthen the friendship between the two peoples," many stakeholders question the Russian leader's sincerity.

Moscow has watched billions in investments from China pour into Central Asia in recent years, including in Kyrgyzstan, with Russian companies struggling to compete.

The competition has made Kyrgyzstan something of a political football between two giant, self-serving countries.

"There is a big hidden fight going on between Russia and China for influence in Central Asia," Kyrgyz energy analyst Rasul Umbetaliev told The New York Times in 2019.

Even though Russia has historic ties to Kyrgyzstan, "the Russians don't have any money," he said.

Investment from China has not filled the Kyrgyz with jubilation either.

In January 2018, a heating plant in Bishkek that the Chinese had modernised broke down for four days, leaving residents of the capital to freeze in -20°C weather.

When Kyrgyz leaders sought relief on immense loans from China during the COVID-19-related economic slump in 2020, Chinese lenders responded by stretching out the 2020 planned repayment over the next four years -- but tacked on a 2% penalty.

An opportunity for plunder

Russia's involvement in the Jerooy mine is an opportunity to overcome its economic disadvantage -- and to plunder Kyrgyzstan's natural resources, critics say.

"The Jerooy gold mine represents billions of dollars that will never reach Kyrgyzstan but will flow instead to Russian oligarchs because our state has no ownership stake in this project and because we're not participating in the management of the mining company," said Aibek Buzurmankulov, former governor of Talas province.

When the Alliance Group acquired rights to the Jerooy gold mine in 2015, it did so under pressure from Putin, he said.

"This is an absurd situation," Buzurmankulov said, calling for "a dedicated government commission [to] investigate the conditions and details of this agreement".

"The Russian authorities basically seized our Jerooy mine," said Bishkek-based economist Elmira Suranchiyeva.

"Never mind the formal acquisition of rights to the gold mine by a private investor," she said. "That investor is affiliated with the Russian authorities."

Putin showed his role in the project by participating in the kick-off ceremony for the gold mining conglomerate, she said.

"It is perfectly clear that Russia pushed Kyrgyzstan to agree to terms so absolutely unfavourable for us ... even though we are a poor country with almost no natural resources," Suranchiyeva said. "We should have protected such a motherlode."

"This is one of the glaring examples of the risks of ties to Russia, which has plenty of levers to use on a small Central Asian country and to seize such major, attractive assets like Jerooy," she said. "In the end all we did was to deepen our dependence on Russia."

Loss of sovereignty

Suranchiyeva pointed to a past Russian project in Kyrgyzstan that benefited Moscow.

"Back in 2014, Russia's Gazprom bought out its Kyrgyz gas distributor, Kyrgyzgaz, for the token price of $1 and received all of our country's gas pipelines, distributing stations and underground storage tanks," she said.

Other examples of Russian heavy-handedness in the former Soviet republic include the Russian 954th Anti-Submarine Weapons Test Base, which has been testing torpedoes on Kyrgyzstan's cherished Lake Issyk-Kul since 1943, as well as the Kant air base, which dates back to 1941.

"We are not losing sovereignty, as several activists claim," said Suranchiyeva. "We already lost it."

[Kanat Altynbayev in Almaty contributed to this report.]