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kazakhstan

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KAZAKSTAN


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 24,205 22,400 18,300 60
         
GNI per capita
 US $ 1,510 1,350 1,250 117
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km) 
2,717,300 

Population
16,731,303

Principal 
ethnic groups 
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others

Capital 
Astana
(formerly Akmola)

Currency
Tenge

President 
Nursultan Nazarbayev

  

Background:
Native Kazaks, a mix of Turkic and Mongol nomadic tribes who migrated into the region in the 13th century, were rarely united as a single nation. The area was conquered by Russia in the 18th century and Kazakstan became a Soviet Republic in 1936. During the 1950s and 1960s agricultural "Virgin Lands" program, Soviet citizens were encouraged to help cultivate Kazakstan's northern pastures. This influx of immigrants (mostly Russians, but also some other deported nationalities) skewed the ethnic mixture and enabled non-Kazaks to outnumber natives. Independence has caused many of these newcomers to emigrate. Current issues include: developing a cohesive national identity; expanding the development of the country's vast energy resources and exporting them to world markets; and continuing to strengthen relations with neighbouring states and other foreign powers. 

Update No: 275 - (01/12/03)

The terrorist threat mounts
The Kazaks are not so affected by terrorism as neighbouring Uzbekistan and Kyrgystan, but they do face problems with it all the same. The Islamic Movement for Uzbekistan (IMU) operates in the whole region and has tentacles in Kazakstan too. The police and security forces liaise to combat the menace, pooling their resources.
The borders are highly porous in this huge country, the size of Western Europe. The Hizb ut-Tahrir al-Islami (HTI) operates in Kazakstan. It is not listed as a terrorist organisation by Western states, but it has been increasing in militancy in the last twenty months since the war in Afghanistan and distributes pamphlets of a subversive nature throughout most of the region. This may be due to widespread discontent at the new US military presence in Central Asia, which is resented by nearly all Moslems. The increased scale of governmental repression also breeds the very scourge it is designed to curb, pushing frustrated protesters into violent reaction.
The growing discontent within HTI ranks indicate that the group may feel obliged to turn to alternative modes of action in the near future. These could include organising demonstrations against the detention and imprisonment of HTI members perhaps escalating into the use of violence to confirm commitment to the cause.

The economy recovers
The main additional reason for the rise in militancy is the high incidence of youth unemployment. Although the rate of growth of GDP has been spectacular, in the scale of double figures for several years on the back of a massive oil and commodities boom, it has not benefited the bulk of the population, while clearly doing so for the upper echelons in the regime. If GDP rises by 10%, as in 2000-01 (it rose by 8% in 2002), this does not automatically translate into jobs and prosperity for all.
President Nursultan Nazarbayev, who runs a tight ship, addressed the problem in his annual state-of-the-nation speech on April 4th. He indicated that the large budget surplus, created by the boom, would be used to generate an expansion of infrastructure investments and job-creation programmes in both industry and agriculture. At the same time there is to be an enhanced role for social welfare, with higher wages and lower taxes. Increases in pensions and in the minimum wage are on the statute book. As of January 1st, 2004, the value-added tax is to be lowered from 16% to 15%, while the maximum rate of income tax is to be lowered from 30% to 20%. 
All very commendable and to some degree capable of being implemented, but not in time to stem a rise in disaffection among many young people. 

EBRD to the rescue
The republic is, nevertheless, the success story of Central Asia. It has won the plaudits of the President of the EBRD, Jean Lemierre, who praises the reforms made so far. He puts this in a nuanced way in saying: "Kazakstan has undertaken structural reforms in the financial, transport and telecommunications sectors. A new tax code, a transfer pricing law, a draft law on investments and amendments to the joint stock company law all contribute to healthy economic legislation. The banking sector is efficient and is financing more and more of the real economy.
"Perhaps the element that most differentiates Kazakstan from its Central Asian neighbours was its early position that it would try to attract foreign investment and build a strong economy, in part by building a strong democracy. A lively press developed in Kazakstan, political opposition was fairly vocal and there was a general perception that the rule of law applied to contracts and trade agreements as well as to the broader society.
"Events in the past year, though, have given rise to particular concerns over freedom of the media and political opposition. There have been allegations of wrongful arrest and mistreatment of journalists, and official backlash over reports of the government's failure to disclose funds deposited abroad."
Lemierre went on to note that the republic now belongs to the Eurasian Economic Union, which links together the economies of Russia, Belarus, Kyrgyzstan, Tajikistan and Ukraine. That is seen by some as a retrogressive step, incompatible with membership of the World Trade Organisation. But Lemierre did not say that. 
The EBRD will continue its extensive funding policy to the country, which has seen substantial investments in the oil capital, Atyrau, on the Caspian Sea, where an abundance of oil reserves lie in the Kazak share of the sea. 
The Kazaks are well aware of how jealous the Russians are of their stranglehold on oil from Central Asia to Western markets. They are looking to diversify by exporting to China, in a massive pipeline from Atyrau to Xinjiang, one that by 2015 could be pumping as much as 3.5 million tonnes of oil to the westernmost Chinese province daily. This development would give the Kazaks a decisive independence from Moscow for the first time in the history of their oil industry, supplying the third largest petroleum user in the world, one which is destined by then to become the second or even premier global consumer.

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ENERGY

BAK to increase coal shipments end-2003

Kazakstan's Bogatyr Access Komir (BAK), the leading supplier of power-generating coal to Kazak and Russian consumers, owned by US firm Access Industries Inc, recently announced it will increase shipments by more than 11% in 2003 to 23 million tonnes, Interfax News Agency reported.
BAK, which mines the Bogatyr and Severny coal fields in the northern part of the country, supplied coal to 10 power plants in neighbouring Russian regions. Access Industries owns the Bogatyr mine. BAK rents the Severny mine, and the Bogatyr No 9 field from Russian electricity giant, Unified Energy System (UES). BAK has announced it will complete the restructuring of the Bogatyr mine within the next 12 years, introducing new mining, stripping and coal blending equipment. It has also launched an extensive electrification project worth 396.2m tenges (US$2.7m) at the Severny mine's stripping complex, and is almost finished with its plan to convert underground drainage to surface drainage with a price tag of 399.9m tenges.

Kazak leader tells Ukrainian minister of "untapped" oil transport potential

Kazak President Nursultan Nazarbayev is convinced that Ukraine and Kazakstan have considerable untapped potential in transporting energy sources to Ukraine and further via Ukraine to Europe, as well as in other spheres of economy. Nazarbayev said this during a meeting with Ukrainian Foreign Minister, Kostyantyn Hryshchenko, in the Kazak capital Astana, the press service of the Ukrainian Foreign Ministry reported, Interfax-Ukraine News Agency has reported.
Hryshchenko conveyed an invitation to visit Ukraine to Nursultan Nazarbayev from Ukrainian President Leonid Kuchma. 
During the talks, the parties discussed topical issues of bilateral cooperation in the trade and economic sphere, opportunities for the implementation of multinational projects, and exchanged views on key international problems. 
Hryshchenko also met the head of the Senate [upper house] of the Kazak parliament, Oralbay Abdykarimov.

Kazakstan to export oil to Europe via Odessa-Brody

Kazakstan is ready to export its oil to Europe through the Odesa-Brody-Gdansk-Plock oil pipeline, Kazak Ambassador to Ukraine, Ravil Cherdabayev, announced recently. "I believe this oil pipeline is a very attractive and a good project to link Asia with Europe. I would like this project to operate as soon as possible, just as soon as we are able to find a purchaser," he said, Interfax News Agency reported. 
Cherdabayev reminded that today Kazakstan extracts around 50 million tonnes of oil annually. "We consume no more than 10m tonnes of oil annually, and export 40 million tonnes of oil," the ambassador noted. "The plant of where this oil will go is a problem of sellers and buyers," he stressed.

Russia cannot object to Total's inclusion in Kurmangazy plan

Russia cannot be against Kazakstan's plans to invite third parties to develop the Kazak share of the Kurmangazy project, Russian Deputy Prime Minister, Victor Khristenko, said recently, reports New Europe.
Khristenko made this statement in response to a question about Kazakstan's plans to invite the company, Total, to participate in the project. "At the same time, Russia is interested in a quick start to exploration work at this field," Khristenko stressed. He reminded that the Russian participant in the project - Rosneft - has already made a big effort to begin this work. Therefore, Khristenko said that discussion of the inclusion of new participants should not delay the start of the exploration work. 

Kazakstan kicks off dam construction in Aral Sea

The shrunken Aral Sea in Central Asia is considered a global environment disaster and Kazakstan recently kick-started a project to construct a dam across a small northern section of the sea, The Guardian said in a special report.
The saline inland sea, split between Kazakstan and Uzbekistan, two former Soviet republics, has been drying out for a quarter of a century. The crux of the problem is a vast irrigation scheme conducted by the former USSR to draw water from the sea's tributary rivers to grow cotton and rice in the desert.
Plans to save the sea since the early 90s have not worked and one of the two rivers no longer flows, the report said. In some places the depth of water has fallen from 54 metres to 28 metres and the retreat has left the hulks of ships marooned in a desert wasteland, The Guardian said.
The Kazak government decided to construct a dam to impound the waters of the second main river. The construction project is part of a water battle with Uzbekistan, which itself stopped the flow into the south of the Aral Sea from the Amu-Daria.
The report noted that tension between the two countries has been increased by a number of border incidents, and Uzbekistan has barred the whole of its part of the sea to visitors and aid agencies. The Guardian quoted the last foreigner to visit the area as saying people who used to be farmers and fishermen now live only on food aid in a salt desert. Cancer and liver and kidney failure is the norm now, both in adults and children.
The Syr-Daria cannot by itself keep the whole sea alive, the Kazak government said. "The water is in effect being wasted in the southern dead zone," it added.
Kazakstan is investing 72.9m Euro of its newly gained oil wealth on cutting losses to the Syr-Daria from irrigation and winter flooding, the report said.
The construction of the dam would help restore the fishery industry and reduce dust storms. Kazakstan is being financially supported by the World Bank to get the project off the ground successfully.
Five CIS countries use the two rivers for irrigation and have done so for centuries, the report said. However, the area irrigated grew to 8m hectares from 6m hectares and the sea started to shrink. The Aral Sea is now reduced to three separate parts and is still shrinking.
"There is tension now over water, within 10 years if nothing changes there will be armed conflict," The Guardian quoted a British diplomat in Dushanbe, Tajikistan, as saying. The Chairman of the International Fund for Saving the Aral Sea, Sirodjindin Aslow, is making a huge effort to resolve this issue. He said "Soviet planning and the competition for water between these five states has tuned the Aral Sea into trash." 
"To restore the sea we need 1,000 cubic kilometres of inflow a year, but we have barely one tenth of that - 110 cubic kilometres - and all that is from the north," he added. "The south gets only a trickle, if that. The shore line has receded on average by 250 kilometres. The level of salination has increased dramatically and the waters leave behind a salt paste containing pesticides and other minerals." Aslow said.
"We have a new 14-point action plan with a total of 58 projects which involve growing less thirsty crops and we believe we can cut the water use by half with modern irrigation methods. We have to persuade the countries involved not to use the water saved for yet more irrigation."

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FOREIGN LOANS

ADB offers US$190m credit plan to Kazakstan

The Asian Development Bank (ADB) recently announced it would grant a US$190m credit programme to Kazakstan for the period 2004-2006, based on the Country Strategy and Programme (CSP), approved by the bank's board of directors.
Four loans will be tranched out during the three-year period, which will cover rural development, natural resource management, rural water supply and road rehabilitation, New Europe reported.
This lending programme is in addition to the US$34.6m loan ADB recently green-lighted for a rural water supply and sanitation project, the bank said in a statement. The lending programme is complemented by a US$6m technical assistance (TA) programme of 13 projects.

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NUCLEAR ENERGY

Kazatomprom to invest in Mangyshak complex upgrade

Kazak nuclear company, Kazatomprom, recently announced it will spend 7.7bn tenges (US$53m) to upgrade and expand the Mangyshlak nuclear energy complex from 2003-2010, Interfax News Agency reported.
Of the overall investment, 230m tenges will be spent in 2003 to revamp existing equipment, Kazatomprom president, Mukhtar Dzhakishev, was quoted as saying. "Kazatomprom will invest 840m tenges in upgrades and 83m tenges on new construction in 2004, and pump 1.597bn tenges the Mangyshlak plant's way in 2005," he said. According to Dzhakishev, the investment programme would coincide in every respect with the needs of the Mangistau region, where the nuclear complex is located. "It is designed in such a way as not to disrupt the region's industrial development plans, so that the region has additional electricity when it needs it, but not more," he said.

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