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Update No: 257 - (30/05/02)

The Kazaks are benefiting from a rocketing boom, generated in the first place by energy developments, notably since October 2001 an oil bonanza whose output can now be transported to Russia's Black Sea port, Novorossysk, and onwards to European markets. Minerals are also being exported in abundance.

Industry blossoming
The rate of growth of GDP was 9.6% in 2000 and 13.2% in 2001, with growth of 7.6% projected for this year. The rise in industrial production was running at 12% in the first quarter.
Steel production is being adversely affected by new US tariffs; but almost every other sector is booming. The EBRD and other international agencies are convinced that the days of steel exports are over for Kazakstan, despite its cheap production costs, due to world-wide over-production and gathering US protectionism.

Political repression
Kazakstan has a strict dictatorial regime, no free elections or right of assembly, no free press and an absence of civil rights. 
But its monolithic façade has revealed cracks of late. An opposition has formed, moreover from within the ranks of the regime itself.
There was a series of odd incidents late last year 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 dynastically 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 and with a position requiring a high degree of trust by the President.
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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BANKING

Kazak-Uzbek strategic banking cooperation

The Commercial People's Bank of Kazakstan and the state and Commercial People's Bank of Uzbekistan recently signed a framework agreement on cooperation. The two sides believe, as was pointed out in a press release circulated by the People's Bank of Kazakstan on this occasion, that "against the background of liberalisation in Uzbekistan's banking system, this mutually beneficial cooperation will have a beneficial effect on the two banks' activities.
Specifically, the heads of the Kazak and Uzbek banks, Kayrat Satylganov and Jamshed Sayfiddinov, respectively, emphasised during the talks that mutual cooperation would make it possible to optimise settlements between the countries and to improve the quality of the services offered by the banks, Uzreported.com reported.
Indeed, the press release by the People's Bank of Kazakstan notes that under the agreement both sides intend to provide mutual support in providing retail banking services and in carrying out activities on the two countries' financial markets.
The document also provides for cooperation between the two major banks in providing joint credits for certain projects, and also in the spheres of information technology, personnel training, exchange of information and conducting market research.

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ENERGY

Kazakstan needs billions to develop oil, premier tells Swiss vice-president

Kazakstan needs US$200bn for the development of its oil and gas sector, Kazak Prime Minister Imangali Tasmagambetov said at negotiations with Swiss Vice-President Pascal Couchepin in Astana on 2nd May, Interfax News Agency has reported.
In particular, the development of oil and gas fields in the Kazak shelf of the Caspian alone will cost about US$16bn, Tasmagambetov said.
As was noted at the talks, up to 75 per cent of all Kazak GDP falls in the private sector.
Couchepin in turn said that Swiss investors are displaying growing interest towards Kazakstan. In addition, the vice-president highly praised political stability, interethnic accord and the success of economic reforms conducted in that country.

Kazakstan favours Iranian oil pipeline route

The presidents of Kazakstan and Iran, Nursultan Nazarbayev and Mohammad Khatami, have described the Iranian route as the most economical for Kazak oil exports, Interfax News Agency has reported.
Nazarbayev told a 24th April news conference in Almaty that Kazakstan is seeking a diversity of oil transport routes crossing Iran to the Persian Gulf, especially as "everyone recognizes the economic benefit of the project," he added. "I think this is a good prospect," he said.
Khatami, who arrived in Almaty for a visit, agreed that the oil export route in the direction of Iran is "the most reliable and economical." "We fully welcome the transportation of Kazak oil and the construction of a pipeline to Iran," he said.
Khatami voiced the hope that the two sides will soon witness the construction of a pipeline via Turkmenistan to Iran to guarantee the further transportation of Kazak oil to world markets.
Iran suggests implementing the Kazak oil transportation project in stages. During the first stage a 390-km pipeline would be built from Neka to Tehran with a daily throughput capacity of 800,000 barrels. Kazak oil would be transported to Neka by tankers across the Caspian Sea.
The Iranian side believes that during the second stage a pipeline could be built from Kazakstan via Turkmenistan to the centre of Iran and later integrated in the national network.
The project calls for the transportation of oil both from the north to the south of Iran and in the opposite direction. The pipeline from Kazakstan to Iran may be about 1,500 km long: 700 km in Kazakstan , 240 km in Turkmenistan and 500 km in Iran. It could have a daily throughput capacity of 1 million barrels. The project is estimated at US$1.2bn.

ChevronTexaco to boost output and investment in Kazakstan 

US company, ChevronTexaco, plans to increase oil production in Kazakstan to 20m tonnes per annum by 2005, chairman and CEO David O'Reilly told journalists in Astana, Interfax News Agency has reported.
At the moment the company produces 13m tonnes of oil in the republic, or 37,000 tonnes per day, O'Reilly said after a meeting with Kazak Prime Minister Imangali Tasmagambetov. Of this amount, about 30,000 tonnes per day is currently being transported through the Caspian Pipeline Consortium pipeline, he said.
The CEO noted that the launch last year of the pipeline created for ChevronTexaco "a basis for the further expansion of the production capacity" of its joint venture Tengizchevroil, in which the company is the main shareholder, over the next few years.
He said that about US$3bn would be invested in expanding the production capacity of the joint venture over three years, of which the ChevronTexaco share will amount to US$1.5bn. The company has invested about US$1.4bn in Kazak projects to date, O'Reilly said...
As reported earlier, ChevronTexaco is implementing a number of large-scale projects in Kazakstan . The company has a 20 per cent share in Karachaganak Integrated Organization (KIO), which is developing the Karachaganak gas condensate deposit in Western Kazakstan region, a 50 per cent share in Tengizchevroil, which is developing the large Tengiz deposit in the west of the republic and also a 15 per cent share in the Caspian Pipeline Consortium.

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FOREIGN INVESTMENT

Korean watch market enters Kazakstan slowly yet surely

The Korean business world has appeared highly interested in initiating investment projects in the Kazak market. In particular, a country delegation recently visited Almaty to attend a relevant meeting organised by the Seoul Trade Industrial foundation in association with the Korea Trade Promotion Corporation (KOTRA). Most importantly, the meeting was also attended by Korea Trade Investment Foundation President, Chong Kwi Lae.
The delegation included the participation of 14 new companies that had never operated in the Kazak market. Namely, Veloce Watch Co. Ltd., Korea Autgas System Technology (KASTEC) Company, T.A.T. Co. Ltd., Nanogiga Co. Ltd. And Namyong Motor company were among the top Korean companies represented at the exposition, the Almaty Herald daily reported.
According to Veloce Watch President, T.R. Cho, the timepieces produced by his company were cheaper than Japanese and Swiss watches. "In spite of the high costs the quality of other watches do not compare with the Korean watches and the design is superior to the Swiss," he stressed.
Han Seung Electronics Company plans to establish common enterprises with some Kazak companies to manufacture electronic security systems. Similar plans were revealed by Nanogiga Co. Ltd, Overseas Marketing Manager, Jong Ok Yurm, for the manufacture of security systems in Kazakstan. 
Handoo Data Communication Co. Ltd. Specialises in defence systems. Its programmes elaborated included software to prevent misuse of the Internet by employees. Korea Autogas System Technology (KASTEC) Company offered equipment for the use of natural gas as an alternative automobile fuel. KASTEC President Kim Jae Kuk claimed that natural gas was a cheaper fuel compared to the conventional petrol and gasoline for automobiles.

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FOREIGN LOANS

World Bank discusses Kazakstan loan 

World Bank chief, James Wolfensohn, discussed a US$700m programme for Kazakstan with President Nursultan Nazarbayev and pledged the bank's support for the country's bid to join the World Trade Organization, Associated Press has reported.
The three-year programme of low-interest loans is aimed at developing small and medium business, health care and agriculture, Nazarbayev said.
Wolfensohn praised the former Soviet republic's economic reforms and said the World Bank would help Kazakstan gain admission to the WTO and would encourage investment in the country's oil and gas sector.

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FREE TRADE ZONES

Kazakstan plans free trade zone on Caspian Sea

Kazak President Nursultan Nazarbayev has signed a decree to create a free trade zone in the Aktau sea port on the Caspian Sea (Mangistau Region, Western Kazakstan), Kazak Prime Minister, Imangali Tasmagambetov, told the port administration while visiting it on 26th April, Interfax News Agency has reported.
Talgat Abulgazin, director of the company Aktau Sea Trade Port, told the prime minister that the total area of the free trade zone is 227 ha. In total, 24 economic entities will be located in the free trade zone, he said.

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SHIPPING

Russia, Kazakstan agree to cooperate on maritime transport

Russian Transport Minister, Sergey Frank, and Kazakstan's Karim Masimov, have signed a protocol on cooperation in maritime transportation, ITAR-TASS News Agency has reported .
A Kazak delegate said the contracting parties agreed to establish a stable ferry link between Aktau and Astrakhan.
Among other things, Masimov and Frank discussed greater Russian cargo traffic from the Urals and Siberia across Kazakstan to Iran and the Persian Gulf.
There are plans for the transit of Kazak cargoes from Aktau through Astrakhan to Russian ports in the Baltics.
Russia and Kazakstan agreed to consider the creation of a maritime exchange to put in order transactions in the foreign market and for the timely presentation of impartial information about the condition of the market of transport services in the area of the Caspian and the priority development of those transport routes, in which Russia and Kazakstan can participate.
A bilateral working group will be set up to deal with the set objectives.

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