FACTBOX-Key political risks to watch in Kyrgyzstan

MOSCOW, June 1 (Reuters) - More than a month after a bloody revolt deposed president Kurmanbek Bakiyev, Kyrgyzstan remains a headache for key regional players -- the United States, Russia and China -- and the threat of civil war has never been bigger.

The United States leases the Manas air base, which provides significant support for U.S. and NATO operations in Afghanistan. Washington's erstwhile Cold War foe Russia, which has long dreamed of evicting the United States from ex-Soviet Central Asia, also leases a local base, in Kant.

Bakiyev, who fled and ended up in Belarus, has said his decision in 2009 to extend the Manas lease -- months after announcing the U.S. military would have to leave -- unnerved the Kremlin and was a factor in his overthrow.

He has also said Russian special forces may not have been directly involved in the revolt, but accused Moscow of meddling in the strategically located Central Asian nation's affairs.

China has a long border with Kyrgyzstan and a sizeable share in the republic's retail trade and services sector. Chinese shops and other businesses in Bishkek were looted and torched during the April 7-8 violence.

VAGUE FUTURE AFTER BLOODSHED

At least 85 people were killed in the uprising when security forces shot into crowds of protesters, some of whom seized arms and returned fire.

Bakiyev's opponents say the revolt was sparked by anger with his five-year rule, which they say was marked by deep-rooted corruption, nepotism and poverty.

The opposition was fast to form an "interim government" and declare that it was in full control. But a day of violence in which crowds of looters robbed and burned down homes in mainly Russian-speaking villages outside Bishkek, killing at least four, underscored the persistent volatility. [ID:nLDE63J24W]

On May 13, crowds of Bakiyev supporters seized key government buildings in all three southern regions though the government's backers regained control the next day. Two people were killed in the turmoil. [ID:nLDE64DOB7]

Next week, the government was forced to impose a curfew in the southern city of Jalalabad after thousands of ethnic Kyrgyz and Uzbeks clashed in the area, leaving at least two dead and over 70 injured. [ID:nLDE64IOKR]

The interim government has charged Bakiyev in absentia with "mass killing" and asked Belarus to extradite him, a request Minsk publicly snubbed.

What to watch:

-- Latest events in the south have shown that the interim government's grip on power remains tenuous. New outbursts of unrest, lootings and violence appear likely at a time when police and security forces remain largely demoralised.

Groups of civilian vigilantes can provide some protection to shops and property, but are unlikely to rebuff large crowds.

-- The Ferghana Valley, where Bakiyev has his power base, is highly flammable and may again become a scene of ethnic clashes between almost equally populous Kyrgyz and Uzbek. Before the Soviet Union's demise, hundreds of people were killed in clashes between Uzbeks and Kyrgyz near Osh, southern Kyrgyzstan's main city, in 1990.

SUPERPOWER POLITICS

The United States and Russia are at loggerheads over Kyrgyzstan, although their leaders do not publicly say so.

Washington's priority will be keeping the Manas transit centre base open but Russia wants it closed. [ID:nN08193339].

Some 50,000 troops travelled into or out of Afghanistan via Manas in March. Manas is also a hub for in-flight refuelling.

Pentagon officials say they have other options but they would be more expensive.

Both Moscow and Washington promptly offered support for Otunbayeva's interim government and have promised assistance.

In a further sign of support, Moscow appointed its heavyweight politician Vladimir Rushailo special envoy to Kyrgyzstan, charged with establishing closer ties with Bishkek.

What to watch:

-- Whether the lease will be renewed. Otunbayeva has said it will be renewed in July, but other interim officials have said it will have to wait until after elections in October.

-- Will Russia use Kyrgyzstan's volatility as an excuse to beef up its military presence? If so, how will China react?

-- Belarus's already chilly ties with ally Russia soured further after Kyrgyzstan's turmoil. President Alexander Lukashenko dubbed the uprising a "bloody coup d'etat".

-- China's eyes are riveted on Kyrgyzstan's potentially lucrative iron ore, gold and coal mining. The giant neighbour also has strong interests in textiles and agriculture. China has so far has used the mountainous nation as a major transit route for its merchandise sold elsewhere in Central Asia or Russia.

POLITICAL REFORM

The interim government has pledged to overhaul Kyrgyzstan's political system to decrease the president's powers, saying that will help prevent any leader from amassing power by placing family and clan members in influential positions.

Under the government's political reform plan, Kyrgyzstan will hold a referendum on changing its constitution on June 27, with proposed amendments aiming to reduce the power of the president and create a parliamentary republic with strong checks and balances.

Parliamentary elections are planned for October 10. The new legislature will form a new government.

The country will hold a presidential election in October 2011, and in January 2012 there will be a ceremony to mark a transfer of power. Interim President Roza Otunbayeva will be in charge until this ceremony. She will not be eligible to stand in the elections. [ID:nLDE64J05O]

What to watch:

-- How stable and sustainable will any new system be? Diplomats say the new leaders will face an uphill battle fostering democracy in Central Asia, which is dominated by authoritarian leaders.

-- Elections raise the prospect of heightened tension among the former opposition leaders now in power. Opposition forces that came to power after former longtime president Askar Akayev's ouster in 2005 were quickly fragmented, and there are differences of opinion among the current interim leaders on issues including the U.S. air base.

ECONOMY AND INVESTMENT

Kyrgyzstan's economy is dependent on remittances from its citizens working abroad, most of whom are in Russia, which make up as much as 40 percent of its gross domestic product, as well as the country's mining sector.

The mountainous nation has attracted few major private foreign investors, with Canada's miner Centerra Gold (CG.TO) alone accounting for 7.3 percent of the nation's GDP, a quarter of its industrial output and a third of all exports last year.

Centerra said its operations were not hit by the unrest.

But analysts say violent unrest has increased uncertainty for foreign investors in Kyrgzstan's mining sector, which also include London-listed Charaat Gold Holdings Ltd (CGH.L).

With very little foreign investment coming in, the country has in the past been reliant on loans from the World Bank, the International Monetary Fund and the Asian Development Bank.

The country's economic woes were seen as a major factor in the uprising.

The interim government has lowered electricity, heating and hot water rates and cancelled some sell-offs in telecoms and energy sectors that appear to have involved the business interests of Bakiyev's clan. Proceeds from these deals are due to replenish state coffers.

Kyrgyzstan's GDP was expected to expand by about 5.5 percent in 2010, but economists say the growth is from a very low base, and the size of the economy is still far below its Soviet-era level. Wages average some $130 a month.

What to watch:

-- Are potential foreign investors feeling confident about the government's ability to control the unrest. Established investors have seen sudden changes of government before, but widespread trouble might put some off [ID:nLDE63B1J9]

-- Most investors are likely to embrace government efforts to stem corruption. But it is an open question whether the country's future leadership will indeed be immune to nepotism and cronyism which sparked popular indignation that toppled two presidents in the past five years.

-- Kyrgyzstan has ample hydropower resources but no cash to develop them. Will the new government attract investors? What may scare off potential investors is the concerns voiced by far bigger neighbours Kazakhstan and Uzbekistan that depend on water supplies from Kyrgyzstan and have already criticised the construction of a hydro power plant there.

For political risks to watch in other countries, please click on [ID:nEMEARISK] (Writing by Dmitry Solovyov; Editing by Sonya Hepinstall)