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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 24,205 22,400 18,300 60
GNI per capita
 US $ 1,510 1,350 1,250 117
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ethnic groups 
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
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(formerly Akmola)


Nursultan Nazarbayev


pdate No: 286 - (28/10/04)

The elections to parliament in Kazakstan went off as well as could be expected on September 19th. Foreign observers were not impressed, but then were never likely to be. The pro-regime parties won rather too easily for the elections to have been honest.
The parliamentary elections took a familiar and disappointing shape. Like most of the recent elections held in former Soviet states, they were marred by serious flaws: official interference, extensive procedural irregularities and a strong pro-government bias in the media.
Such electoral abuse is often ascribed to raw power grabs. But there's a larger and more pernicious factor at work: deeply entrenched corruption.
The elections in Kazakhstan are only the latest example of this corrosive phenomenon in a part of the world whose democratic performance has been steadily slipping backwards.
Recent elections in Armenia and Azerbaijan were similarly flawed. And with a raft of elections scheduled for this year and next in Belarus, Kyrgyzstan, Ukraine, Uzbekistan, Azerbaijan and Moldova, the impact of corruption in the FSU is a matter of grave concern.
In profoundly corrupt settings, leaders go to extraordinary lengths to cling to power for fear of prosecution by their successors.

The West disapproves
The elections fell short of international standards, according to the Organization for Security and Cooperation in Europe (OSCE), setting the stage for a possible confrontation between it and former Soviet states that resent being lectured by the West. The elections came a year after Kazakhstan announced its candidacy to serve a turn in the leadership of the OSCE. 
No former Soviet country had made such an effort, and the organization has been critical of elections, human rights and press freedom in most of them. Foreign Minister Kasymzhomart Tokayev had promised that the elections would be a test for Kazakhstan's democracy. In Astana, the capital, the director of the Central Election Commission, Zagipa Baliyeva, told Reuters: "Were you expecting anything else? My opinion is that our elections went splendidly." But the European group, which sent 330 people to serve as election monitors, concluded that while more parties were allowed to register than in the past, "considerable pressure was placed on voters, especially by local officials and workplace supervisors." Unofficial results showed that Otan, the party created to support President Nursultan Nazarbayev, won by a wide margin. Information Minister Altynbek Sarsenbayuly resigned to protest "falsifications" in the elections.
There have been considerable tensions between the former Soviet countries and the rest of the 55-country membership of the European group, which includes the United States and Canada as well as European nations. Under Vladimir Putin, Russia has taken an increasingly hostile tone toward the European group and its Office for Democratic Institutions and Human Rights, the world's largest election-monitoring organization. Russia says the Europeans use standards for former Soviet countries that are different from those for others. That view has found receptive ears among the autocratic leaders who dominate in Central Asia and the Caucasus. In a paper presented to the European group in July, Russia, Kazakhstan and seven other former Soviet states said they may stop cooperating with the organization if it does not reduce its efforts to promote press freedom, human rights and democratic elections, efforts that they called interference in their internal affairs. The U.S. Commission on Security and Cooperation in Europe replied by noting that all members had signed a declaration in 1991 stating that human rights commitments "are matters of direct and legitimate concern by all participating states and do not belong exclusively to the internal affairs of the state concerned." 
As plans are announced to give Kazakhstan an official ruling party in the wake of last week's parliamentary elections, political opposition against President Nursultan Nazarbayev is hardening. Ak Zhol, a centrist opposition party and one-time government ally, has announced plans to challenge the results of Kazakhstan's recent parliamentary elections and to ally with two other opposition parties in a national protest against the vote.
Speaking on Khabar TV's September 26 program "Zheti Kun", presidential aide Yermukhamet Yertysbayev declared that the pro-presidential party Otan (Fatherland) can now effectively be considered Kazakhstan's ruling party following the September 19 vote. According to data from the Central Election Commission, Otan secured more than 60 percent of the votes cast. 
"There is a unique possibility now to institutionalise a ruling party," Yertysbayev said. "Until now, there has not officially been a ruling party and consequently, there has not been official opposition as legalized public institutions. I believe that this mechanism will inevitably be formed within five years." Further details for this process were not provided. 
Election results released four days after the September 19 poll showed a clean sweep by Otan with 60.62 per cent of the overall vote. Ak Zhol (Bright Path) trailed Otan with just over 12 per cent of the vote, followed by Asar (All Together) with 11.38 per cent and the lesser-known pro-government bloc Aist, or Agrarian-Industrial Union of Workers, with 7.07 per cent of the vote. 
Under Kazakhstan's electoral system, Otan will have seven out of a possible ten members of the 77-seat parliament elected proportionally, or by party list, with the remaining three seats given to Ak Zhol, Asar and Aist. Remaining seats are allotted to individual candidates. Seats for 22 of the country's remaining 67 single-mandate electoral districts remain contested, according to the Central Election Commission (CEC). Run-offs in those districts have been scheduled for October 3, KazInform reported recently. 
The reaction of Ak Zhol, the only opposition party to win a seat in parliament, to the election results was swift. "These results do not represent the real results of the people's will," a September 23 statement posted on the party's website reads. "They only represent the most blatant falsification and vote-rigging, and they do not even conform to those results that were recorded during vote counting at polling stations on the night from September 19 to September 20." Officials have said that the party expected to receive as much as half of the overall vote count. 
In response to the announced results, the party, a sometime government ally, has planned a string of actions designed to mobilize popular opposition to the government. The first, a national protest against the parliamentary vote, scheduled for October 2, the day before run-off elections, is being organized in conjunction with Democratic Choice of Kazakhstan (DCK) and the Communist Party, two opposition parties whose own election bloc failed to secure a seat in parliament. The one Ak Zhol candidate to win a seat in parliament - Co-chairman Alikhan Baymenov - has since stated that he would refuse to take his seat as a form of protest against the elections' alleged illegitimacy. 
In discussions about the October 2 demonstration, opposition members have repeatedly referred to Georgia's November 2003 Rose Revolution, when a popular protest of parliamentary election results led to the overthrow of President Eduard Shevardnadze. If relatives and friends of those opposition candidates who lost in the elections "take action with the demand to re-examine the election results and bring to justice those guilty of their falsification, then there will be pressure [for change]," wrote former emergencies minister Zamanbek Nurkabilov, an outspoken Nazarbayev critic, in a September 24 commentary in the pro-opposition newspaper Respublika. "There will be pressure if they, like the Georgians, stand to the end, not giving the authorities any peace. " 
While sidestepping the opposition's allusions to the Georgian revolution, Yertysbayev on Sunday rejected claims that Otan's victory at the polls meant that Kazakhstan would become a one-party state. "A one-party parliament is possible only in one case - only if we stipulate in our constitution that Otan is a leading and directing force of Kazakh society," he said. "This is impossible because political pluralism has taken too deep root in our country." 
Despite their plans for protest, Ak Zhol members have stated that a government reaction to their earlier concerns could halt additional measures. Altynbek Sarsenbaev, a party co-chairman who resigned as information minister to protest the elections, stressed that the president's response will dictate the party's future actions. "We will wait for his reaction. An expression of distrust is our first step. If anti-constitutional activities continue in Kazakhstan, we'll react quite tough," Sarsenbaev told reporters. 
If no response is received, Co-chairman Bolat Abilov, told a press conference, Ak Zhol will attempt to stage a public vote of confidence in the president. The party also plans to set up a public commission, made up of parliamentarians, non-governmental organizations and political parties, which will investigate reports of voting violations - reportedly the result of the government's failure to respond after three appeals last week from Ak Zhol to President Nazarbayev to respond to alleged voting violations. CEC chairperson Zagipa Baliyeva had earlier stated that all reports of voting violations would be thoroughly examined. 
Ak Zhol has also announced plans to request that the courts bring a criminal case against the Central Election Commission, members of the presidential administration and government officials for the provinces and cities of Astana and Almaty for the conduct of the elections. The party has demanded that parliament request the Constitutional Council to declare the vote unconstitutional and is undertaking a signature drive for fresh parliamentary elections to be held. 
In a detailed overview of the opposition's complaints, a statement posted on the DCK website Friday declares that DCK-Communist Party election monitors believe 90,000 voters were denied the right to take part in the elections. The group goes on to charge that the government's newly introduced and much-touted electronic voting system was "used as a tool for the large-scale fraud." The group demands that the Organization for Security and Cooperation in Europe (OSCE) refuse to monitor the run-off elections and declare the September 19 poll invalid. 
The OSCE's 330 monitors have been fairly critical of the vote, reporting widespread violations of election law as well as instances of voter intimidation, and criticizing media bias in favour of pro-government candidates. 
So far, the government has largely ignored the opposition's reaction. On September 24, one day following the results' announcement, Nazarbayev paid a two-day official visit to China's Xinjiang region. A September 24 edition of the pro-government Kazakhstanskaya Pravda newspaper avoided all mention of the opposition's threats, focusing instead on foreign media coverage of the poll that referred to the new wealth created under Nazarbayev by Kazakhstan's energy boom. 
Speaking on Khabar TV Sunday, Yertysbayev largely followed that pattern. A longtime sparring partner for Kazakhstan's opposition, the presidential aide commented that a failure in Ak Zhol "intelligence" had led to Sarsenbaev's resignation on September 20 - three days after Nazarbayev announced a plan for the dissolution of the information ministry headed by the Ak Zhol leader. "Had [Sarsenbaev] done it on 15 September, Wednesday, or 16 September, there would have been an effect," Yertysbayev said. "Nonetheless, one should give him his due: he fulfilled his promise - he is the last information minister." 
But ignoring Ak Zhol for long could prove a difficult task. Unlike other opposition members, Ak Zhol, which retains extensive ties to Kazakhstan's business elite, has traditionally favoured some form of compromise with the government. In the run-up to the parliamentary elections, the Nazarbayev administration and the pro-presidential party Asar made overtures to the group on a range of policy issues that could affect power-sharing, most notably with the appointment of Sarsenbaev as information minister in July. 
But Ak Zhol officials maintain that those days of co-existence have come to an end. Some analysts believe that a union between Ak Zhol and the more stridently anti-government Democratic Choice of Kazakhstan and the Communist Party could well be in the offing. Though Ak Zhol has said that it has no plans to form an official bloc with any other political party, the three, along with the lesser-known Patriotic Party of Kazakhstan, were working together on preparations for the October 2 election protest. Ak Zhol also intends to help create an opposition bloc for presidential elections in 2006, Abilov told reporters. 

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S&P rates Halyk savings bank Euro bond 'B+'

Standard & Poor's Ratings Services assigned its 'B+' debt rating to a 5-7 year, US Dollar denominated fixed-rate bond to be issued by Halyk Savings Bank of Kazakstan (Halyk; B+/Positive/B) in September 2004, S&P said in a press release on September 21st. Standard & Poor's considers Halyk's capitalisation as just adequate, however, given its balance-sheet growth and due to the risky environment in which the bank operates, Interfax News Agency reported.
The ratings on Halyk reflect the bank's consistent progress in strengthening its financial and business profile since its privatisation in 2002, although still slightly lagging its larger peers. The bank has also improved its efficiency and core revenue generation, and has introduced customer segmentation.
The ratings are supported by the bank's dominant position in retail banking, ample liquidity from customer deposits, and its systemic importance as the former state savings bank. The ratings are constrained by the still-high-risk economic environment in Kazakstan, fast loan growth, and just-adequate capitalisation. Halyk's asset quality has improved considerably following its privatisation, with the writing off of problematic legacy loans and the granting of better quality new loans, which has also reduced loan concentrations.
Prudent levels of provisions set aside for potential adverse developments in asset quality somewhat mitigate Standard & Poor's concerns over the still-concentrated portfolio, risky economic environment, and still-high proportion of US Dollar denominated loans.
Halyk's historic nature as a savings bank gives it strong liquidity. Its extensive branch network and client base result in stable retail deposits remaining its most important source of funding.
Halyk's profitability has increased severely in the past two years with improved efficiency and core revenue flows. Capitalisation has been improving, buoyed by the full retention of earnings and new capital injections.

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KazMunaiGaz, S Korea agree on oil projects

Kazakstan's national oil and gas company KazMunaiGaz and South Korean firms have agreed on the joint implementation of a number of oil projects in Kazakstan. KazMunaiGaz's press office said a protocol had been signed with a Korean consortium on the development of the Zhambyl offshore section in the north-west Caspian, Interfax News Agency reported.
The partners will by the end of the year hold negotiations on the main principles of cooperation and start to draft a mineral development contract to be signed in 2005, KazMunaiGaz said.
KazMunaiGaz and the consortium earlier formed a working group to assess the hydro-carbons potential of the Makhambet elevation in the north-west Caspian. KazMunaiGaz and the Korean National Petroleum Corporation signed a memorandum of understanding to start talks on the sale to the Korean company of 69% of KazMunaiGaz's interest in the TOO Tenge company. The Tenge offshore field in the Mangistau region holds 13.7m tonnes of recoverable oil.

Work on Kazakstan-China oil pipeline now in motion

Construction of an oil pipeline from Kazakstan to China was expected to start in the near future, Kazak oil and Gas Company KazMunaiGaz said in a press release, New Europe reported.
The agreement in principle to build the pipeline from Kazakstan to China was reached in 1997.
According to the statement, a ceremony marking the start of construction was scheduled to be held in Atasu. Executives from KazMunaiGaz, CNPC, and KazStroiService were also expected to participate in the ceremony with Kazak Prime Minister, Daniyal Akhmetov.
The Atasu-Alahankou pipeline will be the second phase of the Kazakstan-China pipeline project. It will be built from a railroad loading rack in Atasu to the Chinese border at the Druzhba-Alahankou railroad terminal. The pipeline will pass through Atasu-Agadyr-Akchtau-Aktogai-Ucharal-Alashankou in Karaganda, East Kazakstan, and Almaty regions of Kazakstan and will stretch 988km. Kazakstan's state transport company KazTransOil and China's CNODC, a division of CNPC, announced the formation of a joint venture in mid-July to build the pipeline. The first phase of the pipeline is expected to open in 2006 and the second phase will follow in 2011. First phase capacity will be 10 million tonnes and second phase capacity will be 20 million tonnes, the pipeline diameter will be 813 millimetres.
The Kazakstan-China pipeline worth three billion Euro is 3,000km long and will pump at least 20 million tonnes of oil a year. The Kenkiyak-Atyrau oil pipeline was opened in western Kazakstan in the spring of 2003 with first phase capacity of six million tonnes a year.
The second phase to be opened this year will bring capacity to 10 million tonnes and the third phase to be opened in 2006 will have capacity for 14 million tonnes. The pipeline will be the first leg of the oil pipeline to China if used in reverse.

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Dutch-Kazak JV raises gold production up 5% in 8 months

The Vasilkovskoye Zoloto joint venture between Dutch company Floodgate Holding BV and Kazakstan increased production of cathode gold from the gold it mines at the Vasilkovskoye gold field in the Akmola region 5% year-on-year to 636.515kg in January-August, Interfax News Agency reported.
The company said in a press release that cathode silver production rose 15% to 40.863kg. Output in value grew 2% to 1.044bn tenge, the cost of producing a gram of gold fell 2.5% to 1,628.78 tenge. Vasilkovskoye Zoloto was set up in August 2002. Floodgate Holding owns 60% and the Kazak Finance Ministry's State Property and Privatisation Committee owns 40% of the equity, which is 2.158bn tenge. Cathode gold production rose 3.47% to 955kg in 2003.

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Kazakstan, SCO countries develop transport routes

Kazakstan is interested in intensifying cooperation in the transportation sphere according to peculiarities of geo-strategic position of the country, Kazak Prime Minister, Danial Akhmetov, said at the SCO Council session in Bishkek. In his view, development of the Organisation's transportation system should meet requirements of economic evolution rate of SCO state members. The premier said that only through joint use of transport reserves is it possible to develop and strengthen economic potential of SCO state-members, Kazinform reported.

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