latest arrangements for the giant Kumtor gold mine will prove more lucrative 
than before.  By Aziza Turdueva in Bishkek

populist measures to promote Islamic values could run out of control in the 
long run.  By Tolkun Namatbaeva in Bishkek


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Jury still out on whether the latest arrangements for the giant Kumtor gold 
mine will prove more lucrative than before. 

By Aziza Turdueva in Bishkek

While the Kyrgyz government has acquired a bigger stake in the company working 
a major gold mine at Kumtor, it may not receive the increase in revenue that it 
anticipates, experts warn.

The deal will see the government’s share in Centerra Gold, a joint venture 
between Kyrgyzstan and Canadian mining company Cameco, double to nearly 30 per 

Commentators interviewed by IWPR want the deal to mark a new era in the way the 
government handles foreign investment deals, which under the previous president 
Askar Akaev were sometimes less than transparent.

Kumtor, is located in the Issykkul region in the northeast of the country 70 
kilometres from the Chinese border, is one of the ten largest gold mines in the 
world. Over 180 tonnes of gold has been mined since commercial extraction 
began, and the field accounted for one-third of the country’s industrial 
production in the first six months of 2007. 

Centerra Gold was set up by the government and Cameco in 2004, and the Kumtor 
Operating Company, KOC, which runs the actual operation, was transformed into a 
wholly-owned Centerra subsidiary. This restructuring followed the expiry of an 
earlier arrangement with Cameco dating from 1994 which exempted the Canadian 
company from paying profit tax for a decade.

The government initially held around 30 per cent of the shares in Centerra, but 
subsequently sold about half, leaving it with 16 per cent.

Since then, there has been a change of government – President Akaev was ousted 
in March 2005 following massive demonstrations. Under the new dispensation, 
questions began to be asked about the previous administration’s handling of the 
contract and the transparency of its finances.

Negotiations to review the arrangements for Kumtor started at the end of 2006, 
when the Kyrgyz authorities indicated that they would like to up their share in 
Centerra from 16 to 61 per cent so as to generate more profits and tax revenue.

The latest agreement, reached after a second round of talks was held in July, 
does not go nearly as far as that. The deal announced on August 30 involves a 
complex set of transactions in which Kyrgyzstan receives 22 million shares from 
Cameco, and Centerra issues ten million new shares which also go to the 
government. The Centerra share issue will be absorbed by Cameco’s shareholders 
as a one-off loss. 

Some of the shares are to be transferred immediately, but others will be 
released within four years, depending on a number of conditions. 

By the end of the process, Kyrgyzstan will own about 29 per cent of Centerra, 
with Cameco holding 41 per cent and public shareholders the rest.

The deal also grants Centerra concessionary rights to explore and mine a wider 
area at Kumtor and sets out a simplified new taxation rate for the project.

Addressing parliament following the announcement of the deal, Prime Minister 
Almazbek Atambekov said, “We have come to an agreement which is beneficial not 
only for us but also for Kumtor, which will continue to operate.”

The agreement has to go before parliament for approval this month.

Orozbek Duysheev, a member of the Kyrgyz delegation which negotiated the deal, 
welcomed an arrangement which he said would leave the country with more shares 
in Centerra, greater profits, and higher tax revenues. In addition, he said, 
the government would be able to use its Centerra stock as collateral when 
seeking foreign loans. 

The government is counting on earning increased profits from the rising price 
of gold. According to Finance Minister Akylbek Japarov, “The Kyrgyz government 
is convinced that the price of gold will continue to grow from year to year.” 

He noted that when the deal was clinched, shares in Centerra went up and he 
predicted a rising trend through 2010.

But some analysts said the government’s increased stake in the company would 
not necessarily lead to greater profits.

Sapar Orozbakov, the director of the Bishkek-based Centre for Economic 
Analysis, said that the conditions attached to the share transfer were 
difficult to fulfil, and the total value of the completed transaction might not 
be as high as the government expects. 

Member of parliament Kanybek Imanaliev said it was unwise to be projecting high 
returns on the basis of a forecast rise in gold process. 

“The share of the profits [for Kyrgyzstan] will depend on the world price of 
gold and on the value of Centerra shares. So it is too early to be talking 
about a positive outcome,” he said.

Other experts noted that future revenues would depend on the amount of gold 
produced at Kumtor.

According to Nasirdin Shamshiev, head of the department for macroeconomic and 
microeconomic analysis at the Ministry for Economic Development and Trade, the 
rate of production has slipped of late.

“Judging from recent months, we cannot talk of an increase in gold mining. In 
2006, around nine tons of gold was mined at Kumtor. In the first half of this 
year, it was around four tons – in other words, less than for the first half of 
last year.”

In July, Cameco revised its 2007 forecast for Kumtor production from nearly 13 
tons down to 8.5 tons.

Much of the pressure for economic reform since 2005 has been based on a 
perception that Kyrgyzstan’s former rulers failed to secure the best possible 
terms when they signed foreign investment deals, and that as a result the 
country has lost hundreds of millions of dollars in potential revenues.

Analysts interviewed by IWPR said the share deal provided an opportunity for a 
fresh start, with more transparent accounting by government to avoid the 
allegations of corruption that persisted through the Akaev years. 

Jumakadyr Akeneev, formerly head of the national statistics committee, said 
that in the old days, neither the statistical office nor the tax agency had 
access to information about Kumtor.

“It was an area that was closed to everyone, to the entire country. The 
information was kept a complete secret. Only former president Akaev and his 
immediate entourage had information about Kumtor,” said Akeneev.

Economics professor Ayilchy Sarybaev said that in future, the government must 
be conducted with “transparency, openness, and the publication of financial 
reports”. Otherwise, he said, “things will change little from what went on 

Duisheev hopes the deal will set a precedent for how contracts with foreign 
companies are drawn up.

“In future, the talks with Cameco will serve as a model for other foreign 
companies that wish to work Kyrgyzstan’s mineral deposits,” he said. “The talks 
showed that when a deposit is to be opened up, the interests of the local 
population and indeed the entire nation must be taken into account.” 

Aziza Turdueva is an IWPR contributor in Bishkek


Some analysts fear that populist measures to promote Islamic values could run 
out of control in the long run.

By Tolkun Namatbaeva in Bishkek

In an attempt to win public support, Kyrgyz officials are launching increasing 
numbers of initiatives that reflect Islamic influences – a trend which analysts 
warn could eventually lead to the erosion of the secular state.

However, a leading public figure – human rights ombudsman Tursunbay Bakir-Uulu, 
who is a devout Muslim – argues that restoring religious values to public life 
only makes for a healthier, more ethical society, and rejects claims that this 
undermines the secular state.

As political agendas are increasingly coloured by religious values, some see 
the growing endorsement of Islam in official life as a contradiction of the 
principles underlying this post-Soviet republic, whose constitution stipulates 
that Kyrgyzstan is a secular state. 

Last month, for example, the head of the State Agency for Religious Affairs, 
Toygonbek Kalmatov, announced a special scheme where up to 70 officials will be 
able to travel to Saudi Arabia to perform the pilgrimage in Mecca under a 
tax-free arrangement. 

A number of officials have been making recommendations influenced by Islamic 
precepts for some time now. One such is Bakir-Uulu, who has drafted a bill that 
would outlaw abortion. The draft is due to be considered by parliament. 

Another proposal, to decriminalise polygamy, has already gone before parliament 
three times.

The politicians pushing this agenda appear to be acting out of a mixture of 
personal conviction and an awareness that there is popular support for a 
restoration of traditional values.

According to Erkin Alymbekov, deputy speaker of parliament, “The trend towards 
excessive Islamisation is taking place at both the state level and at the 

Ombudsman Bakir-Uulu rejects this suggestion. “As for talk that religion is 
infiltrating state institutions, I am not aware of any examples of this,” he 

“In our society, the state is separate from religion…. When people seek 
spirituality, search for God, and are interested in religious history, this 
should be welcomed. If society lacks moral values, it will be governed by 
corruption, crime and the mafia.” 

Much of the pressure to shift towards a more overtly religious society comes 
from southern Kyrgyzstan, where the Islamic tradition has always been stronger 
than in the north, which was historically more subject to Russian influence and 
to Soviet secularism and anti-clericalism. 

Last month, Mutakalim, a group based in the south which supports the rights of 
Muslim women, won a campaign for women to be allowed to have their passport 
photographs taken wearing headscarves. Parents in the south have also formed a 
pressure-group to win permission for their daughters to wear hijabs or Islamic 
clothing to school.

Although the state should technically avoid involving itself in religious 
affairs, the local government in the southern city of Osh has thrown its weight 
behind a major new mosque that will form part of a wider project including an 
Islamic centre and a religious school. 

The rising influence of Islam in public life dates from the period after March 
2005, when Askar Akaev – a northerner - was ousted as president in a popular 
revolt. He was subsequently replaced as head of state by Kurmanbek Bakiev, a 
native of Jalalabad in the south.

In a country where most of the population belongs to the Muslim tradition, 
official attitudes to religious practice have varied over the years and remain 
complex. While it is increasingly modish to appeal to conservative Muslim 
sentiment in order to win votes, there is strong opposition to anything that 
resembles extremism because of the recent history of instability in southern 
Kyrgyzstan and adjoining parts of the Fergana Valley.

Between 1999 to 2000, the Islamic Movement of Uzbekistan, IMU, an armed 
guerrilla group with links to the Taleban, launched a serious of armed 
incursions into the Batken region of southern Kyrgyzstan. The IMU has not been 
sighted in force Kyrgyzstan since its Taleban allies were routed in Afghanistan 
at the end of 2001. 

However, militant groups remain a concern for the Kyrgyz authorities. A string 
of armed attacks last year were blamed on another radical group, 
Hizb-ut-Tahrir, which like the IMU originated in Uzbekistan but took hold in 
southern Kyrgyzstan in the late Nineties, initially among the large ethnic 
Uzbek community there.

While the security services keep a close eye on covert groups of this kind, 
Islamic principles appear to becoming an increasingly acceptable part of 
mainstream politics. That worries observers like Gulnara Ibraeva, an 
independent sociologist, who fear that Kyrgyzstan risks diluting or even 
abandoning its secular identity.

“The process of bringing religion into the political system is happening 
gradually, and the principle of the separation of religion and state – laid 
down in the constitution - is constantly being violated,” said Ibraeva.

Aman Saliev, an analyst with the Institute for Strategic Analysis and 
Forecasting, says Islam is seeing a revival as people seek answers in a 
confusing and difficult process of social transition. 

“Society today, with its principles of untrammelled capitalism, in many ways 
does not provide solutions to moral and social problems,” he said. “People are 
starting to turn to what they have traditionally seen as the tried and true 
ways. It even offers a kind of protection against all that’s going on in 
society today.”

However, Alymbekov insists that while there is nothing wrong with applying 
religious principles in one’s personal life, “we need to make sure that 
religion is kept separate from the state”.

Bakir-Uulu said it was only natural that Kyrgyz Muslims should seek an 
alternative to Soviet atheism. 

“In this era of independence, it is not surprising that there has been a return 
to spiritual roots not only in Kyrgyzstan, but also in other post-communist 
republics. It would be immoral to develop a market-based society without an 
ethical dimension,” he said. 

Some analysts fear that the secular nature of the constitutional system could 
be at risk. 

When the constitution was revised in November last year, the drafting 
commission deleted all reference to a secular state altogether. According to 
Ibraeva, the secular principle was re-inserted in a later draft.

Bishkek-based political analyst Natalya Shadrova said state officials must 
remember that Kyrgyzstan is a secular state, and should not dabble in religion 
or woo faith organisations for populist reasons.

“If religion really begins to permeate all areas of life, I fear it will 
greatly undermine the foundations of the secular state, and ultimately damage 
them,” she said. 

According to Shadrova, those officials who are keen to incorporate Islamic 
ideas into public life “do not fully realise what they are doing and do not see 
the consequences, but only look at the advantages for themselves.”

Saliev does not agree that all politicians are driven purely by an ambition to 
win votes. “There is in addition a kind of personal motivation which one might 
call a spiritual quest,” he said.

Since it became independent in 1991, Kyrgyzstan has seen an explosion in the 
number of mosques from just 39 to about 2,500. Shadrova is insistent that 
politicians should not use their public positions to build mosques. Doing this 
is, she said, tantamount to buying votes. 

“It is a gross violation. They can make a personal donation as private 
citizens, without advertising it, but they must not do so officially,” she said.

Ibraeva agreed. “Some politicians are indeed adepts of Islam, and as citizens 
they have the right to be so, but the fact that they… articulate this without 
separating it from their position of authority is, I believe, a violation of 
the basic principles of a secular state,” she said. “It is an abuse of the 
mandate which Kyrgyzstan citizens have given deputies and other politicians.”

She warned of dire consequences if the process was allowed to continue 
unchecked, “There are numerous examples of what the politicisation of Islam can 
lead to – from the establishment of an Islamic state to attempted coups and 
creeping revolution. Unfortunately, the politicisation of any religion leads to 
quite radical consequences, and losing the benefits of a secular state would be 
obvious and significant.”

Alymbekov does not agree that the country faces the threat of a religious 
revolution, he warns that continuing to integrate religious ideas into the 
institutions of state could lead to Islamicisation over ten or 20 years. 
“There’s nothing wrong with it if that’s what every individual wants, but if 
it’s imposed, there will be conflicts,” he said.

Bakir-Uluu dismissed such concerns as scaremongering, saying, “When certain 
experts express fears that Kyrgyzstan is losing its secular nature, I would say 
they shouldn’t exaggerate. It is not as bad as they paint it. There is no need 
to fear religion or religious people. You should fear those who do not believe, 
who fear neither God nor the Devil.”

Tolkun Namatbaeva is an independent journalist in Bishkek.

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