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kazakhstan

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KAZAKSTAN

 

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

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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: 264 - (01/01/03)

The Kazak republic is the Central Asian state attracting the most attention in the West right now. Not bordering Afghanistan, it has not in fact been in the front-line against al-Qaeda and the Taleban, nor has it had the Islamic Movement of Uzbekistan (IMU) penetrating its borders in a big way, unlike neighbouring Kyrgyzstan and Uzbekistan and unlike Tajikistan, a front-line state in every sense.

The Central Asian late-developer
Nevertheless, Kazakstan is the great beneficiary of 9:11 in Central Asia. For it has oil in copious quantities and collateral natural gas, a minimum of 15bn barrels of proven oil and of 2 trillion cu. m of natural gas, to cite figures commonly used at the beginning of the decade. But since then it has become clear that there are further huge fields not fully explored in its section of the Caspian Sea. The Kashagan field, the largest recent discovery, has proven reserves of 15bn barrels and likely ones of 40bn, making it the world's biggest find since Prudhoe Bay in Alaska thirty years ago.
From being a former Soviet backwater in Central Asia, Kazakstan is now becoming an epicentre of the world energy industry, the centre remaining the Middle East. This development, already under way before 9:11, has been redoubled subsequently. Russia and the Caspian Sea came swiftly to the fore, representing the new energy frontiers to counter-balance dependence on Middle East suppliers. Kazakstan's day in the sun had finally come, so it seemed.

Opposition took heart prematurely
An oil boom has been under way in Kazakstan for some time. It has coincided with a primary commodities boom, as world demand and prices for metals rose along with the price of oil. GDP growth in the last three years has been phenomenal, around 10% per annum, for instance 13% in 2002 and 7-9% this year, moreover with inflation declining to 5 to 6% annually.
The favourable times have emboldened opposition forces to demand greater genuine democracy. An earlier opposition movement, they knew, had been dispersed, its leader being forced into exile and denied the chance to stand against the incumbent, Nursultan Nazarbayev, for the presidency three years ago, which guaranteed a walk-over at his re-election. The oppositionists this time round mistakenly thought that greater prosperity and contacts with the West would persuade the president to open up the system to enable the younger, better educated technocrats and businessmen to participate more creatively in public life.
They could not have more totally wrong. Nazarbayev's reaction has been more brutal still than three years ago; he now puts his opponents in jail and does not just content himself with their exile.
The main players in the drama are Nazarbayev and his ex-premier and former supporter, Galimzhan Zhakiyanov, who used to be governor of Pavlodar, an industrial province on the border with Russia. A year ago, Zhakiyanov launched a new opposition group called the Democratic Choice of Kazakstan (DCK), with strictly limited aims of reforming, not replacing the regime. The premise, as he now admits in prison, was naïve; he and his co-founder businessman and former energy minister, Mukhtar Ablyazov, were openly denouncing the corruption of the regime and asking it to renovate itself from within.
This over-optimism was doubtless sparked by an unprecedented event. The launch of DCK came just days after Nazarbayev had ousted his son-in-law, Rakhat Aliyev, married to his favourite daughter, Dariga, who runs most of the printed and electronic media. Her husband for his past had cornered the lucrative sugar market. His dismissal and arrest seemed to mean that Nazarbayev was serious about combating corruption. It is understandable that the DCK leaders thought that they could become the liberal opposition, as it were, to a liberalising president.
They had totally misread the situation; Nazarbayev obeyed his oldest deepest instincts as a long-time stooge of Soviet power in the region. Any weakness would prove fatal, he must have thought. An ardent supporter of Gorbachev in his time, when the former First Secretary General was about to make him the Soviet premier in 1991 just before the August coup, he has had ample time to reflect on Gorbachev's mistakes. His central one, he must have long worked out, was to tolerate anyone, like Yeltsin, who was more radical than himself.
In August this year, perhaps taking a leaf out of the Soviet coup-plotters ' book eleven years ago, he acted. The DCK top two were arrested, charged and found guilty of treason. Zhakiyanov was sentenced, to seven years, and Ablyazov also, to six years. It was what Gorbachev should have done to Yeltsin in early August 1991, Nazarbayev must have concluded, and, like his Kazak counterpart, he would still be in power. Nazarbayev soon widened his purge, as Stalin would have approved. Within days of the sentences, members of the DCK were sacked and media outlets controlled by Ablyazov were foreclosed. The daughter of an outspoken editor was found dead in a police cell. In November an opposition journalist, Sergei Duvanov, was arrested on the eve of his departure to address US civil rights groups. The regime continues to beat up journalists and denounce the opposition at Soviet-style mass rallies with rent-a-crowd supporters bussed in from the provinces.
Nazarbayev's daughter, meanwhile, and her spouse have been let off lightly. He is now enjoying a gilded exile in Austria, whose capital, Vienna, is rather more agreeable a place than Astana, the new Kazak capital, out in the provincial sticks.
But that would have been a better fate than the one facing Zhakiyanov. He is held in a far northern prison camp, a former part of the gulag, which is hot and mosquito-ridden in summer and subject to howling blizzards in winter. Imprisoned with common criminals, many suffering from TB, HIV and other contagious diseases, the aim appears to be to break his spirit and make him grovel for an apology or to break his body. It remains to be seen if Zhakiyanov has the makings of a Kazak Mandela in him.

Nazarbayev looks to vindication by posterity
The Kazak president thinks that he, rather than Zhakiyanov, is going to be vindicated by future generations. He is the ablest of the Central Asian despots with the possible exception of Askar Akayev, president of Kyrgyzstan, whose elder son is another of his sons-in-law, a result of a dynastic marriage, as in the Khanates of the past.
Nazarbayev justifies running a tight ship by the threat, real to many, of the Russian population, who predominate in the northern provinces, opting for union with Russia and taking the oil and the fertile land with them. This, if it transpired, could lead China, Uzbekistan and Iran to claim border areas and leave the Kazaks with the dreary, radioactive steppes.
He has moved the capital from Almaty-Ata in the far south to Astana in the heart of the country to forestall the threat of Russian secessionism. He certainly leads a strong functioning state with clearly defined borders and the most vibrant economy of the region. But success in holding it together is being bought at the expense of developing democracy. Perhaps only after decades of prosperity will democracy become a realistic possibility, but it is a classic example of the relevancy of the injunction: "don't hold your breath."

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ENERGY

Tengizchevroil suspends some projects in western Kazakstan

The Tengizchevroil joint venture, which is developing the Tengiz field (the Atyrau region in Western Kazakstan), has announced that it will suspend some of its projects. As a result, the company will not finance projects related to back pumping of raw gas or the construction of a second generation refinery.
"The council of partners has not approved the budgets for these two projects. The partners have failed to reach a mutually acceptable decision that would provide financing for major back pumping of raw gas or refinery plant projects in consideration of meeting the economic interests of the partners," Interfax News Agency quoted the company as saying in a press release. Work to suspend the aforementioned projects and related drilling efforts has already begun.
Tengizchevroil intends to focus on "optimising the operation of existing production capacities, which today help produce 12-13m tonnes of stock-tank oil a year, in addition to large volumes of residue gas, propane, butane and sulphur."
In July 2002, the Tengiz launched a raw gas back pumping project at underground oil-bearing layers in order to sustain interstratal pressure at the field. This would also facilitate resolving the issues concerning sulphur stockpiles, which currently total six million tonnes. According to the estimate, if the project proves successful, it will increase oil production at the Tengiz field by three million tonnes a year.
Gas back pumping facilities were due to begin operations in August 2004. The project is estimated at US$800m, while the second generation refinery carries a price tag of US$2.5m. Oil production at the Tengiz field began in 1994.
The joint venture is 50 per cent owned by US Chevron Texaco Overseas, 25 per cent by ExxonMobil Kazakstan ventures Inc, 20 per cent by the Kazak government and five per cent by the LUKArco Russia-US joint venture. Tengizchevroil increases its production by 40 per cent annually. In 2001, it produced 12.5m tonnes of oil

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FOREIGN ECONOMIC RELATIONS

Japan mission to study economic prospects in Astana

Kazak members of the Senate Committee for Economy, Finance and Budget met with a Japanese delegation, headed by Tetsuya Ishii, the administrative director of Economic Cooperation Bureau at Foreign Office of Japan, in the Kazak capital, the Almaty Herald daily reported recently.
Ishii said that the purpose of the group's proposed visit was to survey the economic situation in Kazakstan and share opinions concerning further development of economic cooperation between two countries.
Thus, he underlined that the effective development of relationships between countries was possible with the involvement of legislative authorities. Chairman of the Committee, Mussirali Utebayev, acquainted the guests with the economic developments in Kazakstan noting the sustainable production growth, legislative maintenance of the process of transition to the market economy and democratic reforming of society.

Japan expresses support for early WTO entry for Kazakstan

Foreign Minister, Yoriko Kawaguchi, expressed on 6th December Japan's continued active support for an early entry into the World Trade Organization (WTO) by Kazakstan, a Foreign Ministry official said, Kyodo News Service has reported. 
During a meeting with Kazak Foreign Minister, Kasymzhomart Tokayev, in Tokyo, Kawaguchi welcomed Kazakstan's efforts to join the WTO and said its entry will be beneficial for both countries, according to the official. 
Kawaguchi was quoted as saying that with Kazakstan's WTO entry, market-economy systems in the country will be promoted and both countries will be able to make use of common systems. 
Tokayev, who was on a five-day visit to Japan, called for more direct Japanese investment in his country, saying that Kazakstan welcomes Japanese companies. Kawaguchi and Tokayev also agreed to further strengthen bilateral friendship and cooperation. 
During a meeting with Prime Minister Junichiro Koizumi, Tokayev was quoted as saying Kazakstan seeks Japanese investment for development projects in the Caspian Sea. 
Tokayev apparently also handed Koizumi a letter from Kazak President Nursultan Nazarbayev, and invited the Japanese premier to Kazakstan. 

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FOREIGN LOANS

Alyans Bank extends loan for Russian banks

Kazakstan's Alyans Bank has raised its first loan from a syndicate of Russian banks totalling US$6m, the bank was quoted as saying by Interfax News Agency. "The six-month loan has an option to extend for another six months. Interest on the loan is three-month Libor plus four per cent," a source from the bank said. Renaissance Capital is the agent for the deal. The syndicate includes Russky standart. The loan will be used to finance export contracts for the bank's clients.

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MINERALS & METALS

Mineral extraction potential impressive

The potential of Kazakstan's extracting industry is estimated at US$9 trillion, President Nursultan Nazarbayev stated during his recent visit to The Hague. "Kazakstan has been recognised as one of the richest countries by mineral resources. It has been estimated that our land contains about US$9 trillion worth of extractable resources, and it will take several hundred billion dollars to develop them," the president said at the Kazak-Dutch business forum, Interfax News Agency reported.
Both the US and the EU have recognised Kazakstan as having a market economy, while Kazakstan was first among former Soviet republics to gain high ratings from the Moody's upgraded Kazakstan's rating for foreign currency bonds from Ba2 to Baa3. The rating for foreign currency bank deposits was revised to Ba1, while the rating for long-term national currency borrowings of the government was upgraded to Baa1. The ratings have a stable forecast. Kazakstan has stopped external borrowings. "This year we have become best exporters of capital for the first time ever," Nazarbayev stressed noting that his country had recorded GDP growth of 10-11 per cent in the past three years. During that period, the government has focused on the development of agriculture. "The future introduction of private property in land will be the second most significant economic revolution in the country," the president concluded.

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NUCLEAR ENERGY

Kazakstan to build thermal nuclear reactor

Kazakstan will implement a project on building a thermonuclear reactor, called Tokamak, for studying materials. 
"We are the only country in the CIS that will undertake the construction of such a complex physics-engineering facility next year," Kazak Deputy Prime Minister, Alexander Pavlov, told a press conference on the passage of the country's 2003 budget by parliament, Interfax News Agency reports. 
The budget for next year allocates 198.04 million tenge for building the facility. 
In general, Kazakstan intends to significantly increase allocations to finance scientific research next year, Pavlov said. 
"The financing of fundamental science will be increasing by 250 million tenge, and scientific research by 450 million tenge," the deputy prime minister said. 
Tokamak will be a thermonuclear reactor, in which atomic nuclei fuse, unlike better known fission reactors, in which nuclei disintegrate. 
The prototypes of Tokamak include such reactors as MAST, NSTX, and SELENA, which are already successfully operating for research in plasma physics in Britain, the U.S., and Russia. These plants use deuterium, a cheap and inexhaustible fuel source, which is contained in seawater. Such reactors have virtually no environmental effects, as they produce little nuclear waste. 

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