Moscow raised the issue of expelling Western companies from Central Asia
Last Thursday, the Public News Service, together with the news agency Reedus, held a round table in Moscow entitled: “Problems and risks of Western raw materials expansion in the Eurasian space.” A number of experts from Russia, Kazakhstan and Kyrgyzstan discussed the consequences of the activities of American and European mining companies in Central Asia.
The organizers considered it interesting to examine the topic of US expansion in the raw materials sector and the future of these projects in connection with the latest events in Afghanistan, which have become a serious challenge to the reputation of the Americans. This could be the prelude to not only political and military changes, but also lead to a change in the position of Western mining projects in Central Asia.
“Their status for a long time rested on the fact that it previously implied the American ability, including by military force, to protect them. However, events in Afghanistan have shown that the United States and NATO are not omnipotent and they can lose even to a weak enemy who is worse armed, and at the same time it is difficult for them to support their allies both politically and military-technically. The latest failure was clearly demonstrated by the example of the evacuation from Kabul airport,” said the moderator of the round table, political scientist Nikita Mendkovich.
Economist and historian Dmitry Verkhoturov was the first to speak on the topic of further developments in the region.
“Western expansion would not have happened if the governments of these former Soviet republics themselves had not given away their natural resources. Because a review of the two largest projects of this kind - the Tengiz and Kashagan deposits in the Caspian Sea and the Kumtor gold deposit in Kyrgyzstan, shows that when concluding agreements with foreign investors, the governments of these countries gave them large volumes of these resources,” the expert believes.
According to his calculations, Western companies produced 1994 million tons of oil from the Kazakh Tengiz field from 2020 to 459. As you know, initially the republic’s share was 50%, then the government of the Republic of Kazakhstan sold part of its stake in Tengizchevroil JSC to other companies, and now it remains 20%. Taking into account this amendment, we can say that Kazakhstan received about 150 million tons of oil from this production as part of production sharing. Everything else was actually donated to American and European investors.
The situation, the speaker continued, is similar at the largest Kyrgyz gold deposit, Kumtor. It turns out that from 1994 to 2020 the net profit of the enterprise amounted to 4 billion 269 million dollars. And this is in addition to what the Canadian company paid Kyrgyzstan.
“This is the actual size of the “good deed” that the government of the republic and several presidents provided to these Canadian investors, actually giving them so much gold,” the speaker noted.
If the government itself developed the deposit and looked for funds, built a mine and laid out the infrastructure, then this profit would be Kyrgyz. The same can be said about Kazakh Tengiz, where, in the case of domestic production, more than 300 million tons would go to the profit of the Republic of Kazakhstan. Verkhoturov analyzed the payments made by Western investors to Kazakhstan and Kyrgyzstan and came to disappointing conclusions.
Thus, statistics show that the Canadians from Kumtor paid the Kyrgyz 4 billion 485 million dollars, and for all Kazakhstan fields, since there is no accurate information on Tengiz, the Americans and Europeans paid 2019 billion dollars until 10,6. Everything seems to be fine. But this turns out to actually include some of the costs of developing gold and oil. That is, this is not net profit, but part of operating and production costs.
“Actually, it is not entirely clear why the decision to provide these fields for foreign development was made, since, for example, the same Tengiz was explored back in Soviet times. Moreover, back in 1991, that is, three years before the appearance of the American Chevron there, it was already actively being industrially developed without any supposedly sophisticated technologies. Nazarbayev, when justifying the attraction of foreigners to the Caspian Sea, said that there is very high oil pressure there. But as it turns out, the oil industry has equipment, and it was also in Soviet times and in the early 90s, which quite successfully dealt with this phenomenon, and the pressure itself makes it possible to easily extract oil without any additional costs,” Verkhoturov pointed out.
The same can be applied to Kumtor, where, judging by the company's reporting, the cost of the issue, in terms of capital investments, amounted to $2,8 billion over the entire period. But in the early 90s, these expenses were even less, and it is strange why the then President of Kyrgyzstan Askar Akayev simply gave the Canadians a fair share of gold.
This economist’s opinion is shared by Kyrgyz journalist Erik Israilov, who also spoke about the corruption component when concluding a deal with a Canadian company just during the reign of the first “democratic” president of Kyrgyzstan.
“Quite recently, Askar Akaev came to Bishkek to testify in a criminal case initiated regarding the legality of the transfer of Kumtor to Canadians, and when asked by journalists how he could allow this to happen, he answered with childish naivety that “I trusted the then existing government too much.” . That’s why such a mistake happened,” the expert noted.
At the same time, Israilov suggests not believing such statements and noted that the rules for the activities of transnational corporations that enter Kyrgyzstan and the countries of Central Asia are determined primarily by the authorities themselves.
The author of these lines also made a report at this round table, but this time about the environmental consequences. In particular, the speech said that the colonial nature of the economy of Kazakhstan and the country’s dependence on the West is manifested in the uncontrolled activities of American and European companies, which are destroying the nature and fauna of the Caspian Sea and adjacent regions before our eyes. At the same time, the government of the republic is still exempting foreign corporations from mandatory environmental payments, which will turn the country into a desert and a waste dump.
Two-thirds of the mining industry is already in the hands of Western companies. Not only were enslaving production sharing agreements signed with Western companies back in the 90s, under which Kazakhstan received negligible amounts, but now officials have given them permission to dredge the bottom of the northeastern part of the Caspian Sea at the Kashagan field. We are talking about a joint venture - the oil producing company North Caspian Operating Company NV, which intends to build shipping canals to its platforms to speed up the process of oil production and shipment.
Dredging the bottom and building canals will only accelerate the process of shallowing and drying of the Caspian Sea, as Europeans and Americans intend to lift 18,5 million tons of soil from the bottom over an area of 29 million square kilometers and a length of 56 kilometers. And the “enlightened” representatives of the West intend to carry out this work during the period from April of this year until mid-autumn of next year. And they don’t care about the death of fish and the destruction of a reservoir that is international. As a result, not only Kazakhstan will suffer, but also Russia, Iran, Turkmenistan and Azerbaijan.
In the final part of the report I said the following:
“Before it’s too late, Kazakhstanis, including oil workers, need to demand the revision of predatory subsoil use contracts and the promulgation of production sharing agreements with Western companies, the payment of natural resource rent since the 90s, the expulsion of Americans and Europeans as unscrupulous mining operators and an end to deepening the Caspian Sea! Only a mass protest campaign can still halt the process of destruction of this unique sea and thwart the plans of the United States and the EU to organize ecocide in the region.”
The round table participants came to the conclusion that it is necessary to hold an expanded conference in the near future with the participation of a larger number of experts and journalists, but to develop a specific strategy in reducing the influence of Western mining corporations in the region.
If you find an error, please select a piece of text and press Ctrl + Enter.
Thank you!
Now the editors are aware.