Kyrgyz leader rejects calls to nationalise Centerra mine as riots persist

Reuters

* Atambayev says "wrong decision" will hit economy hard

* Says "paid scum" using Kumtor row to grab power

* Persistent riots show weakness of central government

By Olga Dzyubenko

BISHKEK, Oct 9 (Reuters) - Kyrgyzstan's President AlmazbekAtambayev on Wednesday rejected opposition calls to nationalisethe country's flagship venture with Centerra Gold,saying his opponents were using the dispute with the Canadianinvestor to grab power.

The Kumtor mine is Kyrgyzstan's major foreign exchangeearner and accounted for 12 percent of 2011 gross domesticproduct in the impoverished nation of 5.5 million which has seentwo presidents deposed by popular revolts since 2005.

Persistent violent riots over ownership of the mine flaredup again this week, and Atambayev's government has passed itsdeadline to renegotiate or cancel its agreements with Centerra,signed in 2009 under President Kurmanbek Bakiyev, who fled afteran uprising in April 2010.

Last month Atambayev's government and Centerra Gold signed amemorandum of understanding, which paves the way for Kyrgyzstanto swap its 32.7 percent stake for a 50 percent interest in ajoint venture that would own Kumtor, Centerra's core asset.

The draft deal was met with opposition demands to eitherboost Kyrgyzstan's share to at least two thirds, nationaliseKumtor or pass a no-confidence vote in the government.

"Certainly, I would not want nationalisation. It is fraughtwith many risks," Atambayev told journalists. "One shouldn't useblackmail and threats of resignation to force the government tomake a wrong decision."

Presidential powers are limited compared with those in thefour other Central Asian countries, which are ruled byauthoritarian leaders and whose parliaments rubber stamp laws.

Maksat Sabirov, a Respublika faction deputy, said he wouldvote to cancel the 2009 deal. "These agreements were wrong,tainted with corruption. Two presidents have been deposed due tothis reason - corruption. We have still 500 tonnes of gold left(at Kumtor), and we will tear up the past agreements."

While acknowledging lawmakers' authority, Atambayev said:"The deputies must hold a roll-call vote, because if they take awrong decision and the country is hit by financial crisis, if wages and pensions are delayed, somebody must be heldresponsible."

"PAID SCUM CRAVING POWER"

He lambasted the nationalist opposition - in minority in theparliament but still able to galvanise nationwide protests - as"the paid scum trying to reverse our political mainstream andcraving power".

"Why do they seek the government's resignation? Their goalis again to disrupt the government and cause chaos in thecountry," he said. "Democracy does not mean mob rule."

On Monday, police clashed with hundreds of locals in theadministrative centre of the northern Issyk Kul region, whereKumtor is, after protesters took the governor hostage andthreatened to burn him alive in a car doused in petrol.

On Tuesday, police pushed protesters in the same region awayfrom a motorway which they had blocked.

The riots have more than once shown the weakness of centralgovernment in the mainly Muslim country, which lies on a drugtrafficking route out of Afghanistan and where powerful localclans often have more authority than the president.

In May, Atambayev imposed a state of emergency on a districtin Issyk Kul after protesters blocked a road to Kumtor and cutoff electricity supplies, temporarily halting production.

He pledged on Wednesday to use tough methods to crack downon any new protests: "You must use weapons when a man is takenhostage and threatened with death. This is not a joke."

A spokesman for Kumtor Operating Company said it wasbusiness as usual there. He declined further comment.

Output at Kumtor dropped to 315,238 ounces (9.8 tonnes) lastyear, mainly due to ice movement in the pit, and this year isexpected to be between 550,000 and 600,000 ounces.

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