N22 -December 6 2007 CO N T E N T S

KYRGYZSTAN c Wariness Reigns Ahead of December 16 Election P. 2&3 GEORGIA c Election Campaign and Political Maneuvering in Georgia DEFENSE P. 4 c Kazakhstan Builds its Caspian Sea Fleet
P. 1

Published every two weeks / International Edition

KYRGYZSTAN c Wariness Reigns

Ahead of December 16 Election

Can President Kurmanbek Bakiev and his entourage refrain from taking all the seats in the Jogorku Kenesh when snap parliamentary elections are held on December 16? Will they be able to refrain from taking advantage of administrative resources after having set up exceptionally restrictive rules for the game? Given that his position is hardly as solid as that of Vladimir Putin and Nursultan Nazarbaev, will Bakiev be capable of sharing power ? The possible misuse of power is what is feared by most of the twelve parties vying for the 90 seats at stake, on a party list system, even though the potential is there to make this election one of the most contested that the young republic has ever known. The parliamentary election could usher in either a renewal of political turmoil, or the end of the chaos that has reigned since the fall of President Akaev in March 2005. There is nothing to encourage an optimistic outlook. On November 28, Prime Minister Almaz Atambaev, head of the Social Democratic Party of Kyrgyzstan (SDPK), resigned from his government post. According to the partys secretary, Edil Baisalov, the Prime Minister threw in the towel because he told President Bakiev to his face that Ak Jol (his party, the bright path) and government officials were interfering in the election process. Many members of political parties and NGOs condemn the ruling coalitions use of administrative resources and of the media. The state television channel, KTR, headed by Melis Eshimkanov, a man devoted body and soul to the President after having been, until last April, his fiercest opponent, refuses to grant publicity slots to Ak Jols eleven rivals. He also refuses to hold a live debate. On December 3, six important parties, speaking through Kubatbek Baibolov, n2 on the list of Ata Meken, questioned the credibility of the Central Electoral Commission (CEC), threatening legal proceedings against its members and its chairwoman, Klara Kabilova, former press secretary to the President and a native, like himself, of Dzhalalabad. A simple letter from the Interior Ministry asking for more information concerning the citizenship of 16 of the 84 candidates on the list of Watan (Nation) was, in the eyes of the CEC, sufficient reason to eliminate this Uzbek party from the race. It was a convenient way for the authorities to sideline Kadirzhan Batirov and Davran Sabirov - their rivals within the Uzbek community and to take their votes, since minorities often vote for the ruling party. Meanwhile, the CEC does not penalize Ak Jol for the blatant irregularities it commits. But what has led to the most criticism and even prompted threats of an election boycott is the CECs interpretation of what constitutes the threshold for winning seats in the Jogorku Kenesh. On November 19, it decided that the 0.5% threshold that the parties must obtain in each oblast (region) of the country is not to be based on the number of registered voters in each region, but on voters nationwide. This sets the bar very high and will prevent several of the parties from entering Parliament, even if they do obtain the 5% required on the national level. Former Secretary of State Adakhan Madumarov, n2 on the list of Ak Jol has no qualms If any party fears that it will not obtain the necessary number of votes to bypass this half a percentage barrier, then it does not have the right to call itself a national political party and to form a council of ministers. The rule has prompted the parties to form coalitions. Two of the main opposition parties, Ata Meken, led by Omurbek Tekebaev and Ak-Shoumkar, led by Kubatbek Baibolov, merged together for the occasion. It was no easy task establishing the list, with the powerful wishing to enter parliament to protect their businesses. The job was made even more difficult because quotas have been established for women, the young and ethnic minorities. However, in the end, money was the main criteria for establishing the lists. Thus Jenichbek Nazaraliev, the rich and famous doctor specializing in the treatment of drug addiction and alcoholism, practically bought Asaba from Azimbek Beknazarov, who was relegated to second place on the list of his own party which includes very few of its members. And despite his popularity, Edil Baisalov is relegated to 13th place on the list of the PSDK. Those running for parliament are very worried. Apart from Ak Jol, only Ata Meken and the PSDK have a slight chance of sitting on the Jogorku Kenesh. Former Prime Minister Felix Kulov, n1 on the list of Ar Namys, has hardly any illusions. It is likely that many will be discontent if Kurmanbek Bakiev is not willing to share power. d

ALERT c Kazakhstan to Preside OSCE in 2010

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RUSSIA INTELLIGENCE
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KREMLIN c Half-tinted election triumph ALERT

c Yevgeny Shkolov, or the

"Dresden connection" in the Interior ministry FOCUS

c The strange confession by

Oleg Shwartzman BEHIND THE SCENE

c Vladimir Zhirinovsky : the

little secrets behind an election list METALS, MINES

c Norilsk Nickel in the eye of

the cyclone TELECOMS

c Fridman and Reyman bury

the hatchet

UKRAINE INTELLIGENCE
www.ukraine-intelligence.fr

GOVERNMENT c Towards a YatsenyukTimoshenko Ticket ? ENERGY

c Ukraine Faces Gas

Dilemma Once Again

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GEORGIA c Election

Campaign and Political Maneuvering in Tbilisi

In the backdrop, difficult relation with Russia

After a nine-day state of emergency, Georgia has now entered an election campaign period. The coming weeks will be decisive in determining the countrys developments, its geopolitical position as well as the balance of power between the spheres of influence vying for control.
A turbulent election campaign

On November 8, President Mikhail Saakashvili announced that a presidential election is to take place on January 5, 2008. Along with the election, there will be a referendum asking each citizen to chose a date for the legislative election (spring or autumn 2008) and to decide on whether Georgia should join NATO. In accordance with the countrys legislation, the outgoing President resigned from his post in order to stand as a candidate for a second mandate. Parliament Speaker Nino Burdzhanadze has taken over as acting Head of State. In a bid to tone down criticism from the opposition, Prime Minister Zurab Nogaideli, who had justified the use of force against demonstrators, was dismissed and replaced by Lado Gurgenidze, Chairman of the Board of the Bank of Georgia. As a businessman who is loyal to the ruling power, Gurgenidze is meant to serve as a counterexample to oligarch Badri Patarkatsishvili by proving that that business can work in favor of the central government and not in competition with it. The fact that early elections are being organized, a demand repeatedly expressed by the opposition for months, is interpreted as a political concession showing that the President is willing to compromise. However, the fact is that the short time span for preparing the election plays in favor of Saakashvili, since it allows him to limit the duration of the campaign and therefore to limit the extent to which the opposition can organize itself. Moreover, thanks to the early election, the outgoing President avoids competition from his main opponent, former Defense Minister Irakli Okruashvili, one of the leaders of the opposition, who cannot run for office as he will not reach the legal age required (35 years) until the end of 2008. Okruashvilis legal situation has gone through many twists and turns and remains complicated. Arrested in late September, he left Georgia on November 1st after retracting his accusations against the President and being obliged to pay a particularly steep fine of $6.5 million (CACI n20). Once settled in Germany, he went back on this last statement, claiming once again hat he had proof of Saakashvilis direct implication in the murder of several political figures. Meanwhile, Okruashvilis trial in absentia has begun in Tbilisi. The Georgian state accuses him of money laundering, extortion and abuse of office. On November 27, Okruashvili was arrested in Berlin, through Interpol, on a request made by the Georgian government. Georgia now has 40 days in which to prove the legitimacy of its accusations and have him extradited from Germany, where he could be given refugee status if there is insufficient proof against him. German police also arrested Yason Shikhladze, former head of the Georgian Defense Ministrys procurement department, and a close associate of Okruashvili Meanwhile, the Imedi opposition television channel, which the government considers to be a political tool, has been shut down since the November 7 demonstration and is still banned from broadcasting. On November 25, thousands of people returned to the streets demanding the station be reopened and denouncing the governments grip on the main press organs in the country. Central Asia & Caspian Intelligence N22

The Georgian government continues to denounce bitterly what it sees as the hand of Moscow and accuses the Kremlin of orchestrating these attempts at political destabilization in order to hold up Georgian membership to NATO (Georgia hopes to join the Membership Action Plan at the summit in Bucharest in April 2008) and prevent it from regaining control over the separatist republics of Abkhazia and South Ossetia. It is common knowledge that Russian-Georgian relations have deteriorated since 2006. Russias ban on Georgian wine and produce, its postal and road blockade, its deportation of thousands of Georgians from Russia and the many reciprocal accusations of espionage have inflamed an already complex situation. On November 13, Moscow vacated the Batumi military base and handed it back to Georgia before schedule - an agreement signed in 2005 stipulated the closing of the base in 2008. The situation remains uncertain for the Gudauta military base - one of the centers of the Abkhaz-Georgian conflict in the 1990s - as the 10th airborne peace keeping unit has still not been given orders to evacuate. Despite the visible withMikhail drawal of the Russian military from Georgia, the Saakashvili Minister for Conflict Resolution, David Bakradze, Georgian President accused Moscow of stockpiling military equipment in Abkhazia over recent weeks. He claims that hundreds of men, in particular Chechens working for Russian military intelligence, had entered the country through the Black Sea port of Ochamchira. It is obvious that Moscow takes advantage of Georgias political and economic weakness to apply pressure on it. Georgias membership to NATO would be a first for a CIS nation and would weaken Russias geopolitical status in the post-Soviet arena. Nevertheless, Georgias allegations that Russia is implicated in forming the opposition seem to be exaggerated. Tbilisi appears to prefer putting forward the theory of a fifth column working in Moscows interests than to acknowledge that there is a political crisis in the country. The majority of leaders in the opposition are as anti-Russian as the government. They even criticize what they consider to be President Saakashvilis weakness in the face of pressure from the Russian Federation. In the meantime, the Georgian government turned the international community against it when it made public audio and video conversations between officials at the Russian embassy in Georgia and members of the opposition. The non-respect of individual rights and privacy, in the name of national security, has compromised Georgias efforts to portray itself as a democratic nation, and produced the opposite effect to the one the government expected. The Interior Minister had hoped to prove that Russia was directly involved in the demonstrations and to accuse the political opposition of instigating anti-constitutional trouble. Those directly targeted include Republican Party deputy, Levan Berdzenishvili, the former Minister for Conflict Resolution, Giorgi Khaindrava, the leader of the Labor Party, Shalva Natelashvili as well as Tsotne Gamsakhurdia, whose brother, Konstantin Gamsakhurdia, heads the Liberty Party. December 6 2007

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Candidates and power games within Georgias political class
ddd

Within just a few days, twenty-one people registered as candidates for the presidential election. Few of them will succeed in obtaining the 50,000 signatures of support required before the December 6 deadline. Only a few figures have what it takes to oppose Saakashvili and are backed by parties capable of surpassing the 5% threshold at the next legislative election. Levan Gachechiladze is the most well known candidate as he has been chosen by the National Council, which groups nine of the main opposition parties. Gachechiladze, a businessman whose fortune has been estimated at over $10 million, has been at the head of the Georgian Wines and Spirits Company since 1994. He portrays himself as the personification of the Georgian businessman who cares about the economic well-being of the people. He was one of the founders of the New Rights Party but left it in 2003 when its other leaders refused to back the Rose Revolution. Levan Gachechiladze was chosen as the candidate of the National Council for the very reason that he has stayed away from the political limelight until the September demonstrations, that he does not formally belong to any one party and that he made no show of any presidential ambition, which conforms to the National Councils credo, which is to abolish the presidency and give more powers to parliament. He is backed by Salome Zurabishvili, who cannot run since she has not been living in Georgia for over 15 years, but she has been approached about being his prime minister in case of victory. Despite standing unanimously behind its candidate, the National Council is divided by a certain amount of friction. For example, ultranationalist leader, Jondi Baghaturia, has called for companies owned by foreigners to be nationalized, whereas other figures in the coalition not only have a less radical position, but on the contrary, are trying to win over the countrys ethnic minorities. Levan Gachechiladze supports businessmen and the middle classes, which benefited from economic reforms and privatization. In his drive for the votes of the urban middle class, he is up against David Gamkrelidze, leader of the New Rights Party. The two men had worked together within the same party for a long time but Gamkrelidze is considered to be more moderate than Gachechiladze. He has obtained the backing of the Industry Party, founded and led by the beer magnate, Gogi Topadze, head of the Kazbegi company, which groups older businessmen who have on several occasions sought reconciliation with Saakashvili. The New Rights Party and the Industry Party did not join the National Council coalition, which they consider too radical. They had hoped to obtain financial backing from Badri Patarkatsishvili, but he finally opted in favor of the National Council, then decided to run for the presidency himself. Badri Patarkatsishvili has set himself up as one of the main figures in the limelight of the campaign, although polls say he will get less votes than Levan Gachechiladze. During the 1990s he managed several Russian media outlets such as the ORT and TV6 television channels belonging to his friend Boris Berezovski. In 2006 he created quite a stir when he sold 100% of his shares in the newspaper Kommersant to the Uzbek-born Russian oligarch Alisher Usmanov. The Georgian government now accuses him of having instigated a coup detat during the November demonstrations, with the backing of the Russian secret services. This accusation seems erroneous, however, as he is sought by Moscow for criminal activities relating to several cases implicating the Russian oligarch in exile in London. Badri Patarkatsishvili has not received wide support in Geor-

gia. The National Council prefers its own candidate and hopes Patarkatsishvili will stand down in favor of Levan Gachechiladze. Incapable of agreeing on a single candidate, the opposition saw divisions intensify when the Labor Party decided to withdraw from the National Council and back the candidacy of its leader, Shalva Natelashvili. Natelashvili promotes radical measures, including renationalizing some companies in the private sector, targeting an electorate with more socialist tendencies than does the National Council. According to local sources, the government gave its discreet backing to Shalva Natelashvilis candidacy in a bid to divide the opposition. Indeed, the governments accusation against Natelashvili of espionage and attempting to overthrow the government during the large-scale demonstrations in November was abruptly withdrawn by the General Prosecutor, leading some to believe that the Labor Party was bought off politically. Most of the opposition figures running against Saakashvili played a major role in the Rose Revolution of 2003 and were allies of the President in his struggle against Eduard She-

vardnadze. The rift in the revolutionaries camp is not new. It dates back to the mysterious death of Prime Minister Zurab Zhvania in February 2005, followed by the dismissal of Foreign Minister Salome Zurabishvili in October of that year. There are several reasons for these power struggles within Georgias political sphere. First of all, Saakashvilis refusal to share some of his presidential powers with parliament has led the opposition to campaign for the abolition of the presidency. Then there is the Presidents inability to put an end to the countrys recurring economic problems as well as to corruption, and his inflexible attitude when it comes to resolving the separatist conflicts in Abkhazia and South Ossetia problems which have paralyzed the country while the entire political class aspires to membership of the European Union and wants to take a distance from Russia. There is also strong competition between those individuals affiliated with the Liberty Institute - an NGO that groups many politicians in government posts such as Giga Bokeria, one of the leaders of the United National Movement, Interior Minister Vano Merabishvili and Education Minister Kakha Lomaia - and their opponents, often former associates of Zurab Zhvania. Meanwhile the opposition is also divided over its political aims, torn by power struggles and split by powerful economic rivalry between Badri Patarkatsishvili and his personal empire, the entrepreneurial milieu that backs David Gamkrelidze and Gogi Topadze, and those that back Levan Gachechiladze. The die has not yet been cast when it comes to Georgias election. d December 6 2007

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DEFENSE c Kazakhstan

Builds its Caspian Sea Fleet

Kazakhstan is also eager to work with those further away, especially with the North Atlantic Treaty Organization. NATO has been offering Kazakh soldiers maritime training on the bases of southern Europe for several years now. Meanwhile, the recent visit to Astana of Robert Simmons, NATOs representative for the South Caucasus and Central Asia, reaffirmed the United States interest in the formation of a Kazakh military fleet. This visit was followed by a meeting in November between Bolat Sembinov, Deputy Defense Minister of Kazakhstan and French general Emmanuel Beth, Director of the Defense Ministrys International Cooperation Agency, who had come to negotiate Franco-Kazakh collaboration in the framework of NATOs Individual Partnership Action Plan (IPAP). Moscow is very worried over the rapid growth of Kazakhstans military fleet, and has protested against the change in the balance of powers. Yet Russia will have almost completely renewed its Caspian fleet by 2016, while Azerbaijan, and, to a lesser extent, Turkmenistan, are following the trend set by Astana and have begun efforts to develop their own Caspian Sea fleet in order to secure their offshore fields. The militarization of the Caspian Sea seems therefore inevitable, with as yet unknown consequences for the medium and long term. d

With a 50% increase in their military budgets between 2006 and 2007, Central Asian states have entered a new phase in their military history. Leading this drive, and boosted by its oil windfall, Kazakhstan has reaffirmed, through its president Nursultan Nazarbaev, that it wants to become an advanced military power by 2012. Of the main areas to be developed, Kazakhstan believes that a fleet in the Caspian Sea is the most crucial in order to protect its offshore oil and gas sites, which were protected during the 1990s by Russian patrol boats, and to secure the energy corridor used by Kazakh tankers going to Baku. Officially set up in 1996 on the naval legacy left over from the Soviet Union, the Kazakh fleet did not really start growing in size until the military reforms begun in 2005-2006. In Kazakhstans oil capital, Atyrau, there is only a motorized brigade, a few patrol ships and a navy airfield, while Aktau, the capital of the Mangystau region, has the prestigious Military Maritime Institute linked to the Defense Ministry. The largest part of the Kazakh military fleet is based in the small deep-water port of Bautino, located to the north of Aktau. In 2007, the new Defense Minister, former Prime Minister Danial Akhmetov, the first civilian to take up this post, launched a new training program for navy officers, which was badly lacking in the country. He also recentralized military-maritime management with the creation of a Department of Maritime Forces within the Defense Ministry, to take effect as of January 1st 2008. One of the principle challenges of this program concerns naval construction. This includes building the infrastructure necessary for accommodating ships in the countrys various ports. Indeed, the only ship building plant in the country, Zenit, located in the western region of Uralsk, has the capacity to build ships of less than 500 tons, which patrol the region of Atyrau. Heavier ones, which ensure security in deeper waters, must be imported. By the end of 2007, the Kazakh government will chose the foreign partner that will provide it with ships weighing from 500 to 1,000 tons (a decision by the five littoral states stipulates that no ship weighing more than 1,000 tons is authorized in the Caspian Sea). Several companies are in the running: Frances CMN (Compagnie Mridionale de Navigation) and Armaris DCNS, some Ukrainian state-owned companies, as well as Russian firms incorporated in Rosoboronexport. In April 2007, Danial Akhmetov held talks with the Prime Minister of Tatarstan, Rustam Minnikhanov , and then with Russias Defense Minister, Anatoly Serdyukov, and mentioned the possibility that Tatarstan, which has several plants in the military- industrial complex field on its territory, become Zenits main partner.

ALERT

3 Kazakhstan to Preside OSCE in 2010

Foreign Affairs Ministers from the OSCE, meeting in Spain on November 29 and 30, have chosen to assign the rotating presidency of the organization to Kazakhstan in 2010. This was a relief for President Nursultan Nazarbaev, for whom it was a matter of personal honor. The Kazakh presidency was expected for 2009, but was delayed by one year in order to allow the country to set in place new reforms, such as changing the electoral laws, the conditions for registering political parties and legislation concerning the media, which are far from adhering to OSCE criteria. Despite the fact that Kazakhstans legislative elections of last August were harshly criticized as undemocratic, the countrys intense campaign, stressing its economic success and its strategic advantage for the European Union, was fruitful in the end. To obtain Washingtons backing, Kazakhstan had to drop its support of Russia on the question of reforms within the OSCE. This turnaround was bitterly felt by Sergey Lavrov, who had backed Astanas bid for 2009 on many occasions. d

c Central Asia

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December 6 2007

Central Asia & Caspian Intelligence N22