CEU eTD Collection
In partial NATIONALIZATION OF KUMTOR: POSSIBLE CONSEQUENCES fulfillment of the requirements Economic forfulfillment ofthe Master thedegreeArtsPolicy in of of FOR THE ECONOMY OF KYRGYZSTAN Supervisor: Central European University Department ofEconomics Budapest, Hungary Maksat Musaev Global Markets
Submitted to Submitted Professor 2013 By in
Julius Horvath Julius
CEU eTD Collection country thereturn of revision current for agreement. in policy country.the into inflows capital decrease and country the of image investment the damage will nationalization publi the in corruptionof levelhigh experience adequate have not does country the reasons: may nationalization towards performance the assessed country, the of experience set to order t of economy the for nationalization of consequences possible the investigated groups. interest and parties political certain by propagated actively is Gold damage. imposin of accused now is Gold media. and society parliament, the in debates biggest the of One
which suggests the government to propose the Centerra Gold other gold fields in the the in fields gold other Gold Centerra the propose to government the suggests which In
a the light of these events, these of light the
sound ground for analysis for ground sound Based on the current situation around Kumtor, the thesis proposes alternativeproposes thesis the Kumtor, around current situation the Basedon and influential companies in Kyrgyzstan became an e an became Kyrgyzstan in companies influential and of the state the of
lead to negative consequences to consequences negative to lead h eprec a te nentoa abtain rcse, and processes, arbitration international the at experience the
g unjust investment terms and of causing environmental environmental causing of and terms investment unjust g c
sector may sector
- the owned enterprises. owned the thesis the
Abstract nationalization of the local subsidiary of Centerra Centerra of subsidiary local the of nationalization
Canadian based gold mining company Centerra Centerra company mining gold based Canadian i
degrade the performance of the company, the the of performance the degrade
reviewed and evaluated the nationalizati the evaluated and reviewed
in managing companies of this of companies managing in
T he paper revealed that the policy the that revealed paper he
the economy the heated of picenter
The present work work present The for the following the for he country. In country. he
scale, on
CEU eTD Collection gratefulIam useful Tothfor alsotoAgnes her advicesencouragement. and constant I Horvath for Julius his thankProfessor
Acknowledgements guidance ii
and supportthroughout the writing process.
CEU eTD Collection Chapter 4.Nationalization of Kumtor: Possible consequences for the economy Kyrgyzstan of Chapter 3. Kumtor Investment Project Chapter 2.Foreign Direct Investment aGlobal in Arena and Kyrgyzstan CHAPTER 1.Foreign Direct Investment, Nationalization: Theoretical Framework INTRODUCTION 3.3 Summary of clashthe points between the Government of the Kyrgyzstan and Centerra Gold 3.2 Importance of the project to the economy of Kyrgyzstan 3.1 Overview of Kumtor Project 2.3 Foreign Direct Investment Kyrgyzstanin 2.2 Foreign Direct Investment Centralin Asia 2.1 Foreign Direct Investment: Global Trends 1.2 Nationalization: Basic concepts 1.1 Foreign Direct Investment: Basic concepts 1.1.4 Importance 1.1.3 Methods 1.1.2 Objectives 1.1.1 Definition 3.3.4 Recommendations 3.3.3 The agreement of 2009 3.3.2 The agreement on restructuring the Kumtor Project (2003 3.3.1 The agreements of 1992 3.2.3 Contribution to Issykthe 3.2.2 Impact onthe em 3.2.1 Contribution of the company Budget, the to Exports, and Industrial Output 2.3.2 2.3.1 Regulatory Framework 1.2.5 Impact onthe Economy 1.2.4 Importance 1.2.3 Methods 1.2.2 Objectives 1.2.1 Definition 1.1.5 Impact FDI of onthe Economy Political Situation
......
......
......
...... ployment
......
......
......
...... – - Kul region Kul
1994
......
...... Table Table of ......
......
......
......
......
...... iii
Contents
......
......
...... - 2004) ......
......
......
......
......
......
......
50 47 45 44 43 42 42 41 40 39 35 35 33 32 30 27 23 23 22 21 20 18 18 18 14 13 12 10 10 10
9 1
CEU eTD Collection BIBLIOGRAPHY CONCLUSION 4.3 Possible outcomes and recommendations 4.2 Performance of the state 4.1 Theexperience of nationalization Kyrgyzstan.in 4.1.1 The experien
......
...... ce ce of the country at the international courts - owned enterprises Kyrgyzstanin
......
...... iv
......
......
......
63 62 60 57 55 50
CEU eTD Collection groups two into divided have people local The years. those country. and The interms ofpeople agricultural wealth oflivestock landsin decreased sharply 2012) (Jusupzhan China in Prefecture Autonomous thousands o 2012) Usmanov killed were immigrants Russian thousand two Almost Kyrgyzstan. of territory anti R The in war of revolts. local small some and hunger needs massive with accompanied was period war the The Europe. satisfy to Russia to sent were livestock and commodities produced p were theregion.intensified social Russiansettlements unrestwere New formed. in pastures as used mostly and locals by owned Russian of rule the under fell Kyrgyzstan current of territory by destroyed was Kokand of khanate the century nineteenth majority. The t Kyrg the where nationalities many of consist demographics The sea. Kazakhstan, - Russian waves. In 1916 the biggest revolutionary movements covered the current current the covered movements revolutionary biggest the 1916 In waves. Russian ussian order to mobilize thousands of young people for rear works had provoked huge huge provoked had works rear for people young of thousands mobilize to order ussian During r Russian with borders common has which Asia Central in country unitary small a Kyrgyzstanis h cvl a wih tre i 11 bogt ue da huge brought 1917 in started which war civil The immigrants started with the incentives created by the regime. The lands previously previously lands The regime. the by created incentives the with started immigrants f local Kyrgyz and Kazakhs f local Kyrgyz Tajikistan, Uzbekistan and China. The territory is mountainous with no access to to access no with mountainous is territory The China. and Uzbekistan Tajikistan,
otal population of Kyrgyzstan people. fivemillion otal population isabout the .
ule . In a very short period of time Russian military suppressed the revolts and and revolts the suppressed military Russian time of period short very a In
First World War the well the War World First
lyd sgiiat oe n h frain f h cuty I te late the In country. the of formation the in role significant a played ,
INTRODUCTION hr almost where
ran to China. Nowadays we may find Kizilsu Kirghiz find Kizilsu Nowadays may toChina. ran we - being of local people deteriorated as most of the of most as deteriorated people local of being 1
7 thousan 170
the
rily ie t nwoes that newcomers to given artially
usa Ta. h ifo o the of inflow The Tsar. Russian ,
where one was supporting the the supporting was one where
ae o h eooy f the of economy the to mage the Kry pol sil live still people Kyrgyz d
Russian Empire and the the and Empire Russian yz ethnicity makes a a makes ethnicity yz
(Kokaisl and and (Kokaisl
CEU eTD Collection couldcountries reap ofCentral ofthe most of benefits Asia sha the 1980 in by production and times 379 by increased Kyrgyzstan of production industrial the decades seven within instance, For level. qualitative new a to country the of togethagriculture of development of Republics losses. the Russian inventory with together land of thousands hundred two given (about “desyatins” were households poor 6000 About bays). and (kulaks elites former from confiscated for were cultivation which receive they lands could partyassaw peoplethe ordinary asfor party ahope 2011) (Toktomushev the reforms: those from lot agained economy the of structure agricultural simple very having and regions developed least the of one being time that at Kyrgyzstan country. the of development gained power. Representatives of quickly “Bays” rich against movement the and people devastated and poor on impact its had s Populist opposed. aggressively who others to and Bolsheviks of power
natural type of economy was eliminated and eliminated was economy of type natural communist party did facilitate the recovery of the country from country the of recovery the facilitate did party communist
Indeed, relative to what i what to relative Indeed, The n 96 Kyrgyzstan 1936 In New Economic Policy developed by communists in 1921 contr 1921 in communists by developed Policy Economic New
D a 55.6% was GDP the
oit no wt te aia o Fuz (R) Idsraiain and Industrialization (FRU). Frunze of capital the with Union Soviet 1 tosn hcae) n ms o te oas ee ete ad given and settled were nomads the of most and hectares) thousand 218 . The m The
gain (Toktomushev 2011) (Toktomushev ajority of people supported the undertakings of the communist communist the of undertakings the supported people of ajority
(Industry 2013) (Industry t used to be to used t
ed the er with educational pro educational with er
status of republic and became one of the fifteen Soviet Soviet fifteen the of one became and republic of status
local “elite”werelocalarrested and dispossessed. ,
the well the 2
.
th oprdt mn te oitSae the States Soviet other many to Compared by undertaken reforms water and land The .
e a
patriarchal better future.better - being of poor people improved a lot as lot a improved people poor of being grams have grams
the
Soviet Rule. Soviet - feudal system was destroyed was system feudal
turned the historical path historical the turned
after logans of Bolsheviks Bolsheviks of logans -
ibuted a lot to the to lot a ibuted war damages and and damages war re of industrial industrial of re
CEU eTD Collection strategy development new of lack a create to needed country framework, The investors. foreign for barriers additional legal created had expertise weak corruption, of level High transformation. the of failures factories the of prospects by bankrupted man not were There consequences. catastrophic to led knowledge market lacked that management under work to used who managers of aim incre the with Privatization country. the in invest to willing were investors foreign few and unemployment posit The both consequences. brought liberalization Harsh state. the by owned previously sectors other and manufacturing in efficiency the increase to order in place took privatization a a wellestablish reforms.political and economymarket 2011) formingof agree an signed haveAccords Belavezha in Belorussia and Russia Ukraine, of leaders So the Gorbachev of president last the by made reforms political controversial
aia wy f eomn te sy the reforming of way radical y but some quite competitive manufacturing units in Kyrgyzstan that were deliberately were that Kyrgyzstan in units manufacturing competitive quite some but y sn efcec dd o mtraie s ot f h unit the of most as materialize not did efficiency asing . Aftergradually other states event this one byone their declared independence. After the collapse of the Soviet Union in Union Soviet the of collapse the After By
, the
h ed f 1980 of end the eknd h pwr of power the weakened
Commonwealth Independent States which put an end an put whichIndependent States Commonwealth - the functioning market economy. Like Russia and Poland Like and Russia economy. market functioning
e onr i odr o e fs poi wtot hnig of thinking without profit fast get to order in owners new a w
rapid decline in total output. At output. total in decline rapid mass to led that country the throughout passed bankruptcies of ave
(Musaev 2013) (Musaev and develop develop and s
the Soviet Union experienced huge political shocks. shocks. political huge experienced Union Soviet the stem which later was called a “shock therapy”. Massive Massive therapy”. “shock a called was later which stem
the
Kyrgyzstan has implemented many reforms in order to orderto in reforms manyimplemented has Kyrgyzstan the
. The . an omns regime. communist
omns regime communist cetbe lmt fr netet Kyrgyzstan investment. for climate acceptable 3 mentality of people can people of mentality
1991 ,
the beginning of the transition the of beginning the Kyrgyzstan stepped on a new path of of path new a on stepped Kyrgyzstan
s were privatized by the same same the by privatized were s n 8 On . Having no change in the the in change no Having .
th up ,
of Kyrgyzstan
partially for USSR for
it Union viet December v ad negative and ive
explain many explain
(Melnichuk
has the
,
1991 the the 1991
ment on on ment Mikhail
chosen only a a only future future The
CEU eTD Collection to potential a had that fields main were agriculture and mining Tourism, projects. domestic and economy stabilize to was government the of goal main The revenues. increase to income of sources new for looking eagerly were Politicians government. the of policy the with discontentment Kyrgyzstan. Moscow from transfers at that account 1989 in be to used it what of 55.3% only constituted it 1993 by that extent the to decreased production industrial total the and 74.1% by decreased income hu integrated Highly independence. of years to attributed is period difficult most The factors. subjective and objective by country. in theoret undertaken reforms the all Indeed, Asia. Central in democracy” of “oasis Akayev and region the in states promising most the of one as perceived was Kyrgyzstan states. was it and of existence shown later measures liberal most the far by implemented has neighbors its to compared ge drop in total income. In the In income. total in drop ge ically matched the values of values the matched ically There were many other reasons for reasons other many were There F esos salaries Pensions,
(first president of Kyrgyzstan 1990 Kyrgyzstan of president (first for crucial were which reforms implementing in successful being or
a momentous event as the country the asevent momentous a .
the market economy market the
attract
the
of complied was budget national the of 30% to 20% from time soviet foreign capital into the co the into capital foreign
(Encyclopedia n.d.) (Encyclopedia n sca bnft hv be inflated been have benefits social and , Kyrgyzstan ,
first four years of independence Kyrgyzstan’s total national total Kyrgyzstan’s independence of years four first
democracy and the freedom literal freedom the and democracy
cnmc od wr eliminated were bonds economic the - , 2005)
we may imagine how harsh the situation was in was situation the harsh how imagine may we managed to enter WTO first among other fifteen fifteen amongother first WTO enter to managed
4
was accepted to accepted was untry as the budget was not capable not was budget the as untry failures of some reforms that can be explained explained be can that reforms some of failures
used to say that say to used
the
(Cologlu 2010 ) 2010 (Cologlu
World Trade Organization, Organization, Trade World the , ly had no “limits” in the the in “limits” no had ly
Kyrgyz Republic is the the is Republic Kyrgyz which created social social created which ,
hc ld to led which
. Taking into into Taking .
the s t il be will it as
the the
to finance finance to
is five first
country country proper proper Askar Askar
the
a
CEU eTD Collection times several country Japarov Sadyr divide partners the Kyrgyzstan tax. less pay to repairing roads. th where guess just may public The roads. the of quality to it that claimed hand other the on representatives company The he by exploited actively were which roads like infrastructure the of deterioration imposing whichinfringenational wane ofcountry. interests investment ofthe terms evasions tax of accused is company The issues. environmental use coalition to ruling the blackmailing powers oppositional for trend common a become has It official Centerragold website of Cameco company uranium traded Th country. the of part Northern the in operations extracting gold the into investment an was It Project. Kumtor the borders inflows. toforeign capital projects potential in invest to funds no Having growth. the contribute
the budget of the region and it is the responsibility of local authorities to look after the the after look to authorities local of responsibility the is it and region the of budget the h rao fr ulc icnetet ih opn oeain wr rltd o the to related were operations company with discontentment public for reason The Periodically was foreigncapital involvedthe which investmentprojects biggest first and One the of
The company is also blamed of blamed also is company The ,
who is currently in prison for attempts to overthrow the political regime in the the in regime political the overthrow to attempts for prison in currently is who
A ccording to the agreement between investors and the Government of the the of Government the and investors between agreement the to ccording
the ,
e investment agreement was signed with the world’s largest publicly largest world’s the with signed was agreement investment e Kumtor Project becomes a matter of big political big of matter a becomes Project Kumtor has accused the company of paying extremely high salaries and and salaries high extremely paying of company the accused has , the profits the
total cost of the plant was 450 million US wastotal costofthe 450million dollars. plant . Mainly the clash points can be divided into economic and economic into divided be can points clash the Mainly .
(Centerragold 2012) (Centerragold
the ,
not produced gold. The deputy of the parliament the of deputy The gold. produced not
artificial increase of costs of production in order in production of costs of increase artificial 5
. According to the information at the the at information the to According . fns o ls o te a to way the on lost got funds e
makes financial contributions financial makes
Aaio 2008) (Abakirov the ,
the count the
case of Kumtor in in Kumtor of case and social tensions social and ry opened its its opened ry avy trucks. trucks. avy
n of and . CEU eTD Collection th to Kumtor of contribution the mentions he where rate be will they briefly mentionedbelow. done already was what of picture a have to order in and Project Kumtor the public. the in discussed central the of one is undoubtedly and popularity of peak its in now is it as research issue. this on work Project Kumtor the and issue the of explanation clear a get not could public the Unfortunately issue. hand other the On deat for except problems other any or skin cause cannot cyanide were the as claims groundless totally those that say experts Some people. local of side the from support financial It each member. family to compensation financial gave company the that to response In chemicals. to them relating problems manyother and skin with hospitals the into rushed people local of hundreds loc the when country Issyk the in lake biggest the into flows which River, Barskaun the into cyanide of tons got gold) of production the in used is that chemical paid according tothe international standards. Can to bonuses
reason for misunderstanding of locals with the companyreason locals misunderstanding represe the of with for - Kul (one of the most attractive recreational places in Central Asia). The panic started started panic The Asia). Central in places recreational attractive most the of (one Kul h evrnetl sus ae tre i 19 we a when 1998 in started have issues environmental The Yakisik the to related issues the with dealt have that works academic many not are There l epe ae f have people al
adian managers. The company on its side keeps saying that the benefits are benefits the that saying keeps side its on company The managers. adian Harun and it gives a wide range of selection alternatives to a person who chooses to chooses who person a to alternatives selection of range wide a gives it and
,
was the first incident that had built a basis for repetitive claims for more more for claims repetitive for basis a built had that incident first the was
there are other experts that state that experts other are there The investment project in itself could be a very attractive subject for for subject attractive very a be could itself in project investment The
(2007) There are some works that have directly or indirectly touched upo touched indirectly or directly have that works some are There
has studied relationship between inflation and economic growth economic and inflation between relationship studied has ud ed fish dead ound
6
n sm ohr nml na te river. the near animals other some and into an accident and overturned and accident an into
the
e economic growth of 1997 of growth economic e completely opposite view about the the about view opposite completely
truck full of cyanide (the (the cyanide of full truck ntatives.
it ,
couple of of couple
becomes (Yakisik (Yakisik issues issues The h. h. n
CEU eTD Collection ability the assess and companies nationalized with country the of experience previous consequencespossible nationalization of country. the in towards have nationalizationwill population. of groups nationaliz certain among moods nationalistic increasing on has it as attention country, mechanisms, corruption hos the and investors between distribution share the of justification the issues: following just it where 2013) Comission cooperation of terms on negotiations of route new for basis a became and government an of option world with have shareholders the wheremarket stock on relies mostly sectors such of financing compliance practices, in that states She financing. of ways complex more needs sector projects into take don’t we if policymakers mislead could which outcomes, uncertain had 1996 in currency 2007) the account Kumtor. the impact of . In his paper he has explained that explained has he paper his In . h Mnsr o Economy of Ministry The The around situation The
The methodology used to answer the main research question is to analyze the the analyze to is question research main the answer to used methodology The nationalization of the project and the situation is inflated in the background of of background the in inflated is situation the and project the of nationalization Ooooa 2007) (Otogonova to ws not was ation
study by Otogonova AnaraOtogonova by study pooling risks. pooling risks. fe cret terms current ifies h mi rsac qeto t b answ be to question research main The . The company on the other ha other the on companyThe .
a
significant place in the economy of the country. Oppositional forces insist insist forces Oppositional country. the of economy the in place significant
profoundly
. According to her work the mining industry being a high risk risk high a being industry mining the work her to According .
the
the Kumto a Kmo Rpr 2013) Report (Kumtor
positive or negative impact on the socioeconomic situation negative socioeconomic situation impact or onthe positive
studied yet and it is difficult to see whether the policy policy the whether see to difficult is it and yet studied issues related to a peae a eot hc reflects which report a prepared has
(2007) r Project is extremely heated extremely is Project r
of Kumtor
the
policy of intentional devaluation of the national national the of devaluation intentional of policy
7 has elabor has
nd has issued the reaction paper stating points points stating paper reaction the issued has nd
to the economy ofKyrgyzstan?”
the
ated on the ways of financing of ways onthe ated rd n hs ae i: “W is: paper this in ered ecology ofthe region Te reports The .
and it requires special special requires it and
any discuss mainly
. T
lis f the of claims he issue of of issue he hat are the the are hat
mining mining
of the the of (State (State
the t
CEU eTD Collection consequencesbepossible will discussed nationalization of inthefourth chapter. anal and country host the of economy the on impact project, investment the of overview following: the cover will and chapter third The level. country the on influence understandi better for basis a create will which Kyrgyzstan, and Asia Central in then arena, global a in concepts given the of implications changes. those fostered factors ev been have concepts these how explain also will paper The economy. the influence they which through channels and mechanisms the throughgo will We nationalization. and investment direct foreign of concepts theoretical main the with provided country’sand economy thereactioncommunity of theworld also will becovered inthe paper. large such manage to country h tei hs en iie it fu catr. n h frt chapter first the In chapters. four into divided been has thesis The ss f h problems the of ysis - cl poet. h ipc o te ainlzto o the on nationalization the of impact The projects. scale n h scn catr w wl nro or ou t real to focus our narrow will we chapter, second the In 8
will focus on the main subject of our interest interest our of subject main the on focus will ng of the main trends in the world and its its and world the in trends main the of ng eae t te project. the to related olving through time and what what and time through olving The analysis of the the of analysis The
h rae is reader the
CEU eTD Collection foreign the for definition the provide will which concepts theoretical basic the to devoted structural picture. main concepts paper asprovides for ofthis oftheingredients a it placing iscrucial ina basis it country. host the and company foreign a between confrontation a face we to forced were governments some that ca our In units. private some nationalize show crisis financial recent the and economy s of cons measures nationalization r countries different how witness could we history the Throughout peculiarities. rationaleget thecentral order inflowsin into capital of behind thepaper. to the question countr the on impact negative inflows capital of out most the get to manage countries Some straightforward. that not is case the that shown have studies recent of terms in economies host the on impact had and history the significantchanges inperceptions. throughout transformed have issues these of each of understanding studied The topic. of the concepts of theoretical development further for basis a create will which Nationalization and CHAPTERForeign Theoretical Direct 1. Framework Investment,Nationalization:
h cnet f n of concept The dir foreign the that wisdom conventional a be to used It is chapter This T subjects in the academic world and its improvement is still in process. The The process. in still is improvement its and world academic the in subjects his chapter was designed in the following way. The first part of the chapter is is chapter the of part first The way. following the in designed was chapter his uch actions. In some cases nationalization is perceived as the only way to save the the save to way only the as perceived is nationalization cases some In actions. uch
devoted to the theoretical principles of the Foreign Direct Investment Direct Foreign the of principles theoretical the to devoted
oeg Drc Ivsmn ad h Ntoaiain r intensively are Nationalization the and Investment Direct Foreign . We may find may We . at oaiain s a is ionalization ’ cnmcgot.I s rather is It growth. economic y’s
and there are some cases where we may observe even a a even observe may we where cases some are there and
se we are going to discuss rather discuss to going are we se a
a
vast num vast
wide range of externalities and capital inflows, but inflows, capitalandrange wideexternalities of
controversial issue and each case has its own own its has case each and issue controversial 9
ber of literature that discuss that literature of ber ect investment has a positive positive a has investment ect
important to understand the the understand to important
different case different
Understanding the the Understanding
the pros and pros the esorted to to esorted where where
CEU eTD Collection move abroadand countryhost for the capital toattractforeign inflows suitable most the P.Graham choose Jeffrey businesses. their for locations investors and another from differ country each in investment 1.1.2 requireeffective control management Investme mergers, is outflow capital speculative sudden of risk the Investment Portfolio Foreign to compared and t divides invests Economics 1.1. 1.1 nationalization. bring will chapter part second The economy. country’s host the on FDI of impact the show will and FDI import about information FDI, settling of methods objectives, its investment, direct
1 Foreign Foreign Portfolio Investment.Foreign Portfolio Objectives Definition oeg drc ivsmn i ls liquid less is investment direct Foreign the to According For investors: of Terms abroad. invest to individuals or companies for reasons many are There in productive assets productive in
he foreign ca foreign he nt acquisitions , o
sal tks om f netet it te short the into investments of form takes usually Foreign Direct Investment takes place when a foreign company or an individual individual an or company foreign a when place takes Investment Direct Foreign Direct Investment:
Opens access new to markets
h dfnto o te ainlzto, t objectives its nationalization, the of definition the
pital investments pital n jit ventures joint and
ril b Boign 21) n the in (2012) Bloningen by article
abroad and acquires management acquires and abroad Basic conceptsBasic
(Business Dictionary 2013)
into two types two into
Eccoæi Bianc 2013) Britannica (Encyclopædia
and relatively and , resources 10
lists the following incentives following the lists
ey low very (Encyclopedia
,
which are F are which
more secure for the host country host the for secure more I usual It .
- control em euiis wih o not do which securities, term e Plrv Dcinr of Dictionary Palgrave New .
oreign Direct Investment Direct oreign ol Eooy 2012) Economy World
(Graham 2005) (Graham (Bloningen 2012) (Bloningen y oe i trs of terms in comes ly . ad ehd of methods and , Foreign Portfolio Portfolio Foreign
for business to business for : ance of of ance
of the the of . . , He He
as as
CEU eTD Collection interests host the in available be might costs higher than more and unions developed countries less to operations their moved have businesses many differences wage huge of Because costs. life. to Without intentions their bring to investment. countries developing for problematic be capital would it finance external human and financial huge require projects other many and oi mining, gold as corporations international of help to resort to have own their on wealth natural extract to technology and capital internal lacking countries developing Many
aua rsucs r oe f h cmo raos o cmais o net abroad. invest to companies for reasons common the of one are resources Natural For Some firms move abroad in order to gain access to more advanced technology which which technology advanced more to access gain to order in abroad move firms Some inno for look to companies forced competition Increasing
in investing in more developed countries to increase human capital and possibly possibly and capital human increase to countries developed more in investing in
o o o o o o o o the
Other positive externalities New jobplaces Management skills Newcapital technologies, Other incentives New financing opportunities Acce Lower costsfacilities oflabor, host country:host
in developing countries. as evrnetl standards environmental harsh
ss to new technologies new ss to (Bajaj 2010) (Bajaj
. In. h countries addition, developed usually country
Gaa 2005) (Graham , skills
11
Hwis 2011) (Hawkins . eeoig onre have countries Developing ,
aie as o minimize to ways vative hc mks production makes which ave labor stronger l extraction l
keen keen
CEU eTD Collection the addition, pare in and run long the in contribution less make to perceived are Acquisitions acquisitions and for CentralCommission Asia and thePacific and structure 1.1.3 country increase may budget revenues. and locals for places job new create companies. foreign from externalities internalize to tend they as companies investment flowsalso take place developed countries. between country recipient the of achievements some imitate nt companies are usually outside the jurisdiction of thehost country. are usually outsidethejurisdiction nt companies Methods o o in vary significantly which methods different many has investment direct Foreign domestic in efficiency increasing of terms in gain may countries recipient The The o o o
investment projects. other from gained earning out made is which investment earnings: Reinvested the scratch factory new byorplant. building business a start investors the when investment typeof investment: Greenfield Non equitylicensing,forms ofFDI: etc. franchising and domestic the of company gain rightcontrol. enough to management shares the buys investor an when acquisitions: and Mergers subsidiary has capital where the Intra Greenfield investment is more desirabmore is investment Greenfield
forms. Her forms.
-
company loans: happens when the parent company transfers money to its its to money transfers company parent the when happens loans: company from the development perspective development the from e is the classification described in described classification the is e
usually
to berepaidwith interest. back
(United Nations 2003) (United improve their productivity. their improve 12
le for the host country host the for le
(United Nations 2003) Nations (United
(Xiaojin
the paper by Economic and Social and Economic by paper the
2011) g
:
Technology .
compared to Mergersto compared
In addition, the host the addition, In
. The Mergers and Mergers The .
FDI
inflows also also inflows - seeking seeking from from CEU eTD Collection c the from deviations observe mechanism and ofFDIthereare many inflows u still can we where examples many are markets export foreign access to country host a for opportunity an gives extremely countries those savings of rates low very Having countries. soviet post the of most in place taking are 2002) interna influence to resources enough big have as to sovereignty said national are of multinationals loss a as perceived sometimes country the in ownership 2011) unemployment increasing of terms in countries host to problems creating of for vital neo of form a as inflows in the country. prof their increase opportunityto givethem which needs operational basic support that firms also are there Usually multinationals. from learn can firms and skills their improve can workers domestic the as externalities positive the up in the for advantages bring additional the of to One country. the into order experience in capital foreign attract to try when cases countries some are there it, to addition In projects. domestic finance to capital internal th cases the of most in as countries emerging in important especially it’s and economy 1.1.4 Importance . creati and ,
In many developing countries developing many In the of development the in role significant a plays investment direct foreign The Foreign Direct Investment plays a significant role in transformational processes that that processes transformational in role significant a plays Investment Direct Foreign
the development of the country within current realities. FDI inflows FDIrealities. current within countrythe of development the
g etans n exports on restraints ng
need sources for new inv new for sources need - colonialism
a part of part a (Glushak 2004) (Glushak
Erhmae 2012) (Ebrahimzadeh its. On its turn it increases the overall employment employment overall the increases it turn its On its. 13 estments. In addition In estments.
local people perceive foreign direct investment direct foreign perceive people local
nanswered questions nanswered , where o where , the . rs h h The , foreign direct investment investment direct foreign , - accept FDI as something something as FDI accept to
host country might be be might country host -
date knowledge and and knowledge date (Moosa 2002) (Moosa igh share of foreign foreign of share igh ommonly perceived perceived ommonly
to bestudied. decisions l
are (Govindacharya
often blamed blamed often
(Moosa (Moosa ey lack lack ey . There There .
CEU eTD Collection shown have might resources natural for rich countries that concluded has Warner and Sachs identifying curse resource may benotapplicable misleading and toall countries. in account into taken concepts fundamental the as study further needs and straightforward Disease” export other on impact negative a has turn its on which appreciate to currency national the force economy the of sectors other foreign o point a to come we when role crucial a play aspects other many and institutions financial the of development of level the economy, the of openness studies econometric other many combining By investment. foreign ga do that economies developed to compared FDI from benefits growth n.d.) the economy of the on country. host FDI the of impact the about questions raised have that researchers many are there state. the of welfare the increase and growth economic trigger would it that think i that accepted commonly is it wisdom conventional of matter a As economy. national a for investment direct foreign the of 1.1.5 nvestments but also has also but nvestments . The analysis shows that lower income developing countries do not enjoy substantial substantial enjoy not do countries developing income lower that shows analysis The . Impact -
retd etr o te economy. the of sectors oriented Dierk Herzer Dierk mayWe find ihr M A M. Richard on Investment Direct Foreign of impact detrimental about saying views also are There direct
(Saad
of FDItheEconomyof on investment - Filho
a (n
uty variety of academic papers that address issues related academicaddress issues to that papers of variety n Wes 2013) Weeks and .d .
)
positive externalities on other sectors of sectors other on externalities positive
At 2001) (Auty made a made
(Ebrahimzadeh 2012) (Ebrahimzadeh
foreign direct investment brings more than just capital capital just than more brings investment direct foreign
cross
- ae o te tde ta wr dn b Rns Lal, Ranis, by done were that studies the on based country analysis with an interesting outcome interesting an with analysis country . Some scholars state that the problem is not that that not is problem the that state scholars Some . This phenomenon is widely known as “Dutch “Dutch as known widely is phenomenon This 14
. Increasing revenues from exports may may exports from revenues Increasing . f assessing the positive effects of of effects positive the assessing f
the economy. One would would One economy. the
he states that states he in much more from from more much in
the
Despite this, this, Despite
importance
education,
(Herzer (Herzer CEU eTD Collection policies of inefficient macroeconomic outcome an is itself in curse resource that saying By authorities. by made decisions political They curse. resource on views accepted generally of implications the analyze they work their In issues. curse resource light sheds those countries naturalresources. poor whichwere for century resou natural for rich countries American outcomes different with up come may we horizons time different account into taking that out found and studies of differences time following measurement studies: approaches indifferent used For abundance. resource of types measurement of differences the to insensitive be to seem results research factors those despite but abundance, resource of definitions and approaches different with studies several are there that shown resources for poor were which ones those to compared rates growth lower 2. 1.
Dependenceproduct (referringand exports onprimary Warner toSachs 1995) Single indicators: Export orientation (referring andExport populationsize Syrquin and to Chenery 1989) Dual indices: Labor force (referring inthesector et.al. primary toGylfason 1999) Per capital(referring land area toWo I addition, In . aig o hne n eut wt dfeet ye o maueet h has he measurements of types different with results in change no Having Another work by Alfredo Saad Alfredo by work Another o h ofsoswihacmay most accompany which confusions the to
in
the tt ta te ocp o rsuc cre s mainly is curse resource of concept the that state
196 0 s they had higher average per capita income compared to to compared income capita per average higher had they s ,
they give they - Filho and John Weeks John and Filho
rces have shown higher rates of growth in the 19th 19th the in growth of rates higher shown have rces At 2001) (Auty od and1997) Brge 15
the
following explanations in support of their supportof in explanations following ntne Auty instance
Acrig o i osrain Latin observation his to According . ftewrs n eea that general in works the of
(Saad
- At 2001) (Auty Filho and Weeks 2013) Weeks and Filho . In his book he has has he book his In .
the
outcome of of outcome
has listed listed has okd at looked
relate to to relate
CEU eTD Collection by andperiods. indifferent time schools arose which abundance, resource on views different listed have they particular In statements. 4. 3. 2. 1.
xhne icesd investm foreign increased on exchange, restrain decreased benefits: the rip could economy channels the The which investment. through and growth economy’s the on influence positive a has Weeks wave first The ewe rsuc audne n cruto. codn t ter study, their to According corruption. and abundance resource between sc Neoclassical unemploymen increasing corruption. exports, diversified less savings, low countri abundant resource sta results similar got economists Mainstream countries. African rich resource some taking particularly abundance, resource and growth economic of correlation in place took that studies The usingtools appropriate policy take should authorities the and goods consumption and inputs of imports higher to leads employment low with together and economy the of reso big structuralists to sectors According employment”. little “generate other on externalities positive less has it as pattern desired a not is growth driven resource that believe “structuralists” seen, have we the on impact abundance resource on view different a shown Hirschman to Referring infrastructure andenlargedmarket. improvement domestic
(Saad
(Saad - Filh hool has narrowed its research and focused more on more focused and research its narrowed has hool
f cnmss bfr md 1980 mid (before economists of - Filho and WeeksFilho 2013) and o and Weeks 2013) Weeks and o – es were more vulnerable for illnesses such as such illnesses for vulnerable more were es
h rpeettv of representative the
(Saad n opruiis y en o adtoa revenues, additional of means by opportunities ent
h ery n md 1980 mid and early the - Filho and
16 an categorization, stated categorization,
.
active position in tackling these challenges challenges these tackling in position active
Weeks 2013)
the ) acrig o Saad to according s),
“structuralist” school, they have have they school, “structuralist” hv shown have s
.
that resource abundance abundance resource that economy. In contrast to to contrast In economy. urce export revenues export urce , nlto and inflation t,
the
-
the low growth, growth, low Filho’s and and Filho’s relationship relationship
the negative negative ting that that ting
main main CEU eTD Collection the social discontentment districts producing within inequality widening observed study the social for basis the create increasing bet that performance be socioeconomic might in reason differences possible one that stated researchers findings on country. Based the of economy the on operations mining of impact positive average the despite outcomes districts 9 of average an with provinces 142 from taken plants without districts 1195 and plants mining with districts 87 of sample sites operation from far geographically well economic sector per for reason the becomes ev mliainl as multinationals ceive o o o
ie a itrsig nih o hw lo how on insight interesting an gives people called“urbanelites” fr generated revenues of beneficiaries 14% higher capita per expenditure. non other from districts to Compared hadDistricts mines with 2.5percentage rates of lower extremepoverty. points’ 10% by higher was mines with withinthe same mines compared without todistricts districts in expenditure capita per average On I h suy hn ie sm psil raos for reasons possible some gives then study The n many countries the presence of foreign multinational companies sometimes sometimes companies multinational foreign of presence the countries many n
(Loayza,y Mierand RigoliniTeran 2013) - en o pol lvn i dsrcs clo districts in living people of being
(Loayza, Mier y(Loayza, Rigolini 2013) Mierand Teran oa dsotnmn. hr are There discontentment. local tensions
a
ore f hi polm. problems. their of source
(Loayza, Mier y Teran and Rigolini 2013) Rigolini and Teran y Mier (Loayza,
(Saad
(Loayza, Mier y Teran and Rigolini 2013) Rigolini and Teran y Mier (Loayza, - Filho 2013) and Weeks
- e province per 17 producing provinces the producing districts had districts producing the provinces producing om resource exports would be would exports resource om
en rdcn ad opouig distric nonproducing and producing ween a mnn oeain influence operations mining cal :
se to plants and those who who those and plants to se The oil discontentment social h stud the province aite of varieties
td on study
, which , . showed y
.
the reasons why people people why reasons
could contribute to to contribute could
Peru . In addition to it it to addition In . small group small
the
which vian mining mining vian
social and and social following following . Using a a Using
arises s live
of of ts
CEU eTD Collection socio direct 1.2.2 economy long and big require which industries production the covers nationalization the Mainly industries. banks, enterprises, industrial land, be: can nationalization ownership state to ownership private from businesses inthe country foreign nationalized government the where 1960 in Cuba in and 1951, in Iran in industry), oil and indus transportation coal electricity, nationalized government the where England in 1918, after Russia in observed was nationalization The theories. socialist and communist accompanied mostly and the by property private 2013) Britannica of ownership or control of assumption 1.2.1 1.2 wepoint mayadvance this From phenomenon. spread wide a become have company the of nationalization for Calls Kyrgyzstan. in company multinational the by managed project Gold Kumtor the to related paper the in mentioned reasons possible Nationalization: BasicNationalization: concepts - em investments. term Objectives Definition The Encyclopedia Britannica defines the nationalization as an “alteration or or “alteration an as nationalization the defines Britannica Encyclopedia The W The of definition Another
depending on manydepending on factors hile studying the Peruvian case Peruvian the studying hile - nat economic life of the country according to their vision on how the economy economy the how on vision their to according country the of life economic ionalization has been a tool in the hands of different parties and leaders to to leaders and parties different of hands the in tool a been has ionalization
. According to According tries,
further and go andfurther thetheoretical into basisofnationalization.
t a hv pstv ad eaie mat o te rwh f the of growth the on impacts negative and positive have can It
(EncyclopædiaBritannica 2013) in France durin France in
h tr sae ta ntoaiain s tase o ownership of transfer a is nationalization that states term the
the
source nationalization is nationalization source
.
g 1945 g we m we ih b appli be might 18 ay ob ay
-
195 Ifrbra 2013) (Informbureau 0s, in Mexico in 1938 (nationalization of of (nationalization 1938 in Mexico in 0s, serve similar features in features similar serve cable . and transportation and
recent development in the history the in developmentrecent
o sca t social for
. The objects of the the of objects The . state” ensions which are are which ensions , communications ,
Kyrgyzstan
(Encyclopædia (Encyclopædia
. The The . CEU eTD Collection nationalization towards policy the propagating actively was II War World the party political ruling the on depending implemented renationalization. has thefollowing listed common (2012) Tatyana Lushnikova controversial. rather are nationalization the of Results country. of system economic and political the on based differed also aims The settled. be should o o o o o o o o
hr ae onre wih a a itr o svrl ae o ntoaiain and nationalization of waves several of history a had which countries are There term payback period and are exposed to hig to exposed are and period payback term requ they as sector private to attractive less are w economic s To To ensure of the theimplementation In (e.g.extreme situations crisis). To prevent withdrawal unlawful ofthe out country. ofprofits intervention and ofcapital. by theintervention private refo structural the when cases rare the are These economy. the in reforms structural implement To cannot preventabuses. forces market the when intervenes government the cases these In monopolies. owned rights the protect To To save theenvironment. sovereignty oftheare tonationalization. countryexposed the to threat have might which sectors The country. the of sovereignty preserve To others). ave strategic sectors of the economy the of sectors strategic ave
For instance, in England the nationalization or privatization policies were policies privatization or nationalization the England in instance, For ell - rms cannot be made through traditional methods of government government of methods traditional through made be cannot rms being of the country and its and country the of being
of local cust local of
objectives
omers from mistreat usually created by the privately privately the by created usually mistreat from omers
of the nationalization of the main socio 19
which have vital importance to the socio the to importance vital have which
h risks (infrastructure, atom industry and and industry atom (infrastructure, risks h (Schifferes 2008) (Schifferes security. ire big capital investments, have long have investments, capital big ire - economic goals.
Mostly these are sectors which which sectors are these Mostly
(Lushnikova 2007)
. The Labour party after Labourparty The .
n many and :
the the - - CEU eTD Collection Mexican government. inthefollowing They way: definedtheterms have State of compensation Secretary U.S effective” the by and developed adequate, “prompt, of standard the favored to approaches the on compensation preferences different have countries developed other formsof accordancewiththe national thecountry. in laws l (French bonds government of form the in payments, forms following the take can shows, experience state, property. forproperty, by the compensation the wasowned The nationalized which previously compe of practices also are There owned and established tha property to comes it When property. the of type the on depends amount compensation that, adds She nationalization. on laws national to according another 2007) (Lushnikova Ron”), and “Gnome and “Renault” as such companies French of nationalization with case (the measure punitive without modes: following 1.2.3 asprivatization more option desirable the viewed party Conservative the where rule, their under nationalized were objects industrial
Methods is usually much less than for than usuallyless much is codn t Lsnkv (07, h ntoaiain a b cnutd n the in conducted be can nationalization the (2007), Lushnikova to According In the article by Lin and Allison (1994) the authors have stated the developing and and developing the stated have authors the (1994) Allison and Lin by article the In
(Lin and Allison 1994) Allison and (Lin
ie f aig r ae dfntv cmimn a o bfr te t the before or at commitment definitive a make or taking of time “Prompt” means that the that means “Prompt” . The way how the national the how wayThe . , t , and and he compensation might be based on the market price of the property. property. the of price market the on based be might compensation he compensation of the value the of compensation ih opnain f h value the of compensation with
the sto of nsation
.
(Pym 2013) originally owned property. originallyowned According to them, the them, to According
government must either pay compensation from the from compensation pay either must government C 20 ization is conducted differs from one country to to country one from differs conducted is ization
rel ul drn te eoitos ih the with negotiations the during Hull, ordell the
.
Lsnkv 2007) (Lushnikova lost profits to the owners of the private private the of owners the to profits lost
of the nationalized pr nationalized the of aw on nationalization of 1982), and in in and 1982), of nationalization on aw
United Stated since 1938 have have 1938 since Stated United
f the of The compensation, as world world ascompensation, The t was originally privately privately originally was t : in the form of cash cash of form the in : ainlzd property nationalized
operty,
, h ise of issue the
which was was which
used as a a as used aking to to aking
CEU eTD Collection (Fysul 2011) nationalization of importance in believe countries im be to thought are measures nationalization when cases some are there However nationalization. Therea whichwouldapproachconsensus standard provide clear tothe importance isno the of 1.2.4 compensation whichbased was onthenational legislation. Union Soviet the by rejected term. the for explanation or definition any term given not the have but included compensation, of has case in which compensation “appropriate” 1803, Resolution a adopted Assembly General the paper accepte broadly was the fo of losses the compensating for need no is there that opinion expressed have countries Some case. each of features specific the to adapted were which compensation, of standards own 1994) Allison and (Lin the
world as emerging as world Importance reign countries asa during company suffered of their have lot times colonialism. the otn t ahee socio achieve to portant Lin and Allis and Lin generall not was Hull by developed standard The The importance of importance The :
restrictions on repatriation. “Adequate” generally has been interpreted as as interpreted been has generally significant “full”. “Adequate” by accompanied repatriation. payment on is or restrictions nor compensation, currency effective not nonconvertible is with “readily to Payment assets, illiquid translates relatively repatriable”. essentially and “Effective” rates. convertible reasonable at date interest future expressed an by determine,
d by the developing countries developing the by d on (1994) have described have (1994) on
countries had objection had countries . In their study they state, that developing nations have created their their created have nations developing that state, they study their In Steven Johnson has Johnson Steven nationalization can vary depending on the socio the on depending vary can nationalization - cnmc goals. economic
Ln n Alsn 1994) Allison and (Lin such as bonds not tradable on an established market, established an on tradable not bonds as such 21 equa s
standard
to the way the compensations the way the to
Here are some common reasons why some some why reasons common some are Here
ted this term to Hulls rule, Hulls to term this ted (Lin and All and (Lin
n wy oe eet hs ye measures type this reject some why and
of “appropriate compensation” “appropriate of te mut f opnain with compensation of amount the , y accepted in the developing part of of part developing the in accepted y
. Soviet Union insisted on the the on insisted Union Soviet . ison 1994) ison . According to their their to According . -
political factors. political
which were conducted was later later was
which which
CEU eTD Collection bearing realities the current inmind inthecountry. Kyrgyzstan of economy the on nationalization the determined reaped rather is nationalization of issue The others. and Pakistan Bolivia, Cuba, Mexico, Venezuela, Union, Soviet England, as such 1.2.5 Arguments against: Arguments for: o o o o o o o o o o o Impact ontheEconomy
There are many countries that have experienced the policy towards the nationalization nationalization the towards policy the experienced have that countries many are There by Others Lackefficiency of Lack ofincentives Red tape High management costs Others Improve National Security InterestsProtect Public Improveconditions working Improve Prevent Monopolies
one country on others. Each country had unique circumstances which later later which circumstances unique had country Each others. on country one
impact on the national economy. This paper concentrates on the impact of the of impact the on concentrates paper This economy. national the on impact
living standards in living standards
controversial
poor regions
22
(which will be expan be will (which n ti dfiut o generali to difficult is it and
ded in the fourth chapter) fourth the in ded ze the outcome the ze s
CEU eTD Collection third countrie developing certain concentratedin 2006) (Velde decreasing a with decades, two last the in dramatically factors. other and time geography, challenges. compa economies signi brought purs in forward step qualitative new national the within invested investment direct foreign 2.1 peculiarities inKyrgyzstan. geographicall changed flows FDI how arena, d be will which possible t FDI the on As Central in countries developing the into capital directing behind incentives the Kyrgyzstan. in flows FDI particularly then investment
topic Foreign DirectForeign s
of the FDI flows were going to developing countries, and now and countries, developing goingto were flows FDI the of nies were forced to move to a new level of competition where they had to face global face to had they where competition of level new a to move to forced were nies The globalization of the world market played an important role in the de the in role important an played market world the of globalization The direct foreign of concepts and mechanisms main the discussed having After The
Chapter of interest as it sheds light sheds it as interest of akt reaction market ,
we proceed we history of foreign direct investments was changing over time in terms of of terms in time over changing was investments direct foreign of history rends in the region will help to place the place to help will region the in rends . iscussed in this chapterare this iniscussed ed (06 sos ht f that shows (2006) Velde
2. Foreign2. D Investment: GlobalTrends ficant structural changes tothe changes ficant structural by
o h psil p possible the to Lia 2012) (Leitao
explaining foreign direct investment trends in a global arena and and arena global a in trends investment direct foreign explaining
borders are left behind and the international society has made a a made has society international the and behind left are borders irect Investment in a Global Arena Global irect ina Investment The historical data shows that FDI flows have flows FDI that shows data historical The to the level of competition in the region and explains c explains and region the in competition of level the to ig ihr grgt wlae The welfare. aggregate higher uing . The times when the national capital was mainly mainly was capital national the when times The . : the main the : s, but now but s, This chapter has an i an has chapter This r h ps 10 years 100 past the or lc twrs nationa towards olicy 23
and y
foreign direct investmentforeigndirect the pattern has changed. Previously changed. has pattern the
way business relations are settled. The The are settled. relations business way topic in a bigger picture in order see see order in picture bigger a in topic
ics frin iet investment direct foreign discuss flows
rn t dvlpd countries developed to trend mportant role in approaching approaching in role mportant iain Te m The lization.
and Kyrgyzstanand FDI flows were mainly mainly were flows FDI the
most of the flows are are flows the of most
ieaiain of liberalization
trends in global in trends ia. The insight insight The ia. velopment of velopment ain points points ain increased increased
two two ore ore
CEU eTD Collection countries other in investments their increased 2000. in 0.5% to decreased which 1980, Sub the and countries American Latin rel investment direct foreign little very attracted have countries developing of 75% almost for accountable are India and Chile Mexico, Kong, Hong Mexico, Singapore, Brazil, states markets bigger have usually they as investments of amounts larger attract finan situation the influenced have might that factors possible some are Here research. countries developed significantly changed has picture 1) trend decreasing its despite countries developed in concentrated
we hows may clearly observe
China Australia Africa South Ceylon India and Mexico Brazil Spain Hungary Austria Argentina Canada Russia USA il de cial
that amongst developing countries, the following recipients: China, Russian Federatio Russian China, recipients: following the countries, developing amongst that FDI flows in 1913 were mainly concentrated in developing c developing in concentrated mainly were 1913 in flows FDI Source:
the
-
eomn ad ik factors. risk and velopment
total inward foreign direct investments. According to his findings, African African findings, his to According investments. direct foreign inward total
Velde (2006
1913/14 billion 1:inwardTable Stock of investment, recipients main USD 1.6 1.7 1.7 2.2 2.5 2.5 3.7 3.8 7.1
2 2 3 (Velde 2006) (Velde
, p.6
1913/14 15.8 3.6 3.8 3.8 4.4 4.4 4.9 5.6 5.6 6.7 8.2 8.4 % )
ituation hasituation changed time. over
.
The reason for such transformation is a subject for future for subject a is transformation such for reason The Cumulative where the large large the where (%) 72 68 55 75 64 60 50 45 39 32 24 16 -
Saharan Africa’s share in world FDI was at 6% in in 6% at was FDI world in share Africa’s Saharan In the last two decades the developing countries have have countries developing the decades two last Inthe
Velde
24
(Al India Brazil Switzerland China Canada Kong Hong (China) Belgium/Luxemb. Japan Italy Netherlands France Germany Kingdom United USA
20) hw ta bge cutis ed to tend countries bigger that shows (2006) -
Sadig 2013) Sadig
otos f lw are flows of portions
. Mainly the investments were were investments the Mainly .
(Velde 2006) (Velde billion 1027 1431 1866 2204 6277 2001 USD 130 443 521 534 597 608 741 871 943 ountries and ountries
2001 26.9
0.6 1.9 2.2 2.3 2.6 2.6 3.2 3.7 4.0 4.4 6.1 8.0 9.4 %
ative to Asian and and Asian to ative (Velde 2006) (Velde
concentrated in in concentrated . In .
Cumulative :
by 2001 2001 by the the (Table the (%) 76 73 71 68 66 63 59 55 50 44 36 27
level of of level
. He He .
the the n, n,
CEU eTD Collection to investments are there Also sector. automobile and sector textile in corporationsinvest FDI seeking strategic and seeking efficiency with but resources, natural in rich places for looking countries developing into e also had sector the was countries developing 2006) (Velde 2006) 1% was investments world total in countries investment flowstodeveloped borders, regional within made countries seeking
98 h srie cntttd 9 o ivsmns Ivsmns into Investments investments. of 59% constituted services the 1998 .
The sectors into which the i the which into sectors The . Chart 1Developing country outward FDI (US$ million), 1970 Source: e hw that shows He 0 20000 40000 60000 80000 100000 120000
xperienced
talents and skills (e.g. andskills India,talents Singapore etc.) China,
Velde (2006 Velde
mainly made into the agric the into made mainly (Velde 2006) (Velde
a
sharp increase from 1% to 27% of total outward investments investments outward total of 27% to 1% from increase sharp n 94 h bget hr o U otad netet o the to investment outward US of share biggest the 1914 in , p.7 ,
but in some cases developing countries have directed directed have countries developing cases some in but
nvestments were mainly directed mainly were nvestments (see Chart 1) Chart (see )
.
(Velde 2006) At
the beginning of the 20 the of beginning the 25
Vle 2006) (Velde , which , ulture and mining sectors (70%). But (70%). sectors mining and ulture
. In 1970 the share developing countries countries share developing In 1970the . time the trend has changed into changed has trend the time by 1990 has increased to 6% to increased has 1990 by Now . th have changed over time over changed have
the century
(Velde 2006)
large multinational multinational large the – 2003
investors were investors manufacturing manufacturing
.
flowing
a (Velde (Velde
more more
by
CEU eTD Collection has and ones developed in those surpassed history in time first the For ago. years ten 2013) had future near the in continue to seems trend this and economies emerging to switched and declined slightly countries developed to 2010) comparison Report Investment in investment Greenfield more attract to 44% by plummeted have developing economiesand had transition flows FDI the 2009 by and countries developed and inflows FDI global 2) Chart 2010) Report
shown firstrecoveryeconomic signsand thespeedof of down. declinehad slowed . The FDI The .
In i Although The Global Financial Cri Financial Global The . According to According .
02 h goa foreig global the 2012
(World Investment Report 2010) Report Investment (World
eas mn ivsos ee eutn t reluctant were investors many because
Source: World Investment Report (2010) Report Investment World Source: Chart 2 FDI inflows, globally and bygroups of economies, 1980 flows in flows n a period from 2008 from period a n
the
the
. After 2008 the interest of investors in developed countries has has countries developed in investors of interest the 2008 After . developed countries decreased countries developed
World Investment Report (201 Report Investment World
43% drop in outflows. The biggest shocks were experienced in in experienced were shocks biggest The outflows. in drop 43% sis had a negative impact on impact negative a had sis drc ivsmn inflows investment direct n -
(Billions of dollars) 2009 developing and transition economies managed economies transition and developing 2009 the
the the
. declined only by 3%. Foreign direct investme direct Foreign 3%. by only declined 24% decline 24%
26 The same report shows that shows report same The amount of FDI flows to developing countries countries developing to flows FDI of amount
invest o
dramatically to the levels witnessed witnessed levels the to dramatically (World Investment Report2010) (World 0
) in 2009 there was a 37% a was there 2009 in )
erae b 18% by decreased FDI flows FDI
a t
ie of time
by (World Investment (World
uncertainty (See (See uncertainty 2010 the market market the 2010 – 2009 ,
(UNCTAD where the the where
(World (World
fall in in fall .
nt CEU eTD Collection world the in cotton major exporters the of one currently are Uzbekistan with together and reserves gas of years year 65 holds stated alone thatKazakhstan is it (2011) Cernov and Gurio Farra, by paper the In output. domestic and standards living of level the in difference huge a is there result a as and Asia Central in distributed evenly China. and EU US, Russia, from inflows capital for projects domestic in investing for countries pr packages incentive attractive with together frameworks regulatory dynami the Tajikistan, Kazakhstan Turkmenistan and North Kashmir, Punjab, China, Western Mongolia, includes Asia Central that Uzbekistan and Turkmenistan Asia Central o chosen 2.2 accountable for 90% d decline 17% econ transition to flows n eveloped
h floig criteria following the Foreign Direct Investment in DirectForeign Asia in Investment Central - Eastern Iran, Afghanistan, some Asian parts of Russia, Kyrgyzstan, Uzbekistan, Uzbekistan, Kyrgyzstan, Russia, of parts Asian some Afghanistan, Iran, Eastern . There are different methods of methods different are There . Central Asia being rich in rich being Asia Central The
created a solid basis for future investment perspectives. Lacking internal resources internal Lacking perspectives. investment future for basis solid a created
countries is that biggest economies like USA, EU and Japan which were were which Japan and EU USA, like economies biggest that is countries
al goig regions. growing cally countries countries
UCA 2013) (UNCTAD includes the following countries: Kazakhstan, Kyrgyzstan, Tajikistan, Tajikistan, Kyrgyzstan, Kazakhstan, countries: following the includes
of included in in included
the total FDI the omies have fallen by 13% and in particular Russia has experienced has Russia particular in and 13% by fallen have omies
ehia, egahcl n gooiia. n o te eiiin of definitions the of One geopolitical. and geographical ethnical, : Fra Gri ad env 2011) Cernov and Gurgio (Farra,
Eccoei Bianc 2013) Britannica (Encyclopedia .
, natural resources like oil, gas, gold and coal became one of of one became coal and gold gas, oil, like resources natural
Central Asia change Asia Central One of the reasons why developing countries surpassed surpassed countries developing why reasons the of One most of the Central Asian countries have been competing been have countries Asian Central the of most
flows ail dvlpn fnnil akt, invest markets, financial developing Rapidly drawing the borders of borders the drawing
(UNESCO 2012) (UNESCO s of oil reserves, where the Turkmenistan holds 223 223 holds reserves, theTurkmenistan where ofoil s
contraction. 27
The deposits deposits The
(VestiFinance 2013) depending on the on depending .
Te 8 The .
the region which can be based based be can which region the . The of oil, gas and gold are not not are gold and gas oil, of th
ifrn source different biggest gold mine is is mine gold biggest
ovided by the the by ovided source of definition of source Northern Pakistan, Pakistan, Northern .
shows ment ment host host
a
CEU eTD Collection 2005) intensified Asia Central to 3) Chart (See inflow capital private the established, gave reforms results the and lackedcredibility. 1995,some of when But after co the and yet fulfilled not were reforms the of Most region. the in formedwas that situation unique the by dictated wereperiod that at investments (2005) Bayulgen economy. market the towards donors international establis and (2005) to According them. of one was economy planned the of collapse accession to plants hydropower products Chinese for markets new to access territories their through railroad building on Uzbekistan and Kyrgyzstan order in infrastructure developing in invest to incentives additional countrie producing plantinTajikistan c urrently operating in Kyrgyzstan and there are some perspectives to build the aluminum aluminum the build to perspectives some are there and Kyrgyzstan in operating urrently
the . , the structure and source of source and structure the ,
e Cnrl sa Countries, Asian Central hed has Asia Central reg The
lk Cia Rsi ad India and Russia China, like s political
a
newly established Customs Union(Kazakhstan, newlyCustoms established Belorussia). and Russia, ion has a strategic location as it is it as location strategic a has ion iuto i te ein A te einn of beginning the At region. the in situation
Oehi 2013) (Oreshkin (Bayulgen 2005) (Bayulgen
experienced several severe economic and political shocks. The The shocks. political and economic severe several experienced
(Farra,CernovGurgio 2011) and Central Asia Central to boost trade. Currently China is having negotiations with with negotiations having is China Currently trade. boost to
foreign capital inflows was changing depending on time time on depending changing was inflows capital foreign
, mainly in the form of grants to grants of form the in mainly ,
n Kyrgyz in 77% of the total capital inflows were coming from from coming were inflows capital total the of 77%
Fra Gri ad env 2011) Cernov and Gurgio (Farra,
(Abdyraeva 2013) (Abdyraeva 28 . There are several projects that are devoted to devoted are that projects several are There
tn n atvl poaaig the propagating actively and stan
surrounded by one of the fastest the of one by surrounded xlis ht o aons f private of amounts low that explains mmitment of the national governments governments national the of mmitment .
. Russia is h is Russia .
the
independence of newly newly of independence the assist the reforms take reforms the assist ,
study by Bayulgen Bayulgen by study which will increase increase will which eavily investing in in investing eavily
institutions wereinstitutions , which creates creates which ,
(Bayulgen country’s
growing growing
n
CEU eTD Collection 2006) (Nurashev 2011) capita) per USD 1710 to capita per USD 8.14 (from billion 18.6 to million 188 concern leg oriented investor enjoy maycompanies market) domestic the on oriented is inflow FDI of share from operations business starts company parent
Source: U T T K K Country Table 2.Inward FDITable urkmenistan ajikistan zbekistan yrgyzstan azakhstan . The inward foreign direct investments in Central Asia are mainly Greenfield type (the (the type Greenfield mainly are Asia Central in investments direct foreign inward The Sin The
Chart 3 (Arazmuradov 2011) Arazmuradov(2011 ce 1992 the amount of FDI inflows to Central Asia Central to inflows FDI of amount the 1992 ce
huge share FDI share huge
Source:
. One of the possible reasons might be the investments made to oil extraction oil to made investments the be might reasons possible the of One . Comparison of capital flows toCentral Caucasus capital flows Comparison and of by Asia
Bayulgen (2005, p.57) Bayulgen(2005,
a Average , p.8 , nd GDPnd 1992 the for period 105.34 245.73 inflows to Central Asia ar Asia inflows toCentral 13.96 17.83 Flows . 7.71 FDI
) ($)
FDI
source. islation having only stability i stability only having islation Average Growth Annual 17.84 36.92 95.53 79.92 98.57 29 (%)
scratch) and are export oriented (only a small small a (only oriented export are and scratch)
e
absorbed by Kazakhstan -
2009 (Arazmuradov 2011) (Arazmuradov
has increased has 1.364.01 2.869.23 Average 633.32 294.66 461.39 GDP n mind as a a as mind n ($) GDP
. Multinational . by 2009, by (Arazmuradov
(See Table 2) Table (See matter of of matter Average Growth Annual 10.72 10.60 5.12 6.67 4.81
(%) from
CEU eTD Collection half of inflowsincreased the2011 investment by 1.7times first the In 2010). (2008, country the to inflows FDI the on impact negative a had that shocks 2013) Economics (Trading annually a experienced2005 to 2001 Kyrgyzstanfrom to inflow Kyrgyz the of Government the under Investment 2.3 single country describing inthe level country. theinvestment climate a to narrowed be will session next the and paper this for interest special a of is Kyrgyzstan future Asia. 80% of activities. DirectForeign in Investment Kyrgyzstan
T ,
he hasa region perspective promising codn t te nlss rprd y h Cucl o Bsns Dvlpet and Development Business for Council the by prepared analysis the to According a was This
total inflows to theregiontotal inflowsto Source: Trading Economics (2013) aig no con te napd potential. untapped the account into taking Chart 4 Foreign (% ofChart direct GDP 4 investment; net inflows
Ivsmn Cucl 2013) Council (Investment uig h pro fo 1993 from period the During
brief overview of the situation with the foreign direct inflows in Central in inflows direct foreign the with situation the of overview brief
due to political instability in the country. There were two other two were There country. the in instability political to due
(Nurashev 2006) . fe 20 tee a a eln i ivsmn inflows investment in decline a was there 2005 After
- 2006 Kazakhstan alone managed to attract almost almost attract to managed alone Kazakhstan 2006
to become
30
.
Republic
steady growth steady one of the major FDI theone major of the recipients in Among other Central Asian states states Asian Central other Among
(MID 2 the foreign direct investment investment direct foreign
) 013) (See Chart 4) Chart (See
.
by 19.5% by19.5%
CEU eTD Collection to proceedfurther. was developme the to body constraints putting legislative that Stating parliament. the dissolved and power his used president The agreement. the ratify to refusing parliament the and president the of confrontation to led very a was It country. the of sector mining the into investment based 2011) flows Kyrgyzstanbusiness in 2012) industries processing food and banking manufacturing, mining, the Table 3ForeignTable multinational companies Kyrgyzstan in Source: Canadian goldCanadian Kyrgyz Petroleum Company Coca HyattBishkek Regency Central Asian Group Plaskap Reetsma Kyrgyzstan Company JointVentures and Foreign Companies Source: U.S T Germany USA Russia Kazakhstan England China Canada Country/Year able 4 able
. . Se al 4) Table (See -
Table 3 shows 3 Table According to the National Statistics Committee the biggest foreign direct investment direct foreign biggest the Committee Statistics National the to According State of Department U.S. The biggest foreign direct investment since regaining independence was the Canadian Canadian the was independence regaining since investment direct foreign biggest The Cola Icecek Cola
National Statistics Committee (2011) Committee StatisticsNational
Bishkek Company
FDI cou inflows by
Department Stateof (2012)
- mining firm Centerramining Gold firm
n 01 ee om aaa n China and Canada form were 2011 in
2007 41,8 13,8
the list of the main transnational companies that have established their established have that companies transnational main the of list the 6,6 3,0 3,1 6,7 1,4 .
ntries 2007
reports that reports nt of the of nt 2008 41,7 11,1 5,5 0,7 4,2 8,5 6,6
- 2011 (percent total of
the foreign direct inflows are mainly directed to to directed mainly are inflows direct foreign the 31 country, Askar Akayev Askar country, mining industry industry oil beverages hospitality entertainment/garments packaging/bottling cigarettes Business activity
2009 32,2 16,7 12,2 1,3 3,5 6,8 7,8
(National Statistics Committee Committee Statistics (National
)
2010 14,6 11,1 10,6 30,8 (U.S. Department of State State of Department (U.S. 1,8 1,8 6,2
controversial deal which which deal controversial
successfully let project project let successfully
2011 15,2 42,6 5,8 2,7 3,7 4,7 8,9
CEU eTD Collection which corruption of rate high a has country that adds also report The it. of use make to failed K report investors. of side the on concerns creates which practices, enforcement not are laws the webpage official the in stated investor and liberal (Ministry theKyrgyz ofEconomy of Republic 2012) the following the that, provides and states friendly investor Republic rather is Kyrgyz country the the of legislation of Economy of Ministry the of webpage official investment state strategy of development and targets investment main defining for responsible is committees governmental and ministries other of assistance the with Finance of Ministry the Kyrgyz of policy investment the in stated clearly is which investor foreign 2.3.1 Regulatory FrameworkRegulatory The government of the Kyrgyzstan guarantees predictable and favorable conditions for conditions favorableguaranteesgovernment and The Kyrgyzstan ofpredictable the The US Department of State of Department US The
yrgyzstan have successfully established Commercial Arbitration Court in 2004, but 2004, in Court Arbitration Commercial established successfully have yrgyzstan (Embassy of the Kyrgyz Re Kyrgyz the of (Embassy o o o o o
reo o mntr tascin (o xhne etitos fe capital free mobility etc.) restrictions, exchange (no transactions monetary of Freedom of theKyrgyz internationa and Republic legislation the with accordance in investors of interests and rights of Protection Equal investment rights local for andforeign investors compensation) rela which expropriation and nationalization from Protection taxes necessary all paying after currency convertible a in profits repatriate to Right
redy bt ny n paper on only but friendly, te to public interests, in this case the government guarantees guarantees government the case this in interests, public to te
also public in Ukraine 2013) Ukraine in public
classifies the laws on investments in Kyrgyzstan as Kyrgyzstan in investments on laws the classifies 32
US Dprmn o Sae 2012) State of Department (U.S. ossety implemented consistently :
l agreements .
The information given in the the in given information The
(except for certain cases cases certain for (except
According to the the to According Republic, where where Republic,
and they lack lack they and guarantees A i is it As .
CEU eTD Collection events which climate hadin thecountry. impact detrimental onthe investment well economic to related be can which shocks social and political to vulnerable highly is country The investors. potential for image negative 2.3.2 ofgiving theinitiatives ofagainst thepopulation is landownership toforeigners. regarding long business own Disputes InvestmentDepart of Settlement the for Center International the at membership ha 1997 in Kyrgyzstan addition, In agreement. the in stated was inve with disputes resolving of matters on legislation flexible has country the that stated and thevastbanking ofthe share inthe sector country belongsentities. toforeign banks foreign against discriminate not do they banking, commercial on laws the Regarding places on practices discriminatory for basis a create to comes it when but non propagates government the of T policy capital. foreign attract to government the of efforts the on restraints puts stors, which can be regulated at the at regulated be can which stors, - em es o ln fr 9 years 99 for land of lease term Political Situation ment of State 2012) State of ment The dispute settlement pr settlement dispute The Kyrgyzstan is perceived as politically instable country in the region which creates a a creates which region the in country instable politically as perceived is Kyrgyzstan
foreign ownership foreign o o
in the country the in 2005, March country. August 1999,
licensing process, the investors face rather opaque procedures which which procedures opaque rather face investors the process, licensing
. The legislation of the Kyrgyz Republic allows foreign investors to to foreigninvestors allows KyrgyzRepublic the of legislation The – , except for owning land and farmlands, but there is an option of of option an is there but farmlands, and land owning for except ,
of the land the of
– First Revolution
armed intervention of terrorists to the Southern part of the the of part Southern the to terrorists of intervention armed ocedures in Kyrgyzstan were also included in the report. It is is It report. the in included also were Kyrgyzstan in ocedures
is very sensitive issue in the countr the in issue sensitive very is US Dep (U.S. international or domestic courts depending on what what on depending courts domestic or international - discriminatory practices towards foreign investors, investors, foreign towards practices discriminatory 33 -
being of the population. The population. the of being
rmn o Sae 2012) State of artment
US Dprmn o Sae 2012) State of Department (U.S. d
ratified agreement on on agreement ratified re were four major major four were re . y as the majority majority the as y
The legislation legislation The e investment he
foreign
(U.S. (U.S. . CEU eTD Collection Department ofState 2012) president former the with bonds having of accused were which companies several towards applied were tools such 2010, of revolution the after but 1991, since expropriation and nationalization practiced never had country The protection. property 2011) Committee Statistics (National After each revolution the country the revolution each After o o
2010, June 2010, June 2010, April – . Some companies. Some foreign included investments. –
Ethnic conflict theSouthern part in of thecountry.
Second Revolution . The changing political regimes raise concerns raise regimes political changing The .
had 34
experienced sharp drop in investment inflows investment in drop sharp experienced
K , rabk Bakiev urmanbek
about the the about
(U.S. (U.S.
CEU eTD Collection and Republic Kyrgyz the of Government (IssykkulInvest 2013) giving agreement cor Canadian the and "Kyrgyzaltyn" Concern State the Republic, Kyrgyz the of Government the Toronto in 1992 in however permafrost, of complexity the given profitable, 2013) a and deposits above to close range, Mountains Shan 3.1 Overview Kumtor Project of of showthe thecompanywill position these concerning issues. and nationalization propagatingforparties argumentsof main the explain Itcompany.will the and government the between points clash main the summarize will section third The chapter. well economic to order in Kumtor on the understand to important is It country. the of economy the in company the of significance the show will section second The Project. Investment Kumtor interest of topic levels country and regional nationalization, of concepts .
the Discovered by Soviet geologists in 1989, the Kumtor gold mine was considered as not not as considered was mine gold Kumtor the 1989, in geologists Soviet by Discovered The p the stage this to Up In accordance with the agreement, the State Concern "Kyrgyzaltyn" on behalf of the the of behalf on "Kyrgyzaltyn" Concern State the agreement, the with accordance In
sea level sea Kumtor mine is mine Kumtor ccording to r to ccording - being of the country, which will be discussed in greater details in the fourth the in details greater in discussed be will which country, the of being Te is scin f thi of section first The .
(KyrgyzAltyn 2011) (KyrgyzAltyn the .
see the scope of possible consequences of nationalization on the socio the on nationalization of consequences possible of scope the see
aeo oprto ecuie rights exclusive Corporation Cameco Chapter ecent reports, ecent . On that note, the scope of the paper narrows down to the main the to down narrows paper the of scope the note, that On .
located in the Jeti the in located introduced pr a son h bsc of basics the shown has aper
h border the
3. Kumtor Investment Project3. Kumtor Investment the .
iig prtos in operations mining it contains 731 tons of gold reserves gold of tons 731 contains it The s h frin iet aia fo trends flow capital direct foreign the
hpe wl b dvtd to devoted be will chapter ih hn, t n liue f 3700 of altitude an at China, with the 35 - Kumtor mine is one of the of one is mine Kumtor Oguz
Cameco Corporation have founded CJSC CJSC founded have Corporation Cameco oain aeo Corporation Cameco poration
of Issyk of
- level of level Kul Kul
oeg drc investment, direct foreign ifcl ntrl odtos of conditions natural difficult
region
o eeo te deposit the develop to
reliance of the economy economy the of reliance
the along world’s
vriw o overview
(IssykkulInvest (IssykkulInvest
with - 4500 meters meters 4500
largest gold gold largest signed an an signed n global, in
the Tien the f the the f
the - -
CEU eTD Collection 2013) (State Comission 2004, Centerra company joint new the in shares of distribution following the to led process restructuring a Republic Kyrgyz the of on negotiations of result a Project Kumtor toreorganize the Kyrgyzstan Government of Cameco the proposed had Gold) Cameco by owned units other also were Gatsuurt and Boroo as such Mongolia in the KumtorGoldCompany inpercentages: bar gold first its produced company the year, had plant processing gold Kyrgy to belonged company the in shares Compa Gold "Kumtor
e jit etr comp venture joint new
was conducted by combining the following assets of Cameco Gold and Kyrgyzaltyn and Gold Cameco of assets following the combining by conducted was y 2004 By h poes of process The Gold o o
(State Comission 2013) (State Comission Cameco Corporation The Cameco Corporation The owned 95% interest i interest 95% owned Gold Cameco Kyrgyzaltyn
the Government of the KyrgyzGovernment ofthe Republic KyrgyzGovernment ofthe Republic
aeo Corporation Cameco
ny" :
the
signed
31
started its operations in 1996 and on 31 on and 1996 in operations its started IskuIvs 2013) (IssykkulInvest – etutrn o te utr Project Kumtor the of restructuring any
st Kumtor Mine (67%).Kumtor –
December 2003 December an agreement on re on agreement an
the , 36 o itrs i AGR in interest of 53.6% – – n Boroo mine, loans from Cameco Barbados to build a a build to Barbados Cameco from loans mine, Boroo n
67% 33.33% :
etra od Inc. Gold Centerra
,
hc wr mngd hog Cmc Gold Cameco through managed were which zstan,
a acquired had
36 (KyrgyzAltyn 2011) (KyrgyzAltyn ,
the rest the the Cameco Corporation a Corporation Cameco the . structuring
s e te agreement, the per As (Centerragold went to went – –
66.67%; 33%; neet n eea mnn sts in sites mining several in interest
Asrla Gl Comp.) Gold (Australian Sae oiso 2013) Comission (State
the Kumtor Project and forming and Project Kumtor the
the wih ok lc in place took which ,
.
2012) Cameco Corporation. Cameco The distribution of shares of distribution The st
December of the same the of December . nd the Govern the nd
Two years before before years Two w tid o the of thirds two .
and a and which which 2003 (there
ment ment The The The s -
CEU eTD Collection Exchange,Toronto of Stock share thedistribution offering public 4 Table reserves Kumtor mine which up92% in2011 made oftotalrevenues geologic under currently are or Gold exploration Centerra the of 4) Chart (See properties available Boroo 2. 1.
Theaon gold reserves based price haveestimated ounce.ofbeen per $325 to According Gold Centerra in mines operating two only are there Currently On Boroo Kumtorand 100% is 79% are Gold. byowned Centerra Source: Centerra Sae oiso 2013) Comission (State
Mineral reserves information (See 4) Table
o o o 9 th
January 2004 the shareh the 2004 January
ln Bro n ogla n ivsmns no utr 7% neet in interest 73% Kumtor, Gatsuurt (Nevada, andinthe REN USA). mine 62.14% into investments and Mongolia in Boroo plant Other shareholders Cameco Centerra) Kyrgyzaltyn Company (Kyrgyz) State
(State Com (State revenu main The stage. preparatory the
the
at the two mainoperatingmines was asfollows
Gold Prospectus –
prospectus issued by the company in June 2004, the structure of the the of structure the 2004, June in company the by issued prospectus 52.68% ission 2013) ission Acrig o h rpr o te omsin ohr eight other commission, the of report the to According .
–
31.66%
olders of the Centerra Gold Centerra the of olders (2004, p.5) . As a result of placing shares of Centerra Gold at the at Gold Centerra of shares placing of result a As .
37
s
in th
– e Centerra asfollows Goldwas
15.66% e generator of the company is the the is company the of generator e
(State Comission 2013)
(from in 33%interest initial
agreed to undertake initial initial undertake to agreed
, (Centerra Gold 2004)
which are Kumtor and Kumtor are which .
:
: al al
CEU eTD Collection rout of was parliament the but 29%, to 15.66% from Gold Centerra th with negotiations The 52%. reorganization, of time the restructuring renegotiate of theterms 2007 dollars) US of millions had Kyrgyzstan it IPO the after but 33%, ,
h Prim the negotiations place took and According to the agreement the to According o o o
the agreement) The tax company additional received Centerra increasearea theconcession Goldmanaged to by 16 32.75%. The share the country of Mnse Amze Atambaev Almazbek Minister e od . mlin f omn shares common of million 7.5 sold dissolved
uig h poes f IPO of process the during
the share of share the
declined to to declined
e Cameco resulted in resulted Cameco e (State Comission Comission (State
resulted ,
the share of Kyrgyzstan in the Centerra Gold had to had Gold Centerra the in Kyrgyzstan of share the (State Comission 2013) Comission (State
in Centerra Goldwas
the agreement was not approved as approved not was agreement the Kyrgyzstan in Kyrgyzstan 56% Te an esn for reason main The 15.66%.
in
38 the following the
2013)
ree t cet a ru o eprs to experts of group a create to ordered
- the
exemptions (except in for included taxes Sae oiso 2013) Comission (State
Fnly o 24 on Finally, . b (the
increase of increase the Centerra Gold had to be at least at be to had Gold Centerra the
(State Comission 2013) (State Comission
. The government claimed that at government thatat claimed . The udget received revenue of 83.4 83.4 of revenue received udget increased fromincreased 15.66%to
the
share th
pi 20, another 2009, April
decline was that that was decline
300 hectares. 300 on 2 on of .
Kyrgyzstan in in Kyrgyzstan n 22 On nd
: June 2007 June
nd
May
be be
CEU eTD Collection Kumtor’s The Kyrgyzstan. the of economy 3.2 Importanceofthe projectofKyrgyzstan economy the to several since then changes structural Mongolia, company the of participation Chart 4 Inter Source: In this section the paper will elabora will paper the section this In 4 Chart The
contribution to the budget of the country, share of the company output in the total total the in output company the of share country, the of budget the to contribution Turkey, Centerra - corporate relationships of the relationships corporate CenterraGold Inc
Gold Prospectus
Russia shows the structure of the Centerra Gold Inc. and explains the equity equity the explains and Inc. Gold Centerra the of structure the shows
n Barbados and n ifrn projects different in
section (2004, p. 20) (e.g. REN was sold in2010) sold was (e.g. REN
a be dvdd no h following the into divided been has o t to te on the importance of the Kumtor Project to the to Project Kumtor the of importance the on te 39
he
ae f 04 Te company The 2004. of date
n eea cutis uh as such countries several in
(State Comission 2013) (State Comission .
subsection experienced experienced
the
US .
A, s :
CEU eTD Collection terms salaries oftaxes, other contributions and paid has Project Kumtor mine. Kumtor the of output provided the information to According on economy country’s the of dependence of level the 1.8% to 7.5% planned from 2012 of year the for forecast growth GDP the change to had government the result site the was country the of 18.9% was output 5.5% to decreased country the of GDP the in Kumtor a Issyk industrial and exports 3.2.1 d osiue 5.% f oa exports total of 51.1% constituted nd - Kul Contribution of the of Contribution company Industrial tothe Output Exports, and Budget,
In 2011 Kumtor alone made up 11.7% of the gross domestic product of the country the of product domestic gross the of 11.7% up made alone Kumtor 2011 In
and was forced to decrease gold production by 66.4% in 2012 in 66.4% by production gold decrease to forced was and
region ’s
(Kumtor 2013) (Kumtor economy that
rdcin opn’ mat n mlyet n t impact its and employment on impact company’s production, (Dzyubenko 2012) (Dzyubenko
the
(See Table 5) Table (See
company faced temporary problems temporary faced company .
. One of the reasons for decreased share in the total output output total the in share decreased for reasons the of One .
on
the official webpage of the company, the of webpage official the
Kmo 2013) (Kumtor to Kyrgyzstan more than 2.15 b 2.15 than more Kyrgyzstan to . The s The . 40
(Kumtor 2013) (Kumtor
harp drop in growth forecasts growth in drop harp
and its share in the overall industrial industrial overall the in share its and the of share the 2012 in However, . .
related to the moving ice on ice moving the to related
(Infogeo 2012) (Infogeo illion US dollars US illion
since 1994, the the 1994, since
clearly shows shows clearly
on the on .
As a As
the
in in
CEU eTD Collection 2012) releases official basis contractual a on employed people 620 Kumtor at employed people 3361 3.2.2 Source : Kumtor (2013, Contribution to the economy) 5 Table Impact ontheemployment te utr ly a iprat oe role. important an plays Kumtor the , According to the o the to According KumtorGold Project’s the Kyrgyz paymentsRepublic within
stated that stated fficial information published on published information fficial
the number of unemployed reached unemployed of number the ,
out of which 2644 are Kyrgyz citizens, 97 expat staff and and staff expat 97 citizens, Kyrgyz are 2644 which of out 41
Kmo 2013) (Kumtor
f e sue that assume we If
the company’s webpage company’s the . 212 Fo te onr, hr the where country, the r
000 people 000
an average family in in family average an
(Ajihodjaeva ,
there are are there
CEU eTD Collection establishment. its of Gold of 3.3 Summary were distribute in Eachsectorgovernment.local the 2012) (Tynaeva Chong in hall assembly Sary in school one objects: following soc other and hospitals centers, sports Fund Development Issykthe the of Fund” Development 3.2.3 dependent onthe Kumtor’s to come we least, at people 4 of consists Kyrgyzstan o o o o o
Contribution totheContribution Issyk region For thegovernm developmentneeds local of Spor Cult Educatio Healthcare n 02 h company the 2012 In the help to order In The - Kul developmentfund. ure Kumtor ts
using extra using – d inthe following proportion –
. n 57
the clashthe between the points oftheKyrgyzstan Government Centerra and 12 In addition, 19 million soms were spent to buy equipment for the needs of of needs the for equipment buy to spent were soms million 19 addition, In –
–
952 000
Investment 079 000 50 95 million KGS 95 million 2012) (Tynaeva (Kumtor 2013) (Kumtor Since then, several state commissions have commissions state several then, Since
150 000 - - rku village, Oruktuu budgetary sources budgetary
operations KGS
region KGS
KGS
Project has b has Project -
Kul
rnfre ams 38 ilo sm to soms million 308 almost transferred
o develop to
. It was designed to finance the socio the finance to designed was It .
. the region . Using a bet. I objects. ial
- region Kamysh village, one school in Saruu village, an an village, Saruu in school one village, Kamysh
and
. (Tynaeva 2012) (Tynaeva
een a very controversial deal controversial very a een
hs funds, these The Centerra Gold is the biggest contributor to to contributor biggest the is Gold Centerra The 42
, the government the ,
benefited from transfers and the funds of 2012 of funds the and transfers from benefited n mdcl post medical one
ent n 2012 the funds were used to build the the build to used were funds the 2012 n –
91 the
h officials the
:
097 000
ubr f 35 peopl 13056 of number
created a special “Issyk special a created
n Chong in issued
KG
built
S reports covering reports
since the beginning beginning the since - economic projects projects economic -
oubi village Toguzbai
several schools, schools, several the
Issyk e being being e - -
Kul Kul Kul the
CEU eTD Collection commission the by expressed accusations for reasons the understand d company the andKyrgyz Republic the of Government the byapproved andreviewed following reasons did Corporation Cameco the with agreements 3.3.1 governmentCenterra againstcompany’sresponseand the thenthe follows. Gold Go fo commission state special the by prepared was which (2013), to related problems vernment of the KyrgyzRepublic the ofvernment The agreementThe 3) 2) 1) Commission State The h cmay ersnaie hv rsodd y stat by responded have representatives company The 6) 5) 4)
this structurethis thecompany interestedwas in them agreement The of 2 the where people representatives of theCameco 3 of consisted committee (Executive T the Kyrgyz T Other of violationsofthelaws Kyrgyz Republic. dollars. c planned the exceeded had company The the necessary funds. of rest the raise to collateral as Kumtor used Cameco costs. total the of 3.4% only to According e aaeet vr h cmay was company the over management he by rejected were terms better much had which companies other from offers he
(State Comission 2013) Comission (State
the s
side. of 1992 of
Kumtor Project. Kumtor
the
also
report the investments of the Cameco to the project constituted constituted project the to Cameco the of investments the report
– assumed division of profits, not the output the not profits, of division assumed
Report states that the terms of investment given in the the in given investment of terms the that states Report 1994 .
Each subsection begins with listing thelisting beginswith subsection Each
) In this section the paper summarizes the last report report last the summarizes paper the section this In : .
43 not me not
et the interests of Kyrgyzstan due to the the to due Kyrgyzstan of interests the et ntuto ot y156mlin US million 175.6 by costs onstruction increasing costs ofproduction.
practi
ing that all agreements were were agreements all that ing cally rmed by the Parliament and Parliament the by rmed
n h Cnda side Canadian the on (Centerra Gold 2013) Gold (Centerra
(gold) arguments of the the ofarguments
. Based on on Based
oes not oes
were .
CEU eTD Collection of debt Kumtor Project 3.3.2 1997/1998 ex The The agreementThe onrestructuring the Kumtor Project(2003 cess costs were audited and audited were costs cess 4) 3) 2) 1) agreement the report, the to According Centerra Gold rejected the fact the rejected Gold Centerra 6) 5) BD n IFC and EBRD
had to be transferred to Kyrgyzstan, but the government decided to sign a new new a sign to decided government the but Kyrgyzstan, to transferred be to had Gold Centerra in interest of 38% Bank, Standard the of calculations to According increased theshare it registering of instead Gold, Centerra buil to Cameco by given loan The during restructuring theprocess of of reserves The the Kumtor. over control the limited which Gold, Centerra in interest 33% to Project Kumtor ag that signing By was overvalued intheprocess into transformed by provided USD million 20 of debt subordinated The data Cameco checked. was by the itselfand not provided was the as overvalued were REN and Gatsuurt Boroo, as such Cameco of assets The violated the interest ofKyrgyzstan. decrea was Kyrgyzstan of share the where agreement (CenterraGold 2013) were muchworse in1992 one signed thanthe
Cner Gl 2013) Gold (Centerra
the 3 061 3
of inCenterra Cameco Gold Kumtor mine and the shares of Kyrgyzaltyn were undervalued were Kyrgyzaltyn of shares the and mine Kumtor emn Krysa exchanged Kyrgyzstan reement
212 shares in Centerra Gold Centerra in shares 212
ae h su a stldwt tesaecmiso of commission state the with settled was issue the later
of overvaluing of of transforming it toshares.of it transforming d . 44
terms of 2003 of terms the .
. h rpr claims report The ).
Boroo mine was mineBoroo
as of
the Boroo, REN, Gatsuurt and Gatsuurt REN, Boroo, the
a
-
et Ti fco sign factor This debt. 2004 (State Comission 2013) (State Comission .
The report states that the debt debt the that states report The
sed to 33%, which explicitly explicitly which 33%, to sed 67%
- on the restructuring of the the of restructuring the on tr 2004) the EBRD and IFC was was IFC and EBRD the
ansformed into shares in in shares into ansformed
the Government of the the of Government the f its of
neet in interest ificantly ificantly :
the the
CEU eTD Collection have expressed disconten t to favorable more relatively were 2009 of terms the that accepted resulting 2009 in place took disso was it as Parliament the by approved 3.3.3 activities ofUSdollars). inKumtor (115 million than profitable more was mine 2013) Gold (Centerra finall and country, co the the became Kyrgyzstan of budget to USD million 87 brought which shares of part cash be several Gold (Centerra experts of involvement the with LLP Graydon and Bank Standard the by represented was (Kyrgyzstan side each representing negotiations detailed through went restructuring of are accusations that believes company the this, on Based Gatsuurt.Boroo,and aboutKyrgyz access the allREN information to full Republic had
The agreementThe 2009 of As it was mentioned in the Kumtor overview section, the agreement of 2007 was not not was 2007 of agreement the section, overview Kumtor the in mentioned was it As 2) 1)
nefits to Kyrgyzstan such as increased as such Kyrgyzstan to nefits the futuregold potentialdamageand the reserves environment for area. ofthe assessing without hectares, thousand 16.3 by increased was area concession The benefits received by t that means capitalizat shares of emission additional of reserves gold of tons to According 2013) o o Cner Gold Centerra of ion .
. the
h rpr as sae ta i te eid rm 2006 from period the in that stated also report The
h cmay de that added company The tment with sometment casebelow with points the
- benefits gained by Kyrgyzstan are not adequate to the amount the to adequate not are Kyrgyzstan by gained benefits owner of the other assets of Cameco Gold (Boroo, Gatsuurt etc.) Gatsuurt (Boroo, Gold Cameco of assets other the of owner
new agreement the agreement new in
the changes in terms of agreement. The State Commission have Commission State The agreement. of terms in changes he Centerrahe Gold in the Kumtor mine Kumtor the in
Kumtor mine and during that time Boroo was financing financing was Boroo time that during and mine Kumtor
lved by that time. The new round of negotiations negotiations of round new The time. that by lved ol b icesd o 0 mlin S, which USD, million 700 to increased be could 45 ,
Centerra Gold received Gold Centerra . liquidity of the shares in Kumtor, in shares the of liquidity aig no con nw reserves new account into taking
groundless. In addition, In groundless. the .
The commission points that in that points commission The
restructuring of the project brought brought project the of restructuring
(State Comission 2013) he one signed in 2004, but 2004, in signed one he
the
the whole process whole the
- additional 40.43 additional 07 h Boroo the 2007
: ability to ability
the ,
case the the
of y )
CEU eTD Collection adequatefor thefollowing reasons 5) 4) 3) 2) 1) states company the by report The 6)
s urnl iefcie in ineffective currently is t in shares of portion largest the of owner being Kyrgyzstan addition, Bor than revenue more times 11.8 brought winding is mine Boroo the of profitability The ineffective management oftheCenterra Gold, calculated increase have 2003 since prices gold The USD. million 34.9 for sold was it 2010 in and USD Cameco REN project The the 32.75% interest theCent in account into taking Kyrgyzstan of interests the limited structure this that argued be must another and government incr of number The Kyrgyzstan’s received budget Kyrgyzstan33.1% share its managed 15.66% toincrease inCenterra to Gold from yield hasraisedcommission concernsefficiency aboutthe current the of management. lower and costs depreciation costs, capital higher Gold The situation. s commission ae t 2 epe oe ersnaie must representative (one people 2 to eased Comparative analysis (AngloGold Ashanti, Polyus Gold, Polyus Ashanti, (AngloGold analysis Comparative
taken as a benchmark) a as taken ,
did not bring any benefits. benefits. any bring not did
loss of 11.5 million USD for Centerra Gold. It was the result of of result the was It Gold. Centerra for USD million 11.5 of loss fo 40 S po o 10 S p/o USD 1100 to p/o USD 400 from d ae ta Krysa hs o ae tp t cag te current the change to steps take to has Kyrgyzstan that tates representatives of Kyrgyzstan in the board of directors was was directors of board the in Kyrgyzstan of representatives ,
hc ws nldd no h ast o te etra od by Gold Centerra the of assets the into included was which
(Centerra Gold 2013) Gold (Centerra
conducted by the commission shows that Kumtor has Kumtor that shows commission the by conducted h mngmn of management the 1 erra Gold.
750 ht h benefit the that
46 presented
000 USD.
In 2003 the REN was bought for 35 million 35 for bought was REN the 2003 In
: from Kyrgyzaltyn). The commission commission The Kyrgyzaltyn). from
o n Gtur tkn oehr In together. taken Gatsuurt and oo
the
s gained by the Kyrgyzstan were were Kyrgyzstan the by gained s
commission added.commission u. n 20 In out.
Kumtor (KOC, KGC). The The KGC). (KOC, Kumtor
be
. The commission has has commission The . needn from independent s 1 h Kmo mine Kumtor the 11
and African and n dividends. on
he company he
Barrick
The The the
,
CEU eTD Collection 2013) (State Comission 3.3.4 the changegovernment the of states which law, international public the which to points governments previous the country the by of interests the signed contradicted agreements the over responsibility take stopped. was process signing process whole The report. the in presented initiated already issues these that reminds also company and Court Constitutional the Republic, Ky the of Parliament the Republic, Kyrgyz the of Government the bodies: following
Recommendations
The company The 5) 4) 3) 1) the on Based the
to 2people. of board the in representatives Kyrgyzstan of number The amounted 4 The country,plus a tax new The 2009 of agreement the of termination about Gold Centerra with negotiations Initiate
new agree new
, as the current share current the as , Kumtor Gold Company also forgave the debt of the government which which government the of debt the forgave also Company Gold Kumtor an
international arbitration process against Kyrgyzstan concerning the issued issued the concerning Kyrgyzstan against process arbitration international
investigation results, the State Commission recommended the following the recommended Commission State the results, investigation The State Commission claimed that the that claimed Commission State The added that the agreement of agreement the that added ment
400 :
eie a accepted was regime catch up tax paymentcatch uptax 20 of
, 000 USD.
hc ete l sus up issues all settled which
(Centerra Gold2013)
of Kyrgyzstan of the
ee asd eoe I March In before. raised were Sae Comissio (State
Department of Justice of Department took 3 years and ultimately both sides agreed on on agreed sides both ultimately and years 3 took 47 ,
hc icesd h bde rvne o the of revenues budget the increased which
. that obligations cannot be reversed due to due reversed be cannot obligations that 2009 was reviewed and approved by the the by approved and reviewed was 2009
in the Centerra Gold Centerra the in 692
o 6 to
n 2013) n 921 USD. 921 th
current government should government current June 2009 and the arbitrat the and 2009 June
etra Gold Centerra . (Centerra Gold 2013) Gold (Centerra
directors was increased increased was directors
2006 2006
is not adequate to to adequate not is etra Gold Centerra
nis turn its on . rgyz
The not ion
CEU eTD Collection generator revenue main the as Kumtor the recommendedgovernment totake thefollowing the actions n ae f nucsfl eoitos ih etra od te commission the Gold, Centerra with negotiations unsuccessful of case In 7) 6) 5) 4) 3) 2) The 6) 5) 4) 3) 2) 1)
Other recommendations. compensation d environmental for the violations environmental of facts the Eliminate Kyrgyz themanaging in citizens positions of number the (increase company the in structure management the Renegotiate Increase of of thenumber inthe representatives board the proposal tocreateSubmit acompany managing new instead of other compensations. and site the of reclamation regime, tax damage, environmental for compensation th concerning Republic Kyrgyz the of legislation the N generator. financial the of thedecrees the government. previous of Init Terminateagreements related other toKumtorProjec Terminate 6,2009. the concession agreement revised June from 6,2009. Terminate June agreement thefrom investment revised Repeal the l Repealratified theagreement the law that company accepted the statement of the commission concerning the importance of of importance the concerning commission the of statement the accepted company egotiate the possibility of signing new signing of possibility the egotiate iate legal proceedings about confiscationiate proceedings property, legal of land ontermination based
aw on amendments to the tax code thetax to fromamendments Aprilaw 30,2009. on otiuin f h Kmo mn, hc i te an revenue main the is which mine, Kumtor the of contribution
of 48
the company the
amage.
the ) on new terms. on new
.
agreement
(State Comission 2013)
(Centerra Gold 2013) Gold (Centerra
n ices te mut of amount the increase and t. directors(to 4out12).
with new terms new with e following issues: issues: following e
KOC and KGC. KOC and
. However, However, . :
based on based
the the
CEU eTD Collection the economic well of consequences the on elaborate will chapter next The laws. the revise to refuses hand demands that stating other agreement the on Gold Centerra The negotiations. unsuccessful of case in Project Kumtor the to related agreements all denounce to threatens and agreement Kyrgyzstan. of interests the contradict agreement of terms the because government, previous the by made obligations the execute to want not does government current the that is reason Another Kumtor. the of value the and is Gold Centerra the in share country’s the as investment of legislation p managing the at citizens Kyrgyz of number the matter. this on working already is company that added and KGC), (KOC, two of instead company managing one creating of idea the on agreed company and standards international the to according be to said also 2009. of agreement the and to according amendments sides both by accepted was regime tax current of that units explained company the regime, tax other the changing of issue the from Concerning Gold. Centerra financed were mine Kumtor the into investments capital that stated yea previous investment capital of recipient main the was Kumtor that reminded company the To summarize, the government of the Kyrgyz Republic wants to renegotiate the term the renegotiate to wants Republic Kyrgyz the of government the summarize, To
does oblige investorstoappointKyrgyz not citizens rs, which influenced the Kumtor’s ability Kumtor’s the influenced which rs, - being of the country. the being of
of the government contradict the principles of international of principles the contradict government the of
Th ereby, the government insists on revision of the the of revision on insists government the ereby, 49
ositions, the ositions, h e The
to generate to t ant e sbet o f for subject a be cannot it cological damage compensation is is compensation damage cological Regarding the request to increase to request the Regarding
not adequate to the contribution the to adequate not company stated that the that stated company along with the agreement. The The agreement. the with along .
the
ainlzto o the on nationalization current
revenues.
s country country
n the in uture uture It is is It s CEU eTD Collection followinggroups had government the 2012) State of Department properties and enterprises companies, several nationalized time first the for government 7 of revolution second the after but property, owned privately in4.1 The experience Kyrgyzstan. nationalization of socio them managing are successful state the of performance the examines prope nationalized the policies previous the exper nationalization the explains for ground sound pos the Kumtor Several a government the between agreement the of denunciation the approved majority country. the in subjects discussed most the of one became property Chapter 4 - economic well sible
The issue about the nationalization of the biggest investment project in the country country the in project investment biggest the of nationalization the about issue The ic gaining Since
meetings took place took meetings (Denisenko 2012) (Denisenko
consequences of consequences which
public companies and demonstr and companies public . . Nationalization final The (FNI 2011) (FNI
ainlzd 7 objects 47 nationalized
t was he - being of the country.being ofthe towards nationalization. It nationalization. towards
rty and describes the results of subsequent actions. subsequent of results the describes and rty independence, Kyrgyzstan had never nationalized any company or or company any nationalized never had Kyrgyzstan independence, analysis
acquired by the previous regime previous the by acquired
. (Sultanbekova 2013) (Sultanbekova section elaborate section
d h Cner Gold Centerra the nd The main rationale behind the nationalization was to return back back return to was nationalization the behind rationale main The in the capital of the country demanding the nationalization of the of nationalization the demanding country the of capital the in :
nationalization to nationalization ,
the chapter is divided into four sections. The first section section first The sections. four into divided is chapter the of ience of the country, which country, the of ience
Kumtor - owned enterp owned Kyrgyzstan
Se al 6) Table (See s on the possible impact of of impact possible the on s : Possible consequencesPossible for : 50 ates the ates
. .
the economy of economy the elaborate This chapter is devoted to devoted is chapter This
il o be not will
rises in Kyrgyzstan, wh Kyrgyzstan, in rises
level of expertise of expertise of level on the Kumtor, in case the consensus consensus the case in Kumtor, the on
(Tynaliev 2012) (Tynaliev s ,
The coalition of the parliamentary the of coalition The on how the government managed managed government the how on hc cn be can which
shed th reached
Kyrgyzstan. April 2010 April s
light on the outcomes of of outcomes the on light
Fraaes 2013) (Fergananews nationalization to the to nationalization
the economy of .
The second section section second The In total the interim interim the total In
the government in in government the
the , divided into the the into divided
In order order In the new interim interim new the ich shows how how shows ich
assessment of of assessment to set a a set to
(U.S. . CEU eTD Collection experts business and legal among concerns result 26nationalized objects 15 on government the by approved was program The objects. certain property, state the of disposal and management effective managin special
Table 6Groups objects ofnationalized bytype Source: FNI Report (2012) Source: FNI Report (2012) Table 7 Table Total Transport vehicles Companies (shares) Landwith Land Type n re t efciey aae h ntoaie property nationalized the manage effectively to order In The nationalization mechanism chosen by the interim government raised serious serious raised government interim the by chosen mechanism nationalization The 9 8 7 6 5 4 3 2 1
№ Properties
ОАО«Чакан ГЭС» GES) (Chakan ОАО«АзияАгроресурс» (Aziyaagroresurs) ОАО«Дитис» (Ditis) (Naryngidroenergomontaj) ОАО«Нарынспецгидроэнергомонтаж» ОАО«Нарынгидроэнергострой» (Naryngidroenergostroy) Others ОсОО Piramida) ОсОО«Телерадиокомпания "Пирамида» (Teleradiokomp. ЗАО«Альфа телеком» ( g premises ud o ntoaie objects nationalized for fund
«Петрол Групп» (
subject to privatization
(See 7) Table
Alfa Petrol
. Title
Gulnara Kalikova, the founder and Senior Partner Senior and founder the GulnaraKalikova, had tobeprivatized throu had
Telecom 51
Group
T .
e ud a dvlpd program a developed had fund he ) )
which implied which ,
h gvrmn cetd a created government the ghauctions. th
April 2011 and as a as and 2011 April
the 47 7 19 18 3 Quantity
Shareof the
privatization of of privatization 100 71,3 % 100 % 100 % State 49 % 35 % 33 % 90 % -
%
for for CEU eTD Collection sel to advised and controversial is object Telecom Alfa in shares W Sovereign objects. nationalized buying in engaged get or invest to reluctant were them of most and investors the by accepted land propertiesIssyk in GES, (Bystrovskaya court the of decision the by ownership private to returned were objects revenues bring to designed was government interim the of decrees the groundforreasons thefollowing nat for basis legal the as decrees own its used representing lawyers the by Republic Kyrgyz the of constitution the contradicted Firm, Law Associates and Kalikova of As h plce o the of policies The a result by the by result a o o o
eal canapprovedthe parliament. be by only which law, on based conducted be can nationalization because nationalization, have not did government interim The conductedapproved only based on laws. d The to has country compensation in the constitution the to according because Republic, the of Decrees h Fund, th
For instance, the Deputy Chairman of Board of JSC “Samruk JSC of Board of Chairman Deputy the instance, For ecree is not a law. According law. a not is ecree - , Kul, Aikol
which was proposed to him by the government by saying that the that saying by government the by him to proposed was which aahtn Adn Karib Aidan Kazakhstan) 12th
the nei gvrmn twrs ainlzto wr negatively were nationalization towards government interim
June 2011 there were already were there 2011 June
nei gvrmn cnrdc te an a o te Kyrgyz the of law main the contradict government interim
the
Kalikova (Saaduev and Saynazarova 2013) o h budget the to -
5 case ofnationalization. case
(24%)others) and
(FNI Legal 2012) Legal (FNI
l it it l has stated t stated has
and Associates Law Firm, the interim government government interim the Firm, Law Associates and to 52 ionalization, which have which ionalization, another investor another
ae leg faced to ao knl rjce t buy to rejected kindly janov hat
(Dudka 2010) (Dudka
the
(FNI Legal(FNI 2012)
the whole process of nationalization nationalization of process whole the the l btce as obstacles al
. constitution,
The government’s program which which program government’s The
authority to make decisions on on decisions make to authority 66
(Otor legal complaints filed against against filed complaints legal :
. As per analysis prepared analysis per As . baeva 2011) baeva
nationalization can be be can nationalization the
. several nationalized nationalized several
questionable legal legal questionable
.
49% of the the of 49% The EBRD EBRD The - Kazyna” ( ( Kazyna”
pay
CEU eTD Collection to According company. the buy to refused and protocol auctions the the sign to rejected company Later, price). starting the higher times (12 KGS 000 000 555 1 of price final the with wa Company) Petroleum (Bishkek BNK company local Kazakhstan. of citizen one and Kazakhstan from company one auctions the at participation for submitted circumstances suspicious with surrounded was company the auction *The Source: FNI Results Auction (2012) auctions 8Results of Table absence. n sell to government the Kyrgyzstan” in property private for disrespect absolute following the expressed Caucasus the and Asia Central Europe, Eastern South for Director Group Business properties minorOther 35% of shares. Aziyaagroresurs Ditis “Dostuk” CenterHoliday 100% ofshares. PetrolGroup GES 100% ofshares. Chakan of shares. TelecomAlfa Object
–
33% ofshares.33% See Table 8 for auctions 8for Table results See
related to Petrol Group Petrol to related
opinion about the actions of the government: “the events of 2010 showed an an showed 2010 of events “the government: the of actions the about opinion
– -
49 % –
–
- 11th October 2011 11th October 2011 22 17th October 2011 25 22 Auction Dateof ationalized property by auctions fail auctions by property ationalized
nd th nd
October 2011 May 2012 May 2012 for sale of the salenationalizedfor of objects (2011
requires
(FNI Auction Results 2012) Results (FNI Auction
(FNI Petrol Group 2011) Group Petrol (FNI
53 special attention as the whole process whole the as attention special 1 048383 4 900000 Price Starting - 3 634 7 620 63 556 123 189
085 KGS 904
000 KGS
s declared the winner of the auctions the of winner the declared s 803 KGS (Mazykina 2011) (Mazykina
600 KGS 000 KGS KGS ed mainly due to due mainly ed
Tee ee application 9 were There .
n 17 On
: , seven local companies, companies, local seven ,
- declared invalid. in object. The auction expressed an interest No single investor declared invalid. in object. The auction expressed an interest No single investor Result - KGS forSold 16084 KGS forSold 9920 declared invalid. in object. The auction expressed an No single investor circumstances) special KGS * forSold 137000 2012)
th
. October 2011, the the 2011, October Many attempts of of attempts Many
the (under
applicants’ of selling of interest
904
085
000 s
CEU eTD Collection of thecountryto internal compared investors. brought have might which investors property Kyrgyzstan in process nationalization F p revenues. for reasons the of One property. nationalized the implied which property, state the of disposal and management effective tr under still are objects the of some and go decision the against lawsuits of dozens led which Kyrgyzstan, the of law main events cou buying in interest St investors. internal to mainly value and importance only 137 7 On K.M). (Kurbanov Kyrgyzstan of citizen one and CRM) and (Shnos companies 2 only were there auction the of round second the On organize to ManagementPropertyhad State forFund price the pay and protocol the sign to refused offered company the regulation, auction the vernment. As a result, several nationalized properties were returned to private ownership ownership private to returned were properties nationalized several result, a As vernment. l o ivsos rm Kazakhstan from investors of ple , both To summarize, the whole process of nationalization was held in contradiction to the to contradiction in held was nationalization of process whole the summarize, To minor of assets the selling in successful was government the that shows 8 Table - .
000 1 550 000 550 1 In the face of these of face the In
Kazakhstani investors decided not to attend the second round ofattend investorsdecidedauction. thesecondroundKazakhstani notto
oreign investors and international institutions negatively accepted the the accepted negatively institutions international and investors oreign 000 KGS to Kurbanov K.M 000 KGS to
any of any
000 KGS 000
the nationalized the
events )
had to be declared the winner, but the second company also also company second the but winner, the declared be to had ,
investments Kyrgyzstan worsened its investment image and deterred deterred and image investment its worsened Kyrgyzstan which offered the second highest price ( price highest second the offered which
n i nt hwayitrs i b in interest any show not did and atcptd n h acin bt hn fe suspicious after then but auction, the in participated
(FNI Auction Results 2012) Results Auction (FNI assets ials. The government approved the program for for program the approved government The ials. th 54
December 2011, the December2011, (FNI Auction Results 2012) Results Auction (FNI . In .
of better quality and impact to impact and quality better of the
the rategic fo rategic case of case iaiain a t increase to was rivatization
new auction to sell the Petrol Group.Petrol sell tothe auctionnew
the reign investors did not show not did investors reign
Petrol Group there Group Petrol Petrol Group was sold for for sold was Group Petrol .
the uying nationalized nationalized uying .
As a a As pri s “Bishkek Oil” Oil” “Bishkek
of the interim the of the economy economy the vatization of of vatization result, the the result,
budget were a a were
CEU eTD Collection Ak liquidated previously the of profits generatedHotel. by the Sistem covered.” wholly is Agreement this by deemed amount the until Hotel the of operation the from gained be to profit the of 50% of remittance purchase 2009) (Cisarbitration Ak “Hotel company new Tu to Kyrgyzstan of President the of visit the Keme 2009) joint new venture the of termination revoked were licenses construction and investment foreign ofthe h participate operations inthe not did 1998 theSistem project the over control took and obligations its fulfill to failed side Turkish o Bishkek of center the at beds 400 of hotel class company “Sistem company Turkish Investment of Settlement for Centre International the of award the 4.1.1 n 19 n
The experience international atthe thecountry courts of . th
company wascompany declared
A year later o later year A In 1999 as a result of discussions of result a as 1999 In had already Kyrgyzstan In political 2005,the was not obliged to pay anything from the budget of the company, but pay from the the from pay but company, the of budget the from anything pay to obliged not was December 1995, December ,
“ “The payment in exchange of the purchased shares shall be provided with the the with provided be shall shares purchased the of exchange in payment “The etr wt te uies ou Cn h (aasa company) (Malaysian Bhd Cdn Focus Business the with venture Ak - Keme” . The terms of the new agreement assumed the following mechanism of of mechanism following the assumed agreement new the of terms The . n 10 n
formed a joint stock venture in order to build and manage the world world the manage and build to order in venture stock joint a formed
Ak
th (Cisarbitration 2009) (Cisarbitration
-
December 1998, December regime inthecountry regime ee e us ad od 0% f t sae t Sistem to shares its of 100% sold and Luks” De Keme - uedsi Isa Sny v Tcrt .” and A.S” Ticaret ve Sanayi Insaat Muhendislik
Keme bankrupt bankrupt
- Finally in
Keme, took over the Hotel the over took Keme, the
experience in experience had and for subject liquidation
terminated terminated between the Kyrgyz and Turkish delegations, Turkish and Kyrgyz the between 1999 the Sistem became1999 theSistem the sole
55 rkey, the liquidator of the Ak the of liquidator the rkey, by the decision of the Supreme Court, the Court, Supreme the of decision the by . On its turn, the Ak the turn, its On .
(Cisarbitration 2009) (Cisarbitration
changed and Mr.Sarymsakov, chchanged the expropr Csrirto 2009) (Cisarbitration h cnrc ih itm saying Sistem with contract the iating
(Cisarbitration 2009) (Cisarbitration otel and as a result thecompany’s as a and otel ,
hc cneunl ld to led consequently which
foreign assets. foreign
(Cisarbitration 2009) - Keme . ipts i 1992 in Disputes, The ICSID The I ohr word other In .
owner of thehotel. -
Keme created Keme in 1997 in
. From 1995 to 1995 From . (Cisarbitration (Cisarbitration . . to According the In response In states that states
formed
that the the that Kyrgyz Kyrgyz
. airman airman during
s
Ak
the the the the the
a -
CEU eTD Collection following and compensation) receive not did (investor expropriation an as Kyrgyzstan Gold. Centerra remind ago years 4 almost used government arbiter the by and parliament agreements the bribing following: the r included company Disputes Investment of 2009) (Cisarbitration Settlement for Centre International to agreement1999 the of Court of decision case the resolve to asking authorities to complaint (Cisarbitration 2009) rights.” property LTD’s Bishkek” “Pinara regarding injustice the cure to order in unlawfully, usurped were which premises Hotel’s Bishkek” “Pinara return to obliged are “You follows: Assistant the order Republic, gave Bishkek Kyrgyz of Prosecutor the of authorities the to Sistem the of complaints the to iii. ii.
i. the
Joint KyrgyzJoint To reimburse theSistem To compensate the Si USD To compensate 8.5million the Sistem n 11 On
(Cisarbitration 2009) (Cisarbitration . In addition, Kyrgyzstan addition, In .
the th
did not have any legal force. All argumen All force. legal any have not did
fe r After Csrirto 2009) (Cisarbitration Leninski October 2005 the Turkish company seeking for justice addressed the the addressed justice for seeking company Turkish the 2005 October - Malaysian Enterprise . .
But the order was not executed and the Turkish company again filed again companyexecuted Turkish and the wasnot the order But codn t ISD Krysa’ mi arguments main Kyrgyzstan’s ICSID, to According veig n aayig h case the analyzing and eviewing
itit Court, District
stem its legal its stem expenses was invalidatedwas :
its ex its to r to stated that the agreement of agreement the that stated penses relatedICSID to Wehr y hne r o, h agmns f the of arguments the not, or chance by Whether . eturn the hotel to the owner the to hotel the eturn
(Cisarbitration 2009) (Cisarbitration the
and the ownership over the hotel was transferred was hotel the overownership the and 56
ihe Ct Court City Bishkek Kyrgyz te ruet operated arguments the s
, plus , plus interest. -
400 Csrirto 2009) (Cisarbitration
authorities and and authorities ,
000 USD. ts h ICSID the
of the Kyrgyz side were declined declined were side Kyrgyz the of - .
247
1999 was not ratified by the the by ratified not was 1999
,
410 USD 410 and
which was formulated as as formulated was which
declared the actions of of actions the declared
violating the terms of of terms the violating qetn arbitration equesting the
. today against the the against today
Kyrgyz Supreme Supreme Kyrgyz
n 05 b 2005, In against Turkish Turkish against
ordered the the ordered y the the y
the
CEU eTD Collection comp and sector the into mechanisms market implement to decided government the 1997 In electricity the of distribution and transmission generation, the American the by audited independently engineeringconsulting and company division public only the is it because is sector enterpris owned studied Index, Perception Corruption International uncompetitive are state reasons. countries, other with ties broken transfers, of lack to due regime year 4.2 the arguments Centerra government the usedby the against Gold. towards court the of decision possible project to helps it that is subsection this of importance the compensate to obliged was Kyrgyzstan the because expropriation as property foreign the towards country the of actions the classified and respondent the of arguments the rejected parliam the by ratified not was investor the with agreement the that stating by and terms agreement the fulfilling not bribing, of investor foreign the accusing a international the addressed later which
Performance ofthe state etcly integrated vertically s
any experienced unbundling process unbundling experienced any ago
Kyrgyzstan is a small, open, transition economy transition open, small, a is Kyrgyzstan has Kyrgyzstan summarize, To Starting
Tasaec Itrainl 2012) International (Transparency T .
e S eatet f State of Department US he h idsra ptnil fte onr clasd fe te al of fall the after collapsed country the of potential industrial The
es on t on es from
1996 he example of the energy sector. The sector. energy the of example he
US Dprmn o Sae 2012) State of Department (U.S. joint
the energy sector of sector energy the - owned owned - stock
enterprises (Denisinko 2012) (Denisinko opn “ company
a sae that stated has
curd h poet of property the acquired rbitration body. The country The body. rbitration
. (Abdyrasulova and Kravcov 2009) Kravcov and (Abdyrasulova Kyrgyzstan was Kyrgyzstan hs eto dsrbs h stain t h state the at situation the describes section This oss n epne o te investor. the of expenses and losses 57
investor did not receive any compensation. compensation. any receive not did investor in Kyrgyzstan in Kyrgyzstan was supervised and operated by operated and supervised was Kyrgyzstan Kyrgyzenergo
. most of the companies owned by the the by owned companies the of most ,
which gained independence only 22 22 only independence gained which
(Abdyrasulova and Kravcov 2009) Kravcov and (Abdyrasulova .
ranked 154 among 176 countries countries 176 among 154 ranked According to the Transparency Transparency the to According reason for choosing the energy energy the choosing for reason
” , which was responsible for for responsible was which ,
ent. The international arbiter international The ent. lack of experience and other other and experience of lack
oeg ond company owned foreign
justified its actions by actions its justified
. As a result of of result a As . the
communist
The main main The the the - . ,
CEU eTD Collection following state bodies state the of hands the in are companies CompanyDistribution (heat): companiesDistribution (electricity): Transmission Company: Generatingcompanies: Kravcov 2009) 2001 by reforms o o
Ministry ofEnergy State Fund for State Property Management the Despite 7. 6. 5. 4. 3. 2. 1. 8.
OAO “Bishkekteploset” OAO “Djalal OAO “ Oshelektro” OAO “Vostokelektro” OAO “ Severelektro” OAO “ Nacionalnaya Elektricheskaya Set OAO OAO “Elektircheskiye Stancii” :
h cuty a 8 opne i te etr hc are which sector the in companies 8 had country the
policy towards privatization the controlling interest controlling the privatization towards policy
“ GES” Chakan
(Abdyrasulova and Kravcov 2009) (Abdyrasulova and Kravcov
and Industry and - Abadelektro”
and the government manages the sector through the the through sector the manages government the and
58
: Kyrgyzstana”
(93
(Abdyrasulova and and (Abdyrasulova .7 2 %)
in all eight all in CEU eTD Collection management effective lacks and control financial proper lacks corrupted, highly is country the of sector energy the states and Republic Kyrgyz in Initiative Transparency energy sector conducted Tech Tetra company consulting In 2011 by the request of the Ministry of Energy the American engineering and and engineering American the Energy of Ministry the of request the by 2011 In Another report prepared by the Anticorruption Business Council, Fuel Energy Sector Sector Energy Fuel Council, Business Anticorruption the by prepared report Another o o o o o o o o o
(Tetra Tech 2011) (Tetra Tech Incompanies the some themanagement changes. resisted to their obligations. stick not do sometimes suppliers the and overpriced were purchases some that reported Tech Tetra activities. procurement over control lack companies The formal purpose for only prepared are and plans develop to used not are reports financial The The companies inventory lack controls. well equipment. not are companies the of employees i work of organization The underperformingand agents take measures toincrease efficiency. The deliberately increasing technical to losses that stated report Tech Tetra calculations, own on Based losses. technical of 30% report to tend companies distribution The Thegeneral companies are in reported tobeineffective and inefficient. The corporate organizational framework is structured in a way that it is difficult to detect to difficult is it that waya in structured is framework organizational
h adt opn sset the suspects company audit the (ADC 2012) (ADC governance isreportedweak. tobe s.
. The
main .
In January 2013 the Ministry of Energy registered registered Energy of Ministry the 2013 January In findings of the Tetrafindings ofthe Tech
an audit of audit an rpre t b wa ad nfiin a the as inefficient and weak be to reported s 59
NSN a similar had UNISON ed that such high such that ed
performance of the companies in the the in companies the of performance hide commercial losses. - trained and lack appropriate appropriate lack and trained
distribution
loss is impossible. It wa It impossible. is loss
are below: listed
findings. The report report The findings.
companies
of s CEU eTD Collection country. the in climate investment the worsen policies such that lose thecase the to lead inevitably will government the of action The project. the to related objects expropriate the o denunciation the require which Commission, State the of recommendations the fulfill to order In compensation. effective” and adequate, “prompt, require which standards international the with accordance in losses their investors foreign outcomes4.3 Possible on the consequenc the and Kumtor like had never Kyrgyzstan nationalized. being after face may Kumtor the that problems and obstacles possible the shows It thesis. sp have section this of outcomes The management. state that show companies state the in management poor has provide adequate to services 1 for Gazprom Russian of example another is gas) (natural “Kyrgyzgaz” company The situation. critical a in is country the of system electr of cases 537
int case of unsuccessful negotiations with the Centerra Gold, the government will have to to have will government the Gold, Centerra the with negotiations unsuccessful of case ernational p arbitration economy. Kyrgyzstan most the of one is Kyrgyzstan summarize, To B ased on the previous nationalization experience of the country the of experience nationalization previous the on ased
and will be orderedcompensateand be losses will ofinvestors the to
icity power outages power icity
os o hv sfiin resource sufficient have not does poorly performing state performing poorly
and recommendations and USD in autumn of 2013 due to high indebtedness and inability to to inability and indebtedness high to due 2013 of autumn in USD
- the rocess owned companies are highly inefficient and lack effective effective lack and inefficient highly are companies owned
population es of ineffective management can management ineffective of es .
the The thesis has shown that the country has shownthatthecountrychances high has to The thesis - owned enterprises. The reports of independent audit audit independent of reports The enterprises. owned
(VB 2013) (VB
experience of experience
(Tribuna 2013) - owned enterprise, owned
60
, which clearly shows that the whole energy energy whole the that shows clearly which , ecial implications to the main topic of this of topic main the to implications ecial
corrupted countries in the world which which world the in countries corrupted managing gold companies of this of companies gold managing s
f all agreements related to Kumtor in Kumtor to related agreements all f Slao 2012) (Sultanov .
In wh
the
c s on o esl to sold be to going is ich have .
case of nationalization, nationalization, of case
,
the thesis has shown shown has thesis the
the to compensate the the compensate to
negative impact impact negative
scale
CEU eTD Collection seems thestalemate theonlyway outfrom situation. offer 2013) already had Gold Centerra 2009 In country the in climate limited. rather is tools of Department policy rangeof the 2009, ofagreement the review to rejects Gold Centerra the Incase Justice. the and Parliament the Government, the by approved and reviewed were scale. this of companies managing in experience have doesn’t country the and project investment management. effective state the that shown has the as optimistic rather be to seem itself mine the manage can country the that stating The company. the of disposal effective the about doubts serious sold were companies nationalized questionable previously the of some that shown has thesis international assistanceeconomic situation. breakup may the worsen international the on dependent highly is which actions, do they as donors, international from support lose to risks Kyrgyzstan
these
and now there are more goldfields available for exploration for available goldfields more are there now and
h c The T
he future of the Kumtor after the nationalization seems to be rather opaque. The The opaque. rather be to seems nationalization the after Kumtor the of future he
new fields new
circumstances to internal investors. investors. tointernal circumstances urrent government does not have much room room much have not does government urrent
was openly stated by the EBRD r EBRD the by stated openly was ,
to Centerra Gold in return for revision of the agreement of 2009 of agreement the of revision for return in Gold Centerra to the thesis proposes the alternative that can possibly benefit both s both benefit possibly can that alternative the proposes thesis the
The thesis has shown that the Kumtor Project is the first big big first the is Project Kumtor the that shown has thesis The sd fo te polic the from Aside - we etrrss n h cuty lac country the in enterprises owned
sho wn interest in other gold field gold other in interest wn aia inflows capital 61 y options which may damage the investment investment the damage may which options y
The level of corruption in the country cr country the in corruption of level The epresentati
ve. It was shown that the country country the that shown was It ve. Adfetvns 2009) (Aideffectiveness for maneuver as all agreements agreements all as maneuver for k competitiveness and lack lack and competitiveness k
claims of political leaders leaders political of claims . The government should government The .
in Kyrgyzstan in
not appreciate such such appreciate not
(Avdeeva
analysis n the and under under eates ides. .
It
CEU eTD Collection decisionexpected is innear future. government the Currently 2009. and low extremely therefore seemsgoing cause meaningful to costswithout for additional option this return. are process arbitration international the win to chances The country. rul the on weighted based more decisions take to desirable is it country the of economy the to operations company the of significance to Due analysis. further needs and hasty bit a be to seem negotiations ag all denounce to State the Commission of recommendations The losses. high bear to risks and position unfavorable an countryforreasons. several may nationalization state the of performance the assessed and processes arbitration international the at experience the property, private natio in government the of experience the evaluated thesis the analysis for ground a set to order In country. the in project investment direct foreign biggest the towards On The present study has shown that shown has study present The policy nationalization the of consequences possible the assessed has thesis The The thesis proposes to proposes thesis The
ht em te odils will goldfields the terms what lead to negative consequences for consequences negative to lead and Centerra and - owned enterprises. The analysis revealed that policy towards towards policy that revealed analysis The enterprises. owned e of law and stick to all international obligations taken by the the by taken obligations international all to stick and law of e
offer other goldfields in return for revision of the agreement of of agreement the of revision for return in goldfields other offer
reements related to Kumtor in case of unsuccessful unsuccessful of case in Kumtor to related reements
CONCLUSION
Gold are holding negotiations about t about negotiations holding are Gold by nationalizing Kumtor, Kyrgyzstan puts itself into itself puts Kyrgyzstan Kumtor, nationalizing by
be bargained is a matter of bilateral negotiations. negotiations. bilateral of matter a is bargained be 62
the socio the - econ omic well omic he issue and the the and issue he - being of the the of being nalizing
sound
CEU eTD Collection Bayulgen, Oksan. Bajaj, Vikas. Avdeeva, E. Auty, Richard M. Arazmuradov, Annageldy."Foreign Aid, foreign direct investment anddomestic investment nexus in Al Ajihodjaeva, А. Aide ADC. "Korrupciya v energosektore Kyrgyzstana Corruption / in energythe sector of Kyrgyzstan." Abdyrasulova, N.,and N. Kravcov. "Upravleniye Sectorom E Abdyraeva, Aiganyw. Abakirov, Nurshat. "ETH Zurich." - Sadig, "Outward J. Ali Foreign Direct Investment andDomestic Investment: the Case of ffectiveness. http://www.imf.org/external/pubs/ft/wp/2013/w Developing ." (accessed Arpil 29, 2013). unemployed people reached 212 Republic.html (accessed May 08,2013). (accessed May 06,2013). http://adc.kg/. kz.org/attachments/165_164_EGI_final%20 and practical analysis." Institucionalniy prakticheskiy i Energy / analiz Sector management Kyrgyzstan in institutional : 2013). covered by China. doljen nesti Kitay The/ main costs of building railroad China 6ad2 kms1.isn.ethz.ch/serviceengine/Files/ISN/48349/ichaptersection_singledocument/36c360e5 Connecticut, March 2005. (accessed April 24, 2013). http:// treasury. kazny For/ whom the Development Fundwill explore Djeruy? Thegold is flowing bythe Press, 2001. http://mpra.ub.uni landlocked economies in Central Asia." - 491d www.nytimes.com/2010/07/17/business/global/17textile.html?pagewanted=all&_r=0
Dlya kogo Dlya kogo fond razvitiya Kyrgyzstana budet razrabatyvat Djeruy? Zoloto utekayet mimo Bangladesh, With Low Pay, Moves on in China.
2013. http://www.centrasia.ru/newsA.php?st=1256633760 (accessed May 08,2013). Chislo bezrabotnyh Kyrgyzstane v dostiglo 212 tysyach chelovek / Thenumber of - b9f8 Country Profile: Aid. Resource Abundance andEconomic Development. Foreign Foreign capital Centralin Asia and Caucasus:the Curse or Blessing? .
http://www.imf.org/. Septermber 2012.http://adc.kg/images/stories/files/otchet%20minenergo.pdf - Osnovnye zatraty nastroitelstvo jeleznoy dorogi Kitay fce4b5b8ce81/en/2.pdf (accessed March 22,2013). -
muenchen.de/ March 18, 2013.http://www.knews.kg/ru/econom/29355/ (accessed April 25, http://open
ethz.ch. B 36958/1/MPRA_paper_36958.pdf (accessed April 19,2013).
thousand. 2009. http://www.aideffectiveness.org/Country IBLIOGRAPHY -
2013. society
March 5, 2008. http://mpra.ub.uni
-
kz.org/. 2012. http://www.kyrtag.kg/?q=ru/news/26962 63 version_RUS.pdf (accessed May 06, 2013).
p1352.pdf (accessed April 25, 2013).
October 2009. http://open
lektroenergetiki v Kyrgyzstane: July 16,2010.
- muenchen.de/. -
Kyrgyzstan New York: UniversityOxford
- Kyrgyzstan -
December 21, 2011. Uzbekistan must be - society - Kyrgyz - Uzb
- ekistan
- -
CEU eTD Collection Encyclopædia Britannica. Embassy the of Kyrgyz in Ukraine. Republic "Ivesticionnaya politika Kyrgyzskoy Respubliki / Ebrahimzadeh, Christine. Dzyubenko, Olga. Dudka,Irina. Denisinko, Evgeniy. Denisenko, Dmitriy. Cologlu, Ziya. Cisarbitration. "International Centre for Settlement of Investment Disputes. In the proceeding between Centerragold. Centerra Gold. Centerra Gold. Business Dictionary. Bloningen, Bruce A. _chelovek.html (accessed May 2,2013). http://www.vb.kg/doc/201446_na_miting_z meeting onKumtor gathered about 1000people. 2013). http://www.thewashingtonreview.org/artic content/uploads/2012/07/Sistem http://cisarbitration. Sistem Muhendislik Insaat Sanayi ve Ticaret A.S and Kyrgyz Republic." (accessed April 28, 2013). ink response theto report of State Comission. 2013). http://www.businessdictionary.com/definition/portfolio ign%20direct%20investment&topicid=&result_number=1 (accessed April 24,2013). http://www.dictionaryofeconomics.com/article?id=pde2008_F000168&edition=current&q=Fore April 24,2013). http://www.britannica.com/EBchecked/topic/1025379/foreign http://kyrgyzembassy.com.ua/?page_id=12667 (accessed April 27, 2013). Investment Policy of the Kyrgyz Republic." h (accessed April 29, 2013). http://www.reuters.com/article/2012/06/15/kyrgyzstan 28,June 2010. http://www.centrasia.ru/newsA.php?st=1277722200 (accessed May 03,2013). Kyrgyz style Nationalizationof (accessed May 06,2013). ttp://www.imf.org/external/pubs/ft/fandd/basics/dutch.htm#author (accessed April 25,2013). - i - kompanii
Nacionalizaciya pokyrgyzski History Centerra of Gold. The Wahington review ofTurkish and Eurasian Affairs . Prospectus. Kumtor publikuet otvety naotchety gosudarstvennoi komissii Kumtor/ publishes the
Gold mine ice crushes Kyrgyz economic growth hopes. Audit Velit Velit Audit / Orders. . Na miting za nacionalizaciyu Kumtora sobralos okolo tysyachi chelovek The / The New Palgrave D - BusinessDict kumtor
Dutch Disease: Wealth Managed Unwisely. Foreign direct investment (FDI). com/.
Prospectus, Toronto: Centerra, 2004. - na
-
Sepetmber 09, 2009. http://cisarbitration.com/wp otchety ionary.com. - -
v. seizure or an act of returning things that belong to people?
- 2012. http://www.c - gosudarstvennoj Kyrgyz ictionary of Economics Foreign : Direct Investment . -
reiderskiy zahvat ili vozvrasheniye narodnogo dobra? /
2013.
les/poverty 2013. http://www.kumtor.kg/ru/otvet 2012. http://members.vb.kg/2012/01/11/enerj/3.html - 64 a_nacionalizaciu_kymtora_sobralos_okolo_tysiachi Republic.pdf (accessed May 04,2013). http://kyrgyzembassy.com.ua/.
October 3,2012. - komissii/ (accessed May 1,2013).
2013. - enterragold.com/corporate/history in - gdp - investment.html (accessed April 24, - kyrgyzstan.html (accessed April 16,
- idUSL5E8HF79520120615 - direct
March 28,2012.
July 2010 .
June June 15, 2012. - investment
2013. - - - centerra FDI/ (accessed
-
gold 2012.
-
CEU eTD Collection Govindacharya, N. K Glushak, Ekaterina. Fysul, Mirza. FNI Report. FNI Group. Petrol FNI Legal. FNI Results. Auction FNI. Fergananews. Farra, Faddi, Claire Gurgio, andMarina Cernov. "The Competitiveness Potential Centralof Asia." Encyclopedia, Travel. Encyclopedia World Economy. Encyclopedia Britannica. — . nati Akcii doliAkcii i v ustavnom kapitale Shares / and common stock. http://www.fni.kg/view_material.php?id=221 (accessed May 03,2013). on current legal issues concerning nationalizedthe objects. 2012. http://www.fni.kg/view_material.php?id=217 (accessed May 04,2013). sobstvennosti 22 Maya 2012 Open / auctions results on selling the state proprty, 22 May 2012. http://www.fni.kg/view_material.php?id=180 (accessed May 03,2013). 2013). Kumtor. po Kumtoru Kyrgyzstan:/ Majority coalition approved denunciation the of the agreement on oecd.org. (accessed March 22,2013). http://celestial.com.kg/articles/travel/Basics stops DirectInvestment. (accessed April 26, 2013). govindacharya/ (accessed April 25, 2013). http://www.ibtl.in/news/exclusive/1588/fdi http://www.referat.ru/referats/view/17250 (accessed April 25,2013). consequences of FDI for recipient countries. inostrannyh investiciy v April 30,2013). http://studypoints.blogspot.hu/2011/03/advantages 02, 2012.http://www.fni.kg/view_material.php?id=216 (accessed May 03,2013). http://www.fni.kg/ onalization. Otchet i tekushey situacii ssudebnymi d - importance Otchet fond po nacionalizirovannym obyektam Report / on nationalized objects.
http://studypoi Kyrgyzstan: Koaliciya parlamentskogo bolshinstva odobrila denonsaciyu soglasheniya
January 25,2013. http
2011. http://www.oecd.org/daf/psd/ 100% shares in Petrol Group. of
2013. http://www.britannica.com/EBchecked/topic/405796/nationalization Specialnye, ekonomicheskiye politicheskiyei posledstviya privlecheniya Rezultaty otkrytyh aukcionov po FDI in retail will lead unemploymentto .
Celestial Mountains Travel Encyclopedia of Kyrgyzst -
of November 11, 2012. http://world view_material.php?id=162 (accessed May 04,2013). Central Asia. - financing nts.blogspot.hu/.
ekomiku prinimayushih stran / Special economic and political Hot money andsudden stops: Importance Financing of Foreigvia
- ://www.fergananews.com/news.php?id=20124 (accessed May 2, via
April 19, 2013. - foreign
March 18, 2011. -
- direct - 65 in on
elami ponacionalizirovannym obyektam / Report
April 2004. 46974002.pdf (accessed April 19,2013). - 2011.
retail -
Kyrgyzstan/Economy/Economy_81.htm realizacii obyektov gosudarstvennoi
- investment.html (accessed April 24, 2013). - of - - economics.org/467 will - nationalization_8368.html (accessed -
lead Novemb
2011. 2012. - to - unemployment er 24,2011.er
an. -
hot
- money
---
k.n. - and
-
February - sudden n
- CEU eTD Collection — — Kumtor. Kokaisl, Petr, and Amirbek Usmanov. "Czech University Agriculture." of Karamaev, Sergey. Kanekeev, Dair. Jusupzhan, Janyl. IssykkulInvest. Investment Council. Informbureau. Infogeo. Industry, Kyrgyz. History of Kumtor. Herzer, Dierk. "How does the FDI affect really developing countries' growth?" Hawkins, John. Graham, Jeffrey P. . . Provision on I Kumtor.kg. Report form Sinzhan. kumtor/ (ac investmentcouncil.kg/.../0_Invest_policy290708.doc (accessed April 30,2013). http://abc.informbureau.com/html/iaoeiiaeecaoess.html (accessed April 26, 2013). http://www.infogeo.ru/metalls/news/?act=show&news=38365 (accessed April 29, 2013). production of gold Kumtor in decreased by 64.4% 7 first in months of 201 Kyrgyzstan. 2013). http://www.uni ca/page/full/ (accessed April 24,2013). http://townhall.com/columnists/johnhawkins/2011/03/08/5_reasons_unions_are_bad_for_ameri April 24,2013). http://www.going development (accessed March 22, 2013). relations/contribution http://www.hks.re/ (accessed April 16,2013). 16, 2013). 2011 inare order and under the control of Fund.the (accessed April 16, 2013). Proizvodstvo zolota naKumtore za 7 mesyacev 2012goda snizilos na64.4% The / Contribution to the Economy. - 06
- Nacionalizaviya Nationalization./
15 2013. http://www.kumtor.kg/ru/media Project Kumtor. 5 Reasons Unions Are BadFor America.
Ni cessed April 28, 2013). ssyk - V poiskah Kyrgyzov vKitae: Reportaj iz Sinzanya / pursuitIn of Kyrgyzs China:in Stanovlenie PromyshlennostiStanovlenie Kygryzstana Development / of industrial sect
09 2013. http://www.welcome.kg/ru/economics/industry/ (accessed April 16,2013). chto iz nacionalizirovannogo imushestva neushlo na levo All / nationalized objects - Understanding Foreign Direct Investment (FDI). lenta.ru. Kumtor.kg. fund/ (accessedfund/ April 29, 2013). Tendenci - - - 48 graz.
Kul DevelopmentRegion Fund. - - global.com/articl 16 (accessed 16 (accessed May 03,2013). at/socialpolitik/papers/Herzer.pdf (accessed April 16, 2013).
-
2012. http://rus.azattyq.org/content/china_kyrgyz_/24269672.html to August i razvitiyai na2006 god / Growth trends for yearthe 2006. of -
the 2013. http://www.kumtor.kg/en/deposit/history/ (accessed March 22,
2013. http://www.issykkulinvest.kg/ru/publications/success/project
- kyrgyz
19, 2004. http://lenta.ru/articles/2004/08/18/coup/ (accessed April
Janu
es/understanding_foreign_direct_investment.htm (accessed - economy/ (accessed April 29, 2013). ary 1,2013. http://www.kumtor.kg/en/media
2013. 66
- 2011. http://delo.kg/index.php/health
relations/contribution
2013. http://www.kumtor.kg/en/region
March 8, 2011.
June 18,June 2005. www.hks.re. - to - uni the
2.
- - 2012. graz.at. kyrgyz
2012.
- -
- economy/ 2013. 7/2894 or of -
- -
CEU eTD Collection Musaev, Ardakbek, interview by Maksat Musaev. Moosa, Imad. Direct "Foreign Investment Theory, Evidence and Practice." Ministry Economy of Kyrgyz the of Republic. "Investicionnyi klimat Investment / climate." MID. Melnichuk, Ta Mazykina, Julia. Lushnikova, Tatyana. "Uprvaleniye gosudarstvennoi i municipalnoi sobstvennostyu Public property / Loayza, Norman, Alfredo Mier y Teran Lin, Lianlian, and John R. Alliso Leitao, NunoCarlos. "FOREIGN DIRECT INVESTMENT AND GLOBALIZATION." KyrgyzAltyn. Kumtor Report. Economika Kyrgyzskoy Respubliki Economy / of Kyrgyz the Republic. http://eng.24.kg/business/2011/04/06/17361.html (accessed May 04, 2013). 149811.html?page=6 (accessed April 26,2013). management. ." Natural Resource Curse. rnals (accessed April 26, 2013). http://heinonline.org/HOL/Page?handle=hein.journals/yjil19&div=8&g_sent=1&collection=jou http://heinonline.org/. %26sa%3DX%26ei (accessed April 25, 2013). %2Band%2Bglobalization%26hl%3Den%26as_sdt%3D0%26as_vis%3D1%26oi%3Dscholart http%3A%2F%2Fscholar.google.com%2Fscholar%3Fq%3Dforeign%2Bdirect%2Binvestment http://repositorio.ipsantarem.pt/bitstream/10400.15/608/1/Nu http://repositorio.ipsantarem.pt/. kumtor&catid=36:invest http://www.plusit.biz/ka/index.php?option=com_content&view=a 2013). centerra resposethe theto report of State Comission. 20zgjedhur.pdf (accessed April 16,2013). et%20e%20Jashtme http://www.petritgashi.000space.com/Fakulteti%20Filologjik,%20UP/Master/Mbi%20Investim 3&lang=ru (accessed April 27, 2013). http://www.mineconom.kg/index.php?option=com_content&view=art http://www.mineconom.kg/. http://web87381.vhost056.c (accessed April 16, 2013). http://www.bbc.co.uk/russian/international/2011/12/111222_melnichuk_viskuli_ussr.shtml
Project Kumtor. - tyana. gold Kumtor Publikuet Otvety na Otchety Gosudarstvennoy komissii / Kumtor publishes Nationalization. Kyrgyzstan as adog in - ink BBC Russian. http://do.gendocs.ru/. - i - kompanii %20Direkte/FDI_Theory%20evidence%20and%20practice_kapituj%20te%
1994.
- December 8, 2011.
proekti&Itemid=2 (accessed April 28,2013). Bonn, February 2013.
n. "An Analysis of Expropriation and Nationalization Risk in China."
n/ru/content.asp?cid=282&id=179 (accessed April 30, 2013). September 22, 2012.
- December 23,2011. kumtor
, and Jamele Rigolini. 2012. -
na 2007. http://do.gendocs.ru/docs/index - otchety
67 Kadji
February 22,2013.http://www.kumtor.kg/ru/otvet
- gosudarstvennoj - - Say Electrotechnical Plant the - manger. Poverty, Inequality, andthe Local noLeitao_APE_2012.pdf?referer=
April 06, 2011. - rticle&id=46:proekt komissii/ komissii/ (accessed April 24, petritgashi.com.
2013. icle&id=1481&Itemid=65
-
(April 15,2013).
2002. -
- CEU eTD Collection Tetra Tech. Sultanov, Marat. Sultanbekova, Zarema. State Comission. Schifferes, Steve. Saaduev, Magomed, Pamira and Saynazarova. "Nacionalizaciya kak prava institut instrumentariyi Saad Pym, Hugh. Petrov, Artem. Otorbaeva, Asel. Otogonova, Anara. "Nauka Tsentralnoy Azii Science / Centralof Asia." Oreshkin, Andrei. Nurashev, Timur. National Statistics Committee. "Postupleniya pryamyhi - Filho, Alfredo,Filho, and WeekJohn prava Kyrgyzstan." politiki v Kyrgyzstane Nationalization / anas institute lawof an World Quarterly http://www.bbc.co.uk/news/business http://www.rg.ru/2013/03/06/milliardy.html (accessed May 03,2013). Nationalization. http://www.oel.bik.org.kg/ru/view/5/ (acce http://www.rg.ru/2013/03/14/ges.html (accessed April 25, 2013). decision onwho will prepare the (accessed April 19, 2013). attractive to foreign investors. http://stat.kg/images/stories/docs/KZ/Invest/invest12%20.pdf (accessed April 27, 2013). inflows by country." . kumtor 2012.June http://business.financialpost.com/2012/07/25/trouble regionah/ (accessed May 2,2013). http://kloop.kg/blog/2013/04/24/miting meeting are promised to t Economyof the of KyrgyzRepublic, 2013. proizvodstv.bezop. processov soc. i zashity State / Comission report onKOC. Company" norm i treb. po racionalnomu ispol. prirodnyh res., ohrane okrujayushey sredy, h
2011. http://www.energo.gov.kg/site/images/documents/124.pdf (accessed May 06,2013). ttp://news.bbc.co.uk/2/hi/business/7250252.stm (accessed April 26, 2013). - Management Diagnostic of the Electricity Distribution Companies of Kyrgyzthe R Margaret Thatcher:Margaret How the economy changed. i - - instrumentarii gold Milliardy v Billionsplyus / plus.for Trouble in Kyrgyzstan Kyrgyzstan. Exproproatsiya =Nacionalizaciya Kyrgyzstan:/ Expropriation = Otchet Gosud. Komissii po proverke izucheniyu i soblud. ZAO "Kumtor Operating The lessons of nationalisation. Kazakhstan V respublike reshayut, budetkto proektirovat Kambaratinkuyu GES - mine http://www.k
2011. http://www.ia Miting zanacionalizaciyu Kumtora obeshayut prodoljit v regionah The / , 2013: 34:1, 1 - is - http://stat.kg/. under - politiki - lider SNG po investicionnoy privlekatelnosti Kazakhsta / ake place in regions.the
- - a.kg/. political - s. "Curses, Diseases andOther Resource Confusions."
v December 14,2006. http://www.nomad.su/?a=4 - - 21. kyrgyzstane (accessed April 27,2013).
plan for Kambarata GES 2013. http://www.k —
2011.
- - Centerra’s Kumtor gold mine is under political - attack/ (accessed May 07,2013). 22073527 (accessed April 26, 2013). centr.ru/expert/10796/ (accessed May 04,2013). - za -
ssed April 16, 2013). February 18,2008. natsionalizatsiyu
68
Mar
ch 16, 2013. nostrannyh investiciy postranam FDI /
April 24, 2013. - a.kg/ru/natsionalizatsiya
April 8,2013. - -
kumtora 1 is in process.
d policythe tool in -
in oel.bik.org.kg. - kyrgyzstan - obeshhayut
March 14,2013.
- Bishkek: Ministry - - kak centerras 200612140019
- 2007. - 1 / The1 / n is the most prodolzhit - institut attack. Third
epublic - -
- v - CEU eTD Collection VestiFinance. Velde, Dirk Willem. "Foreign Investment Direct andDevelopment: An Historical Perspective ." "KolichVB. United Nations. "Foreign Direct Investment Central in Asian and Caucasian Economies: Policies and UNESCO. UNCTAD. "Global Investment Trends Monitor." U.S. Department State of . Investment"2012 Climate Statement T Tynaeva, Nurzada. Tribuna. "Gazprom kupit Kyrgyzgaz osenyu 2013 Transparency Trading Economics. Toktomushev, К. Thestar Business. ynaliev, Urmat. (accessed April 27, 2013). http://www.state.gov/. (accessed April 03, 2013). http://www.gezitter.org/economics/16391_natsionalizatsiya_komu_polza_komu_vred/ November 30,2012. 308 (accessed May 07,2013). http://www.tribuna.ru/ne 2013." 2013. http://cpi.transparency.org/cpi2012/results/ (accessed May 05,2013). of http://www.tradingeconomics.com/kyrgyzstan/foreign http://www.kirghiz.ru/enc/istoriya_182/kirgiziya_v_per ction_forecast.html (accessed April 29, 2013). http://www.thestar.com/business/2012/03/27/centerra_gold_shares_plunge_after_cutting_produ January 25,2013.http://www.vestifinance.ru/articles/22470 (accessed April 19, 2013). opinion odi.org.uk. _mesiac.html (accessed May 06,2 http://www.vb.kg/doc/215740_kolichestvo_avariynyh_otklucheniy_v_setiah_prevysilo_500_za outages exceeded 500 in one month." February 2013. Issues." of http://www.unesco.org/new/en/culture/themes/dialogue/general http://unctad.org/en/PublicationsLibrary/webdiaeia2013d1_en.pdf (accessed April 18,2013). - - civilizations gdp - millionov History CivilizationsHistory of of Central Asia. estvo avariynyh otklucheniy v setyah prevysilo 500za mesyac / The cases emergencyof -
wb - International. "Corruption Perceptions Index 2012." 2012. Pritok Pryamyh Investiciy v mire upal na 18% Theworld / FDI flows dropped by 18%. . Studies in Trade and Investment. files/850.pdf (accessed April 18,2013). -
Nacionalizaciya: Komu polza, komu vred? Nationalization/ Winners : andLosers. data.html (accessed April 30, 2013). Kirgizskaya SSR/ Kyrgyz SSR. January 2006. http://www.odi.org.uk/sites/odi.org.uk/files/odi Centerra Gold shares plunge after cutting production forecast. http://www.kumtor.kg/. - Foreign direct investment inflows, Kyrgyzstan. somov - of - central -
June June 2012. http://www.state.gov/e/eb/rls/othr/ics/2012/191179.htm v - issyk ws/economy/gazprom_kupit_kyrgyzgaz_osenyu_2013_go_goda/
-
asia/ (accessedasia/ April 19, 2013). - kulskij 013).
2012. http://www.kumtor.kg/ru/kumtor - fond
Bangkok United : Nations, July 2003.
- 2011. http://unctad. razvitija/ razvitija/ (accessed April 29,2013). - 69 goda / Gazpromgoda / will buy Kyrgyzgaz autumn in
2012.
- direct iod_229/ (accessed April 16, 2013). org/.
-
Kyrgyz Republic." -
investment
2013. January 23, 2013. - and - regional
- net - assets/publications
March 2012. - - otchislil - inflows histories/h
- - percent pochti
istory
- - - -
CEU eTD Collection Yakisik, Harun. "Sosyoekonomi." Xiaojing, Chen. World Investment Report. "Global Trends FDIin ."
http://www.sosyoekonomi.hacettepe.edu.tr/070201.pdf (accessed March 22, 2013). ore.ieee.org%2Fxpls http://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=6015741&url=http%3A%2F%2Fieeexpl http://
unctad.org/en/Docs/wir2010ch1_en.pdf (accessed April 19, 2013).
Study on technology %2Fabs_all.jsp%3Farnumber%3D6015741 (accessed April 25, 2013). sosyoekonomi.hacettepe.edu.tr. - seeking FDI strategy of Chinese enterprises. 70 http://unctad.org/.
July 2007.
2010.
2011.