Russia

[HenryTo]

More embarrassment for the Russian "legal system":
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AP Exclusive: Fugitive Russian lawmaker in high-stakes legal fight flees to US, fears for life

WASHINGTON (AP) -- A wealthy Russian lawmaker has fled with his family to the United States, where he says he fears assassination over accusations that some of Russia's richest and most influential people swindled him in a real estate deal. Back home, he's been charged with financial crimes.

Ashot Egiazaryan (pronounced Ah-shawt Yeh-gee-ah-zar-ee-AHN) says he is considering seeking asylum in the U.S. But after suing a Russian billionaire and several former business partners -- including a close friend of Russian Prime Minister Vladimir Putin and Moscow's former mayor -- he said he doesn't feel safe even in this country.

"I do think it's possible than an assassination attempt can be mounted against me here," he said flanked by lawyers in a conference room a few blocks the White House. The interview with The Associated Press was his first with Western media and came a few weeks after one of his relatives was gunned down in the Russian city of Astrakhan on Dec. 7, an attack he claims is connected with his suit.

The struggle over the Moskva Hotel, a prime piece of Moscow real estate, is now being waged in a civil court in Cyprus, the London Court of International Arbitration, on the Web and on Capitol Hill. It provides a rare insider's view of the often ruthless world of money, power and politics in Russia, where wealth and connections can sometimes trump property rights and the rule of law.

The case could become a headache for the Obama administration. The U.S. is counting on Moscow's support in everything from the fight against extremists in Afghanistan to efforts to derail the nuclear programs of Iran and North Korea.

If the 45-year-old Egiazaryan seeks to remain in the U.S., the administration could face a difficult choice: risk angering the Kremlin by sheltering a high-ranking Russian official charged with financial crimes, or force a fugitive to return and face a legal system that even Russian officials recognize is riddled with corruption and cronyism.

Russian President Dmitry Medvedev came into office in 2008 pledging to battle what he called Russia's "legal nihilism." But so far, many inside and outside Russia see more rhetoric than reform. The respected watchdog group Transparency International's latest rankings place Russia 146th out of 180 countries in its corruption index, just ahead of Sierra Leone but behind Kenya.

For two years, Egiazaryan told the AP, he was subjected to groundless police raids, personal smears and anonymous death threats as he struggled to hang onto his $2 billion stake in a project to tear down the Moskva, an old Soviet hotel a few dozen steps from the Kremlin, and reconstruct it as a five-star luxury establishment.

He says he was forced to hand over his share in the hotel in June 2009 after a campaign of intimidation that included raids by armed police on some of his partners and businesses and threats of criminal prosecution. He said he was the target of anonymous threats, including threats to behead his children.

Last September, shortly after Egiazaryan arrived in the U.S., his lawyers filed a civil suit in a court in Cyprus charging the billionaire Russian investor Suleiman Kerimov with leading a hostile takeover of the Moskva hotel project.

The court ordered a freeze on about $6 billion in Kerimov's assets as well as the assets of several of Egiazaryan's former partners in the project. They include Moscow's canny and colorful former mayor, Yuri Luzhkov, and Arkady Rotenberg, Putin's longtime judo partner.

A New York lawyer representing Kerimov in this country, Eliot Lauer, denied the allegations. "They are total fabrications," he said.

Lauer said Egiazaryan transferred his interest in the Moskva Hotel as part of a legitimate business deal. "He was overextended," Lauer said. "He was deep in debt and he was facing financial ruin." A year later, Lauer said, Egiazaryan "concocted this scheme" to regain control.

Within weeks of the suit, Egiazaryan was stripped of his legislative immunity by his fellow deputies in parliament, charged with fraud by Russian prosecutors and put on his country's wanted list. Several of his Russian properties have been seized.

In coming weeks, the judge in Cyprus is expected to rule on a defense challenge to the asset freeze.

The dispute spilled into cyberspace. An anonymous website appeared detailing a long list of allegations against Egiazaryan. He fought back with two websites of his own, including http://www.ashot-egiazaryan.com, where he has published documents that he said support his allegations that he is the victim of persecution.

Egiazaryan compared himself to other business and political figures who have run afoul of Russia's political elites -- including Mikhail Khodorkovsky, the former Yukos Oil chairman who has twice been convicted of financial crimes. Many Russian human rights activists say Khodorkovsky's prosecution was politically inspired.

But two of Khodorkovsky's most prominent supporters, rights advocates Lyudmila Alexeyeva of the Moscow Helsinki Group and Lev Ponomarev of Russia's For Human Rights, wrote to key U.S. lawmakers Jan. 29, urging them to raise questions with the State Department and Department of Homeland Security about Egiazaryan's continuing presence in the U.S.

Alexeyeva criticized Egiazaryan's role on a parliamentary committee he helped found on human rights in Chechnya. Alexeyeva wrote that the panel had provided cover for well-documented atrocities during Russia's second war with Chechen insurgents.

Drew Holiner, a lawyer representing Egiazaryan, denied the allegations. He contended the two Russian rights advocates were "misled" into writing the letters, which he called part of a "black PR" campaign against his client. "We're going to find out who misled them, and why," he said.

Alexeyeva told the AP on Sunday that she had met with people who spoke on Egiazaryan's behalf and that she was now uncertain of the facts in her letter. She said she planned to look more closely at the case of the fugitive lawmaker on Monday.

[HenryTo]

Russia's ongoing (struggling) privatization efforts.
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Russia Sberbank sees sale certainty after government formed

WASHINGTON (Reuters) - Europe's second largest lender Russia's Sberbank (SBER.MM) will see some certainty over the planned privatization sale after the new Russian government's lineup is announced on May 21, CEO German Gref said on Saturday.

Sberbank initially planned the sale of the 7.6 percent stake, part of Russia's ambitious privatization program, last September but postponed the deal after global risk aversion wiped around $1.5 billion off the stake's value.

"It seems to me that, yes, such certainty should emerge (after the cabinet announcement)," Gref said. "As soon as the market stabilizes, we can go ahead with the deal."

Russian president Vladimir Putin and Prime Minister Dmitry Medvedev will announce the lineup in the Kremlin on Monday after secretive negotiations which kept the investors in suspense over the future government's policies.

The new government is expected to focus on privatization and reduce the state share in the economy, currently estimated by economists at 50 percent.

Sberbank shares fell by up to 9 percent on May 17, their biggest intraday fall so far in 2012. Gref said the share price plummeted because two unidentified investors suffered from margin calls.

The stake destined for privatization is now worth $4.3 billion.
ABNORMAL SITUATION

Gref said that Sberbank, the biggest blue chip stock on the Russian market, held between 30 and 60 percent of the daily trade volume share on the Russian stock market and therefore was the main victim of volatility.

"It is the question for the government. It is an abnormal situation when one stock makes up for half of the daily trade," said Gref. "It would be a pity to sell Sberbank at current levels."

Sberbank closed at 78.2 roubles per share on May 18, well below the 100 per roubles per share which the bank sees as the favorable level for the sale to proceed.

Gref spoke on the sidelines of his visit to the United States where he met top management of key technology firms and discussed cooperation in airplane leasing business with Boeing (NYS:BA - News).

Gref said Sberbank expressed interest in Dexia's planned sale of Turkish unit Denizbank, Turkey's sixth-biggest private bank but said it had no interest in Dexia assets outside Turkey.

"We have made enough acquisitions. Now we have two targets left - Turkey and Poland. Turkey is a much more significant goal," Gref said. "In the next few years we need to consolidate these assets. I am not a big supporter of aggressive growth."

Dexia is being dismantled and its assets sold after France, Belgium and Luxembourg had to bail it out in October, after it was crippled by the euro zone debt crisis when it was shut out of funding markets.

Gref said he believed in the euro and said the currency will strengthen after Greece's exit from the eurozone which he saw as imminent.

"There is a zero chance to keep Greece in the eurozone. Why torture a country which is not capable to show a level of competitiveness needed to stay in the union. This year Greece will leave the eurozone," Gref said.

[HenryTo]

With Brent @ $107 and WTI @ $91, Russia will not be running a budget surplus this year.

http://www.bloomberg.com/news/2012-05-15/russia-s-four-month-budget-deficit-narrowed-to-0-3-of-gdp-1-.html

[HenryTo]

Russia set to officially join the WTO this year.

http://www.kyivpost.com/news/russia/detail/127272/

[HenryTo]

Morningstar bullish on Russia and its mobile industry.

http://news.morningstar.com/articlenet/article.aspx?id=547728&t1=1335224885

[rffrydr]

If that's the plan it's not going to get past Ukraine. There's a reason why Regan populated our USofA with a momentous flow of Ukrainians (besides their being heavy christian and jewish (oops, forgot that Statfor), and Caucasian (where we get the word)). Ukraine has identified with the West at least since Ivan the Terrible--which is why he's called Terrible. And no number of native russians nor gas quotas are going to change that.

http://answers.yahoo.com/question/index?qid=20100331180527AApFK9n
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Courtesy Stratfor.
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The Next Stage of Russia's Resurgence: Ukraine, Belarus and Moldova

The Eastern European former Soviet states of Ukraine, Belarus and Moldova are important to Russia for various reasons, including geographic location and economic relations. Generally, these states all cooperate with Moscow, but the degrees of cooperation vary. Ukraine understands the necessity of strong ties to Russia but works to play Russia and the West off each other to gain the most concessions possible. Belarus, largely isolated from the West for political reasons, depends greatly on Russia and is already a member of Moscow's customs union with Kazakhstan, so will be the least resistant to integration into the Eurasian Union. Moldova is a country divided against itself, drawn in part to Western powers and in part to Moscow, and is likely to remain in political paralysis for the short to medium term.

Ukraine

Several factors make Ukraine crucial to Russia. Its location on the North European Plain and along the Black Sea has made Ukraine a traditional invasion route from the west. Ukraine is also the second-largest country in the former Soviet Union in terms of population. Furthermore, Ukraine has the third-largest economy in the former Soviet Union, and its industrial, agricultural and energy sectors are integrated with Russia's.

Russia's Levers

Political: Ukrainian President Viktor Yanukovich and his Party of Regions enjoy a supportive relationship with Moscow. Russia also has ties to Ukrainian opposition leaders such as former Prime Minister Yulia Timoshenko and prominent political figure Arseny Yatsenyuk.

Furthermore, Ukrainian oligarchs like Dmitri Firtash and Rinat Akhmetov have maintained business relationships with Russia.

Social: Ethnic Russians make up 17 percent of Ukraine's population, and 30 percent of Ukrainians speak Russian as a native language.

Furthermore, Ukrainians come from the same East Slavic ethnic and language group as Russians (and Belarusians). Most of the country is Orthodox Christian, and more than 10 percent of Ukraine's population is under the Moscow patriarch.

Security: Russia maintains a military presence in Ukraine by stationing its Black Sea Fleet in Crimea. Russia's Federal Security Service and its Ukrainian counterpart cooperate on intelligence and training. Although Ukraine is not a member of the Russia-led Collective Security Treaty Organization, it is also not a NATO member.

Economic: Ukraine gets more than 60 percent of its natural gas from Russia, which can manipulate the Ukrainian pipeline infrastructure by cutting off supplies. Russia owns many assets in Ukraine's metals industry and supplies the industry with energy (besides maintaining business relationships with the industry's oligarchs). Russia also gives Ukraine financial assistance and loans via Sberbank and other financial institutions.
Russia's Successes, Obstacles and Ambitions

Between 2010 and 2012, Russia achieved many of its goals in Ukraine. Moscow extended the Black Sea Fleet's lease of Sevastopol to 2042. Ukrainian legislation making NATO membership illegal limited Kiev's ties to the bloc, and the pro-Western faction in the Ukrainian government led by former Prime Minister Viktor Yushchenko and his Our Ukraine-People's Self-Defense party has been marginalized. A major threat to Russia's plans -- fast-tracked negotiations between Kiev and the European Union -- were not completed in 2011 as planned, leaving Ukraine without association and free trade agreements with the union and without explicit prospects for EU membership.

In 2012, Moscow hopes to gain some degree of control over Ukraine's energy pipeline and storage system by maintaining high natural gas prices and forcing Ukraine to trade energy assets for cheaper natural gas. Russia also wants to keep Ukraine from growing closer to the European Union by creating and manipulating domestic challenges that will keep Yanukovich preoccupied and make Ukraine seem less desirable to the Europeans. Moreover, Moscow plans to keep specific EU members (particularly Sweden and Poland and their Eastern Partnership initiative) from focusing on Ukraine by keeping those countries divided and focused on other matters.

Still, this does not mean Moscow can do whatever it likes inside Ukraine. The largest challenge to Russia's ambitions in Ukraine has come from the Ukrainian government, despite the government's close ties to Moscow. It is not in Yanukovich's interest -- or in the interest of the oligarchs that make up his power base -- to give Russia control of the country's natural gas transit system, which is not only a vital economic asset but also a symbol of Ukraine's sovereignty. This is why Ukraine has continued to resist selling the system to Russia and joining Russia-led institutions like the customs union, which would further undermine Kiev's economic sovereignty.

Beyond 2012, Moscow wants to prepare Ukraine for closer integration via membership in the Eurasian Union as it evolves from the customs union and Common Economic Space.

Ukraine's Position and Strategy

Because it historically has been ruled by many external powers -- Russia, Poland, Austria-Hungary and the Ottoman Empire among them -- the territory that makes up modern Ukraine encompasses people from different cultures and with different worldviews. The broadest division in Ukraine is between the country's east, which is economically and culturally more integrated with Russia, and the country's west, which is more nationalist, closer to the West and more supportive of Ukrainian membership in Western institutions like the European Union. The chief imperative for any Ukrainian state is to prevent the country from splitting apart and balance between external powers to maintain sovereignty.

Thus, Yanukovich -- despite hailing from eastern Ukraine and campaigning on a much more Russia-friendly platform than his predecessor -- has not been merely an unquestioning ally of Moscow during his presidency. Although he made numerous favorable gestures to Russia early in his term, such as passing legislation legally barring NATO membership and signing the Black Sea Fleet-for-natural gas deal, Yanukovich then sought to balance this by fast-tracking its negotiations with the European Union on signing association and free trade agreements (which Kiev hoped would include a provision for eventual EU membership).

However, the failure of Ukraine's negotiations with the European Union due to the imprisonment of Timoshenko weakened Ukraine's counterbalance against Russia and forced Kiev into a difficult position. Ukraine can only afford to pay Russia more than $400 per thousand cubic meters for natural gas for so long before the high prices create a financial crisis, so it is really a question of when -- not whether -- Ukraine will have to give Russia at least some control over or access to its energy system in exchange for lower prices. This will diminish Kiev's ability to maneuver against Moscow even further and will ensure that, whether it wants to or not, Ukraine will have to take Russia's interests into account eventually.

Belarus

Geography plays a large role in Belarus' importance to Russia. The country is located on the North European Plain, a traditional invasion route from the west, and there are no meaningful geographic barriers to invaders because of the country's flat terrain. Belarus serves as a territorial buffer for Russia's core. Belarus also has one of the largest economies in the former Soviet Union, and its industry, energy and security mechanisms are integrated with Russia's.

Russia's Levers

Political: Belarus and Russia are partners in the Union State, and Belarusian President Aleksandr Lukashenko receives support from Moscow. Russia has ties to Belarusian security leaders and Belarus' economic elite have business relationships with Russia.

Social: Ethnic Russians make up 11 percent of the Belarusian population. The majority of the Belarusian population speaks Russian as a native language, and Russian and Belarusian are both official languages in the country. Most of the country is Orthodox Christian, with roughly 60 percent of the population under the Moscow patriarch. Belarusians and Russians have roots in the same East Slavic ethnic and language group and thus have cultural similarities.

Security: Belarus' military-industrial complex is integrated with Russia's, and the countries have a unified air defense system. Belarus is a member of the Russia-led Collective Security Treaty Organization (CSTO) and hosts Russian military installations, such as S-300 air defense systems. Also, the Belarusian and Russian intelligence bodies have a cooperative relationship including training.

Economy: Russia supplies 99 percent of Belarus' natural gas and most of its oil. Russia also owns a 100 percent stake in Beltransgaz, giving it full ownership of the country's pipeline infrastructure. Trade between the two countries is important for the Belarusian economy, as half of Belarus' exports go to Russia. Furthermore, Russia provides Belarus with financial assistance, including a $3 billion loan through Eurasec and a $1 billion Sberbank loan.

Russia's Successes, Obstacles and Ambitions

Russia's influence in Belarus did not go unchallenged over the past two years. In early 2010, Lukashenko lashed out at Moscow over high energy prices and began considering alternative suppliers (Venezuela and Azerbaijan in particular) as a way to pressure Russia into lowering prices. But Russia kept prices high and cut off natural gas to Belarus until Minsk agreed to cede complete control of its pipeline system and Beltransgaz to Moscow.

Russia carried out several strategies to increase its influence in Belarus. Beginning in 2010, Russia and Belarus integrated economically as Belarus joined the Russia-led customs union, a body that became the Common Economic Space in 2012. Russia was able to limit Belarus' ties to the West and Polish-led EU overtures to Minsk ahead of Belarusian elections. After the elections, the West chose to isolate Belarus, giving Russia a chance to increase its economic and political support of Lukashenko. Moscow also enhanced its security integration with Minsk when Belarus joined the CSTO rapid reaction force and hosted deployments of S-300s.

In 2012, Russia wants to continue its integration efforts in Belarus. The Common Economic Space will serve Russia's interests economically, but Moscow wants access to more of Belarus' strategic economic assets, such as refineries and potash firm Belaruskali. Politically, Moscow wants Minsk to remain isolated from the European Union and the West. Militarily, Russia wants to use weapons sales and CSTO participation to draw Belarus closer. Beyond 2012, Russia wants Belarus' complete strategic integration via the Eurasian Union.

Belarus' Position and Strategy

Unlike Russia or Ukraine, Belarus has a relatively homogenous society, both culturally and politically. This has facilitated the centralization of power under Lukashenko, who has dominated Belarus politically since 1994. Also unlike Russia or Ukraine, Belarus never developed a powerful class of oligarchs; rather, Lukashenko has maintained a social and economic model much like the old Soviet system since the early years of Belarus' independence. He rules the country with a close-knit group of elites, many of whom have ties to the security and intelligence apparatus.

While this dynamic has made consolidation of power easier, it complicates another imperative: the balancing of external powers to maintain economic, military and political sovereignty. Belarus has never strayed far from Russia in terms of security or economics, given the democratic and economic reform requirements needed to be considered for NATO or EU membership. However, Belarus' political relations with Russia have not been as steady; the two countries formed the Union State in 1997, but this closeness has not prevented spats over economic issues that have led Lukashenko to periodically look to the West for cooperation in order to gain leverage over Russia. Given the integration of Belarus' infrastructure with Russia and the political connotations of economic relationships, this is easier said than done. Testing Moscow on matters such as energy prices has usually backfired for Minsk, as Gazprom's recent acquisition of Beltransgaz has shown.

Countries like Poland and Lithuania have geopolitical interests in courting Belarus, such as the desire to establish the same kind of territorial buffer to the east that Russia desires from the west. But these countries cannot match Russia's influence over Belarus, so they have resorted to soft power maneuvers such as establishing ties to Belarusian opposition groups and spearheading EU sanctions against the Lukashenko government. The success of the first strategy has been limited, since opposition groups face numerous constraints. The second strategy is a more serious threat to the Belarusian government, since Lukashenko's rule depends on a populist economic model and such models weaken in poor economic and financial environments. However, this economic isolation has given Russia the opportunity to provide financial assistance and serve as Belarus' economic lifeline -- a role Moscow will continue playing as long as Lukashenko stays in line.

Moving forward, Belarus will have no choice but to go along with Russia's strategy and broader resurgence, given Minsk's limited options for gaining support from other powers. Russia therefore will continue integrating Belarus as it moves toward the creation of the Eurasian Union in 2015.

Moldova

Moldova's location makes it important to Russia. It is situated in the Bessarabian Gap between the Carpathians and the Black Sea, a traditional invasion route from the southwest and the Balkan states. It is near the strategic port of Odessa and the Crimean Peninsula, where Russia stations its Black Sea Fleet, and it serves as part of the energy transit network linking Russia with Europe and Turkey.

Russia's Levers

Political: Former Moldovan President Vladimir Voronin and his Communist Party are in a partnership with Russia. Moscow also has ties to leaders of the Alliance for European Integration (AEI), including Moldovan Prime Minister Vlad Filat and acting President Marian Lupu. Most notably, Russia subsidizes the leadership in the breakaway region of Transdniestria.

Social: Only about 6 percent of the Moldovan population is ethnically Russian, though in Transdniestria 30 percent of the population is Russian (and another 30 percent is Ukrainian). Roughly 11 percent of Moldovans speak Russian as a native language, and for approximately 16 percent of the population Russian is a primary language. Most of the country is Orthodox Christian but split between Romanian Orthodox and Russian Orthodox.

Security: Russia maintains approximately 1,100 troops in Transdniestria (along with a smaller contingent of Ukrainian soldiers). Although Moldova is not part of the Russia-led CSTO, it also is not a member of NATO.

Economic: Moldova depends on Russia for 100 percent of its natural gas and sends 20 percent of its exports to Russia (especially important is wine, imports of which Russia cut off for political reasons). Russia controls most of the economy in Transdniestria (which, although a breakaway region, is Moldova's industrial heartland) and provides financial assistance and subsidies to Transdniestria.

Russia's Successes, Obstacles and Ambitions

Russia rebuffed attempts to demilitarize Transdniestria or allow a Western presence in the territory. However, Moscow has faced some setbacks in Moldova proper; the Communists have not been in power since the Western-leaning AEI ousted them from power in 2009 following the "Twitter Revolution." Despite its position, the AEI has not been strong enough to elect a president, so Moldova has been in political deadlock for nearly three years.

Russia's goals for 2012 are to improve its position in Moldova proper by strengthening the Communist party and forming independent relationships with AEI leaders and members. If Russia cannot help the Communists regain power, it at least wants to make sure Moldova remains divided and that the AEI remains incapable of electing a Western-oriented president. Moscow could accomplish this by complicating the political process and obstructing negotiations between Moldova and Transdniestria. Russia also wants to maintain its military presence and political influence in Transdniestria and begin laying the groundwork for Moldova's possible inclusion in the Eurasian Union.

Moldova's Position and Strategy

Like Ukraine, Moldova is both weak and divided. Unlike Ukraine, Moldova does not have traditional or ethnic ties to Russia; it is ethnically and linguistically Romanian. This, along with Moldova's small size and strategic location, is a main factor in the weakness of the state and its ability to balance between external powers.

Moldova is divided both territorially and politically. The Moldovan government does not hold territorial sovereignty over Transdniestria, which is home to a Russian military base and is populated largely by Russians and Ukrainians. The split within Moldova proper is a political one dominated by two large groups: the Russia-oriented Communists and the AEI, a collection of parties that want Moldova to become Western-oriented. The AEI is divided further, with some elements pledging close ties to Romania and NATO while others are more flexible in their loyalties, but in general all parties in the AEI support Moldovan integration with the European Union. Since 2009, neither the Communist party nor the AEI has been able to gain enough votes in parliament (61 out of 101) to elect a president, so the country has been paralyzed and unable to form any decisive foreign policy for almost three years. These divisions mean that Moldova's view and strategy is not unified. Any leader of Moldova must overcome these divisions in order to consolidate the country; only then can the issue of Transdniestria and broader foreign policy questions be addressed in Chisinau.

External powers other than Russia have interests in Moldova; chief among them is Romania. Not only do Moldova and Romania share ethnic and linguistic ties, but also the territory that makes up Moldova and Transdniestria (as well as western parts of Ukraine) belonged to Romania's Moldavia province before Russia annexed the territory as a defensive bulwark. However, Romania is not strong enough to challenge Russia militarily in the country, and given that Moldova is the poorest country in Europe and is substantially limited by Russia's presence and influence, EU membership prospects in the near to mid term are very unlikely (though the distribution of Romanian passports to Moldovan citizens that allows them to travel in the European Union is one example of Romania's soft power in the country). Other individual EU states like Poland and Sweden want to bring Moldova closer to the West via the Eastern Partnership program, but this is a long-term process with limited effects.

Moldova's paralysis -- political, territorial and geopolitical -- can be expected to remain until an external power is able to contest Russia in the region in terms of hard power rather than soft power. This is not likely to happen in the short to medium term.

[rffrydr]

Good, let the deleveraging begin.


Morgan Stanley has led a flood of departees as they run aground against the "national champion" organization. This trend cuts across the board but nowhere stronger than investment banking.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

FYI--courtesy of Stratfor:
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Dispatch: Kyrgyzstan's Presidential Election Impact

Analyst Eugene Chausovsky discusses the upcoming presidential elections in Kyrgyzstan and its implications for Russian influence and domestic stability.

Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy.

The Prime Minister of Kyrgyzstan, on the same day as announcing a formal bid for his presidency, announced on Aug. 15 that the U.S. Manas air force base should be withdrawn from the country once its lease expires in 2014. Atambayev has been a staunch ally of Russia and will likely further Moscow’s interests if he takes the presidency.

However, a stronger presidential system coupled with the country’s current fractious politics could put Kyrgyzstan at risk for further social instability and could complicate Moscow’s hold over the country. Atambayev is widely considered to be the front runner in the presidential election race in Kyrgyzstan, where elections are scheduled to take place in October. Atambayev is known to be very pro-Russian as can be seen by his numerous visits to Moscow during his time as Prime Minister, particularly during times of crisis as well as his support of Kyrgyzstan’s entry into the Russian dominated Customs Union.

The timing of Atambayev’s statement concerning Manas is also significant given that Russia is currently in talks with Kyrgyzstan to open another military base in the country’s southern region of Osh. While it was expected by many that Kyrgyzstan would allow the lease to expire, Atambayev has now made this his official stance. Therefore, removing the Manas space would solidify Russia’s position in the country militarily and put into jeopardy U.S. plans to increase its military presence in the country as well. This is related to talks about the U.S. building its own additional military facility in the country, this one in the southern province of Batken.

There are also wider implications behind Atambayev’s statement on Manas as well as his decision to formally announce his presidency ambitions. With the upcoming presidential elections it is likely that Kyrgyzstan will turn to a stronger presidential system of government as opposed to the parliamentary system that they have put in place currently. Under a stronger presidency, the country could become more stable, as a strong president could be able to get more things done than the weaker government has seen over the past year.

However, this does not necessarily resolve the country’s political divisions, which are split between the North and the South. Because Atambayev is a northerner and doesn’t have as much support in the South, any bold moves that he would take under a stronger presidency, were he to win the elections, would be under increased scrutiny. Therefore, while Atambayev would likely facilitate Russia’s strengthening its position in Kyrgyzstan, were he to win the elections, the continuing political tensions between the North and the South ensures that the risk for political instability within Kyrgyzstan remains.

[rffrydr]

But, boy, they can sure "get things done" over there. Egypt will continue to put pressure on the assumptions in EEM investing.
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Today is the Tomorrow you worried about Yesterday!