“The Juice Wasn’t Worth the Squeeze” in Kyrgyzstan Fuel Contracts

The Pentagon recently announced the end of its use of the Manas Transit Center in Kyrgyzstan for logistical support of the war in Afghanistan. The arrangement unraveled due to disputes over compensation to Kyrgyzstan. These negotiations were undertaken in the shadow of strategic geopolitics vis-à-vis Russia. Relations were also, unfortunately, strained by allegations of corruption in U.S. fuel contracts. The end of the United States’ turbulent tenure in Kyrgyzstan implicates a number of issues related to wartime contracting.

In a future post, I will outline law and practice related to wartime government contracts, including contract management, subcontractor transparency, and oversight schemes. I will address some of the challenges associated with the application of typical contracting practices in asymmetric conflict and counterinsurgency environments. For example, without well-demarcated fronts of battle, supply lines that represent the execution of logistics contracts often become the front lines. I will also highlight some secondary effects and unintended consequences. Contracts executed in combat zones often involve sums that dwarf local, and war-hampered, economic activity. In other instances, security contracts—recall Blackwater—raise serious questions about inherently governmental functions, not to mention the potential for international incidents. Finally, I will survey some of the reform proposals. Manas, though, is a good initial case study.

The United States has used the airport at Manas for substantial operations in support of U.S. combat operations in Afghanistan. According to the Congressional Research Service, “[a]s of 2013, the Manas Transit Center reports that it hosts about 1,500 U.S. troops and U.S. contractors and a fleet of KC-135 refueling tankers and C-17 transport aircraft.” Since 2002, the Defense Logistics Agency (DLA) awarded well over $3 billion dollars in fuel contracts at Manas.

During this period, Kyrgyzstan has seen significant political tumult. Per the World Factbook:

Nationwide demonstrations in the spring of 2005 resulted in the ouster of President Askar AKAEV, who had run the country since 1990. Subsequent presidential elections in July 2005 were won overwhelmingly by former prime minister Kurmanbek BAKIEV. Over the next few years, the new president manipulated the parliament to accrue new powers for himself. In July 2009, after months of harassment against his opponents and media critics, BAKIEV won re-election in a presidential campaign that the international community deemed flawed. In April 2010, violent protests in Bishkek led to the collapse of the BAKIEV regime and his eventual fleeing to Minsk, Belarus. His successor, Roza OTUNBAEVA, served as transitional president until Almazbek ATAMBAEV was inaugurated in December 2011.

Of consequence to U.S. interests in Kyrgyzstan, both the Akaev and Bakiev ousters involved significant Kyrgyz political uproar grounded in allegations that the ruling families were profiting from corrupt relationships with U.S. fuel contractors. Such turmoil took place against the geopolitical competition between the United States and Russia for influence in the region. In 2009, after bilateral meetings with Russia that resulted in significant offers of aid to Kyrgyzstan, the Kyrgyz parliament voted to oust the United States from Manas. As Secretary Gates put it at the time:

I think that the Russians are trying to have it both ways with respect to Afghanistan in terms of Manas. On one hand you’re making positive noises about working with us in Afghanistan and on the other hand you’re working against us in terms of that airfield which is clearly important to us.

I first encountered the problematic military fuel contracts in Kyrgyzstan as congressional committee staff working on national security oversight issues. In the wake of the Bakiev ouster, Chairman John Tierney (D-MA) initiated a subcommittee investigation of allegations of Kyrgyz corruption in U.S. defense contracts. At the time, I was staff director and my colleague Scott Lindsay spearheaded the subcommittee’s investigative effort.

After 250,000 pages of document review and interviews in Washington, London, Dubai, and Bishkek, we produced the subcommittee staff report, Mystery at Manas: Strategic Blind Spots in the Department of Defense’s Fuel Contracts in Kyrgyzstan.

As set out in the report, large segments of the Kyrgyz public, including then-Kyrgyz President Roza Otunbaeva, believed that former Kyrgyz Presidents Askar Akaev and Kurmanbek Bakiev and their families were involved in corruption related to the U.S. fuel contracts with two affiliated companies: Red Star and Mina Corporation. The contractors were reliable suppliers of jet fuel. Perceptions of corruption regarding the fuel contracts were significant factors in the overthrow of the presidents and in growing tensions between the United States and Kyrgyzstan. The report cited evidence from the FBI that the Akaev family was corruptly involved with fuel suppliers at what was later called the Manas Transit Center. The investigation found no credible evidence of illicit involvement by the Bakiev family.

However, the investigation shined a spotlight on U.S. national security problems associated with wartime government contracts executed overseas. Specifically, there was a major contractor transparency problem. DLA did not know who owned Red Star or Mina Corp. until late 2010. Notwithstanding Russian interference in U.S.-Kyrgyz relations, the U.S. government did not know that Russia’s state-owned Gazprom gas firm had an ownership interest in a subsidiary of the U.S. contractors. Furthermore, DLA claimed it did not know that the firms were using false certifications to obtain fuel from Russia (which prohibited sale of jet fuel for U.S. military operations), notwithstanding evidence that Red Star and Mina had repeatedly informed DLA of the certifications scheme. Finally, the contracts were awarded without competition on national security grounds, and without the kind of due diligence and senior, interagency policy review that could have adequately assessed the vulnerability of a sudden Russian cutoff of fuel supply.

After the report, DLA undertook steps to diversify fuel supply but the major new supplier was majority owned by Russia. In addition, subsequent efforts to increase compensation to Kyrgyzstan, eventually totaling over $100 million, failed to adequately alleviate diplomatic tensions. As Chairman Tierney wrote: “Contracting rules that work in Boston are simply inadequate in Bishkek.”

Wartime contracts can have consequences far beyond performance needs. The lack of transparency in Manas fuel contracts—both to the Kyrgyz people and the U.S. Department of Defense—had significant bilateral, tactical, and even strategic consequences to U.S. national security interests. Some of the combat support functions at Manas will transition to an airfield in eastern Romania, but these shifts will make the drawdown in Afghanistan more difficult. In the end, per Foreign Policy, a senior defense official indicated that given all the trouble at Manas: “The juice wasn’t worth the squeeze.” 

About the Author(s)

Andy Wright

Senior Fellow and Founding Editor of Just Security, former Associate Counsel to the President in the White House Counsel’s Office. You can follow him on Twitter @AndyMcCanse.