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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

  

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: 270 - (26/06/03)

The Kazaks are in a better position than the other Central Asian states by and large. The regime is dictatorial; but that can be taken for granted in the region. President Nursultan Nazarbayev is a highly repressive leader, who nevertheless, makes an attempt at a democratic facade. "Democracy is our goal," he says, "not yet our reality." This at least has the merit of candour.

The Shanghai Cooperation Organisation
The president does not believe in isolating his republic, whose economy is booming via exports. Russia, China, Uzbekistan, Kyrgyzstan and Tajikistan, all neighbouring states of huge Kazakstan, are joined together in the Shanghai Cooperation Organisation which had a meeting in Moscow recently with Nazarbayev attending. The meeting was on May 29th.
The agenda was predictably concentrated on two main topics, the struggle against terrorism and natural disasters. The terrorists in Central Asia take two forms, Islamic fundamentalists, such as the Islamic Movement of Uzbekistan (IMU), and Uighur secessionists in Western China. The IMU militants were dented in the Afghan war of 2001, but are regrouping. The Uighurs have a pretty hopeless cause, more so than the Kurds, who now have two de facto enclaves in Iraq. The Uighurs straddle four republics, China (Xinjiang), Kyrgyzstan, Uzbekistan and Kazakstan. There are even a few in Russia. There is no chance of their attaining independence with those enemies 
According to Nazarbayev, members must work together diligently to ensure that all modern challenges, in particular fighting terrorism, are met. "Preparations are underway to establish an Anti-Terrorist Centre that will deal with terrorism and drug trafficking," the Kazak leader said. "The international community needs coordinated efforts in fighting terrorism. A new and more efficient way of countering international terrorism has to be devised," he added. "The United Nations must play a key role in tackling international issues."
According to Kazakstan's head of state, the Shanghai Cooperation Organisation promotes a multi-polar world. Diverse positions among the member states must not result in walls being erected between them, particularly in objectives that must be realised, he said.
Zhang Deguang, the Chinese ambassador at Moscow, was also approved as the organisation's executive secretary, Nazarbayev said.

Economy booming
The stability of the regime rests on one major plus for Kazakstan, a booming economy. GDP is growing by around 10% per year, fuelled by exports of energy mainly oil, and metals. This year's GDP should reach 4.368 trillion tenge (US$29bn).
Kazak prime minister, Imangeli Tasmagambetov, is not being totally unrealistic, therefore, when he says that Kazakstan is aiming at a 250% boost to its GDP by 2015, that is in twelve years.
A huge industrial programme would be necessary to achieve it. But with abundant resources (60% of the former USSR's mineral wealth) the project is a possibility. Massive diversification would be requisite, but is just realistic. In addition Kazak legislation has been and is being tailored to the needs of Western investors. As a result, Kazakstan has attract far higher FDI (foreign direct investment) than its neighbour the Russian Federation, whose legislators take a negative line to such legislation.

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BANKING

Kazkommertsbank to sell shares to EBRD


Kazakstan's Kazkommertsbank hopes to sell about 15 per cent of its shares to the European Bank for Reconstruction and Development (EBRD) for US$35m, Interfax News Agency reported. "We have completed discussion of all details of the deal and we do not have any outstanding questions," Kazkommertsbank Managing Director, Eldar Abdrazakov, said. 

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ENERGY

Hungarians eyeing energy projects in Kazakstan

Hungarian firms are looking to do US$20m in reconstruction work on heating and power plant #3 in the Southern Kazak city of Chimkent, Interfax News Agency reported. The regional administration there said the project was discussed during a meeting between the region's akima (chief) and a delegation of Hungarian entrepreneurs. 
The possibility of a range of joint business projects in the region was considered. A protocol of intention was signed that says that the plant overhaul project would take three years.

Oil groups hit problem on Kazak deal

Western oil companies working in Kazakstan's US$20bn Kashagan offshore oil field, including ExxonMobil, Royal Dutch/Shell and Agip, could face stiff penalties from a dispute over the project's start-up date, the country's president said, the Financial Times reported on June 9th.
Kashagan - the largest oil find in the past 30 years - is a critical field in the oil companies' portfolio and contains 9bn or more barrels of recoverable reserves.
Nursultan Nazarbayev said in an interview with the Financial Times that if the six-member consortium developing Kashagan wanted to delay the start of production by two years, then the government would "switch on" a clause enabling it to claw back money from the group.
"We have an agreement with the consortium over the process of production. We expect the consortium to keep to the schedule as set out in the agreement," said Nazarbayev.
President Nazarbayev has pushed for the first oil to be pumped in 2005. But consortium members believe that 2006 or even 2007 is more feasible; given the technical challenges of drilling in the shallow north Caspian waters.
The dispute has caused officials in the central Asian state to delay signing off on a project development plan, which was submitted by consortium members in December, said officials close to the consortium. This in turn threatens to push back production even further.
Officials at Eni, the Italian oil group which operates the Kashagan consortium through a subsidiary, Agip KCO, were not available for comment.
Meanwhile, in a move that western businessmen said was a sign of the worsening investment climate in Kazakstan, authorities recently revoked an exemption on paying value added tax previously enjoyed by the Kashagan consortium.
Kazak officials in February instructed the oil companies that the exemption did not apply to work since the beginning of the project in 1999, since this was devoted to exploration and seismic studies and not to actual production. Consortium members, who have invested about US$2bn into Kashagan to date, said that this violated the terms of the 1997 agreement signed with the Kazaks.
According to one western consultant, Kashagan's sub-contractors could bear the lion's share of the costs of reimbursing the government for VAT, which might total some US$500m if possible additional penalties areincluded. VAT stood at 20% in 1999, but was dropped to 16% the next year.
Western oilmen said that the Kazaks reinterpreted contracts as it suited them, in order to squeeze more revenues from oil companies.
Kazak officials said they were only discussing contractual conditions - many of which were given under very favourable circumstances when the country was in desperate need of hard currency - with their foreign partners as the need arose.
This is the second instance in the past year where Kazak authorities have targeted one of the country's main oil projects. Tengiz-Chevroil, the ChevronTexaco-led consortium developing Kazakstan's massive Tengiz onshore oil field, last year shut down production over a budgetary dispute with Kazak officials.

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FOREIGN ECONOMIC RELATIONS

Ukrainian, Kazak president urge CIS free trade zone

Ukrainian President Leonid Kuchma, who made a four-day working visit to St Petersburg to mark the city's 300th anniversary, held a bilateral meeting with Kazak President Nursultan Nazarbayev.
UNIAN News Agency has learnt from Ukrainian presidential press secretary, Olena Hromnytska, that the parties exchanged views on foreign policy. They paid special attention to economic cooperation between CIS member states. The Kazak president, in particular, remarked that he had always actively supported, and would continue to support, the economic component of CIS collaboration.
Kuchma and Nazarbayev stressed the need to sign a treaty on the setting up of a free trade zone spanning the CIS.
In addition, Kuchma and Nazarbayev noted a recent reduction in trade turnover between Ukraine and Kazakstan and emphasized the need to rectify the situation.

China will reinforce relations with Kazakstan

Hu Jintao, the new leader of China, travelled to Astana recently to meet with his Kazak counterpart, Nursultan Nazarbayev. Hu said he will do whatever is possible to bolster his country's relations with the former Soviet republic, New Europe has reported.
"The fact I've come to Kazakstan on my first visit is an important and significant sign. Both sides expressed the wish to intensify cooperation in the spheres of oil, transportation, communications and culture," AFP News Agency reported Hu as saying following his meeting with Nazabayev.
According to AFP, there are not many problems between these two countries. One main area under examination is the exploitation of Kazakstan's huge Caspian Sea oil and gas reserves. However, analysts were quoted as warning that a stronger presence by the Chinese may not be seen as very positive by a number of Kazaks.
The Kazak leader recommended the position taken by the Chinese National Petroleum Corp in developing the Kazak section of the Caspian shelf. The oil group has spent 600m Euro (US$700m) in the Central Asian state to date. Nazabayev also called for the revival of stalled plans to construct an oil pipeline to China, but experts are not very optimistic about it.
The Chinese leader said he was pleased with the comments made by Nazarbayev. Said Hu: "China lacks mineral resources .. whereas Kazakstan can export tens of millions of tonnes of oil to foreign markets - there are great prospects for increased cooperation in the energy sector." 
Talks between the two heads of state included measures to fight terrorism.

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