Books on Kazakstan
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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
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
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
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
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
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
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
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.
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
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
MINERALS & METALS
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.
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
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