Books on Kazakstan
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Update No: 292 - (26/04/05)
Economic prowess after the downfall of the rouble
The economy of Kazakhstan, the gigantic Central Asian oil-producing republic
five times the size of France, is surging ahead. Last year it posted stunning
Asian Tiger-style growth of 13.2%, according to recent government figures, up
from an already impressive 9% growth in 2000. It has recorded 10% annual growth
or thereabouts for five years past.
That comes largely thanks to continued strong global demand in recent years for
oil and metals, the nation's main exports.
Kazakhstan has also benefited from the devaluation of the tenge, the national
currency, in 1999, after the downfall of the rouble the previous year in 1998.
That gave domestic industry a much-needed competitive boost, as hard currency
export revenues remained strong while domestic operating costs in tenge more
As oil exports have ballooned in recent years, Kazakhstan's trade surplus has
quadrupled to over US$4bn since 1998 and tax revenues have soared.
The government has been quick to take advantage of the windfall and has won
widespread praise for curbing the budget deficit and balancing the nation's
books by the end of 2001.
The International Monetary Fund (IMF) in particular has been impressed with the
government's determination to clean up the country's shaky finances.
"Although a favourable external environment, including high oil prices,
contributed to such a positive outcome, the prudent stance of macro economic
policies adopted by the authorities played an important role," says a
recently released IMF report on Kazakhstan. "Kazakhstan is in a much better
position now to confront a downturn in the external environment," the
Much of Kazakhstan's good fortune, a rare island of economic and inter-ethnic
stability in the fractious central Asian region, stems from the nation's
enormous energy reserves. But it has made little headway in stimulating growth
in new industries, and small and medium sized business accounts for just a small
fraction of the economy.
Despite the economic growth, fears of worsening political repression and
widespread corruption are also tarnishing Kazakhstan's image as the region's
star performer. In the last couple of months a series of prominent opposition
and independent media figures have been arrested and an independent TV station
TAN was forced off air when an unidentified sniper shot the channels feeder
The increasing role in public affairs played by relatives of the President of
Kazakhstan Nursultan Nazerbayev has raised eyebrows and led to claims of clan
style favouritism in business.
One analyst in Almaty, who asked not to be named for fear it would damage his
relations with government officials, says he has been dismayed in recent months
by the turn that political events have taken this year. "The family circle
is so corrupt that Kazakhstan is turning into a central Asian version of
Indonesia's Suharto regime."
Perhaps most worryingly, in March Prime Minister Imangali Tasmagambetov made the
stunning public admission that more than US$1bn was transferred offshore in 1996
to accounts in President Nazerbayev's name.
Top government officials have explained that the diverted money was being
reserved for troubled financial days and that the devaluation of the tenge in
1999 would have wiped millions off the value of the fund anyway had it remained
But with no further concrete details forthcoming over the nature of the funds
and exactly how and when they were to be used, many say the explanation is
unconvincing. Heading up any or all of the former Soviet Central Asian republics
has proved to be very rewarding for the former General Secretaries of the local
communist parties. Kazakstan, along with three of the other four is still run by
the same man who was the communist political boss at the time of their
unexpected independence. This happened without any request at any level for
independence, or even a shot being fired. When Yeltsin decided to abolish the
Soviet Union in 1991, an unexpected outcome was that these former local bosses
would become independent potentates in their own right.
After 14 years of complete dominance they are contiguous with the old-time Khans
that were removed by imperial Russia in their conquests of the 18th and 19th
centuries, even to the extent of dynastic marriages with the families of other
former communist Presidents. As the President ages and his children grow up,
what could be more natural than that they should enter, with a view eventually
to taking over, the family business.
Thus on the question of wealth, what is that of the state and what of the ruling
family, is answered by the famous Louis XIV dictum, "L'Etat c'est moi."
AVIATION & SPACE
Astana and Moscow propose new space complex project
Russia and Kazakstan have been discussing a project to launch minor
satellites into space from aboard MiG-jet fighters, Interfax News Agency
Kazak Prime Minister, Danial Akhmetov, met chief designer of the Moscow
Institute of Thermal Engineering, Yury Solomonov on March 23rd to discuss the
problem of creating a space aviation missile complex Ishim, the press service of
the Kazak government said.
Akhmetov has instructed state agencies to study the option of forming a national
aviation-space complex for launching small civilian spacecraft to low earth
orbit, according to the news agency. He instructed the Kazakstan Aviation and
Space Committee and its Information and Communications Agency to form a working
group for comprehensive assessment of the Ishim space missile project and its
For his part, Solomonov declared that Moscow Thermal Engineering Institute can
design and build a new rocket provided with solid fuel-powered engine that
guarantees rockets' safety and absence of toxic components. The Ishim complex
will use Russian-built MiG-31 supersonic interceptor fighters to lift small
rockets with satellites to the required altitude, the press service said.
The rockets will be fired from the fighters and propel small satellites weighing
up to 360 pounds into orbit, the press service said. The Ishim complex is
intended for launching minor space apparatuses into space for civilian purposes.
Experts believe the market will be perspective and allocations worth around
1.5bn Euro might be made until the year 2020 to finance the project.
Commenting on the project, an expert said that the jet fighter MiG-31 gains the
necessary altitude with a small rocket and satellites on board, then the rocket
is separated from the jet and takes into the orbit a space apparatus with the
weight of no more than 160 kilograms by means of its own engine.
BG Group sells Kashagan stake to Kazakstan
Selling its share (16.67%) in Northern-Caspian oil project BG Group is planning
to get about US$1.8bn from the deal before taxation. According to the company's
reporter at its web-site, the sum will include compensation for BG Group's
expenditures under the Northern Caspian PSA that it incurred since inaction
(January 1st 2003) until termination of the agreement, New Europe reported.
BG Group also reports that it is planning to finalise the deal to sell its share
to partners in the consortium having pre-emptive rights - Eni, ExxonMobil, Royal
Dutch Shell, Total, ConocoPhillips - on April 6th 2005. As it was already
reported on March 30th, Kazakstan and Agip KCO developing Kashagan oil field
have completed negotiations and inked the agreement, thus, Kazakstan has
purchased one half of BG share in the Northern-Caspian project, while the second
half of the share was equally split among members of the consortium. Thus, as
was officially announced by the negotiating parties, BG has sold its share in
Kashagan project directly to Agip KCO members, while the latter assigned one
half of BG share to Kazakstan. As a result of this deal shares in the project
are distributed among members the following way: ENI (operator of
Northern-Caspian project), Total, ExxonMobil and Shell have 18.52% each,
ConocoPhillips - 9.26%, Impex and KazMunaiGaz - 8.33% each.
Construction starts on key Kazakstan-China oil pipe
China National Petroleum Corp (CNPC), China's biggest oil producer recently
announced that construction had started on the 240km Chinese section of the
Kazakstan-China oil pipeline in Jinghe country, Xinjiang Uygur autonomous
region, Interfax News Agency reported.
The Xinjiang section will form part of a 3,000km pipeline from the oil-rich
Caspian shelf to China, which will carry oil across eastern Kazakstan into
China's Xinjiang autonomous region, where it will be refined or sent directly to
China's booming east.
According to oil analysts, the pipeline will benefit both countries. China can
get a stable and secure crude oil supply while Kazakstan, the world's third
largest oil producer will have a reliable oil market.
Construction on the Kazakstan section of the oil pipeline began in September and
will be completed in 2005. The country plans to raise its annual crude
production to 100m tonnes by 2010. The cost of the pipeline expected to be worth
US$3bn, began construction last year. It will link Atasu in Kazakstan to
Dushanzi and is China's first major land oil import route. A CNPC staff member
said the cross-border oil pipeline, with 2,800km in Kazakstan and 240km in China
is expected to be completed on December 16th 2005. It will be able to carry 20m
tonnes of oil per year. Three Chinese factories are responsible for supplying
the pipe. Chinese made pipes have been shipped to Kazakstan since last winter.
China's imports of Kazak oil now travel hundreds of kilometres by rail to
Kazakstan becomes new IT hotspot for India
The main aim of Kazakstan is to be the hotspot of information technology (IT)
for India, New Europe reported recently.
It is embarking on a big drive to become the IT services doorway to the huge
Russian market which is comprised of the former Soviet republics. Some officials
from Kazakstan were scheduled to visit India in April. The main aim of the trip
will be to attract Indian IT firms and professionals to join hands in a 33m Euro
IT Park plan.
Prasad Bhamre, advisor to Kazakstan's Ministry of Economy and Budget Planning,
was quoted as saying; "Kazakstan is a ideal springboard for Indian firms
for the Russian-speaking market. In immediate terms, there is nearly one billion
Euro waiting to be tapped by way of incentives and subsidised loans."
Bhamre added, "The incipient trend of the economy will be oil and gas. All
oil deals have local content requirements. Setting up shop here will make Indian
firms local and allow then to grab big IT product development services and
maintenance business from global oil majors." It is expected that Kazakstan
will make their presentation at Hyderabad and Bangalore.