Caucasus/Russia/Central Asia |
Kyrgyz opposition says running government |
2010-04-09 |
[Al Arabiya Latest] Kyrgyzstan's opposition said on Thursday it has taken over the government of the impoverished Central Asian state after at least 65 people were killed in violent protests that forced the president to flee the capital. Opposition leader Roza Otunbayeva demanded the resignation of President Kurmanbek Bakiyev, whom she helped bring to power five years ago, and told Reuters she would run an interim government for six months. "We have a caretaker government now in place, and I am the head of it," Otunbayeva said. "It will remain in place for half a year, during which we will draft the constitution and create conditions for free and fair (presidential) elections." "Hard changes are upon us, authority has passed into the people's hands, and in some places it was done by force," Otunbayeva said in a radio broadcast. "We ask you not to give in to provocations, or to destroy and loot the property of ordinary citizens. Some of us were killed and wounded, and we must do everything in our power to help them," Otunbayeva added. A health ministry official told AFP Thursday that a total of 65 people had been killed in the riots. Opposition leader Omurbek Tekebayev put the death toll at more than 100. Opposition protesters seized the presidential administration Wednesday night and announced on state radio that they had formed a provisional government with Otunbayeva at its head. Bakiyev left Bishkek, where demonstrators torched the prosecutor-general's office and tried to smash trucks into government buildings, and flew to the southern city of Osh, his traditional power base in a nation split by clan rivalries. Security has been tightened in and around Osh ahead of a rally planned for later this morning. It was unclear whether the rally was being organized by supporters or opponents of Bakiyev. Many cars and shops were ablaze in central Bishkek and about 1,000 people remained outside the government building whose seventh, so-called presidential, floor was blackened by fire. Looting could be seen everywhere, with people running in the streets carrying computers and office equipment. The violent unrest, which spread to Bishkek on Wednesday a day after protests in a provincial town, was sparked by growing discontent over corruption and rising prices in a nation where a third of the 5.3 million population live below the poverty line. The United States has a military air base supporting troops in Afghanistan in the Kyrgyz city of Manas and is a major donor to Kyrgyzstan, along with China and Russia, which also has military base in the former Soviet state. State Department spokesman P.J. Crowley said operations at the Manas base -- visited by U.S. Central Command chief General David Petraeus last month -- appeared unaffected. "It's an important facility connected to our Afghan operations and it's functioning normally," he said. Bakiyev came to power in the 2005 "Tulip Revolution" protests, led jointly by Otunbayeva, which ousted Kyrgyzstan's first post-Soviet president, Askar Akayev. She briefly served as acting foreign minister before falling out with Bakiyev. Spokesmen for the president were not available for comment. A senior U.S. State Department official said Bakiyev's fate was unclear. Asked whether the president was still in power, the official said on condition of anonymity: "The situation is unclear. We are in touch with both government officials and the opposition encouraging resolution according to the rule of law." |
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Caucasus/Russia/Central Asia |
Severed ears, fingers sent to government |
2008-02-07 |
![]() The body parts were sent to the presidential administration chief, the director of the competition monitoring agency and a member of the electoral commission, opposition leader Omurbek Tekebayev told the Delo N newspaper. "It is a warning," Mr Tekebayev said. "The finger means: 'Don't put your hands where they don't belong'. It is surely motivated by a shift in influence within politics and the economy. The ear means be obedient." Kyrgyzstan, a Central Asian former Soviet republic, has been rocked by waves of political unrest since a popular revolt in March 2005 which toppled former president Askar Akayev and brought President Kurmanbek Bakiyev to power. |
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Caucasus/Russia/Central Asia |
Kyrgyzstan Choosing New Parliament |
2007-12-16 |
BISHKEK, Kyrgyzstan (AP) - Kyrgyz voters began casting Opposition groups have alleged that President Kurmanbek Bakiyev's government is planning to rig the election in an effort to oust his staunchest political rivals from the legislature. Bakiyev's Ak Jol party will face the Social Democratic Party of former Prime Minister Almazbek Atambayev, and the Ata Meken party led by former parliament speaker Omurbek Tekebayev. Nine smaller parties are also running, but are given little chance of getting into the single-chamber, 90-seat parliament. Bakiyev has been criticized for increasingly authoritarian policies in a country that has long been considered the most politically open among Central Asia's five predominantly Muslim nations. He has pledged a fair vote, saying Thursday that ``all will be honest.'' But opposition leaders have complained that their activists were subjected to intimidation nationwide during the campaign and local government officials were pressuring citizens to vote for Bakiyev's Ak Jol party. Opposition groups have said they will respond to any election fraud by taking to the streets, as they have repeatedly done in recent years. Alleged fraud during the 2005 parliamentary vote led to mass protests that drove President Askar Akayev from power. A new cycle of protests could hit Kyrgyzstan hard. Unlike its energy-rich neighbors, the largely agricultural nation of 5 million has limited resources and is one of the region's poorest. Security has also been on the decline; in the southern, most-populous regions, radical Islamic groups have gained followings since the 1991 Soviet collapse. Since assuming the presidency two years ago, Bakiyev has struggled with lawmakers over government appointments and the scope of presidential powers. Opposition forces frequently filled the center of the capital, Bishkek. Police cracked down in April, using tear gas and stun grenades to break up protests. In October, Bakiyev pushed through a referendum that changed the constitution; voters no longer elect individual candidates, they vote only for parties - and party leaders choose who gets into parliament. Parties now must receive at least 5 percent of the nationwide vote and at least 0.5 percent in each of the country's seven regions and its two largest cities to get seats in parliament. Critics say that in a country where politics are dictated by regional and clan allegiances, the law could be used to bar opposition parties. |
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Caucasus/Russia/Central Asia |
Thousands protest against Kyrgyz president |
2006-11-03 |
![]() Bakiyev won a landslide election victory but his popularity has plummeted since. The opposition accuse him of presiding over corruption and failing to raise living standards in this mainly Muslim nation of 5.2 million. Police said 5,000 to 6,000 people had gathered in the central square although a Reuters reporter at the scene estimated there could be three times that number. Bakiyev was elected to carry out reforms. He has done nothing in a year and a half, one of the main opposition leaders, Omurbek Tekebaev, told the demonstrators. We didnt simply elect him, we needed him to make reforms. |
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Caucasus/Russia/Central Asia |
Thousands rally against Kyrgyz leader |
2006-04-30 |
![]() Kyrgyzstan has been volatile since Bakiyev came to power last year after a coup that ousted Askar Akayev. Last July, Bakiyev won the presidential election by a landslide, pledging to bring order and democracy. The opposition, led by Omurbek Tekebayev, a former speaker of parliament, demand that Bakiyev limit presidential powers as promised during the election, give more authority to parliament and the prime minister, and eradicate corruption and crime. |
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Caucasus/Russia/Central Asia | ||||
Kyrgyz leader vows to use force if coup attempted | ||||
2006-04-27 | ||||
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Law enforcers are capable of being severe. People run the risk of injury, of ending up in a wheelchair. ... But if the protest is peaceful and lawful, then no problem.
Since the overthrow, Kyrgyzstan has been plagued by crime and instability. Bakiyev, elected in July by a landslide, has been accused by opponents of doing too little to restore law and order. The new Kyrgyz opposition, spearheaded by Omurbek Tekebayev, a former speaker of parliament, says it will gather tens of thousands of people in the capital Bishkek and other big cities and set up tent cities to express their discontent. The United States has called for restraint ahead of the rally, saying Kyrgyzstan should pursue peaceful methods to solve its problems. The US government shares the concern of many citizens of the Kyrgyz Republic about rumours of potential violence in connection with public demonstrations on April 29 in Kyrgyzstan, the US embassy said in a statement. The United States ... calls upon both pro-government and opposition groups to refrain from the threat or use of force during these demonstrations.
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Caucasus/Russia/Central Asia |
Kyrgyz leader sez "foreign forces" stirring up trouble |
2006-04-20 |
Kyrgyz President Kurmanbek Bakiyev, who came to power in a revolution last year promising to bring democracy, accused "foreign forces" on Wednesday of stoking unrest in his impoverished Central Asian country. Kyrgyzstan has been plagued by instability and crime since a violent coup toppled veteran leader Askar Akayev last year, in contrast to peaceful protests in Ukraine and Georgia which brought new pro-Western governments to power. Speaking just hours after he threatened to shut down a U.S. military base, Bakiyev said foreigners were playing their own game against his interests in Kyrgyzstan -- striking a tone typical of authoritarian leaders in other ex-Soviet states. "There are forces, especially foreign forces, who see Kyrgyzstan as a territory for their own interests," Bakiyev told a group of opposition leaders who had gathered to express their disagreement with his policies. "These foreign forces don't want us to develop economically, they want to keep us on a short lead ... We must not fall under any country's influence." Officials in Uzbekistan, Belarus and other ex-Soviet countries where dissent is tightly controlled frequently accuse unnamed foreign forces of trying to undermine their rule. Bakiyev is due to visit Russia -- which has long expressed concerns over the U.S. military presence in Central Asia -- early next week for talks with President Vladimir Putin, who also has blamed foreigners of trying to undermine Russia. The new Kyrgyz opposition, spearheaded by Omurbek Tekebayev, a former speaker of parliament, has accused Bakiyev of backtracking on his pre-election pledges, and promised to hold a countrywide protest on April 29. "What tyranny are you talking about? There is no other country more democratic than Kyrgyzstan in the former Soviet bloc," said Bakiyev, who has vowed to use what he called the harshest methods to prevent any repeat of last year's unrest. Edil Baisalov, an activist who has criticised Bakiyev for not doing enough to restore order, said: "This is what Akayev used to say when he accused Bakiyev of being backed by the West. "This is a clear attempt by Bakiyev to seek Russian support in a situation when his position has weakened," he told Reuters. Earlier, Kyrgyzstan threatened to close the Manas military base, which U.S. forces set up during the 2001 invasion of Afghanistan, if Washington did not agree to a new contract. The Pentagon declined to address the substance of Bakiyev's comments on the Manas base. "The U.S. respects Kyrgyzstan's decisions as a sovereign nation," said Lieutenant Colonel Tracy O'Grady-Walsh, a Pentagon spokeswoman. "The agreement on the use of Manas is a bilateral agreement between the governments of (the) U.S. and Kyrgyzstan." O'Grady-Walsh said use of the base contributes directly to the support of U.S.-led operations against Taliban and al Qaeda fighters in Afghanistan. The presence of U.S. troops in Central Asia, traditionally a Russian sphere of influence, is a headache for Moscow which ruled Kyrgyzstan until the collapse of the Soviet Union in 1991. The United States also set up a base in Uzbekistan, but the authoritarian country last year told the Americans to leave after Washington criticised Tashkent over the bloody suppression of a rebellion in the eastern town of Andizhan. |
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Caucasus/Russia/Central Asia | |
America faces steep rise in rent for Kyrgyzstan base | |
2006-04-20 | |
The president of Kyrgyzstan, Kurmanbek Bakiyev, has threatened to close a US military base if Washington does not agree to a steep rise in rent. Mr Bakiyev said that if the US did not pay more than the current $2m (£1.1m) annual rent for its airfield at Manas he would terminate the rent agreement, ending the Pentagon's permanent presence in the geopolitical hub of central Asia.
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Terror Networks |
Paying for terror: The alliance between organized crime and terrorism |
2005-11-29 |
The first blast struck at 1:25 p.m., shattering the walls of the Bombay Stock Exchange, leaving a grisly scene of broken bodies, shattered glass, and smoke. Next to be hit was the main office of the national airline, Air India, followed by the Central Bazaar and major hotels. At the international airport, hand grenades were thrown at jets parked on the tarmac. For nearly two hours the carnage went on, as unknown assailants wreaked havoc upon one of the world's largest cities. In all, 10 bombs packed with plastic explosives rocked Bombay, killing 257 and injuring over 700. What happened in Bombay on that day, March 12, 1993, was a chilling precursor to the 9/11 terrorist attacks, a careful choreography of death and destruction, aimed at the heart of a nation's financial center and intended to maximize civilian casualties. Engineered by Muslim extremists, the attacks were meant to exact revenge for deadly riots by Hindu fundamentalists that had claimed over a thousand lives, most of them Muslim. But more than vengeance was at work in Bombay. Indian police later recovered an arsenal big enough to spark a civil war: nearly 4 tons of explosives, 1,100 detonators, nearly 500 grenades, 63 assault rifles, and thousands of rounds of ammunition. Within days of the attacks, police had gotten their first break by tracing an abandoned van filled with a load of weapons. The trail soon led to a surprising suspect: not a terrorist but a gangster. And not just any gangster but an extraordinary crime boss, a man known as South Asia's Al Capone. Virtually unknown in the West, Dawood Ibrahim is a household name across the region, his exploits known by millions. He is, by all accounts, a world-class mobster, a soft-spoken, murderous businessman from Bombay who now lives in exile, sheltered by India's archenemy, Pakistan. He is India's godfather of godfathers, a larger-than-life figure alleged to run criminal gangs from Bangkok to Dubai. Strong-arm protection, drug trafficking, extortion, murder-for-hire--all are stock-in-trade rackets, police say, of Dawood Ibrahim's syndicate, the innocuously named D Company. Dawood, as he is known in the Indian press, is very much on Washington's radar screen today. Two years ago, the Treasury Department quietly designated Ibrahim a "global terrorist" for lending his smuggling routes to al Qaeda, supporting jihadists in Pakistan, and helping engineer the 1993 attack on Bombay. He is far and away India's most wanted man, his name invoked time and again by Indian officials in their discussions of terrorism with U.S. diplomats and intelligence officers. As a result of those discussions, the FBI and the Drug Enforcement Administration each have active investigations into Dawood's far-flung criminal network, U.S. News has learned. Understanding Dawood's operations is important, experts say, because they show how growing numbers of terrorist groups have come to rely on the tactics--and profits--of organized criminal activity to finance their operations across the globe. An inquiry by U.S. News, based on interviews with counterterrorism and law enforcement officials from six countries, has found that terrorists worldwide are transforming their operating cells into criminal gangs. "Transnational crime is converging with the terrorist world," says Robert Charles, the State Department's former point man on narcotics. Antonio Maria Costa, the head of the United Nations Office on Drugs and Crime, agrees: "The world is seeing the birth of a new hybrid of organized-crime-terrorist organizations. We are breaking new ground." Some scholars argue that terrorists and traditional crime groups both now exist on a single, violent plane, populated at one end by politically minded jihadists and at the other by profit-driven mobsters, with most groups falling somewhere in between. Mafia groups and drug rings in Colombia and the Balkans, for example, commit political assassinations and bomb police and prosecutors, while terrorist gangs in Europe and North Africa traffic in drugs and illegal aliens. Both crime syndicates and terrorist groups thrive in the same subterranean world of black markets and laundered money, relying on shifting networks and secret cells to accomplish their objectives. Both groups have similar needs: weapons, false documentation, and safe houses. But some U.S. intelligence analysts see little evidence of this melding of forces. Marriages of convenience may exist, they say, but the key difference is one of motive: Terrorist groups are driven by politics and religion, while purely criminal groups have just one thing in mind--profit. Indeed, associating with terrorists, particularly since 9/11, can be very bad for business--and while crime syndicates may be parasitical, most do not want to kill their host. What many intelligence analysts do see today, however, is terrorist organizations stealing whole chapters out of the criminal playbook--trafficking in narcotics, counterfeit goods, illegal aliens--and in the process converting their terrorist cells into criminal gangs. The terrorist gang behind the train bombings in Madrid last year, for example, financed itself almost entirely with money earned from trafficking in hashish and ecstasy. Al Qaeda's affiliate in Southeast Asia, Jemaah Islamiyah, engages in bank robbery and credit card fraud; its 2002 Bali bombings were financed, in part, through jewelry store robberies that netted over 5 pounds of gold. In years past, many terrorist groups would have steered away from criminal activity, worried that such tactics might tarnish their image. But for hard-pressed jihadists, committing crimes against nonbelievers is increasingly seen as acceptable. As Abu Bakar Bashir, Jemaah Islamiyah's reputed spiritual head, reportedly said: "You can take their blood; then why not take their property?" The implications are troubling because organized crime offers a means for terrorist groups to increase their survivability. A Stanford University study conducted after the 9/11 attacks looked at why some conflicts last so much longer than others. One key factor: crime. Out of 128 conflicts, the 17 in which insurgents relied heavily on "contraband finances" lasted on average 48 years--over five times as long as the rest. "If the criminal underworld can keep terrorist coffers flush," says Charles, the former State Department official, "we will continue to face an enemy that would otherwise run out of oxygen." The growing reliance on crime stems from the end of the Cold War, when state sponsorship of terrorism largely faded along with communism, forcing groups to become much more self-sufficient. Accelerating the trend, analysts say, is the crackdown since 9/11 on fundraising by Islamic radicals from mosques and charities, which has pushed their operations further toward racketeering. "The bottom line is if you want to survive today as a terrorist, you probably have to support yourself," says Raphael Perl, a counterterrorism specialist at the Congressional Research Service. The drug trade, in particular, has proved irresistible for many. Nearly half of the 41 groups on the government's list of terrorist organizations are tied to narcotics trafficking, according to DEA statistics. The new face of terrorism can best be seen in western Europe. "Crime is now the main source of cash for Islamic radicals in Europe," says attorney Lorenzo Vidino, author of the new book Al Qaeda in Europe. "They do not need to get money wired from abroad like 10 years ago. They're generating their own as criminal gangs." European police and intelligence officials agree: The Continent's most worrisome cells, composed largely of immigrants from Morocco and Algeria, have in effect become racketeering syndicates. Their scams are as varied as the criminal world: Drugs, smuggling, and fraud are mainstays, but others include car theft, selling pirated CD s, and counterfeiting money. One enterprising pair of jihadists in Germany hoped to fund a suicide mission to Iraq by taking out nearly $1 million in life insurance and staging the death of one in a faked traffic accident. Some cells are loosely bound and based on petty crime; others, like the group behind the Madrid bombings, suggest a whole new level of sophistication. The terrorists behind the Madrid attacks were major drug dealers, with a network stretching from Morocco through Spain to Belgium and the Netherlands. Their ringleader, Jamal "El Chino" Ahmidan, was the brother of one of Morocco's top hashish traffickers. Ahmidan and his followers paid for their explosives by trading hashish and cash with a former miner. When police raided the home of one plotter, they seized 125,800 ecstasy tablets--one of the largest hauls in Spanish history. In all, authorities recovered nearly $2 million in drugs and cash from the group. In contrast, the Madrid bombings, which killed 191 people, cost only about $50,000. Similar reports of drug-dealing jihadists are coming out of France and Italy. In Milan, Islamists peddle heroin on the streets at $20 a hit and then hand off 80 percent of the take to their cell leader, according to Italy's L'Espresso magazine. The relationship, surprisingly, is not new. As early as 1993, says Vidino, French authorities warned that dope sales in suburban Muslim slums had fallen under the control of gangs led by Afghan war veterans with ties to Algerian terrorists. What is new is the scale of this toxic mix of jihad and dope. Moroccan terrorists used drug sales to fund not only the 2004 Madrid attack but the 2003 attacks in Casablanca, killing 45, and attempted bombings of U.S. and British ships in Gibraltar in 2002. So large looms the North African connection that investigators believe jihadists have penetrated as much as a third of the $12.5 billion Moroccan hashish trade--the world's largest--a development worrisome not only for its big money but for its extensive smuggling routes through Europe. Along with drug trafficking, fraud of every sort is a growth industry for European jihadists. Popular scams include fake credit cards, cellphone cloning, and identity theft--low-level frauds that are lucrative but seldom attract the concerted attention of authorities. Some operatives are more ambitious, however. Officials point to the case of Hassan Baouchi, a 23-year-old ATM technician in France. Baouchi told police last year that he'd been held hostage by robbers who forced him to empty six ATMs of their cash--about $1.3 million. Investigators didn't quite buy Baouchi's story and soon put him under arrest; the money, they believe, has ended up with the Moroccan Islamic Combatant Group--the al Qaeda affiliate tied to the bombings in Casablanca and Madrid. Another big racket for European jihadists is human smuggling. "North Africa and western Europe are somewhat like Mexico and the United States," says a U.S. counterterrorism agent. "But now imagine if Mexico were Muslim and jihadist cells were the ones moving aliens across the border." Jihadists do not dominate Europe's lucrative human smuggling trade, but they are surely profiting by it. Authorities in Italy suspect that one gang of suspected militants made over 30 landings on an island off Sicily, and that it moved thousands of people across the Mediterranean at some $4,000 a head. Particularly active is the Salafist Group for Call and Combat, an Algerian al Qaeda affiliate known by its French acronym, GSPC. Two years ago, German authorities dismantled another group moving Kurds into Europe, tied to al Qaeda ally Ansar al-Islam, a fixture of the Iraq insurgency. A recent Italian intelligence report notes that jihadists' work in human smuggling has brought them into contact with domestic and foreign criminal organizations. One partner in the trade, sources say, is the Neapolitan Camorra, the notorious Naples-based version of the Mafia, which operates safe houses for illegal aliens. Italian court records show contact between Mafia arms dealers and radical Islamists as early as 1998. The prime training ground for Europe's jihadist criminals may well be prison. There are no hard numbers, but as much as half of France's prison population is now believed to be Muslim. In Spanish jails, where Islamic radicals have recruited for a decade, the number has reached some 10 percent. Ahmidan, leader of the Madrid bombing cell, is thought to have been radicalized while serving time in Spain and Morocco. Prison was also the recruiting center for many of the 40-plus suspects nabbed by Spanish authorities last year for plotting a sequel to the Madrid bombings--an attack with a half ton of explosives on Spain's national criminal court. Nearly half the group had rap sheets with charges ranging from drug trafficking to forgery and fraud. Al Qaeda's leadership, however, has proved more wary about jumping into the drug trade. Holed up in the forbidding mountain refuges of the Pakistan-Afghanistan border, Osama bin Laden and his remaining lieutenants have steered clear of the largest horde of criminal wealth in years: the exploding Afghan heroin trade. Press reports of bin Laden's involvement in the drug trade are flat wrong, say counterterrorism officials. Long ago, al Qaeda strategists reasoned that drug trafficking would expose them to possible detection, captives have told U.S. interrogators. They also don't trust many of the big drug barons, intelligence officials say, and have encouraged their members not to get involved with them. Bin Laden continues to come up with funds raised from sympathetic mosques and other supporters, but the money no longer flows so easily. Pakistan and Saudi Arabia have banned unregulated fundraising at mosques, and western spy agencies now watch closely how the money flows from big Islamic charities. One result: Cash-strapped jihadists in the badlands of the border region are staging kidnappings-for-ransom and highway robberies, Pakistani officials tell U.S. News . "Those people are now feeling the pinch," says Javed Cheema, head of the Interior Ministry's National Crisis Management Cell. "We see a fertile symbiosis of terrorist organizations and crime groups." Some jihadists have joined in wholesale pillaging of Afghanistan's heritage by smuggling antiquities out of the country--a trade nearly as lucrative as narcotics. Among the items being sold clandestinely on the world market: centuries-old Buddhist art and other works from the pre-Islamic world. Apparently, al Qaeda's interest is not new; before 9/11, hijack ringleader Mohamed Atta approached a German art professor about peddling Afghan antiquities, Germany's Federal Criminal Police Office revealed this year. Atta's reason, reports Der Spiegel magazine: "to finance the purchase of an airplane." Al Qaeda may be avoiding the heroin trade, but nearly everyone else in the region--from warlords to provincial governors to the Taliban--is not. The reasons are apparent: Afghanistan's opium trade is exploding. The cultivation of opium poppies, from which heroin is made, doubled from 2002 to 2003, according to CIA estimates. Then, last year, that amount tripled. Afghanistan now provides 87 percent of the world's heroin. "We have never seen anything like this before," says Charles, the former State Department narcotics chief. "No drug state ever made this much dope and so quickly." The narcotics industry now makes up as much as half of Afghanistan's gross domestic product, analysts estimate, and employs upward of 1 million laborers, from farmers to warehouse workers to truck drivers. And now Afghans are adding industrial-level amounts of marijuana to the mix. U.N. officials estimate that some 74,000 to 86,000 acres of pot are being grown in Afghanistan--over five times what is grown in Mexico. And if al Qaeda itself is staying out of drugs, its allies certainly are not. The booming drug trade has given a strong second wind to the stubborn insurgency being waged by the Taliban and Islamist warlords like Gulbuddin Hekmatyar. Both the Taliban and Hekmatyar's Hezb-i-Islami army control key smuggling routes out of the country, giving them the ability to levy taxes and protection fees on drug caravans. Crime and terrorism experts are also alarmed over the corrosive, long-term effects of all the drug money, not just within Afghanistan but across the region. The ballooning dope trade is rapidly creating narco-states in central Asia, destroying what little border control exists and making it easier for terrorist groups to operate. Ancient smuggling routes from the Silk Road to the Arabian Sea are being supercharged with tons of heroin and billions of narcodollars. Within Afghanistan, drug-fueled corruption is pervasive; governors, mayors, police, and military are all on the take. A raid this year in strategically located Helmand province came up with a whopping 9 1/2 tons of heroin--stashed inside the governor's own office. The smuggling routes lead from landlocked Afghanistan to the south and east through Pakistan, to the west through Iraq, and to the north through central Asia. Throughout the region the amounts of drugs seized are jumping, along with rates of crime, drug addiction, and HIV infection. Particularly hard hit are Afghanistan's impoverished northern neighbors, the former Soviet republics of Kirgizstan and Tajikistan. Widely praised demonstrations in Kirgizstan this year, which overthrew the regime of strongman Askar Akayev, have brought to power an array of questionable figures. "Entire branches of government are being directed by individuals tied to organized crime," warns Svante Cornell of the Central Asia-Caucasus Institute at Johns Hopkins University. "The whole revolution smells of opium." Neighboring republics are little better off. Central Asia's major terrorist threat, the Islamic Movement of Uzbekistan, has largely degenerated into a drug mafia, officials say. In Kazakhstan the interior minister tried to investigate corruption by going undercover in a truck packed with 9 tons of watermelons, motoring 1,200 miles from the Kirgiz Republic to the Kazakh capital. His team had to pay bribes to 36 different police and customs officials en route--some as little as $1.50. (Others merely accepted their bribe in melons.) The cargo was never inspected. What is happening in Iran, meanwhile, is "a national tragedy," according to the U.N.'s Costa. So much Afghan dope is being shipped into the country that it now has the world's highest per capita rate of addiction. The ruling mullahs in Tehran have taken it seriously; Iranian security forces have fought deadly battles with drug traffickers along their border, losing some 3,600 lives in the past 16 years. But even as their troops fight, the corruption has reached high officials of the Iranian government, who are using drug profits as political patronage, sources tell U.S. News. "There are indications," says Cornell, "that hard-line conservatives are up to their ears in the Afghan opium trade." Nor has Russia escaped the heroin boom's impact. From central Asia, growing amounts of Afghan heroin are entering the south of the country; drug-control officials report that large numbers of Russian military are on the take, even trucking the stuff in army vehicles. The level of corruption has, in turn, raised concern over the ultimate black market: in radioactive materials. Russia's "nuclear belt"--a chain of nuclear research and weapons sites--runs directly along those heroin smuggling routes. How bad are conditions in the area? Bemoans one intelligence expert: "We know so little." Iraq, too, is starting to see its share of narcotics, but drugs are but a bit player in an insurgency that has also blurred the lines between terrorism and organized crime. Within Iraq's lawless borders exists an unsavory criminal stew composed of home-grown gangsters, ex-Baathists, and jihadists. "Terrorists and insurgents are conducting a lot of criminal activities, extortion and kidnapping in particular, as a way to acquire revenues," Caleb Temple of the Defense Intelligence Agency testified to Congress this July. Among the biggest cash cows: The insurgents take part in the wholesale theft of much of Iraq's gasoline supply, earning millions of dollars in a thriving black market. Extortion and protection are also rife, and kidnapping for ransom has ballooned into a major industry, with up to 10 abductions a day. Among those targeted: politicians, professors, foreigners, and housewives. Those with political value may find they've been sold to militants. The insurgents are also key players in the graft and corruption that have enveloped Iraq. So much foreign aid money has disappeared that two U.S. intelligence task forces are now investigating its diversion to the insurgency, U.S. News has learned. Western aid agencies, Islamic charities, and U.S. military supply programs all have been targeted, analysts believe. Occupation authorities cannot account for nearly $9 billion of oil revenues it had transferred to Iraqi government agencies between 2003 and 2004, according to an audit by a special U.S. inspector general set up by Congress. "Even if a little bit ends up in insurgent hands," says one official, "it doesn't take a lot to build a truck bomb." The implications are troubling: The insurgents may be using America's own foreign aid to fund the killing of U.S. troops. Back at home, U.S. officials are looking warily at the growing rackets of terrorist groups overseas and voice concern that the trend will grow here. "We see a lot of individual pockets of it in the United States," says Joseph Billy, deputy chief of the FBI's counterterrorism division. "Left unchecked, it's very worrisome--this is one we have to be aggressive on." Federal investigators have uncovered repeated scams here largely involving supporters of Hamas and Hezbollah, and they have traced tens of thousands of dollars back to those groups in the Middle East. "There's a direct tie," says Billy. The list of crimes includes credit card fraud, identity theft, the sale of unlicensed T-shirts--even the theft and resale of infant formula. Most of these U.S. rackets have been low level, but some, involving cigarette smuggling and counterfeit products, have earned their organizers millions of dollars. The big fish--the Indian mobsters, Moroccan hash dealers, and Afghan drug barons--are swimming overseas, however, and U.S. law enforcement is starting to train its sights on the worst of them. After being shut out of Afghanistan for two decades, the Drug Enforcement Administration is making progress in going after top Afghan traffickers tied to the Taliban. DEA agents are applying the same sort of "kingpin strategy" that helped to break the Medellin and Cali cartels in Colombia by targeting whole trafficking organizations. The agency has identified some 10 of these "high-value targets," led by Afghans who have amassed fortunes of as much as $100 million, officials say. Two already have fallen this year: In April, agents nabbed a man they've dubbed "the Pablo Escobar of Afghanistan," Taliban ally Bashir Noorzai, by enticing him to a New York meeting. Noorzai is said to have helped establish the modern Afghan drug trade, and so lucrative were his operations that the indictment against him calls for the seizure of $50 million in drug proceeds. Then in October, the Justice Department announced the extradition of Baz Mohammad, another alleged "Taliban-linked narcoterrorist," charged with conspiring to import over $25 million worth of heroin into the United States and other countries. Mohammad, according to an indictment, boasted that "selling heroin in the United States was a 'jihad' because they were taking the Americans' money at the same time the heroin was killing them." He is now awaiting trial, in a New York jail. The DEA's experience, however, illustrates some of the problems in grappling with the nexus between organized crime and terrorism. Despite post-9/11 calls for cooperation, the DEA's ties to other U.S. agencies are often strained; the drug agency is not even considered part of the U.S. intelligence community. Pentagon officials, worried over "mission creep," routinely refuse to give DEA agents air support in Afghanistan. Other turf issues still plague the FBI, CIA, Homeland Security, and other agencies, making collaborative work on the crime-terrorism issue problematic. The intelligence community, for example, remains leery of seeing its people or information end up in court. "It's the same wall we saw between law enforcement and the intelligence world," says one insider. "Only now it's between terrorism and other crimes." "We have stovepiped battling terrorism and organized crime," agrees Charles, the State Department's former top cop. "You cannot meet a complex threat like this without a similar response. And we don't have one." Indeed, interviews with counterterrorism and law enforcement officials in a half-dozen federal agencies suggest that cooperation across the government remains episodic at best and depends most often on personal relationships. "The incentives are all still against sharing," complains one analyst. "The leadership says yes, the policies say yes, but the culture says no. The bureaucracy has won." Washington looks like a model of cooperation compared with Europe, however, where the walls between agencies and across borders stand even higher. "If we don't get on top of the criminal aspect and the drug connections, we will lose ground in halting the spread of these [terrorist] organizations," warns Gen. James Jones, head of the U.S. European Command, who has watched the rise in terrorist rackets with mounting concern. "You have to have much greater cohesion and synergy." For a brief moment in the early '90s, American cops, spies, and soldiers did come together on a common target of crime and terrorism--Pablo Escobar and his Medellin cocaine cartel. Escobar's killers were blamed for the murder of hundreds of Colombian officials and the bombing of an Avianca airliner that killed 110. To get Escobar, firewalls between agencies came down, information was shared, and money and people were focused on destroying one of the world's most powerful crime syndicates. During the 1990s, transnational crime continued to be seen as a national security priority, but it fell off the map after 9/11. Until January of this year, the federal government's chief interagency committee on organized crime hadn't even met for three years. The intelligence community's reporting on the area, although boosted in the past year, remains a near-bottom priority. One knowledgeable source called the quality of work overseas on crime "sorely lacking" and said the best material comes from other governments. Domestically, meanwhile, years of neglect by the FBI of analysis and information technology have left the agency without much useful information in its files. "Everyone thinks we've got huge databases with all our materials on organized crime," says one veteran. "We've got nothing close." Still, the growing criminal inroads by terrorist groups have raised alarms among a handful of tough-minded policymakers in Washington, and they are pushing for change. The National Security Council has begun work on a new policy on transnational crime that promises to make the crime-terrorism connection a top priority. The CIA's Crime and Narcotics Center is spearheading the work of a dozen agencies in revamping the government's overall assessment of international crime; their report, with special attention to the nexus with terrorism, is scheduled for release early next year. One program that has caught U.S. attention is underway in Great Britain, where London's Metropolitan Police now routinely monitor low-level criminal activity for ties to terrorism, checking over reports of fraud involving banks, credit cards, and travel documents. Similar work is being done by the feds' Joint Terrorism Task Forces in some U.S. cities. And Immigration and Customs Enforcement has prioritized cracking rings smuggling people from high-risk countries, with good success. In some ways, the deeper involvement by terrorists in traditional criminal activity may make it easier to track them. Criminal informants, who can be tempted with shortened prison time and money, are much easier to develop than the true believers who fill the ranks of terrorist groups. Acts of crime also attract attention and widen the chances that terrorists will make a mistake. Take, for example, a case uncovered this July, in which four men allegedly plotted to wage a jihad against some 20 targets in Southern California, including National Guard facilities, the Israeli Consulate, and several synagogues. Prosecutors said the planned attacks, led by the founder of a radical Islamic prison group, were being funded by a string of gas station robberies. The break in the case came not by an elite counterterrorist squad but by local cops who found a cellphone one of the robbers had lost during a gas station stickup. Getting a handle on terrorism's growing criminal rackets will not prove easy, however. "Draining the swamp," as counterterrorism officials vow to do, may require more than even a seamless approach by intelligence and law enforcement can offer. Many of the worst groups owe their success to a pervasive criminality overseas, to failed states and no man's lands from Central Asia to North Africa to South America, where the rule of law remains an abstract concept. In other places, it is the governments themselves that are the criminal enterprises, so mired in corruption that entire countries could be indicted under U.S. antiracketeering laws. Together, they help make up a criminal economy that, like a parallel universe, runs beneath the legitimate world of commerce. This global shadow economy--of dirty money, criminal enterprises, and black markets--has annual revenues of up to $2 trillion, according to U.N. estimates, larger than the gross domestic product of all but a handful of countries. Without its underground bankers, smuggling routes, and fraudulent documents, al Qaeda and its violent brethren simply could not exist. But taking on a worldwide plague of crime and corruption might be more than the public bargained for. "Ultimately, cracking down means trying to impose order where there's instability, good governance where there's corruption and crime, and economic growth where there's poverty," says the University of Pittsburgh's Phil Williams, a consultant to the United Nations on crime and terrorism finance. "As long as the only routes of escape are violence and the black market, then organized crime and terrorism will endure as global problems." |
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Caucasus/Russia/Central Asia |
4 dead in Kyrgyz prison riot |
2005-11-02 |
Gunfire erupted and at least four inmates were killed Tuesday when Kyrgyz riot police stormed three prisons to quell unrest following an insurrection at one of the facilities last month, officials and witnesses said. Police killed two prisoners at a prison colony in Moldovanovka and another two at a jail in the village of Petrovka, both outside the capital, Bishkek, Deputy Justice Minister Sergei Zubov said. Zubov said the country's prison system chief, Kapar Mukeyev, was injured slightly in the arm. Two more inmates were also injured during the unrest, he said. Zubov said the riots erupted in practically all of the country's prisons and detention centers, after police arrived Tuesday morning at the Moldovanovka prison colony to remove 28 inmates suspected of involvement in the murder of a lawmaker, a prison system chief and two other people in the Moldovanovka prison last month. The suspects were taken to another prison for further investigation. Zubov said police used armored personnel carriers to storm the Moldovanovka prison after guards of criminal boss Aziz Batukayev, an ethnic Chechen and a suspect in the Oct. 20 murders, formed a human shield around him and fired weapons. Police on Tuesday seized two Kalashnikov rifles, four grenades, four pistols, and an unspecified amount of ammunition, drugs and money from Moldovanovka inmates, Zubov said. Witnesses said dozens of troops armed with Kalashnikov rifles surrounded the prison â which houses 450 inmates and is located 20 kilometers north of Bishkek â early Tuesday and that at least two ambulances later left the prison compound. A resident of the prison neighborhood who gave only his first name, Sergei, said he had heard shooting inside the prison lasting for about 30 minutes. Kalbu Temirbekova, the mother of one of inmates at Petrovka jail, who was allowed to visit the prison after authorities brought an end to the unrest Tuesday, said three inmates had been killed there. A Petrovka prison official who refused to give his name because of the sensitivity of the subject also said that three prisoners died, in contrast with the official toll of two for that prison. Batukayev's sister, Yaha, said her brother was injured in Tuesday's operation. Deputy chief prosecutor Khabibulla Abdugapparov told reporters that police also seized from the Moldovanovka prison photographs of Chechen rebel leaders Shamil Basayev and Aslan Maskhadov and a Chechen separatist flag. Injured prison system chief, Mukeyev, who joined the news conference toward the end with his left arm bandaged, said the situation in prisons was coming under control. He said police were inside and controlling all except one prison. He did not name that facility. The country has five detention centers, 12 prisons and 19 prison settlements with a total population of about 17,000. Tynychbek Akmatbayev was the third lawmaker to be killed since an uprising in March that forced longtime Kyrgyz President Askar Akayev to flee the country and resign. Some officials say Akmatbayev's killing was linked to feuding criminal gangs. It is believed that Batukayev had been in conflict with Akmatbayev's brother, Ryspek, who is a reputed criminal boss. |
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Caucasus/Russia/Central Asia |
Uzbek Opposition Leader Arrested |
2005-10-25 |
![]() Umarov, a wealthy businessman-turned-politician, was detained on Saturday, the Fergana.ru Web site said. Umarov called on the Uzbek government last week to start a political dialogue, and sent an open letter to Russian Foreign Minister Sergey Lavrov, who was visiting Uzbekistan at the time. In the letter, the coalition expressed its intention to look for a resolution of the political crisis in Uzbekistan, and called for stronger integration and economic ties with Russia. The Sunshine Coalition was formed in April in the wake of the revolution in neighboring Kyrgyzstan that ousted President Askar Akayev. It gained prominence in May for denouncing the brutal quelling of a popular uprising in the eastern Uzbek city of Andijan. |
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Europe | |
Righting the Orange Revolution | |
2005-10-23 | |
For a moment last week, Viktor Yushchenko relived the glory of the Orange Revolution when he appeared in the Mansion House in London to receive an international relations award from Queen Elizabeth II. As the Ukrainian leader accepted the honour, a smile crossed his poison-ravaged face. His wife Katya stood nearby wiping tears of pride and happiness from her eyes. It all seemed a world away from Kiev and the harsh reality of post-revolution politics. Nearly a year after orange-clad demonstrators filled that cityâs Independence Square to support his bid for the presidency, Mr Yushchenko faces daunting challenges in consolidating his victory. Much has been done. But much remains to be done. There is no reversing last winterâs events when Mr Yushchenko forced Leonid Kuchma, the authoritarian former president, and Viktor Yanukovich, Mr Kuchmaâs Russian-backed would-be successor, to concede defeat. The fear that stalked Ukraine in the Kuchma era has evaporated, allowing Ukrainians to live in political freedom. Despite hostility from the Kremlin, which blamed the west for the Orange Revolution, Ukraine has rejuvenated ties with the US and the European Union. Ukraineâs example has also given hope to opposition parties challenging authoritarian rulers in Russia and elsewhere on former Soviet soil â including Azerbaijan, which holds parliamentary elections next month, and Kazakhstan, with presidential polls in December. In a recent FT interview, Mr Yushchenko said that after the Orange Revolution, âmillions of people began to think differently about freedom, about democracy, in the whole terrain of the former Soviet Unionâ. However, already some of the energy created in Ukraine by the popular revolt has been dissipated, notably in a split between the cautious Mr Yushchenko and Yulia Tymoshenko, his firebrand Orange Revolution ally. Allegations of corruption among some of the presidentâs closest allies â mostly businessmen who helped fund his campaign â have put Mr Yushchenko on the defensive. Trying to shore up his political base, the president has sought compromise with the survivors of the old regime, especially Kuchma-era Âbusiness oligarchs. Many young people who filled Independence Square a year ago feel disappointed. But for Mr Yushchenko the priority is the economy. He understands democracy can be secure only if it leads to less corruption, better government and higher Âliving standards. Just as they followed the Orange Revolution, people in other former Soviet states are keeping a close eye on the latest developments. For many, this is the real test of Ukraineâs new rulers. The same is true for the popular revolt in Georgia in 2003 and this yearâs upheaval in Kyrgyzstan. But Ukraine matters most because it is the largest and the most modern of the three. Mr Yushchenko is no radical reformer but a mild-mannered former central banker who served Mr Kuchma as prime minister before going into opposition. He is hampered by the compromise he struck to end last yearâs crisis. In return for giving up power peacefully, Mr Kuchma forced on his successor constitutional reforms that will transfer much of the presidentâs powers to parliament. The changes will mostly take effect in March, immediately after parliamentary elections. Mr Yushchenko admits opportunities to capitalise on the Orange Revolution have been wasted in the conflict with Ms Tymoshenko, who was finally sacked last month and replaced as prime minister by Yuri Yekhanurov, a technocrat loyal to the president. Mr Yushchenko and Ms Tymoshenko fell out over the handling of untransparent privatisations of the Kuchma era. At meetings with business leaders, he has promised to settle disputed privatisations through negotiations, not court action, with the exception of the Âegregious case of Kryvorizhstal, the flagship steel mill (see right). Much depends on the March elections. A move to full proportional representation means the competing parties will almost certainly have to form a coalition government. Ms Tymoshenkoâs supporters, and many of Mr Yushchenkoâs, hope the elections will force them to reunite. But Mr Yushchenko has been extending olive branches to his former enemy, Mr Yanukovich, and courting Volodymyr Lytvyn, the parliamentary speaker, who enjoys big business backing. Whatever happens, none of the combinations seems likely to produce a coherent team of liberal reformers. All this jockeying makes for lively democratic politics. But, as a result, Ukraine has been long on debate and short on practical progress. Economic growth has slowed from 12 per cent last year to just 2.8 per cent in the first nine months, investors hesitate, corruption remains rife and citizens have little confidence in public services. Even in foreign policy, where Mr Yushchenko has invested much effort improving ties with the international community, implementation is slow. Parliament has still to complete the modest legal changes required for joining the World Trade Organisation. Without membership, Ukraine cannot get the most out of its EU co-operation agreement. Without that, Kiev cannot realise its biggest ambition â a promise of eventual EU membership. The conflicts also open doors for renewed involvement from Russia. President Vladimir Putin, who saw the Orange Revolution as his countryâs biggest defeat since the collapse of the Soviet Union, has expressed quiet satisfaction at the arguments between Mr Yushchenko and Ms Tymoshenko. Meanwhile, Russiaâs hand is strengthened by rising energy prices. Its advantage has been tempered by its reliance on Ukraineâs pipelines to export oil and gas to the west. But Moscow is expanding other export routes. In Georgia, the situation is different. Far from reaching out to potential partners, Mikheil Saakashvili, the president, has consolidated power in an increasingly narrow circle of his close allies within his National Movement, which has a large majority in parliament. Mr Saakashviliâs team has made strides in making government more effective â a change from his predecessor, Eduard Shevardnadze, who brought Georgia to the brink of collapse. The economy is growing at a respectable pace of nearly 7 per cent this year. The separatist province of Adjara has been brought under control. Mr Saakashviliâs greatest success has been building warm ties with US President George W. Bush, who visited in May. The support helped Georgia secure Russian agreement to vacate two military bases. US support could play an even bigger role as Mr Saakashvili tries to negotiate with the Kremlin over two separatist ethnic enclaves, Abkhazia and South Ossetia, which have received protection from Russia since they split from Georgia. However, Mr Saakashviliâs brashness has irritated EU leaders. Corruption remains pervasive, foreign investors have shied away and some former Saakashvili supporters are afraid the country could be sliding back into authoritarianism. Among them is Salome Zourabichvili, a French ex-diplomat of Georgian descent, who was sacked last week as foreign minister. She told a rally not to lose faith in Georgiaâs Rose Revolution even though many of its leaders had âstrayed from the roadâ. In Kyrgyzstan, the revolt that forced former president Askar Akayev to flee the country in March has been followed by political turmoil. Despite Âwinning a landslide victory in presidential elections in July, Kurmanbek Bakiyev has failed to restore order, with three members of parliament killed since the spring. There is no sign of a re-run of the parliamentary elections that sparked the original protests against Mr Akayev. Even though the outcome of these three revolts is unclear, they have had a profound effect on the rest of the former Soviet Union. Opponents of authoritarian rulers from Belarus to central Asia have taken heart from the protesters, imitating their methods, slogans and colours. Mr Yushchenko says: âThere is a new way of doing things: the Orange Revolution way.â Authoritarian regimes have had to review their positions. Nurbulat Masanov, a political scientist in Kazakhstan, says: âThere is now a discussion about what to do. One way will be to promote popularity by offering what people want â political stability and economic modernisation.â An example is MolÂdova, Ukraineâs poor southern neighbour, where president Vladimir Voronin, a veteran communist, is weakening ties with Moscow and making overtures to the EU. There are other, more controversial, options, including resorting to nationalism or, in central Asia, Islamism. At the extreme, regimes can respond with violence, as happened this year in Uzbekistan where president Islam ÂKarimovâs forces massacred mostly peaceful demonstrators in the eastern city of Andijan. Mr Masanov says that, while this damaged Mr Karimovâs legitimacy in the west, it strengthened it within his own regime. In Russia, the Kremlinâs main concern is to preserve the dominance of the current elite after the 2008 presidential election. Given Russiansâ respect for authority, rapid economic growth and state control of television, the defeat of the Kremlinâs candidate seems unlikely. But officials worry because they failed to predict Mr Yanukovichâs defeat in Ukraine. Mr Putin, who is personally popular among voters, with support ratings of about 70 per cent, cannot stand for a third term unless the constitution is revised. So the search is on for a candidate who can secure genuine public support. Manipulation alone is not enough. Real appeal is required. Three other post-Soviet regimes face more immediate electoral tests â Azerbaijan, Kazakhstan and Belarus. Oil-rich Azerbaijan goes first on November 6 with parliamentary polls, in which the ruling party is defending an overwhelming majority. Ilham Aliyev, who took over as president in 2003 from his late father, Heydar Aliyev, a former KGB boss, is trying to assert his authority. Last week he made a pre-emptive strike. Two powerful insiders â Farhad Aliyev, the liberal economy minister, and Ali Insanov, the hardline health minister â were sacked, arrested and accused of plotting a coup. Most opposition parties there have joined forces in a bloc named Freedom. They wear orange in imitation of Ukraine and hold rallies in defiance of government bans and rough police tactics. Mr Aliyev, who faces presidential elections only in 2008, does not seem in imminent political danger and could grow stronger as the countryâs oil revenues are set to soar. But last weekâs arrests were a clear sign of growing dissent within the ruling elite, which might not be easily stifled. In Kazakhstan, president Nursultan Nazarbayev, who has held power since communist times, is expected to be voted back into office in the December poll. He has successfully combined authoritarian politics with sound economic policies. If fair Âelections were held, Mr Nazarbayev would almost certainly do well. But he is taking no chances, arresting Âopposition activists and raiding their homes and offices. In Belarus, dictatorial president AlekÂsander Lukashenko is also determined to retain power in the September 2006 election. Inspired partly by the Ukrainian example, the opposition recently chose a single presidential candidate â Alexander Milinkevich. But pressure from the secret police is relentless, with arrests of activists and independent journalists. None of this happens in a vacuum. Russia, in particular, watches its backyard carefully and is in a better position to intervene today, with its coffers flush with oil money, than it was a decade ago. In practice, it mostly supports incumbent rulers and sees opposition groups as pro-west. With its 2008 election on the horizon, it does not want more revolts setting precedents. The US has been increasingly outspoken in supporting democracy in the former Soviet Union, setting aside earlier concerns about upsetting allies in the war against terrorism, including Mr Putin. The EU, mindful of Russiaâs role as an energy supplier, has been less assertive. But the east European new member states are pulling the union deeper into the post-Soviet space. Having intervened successfully in last yearâs Ukrainian crisis, the EU is developing a louder pro-democratic voice, especially on its borders. Next month sees the start of EU-funded radio and internet news programmes for Belarus. Television follows next year. Russian, US and EU diplomats insist they are not doomed to clash over democracy in the region. But they clashed resoundingly in Ukraine and it seems likely they will clash again. Steel auction may be the first and last of its kind At 11am on Monday, bidding is due to start in Ukraineâs first televised privatisation auction. On offer, with a starting price of nearly $2bn but likely to sell for much more, is Kryvorizhstal, the countryâs biggest steel mill. Among the bidders are Mittal Steel, the worldâs biggest producer, and Luxembourg-based Arcelor, which has joined forces with Industrial Union of the Donbass, a Ukrainian company, in a 60-40 joint venture. There is also a dark horse in the race: Smart Group, a smaller Ukrainian steel company controlled by Vadim Novinsky, a Russian businessman. He has connections with Alisher Usmanov, a Russian steel baron, although other backers, Russian or Ukrainian, may be involved. If the auction succeeds, as expected, it will bring Ukraineâs government much-needed money and an even more necessary morale boost. It is about more than just selling a steel mill. President Viktor Yushchenko told the FT recently: âWe really want to hold a showcase tender, to convince business and Ukrainian citizens of the nationâs potential.â Attracting foreign investment has been harder than Mr Yushchenko anticipated. He came to power amid western support and enthusiasm from western companies, which have long coveted Ukraineâs market of 47m people. But investors have had to wait longer than they expected for Mr Yushchenko to deliver economic reform and assurance that the rule of law would prevail. They were disappointed with the disputes in the government of Yulia Tymoshenko, sacked as prime minister last month. Foreign direct investment in the first half of this year came to just over $700m, about the same as in 2004. Business people, including Russians, have higher hopes for the administration of Yuri Yekhanurov, who replaced Ms Tymoshenko. An advisory committee of foreign investors met the president last week and got the impression that he understood the mistakes of his first nine months in office. Jorge Zukoski, president of Kievâs American Chamber of Commerce, says: âFor the first time, we were dealing with a very cohesive team who were all talking from the same page.â Mr Yushchenkoâs goal is to show that everything has changed since June 2004, when Mr Kuchma arranged an auction of Kryvorizhstal with such restrictive conditions that only favoured oligarchs could bid. Viktor Pinchuk, Mr Kuchmaâs son-in-law, and two businessmen linked to Viktor Yanukovich, the then prime minister, bought Kryvorizhstal for just $800m. Mr Pinchuk and his partners say the new government illegally confiscated their shares and have vowed to challenge todayâs auction in any court that will give them a hearing. The auction comes just days after Raiffeisen International, the eastern European arm of the Austrian banking group, completed its $1.03bn acquisition of Aval, Ukraineâs second-biggest bank. Other European banking groups are in advanced talks with targets including Ukrsotsbank and Ukrsibbank, the third- and fourth-largest Ukrainian banks. After receiving only $9bn in FDI since independence in 1991, Mr Yushchenkoâs government appears likely to bring in several billion dollars more within a few months. But outside steel and banking, the investment picture has improved only a little from the Kuchma era. Investors face demands for bribes and some officials still serve the interests of particular businessmen. The auction is likely to be the first and last of its kind. Mr Yushchenko originally intended to recover and resell more companies but now pledges that privatisation disputes will be settled by negotiation with owners, not in the courts. Where necessary, the shareholders will be asked to pay extra. | |
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