Kyrgyzstan Abandons Gold Mine Nationalization

The Kyrgyz parliament ended a debate June 27 on the proposed nationalization of the Kumtor gold mine, which is run by Canadian company Centerra Gold. The parliament instead decided to form a commission responsible for renegotiating Kyrgyzstan's contract with Centerra Gold, presumably on more advantageous terms for Bishkek.

The decision to reject nationalization is not a surprising one. Since the mine opened in 1997, the government has periodically threatened to nationalize it, only to eventually back down after receiving concessions for a better stake in the mine. Given the country's overall economic weakness, it cannot afford to drive away the much-needed capital and technical expertise that comes with foreign ownership of the mine, or risk scaring off current or potential investors by nationalizing a prominent industry. While the government's strategy on extracting concessions has been successful in the past, Bishkek will be careful not to make business conditions so onerous that they drive out foreign investment.