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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: 268 - (25/04/03)

The Kazak republic is the one Central Asian state with the chance to do very well. It is a sort of Australia-cum-Canada combined as regards natural resources, but suffers from 'the tyranny of distance,' its remote land-locked location, saving an outlet on the Caspian Sea.

Dictatorship stays firm
The ruler of the country, President Nursultan Nazarbayev, is an unreconstructed Soviet apparatchik. He has formally shed the trappings of communist rule, but is a Soviet-era hang-over alright, down to a pervasive secret police and tight repression of all opposition.
Politically regressive it may be; but the regime is in a better position to push for economic reforms than any other in the region. For the economy is booming along at around 10% GDP growth per annum. Foreign trade is leading the way, growing by 27% in 2002, with exports up a staggering 43% year-on-year in January. This gives the government considerable leeway.
Nazarbayev keeps an eye on what goes on in Russia, as befits an ex-Politburo member, who was about to be made Soviet premier by Gorbachev if the coup of August 1991 had not happened.

Land reform under debate
He is impressed by the success of Putin's land reform in regenerating Russian agriculture. The obstacles to land reform in Kazakstan have always been formidable, namely the strong grip of the local collective farm bosses on the countryside and the 7,774 villages in the huge republic, the size of Western Europe. But precisely because of the dictatorial style and reach of the regime's power, Nazarbayev is in a position, as was Putin, to override local vested interests in the national interest. This, he seems determined to do.

Parliament is debating a bill on land reform, allowing private sales of farms, moreover at market prices. If the 'red barons,' well represented in parliament, vote themselves down or are over-ruled, then Kazakstan could within a year or two have a boom in agriculture comparable to Russia's.
In the days of Khrushchev, Kazakstan was chosen as the pet site of his 'virgin lands' scheme. Young Komsomol enthusiasts came to till and harvest the Kazak fields in droves. But the scheme backfired, like all Soviet initiatives in agriculture. It just seems that private ownership is usually a prerequisite for sensible farming. Communism certainly does not seem to be an ideology that can fill the gap; where collective farming has worked, there is always a strong dose of market economics, as in the kibbutz in Israel and the co-operatives in Denmark.
Kazakstan has plenty of good land and a small population of 17 million. It should become the bread basket of the region in due course, if the land reform goes ahead.

China beckons
Kazakstan has an alternative model to Russia right on its borders, namely China, another colossus which is evolving its way from the communist past, rather than going in for revolutionary upheavals, qua 1989-1991. The local branches of the Chinese Communist Party are the equivalent of rotary clubs for American businessmen these days.
The Socialist Party of Kazakstan, successor to the Communist party, does not have such a monopoly as its predecessor. The confederation of Kazak Trade Unions, the Peasants' Party and other parties have seats in parliament and are power brokers that count. But basically the regime functions in a similar top-down manner to China, with the 20 main regional bodies answering directly to the president. Kazakstan is not going to change its policy overnight, as did Russia in 1991. Chinese-style caution is the route forward.
China is also seen as the readiest market for Kazak resources, whether oil or gas, nickel or other minerals. The Russians have been barring Kazak oil from going to the West via Ventspils in Latvia, insisting on routing it via Novorossysk on their Black Sea shore. The Kazaks want to develop an eastern alternative to China and Asian markets beyond it as soon as possible.

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BONDS

TuranAlem launches 3rd Eurobond issue

TuranAlem, one of Kazakstan's top three commercial banks, plans to place a third Eurobond issue, Interfax News Agency reported.
ABN Amro Bank and Merrill Lynch will be the lead managers for the planned issue, a TuranAlem press release said. The bank did not specify the parameters and terms of the planned issue, noting that these would be announced at a later date. Foreign investors own 25% of TuranAlem preferred shares, including Raiffeisen Bank with 10%, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC) and German investment company, DEG, each with 4%, and Dutch development bank, FMO, with 3%. The bank's management controls the rest of the shares.

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CREDIT RATINGS

Moody's upgrades Astana Finance to Ba1


The international rating agency Moody's Investors Service has improved its issuer rating for Kazakstan's Astana Finance from Ba3 to Ba1, company sources were quoted as saying by Interfax News Agency. 
Moody's said in a report, "Astana Finance continues to play a very important role in the life of the city, managing a number of vitally important enterprises."

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ENERGY

Tengizchevroil forks out US$4bn in Kazakstan


Tengizchevroil, a Kazak-US joint venture, has invested around US$4bn in Kazakstan Interfax News Agency reported quoting , Kazak President, Nursultan Nazarbayev, at a ceremonial meeting marking the 10th anniversary of Tengizchevroil.
Tengizchevroil has transferred over US$2.7bn in royalties and corporate taxes to the Kazak budget. Of this, more than US$1bn was paid last year.
ChevronTexaco owns 50% in the venture. Kazakstan and Chevron signed an agreement to set up the company on April 6th, 1993 in Almaty. Tengizchevroil began producing oil at the Tengiz deposit in Western Kazakstan in 1994.
It was important for Kazakstan that such a large company as Chevron should successfully pave the way and show the path to other investors. Texaco, ExxonMobil, British Petroleum and Philips invested over US$7bn in Kazakstan, he said.
Under the national programme for import substitution, Tengizchevroil's contracts with Kazak companies are valued at around US$400m, he said. "The most important thing is that a new generation of our personnel, ie. managers, executives and oil specialists, is growing in the company," he said. Kazkas account for 80% of Tengizchevroil staff, he said.
Nazarbayev handed over the Dostyk (Friendship) Order and other governmental decorations to Tengizchevroil executives. In addition to ChevronTexaco, ExxonMobil holds a 25% stake in Tengizchevroil, the Kazak government owns 20% and LukArco, a Russian-US joint venture, has 5%. Over the next five years, Tengizchevroil plans to increase production from the current 13m tonnes to 20m tonnes of oil per year. The company has pumped about 80m tonnes of oil. The 2010 output is planned at 28-30m tonnes of oil.

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MINERALS & METALS

Iron ore supply centre to open in Kustana


In Kustana, plans have taken off to start setting up an iron ore supply centre. The iron ore supply is going to be set up by Jiuquan Iron and Steel (Group) Co Ltd (Jiugang). Jiugang is based in northwest China's Gansu province. The "economic and trade cooperation" were pledged to be extended by both sides, Interfax News Agency reported. Also raw materials and steel production bases were agreed by both governments to bring help to Jiugang, the news agency said. 
In the previous three months, Jiugang received two Kazak delegations, including delegation headed by the chairman of the Sokolov-Sarbai Mining Production Association last December. The meeting discussed the development of a long-term partnership concerning iron ore trading. Sokolov-Sarbai supplied a tiny shipment of pellets to Jiugang to be tested on a trial basis. Because these pellets had a high grade and a low toxic content, the pellets were regarded as excellent for the production as high quality steel products.

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