US Ignores Russian Overture

Despite a personal lobbying effort to President Obama by acting Kyrgyz President Roza Otunbayeva, the Pentagon has granted a $315 million contract to supply jet fuel to Manas air base to the Mina corporation. (www.eurasianet.org/node/62300). Previously the Russian government-owned company, Gazprom, had said they would consider bidding on the contract and the Kyrgyz government had recommended the establishment of a joint, Kyrgyz-Russian company to supply the jet fuel. With a single contract, the Pentagon has thumbed its nose at both the expressed desire of the country hosting their air base, and to a Russian overture to support the war in Afghanistan.

The Pentagon had expressed reservations about giving the Russians a "hand on the spigot," which is understandable given the Russian-US tension over the existence of the only American military base on former Soviet soil. In this case, however, there was a common enemy in the form of al-Qaida and the Afghan Taliban. The award of the contract indicates that the American "reset" of its relations with Russia still have a long way to go.

The Mina corporation itself is under Congressional investigation as to how it got the first $3 billion fuel supply contract. The investigation centers on whether Mina and a Russian partner company, Red Star, bribed former Kyrgyz President Kurmanbek Bakiyev. According to the Washington Post, both companies are controlled by the same individual, Douglas Edelman, who entered business in Central Asia with a "bar and hamburger joint." The Post tried to contact both companies, and uncovered a series of mailing addresses--all of them outside of the United States and Kyrgyzstan, and all of them "mail drops."

Of course, Mina director of operations Chuck Squires denied any accusations of impropriety. Squires' remarks are supported by Congress' inability to find evidence of corruption, despite having reviewed over 250,000 pages of documents and e-mails.(Washington Post, October 30, 2010)

One has to ask why the Pentagon would want to alienate an ally and Russia in favor of a bar owner without any known address.

Dr. James J. Coyle is available to speak to your organization or at your event. Please contact him at jimcoyle@verizon.net.

Fuel for Manas Transit Center

Manas Transit Center can be a lonely base. Opened with Russian approval after the terrorist attacks of September 11, 2001 to help the United States in its war against al-Qaida in Afghanistan, it has become a bone of contention in the great power rivalry in Central Asia. It is only 40 miles from Manas to the nearest Russian base; at one point, the base commanders had monthly dinners together. More recently, however, the Kyrgyz ordered the base closed after the Kremlin offered it a sweetheart energy deal. But Moscow failed to deliver, and the US upped the base rent, and so Manas remains open - the only American outpost within the territory of the former Soviet Union.

Russia's opposition to an American presence in its sphere of influence, the "Near Abroad" as the Russians refer to it, is well known. Less well-known, however, is Russia's willingness to cooperate with the United States if the stakes are high enough. In September, EurasiaNet ran a story that the fuel supply contract for the transit center was expiring--and that the current supplier (Mina Corporation) was under congressional investigation. Washington wanted a competitive tender plan to find a new supplier.

The government of provisional president Roza Otunbayeva put forward an alternative plan, calling for the creation of a joint venture involving a Kyrgyz state-run entity and Gazprom, owned by the Russian government. Pentagon officials rejected the plan, arguing that "a Russian hand on the fuel spigot needlessly compromises the US mission and US forces." (Washington Backing Manas Tender Plan, Shuns Gazprom JV," www.eurasianet.org/node/62036)

More recently, EurasiaNet has reported that Gazprom has confirmed that the company could participate in the Kyrgyz state venture. A spokeswoman said one of the company's subsidiaries was "ready to consider proposals from the Kyrgyz Republic for aviation fuel supply at Manas airport." ("Kyrgyzstan: Gazprom Ready to Fill Manas Fuel-Supply Role," www.eurasianet.org/node/62224 ) This is a striking turnaround that could not have been offered without approval from the highest levels of the Russian government. Whether the reason is to gain control of the fuel supply (doubtful, since most of the fuel was already Russian-origin), or an attempt to curry favor with either the Krygyz or the American governments, the symbolic value of Russia actively supporting the American war on terrorism is tremendous--and should not be overlooked.

Washington appears to be reacting well to the latest development. They have developed a compromise plan that would allow the joint enterprise to provide 50% of the Manas fuel. The Defense Logistics Agency has amended the competitive bid solicitation so that 20 percent of the contract could go to a state-owned Kyrgyz enterprise in February, with that share rising to 50% by July. The amendment does not mention Gazprom by name, but is fashioned in such a way that would allow the joint enterprise to enter the process. Many observers believe that Mina Corporation will win the bidding, regardless; but Gazprom has another asset at its command: the new general manger of the Kyrgyz state owned Manas Refueling Complex is Marat Malataev, the deputy director of wholesale fuel sales for Gazprom Neft Asia in Kyrgyzstan ("Washington Hopes Kyrgyzstan Bites on Compromise Manas Fuel-Supply Offer," www.eurasianet.org/node/62134).

Dr. James J. Coyle is available to speak to your organization or at your event. Please contact him at jimcoyle@verizon.net.