No Comment — September 22, 2010, 2:05 pm

Otunbayeva, Obama to Discuss Fuel Contracts

The Washington Post scores an interview with Kyrgyz President Roza Otunbayeva in New York. Notwithstanding the immense range of problems facing her country, including unrest in the south, discussion of the U.S. government aviation fuel contracts takes center stage. Otunbayeva’s government has resuscitated the state fuel supply agency, and she wants it to receive the potentially massive fuel supply award.

Otunbayeva, who will meet with Obama on Friday, said she would be “very unhappy” if the Defense Department presses ahead with the process and awards a new contract. In a statement, the Pentagon said that it was “open to exploring” the idea of supplying fuel through a state-owned enterprise. “The U.S. priority is to ensure a secure, reliable and uninterrupted supply of fuel to the Transit Center,” the statement said.

In the meantime, the Defense Department is said to be in the final stages of decision-making about the aviation fuel contracts involving Kyrgyzstan, which (including fuel that passed to Afghanistan) may have amounted to some $3.2 billion just in the period from 2005 forward. Red Star and Mina Corp., which have held these contracts up to this point, are widely expected to get the Pentagon’s award. They also appear to be the target of the Kyrgyz government’s ire, what Otunbayeva referred to in her interview as “the absolutely dark corner” of Pentagon contracting.

Kyrgyzstan has also shaken up its team investigating the government contracts and their relationship with deposed dictator Kurmanbek Bakiyev. Kubatbek Baibolov, formerly the minister of the interior, has now been appointed procurator general. In an interview, Baibolov insisted that uncovering the connections between the Bakiyev family enterprise and the Manas aviation fuel supply arrangements was a priority for the nation’s law-enforcement agencies. Kyrgyz authorities have requested U.S. assistance in apprehending a list of persons they believe were involved as intermediaries for the Bakiyevs in connection with aviation fuel deals.

While Otunbayeva promises transparency and an end to corruption, it’s far from clear that simply substituting a state company for private companies would put an end to the current dilemma. The question hovering over the entire fuel supply question is whether the Pentagon is using the payment stream from fuel sales to buy the cooperation of key local government players. Most attention has been drawn to Kyrgyzstan because of the disclosures that followed the revolution there in the spring. But similar issues exist in Afghanistan, Uzbekistan, Saudi Arabia, and Jordan, for instance.

In a report from June 2008, NBC investigative reporter Aram Roston found a similar pattern in the Pentagon’s fuel supply deals in Jordan. In that case,

the American military structured the deal, [so that] only a company with the blessing of the Jordanian government could win the contract. A bidder was required to have a Jordanian government “Letter of Authorization,” and only IOTC received such a letter.

The award went to the company that got the Jordanian Government’s letter, but which was far from the low bidder. A lawsuit in Florida ensued by a member of the Jordanian royal family who demands a commission for having brokered the government’s blessing.

Otunbayeva, however, insists that the Kyrgyz proposal will be fully transparent and carefully monitored—unlike the current arrangements, which remain enshrouded in extraordinary secrecy. She also argues that the fewer links present in the chain, the less opportunity will exist for corruption. Although Kyrgyzstan ranks high on Transparency International’s corruption index, it also has a robust civil society sector, which helps explain why it has to date been far easier to learn details of the Pentagon’s Kyrgyzstan dealings inside Kyrgyzstan than in Washington, where transparency is often invoked but rarely practiced.

When Obama and Otunbayeva meet on Friday, the aviation contracts will certainly figure near the top of their agenda. And the Pentagon’s commitment to oppose corruption and support transparency in contracting will be put to a severe test.

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