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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 29,749 24,205 22,400 60
GNI per capita
 US $ 1,780 1,510 1,350 119
Ranking is given out of 208 nations - (data from the World Bank)

Books on Kazakstan


Area ( 


ethnic groups 
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others

(formerly Akmola)


Nursultan Nazarbayev


Update No: 291 - (29/03/05)

Lately a number of countries have laid a new course for democratisation and political reforms, often in reply to mass public protests, such as Georgia and Ukraine. In history revolutions and defeats in battle have often served as catalysts of radical political renovations. Is there another way for transition economies to ensure sustainable and continuous reforms? 

The Kazaks say they have a Third Way
President Nursultan Nazarbayev has recently promulgated a panoptic plan of reforms for the Republic of Kazakhstan. It aims at wide-ranging reforms in politics, economy and education with simultaneous enhancement of the social protection of citizens, carrying on the policy of tolerance in regard to the multinational population of Kazakhstan and its pro-Western foreign political orientation. A group of experts met to discuss the new programme and the meaning of reforms suggested by President Nursultan Nazarbayev on March 18th in Harvard University, the US. 
One indisputable achievement to the credit of Nazarbayev is that he voluntarily relinquished Kazakstan's nuclear arsenal after independence in 1991. Opening the seminar Gram Allison, founder of the Caspian Research Programme, emphasized the leading role of Kazakhstan in disarmament and ensuring global security giving a good example to other countries. "One can have reasons to anticipate Kazakhstan to play an analogous role in economic modernization and political democratisation in the Central-Asian region and beyond." 
US ex-Secretary of Defence Gram Allison, who assisted Kazakhstan in its nuclear disarmament programme, underlined that the non-nuclear example of Kazakhstan and successful cooperation between their two states is relevant today as never before: "I deem that Kazakhstan deserves recognition and gratitude for its contribution to a nuclear-free future. Moreover, I believe that after President Nazarbayev's reformatory urge is implemented we will be celebrating new triumphs of the country." 
Brenda Schaffer, instructor of the Caspian Research Program, and Ariel Cohen, senior assistant of the Washington-based Heritage Foundation, presented in their reports the analysis of Kazakhstani reformation program and its meaning for the republic, regional development and geopolitics. 
Brenda Schaffer, who has been researching Kazakhstan for many years, states that the important initiatives specified in the Message of the President can lead the internal processes of the republic to the path of sustainable reformation. 
His proposals to strengthen Parliament's role, to decentralize power, to reform the judicial system, to improve people's living standards, to fight against corruption, and others open wide horizons for cooperation between the power and the nation in joint modelling of Kazakhstan's future. This is why President Nazarbayev's urge to take part in drafting the national political reforms programme is 'an absolutely important factor' that would secure 'step-by-step development of the country in another way, the third one. This is a demo version for other economies.' The true Third Way?
By noting that Kazakhstan had been accomplishing its state formation and political and socioeconomic reforms in intricate external and internal conditions, in his speech Ariel Cohen designated US priorities in Central Asia, determining its concern in Kazakhstan's successful development. These priorities are the provision of geopolitical balance, non-admission of radical Islamic ideas to disseminate, control of illicit turnover of drugs and weapons, human traffic, exploration of oil treasure of the Caspian shelf, and transportation to world markets. Finally, the development of regional states towards democracy and market economy, independent of primary sector and leaning towards hi-tech productions.

Dictatorial ways prevail
Nevertheless, for all this up-beat rhetoric, it is as well to recognise that the regime in Kazakstan is dictatorial; there is no doubt about that. It rigs elections, as last October to parliament, and, unlike its Georgian and Ukrainian counterparts, it gets away with it. 
Latterday evidence for this is not lacking. Police in Kazakhstan arrested seven opposition activists at a protest on January 29th against the recent banning of the former Soviet republic's main opposition party, party officials said.
The seven were among around 2,000 people who converged on the former capital Almaty to demand political change in this oil-rich country led by President Nursultan Nazarbayev and the restoration of the Democratic Choice movement's party status, a Democratic Choice spokeswoman said. "They came from all over Kazakhstan to hold a rally ... but the police prevented it," the spokeswoman told AFP.
At an overnight court hearing five of the seven were handed jail terms of between two and seven days and the other two were fined and released, Democratic Choice said in a press release.

Economy booms
The reason that the regime gets away with it is that the economy is booming like none other in the FSU. This does not mean that everyone is benefiting - far from it. But it does mean that anyone with initiative and a gung-ho spirit has a good chance of doing well. They are not therefore going to contemplate revolution as the solution, unlike in Georgia and Ukraine.
In 2004 in Kazakhstan a tentative estimation showed economic growth at 9%, a modest reduction from the 10% average growth rates of yore. Industrial output increased by 10.2%. The international reserves of the country increased in general by 66.3% and amounted to US$14.3bn. 
The problem is that this is all due to just one factor - high global prices for the country's main export - oil.
Nazarbayev is well aware that the main problem is to diversify the economy. He has ordered the government to finalize the shadow economy legalization programme in the first quarter of 2005. 
"The programme for legalizing the shadow sector has not been worked out yet. Despite the difficulty of the problem, there are no grounds for delay," Akayev said at an extended cabinet meeting in Astana, the new capital. 

The magnet in Eurasia for FDI
There is no doubt of the possibilities for adventurous businessmen opening up in Kazakstan. Foreign Direct Investment (FDI) is simply inundating the place, vast as it is.
Kazakstan's government on January 7th said that its economy received foreign direct investments of US$3.9bn during the first 9 months of 2004, up by 17.6% compared to the same period in 2003. This is of all Commonwealth of Independent States countries - the second highest capital inflow in volume after Russia and the highest inflow by capita. The information was released in the latest report of the National Bank of Kazakstan.
The United States is still the largest foreign investor in Kazakstan, with foreign direct investments of nearly 1.2bn Euro during the first three quarter of 2004, up 45% over same-period 2003 (1.09bn Euro). Second is the Netherlands, with investments of 571m Euro over the same period, up by 34.7% over 2003. Britain came third with 529m Euro, up 23.7% over 2003.
The natural-resources sector remains the most attractive sector for foreign investment, but during the first 9 months of 2004, foreign investments in the consumer goods industry grew by 50.7% to 164.4m Euro.
However, even if the oil and gas industry will remain the most attractive sector in which to invest for years to come, other sectors are emerging. During the first 9 months of 2004, foreign investments in the consumer goods industry grew by 50.7%, reaching US$164.4m, whereas investments in transport and communications related industries rose by 6.6% over the same period to US$65.9m.
Growth in the non-oil sector is at least partially due to the government's economic development programme "Strategy of Industrial and Innovation Development for 2003-2015," which aims to diversify the country's economy in order to reduce its dependence on oil. 
"Kazakstan will take further measures to improve the investment climate," announced the Kazak President at the annual meeting of Foreign Investors Council last December in Astana. "The republic devotes much attention to the enhancement of the legislation to protect investors' rights," he said, which is probably right, Kazakstan saw the need for that long before Russia did.

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New airport terminal opens in Astana

An official ceremony to open the new terminal of the Astana International Airport was held in the Kazak capital on February 2nd. President Nursultan Nazarbayev, Prime Minister, Daniyal Akhemotov, the members of the government, representatives of construction companies of Japan, Germany, Turkey and Great Britain and the general public participated in the event, New Europe reported.
The reconstruction works started in September 2002. After the launch, Nazarbayev said the airport is a visiting card of any state and its opening is of great significance. Astana is at the centre of the Eurasian continent. "I want to be sure that the terminal will be made a transit point between Europe and Asia of the world air companies, all necessary conditions will be created for that," Nazarbayev was quoted as saying.

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S&P: Kazkommerts debt rating stays unchanged

Standard & Poor's Ratings Services recently said that it BB- senior unsecured debt rating on the 350m Euro 7.0 per cent notes due 2009, issued by Kazkommerts International BV, a Netherlands-based special-purpose vehicle, remain unchanged, New Europe reported.
The agency said in a report that this followed a proposed increase in the issue amount to 500m Euro. The notes were guaranteed by Kazakstan based Kazkommerts-bank (KKB; BB-/positive/B). The ratings on KKB reflect the improving Kazak economic environment, the bank's strong domestic franchise, more diversified funding profile and rapid loan growth. KKB has been using Kazakstan's improved economic prospects to its advantage, attracting primary funds as well as longer-term international debt and growing its profitable lending business.

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Agip KCO agrees to sell 50% of BG to Kazakstan

Members of Agip KCO agreed to sell one half of BG's share in the North Caspian project to Kazakstan (the whole of BG's share stands at 16.67%), Vladimir Shkolnik, minister of energy and mineral resources of Kazakstan, said at a meeting with members of senate committee for social and cultural development on January 28th, Interfax News Agency reported.
"They agreed to sell 50% of this share. The state will buy it. I hope that we will be able to conclude this deal. This is the return of a very great asset back to the country. It is needed badly and it is very beneficial for the country," Shkolnik was quoted as saying. "This means the return of a very large asset to the country. This is very necessary and profitable for the country," he added.
Regarding the price of the deal, Shkolnik said: "The market value of the entire stake, established by BG, amounts to 1.23bn Euro and for half: We need to divide this figure by two." He said that the deal might be financed using budget funds and also internal or borrowed funds from KazMunaiGaz. Shkolnik said there would be no problem with financing, particularly for a project of this kind. "We really hope that we will manage to finish negotiations by the end of March," he explained.
This is "a legally complicated task, but we will try," the minister said. He said that the next round of talks with Agip KCO participants is planned for February 2nd in Astana. Shkolnik said that under Kazak law, the state has first right of refusal for stakes in production assets, and that the process of buying up stakes "could begin when money started appearing in the country."
The Agip KCO consortium is drilling work at a number of sections in the Kazak sector of the northern Caspian, the largest of which is the Kashagan field. The partners in Agip KCO are ENI, Exxon Mobil, Shell and TotalFinaElf, each with 16.67% interest and ConocoPhillips and INPEX, each with 8.33%. The consortium was set up following the signing of a PSA for 40 years in 1997.
The consortium plans to start industrial production in 2007-2008. According to an announcement by Agip KCO, recoverable reserves at Kashagan are estimated at 7bn to 9bn barrels, with total geological oil reserves of 38bn barrels. Shkolnik didn't quote the price that will be paid for 50% of BG's share in the project. He also noted "negotiations regarding other fields are also being held."
Shkolnik reminded that in accordance with current legislation, which was adopted on November 5th, 2004, the state has pre-emptive rights to buy shares in extractive projects. The head of the oil ministry said that the process of purchasing shares in a number of extraction projects "could only have been started after the country had the necessary money." Agip KCO was created after corresponding production share agreement was signed in 1997 for a 40-year term.

Kazakstan to increase oil, condensate output by 2008

"Forecast oil and gas condensate output is 60m tonnes in 2006, rising to around 72m tonnes in 2008," First Deputy Energy and Mineral Resources Minister, Bak-tykozha Izmukhambetov, said at a recent conference on Kazakstan's mid-term socio-economic development for 2006-2008, New Europe has reported.
Izmukhambetov said that Kazakstan could boost oil and gas condensate output 22% to 72m tonnes by 2008, from 59.17m tonnes in 2004. According to him, 9.8bn Euro of investment in the mineral sector were anticipated in 2006 of which 7.2bn Euro of it from abroad. An investment of 12.7bn Euro is forecast in 2008, including 9.3bn Euro from abroad. Meanwhile, Kazak national oil and gas company, KazMunaiGaz and Japan Bank for International Cooperation recently signed a cooperation agreement, the Kazak company said in a statement. "According to the terms of the agreement, key objectives are to study future KazMunaiGaz projects and actively exchange information about investment plans and operating strategy," the statement said.

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Japan offers financial aid for social projects in Uzbekistan

Five grants with a combined value of US$283,158 for the implementation of small-scale projects in Uzbekistan were issue on February 7th, Interfax News Agency reported.
The government of Japan issued new grants to Uzbekistan with no-strings attached financial assistance. The supported projects are aimed at improving the quality of medical services and supporting women in their professional retraining and strengthening their social status.
The NGO Woman and Society Institute of Tashkent received US$14,362 to purchase necessary equipment. Four grants were earmarked to supply regional central hospitals of Samarkand (US$58,160), Jizzakh (US$77,270), Navoi (US$77,526) and Kashkandarya (US$55,840) regions with modern medical equipment.

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Kazakhmys to boost refined copper output

Kazakhmys, a leading copper producer from Kazakstan aims to raise refined copper output by 7.7 per cent to 460,000 tonnes in 2005 from 427,000 tonnes last year, the company said, Interfax News Agency reported.
Kazakhmys specialises in the production of refined copper and copper ore. It comprises Zhezkazgan Copper Plant (former Zhezkazgantsvetmet), Balkhash Metallurgical Plant (BGMK), Zhezkent GOK. East-Kazakstan spokesman Vladislav Nikolayev said that Kazakhmys would export the zinc to Italy among other destinations. Overall commercial output is targeted at 1.5bn Euro. Nikolayev said the corporation's Balkhash zinc smelter would achieve design capacity of 105,000 tonnes this year. It was officially launched in October 2003, but did not start producing zinc until February last year. Output was 169bn tenges in 2004. Kazakhmys produced 66,000 tonnes of zinc in concentrate, 22,000 tonnes of metallic zinc and 11m tonnes of coal in 2004. Capex totalled 180m Euro, up from 128m Euro in 2003.

Kazakstan targets 2.4% increase on aluminium output

Aluminium of Kazakstan, one of the world's nine biggest aluminium producers and the company that controls Kazakstan's bauxite and aluminium industry, aims to increase aluminium output by 2.4% to 1.5m tonnes in 2005 from 1.465m tonnes in 2004, the company's press office said recently, Interfax News Agency reported.
Aluminium of Kazakstan incorporates the Pavlodar aluminium refinery and Torgai and red October bauxite mines. It also controls the Keregetas limestone quarry and a heat and power plant.
Bauxite production will be unchanged from the 4.7m tonnes achieved in both 2004 and 2003, the company said.
Aluminium of Kazakstan is preparing to have its divisions certified to ISO-14000 environmental standards. The company said it spent 849m tenges on environmental and work safety in 2004.

Frontier Mining eyes Kazak gold and copper development

US company, Frontier Mining Ltd, has decided to start a gold operation in Kazakstan in the near future. The company has posted encouraging results on two copper properties in the same country. Frontier Mining was incorporated in the United States in August 1998 with a view to gold and copper exploration and development in Kazakstan and progressing on three deposits and even has potential for development of a further two, Kazinform reported.
The company has recently announced that metallurgical test work has shown copper to be recoverable via solvent-extraction electrowinning (SXEW) technology from oxide ore at its Beschoku and Yubileiny deposits.
Frontier Mining has two licences covering a total area of 4,326 sq km in Kazakstan. These are the Naimanjal exploration and mining licence, which is held by FML Kazakstan and the Baltemir exploration licence, held by Baltemir LLP. Frontier Mining is currently focusing on three gold projects that contain between them over two million ounces of gold and two copper/gold projects with a combined resource in excess of one billion pounds of copper (454,000 tonnes).
These prospective licence areas are located adjacent to each other in northeastern Kazakstan, on the former nuclear test site commonly referred to as the polygon. Frontier was the first foreign company to receive an exploration and mining licence for the environmentally safe part of the Polygon. The company has made significant progress since its listing on AIM in September 2004, and its most advanced operation is the Naimanjal gold/silver project, which should commence heap leach production in May with an initial target production rate of 25,000 ounces per year.
Naimanjal consists of low cost oxide ore, open along strike and at depth, and underlain by a potentially much larger sulphide orebody. With a gold operation ready to go and potential low cost copper production, Frontier can be popular as one of the first western mine producers in Kazakstan. 
Director of Exploration, Edward Bloomstein, has 30 years experience as a successful international exploration executive in the mining industry and has managed exploration programmes that have led to the discovery of multi-million ounce gold deposits in the US, Russia, Kyrgyzstan and Kazakstan, including the discovery of the multi-million ounce Ivanhoe deposit in Nevada. The board has considerable experience including long-term relationships in Kazakstan.

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