02kazakh
Budapest Business Journal - Article
Last updated:
4th Jan 2002, 9:47
Politics
17th Dec 2001
Sometimes even bad business makes for good government
by Erik D´Amato
ALMATY – You’re excused if you haven’t heard the recent news from
Kazakhstan, what with all the commotion in that other ’stan down the
road. But what’s going down over here is big, and may end up being
more important for the region than the routing of the Taliban or the
smoking of Osama out of his Tora Bora hole. The situation also
offers a lesson about politics and business that is useful to far
more “advanced” transitional societies, including those in Central
Europe.
The drama boils down to a rumble between the different groups of
tycoons and officials who currently lord it over the country, which
may be sitting on the biggest unlooted horde of hydrocarbons in the
world. In one corner are strongman President Nursultan Nazarbayev –
who has been a big dog in Kazakhstan since Gorbachev was a pup in
the Kremlin politburo – and a loyal retinue of presidential
relatives, state officials and hangers-on. In the other corner is an
unsteady alliance of former officials and, to everyone’s surprise,
two of the country’s most notorious – and notoriously quarrelsome –
business oligarchs. Late last month, the feud cracked into the open,
with the dismissal of a group of reformers from government,
including the deputy prime minister, and the establishment of a new
political movement, the Democratic Choice of Kazakhstan. While not
exactly a jackboot dictatorship, Kazakhstan does not see things like
this very often.
The fuse that set off the big bang was an infamous son-in-law of the
president (there are more than one), who had apparently used his
influence to squeeze one too many millions out of the Kazakh
business community. But some say the stakes are much larger.
To date, business has been more or less indistinguishable from
politics in Kazakhstan. Both have been about seizing and defending
territory, and trying to extract the maximum “rent” from that turf,
whether it be the presidency, an empire of banks and aluminum
smelters, or the municipally-owned hotel I have been holed up in for
the past week, where my restaurant bill last night included a charge
of 285 tenge ($1.90) for the temporary use of a bottle of Tabasco
sauce.
Many large domestic businesses were privatized at fire sale prices
in the early and mid-1990s to well-connected folks who rolled them
into predatory conglomerates or simply looted them. Meanwhile, firms
that have stayed in state hands are under the sway of politicians or
various Nazarbayev types. According to many folks I spoke with here,
the restive tycoons are not just tired of being hit up by relations
of the first family, and being cut out of choice deals. In fact,
they have decided that the time has come to dismantle the old way of
doing things and move towards a more open, rules-based system of
government and business.
This was certainly the gist of the lecture given to me by one of the
two biggest tycoons, Mukhtar Ablyazov, the chairman and beneficial
owner of the country’s second-largest banking group, TuranAlem. With
the fuming conviction of a recent ex-smoker, Ablyazov said the
country’s first priority now must be to make its government more
democratic and accountable, its courts and media more transparent,
and so on.
Of course not everyone is convinced that the tycoons are on the
level. The country’s respected central bank president, Grigori
Marchenko, told me he would like to see them first shine a bit more
light on their own businesses before telling everyone else to do the
same.
“Ablyazov is an asshole,” was the slightly more transparent
appraisal of one Almaty player with a similar reputation for
integrity. “In any transparent system he would be in jail.”
It is certainly hard to understand why anyone would want to change
the rules of a game that has made them so filthy rich and powerful.
One answer is simple greed. At a certain point, the tycoons may have
realized that the old game was played out, that there was no new
turf left, no “free” assets left to grab and milk. Meanwhile, the
dead hand of the old system was choking off new opportunities. Uraz
Dzhandosov, the former deputy prime minister who leads Democratic
Choice, told me that the moguls had also started to figure out that
“in the long run, the groups with better governance, and
transparency, will win.” At the same time, the conglomerates were
being infiltrated by an increasing number of newfangled executives,
people who had worked in the West or at Western companies and were
committed to doing things differently.
In any case, an equally powerful group of politicians and their
patrons and supplicants are apparently stuck on doing things the way
they know best, and now everyone is waiting to see which side the
wily Nazarbayev will come down on. While some believe he will co-opt
the new opposition by appointing its leader prime minister early
next year, the youthful Dzhandosov told me that he isn’t holding his
breath. Or, as in Russia, Nazarbayev may throw the tycoons in jail,
or force them to decamp to the south of France. Whatever happens,
count on it to take place under umpteen layers of intrigue, in
classic Central Asian fashion. Also count on everyone feeling
obliged to be slightly more transparent.
The lessons? Firstly, never underestimate the tendency of business
to move faster than government in the direction of transparency and
good governance, or the impact that business’s enlightened
self-interest can have on an unresponsive, authoritarian government.
(Next to the tycoons, the country’s NGOs and other “third sector”
do-gooders seem utterly irrelevant.) You can do well and still do
good, even in places where those who clean up in business usually
are the dirtiest operators.
Next Page
But why would these men and their new coconspirators want to change the rules of a
game that has made them so filthy rich and powerful?
One answer is simple greed. At a certain point, the tycoons apparently began to
realize that the old game was played out, that there was no new turf left, no “free”
assets left to grab and milk. Meanwhile, the dead hand of the old system was choking
off new opportunities. Uraz Dzhandosov, the former deputy prime minister who leads
Democratic Choice, told me that the tycoons had also started to figure out that “in
the long run, the groups with better governance, and transparency, will win.” At the
2
same time, the old-fashioned business groups were being infiltrated by an increasing
number of newfangled executives, people who had worked in the West or at Western
companies and were committed to doing things differently.
But a more powerful group of politicians and their patrons and supplicants are
apparently stuck on doing things the way they know best, and now everyone is waiting
to see which side the wily Nazarbayev will come down on. While some believe he will
co-opt the new opposition by appointing its leader prime minister early next year,
the youthful Dzhandosov told me that he isn’t holding his breath. Or, as in Russia,
Nazarbayev may throw the tycoons in jail, or force them to decamp to the south of
France. Whatever happens, count on it to take place under umpteen layers of intrigue,
in classic Central Asian fashion.
The lessons? Firstly, never underestimate the tendency of business to move faster
than government in the direction of transparency and good governance, or the impact
that business’s enlightened self-interest can have on an unresponsive, authoritarian
government. (Next to the tycoons, the country’s NGOs and other “third sector” dogooders seem utterly irrelevant.) You can do well and still do good, even in places
where those who clean up in business usually are the dirtiest operators.
Erik D’Amato can be reached at erik@erikdamato.com
© 2001 New World Publishing Kft and New World Publishing, Inc. All rights reserved.
Republication or re-dissemination of the contents of this screen are expressly
prohibited without the prior written consent of New World Publishing.
Kazakhstan's Government Resigns
January 28, 2002
Kazakhstan's Government Resigns
By REUTERS
Filed at 4:19 a.m. ET
ASTANA (Reuters) - Kazakhstan's government resigned on Monday after Prime
Minister Kasymzhomart Tokayev quit saying it was time to make way for
people with new ideas.
``The prime minister read out a statement of resignation and the president
accepted it,'' his spokesman Rasul Zhumaly told Reuters.
``The time has come for the arrival of new people with new ideas and
approaches,'' the spokesman quoted Tokayev, who has been in office since
November 1999, as saying.
Under the constitution the whole government had also to resign. A new team
will be named by President Nursultan Nazarbayev, who has led the country
since independence from the Soviet Union in 1991.
Kazakhstan, a vast territory the size of Western Europe but with a
population of just 15 million, is the most economically developed of the
former Soviet Central Asian republics.
Tokayev, one of the longest serving members of the government, was foreign
minister from 1994 and prime minister from November 1999. He joined the
government as deputy foreign minister in 1992.
An urbane former diplomat who served in the Soviet embassy in Beijing, he
is fluent in English and Chinese as well as Kazakh and Russian.
3
The powerful Nazarbayev, who became communist party boss late in the
Soviet era in 1989, is the only president independent Kazakhstan has
known.
Kazakhstan, which achieved gross domestic product growth of 13.2 percent
last year, has vast oil and gas reserves in the west of the country around
the Caspian Sea.
One oil deposit, the offshore Kashagan field, may be the largest
discovered anywhere in the world in the last 30 years, and energy is the
backbone of the economy.
Kazakhstan is also a major metals producer, and is now attempting to
diversify its economy in an attempt to break the cycle of dependence on
mineral exports. It has made significant progress in developing its
banking sector and pensions system.
But while economic growth is undoubted, questions have been raised over
Kazakhstan's democratic credentials in a country where Nazarbayev and his
family wield enormous influence.
Copyright 2002 Reuters Ltd. | Privacy Information
Advertisement
Oil Field Hopes to Become World Power
April 10, 2002
Oil Field Hopes to Become World Power
By BIRGIT BRAUER
ARACHAGANAK, Kazakhstan — About a two-hour drive from the regional
capital, Uralsk, along a bumpy road and close to the Russian border,
Karachaganak lies in an inhospitable, barren area where temperatures can
range from minus 25 degrees Fahrenheit in winter to 105 in summer. Spring
is probably worst of all, as swarms of gnats descend.
But this remote spot and, more to the point, its vast gas, oil and
condensate reserves, are a crucial part of an effort by the government to
turn the energy-rich country into a major oil producer in the next 10
years. In February, in the first meeting of the country's new government,
the prime minister, Imangali Tasmagambetov, made a point of emphasizing
the industry's significance.
[With the news Monday that Iraq would withhold its oil exports for a month
underlining the political volatility that bedevils supplies from the
Middle East, the West's appetite for energy sources far removed from the
turmoil will probably remain high for years.]
Already, Karachaganak and other fields have helped make this former Soviet
republic a magnet for foreign investments, attracting billions of dollars
and promises of more. American companies alone have said they are ready to
invest as much as $200 billion in the next 5 to 10 years.
With more than 30 percent of Kazakhstanis living below the poverty line,
Karachaganak has also attracted people from around the country, many
desperate for work. The population of Aksai, the nearby city where most
newcomers have settled, has soared 55 percent, to 31,000, in five years.
Around 70 percent of its working population is employed at the field.
Karachaganak, one of three premium Kazakh fields being developed in the
northern Caspian region, was discovered in 1979. Though it is smaller than
the other two, Kashagan and Tengiz, its 116 square miles contain more than
1.2 billion metric tons of oil and condensate and more than 1.35 trillion
cubic meters of gas, making it one of the world's top 20 oil and gas
fields in terms of proven reserves.
The Soviet gas industry ministry began production in 1984. After the
breakup of the Soviet Union in 1991, Karachaganak became the property of
4
Kazakhstan and was operated by Gazprom, the Russian-controlled gas giant
that was the ministry's successor. Realizing early on that Karachaganak
was not going to go anywhere with Gazprom, which considered it a
competitor to Russian fields, the Kazakh government looked for other
companies to participate in its development. In 1992, British Gas and Agip
of Italy won the operating contract. Since Gazprom controlled the field's
only export outlet, to a processing plant in nearby Orenburg, it was
offered an equity interest in the field. In 1997, Gazprom sold its stake
to Lukoil, Russia's top oil producer, and Texaco (news/quote) bought a
stake from BP and Agip.
Currently, Agip and the BG Group (news/quote) each own 32.5 percent of the
Karachaganak Integrated Organization, the venture that operates the field,
while ChevronTexaco has 20 percent and Lukoil 15 percent.
Next year is expected to be the long-awaited breakthrough for the field,
which so far has been cut off from international markets because of a lack
of pipelines to transport what it produces out of landlocked Kazakhstan. A
394-mile oil pipeline is expected to be completed in 2003, connecting
Karachaganak with the export pipeline that runs from the Tengiz field to
Novorossiysk, a Russian port on the Black Sea.
The Karachaganak Integrated Organization has already invested more than $2
billion in the project and will invest an additional $1.5 billion by the
end of 2003, when the next phase of development and most infrastructure
work is expected to be completed, allowing the venture to increase
production sharply.
But investors have had some tough going. Production came to a virtual
standstill for two months in the fall when a tax dispute between the
Kazakh and Russian governments caused the field's only customers, Russian
companies, to stop buying gas.
A year ago, hundreds of disgruntled workers, employed by the venture's
Greek-Italian contractor CCC/Saipem, took to the streets to demand higher
wages and better working conditions during a visit by Kasymzhomart
Tokayev, then the prime minister, whose car was stopped by the protesters.
The demands were quickly met. And Mr. Tokayev, in turn, used the
opportunity to chide the venture for not using enough local labor, goods
and services.
(Import substitution is also important to the new government; some foreign
investors were recently asked to come to the capital, Astana, to explain
how much progress they have made.)
The formation of the joint venture had its own tribulations. Scott Horton,
a lawyer with the New York firm of Patterson, Belknap, Webb & Tyler who
has been involved with foreign investments in Central Asia, recalls
intense behind-the-scenes jockeying among the Kazakhstani elite aligned
with different investors. "It is the norm in Kazakhstan for problems to
come up," Mr. Horton said. But with Karachaganak, he said, it "has been
quite a bit more than usual."
A 40-year production-sharing agreement was signed with the Kazakh
government in 1997, providing for development of the field but differences
have continued over issues like taxes and license validation. BG, for
example, was involved in a lengthy tax battle with the government three
years ago and had to pay several million dollars to settle the dispute.
In 1998, the Russian financial crisis left Karachaganak's customers
insolvent and production plunged.
Much is riding on the success of Karachaganak for the Kazakhstanis as well
as for the investors.
"We are now employing, either ourselves or our contractors, 17,500 people
here," up from about 4,000 a year and a half ago, said John Morrow,
general director of the Karachaganak Integrated Organization. "That has
had a dramatic effect on the economy in the region."
But as development continues, questions are being raised about what will
happen with the work force once construction is finished and the project
5
is up and running. "We will have a lot of people out of work in two to
three years," said Aksai's deputy mayor, Maksut Shunshaliyev. "What are we
going to do with them?"
Not a problem, Mr. Morrow said. "Beyond 2003, there are plans for further
development projects in the oil and gas industry around the North
Caspian," he said. "There will be opportunities for people," he said,
especially those already trained at Karachaganak.
Copyright 2002 The New York Times Company | Privacy Information
Economist.com | Country Briefings: Kazakhstan
Political forces
Mar 22nd 2000
From the Economist Intelligence Unit
Source: Country ViewsWire
A weak opposition movement
Country ViewsWire
Kazakhstan
Political parties do not play an important role in Kazakhstan. Key decisions are
taken by an elite group surrounding the president, with parliamentary parties
acting as little more than government-sponsored pressure groups. The president
personally established several of the parties, although he has not supported any
of them for long. In 1991 Mr Nazarbayev gave his blessing to the People's
Congress of Kazakhstan (PCK). In 1993 he set up the People's Unity Party of
Kazakhstan (known by its Russian initials, SNEK). In the 1995 parliamentary
election the president backed four parties: the PCK, the Party of National
Unity, the Democratic Party and the Popular Co-operative Party. However, in the
1999 election only the Popular Co-operative Party won representation, with the
others replaced by three new pro-presidential parties: Otan (Fatherland), the
Civic Party and the Agrarian Party. If the number of parties gives the casual
observer an impression of tolerant, pluralist democracy, then they have served
their purpose.
Senate election results, Sep 17th 1999
Pro-Nazarbayev parties13
Otan11
Civic Party2
Other3
Total elected 16
Majlis election results, Oct 10th and 26th 1999
Part
list
6
Constituency
seats
Total
Pro-government bloc85058
Government sponsored parties83038
Otan42024
Civic Party2911
Agrarian Party213
Pro-government "independents"02020
Unaffiliated-1515
Pro-business candidates01010
Popular Co-operative Party(a)011
Other044
Opposition parties224
Communist Party213
Republican People's Party011
of Kazakhstan (RPPK)
Total 10 68 77
(a) Ran as a pro-presidential party in the 1995 election.
Source: OSCE.
There are four main strands to the opposition: Kazakh nationalists, Russian
nationalists, radical left and soft left. In the past the opposition has formed
a variety of short-lived and ineffective umbrella organisations, the most recent
being the Forum of Democratic Forces in October 1999. Opposition parties are
small, poorly funded, lack access to the media and suffer from intrusive
surveillance by the KNB. In addition, the RPPK is hampered by the fact that its
founder, Mr Kazhegeldin, is forced to live in exile.
Kazakh nationalist movements have only modest support, generally among recently
urbanised Kazakhs. Most ethnic Kazakhs believe that Mr Nazarbayev looks after
their interests. Russian nationalists are less marginalised, and are therefore
under greater surveillance by the secret police. The main Russian minority
movement is Lad (Harmony), which claims to represent all Slavic minority groups
in Kazakhstan. Extreme Russian nationalist groups and extreme Cossack movements
have been crushed, although moderate Cossack movements are allowed to function
under surveillance. In November 1999 the KNB arrested 22 Russian nationalists
who were planning an uprising in eastern Kazakhstan aimed at forming a
separatist Russian state. However, the plot, which the authorities called a
possible coup, was not a serious threat to political stability.
The Communist Party of Kazakhstan promotes nostalgia for the old social and
economic order. The government's current strategy is to ease up on harassment of
the Communist Party while clamping down on the other opposition parties. Mr
Nazarbayev justified the manipulation of the 1999 parliamentary election on the
basis that there was a danger of a return to communist dictatorship. The soft
left is represented by Azamat (Citizenship), which is moderately anti-reform and
anti-corruption. Azamat seeks to appeal to both Russians and Kazakhs.
Main political figures
Nursultan Nazarbayev: The president, Mr Nazarbayev (60 years' old), came to
office with good Communist Party credentials. He is adept at keeping disparate
ethnic groups in balance and has encouraged a measure of economic reform, as
well as considerable foreign investment. However, he is an erratic administrator
who has failed to implement a number of structural economic challenges. His
decision to spend $1bn on moving the capital to Akmola (now renamed Astana)
exposed him to criticism. In 1999 Mr Nazarbayev was embarrassed, but few were
surprised, when it was revealed that he had a Swiss bank account.
Kasymzhomart Tokayev: The prime minister, Mr Tokayev (46 years' old), is a close
associate of Mr Nazarbayev. He served as foreign minister in the government of
7
Nurlan Balgimbayev and resolved an important dispute with foreign investors. His
foreign policy approach is instinctively pro-Russian and anti-Chinese with the
US given due respect but no more. Mr Tokayev is ambitious and would like to
succeed Mr Nazarbayev. He carefully portrays himself as a technocrat and a loyal
servant of Mr Nazarbayev, thereby avoiding the mistakes of the two previous
prime ministers.
Nurlan Balgimbayev: The head of the state-owned oil company, Kazakhoil, Mr
Balgimbayev (53 years' old) opposes oil and gas industry privatisation and wants
to strengthen Kazakhoil. Mr Balgimbayev's power base is among local oil and gas
industry managers. As a result of his poor record as prime minister (October
1997-October 1999), he is now struggling to rebuild his political reputation.
Akezhan Kazhegeldin: Mr Kazhegeldin (48 years' old) is a former prime minister
who served abroad in the KGB during the Soviet period, before going into
business. Mr Kazhegeldin was an inconsistent reformer (October 1994-October
1997), but was regarded as a better prime minister than his successor, Mr
Balgimbayev. He now opposes Mr Nazarbayev and has been forced into exile since
1999 because of legal harassment by the government, which has prevented him from
standing in elections.
Grigory Marchenko: The head of the National Bank of Kazakhstan (NBK, the central
bank), the 40-year-old Mr Marchenko is not linked to any political faction. He
set up the NBK's banking sector reform programme and then began pensions reform
in his capacity as head of the National Securities Commission. He resigned in
October 1997 in protest at Mr Balgimbayev's policies. After two years in the
private sector, when he was untainted by the economic policy mistakes of the
Balgimbayev government, Mr Marchenko was appointed head of the NBK in October
1999. Mr Marchenko's economic policy track record has been generally good and he
is widely respected.
Copyright © 2002 The Economist Newspaper and The Economist Group. All
rights reserved.
Economist.com | Country Briefings: Kazakhstan
Economic structure
Oct 1st 2001
From the Economist Intelligence Unit
Source: Country Profile
Main economic indicators, 2000
Real GDP growth (%)9.6
Consumer price inflation (av; %)13.2
Current-account balance (US$ m)1,074
Foreign debt (US$ bn)12.6(a)
Exchange rate (Tenge:US$)142.1
(a) Kazakstan Economic Trends figure, which includes US$6.8bn of
inter-enterprise liabilities.
8
Sources: TACIS, Kazakstan Economic Trends; IMF; EIU.
More economic data
The economy relies on a few key sectors
Country Profile
Kazakhstan
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Before independence in 1991, Kazakhstan's economy was an integrated part of the
Soviet production system, specialising in agriculture, metallurgy and mineral
extraction. With the break-up of the Soviet Union, this centrally planned system
collapsed, causing a steep fall in output. Industry's share of output initially
declined from a peak of more than 31% of GDP in 1992 to just 21.2% of GDP in
1996, but recovered to 31.9% of GDP in 2000 thanks to rising oil output.
(Reference tables 8 and 9 provide detailed statistics on GDP by sector.)
However, the legacy of specialisation has not been overcome, and indeed the
industrial sector has become more concentrated, with the two main export
sectors—oil and semi-processed metals—now dominating industrial output
and the
contribution to growth of other sectors declining. Oil production employs
relatively few people and is concentrated in western Kazakhstan near the Caspian
Sea. The production of semi-processed metals is concentrated in a few large
enterprises that dominate surrounding towns, such as the steel producer Ispat
Karmet in Karaganda. Around 50 towns and cities depend on two or three large
companies for the bulk of their employment.
Agriculture remains the largest employer and the third largest export sector
after hydrocarbons and metals, even though its share of GDP has fallen from more
than 23% in 1992 to 8.6% in 2000. In particular, there has been a substantial
drop in grain output (the main traditional crop) since 1992, owing mainly to
badly implemented reforms, poor weather and a slow shift to other crops. The
services sector was neglected during the Soviet era, but has grown considerably
since independence.
On the expenditure side of the national accounts—according to the Agency of the
Republic of Kazakhstan for Statistics (ARKS)—total investment in 2000 equalled
13.5% of GDP, down from 30.4% in 1992. Private consumption in 2000 accounted for
63.6% of GDP, with government consumption amounting to 11.1% of GDP in 2000.
However, given the low standards of living of the majority of the population,
and the government's high level of intervention in the economy, the data are
questionable. National accounts data are further distorted by the fact that the
informal economy is probably at least equal to 25% of recorded GDP. (Reference
table 10 provides a breakdown of GDP by expenditure.)
Comparative economic indicators, 2000
9
Kazakhstan
Kyrgyz Republic
Uzbekistan
GDP (US$ bn)18.31.313.5
GDP per head (US$)1,231267544
GDP per head (US$ at PPP)3,2961,7391,890
Consumer price13.218.724.9
inflation (av; %)
Current-account1.1-0.1-0.1
balance (US$ bn)
% of GDP5.9-9.7-0.9
Exports of goods fob (US$ bn)9.620.52.7
Imports of goods fob (US$ bn)-6.85-0.5-2.5
External debt (US$ bn)12.31.64.2
Debt-service ratio, paid (%)36.436.327.4
Exchange rate (av; US$)142.147.7236.6
Russia
Ukraine
GDP (US$ bn)251.131.9
GDP per head (US$)1,729636
GDP per head (US$ at PPP)4,9702,294
Consumer price inflation (av; %)20.828.2
Current-account balance (US$ bn)46.31.5
% of GDP18.54.6
Exports of goods fob (US$ bn)105.615.7
Imports of goods fob (US$ bn)-44.9-14.9
External debt (US$ bn)163.012.1
Debt-service ratio, paid (%)11.116.9
Exchange rate (av; US$)28.15.4
Source: EIU, CountryData.
More economic data
Copyright © 2002 The Economist Newspaper and The Economist Group. All
rights reserved.
Economist.com | Country Briefings: Kazakhstan
Political structure
Jul 18th 2002
From the Economist Intelligence Unit
Source: Country Report
10
Official name: Republic of Kazakhstan
Legal system: On December 16th 1991 the Republic of Kazakhstan became the last
of the former Soviet republics to declare its independence following the
collapse of the Soviet Union. On August 30th 1995 a new constitution was
approved in a nationwide referendum. This greatly increased the powers of the
presidency and largely sidelined the legislature
Country Report
Kazakhstan
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National legislature: Bicameral: 77-seat lower house (Majlis), 39-seat upper
house (Senate)
Electoral system: Universal suffrage over the age of 18 for the presidential and
Majlis elections; senators are elected partly by the regions and partly by the
president
National elections: January 10th 1999 (presidential), September 17th 1999
(Senate), October 10th and 26th 1999 (Majlis). Next elections: 2002 (one-half of
Senate), 2004 (Majlis), 2006 (presidential)
Head of state: The president, Nursultan Nazarbayev, first elected in December
1991 and re-elected in January 1999
National government: Council of Ministers, headed by a prime minister, who is
appointed by the president. In practice, Mr Nazarbayev exercises total control
Main political parties: Otan (Fatherland; pro-president party); the Kazakhstan
Civic Party and the Kazakhstan Agrarian Party (pro-president parties); Forum of
Democratic Forces (main opposition umbrella group), led by the United Democratic
Party (UNP), which includes the Republican People's Party of Kazakhstan (RPPK,
centrist; vehicle of opposition figure Akezhan Kazhegeldin); Democratic Choice
of Kazakhstan (DCK, centrist; emerged in 2002 from within the state apparatus);
Ak Zhol (centrist; splinter group of the DCK); Communist Party of Kazakhstan
(mainstream Soviet Communists, somewhat reformed); Azat Republican Party (Kazakh
nationalists); Lad (ethnic Russians)
Council of Ministers
Prime minister: Imangaly Tasmagambetov
Deputy prime minister & finance: Aleksandr Pavlov
Deputy prime minister: Baurzhan Mukhamedzhanov
Deputy prime minister: Karim Masimov
Key ministers
Agriculture: Akhmetzhan Yesimov
Culture & information: Mukhtar Qul-Muhammed
Defence: Mukhtar Altynbayev
Economy & trade: Mazhit Yesenbayev
11
Education & science: Shamsha Berkimbayeva
Energy & mineral resources : Vladimir Shkolnik
Environment & natural resources: Andar Shukputov
Foreign affairs: Kasymzhomart Tokayev
Interior: Kairbek Suleymenov
Justice: Georgiy Kim
Labour & social protection: Gulzhana Karagusova
State revenue: Zeinulla Kakimzhanov
Transport & communications: Ablai Myrzhakhmetov
Central bank chairman: Grigory Marchenko
Copyright © 2002 The Economist Newspaper and The Economist Group. All
rights reserved.
Economist.com
Central Asia
The rot in Kazakhstan
Jul 25th 2002
From The Economist print edition
How western firms could help western diplomats to buttress a failing democracy
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THESE ought to be good times for Kazakhstan. With every prospect of becoming one
of the world's main energy exporters in the next 20 years, and a population of
only 15m sprawled over a territory five times the size of France, this lucky
Central Asian country should be preparing for a prosperous, democratic future.
Instead, President Nursultan Nazarbaev is turning the screw with a toughness
that has astonished even the most jaded observers of the region. Over the past
two weeks, a law has gone into effect that makes it all but impossible (by
requiring a very high number of signatures) for independent political movements
to register. Of the 19 parties that now exist, only three pro-presidential ones
are expected to survive.
Mukhtar Ablyazov, a media baron and former energy minister, has been jailed for
six years after a trial in which due process was ignored; and another opposition
figure, Galymzhan Zhakiyanov, is on trial amid ominous reports that his health
has suffered in detention. Newspapers and television stations have been closed,
and journalists harassed in a bid to quash a new opposition force that emerged
last year.
As political authority is concentrated in the hands of the presidential family
and a handful of advisers, the western nations that had seen in Kazakhstan a
12
vital strategic partner are embarrassed. There have been protests from America's
State Department and other western institutions.
But how sincere are these protests, and how far should they be pressed? Cynics
might argue that from the West's viewpoint, the biggest event of recent weeks in
Kazakhstan was an agreement to allow stop-overs by American fighters at the
country's military airports; this should be a useful back-up to the new western
base in nearby Kirgizstan. With such enticing strategic prizes—as well as vast
resources—at stake, should the West be worrying about Kazakhstan's internal
affairs?
Should the West be worrying about Kazakhstan's internal affairs? It
should, for there is much to lose
In fact, there is a tough, pragmatic case to be made for worrying quite a lot.
It is not in the interests of anyone in Kazakhstan—not even, save in the very
short term, in the interests of its political rulers—to see the republic's
promising start as a liberal democracy come to an end. In the immediate future,
Mr Nazarbaev may succeed in neutralising his foes. But as power becomes less
accountable, there is a risk that more and more of Kazakhstan's energy revenues
will be salted away to secret, overseas places; and that all its hopes of
becoming a vibrant, extrovert, multi-ethnic society will be dashed. Only a few
years ago, Kazakhstan was winning plaudits for its multi-party system and open
economy; it will be a tragedy if the country's early promise gives way to
Soviet-style repression.
To avoid this outcome, diplomatic protests may not be sufficient; they have
often been ignored. At a time when business ethics are under scrutiny all over
the world, western firms and their shareholders should be asking whether the
cosy ties they have established with elites in several ex-Soviet states have
abetted arbitrary rule—while incurring the risk of a torrent of anti-western
protest when power finally changes hands.
George Soros, an investor and philanthropist, has suggested that energy and
mineral companies agree on a code of conduct to govern their relationships with
resource-rich states in the former Soviet Union and elsewhere. Western firms
should take heed; they would be practising a sophisticated form of self-interest
if they used their influence to promote good governance, rather than the
opposite, in Central Asia.
Copyright © 2002 The Economist Newspaper and The Economist Group. All
rights reserved.
Institute for War and Peace Reporting
Thursday, October 3, 2002
Kazakstan: Land Privatisation Prompts Fears
A bid by the Kazak authorities to sell-off state-owned land may put
farmers out of business.
By Medet Ibragimov in Almaty (RCA No. 142, 30-Aug-02)
A proposed land privatisation law debated in parliament has prompted
13
protests from analysts and farmers.
The new legislation, which is being pushed by President Nursultan
Nazarbaev, is expected to gain parliamentary approval, despite the fact
that existing land laws categorically rule out the possibility of private
ownership.
Earlier this month, Nazarbaev told parliament that the sell-off would be
one of the country's most important socio-economic acts, which would touch
the lives of almost all its citizens.
"The purpose of this draft law is to provide confidence to those who work
on land, so they can invest without fear. The state will be helping
business by making land more attractive," explained Toleukhan Nurtianov,
deputy director at the Kazak agricultural ministry.
Armands Pupols, economic and ecology analyst for the Kazak office of the
Organisation for Security and Cooperation in Europe, OSCE, pointed out,
"Land is being sold everywhere in the world. Since Kazakstan is pursuing
reforms and has already privatised many industrial assets, why not land?"
But some academics and analysts are concerned that the legislation is
being rushed through without sufficient thought and are worried about its
social impact.
Rakhimjan Eleshev, director of the Institute of Agrobiology and Ecology,
argues the proposed reforms should be debated publicly and further refined
before going before parliament. "Talk of selling off land and introducing
private ownership is premature," he told IWPR.
Leonid Leutski, head of the department of economic sciences at the
Kazakstan Academy of Law and International Affairs, warned, "This law
itself will resolve nothing. What is needed is a state programme of
development in rural areas."
"According to forecasts from agricultural scientists, if private ownership
of land is adopted in Kazakstan, 70 per cent of the rural people will lose
their jobs," said Saya Issa, a member of the Kazakstan Union of Writers.
"The law is raw, scientifically unsupported and anti-people," added
activist Sapabek Asipuly. "Discussion of it should be stopped, otherwise
up to 90 per cent of good ploughing land will be sold off to 'money bags'
and ordinary people will be left with nothing."
Many large agricultural enterprises have already been sold off, in many
instances to former Communist Party officials and to certain Kazak
businessmen. However, the legitimacy of these sales has been questioned,
and the new law is designed to legalise the purchases.
Vasilina Vasilieva of the Russian daily newspaper Nezavisimaya Gazeta
believes the vested interests of the Kazak elite are behind the new laws.
"Lobbying for private ownership of land started last year after
legalisation of assets held outside the country brought some 500 million
US dollars into the economy. Those influential people, those behind the
legalisation, started to ask - where to invest the money?" Vasilieva said.
A Kazak businessman, who wished to remain anonymous, said, "The scandal
surrounding Swiss bank accounts belonging to the Kazak political elite 'Kazakgate' - has added impetus to the push for private ownership of land.
"That disgrace alerted the authorities to the fact that their money is not
safe, even in Switzerland. It became more profitable and sensible to
invest their money in the land, not in banks."
Meanwhile, Kazakstan's many small-scale peasant farmers fear they will not
be able to afford their plots or to keep farming under the reformed
system.
"I've heard that the rough price for agricultural land has already been
set at around 300 dollars a hectare. Where am I to find that sort of
money?" asked Almaz Sarsenov, a farmer from the Almaty region.
Another farmer, Adil Riashev, believes the move will force him to abandon
his home and more to the city to find work. "Let's imagine I am able to
find or borrow cash to buy land. In our country, rents for agricultural
equipment and fuel are so high that only the largest landowners can
justify the expense," he said.
14
Analysts are in no doubt Kazakstan's parliament will pass Nazarbaev's land
privatisation law at the end of the month, as the assembly rarely opposes
legislation he proposes.
Again, it would appear that the interests of a narrow elite will be served
while the Kazak public - and especially the rural population - see no
benefit at all.
Medet Ibragimov is the pseudonym for a journalist in Kazakstan
Send this article to a friend
Next article
Recent IWPR Stories of Related Interest:
Kazakstan: TV Host "Beaten"
By Timur Jagiparov and Yuliana Zhikhor in Almaty (RCA No. 141,
29-Aug-02)
Kazakstan: Muslim Villagers Lash Out at Sect
By Olga Dosybieva in Shymkent (RCA No. 139, 20-Aug-02)
Kazakstan: Financial Police Under Fire
By Medet Ibragimov and Alexander Gorodetski in Almaty (RCA, No. 136,
9-Aug-02)
© Institute for War & Peace Reporting
Lancaster House, 33 Islington High Street, London N1 9LH, UK
Tel: +44 (0)20 7713 7130
Fax: +44 (0)20 7713 7140
The opinions expressed in IWPR Online are those of the authors and do not
necessarily represent those of the Institute for War and Peace Reporting.
Registered as a charity in the United Kingdom (charity reg. no: 1027201, company
reg. no: 2744185)
Economist.com | Country Briefings: Kazakhstan
Factsheet
Sep 6th 2002
From the Economist Intelligence Unit
Source: Country ViewsWire
Country ViewsWire
Kazakhstan
Sub price US$: 750 Single issue US$: 300
A daily service offering concise, comprehensive and timely coverage
of political, economic and business analysis by country
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Population: 14.8m (2001)(a)
Population growth: -0.9% (av; 1997-2001)
Land area: 2.7m sq km
Fiscal year: Starts January 1st
15
Currency: Tenge Tenge146.7:US$1 (2001, average) Tenge150.2:US$1 (2001, year-end)
Tenge152.9:US$1 (May 20th 2002)
GDP: Tenge3.3trn (2001) US$22.4bn (2001, at market exchange rate) US$66.9bn
(2001, at PPP)(a)
GDP growth: 5.0% (average, 1997-2001) 13.2% (2001)
GDP per head: US$1,510 (2001, at market exchange rate)(a) US$4,513 (2001, at
PPP)(a)
Inflation: 11.0% (average, 1997-2001) 8.5% (2001, average) 6.4% (2001, year-end)
Background
The nomadic Kazakh tribes were brought under Russian control in the 18th
century, and present-day Kazakhstan was under Russian colonial rule until the
1917 Revolution. Forcibly incorporated into the emerging Soviet state,
Kazakhstan was made an "autonomous republic" and in 1936 was promoted to the
status of a full Soviet republic. With the collapse of the Soviet Union,
Kazakhstan declared independence on December 16th 1991. The current president,
Nursultan Nazarbayev, was elected in December 1991, and a referendum in 1995
extended his presidency until December 2000. An early election in January 1999
returned him to office for a seven-year term that expires in 2006.
Political structure
Kazakhstan is in principle a presidential republic, according to the current
constitution, approved in August 1995. Despite the separation of powers, the
president wields almost total control over all three branches of government and
dictates national policy priorities. The bicameral parliament has been sidelined
by Mr Nazarbayev and organised opposition has been kept under strict scrutiny.
Nonetheless, the elites are growing dissatisfied with the limited political
influence they wield under the current system, and this has led to increasingly
vocal demands for greater democratisation and accountability.
Policy issues
Six issues will dominate the policy process during the forecast period: the
management of the devaluation of the tenge; the continuation of the
macroeconomic stabilisation programme; financial sector reform; tax revenue
administration; pension reform; and oil and gas sector modernisation and
pipeline development. The pursuit of these goals, however, could be compromised
by the government's need to keep its political opponents in check.
Foreign trade
In 2001 total exports were worth US$9.1bn and imports US$8.2bn. Russia remains
Kazakhstan's main trading partner, constituting a key source of imports and a
major market for exports. This is partly the result of Kazakhstan's inability to
move up the value-added ladder, which makes the country unable either to compete
in Western markets or to afford Western products. Instead, the bulk of Kazakh
exports to the West consists of raw materials, particularly oil and metals.
Major exports (2001)
% of total
Major imports (2001)
16
% of total
Mineral products58.0 Machinery & equipment41.0
Metals24.0 Mineral products14.0
Chemicals5.0 Chemicals14.0
Food & agricultural products5.0 Metals14.0
Leading markets (2001)
% of total
Leading suppliers (2001)
% of total
Russia20.2 Russia45.4
Bermuda Islands14.1 Germany7.4
Italy11.2 US5.4
Commonwealth of Independent States30.4 Commonwealth of Independent
States52.0
More economic data
Taxation
A 20% rate of withholding tax is levied on payments made to non-residents, and
value-added tax (VAT) applies to import values inclusive of customs and excise
duties. The corporate income-tax rate remains at 30%, but tax exemptions on
corporate income from construction and land development have been abolished. A
flat rate of VAT of 16% applies to all goods—including food products and
imports, which were previously taxed at 10%. The social payroll tax has been
reduced from 26% to 21%.
(a) Economist Intelligence Unit estimate.
Copyright © 2002 The Economist Newspaper and The Economist Group. All
rights reserved.
Economist.com | Country Briefings: Kazakhstan
Forecast
Sep 6th 2002
From the Economist Intelligence Unit
Source: Country Forecast
Country Forecast
Kazakhstan
Sub price: US $865 Single issue: US $445
Five-year political, policy and economic forecast for each country
Business environment rankings to compare the attractiveness of
different markets
Comparable coverage of 60 countries (27 OECD plus major emerging
markets) plus regional overviews
Click here to buy the complete Country Forecast from the EIU Store
Recent developments support the Economist Intelligence Unit's view that the
17
political climate in Kazakhstan will deteriorate over the forecast period.
Kazakhstan's increasingly poor democratic record will tend to push it towards
even closer ties to Russia, but the main impetus behind a pro-Russian foreign
policy will be the securing of export routes for Kazakhstan's expanding oil
output. Economic policy will tend increasingly towards nationalism, favouring
domestic interests against foreign investors. However, international oil majors
operating in Kazakhstan have made extensive commitments, and their continued
investment will drive rapid real GDP growth. Ongoing oil sector development will
drive up capital goods imports, keeping the current account in deficit, but
large-scale inflows of foreign direct investment (FDI) will make the country's
external imbalances sustainable in the short to medium term.
Key changes from last month
Political outlook
Rumours of a merger between the three pro-government parties in parliament could
force the fragmented opposition parties to join together in an attempt to
contest the next election, scheduled for 2004.
Economic policy outlook
General budget data for the first half of 2002 confirm our expectation that the
budget will swing into deficit in the second half of the year. Inadequate fiscal
management will therefore mean that in order to constrain the budget deficit the
government will need to resort to expenditure sequestration.
Economic forecast
First-half real GDP growth of 9.2% was in line with our full-year forecast of 8%
GDP growth, and strengthens our expectation of easing year-on-year growth rates
over the course of 2002. A deterioration in the outlook for OECD economies has
led to increased risks to the global economy, but under our current assumptions
Kazakhstan will continue to post strong growth in 2003 on the back of oil price
levels at around US$23/barrel for Dated Brent blend.
Copyright © 2002 The Economist Newspaper and The Economist Group. All
rights reserved.
WSJ.com - Article
September 16, 2002
Russia, Kazakhstan To Seek Joint Caspian Oil Devt -Tass
DOW JONES NEWSWIRES
ASTANA, Kazakhstan -- Russian Prime Minister Mikhail Kasyanov will visit
Astana this week to discuss joint development of oil fields in the Caspian
Sea, the Itar-Tass news service reported Monday.
Kasyanov will arrive in the Kazakh capital Thursday to attend a meeting of
the Interstate Council of the Eurasian Economic Community, Kazakh Prime
Minister Imangali Tasmagambetov told journalists Monday, Tass reported.
The talks with Kasyanov will focus on "trade and economic relations," and
on the joint development of oil fields in the Caspian, Tasmagambetov said,
Tass reported.
18
Tasmagambetov said Kazakhstan and Russia are conducting active work at the
Kurmangazy field that, the like Tsentralnoye and Khvalynskoye fields, is
located in the northern part of the sea. The field used to be a subject of
dispute between the two countries. In May of this year, Russia and
Kazakhstan signed an agreement on the delimitation of the northern part of
the sea. Under the agreement, this part of the sea will be developed
jointly.
URL for this article:
http://online.wsj.com/article/0,,BT_CO_20020916_004351.djm,00.html
Updated September 16, 2002 1:46 p.m. EDT
Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved
Printing, distribution, and use of this material is governed by your
Subscription agreement and Copyright laws.
FT.com / World / Asia-Pacific
Friday Sep 20 2002. All times are London time.
World / Asia-PacificPrint article | Email
Kazakhstan upgraded to investment status
By Arkady Ostrovsky
Published: September 20 2002 5:00 | Last Updated: September 20 2002
5:00
Kazakhstan yesterday became the first country in the Commonwealth of
Independent States - a loose grouping of former Soviet republics to reach an investment grade status.
Moody's, a credit rating agency, upgraded the oil-rich republic by
two notches to Baa3 - the same rating as Saudi Arabia and Bahrain.
The agency said the upgrade reflected a surge in foreign direct
investment and export growth, driven mainly by oil and non-ferrous
metals.
The upgrade comes at a time of falling flows into emerging markets
and reduced appetite for emerging markets risk.
Jerome Booth, head of research at Ashmore, an emerging markets fund,
said the upgrade will allow Kazakhstan to tap into a wider pool of
investors who may be reluctant to put money into sub-investment
grade credit. The upgrade of Kazakhstan is likely to be an irritant
to Russia which is still rated Ba3, three notches below investment
grade. The upgrade comes despite a heavy dependence on volatile oil
exports and the slow progress of privatisation in the country.
Moody's said the growth of oil export volumes stemming from
construction of new pipelines should in the medium-to-long term
compensate for price volatility.
"The economy will eventually diversify into pipeline and machinery
sectors, followed by development of food processing and machinery
for construction and infrastructure," Moody's said in its report.
Kazakhstan is running a budget surplus, thanks to high oil prices
and improved collection of taxes.
19
Some of the budget surplus is directed to the government oil fund
which is designed to help fill any budget hole in the future.
Ingrid Iverson at Rothschild Asset Management said the two-notch
move caught the markets by surprise, but was well deserved. "As an
investor you are interested in country ability and willingness to
pay back its debt.
"Kazakhstan has little reason to borrow and no reason to default."
Moody's also praised Kazakhstan's comprehensive pension reform.
In contrast to Russia, Kazakhstan also has a small but stable
banking system with a deposit-insurance scheme in place. While
Kazakhstan is far from being a western-style democracy, it has
stable political elite that runs the country.
Moody's said Kazakhstan's economic health depended on the progress
on privatisation, the ability to withstand currency appreciation and
the narrowing of income gap in the country.
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Institute for War and Peace Reporting
Thursday, October 3, 2002
Kazakstan: Fears Over WTO Plan
Fast track membership of the international trade regulation body may deal a serious
blow to the country's economy.
By Asan Kuanov and Saule Amirbekova in Almaty (RCA No. 148, 23-Sep-02)
A push by Kazakstan's leaders to speed up entry to the World Trade Organisation could
harm the country's fledgling market economy, analysts fear.
Parliamentary deputy Valentin Makalkin, the country's recently appointed
representative at the International Operative Group of WTO legislators, has been
talking of admission before the end of next year.
Political scientist Maksat Ramazanov says local enterprises will be hit hard if
Kazakstan joins the free trade body at such a fast pace.
"Small and medium businesses, described by President Nursultan Nazarbaev as the most
important in the development of the economy, will suffer first of all," said
Ramazanov. "Kazak entrepreneurs, who are just beginning to build their businesses,
will not yet be in a competitive position against producers from WTO member states".
As of July 1, more than 100,000 small firms, employing around half a million people,
had been registered by the Kazak Statistics Agency.
Serik Turjanov, director of the department of small businesses in the municipality of
Almaty, believes Kazakstan realistically needs another 10 to 15 years before it is
ready for the WTO.
"Membership is beneficial for developed countries, but it is still very early to
consider Kazakstan as such, since very few of our local products conform to
international standards," said Turjanov.
20
What opponents of fast track entry mainly fear is that local producers, who are
struggling with outdated equipment, will not be able to cope with a flood of cheap
goods on the market.
While President Nazarbaev has said that Kazak-produced consumer goods would be given
preference for a period of five to ten years, analysts doubt that such a clause would
actually be approved. "If China wasn't able to get significant concessions from the
WTO leadership, what chance has Kazakstan?" said Ramazanov.
Jangeldi Shimshikov, director of the centre of socio-economic studies, argues that
the country could simply become a "neo-colony" of the developed nations. "Kazakstan
is still regarded primarily as a supplier of raw materials," he warned.
Indeed, the director of the Kazak Institute of Social and Political Studies, Sabit
Jusupov, feels that not nearly enough research has gone into all the possible
consequences.
"It is necessary to conduct sectoral analyses of domestic production. It is
impossible to make any conclusions or forecasts when we don't have any such data to
hand," he said.
Kazakstan applied for membership of the WTO in January 1996, before it was officially
acknowledged as a country with the market economy.
Makalkin, while accepting fears that membership could cause a rise in unemployment,
argues that further delay would actually harm the country's prospects "since later we
will have to negotiate with a larger number of countries".
Supporters of the process say that a quick entry will help to bring investment to the
Central Asian nation a decade after it gained independence from the Soviet Union.
"Kazakstan cannot remain outside the process of globalisation, and joining the WTO is
a real step on the road to integration," argued Nikolai Kuzmin, director of the
Centre of Foreign Policy and Analysis.
Sergey Smirnov, senior researcher in the economic security department of the Kazak
Institute for Strategic Studies, believes membership will provide a powerful stimulus
and increase efficiency of production.
However, he agrees that if the country joins hastily, its economic security could be
threatened.
No real public debate seems to be involved in the current process, and analyst Vasili
Komarov believes the population's seeming ignorance of the WTO and the implications
of membership is symptomatic of the prevailing political climate.
"It has become a tradition that the government adopts decisions without paying
attention to its people," he said.
Victor Yambaev, vice-president of the Almaty Association of Entrepreneurs, told IWPR
that the move seems to be driven by political ambitions, with those in power keen for
the country to become a full player on the international stage.
He believes that reform the country's legislative base, which currently "contradicts
not only international standards, but also common sense", is a far more urgent
domestic priority.
Asan Kuanov is an independent journalist and Saule Amirbekova is the editor at the
Prodovolstvennyi sector Kazakstana newspaper in Almaty
21
Send this article to a friend
Previous article in this issue
Recent IWPR Stories of Related Interest:
Nazarbaev Builds a Big Chupa-Chups
By Amanjol Smagulov in Almaty (RCA No. 144, 6-Sep-02)
Kazakstan: Regime Quashes Dissent
By Eduard Poletaev in Almaty (RCA No. 143, 3-Sep-02)
Kazakstan: Land Privatisation Prompts Fears
By Medet Ibragimov in Almaty (RCA No. 142, 30-Aug-02)
© Institute for War & Peace Reporting
Lancaster House, 33 Islington High Street, London N1 9LH, UK
Tel: +44 (0)20 7713 7130
Fax: +44 (0)20 7713 7140
The opinions expressed in IWPR Online are those of the authors and do not
necessarily represent those of the Institute for War and Peace Reporting.
Registered as a charity in the United Kingdom (charity reg. no: 1027201, company reg.
no: 2744185)
Thursday, October 3, 2002
Kazakstan: Fears Over WTO Plan
Fast track membership of the international trade regulation body may deal
a serious blow to the country's economy.
By Asan Kuanov and Saule Amirbekova in Almaty (RCA No. 148, 23-Sep-02)
A push by Kazakstan's leaders to speed up entry to the World Trade
Organisation could harm the country's fledgling market economy, analysts
fear.
Parliamentary deputy Valentin Makalkin, the country's recently appointed
representative at the International Operative Group of WTO legislators,
has been talking of admission before the end of next year.
Political scientist Maksat Ramazanov says local enterprises will be hit
hard if Kazakstan joins the free trade body at such a fast pace.
"Small and medium businesses, described by President Nursultan Nazarbaev
as the most important in the development of the economy, will suffer first
of all," said Ramazanov. "Kazak entrepreneurs, who are just beginning to
build their businesses, will not yet be in a competitive position against
producers from WTO member states".
As of July 1, more than 100,000 small firms, employing around half a
million people, had been registered by the Kazak Statistics Agency.
Serik Turjanov, director of the department of small businesses in the
municipality of Almaty, believes Kazakstan realistically needs another 10
to 15 years before it is ready for the WTO.
"Membership is beneficial for developed countries, but it is still very
early to consider Kazakstan as such, since very few of our local products
22
conform to international standards," said Turjanov.
What opponents of fast track entry mainly fear is that local producers,
who are struggling with outdated equipment, will not be able to cope with
a flood of cheap goods on the market.
While President Nazarbaev has said that Kazak-produced consumer goods
would be given preference for a period of five to ten years, analysts
doubt that such a clause would actually be approved. "If China wasn't able
to get significant concessions from the WTO leadership, what chance has
Kazakstan?" said Ramazanov.
Jangeldi Shimshikov, director of the centre of socio-economic studies,
argues that the country could simply become a "neo-colony" of the
developed nations. "Kazakstan is still regarded primarily as a supplier of
raw materials," he warned.
Indeed, the director of the Kazak Institute of Social and Political
Studies, Sabit Jusupov, feels that not nearly enough research has gone
into all the possible consequences.
"It is necessary to conduct sectoral analyses of domestic production. It
is impossible to make any conclusions or forecasts when we don't have any
such data to hand," he said.
Kazakstan applied for membership of the WTO in January 1996, before it was
officially acknowledged as a country with the market economy.
Makalkin, while accepting fears that membership could cause a rise in
unemployment, argues that further delay would actually harm the country's
prospects "since later we will have to negotiate with a larger number of
countries".
Supporters of the process say that a quick entry will help to bring
investment to the Central Asian nation a decade after it gained
independence from the Soviet Union.
"Kazakstan cannot remain outside the process of globalisation, and joining
the WTO is a real step on the road to integration," argued Nikolai Kuzmin,
director of the Centre of Foreign Policy and Analysis.
Sergey Smirnov, senior researcher in the economic security department of
the Kazak Institute for Strategic Studies, believes membership will
provide a powerful stimulus and increase efficiency of production.
However, he agrees that if the country joins hastily, its economic
security could be threatened.
No real public debate seems to be involved in the current process, and
analyst Vasili Komarov believes the population's seeming ignorance of the
WTO and the implications of membership is symptomatic of the prevailing
political climate.
"It has become a tradition that the government adopts decisions without
paying attention to its people," he said.
Victor Yambaev, vice-president of the Almaty Association of Entrepreneurs,
told IWPR that the move seems to be driven by political ambitions, with
those in power keen for the country to become a full player on the
international stage.
He believes that reform the country's legislative base, which currently
"contradicts not only international standards, but also common sense", is
a far more urgent domestic priority.
Asan Kuanov is an independent journalist and Saule Amirbekova is the
editor at the Prodovolstvennyi sector Kazakstana newspaper in Almaty
Send this article to a friend
Previous article in this issue
Recent IWPR Stories of Related Interest:
Nazarbaev Builds a Big Chupa-Chups
By Amanjol Smagulov in Almaty (RCA No. 144, 6-Sep-02)
Kazakstan: Regime Quashes Dissent
By Eduard Poletaev in Almaty (RCA No. 143, 3-Sep-02)
Kazakstan: Land Privatisation Prompts Fears
By Medet Ibragimov in Almaty (RCA No. 142, 30-Aug-02)
23
© Institute for War & Peace Reporting
Lancaster House, 33 Islington High Street, London N1 9LH, UK
Tel: +44 (0)20 7713 7130
Fax: +44 (0)20 7713 7140
The opinions expressed in IWPR Online are those of the authors and do not
necessarily represent those of the Institute for War and Peace Reporting.
Registered as a charity in the United Kingdom (charity reg. no: 1027201, company
reg. no: 2744185)
FT.com / World / Asia-Pacific
Monday Dec 23 2002. All times are London time.
World / Asia-PacificPrint article | Email
Muscles are flexed as the competition intensifies
Russia's influence by Andrew Jack
Published: October 1 2002 5:00 | Last Updated: October 1 2002 5:00
When the first summit of the heads of state of the five countries
surrounding the Caspian Sea concluded in April this year - without
any clear agreement - Russia's president sent a series of strong
signals by making a detour on his way back to Moscow.
Vladimir Putin laid the groundwork for bilateral deals shoring up
oil reserves with its neighbours Kazakhstan and Azerbaijan before
visiting the operations of the oil company Lukoil, near the Russian
Caspian Volga port city of Astrakhan, and headed to the nearby
headquarters of the Caspian fleet. In doing so, he sent out a
message of Moscow's continued military weight in the region,
combined with a new economic pragmatism.
While Turkmenistan, Azerbaijan, Kazakhstan, Iran and Russia remain
unable to reach a five-way agreement on the division of the vast
reserves of the Caspian, Mr Putin's actions have clearly
demonstrated that he will wait no longer in forging alternative
interim approaches.
Within weeks of the summit, Moscow had agreed with the Kazakhs
jointly to develop oilfields lying in disputed waters between the
two countries. By September, Russia signed a separate bilateral
treaty with Azerbaijan, defining their mutual boundaries.
Viktor Kaluzhny, Mr Putin's special envoy on the Caspian, said last
month that Russia remained keen to reach a five-way resolution on
the division, and there was 90 per cent readiness to sign an
agreement - despite the fact that there are still significant
differences.
Yet he also argued that after a decade of disagreements during which
little had been achieved, Russia saw the need to pursue bilateral
arrangements which did not harm the prospects of a future global
settlement.
In Astrakhan, there is little doubt where the drivers for the
economy - and the development of the region - now lie. Around the
city, there are many advertisements by Lukoil and its petrol
stations. Lukoil is Russia's largest oil group by reserves and the
24
most significant investor in offshore Caspian exploration.
Amid the crumbling historic buildings of the city centre, a large,
modern office complex with manicured lawns and expensive
furnishings, stands out: that of the local subsidiary of Gazprom,
the gas giant, which even operates its own yacht club in the region.
"It's an error to focus merely on the politics in the Caspian," says
Karine Guevorgin, of the Institute of Oriental Studies in Moscow.
"It's all about energy."
She argues that Russian policy in the Caspian is not fully formed,
after a contradictory and unfocused period under former President
Boris Yeltsin. But it is being centralised under Mr Putin.
Anatoly Guzhvin, the governor of the Astrakhan region, agrees. He
points to a growing interest in recent months in the Caspian, with
discussions taking place at the level of the national Security
Council, plus visits from senior officials, including Mikhail
Kasyanov, the prime minister, culminating in Mr Putin's this spring.
"For several centuries, Russia dominated the Caspian," he adds. "As
a super-power, Russia should be present.
"After the collapse of the USSR, the Russian leadership in the 1990s
practically paid no attention to the Caspian, but now the difficult
process of formulating the status of the region is taking place.
Today, we can say that Russia's conception coincides with the
interests of the region."
Mr Guzhvin's priorities for the Caspian include the need for
environmental protection - including keeping a watchful eye on the
potential damage to fish stocks from oil exploration - and the
development of transport routes across the water and, through Iran,
to India and beyond.
The former Soviet republics of Azerbaijan, Turkmenistan and
Kazakhstan would seem Russia's most logical allies culturally,
linguistically and historically. Yet judging by Mr Guzhvin's
conversation - at least, for Astrakhan - it is Iran that dominates
local thinking. In conversation, Mr Guzhvin most frequently mentions
Iran.
While Tehran may be in conflict with Russia and the other littoral
nations, over the Caspian division, diplomatic relations between the
two countries remain good. And, economically, they are intensifying.
At the national level, despite US concerns about the risk of
proliferation of weapons of mass destruction, Russia is most notably
constructing the $800m civilian nuclear power plant at Bushehr, and
has talked recently about a far more ambitious future range of
projects, including other power stations.
Regionally, the links are developing fast. Mr Guzhvin attended a
trade fair in Iran in September. Iran has a consulate in the Russian
city, and there are plans for a Russian consulate in southern Iran
soon. Farsi is now being taught in the local unversity, and trade is
developing.
Nevertheless, against the backdrop of peaceful economic
co-operation, Russia continues to flex its muscles in the Caspian,
in a way that some analysts see as a potential destabilising factor
for the entire region.
In the first half of August, 60 ships and 10,000 troops took part in
naval manoeuvres which had been ordered by Mr Putin during his
Astrakhan visit.
In an indication of the mix of economic power and military might,
Sergei Ivanov, the defence minister, watched the exercise from a
Lukoil oil rig.
The Russian president said the reasons for the exercises included
the war against terrorism, drug smuggling, poaching and
environmental damage. But it seemed merely "accidental" when
officials emphasised that they were taking place on the 280th
25
anniversary of Peter the Great's Persian naval campaign. The
exercises came against the backdrop of tensions in 2000 between
Iranian gunships and oil exploration vessels operating in waters
contested with Azerbaijan.
There is also the growing US military presence in Central Asia. And
while the trans-Caspian pipeline has operated since 2001 between
Kazakhstan and Russia, Washington has supported an alternative
energy route in the region which by-passes both Russia and Iran.
That policy was firmed up in early September in the form of
ground-breaking for the BP-backed Baku-Ceyhan pipeline, which Mr
Kaluzhny - at least publicly - has welcomed as a decision of the
free market.
Meanwhile, for Russia, an intensifying of economic competition is
running in parallel with continued and periodic shows of military
might.
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FT.com / World / Asia-Pacific
Monday Dec 23 2002. All times are London time.
Political tensions below the surface
By David Stern
Published: October 1 2002 8:33 | Last Updated: October 1 2002 8:33
The past months have provided some not-so-gentle reminders that
perhaps all is not as quiet behind the authoritarian facades of
Azerbaijan, Turkmenistan and Kazakhstan as might appear.
In Azerbaijan, President Heydar Aliyev organised a referendum in
August to approve changes to the country's constitution that may
help him hand over power to his only son, Ilham, a vice-president at
Socar, the state oil company.
Two leaders of Kazakhstan's newly-formed opposition movement, the
Democratic Choice of Kazakhstan - which promotes reform in President
Nursultan Nazarbayev's government - have been sentenced to prison on
corruption charges. Numerous independent journalists have been
beaten up as well, and in one instance the daughter of a prominent
reporter died in mysterious circumstances.
In Turkmenistan, President Saparmurat Niyazov's eccentric rule seems
to become stranger by the day. Already the object of a bizarre
personality cult, the Turkmen leader most recently decided to rename
the days of the week and months of the year after himself, family
members and other favourite topics.
Reports have also circulated since last year - fueled to a large
part from opposition members outside the country - that Mr Niyazov
may soon be deposed by an inter-palace coup.
26
From the outside, the three countries may appear unchanging. All
boast the predictability of less-than-democratic systems and are
dominated by ex-communist strongmen who spent their formative years
in the ruthless politics of the Soviet Union. In a way, the three
men have come almost to embody the idea of stability in their
respective countries.
Moreover, until now the three leader's strongarm tactics have not
been altogether unwelcome. Local populations - as well as western
businessmen and diplomats - remember all too well the troubled times
that immediately followed the breakup of the Soviet Union. Many view
the authoritarian rule as a first step which was necessary for
economic and political development.
But questions over who will succeed each of the three men, and a
growing resentment among populations who have yet to see any real
improvement in their lives, could ultimately destroy all of this
hard-earned stability.
None of the three countries will necessarily fall apart tomorrow,
however. Nor may they end up imploding in the long run. All three
men appear more or less still in full control of their countries.
Each says, as well, that he is planning to run affairs for years to
come.
But the risks are nevertheless very much there, analysts say. None
of the three ageing leaders have done much to disseminate power
beyond themselves. In fact, according to some observers, each has
done more to guarantee a chaotic grab for influence and riches among
competing political groups after they leave the scene.
Azerbaijan is perhaps the best example of the country that
potentially could see a power handover soonest. Mr Aliyev, 79, has
dominated the mostly Shia Muslim state of 8m since the 1960s, when
he headed up the local communist party. Many - including members of
the opposition - have a hard time imagining the country ruled by any
other figure.
By all appearances, Mr Aliyev's chosen successor is Ilham, 40, whose
political profile has increased considerably over the past two
years. Ilham, however, at times appears ambivalent about taking over
the top job. Some observers also doubt whether the younger Aliyev
possesses the same steel as his father to survive in Azerbaijan's
cut-throat political culture.
Others, however, maintain that Ilham actually harbours a real desire
to become president, adding that he is a strong leader, a true
democrat and free-marketer to boot.
Whatever the case, the question of who will succeed Aliyev - who, on
a number of occasions, has appeared alarmingly frail and not too
long ago underwent open heart surgery - injects an element of
uncertainty in the country's future.
"Basically, all the billion-dollar development plans are contingent
upon the continued presence of President Aliyev - and that is very
worrisome," says a western businessman in Baku.
Even if the country does not descend into chaos, observers worry
that a period of disorder could follow Mr Aliyev's departure. Or
else, the next government could decide to review contracts signed
under the previous regime.
At the very least, Azerbaijan contains a number of potential flash
points which could erupt in a period of instability or prove too
much for the next government. The country still has not resolved a
conflict with rival Armenia over the disputed territory of Nagorno
Karabakh. Hundreds of thousands of refugees remain in makeshift
housing, eight years after a ceasefire was signed.
Likewise, oil wealth has yet to reach the majority of the
population. Though most Azeris seem to remain politically quiescent,
there are also indications that others are reaching the end of their
27
patience.
The situation is mirrored in the other two ex-Soviet Caspian states.
Populaces continue to suffer from the post-Soviet economic fallout,
and each country possesses problems that could grow worse in times
of trouble. Neither Mr Nazarbayev nor Mr Niyazov has given any
indication over who will be their annointed successor.
At the same time, however, democratic institutions are nascent at
best, and human rights are routinely abused. Presidential and
parliamentary elections in Kazakhstan have been severely criticised
by international bodies.
Turkmenistan has, for the most part, avoided such criticism, if only
because Mr Niyazov has been appointed president for life. Opposition
movements also remain shackled, either due to their own division and
ineptitude, or restrictions placed on them by the government.
"Should Nazarbayev disappear tomorrow, there is no mechanism for a
peaceful transfer of power," says one European diplomatic source.
"How it would play out, however, depends on the circumstances of his
departure - whether he dies, loses control or decides to hand power
to a chosen individual."
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Oil Project Is Suspended
November 15, 2002
Oil Project Is Suspended
By BLOOMBERG NEWS
AN FRANCISCO, Nov. 14 (Bloomberg News) — The ChevronTexaco Corporation
said today that the planned expansion of an oil-and-gas operation in
Kazakhstan had been suspended because the consortium developing the
project could not agree on financing. ChevronTexaco, a 50 percent owner of
the consortium, called Tengizchevroil, said in a statement posted on its
Web site that the partners had not been able to agree on how to pay for
the expansion of the operation.
A ChevronTexaco vice chairman, Peter Robertson, said in the statement that
the expansion could move forward if the partnership could agree on
financing that was consistent with principles outlined in the
Tengizchevroil agreement.
In 2001, Tengizchevroil produced an average of 271,000 barrels of oil a
day and the expansion would have increased that to 430,000 barrels a day,
a ChevronTexaco spokesman, Fred Gorell, said.
28
Copyright The New York Times Company | Permissions | Privacy Policy
Kazakhstan Gets a Lesson in Oil Politics
November 16, 2002
Kazakhstan Gets a Lesson in Oil Politics
By SABRINA TAVERNISE
OSCOW, Nov. 15 — The Kazakhstan government found out this week just how
far it could push the foreign oil companies who are working to develop its
immense oil and gas reserves, analysts said.
When a consortium led by ChevronTexaco said on Thursday that it was
calling off a $3 billion expansion of production at the Tengiz oil field,
one of the biggest and most important investment projects in any former
Soviet republic, the official announcement cited an inability among the
partners to agree on financing.
But people close to the negotiations and analysts who follow oil
development in Central Asia said today that the real problem was the
Kazakhstan government's escalating efforts to rewrite its 1993 agreement
with the consortium to develop the field.
For example, one person close to the negotiations said, the government
proposed changes in the way the project would account for depreciation, a
technical issue that would nonetheless have "significantly affected the
economics of the project."
Much of the Kazakh economy is built on the fruits of an oil boom. In the
1990's, the government in Almaty did its best to attract foreign capital
and skill to develop its energy riches, and it had a reputation as the
most welcoming state in the region for foreign energy investors. Over the
last decade, it drew about $10 billion of foreign direct investment, far
more than its much bigger and richer neighbor, Russia.
ChevronTexaco bet heavily on Kazakhstan, and the Tengiz expansion project
on the north shore of the Caspian Sea was hailed as an important part of
the company's growth strategy.
Building on a decade of work in the former Soviet Union, the consortium —
known as TengizChevroil — includes Exxon Mobil; LukArco of Russia; and a
Kazakh company, KazMunaiGaz, as junior partners. It is already the leading
foreign-run oil operation in the country, pumping 270,000 barrels of oil a
day. The new project would have stepped output up to 430,000 barrels a day
over three years.
But without an agreement on acceptable terms, "we had no option but to
suspend all activity" on the expansion, Peter Robertson, vice chairman of
ChevronTexaco, said in a statement.
The friction with the government began after the discovery in 2000 of a
huge new oil reserve called Kashagan in the Kazakh portion of the Caspian
Sea. Since then, analysts said, the Kazakh government has been trying to
reopen the oil development agreements that it signed in the early 1990's
to get better terms.
"There's a sense that Kazakhstan has been pushing and squeezing investors
to find out how hard they could squeeze," said Laurent Ruseckas, a Caspian
specialist at Cambridge Energy Research Associates in Paris. "Now they
know."
Among other moves, the government has drafted legislation that would
toughen conditions for foreign investors in Kazakhstan, including removing
a clause in current law that specified tax and royalty rates for years
into the future. As Kazakh officials became more confident in the
country's reserves, their stance hardened, Mr. Ruseckas said.
Economic successes "gave them a sense of complacency," said Julia Nanay, a
29
director at the Petroleum Finance Company, a Washington consulting firm.
"They had the view that heaven was the limit."
Kazakh officials say they are simply trying to bring their oil-sector
laws, which now give foreign companies special treatment, into conformity
with global standards. "We are taking international experience into
account in the new laws," said Yerlan Abildayev, chairman of the
investment committee in Kazakhstan's Ministry of Industry and Trade. "In
no way will this infringe on the rights of investors."
The TengizChevroil consortium has disagreed with the government in the
past. An argument over tax payments was resolved last year. A $73 million
fine imposed for storing sulfur near the field is being disputed in local
courts.
How widely the repercussions of the cancellation at Tengiz will be felt is
not clear. Fluor, an oil services company, said today that it was bracing
for $1 billion in canceled orders if the project was not revived. A shadow
may be cast on the Kashagan project, which is being developed by a
different consortium; Angus Miller, a spokesman for the group, declined to
comment.
Antonio Palmeirim, a spokesman for TengizChevroil in Kazakhstan, said that
deals with contractors on the canceled project, including Fluor and Parker
Drilling, "will be revised." But he suggested that the cancellation would
have little immediate effect. "Monday will be another day at the office,"
Mr. Palmeirim said by telephone from the consortium's offices in Atyrau,
Kazakhstan.
But Mr. Ruseckas saw the cancellation in a starker light. "It's a major
thing," he said. "It's not just posturing. It's not a bluff."
Copyright The New York Times Company | Permissions | Privacy Policy
Country Guide / The Times of Central Asia#economicDaily news
from Central Asia!
Wednesday, Nov 27, 2002
State Structure:
Executive branch:
Chief of state: President Nursultan A. NAZARBAYEV
(chairman of the Supreme Soviet from 22 February 1990,
elected president 1 December 1991).
Head of government: Prime Minister Kazymzhomart TOKAYEV
(since 2 October 1999).
Cabinet: Council of Ministers appointed by the
president.
Elections: president elected by popular vote for a
seven-year term; election last held 10 January 1999, a
year before it was previously scheduled (next to be held
NA 2006); note - President NAZARBAYEV's previous term
had been extended to 2000 by a nationwide referendum
held 30 April 1995; prime minister and first deputy
prime minister appointed by the president.
Election results: Nursultan A. NAZARBAYEV reelected
president; percent of vote - Nursultan A. NAZARBAYEV
81.7%, Serikbolsyn ABDILDIN 12.1%, Gani KASYMOV 4.7%,
other 1.5%.
Note: President NAZARBAYEV expanded his presidential
powers by decree: only he can initiate constitutional
amendments, appoint and dismiss the government, dissolve
Parliament, call referenda at his discretion, and
appoint administrative heads of regions and cities.
30
Chiefs of State and Cabinet Members in Kazakhstan:
PresidentNazarbayev, Nursultan
Chmn., Senate (upper house)Abdukarimov, Oralbai
Chmn., Majlis (lower house)Tuyakbayev, Zharmakan
Prime Minister Tasmagambetov,Imangali
Dep. Prime Min. Pavlov, Aleksandr
Dep. Prime Min.Mukhamedzhanov, Baurzhan
Dep. Prime Min. Yesimov, Akhmetzhan
Min. of Agriculture Yesimov, Akhmetzhan
Min. of Culture & Information Qul-Muhammed,
Mukhtar
Min. of Defense Altynbayev, Mukhtar, Col. Gen.
Min. of Economy & Trade Yesenbayev, Mazhit
Min. of Education & Science Berkimbayeva, Shamsha
Min. of Energy & Natural ResourcesShkolnik,
Vladimir
Min. of Finance Pavlov, Aleksandr
Min. of Foreign AffairsTokayev, Kasymzhomart
Min. of Internal Affairs Suleymenov, Kairbek
Min. of JusticeKim, Georgiy
Min. of Labor & Social ProtectionKaragusova,
Gulzhana
Min. of Natural Resources & Environmental
ProtectionShukputov, Andar
Min. of RevenuesKakimzhanov, Zianulla
Min. of Transportation & CommunicationsNagmanov,
Kazhmurat
Min. Without Portfolio Samakova, Aytkul
Chmn., Central Bank Marchenko, Grigoriy
Chmn., National Security Committee (KNB)Dutbayev,
Nartay
Sec., National Security CouncilTazhin, Marat
Ambassador to the USSaudabayev, Kanat
Permanent Representative to the UN, New York
Zharbusinova, Madina
Administrative divisions: 14 oblystar (singular oblysy) and 3 cities (qala, singular - qalasy)*; Almaty,
Almaty*, Aqmola (Astana), Aqtobe, Astana*, Atyrau, Batys
Qazaqstan (Oral), Bayqongyr*, Mangghystau (Aqtau;
formerly Shevchenko), Ongtustik Qazaqstan (Shymkent),
Pavlodar, Qaraghandy, Qostanay, Qyzylorda, Shyghys
Qazaqstan (Oskemen; formerly Ust'-Kamenogorsk),
Soltustik Qazaqstan (Petropavl), Zhambyl (Taraz;
formerly Dzhambul).
Legislative branch: bicameral Parliament consists of the
Senate (47 seats; 7 senators are appointed by the
president; other members are popularly elected, two from
each of the former oblasts and the former capital of
Almaty, to serve six-year terms) and the Majilis (67
seats; the addition of 10 "Party List" seats brings the
total to 77; members are popularly elected to serve
five-year terms); note - with the oblasts being reduced
to 14, the Senate will eventually be reduced to 37; a
number of Senate seats come up for reelection every two
years.
Elections: Senate - (indirect); Majilis - last held 10
and 24 October and 26 December 1999 (next to be held NA
2004)
Official Kazakhstan
Economic Overview:
31
Kazakhstan, the second largest of the former Soviet
republics in territory, possesses enormous fossil fuel
reserves as well as plentiful supplies of other minerals
and metals. It also is a large agricultural - livestock
and grain - producer. Kazakhstan's industrial sector
rests on the extraction and processing of these natural
resources and also on a growing machine-building sector
specializing in construction equipment, tractors,
agricultural machinery, and some defense items. The
breakup of the USSR in December 1991 and the collapse of
demand for Kazakhstan's traditional heavy industry
products resulted in a short-term contraction of the
economy, with the steepest annual decline occurring in
1994. In 1995-97, the pace of the government program of
economic reform and privatization quickened, resulting
in a substantial shifting of assets into the private
sector. The Caspian Pipeline Consortium agreement to
build a new pipeline from western Kazakhstan's Tengiz
oil field to the Black Sea increases prospects for
substantially larger oil exports in several years.
Kazakhstan's economy again turned downward in 1998 with
a 2% decline in GDP due to slumping oil prices and the
August financial crisis in Russia. The recovery of
international oil prices in 1999, combined with
well-timed tenge devaluation and a bumper grain harvest,
pulled the economy out of recession in 2000. Astana has
embarked upon an industrial policy designed to diversify
the economy away from over dependence on the oil sector
by developing light industry.
Industries: oil, coal, iron ore, manganese, chromate,
lead, zinc, copper, titanium, bauxite, gold, silver,
phosphates, sulfur, iron and steel, nonferrous metal,
tractors and other agricultural machinery, electric
motors, construction materials.
Agriculture - products: grain (mostly spring wheat),
cotton; wool, livestock.
Exports - commodities: oil 40%, ferrous and nonferrous
metals, machinery, chemicals, grain, wool, meat, coal.
Exports - partners: EU 23%, Russia 20%, China 8% (1999).
Imports - commodities: machinery and parts, industrial
materials, oil and gas, vehicles.
Imports - partners: Russia 37%, US, Uzbekistan, Turkey,
UK, Germany, Ukraine, South Korea (1999).
GENERAL INFORMATION:
Facts at a Glance, Flag Description, State Symbol,
National Anthem, Country Map, Survival Info, Embassies,
Passport and Visa, Money and Costs, Public Holidays,
Voltage, Weight, Metric System, Useful links, Add Your
Link
COUNTRY PROFILE:
Geography, Environment, Provinces, Main Cities, Climate,
History, State Structure, Economic Overview, Export,
Import, Investors, Special Topic, Picture gallery
TO AND IN:
How to get there, Air, Road, Culture & Arts, Manas,
Museums, Theaters, Cinemas, National music samples,
Recreation possibilities, Kazakh Cuisine, Hotels,
32
Leisure, National Hero, ABC, Phrases
Copyright © 1999-2002
The Times of Central Asia
FT.com / World / Asia-Pacific
Monday Dec 23 2002. All times are London time.
Kazakhs fine US-led oil consortium $70m
By David Stern in Baku and Matthew Jones in London
Published: December 4 2002 0:11 | Last Updated: December 4 2002 0:11
A consortium led by ChevronTexaco of the US developing the
multi-billion dollar Tengiz field in western Kazakhstan has been
fined up to $70m (£45m, €70.2m) by a Kazakh court for environmental
violations.
The penalty is the latest setback for Tengizchevroil (TCO), which
recently decided to halt indefinitely a $3bn expansion that would
double production to 22m tonnes a year by 2005, citing differences
over how to finance the project.
Analysts said it appeared to mark a deterioration in relations
between western oil companies and the Kazakh government in the
oil-rich ex-Soviet republic.
"The Kazakh authorities want to show oil companies who is the boss.
But this is very sad for the country and will undoubtably make
companies more cautious before investing in Kazakhstan in the
future," said a Moscow-based analyst.
A Kazakh official in the Atyrau region where TCO is based said a
local court had upheld a decision to fine the four-member consortium
for violations in storing sulphur, which is a by-product of the oil
production.
TCO has produced around 6m tonnes of sulphur since the consortium
was created in 1993. The yellow substance is stacked in enormous
blocks on the vast Kazakh steppe, near the Tengiz oilfield south of
Atyrau. TCO says the sulphur is a product, whereas the Kazakhs say
that it is waste and therefore requires special permission for
storage.
Tengiz, with up to 9bn barrels of recoverable reserves, is
ChevronTexaco's largest international holding. TCO officials
declined to comment on the timing of the verdict, saying only that
they would review the legal documents in the coming days. "TCO is
very disappointed with the court's decision," said a consortium
spokesperson, who added that TCO took part in the proceedings under
"permanent protest".
Officials have said the main stumbling block over the expansion of
Tengiz was whether to reinvest revenues from the project to fund
further expansion or to seek outside financing. Kazakh authorities,
for whom TCO is the single largest source of tax revenue, said they
could lose up to $200m if TCO's plans were approved.
33
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News / The Times of Central AsiaDaily news from Central Asia!
Great Roads of Resettlement
Kazakhstan, December 07, 2002 [ 10:18 ]
By Natalia BAIGOZHINA, Express-K
ALMATY. According to western experts' forecasts, the
number of entrants to Kazakhstan will increase with each
year. According to United Nations' data, the flow of
migrants to Kazakhstan will grow up to the year 2050.
No one can guarantee, that any combatant trained in
Al-Qaida's camps or suicide bombers with large stocks of
TNT will not appear in the country. Due to transparent
borders these fears today are especially disturbing.
You are welcome ...
The recent report of the UN Department of population
called Kazakhstan one of six Asian countries most
attractive to migrants. Along with Kazakhstan there are
Israel, India, Saudi Arabia, Pakistan, Hong-Kong and
Iran.
Taking into account the current political situation in
Russia and Central Asia, when Kazakhstan became almost
the last island of calmness in this region, an inflow of
migrants to our country is inevitable. At first glance,
such popularity is to the benefit of Kazakhstan in which
the death rate exceeds the birth level. Migration can be
used as a real method of maintaining the population.
However, it should be noted that although similar
demographic crises exist in all EU countries, they,
34
nevertheless, are not eager to welcome all entrants
without exception.
Two main principles of migratory policy have emerged in
the world. Many countries profess the following: "We
need migrants, but only certain migrants". State
requirements include information such as, age, trade,
education, work experience, skill, health etc.
Specialists who are in most need in a particular country
are selected first. Nowadays, Canada, USA, and Germany
widely employ this approach.
In other countries, the requirements differ. In Spain,
Portugal and Great Britain, immigrants of special
interest are those who are ready to work in agriculture
and other spheres less favored by the local population.
UN experts warn of the possible negative consequences of
global migration. First of all, the increase in
unemployment and the possible ensuing rise in ethnic
conflict, conflict driven by the cultural and social
differences of the newcomers and the local population.
Up until now, it was possible to avoid dangerous social
tension in Kazakhstan. First, due to the interethnic
consent policy pursued by the country. Second, because
the best Soviet tradition is still alive in Kazakhstan,
one that has consolidated the ethnic groups into a
single people. Here many generations of Kazakhs,
Russian, Germans, Uygurs, Azerbaijanis, Kurdis,
Armenians, Uzbeks, and Kyrgyzs and many others have been
living in piece. How long can this balance be
maintained? Who will want to settle in our country
tomorrow? It is highly possible that those who are
nursing the plan to overthrow the powers in Central Asia
and establish the Islamic Caliphate will move to the
country, as well as those for whom their whole life is
built on a life for a life principle.
Whether we will manage to avoid the inflow of such
people depends on the migratory policy the country
pursues; that is, what nationalities will be admitted
and in what numbers?
Who comes to us
In recent years, experts in migratory policy point to a
growth in the number of settlers in our republic from
Uzbekistan, Tajikistan and Kyrgyzstan. A significant
share of the settlers is composed of migrants from
Afghanistan and China.
Basically, these are people without higher education and
any special skills. They are ready to work for the
minimum wage in the construction sphere, picking cotton
and so on.
Also, according to the National Security Committee's
data, migration from unsuccessful areas of the Russian
Federation is growing.
35
"Now we notice a very serious migratory trend from
Chechnya, which is connected to our economic growth and
the stable situation in Kazakhstan", Vladimir Bozhko,
the NSC first vice-president declared in an interview to
the Kazakh news agency.
According to Mr Bozhko, migrants from Chechnya underggo
vigorous procedures to receive refugee status in
Kazakhstan. The representative of special services has
emphasized, however, that there has been no evidence of
weapons delivery, or of dirty money being channeled to
Kazakhstan.
Where are you from?
"After the terrorist attacks in the USA, more countries
pay special attention to the issue of security and try
to restrain those who might commit acts of terror
outside their country". World news agencies have
distributed this statement from the chief of the UN
Department of population, Mr Joseph Chemey, all over the
world.
Despite the obvious ambiguity, few western politicians
are confused now by this approach. Naturally, nobody
wants experts in acts of terror, or terrorist recruiters
to arrive in their country. However, it is clear that,
despite diplomats' statements, "terrorisms has neither
nationality, nor religion". Those first to be refused
permanent residence in European countries and America
are natives of Arab countries, as well as those who
profess Islam. Currently in the USA, a new system is
being introduced which will fingerprint all foreigners
entering the country. This informataion will be kept in
a special database. This rule is extended mostly to
citizens of Moslem countries. Representatives of the US
Arabian public tried to oppose this discrimination
measure, but received no support in the government.
The reality is
fading against
Americans, for
state, have to
that issues of political correctness are
the issues of national security. Even
whom human rights form the basis of their
agree with this.
As a reminder, the majority of terrorists, who seized
planes on September 11, 2001, were legal migrants and
had been law-abiding inhabitants of the USA.
The severe lesson was learnt, however. According to
statistics, almost half the countries of the world have
limited immigration. Both advanced and developing
countries seek to reduce the inflow of immigrants.
UN data states that about 175 million people (or nearly
3 percent of the world total population) live outside
countries of their birth. Since 1975 the number of
migrants has increased twofold. Now 60 percent of all
migrants live in advanced countries, and 40 percent in
developing ones. The overwhelming majority of migrants
live in Europe (56 mil), Asia (50 mil) and North America
36
(41 mil). Germany, France and Great Britain are
countries where immigrants prefer to seek permanent
residence in Europe. In North America, as well as all
over the world, USA is the indisputable leader in terms
of the quantity of immigrants.
Copyright © 1999-2002
The Times of Central Asia
News / The Times of Central AsiaDaily news from Central Asia!
Chevron Pullout Might Spell Disaster for Astana
Kazakhstan, December 07, 2002 [ 11:18 ]
By Christopher Pala, The Moscow Times
More news on:
Oil & gas
Nazarbayev Expects Swift Resolution of
Tengizchevroil Dispute
06/12/02 [21:23] KZ
Kazakhstan Produced Over 10.2 Bcm of Gas in
Jan-Nov
06/12/02 [16:37] KZ
Kazrosgas JV Shows Interests in Developing Gas
Deposits
06/12/02 [16:32] KZ
Development of Kazakh Oil Field to Cause
Earthquake
06/12/02 [16:30] KZ
President of RK and Gazprom Discuss Extraction
and Transportation of Gas
06/12/02 [07:58] KZ
Kazakhstan
Zhairem Mining Combine
07/12/02 [11:15]
Great Roads of Resettlement
07/12/02 [10:18]
Astana a Profit-Making Investment Project
07/12/02 [10:16]
Almaty will Not See Serious Earthquake
07/12/02 [10:14]
Kazkommertsbank the Best in Kazakhstan
07/12/02 [10:12]
ALMATY. The indefinite suspension of the biggest
construction project in the former Soviet Union throws
into doubt Kazakhstan's attractiveness to foreign
investors, bankers and oilmen in Almaty said.
Kazakhstan may be as corrupt and bureaucratic as
37
anywhere in the former Soviet Union, foreign investors
say, but it has two major advantages over Russia: There
is virtually no mafia-style violence, and the government
-- often synonymous with the family of President
Nursultan Nazarbayev -- has the ability to get its
decisions carried out in the provinces.
But last month, Tengizchevroil, or TCO, caused
consternation in Kazakhstan when it demobilized
contractors and announced that it would stop work on a
nascent $3.5 billion project aimed at nearly doubling
production at the Tengiz onshore Caspian oil field.
The field is Kazakhstan's biggest single source of
revenue, accounting for 15 percent of the country's
budget. It produces 12 million tons of light crude a
year today, and after a three-year expansion was due to
produce 22 million tons a year.
ChevronTexaco owns half of TCO, ExxonMobil 25 percent,
Kazakhstan state oil company Kazmunaigaz 20 percent and
LUKArco 5 percent.
In a telephone interview from TCO offices in Atyrau,
director Tom Winterton declined to discuss the reasons
for the suspension, but he said no further meetings
between the partners were scheduled.
He said that while the existing investment in Tengiz,
estimated at more than $2 billion, had been financed
mostly through sales of crude, "This is a big project
and there's going to be a need for a direct infusion of
money from the partners, under the most realistic oil
price scenario."
Sources familiar with the negotiations said the
government would not agree to the schedule of
accelerated depreciation proposed by the oil companies.
The companies decided that the schedule offered by the
government did not offer a reasonable rate of return,
they said.
The sources predicted it would probably take months for
the two sides to wriggle out of the impasse.
The cancellation of the huge project -- nearly double
the size of Kazakhstan's annual budget -- came at an
awkward time for this country of 15 million.
Agip KCO, the consortium working on the even larger
Kashagan field, has submitted to the government its plan
to spend some $20 billion over 13 years to develop the
offshore field. Kashagan is the world's fifth-largest
field, with recoverable reserves estimated at 13 billion
barrels, while Tengiz is sixth with 9 billion barrels.
The government, which is not a partner in the Kashagan
consortium, has until the end of the year to accept or
reject the development plan, and sources close to the
38
consortium worry that the government's attitude toward
Tengiz made it likelier that Agip KCO would face similar
problems.
In its first 11 years of independence, Kazakhstan has
attracted more foreign investment than any nation in the
former Soviet Union.
The biggest single investor was Chevron, which after
years of negotiating with the Soviet, then Kazakhstan
government, took control of the giant Tengiz field on
the parched shores of the northern Caspian Sea in 1993.
Tengiz proved highly profitable for the San
Francisco-based company. Chevron, now ChevronTexaco, was
able to increase production 10-fold and organize the
world's biggest railroad-based rail transport system
while overseeing construction of a $2.6 billion pipeline
to carry Tengiz crude to the Black Sea.
In all, analysts estimate, ChevronTexaco has invested
close to $2 billion in the field and the pipeline.
But for the last two years, ChevronTexaco and other
foreign investors have been complaining privately of
government pressure to renegotiate contracts and of what
one oilman called "nibbling around the contracts."
Perhaps the most visible "nibble" is a $73
million-a-year fine that the government imposed on TCO
for storing 5 million tons of sulfur under conditions
identical to those allowed in North America. Kazakh
officials say the comparison is meaningless because the
Caspian climate is different. TCO has appealed the fine.
"It's about time someone drew the line," said a source
close to the Kashagan consortium. "But it's
disappointing that this had to happen."
"This kind of thing doesn't happen often," said another
well-informed oilman. "Sometimes you suspend things
during negotiations, but it's done quietly."
Several sources said there were indications the
government had not expected ChevronTexaco and ExxonMobil
to throw in the towel on the investment project.
Officials at the Kazmunaigaz state oil concern declined
to discuss the case, saying an official reaction may be
issued soon. A spokeswoman for the Energy Ministry
declined comment.
Nazarbayev's management of the economy is drawing
unqualified praise. Growth averaged 10 percent for the
past three years and there is a budget surplus and no
foreign debt.
But there was also unanimity among oilmen that the
suspension of the ChevronTexaco project tarnishes the
country's image just as it prepares to offer, for the
39
fist time, some 100 offshore blocs for exploration.
The suspension "will be seen as a clear sign that
there's something wrong with the investment climate,"
said one senior executive. "There are not many oil and
gas companies left with significant resources and who
are used to operating in difficult offshore
environments, and now this will have ratcheted up their
concern one notch."
Kazakhstan depends on foreign companies' capital and
know-how to lift oil from the country's deep and
technically demanding Caspian fields and achieve
Nazarbayev's goal of making the country one of the world
top half-dozen exporters by 2015, producing 3 million
barrels a day.
While oil executives point out that in the country's
three largest fields, it will be years before companies
have paid back investments and start making a profit,
there is a widespread feeling, even in the Kazakh elite,
that the majors took unfair advantage of the country's
weakness in the early 1990s when negotiating contracts.
Since these contracts are commercial secrets, the truth
remains elusive.
Copyright © 1999-2002
The Times of Central Asia
From: Majordomo@guardian.co.uk
Sent: Friday, December 20, 2002 7:32 PM
To: rbove@wcupa.edu
Subject: Majordomo file: list 'guardian-weekly' file
'gw-international/2002.12.22/200212260401.txt'
-International News / Kazakhstan's solution to nuclear waste: import more / Paul Brown
in Kazakhstan
Kazakhstan's solution to nuclear waste: import more
Paul Brown
in Kazakhstan
Kazakhstan, the largest central Asian republic, already scarred by uranium mines and
by having been the main Soviet nuclear testing ground, is planning to become the
world's first commercial importer of nuclear waste.The national atomic company,
Kazatomprom, hopes to start the imports within a year. The aim is to make enough
profit from the trade to allow it to deal with Kazakhstan's own gigantic waste
problem. Mukhtar Dzhakishev, Kazatomprom's president, said the company was looking to
the UK and other "crowded" European Union countries that had not solved their own
waste problems to take advantage of the open spaces of central Asia. He said the
waste would be transported by rail across Russia. He believes a few hundred thousand
barrels of extra nuclear waste can be disposed of safely in a country with only 16
million inhabitants, but which is the ninth largest in the world. The venture could
40
earn the company between $30bn and $47bn over 30 years, he calculates. He plans to
charge EU countries $4,700 to dispose of a barrel of waste, making $3,800-a-barrel
profit for Kazakhstan. A bill reversing Kazakhstan's policy of banning the import of
nuclear waste is currently before the country's parliament. The Kazakhs plan to build
a nuclear depository, but in the meantime will store imported waste in old uranium
mine workings where there is already heavy radioactive contamination. Mr Dzhakishev
said importing waste from rich countries was the only way of raising the more than
$1.6bn required to begin dealing with his country's nuclear legacy. The company still
mines uranium to make fuel for nuclear reactors in Russia but there are more than a
dozen disused mines and more than 233,000 tonnes of radioactive waste to be made safe
- as well as large quantities of contaminated equipment. Mr Dzhakishev said: "We get
$10 for extracting a cubic metre of uranium. We would get $100 to deposit the same
amount of nuclear waste. "If our depositories took 99% of domestic barrels and 1%
from outside, the extra radioactivity would hardly register but the profit would be
enormous. The question is, shall we do it or not? The answer is, we should." The
most controversial part of Kazatomprom's plan is to import intermediate as well as
low-level waste. Intermediate-level waste contains plutonium, which takes 200,000
years to decay sufficiently to be safe, and the UK and other EU countries have taken
the decision that it can only be buried in deep, stable rock formations. The company
says that "medium-level" waste, as Mr Dzhakishev calls it, is safe in 1,000 years and
does not contain plutonium. He intends to bury it in trenches dug in a deep clay
layer in the east of the country near the town of Aktau, close to the Caspian sea and
Turkmenistan. Timur Zhantikin, chairman of the Kazakhstan atomic energy committee,
the country's nuclear regulatory body, has only 23 staff to oversee the safety of the
vast nuclear legacy in his country. "We have a very large quantity of nuclear waste
in this country and no funds to deal with it," he said. "On the other hand we do not
yet have a depository or even an exact site for one." The provisional site for the
dump is at the opposite end of the country from the former Soviet nuclear test site
of Semipalatinsk, which was the scene of 468 nuclear tests - a third of them
atmospheric. This testing has left a strong anti-nuclear feeling in the country, and
there is alarm at the idea of importing more waste before the country has dealt with
its own problem. Dissent is a risky business in Kazakhstan where the president,
Nursultan Nazarbaev, behaves more like an old-style Communist dictator than a
democrat. Opposition journalists are attacked and newspaper offices catch fire but
some environmental groups are still prepared to speak out. Sergei Kuratov, chairman
of the environmental pressure group Green Salvation, said: "In a country rich in oil
it is crazy to suggest that we cannot afford to deal with our own nuclear waste and
want to import yet more." Vadim Nee, a lawyer for another environmental group, the
Eurasia Partnership said: "In our current situation there is no guarantee of public
safety, no system for compensation, no confidence in the ability of customs to deal
with these cargoes. "Everyone has a human right to a safe environment - but
apparently not here."
The Guardian Weekly 20-2-1226, page 4
News / The Times of Central AsiaDaily news from Central Asia!
Nazarbaev Concludes Moscow Visit with Promises of
Bilateral Cooperation
Kazakhstan, December 21, 2002 [ 17:18 ]
By Antoine Blua, RFE/RL
More news on:
Politics
Kyrgyz President Upbeat on 2003
41
21/12/02 [14:42] KG
Kyrgyz Opposition Plans to Keep Pressing
President on China Issue
21/12/02 [14:41] KG
Turkmen Secret Services Search Uzbek Embassy in
Ashgabat
21/12/02 [09:36] TM
EU to Allocate 30 Million Euros to Tajikistan
20/12/02 [22:54] TJ
Uzbek President Outlines New Parliament's Powers
20/12/02 [22:29] UZ
Kazakhstan
Trial of Former Kazakh Transport Minister
Commences
21/12/02 [14:40]
International Syndicate Extends for Another Year
21/12/02 [14:21]
120 Perspective Structures Found in the
Kazakhstan Sector of the Caspian
21/12/02 [14:20]
Transit of Kazakh Electricity to the West of the
Country is Discussed
21/12/02 [14:19]
Kazakhstan Gold Mining Enterprises Plan to
Increase Production
21/12/02 [14:17]
PRAGUE. Kazakhstan's President Nursultan Nazarbaev
leaves Moscow today following a two-day official visit
during which he met his Russian counterpart, Vladimir
Putin. The two leaders pledged to boost bilateral
relations, with an emphasis on economic cooperation
including the Russian use of the Baikonur cosmodrome in
central Kazakhstan. Putin officially announced that 2003
will be the year of Kazakhstan in Russia.
During their meeting, Vladimir Putin and Nursultan
Nazarbaev publicly expressed their satisfaction
concerning bilateral relations. The Kazakh president
praised 2002 has been a "breakthrough year" for
bilateral ties, and said his country has no unresolved
problems with Russia. Putin, in turn, said all sources
of potential conflict between the two countries had been
solved effectively.
But some analysts say that despite such outpouring of
mutual support, the meeting between the two leaders -held during Nazarbaev's two-day trip to Moscow - is not
likely to amount to much. Artem Malgin is deputy
director of the center for post-Soviet studies at the
Moscow State Institute for International Relations. He
said: "[Russia's] relations with Kazakhstan are
relatively stable and that is why this visit could be
considered a regular visit. It might bring some new
things to our relations, but these things [were]
planned. [So] in general I think nothing extraordinary
will happen during this visit."
42
Aleksei Malashenko, an expert at the Moscow Carnegie
Center, agreed. He stressed, however, the visit still
holds political significance. Malashenko says Nazarbaev
is seeking the support of Moscow and Kazakhstan's
Russian community at a time when he is facing growing
domestic discontentment.
At the same time, Malashenko added, Moscow is eager to
restore its political and economic influence in Central
Asia, which appeared to have waned over the past year as
the United States became a more regular presence in the
region. "Now Nazarbaev faces big pressure from the local
opposition. They try to present themselves as democrats
oriented to the United States, [and] oriented to the
West. Of course, in that situation, Nazarbaev is seeking
support from Russia. Besides, now, with a Russian
minority of approximately 32 or 31 percent [of
Kazakhstan's population] -- by keeping good relations
with Russia -- Nazarbaev thinks that he will be able to
receive domestic support from the Russian part of his
state."
In addition, Malashenko noted, Central Asian leaders -including Nazarbaev -- continue to characterize China as
a potential threat. Under that circumstance, he adds,
Nazarbaev might be seeking Moscow's support out of
concern that China's growing economic power might evolve
into military aggression against its Central Asian
neighbors.
After the
announced
the "Year
stressing
education
first round of negotiations yesterday, Putin
in the Kremlin that the official opening of
of Kazakhstan in Russia" -- a series of events
cooperation and exchange in culture, science,
and business -- was to take place in February.
Malashenko and Malgin agreed that the initiative might
not bring much in the way of concrete results. But,
Malgin said, the project might prove useful to a certain
extent. "It [will create opportunities for] more
intensive contacts between Kazakhstan and Russia on
different levels, starting from the presidential level,
to the level of local communities. That is to say it
could give a kind of impetus to bilateral relations,
[and] to the cooperation between civil societies,
between scientific institutions, between academic
institutions."
The two presidents also discussed trade and economic
cooperation, including the extension of Russia's use of
the Soviet-built Baikonur cosmodrome, an important
source of revenue for Kazakhstan. Since the collapse of
the Soviet Union, Russia has leased the facility as a
launch pad for manned space flights.
Nazarbaev expressed hope that a final decision on the
joint use of the facility will be made at the beginning
of 2003. Speaking on Russian television, he said he was
willing to consider extending Russia's Baikonur lease
43
for up to 50 years.
The two leaders also focused on energy issues. Nazarbaev
said the outgoing year has seen significant progress on
energy issues such as the division of the northern
Caspian Sea, the transit for Kazakh oil through Russia
via the new Tengiz-Novorossiisk pipeline, and the
integration of Kazakhstan's Ekibastuz
hydroelectric-power station with the Unified Energy
Systems of Russia.
Malgin said new "knots" of cooperation have been
established in recent months that will help integrate
Kazakh and Russian energy industries, including the
transport of hydrocarbons. "The Kazakh and Russian
presidents initiated the idea to integrate energy and
transport on a new base. There were even talks about a
kind of natural-gas OPEC-style organization. So I think
these plans will find their continuation during this
visit. I mean closer cooperation in the spheres of gas
[and] oil [as well as] transport routes between
Kazakhstan and Russia."
Putin noted that bilateral trade between the two
countries had fallen by 12 percent this year. But Malgin
said Russia remains Kazakhstan's main trading partner, a
situation he expects to lay the groundwork for further
economic cooperation.
In particular, he said, Russian arms exports to
Kazakhstan are due to increase in the coming years. The
Kazakh Army, which is fully supplied by Russian military
industry, needs to overhaul much of its Soviet-era
equipment.
In the course of negotiations, the parties concentrated
on international and regional issues, and cooperation in
the fight against international terrorism.
Putin said he believes that the active work of Russia
and Kazakhstan at the bilateral level -- in the
framework of Community of Independent States, the
Collective Security Treaty, and the Shanghai Cooperation
Organization -- is "an important factor of stability,
successful economic integration and sustainable
development in Eurasia."
Malashenko said, however, that he does not believe any
greater integration of Russia and the Central Asian
region will happen soon. He said for now, Moscow's
relations with the area -- including with Kazakhstan -will remain strictly bilateral.
Nevertheless, Malashenko highlighted the importance of
cooperation on security between the two countries.
"[Concerning security], Kazakhstan cannot be compared to
Uzbekistan or Tajikistan where we have big Islamic
activity. But in the southern territories [of
Kazakhstan] some Islamic forces are becoming more and
more powerful. I had the chance to talk to some Kazakh
experts, and really they are beginning to feel more and
44
more the threat coming from the southern territories. It
means that Nazarbaev may think about the potential
Russian support if they have, for instance, some
troubles with Muslim radicals."
Security concerns are expected to be one of the main
issues discussed during Nazarbaev's four-day official
trip to China next week, during which the Kazakh
president will meet the new Chinese leadership for the
first time.
Copyright © 1999-2002 The Times of Central Asia
45