WTI Crude


Brent Crude


Natural Gas




Heating Oil


Rotate device for more commodity prices

John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

Central Asian Setback for the U.S. Military

The last few weeks have seen the U.S. Department of Defense suffer a number of setbacks in its effort to retain military influence overseas.

First came the startling announcement on 21 October, when President Obama announced that all American troops would be withdrawing from Iraq by 31 December under the terms of the Status of Forces Agreement. Accordingly, 39,000 U.S. soldiers will leave Iraq by the end of the year.

The deal breaker?

Washington’s demand for continued immunity for any remaining U.S. troops, and the Iraqi government of President Jalal Talibani couldn’t, or wouldn’t, deliver.

Now the handwriting’s apparently on the wall further east, as Kyrgyz president-elect Almazbek Atambaev firmly told the United States on 1 November to leave its Manas military air base outside the capital Bishkek when its lease expires in 2014.

Atambaev, the former Prime Minister, won Kyrgyzstan’s 30 October presidential election. Speaking to journalists in the wake of his victory Atambaev said, “When I was appointed Prime Minister last year, and again this year, I warned employees and leaders of the U.S. embassy and visiting representatives that, in 2014 and in line with our obligations, the United States should leave the base. We know that the United States very often participates in various military conflicts. It happened in Iraq, in Afghanistan and now there is a tense situation with Iran. I wouldn’t want any of these countries one day to make a return strike on the military base.”

If Atambaev carries through with his pronouncements, then assuming that the U.S. military effort in Afghanistan extends beyond 2014, the Pentagon’s efforts there will be impacted, as the Manas facility remains the sole U.S. military base in Central Asia outside of Afghanistan. While the Obama administration has promised to fully withdraw all troops from Afghanistan the same year that the lease for the Kyrgyzstan base expires, 2014, next year’s presidential elections could upend that scenario.

But, roiling beneath the surface, it is the Pentagon’s close relationship with the former presidential administrations of Askar Akayev and Kurmanbek Bakiev that stoked populist resentment against the Manas facility, especially the cozy fueling agreements, details of which are only slowly coming to light, but which apparently provided both presidencies with a massive “off the books” cash flow. Key to the Pentagon’s efforts were murky agreements with the fuel entity Mina/Red Star, which provided fuel for Manas so off the record that when it was awarded a no-bid renewal contract  in 2009 worth $729 million over three years journalistic inquiries were met with a stony “national security” defense to deny particulars of the agreement.

The presidency of interim president Roza Otumbaeva raised the stakes in 14 January, when Kyrgyz government representatives presented U.S. officials and Mina Corp. executives with the proposal to pay $55 per ton of fuel in excise tax, or else volunteer to pay $100 per ton of fuel directly to the state budget. Under the terms of the existing basing agreement for Manas, the U.S. government and its contractors were exempted from all local taxes.

Washington’s response was immediate and predictable. U.S. embassy spokesman Christian Wright in Bishkek said the exemption from excise tax is “vital” to the U.S. military’s ability to operate at Manas, offering the legalese, “Under the bilateral 2009 Agreement for Cooperation, the acquisition of articles and services in the Kyrgyz Republic by or on behalf of the United States in implementing the agreement is not subject to any taxes, customs duties or similar charges in the territory of the Kyrgyz Republic. Such articles and services include all fuel provided to the Manas Transit Center, including fuel supplied by sub-contractors.

This is standard practice around the world. The U.S. government has similar agreements with many countries throughout the world for fuel to be delivered free of all duties and taxes. The exemption from fuel taxes is a vital part of our ability to carry out the mission of the Manas Transit Center.”

Having thrown the dice to continue to operate Manas on the cheap, the Pentagon seems to have lost significant position on the grand Central Asian geostrategic chessboard. What is most extraordinary is that this represents the third time around for Washington wrangling over Manas and its attendant costs. After Akaev was ousted by the March 2005 “Tulip Revolution,” Washington quickly refashioned similar agreement with the new administration of President Kurmanbek Bakiev, who was subsequently ousted by popular unrest in April 2010.

For the Kyrgyz, the Russians are the devil they know, the Chinese are the devils flush with yuan, and the Americans, two decades after the collapse of the USSR, are the tight-fisted guys all too willing to cut a deal corrupting the previous presidential administrations of Akaev and Bakiev while delivering lectures about democracy. To quote some of the acerbic critics of former U.S. President George W. Bush, “all hat, no cattle.”

The Pentagon has lost yet another opportunity to expand its global footprint, but to use an American baseball metaphor, “three strikes and you’re out.” It’s not as if anyone except the most tone-deaf in Washington couldn’t see it coming.

By. John C.K. Daly of Oilprice.com

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News