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UPDATE January 2002

The Kazak republic is looking up. Not only was it growing by 10% in 2001 after growing by 9.6% in 2000, GDP is set to rise by 6% in 2002. The economy is faring well because the republic is sitting atop a cornucopia of energy riches and mineral wealth.
Its proven reserves of oil are reckoned to be 15 billion barrels; but possible reserves are 65 billion barrels. Its reserves of natural gas are two trillion cubic feet, with another trillion also possible. Its mineral reserves comprise 60% of the former Soviet Union's mineral stock. Veritably a bonanza of primary commodity reserves.
The population is only 16 million so that there is a chance that all could eventually benefit. True, it has environmental problems inherited from communism. But then its territory is the size of Western Europe. This, together with its primitive infrastructure explains the difficulties of getting its minerals from their remote sources to markets in the East or West, thousands of miles away.
The Kazaks are experiencing a number of other problems all the same. Not the most repressive of regimes in Central Asia, it nevertheless is in the grip of a dictatorship, that of Nursultan Nazarbayev, ex-communist boss of the country. 
The satisfactory growth performance is more due to energy developments than any overhaul of its still antiquated economic structures. The reliance upon energy to revitalise a moribund economy has its drawbacks and has not yet paid off for the many poor in the population. A dictatorship in these circumstances is not likely to abdicate soon. 
There has been a series of odd incidents of late that indicate trouble in the higher echelons of the regime. One of its mainstays used to be the president's son-in-law, Rakhat Aliyev, married to his eldest daughter (his youngest is married to the eldest son of President Akayev of Kyrgyzstan.) He was first head of the tax police, then vice-head of the security police, successor to the old KGB and little changed. He was about to give an address to parliament on corruption when he was told not to by his boss. Corruption is a very hot potato in the republic.
Mr Aliyev suddenly disappeared. Media outlets associated with him closed down. Then on December 17th the president appointed him vice-head of the presidential bodyguard - a demotion, but still protecting him.
His disgrace removed the main check on media independence for a while. The deputy premier, Oraz Jandosov and several other ministers took the opportunity to announce the formation of the Democratic Choice to combat the erosion of democracy in Kazakstan. The new movement called for the decentralisation of political power and the election of regional governors, at present chosen by the president.
None of this pleased Nazarbayev. His toady of a premier said that he would resign "if his deputy was not sacked," which he thereupon was, along with the other errant ministers. The mystery is how they thought that they would get away with it.
In ridding himself of the rebels the president has evicted those with the brightest talent in the government; for instance Jandasov is highly respected by Westerners. But he forgot the ground rules of his own polity. 

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FOREIGN ECONOMIC RELATIONS

Warsaw re-establishes trade with Almaty

Kazakstan wants to attract a large number of Polish firms especially from the oil and gas sector, Kazak Ambassador to Poland, Konstantin Zhigalov, was quoted as saying by the BBC. The ambassador told a recent international oil conference in Cracow that Polish enterprises were already present in Kazakstan. "This is only the beginning of good economic co-operation. We hope that a visit of the Kazak president to Poland scheduled for May 2002 will boost co-operation," Zhygalov said. 
Information released by the economy ministry reported that the value of Poland's trade with Kazakstan reached US$96.5m after the eight months of the year 2001, a 110 per cent rise on the previous years figure. Since 2000, Poland has reported a deficit in trade with Kazakstan, after the eight months of the year at around US$25m, this being the result of high imports of oil and gas that constitute 93 per cent of Poland's imports from Kazakstan.

Russia, China are Kazakstan's leading trade partners

Russia and China are Kazakstan's leading trading partners in the central part of Asia, a senior official said on 7th December, Interfax News Agency has reported.
Kazakstan's trade with Russia was worth US$4.03bn last year and that with China US$824.3m, Nurzhan Raimbekov, head of the analysis department of the Kazak Energy and Mineral Resources Ministry, told an international conference.
He said mineral fuel made up 17 per cent of Kazakstan's 2000 imports from Russia, chemical products 14 per cent, iron, steel and products from them 11 per cent, reactors, boilers and other similar equipment 11 per cent, electrical machines and equipment 5 per cent, means of transport 15 per cent and other goods 27 per cent.
As for Kazak imports from China, 8 per cent of them was mineral fuel, 15 per cent were chemical goods, 4 per cent fertilizers, 2 per cent light industry products, 9 per cent was footwear, 7 per cent were ceramics, 20 per cent reactors, boilers and similar equipment and 35 per cent other goods.
In 2000, Kazak exports to Russia, mineral fuel accounted for 46 per cent, ores and slags for 8 per cent, inorganic chemical products for 14 per cent, iron and steel for 6 per cent, reactors, boilers and similar equipment for 12 per cent, grain for 12 per cent and other goods for 2 per cent.
In Kazak exports to China, iron, steel and products from them accounted for 52 per cent, copper, aluminium and products from them for 26 per cent, mineral fuel for 16 per cent, leather for 1 per cent and other goods for 5 per cent.
Russian investment in Kazakstan's mineral and raw material sector totalled US$32.2m last year, Raimbekov said. This included US$3.5m put into hydrocarbon prospecting and US$28.7m into the extraction of solid minerals.
Chinese investment in this sector reached US$270m in 2000.

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FOREIGN LOANS 

EBRD president visits Kazakstan

Jean Lemierre, President of the EBRD, in mid-December made his second trip to Central Asia within a month to visit Kazakstan and underlined the Bank's commitment to a region to which it has committed over €1.6bn in the last 10 years, the EBRD said in a press release.
Mr Lemierre, who visited Tajikistan, Kyrgyzstan and Uzbekistan in November, went to Kazakstan to attend a session of the Foreign Investors Council (FIC) in the new capital, Astana.
He also had separate talks with President Nursultan Nazabayev, Prime Minister Kasymzhomas Takaev, deputy premier Karim Masimov as well as signing two infrastructure projects worth around €40m.
The Foreign Investors Council was set up in 1998 - with the ERD and the Kazak government acting as co-sponsors and has the task of advising on how to improve the investment climate. The Astana session coincided with the start of celebrations to mark the 10th anniversary of Kazakstan's independence.
Mr Lemierre argued during his visit that improving governance and diversifying the economy hold the key to securing future growth and building on the economic achievements of the first decade of independence.
Mr Lemierre who was accompanied by the Deputy Vice President, David Hexter, and the EBRD's Chief Economist, Willem Buiter, as well as other senior staff, also stressed that facilitating regional trade is of paramount importance to the long-term stability of Central Asia.
During the visit which took place from December 14th-16th, the EBRD underlined its commitment to helping Kazakstan renew its infrastructure by signing two projects worth around €40m for the western city of Atyrau. These are aimed at improving living conditions for the local population and modernising transport links with the outside world.
A €13.7m loan to the Atyrau regional government will be earmarked for the construction of a new drainage system with the aim of tackling a chronic flooding problem in the city centre.
A separate €28m loan, supported by a sovereign guarantee by the Republic of Kazakstan, will be used to refurbish the main runway and finance other operational improvements at Atyrau airport.
Kazakstan is the largest recipient of EBRD investments in Central Asia. The latest projects signed during this visit will bring the Bank's total commitments to nearly €800m over the last 10 years. The EBRD business volume in Kazak for 2001 is on target to reach more than €180m by the end of the year - a 44 per cent increase on the 2002 total of €125m.
For further information contact Richard Wallis, EBRD, mobile tel: +7095 7628664; e-mail WallisR@mos.ebrd.com.

Major Kazak bank gets US$10m loan

A major Kazak commercial bank, Temirbank, has obtained its first syndicated loan of US$10m, Interfax-Kazakstan News Agency reported on 10th December, quoting the managing director of the bank, Ardak Kuzhanova.
"A syndicated loan group of banks gave the loan to the Kazak bank for six months with the possibility of a single postponement of the repayment time for further six months," the director said, and added that the syndicated loan group comprised six major international financial institutions, namely ING Barings Limited, Commerzbank AG, Mashreqbank psc, Dresdner Bank AG, Bankgesellschaft Berlin AG and Raiffeisen Zentralbank Oesterreich AG.

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TRANSPORT

Electrified railway line links two south Kazakh Regions

The Kazakstan Temir Zholy (KTZ, Kazakh railways) republican state enterprise has completed the electrification of the 172 km of railway line between Otar and Almaty-2 (which connects the southern Zhambyl and Almaty Regions), Interfax-Kazakhstan News Agency has reported.
The director-general of the company, Bauyrzhan Baymukhanov told journalists that KTZ had spent about 4bn tenge [nearly US$26.76m], which were allocated from KTZ's own resources, on implementing the project.
He said that the energy project was more economical and environment-friendly than diesel-electric traction.
Baymukhanov said that the electrification of the sector had been completed in "record time" - in eight months overall.
So the final stage of one of the biggest and most important projects in Kazakstan's rail industry - electrification of the Shu-Almaty railway, which runs for about 320km - has been completed, a KTZ press release says.
The entire railway line from Astana to Almaty has now been electrified...

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