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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)

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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

Update No: 297 - (29/09/05)

Nazarbayev a shoo-in in presidential elections
President Nursultan Nazarbayev is receiving staunch support for his candidacy for a third seven-year term. He will almost certainly win easily. 
Kazakstan has pushed up its presidential election date to December 4th; and the incumbent seems perfectly positioned to secure a third term. 
Nazarbayev, who has presided over Kazakstan's boom economy since the country gained independence in 1991, was formally nominated on September 9th by the Otan Party. The presidential vote was originally scheduled for 2006, but parliament on September 7th decided to delay election-day until December.
On September 26th in Almaty the Party of Patriots of Kazakstan, a loyalist outfit, held its seventh congress during which it passed a resolution in support of Nursultan Nazarbayev in the forthcoming presidential elections.
135 delegates from all regions of the republic took part in the congress. Participation of the party in the forthcoming elections was on the agenda of the congress. As a result of voting the majority gave their voices for the resolution in support of Nursultan Nazarbayev. 
Nazarbayev's main challenger in the election is expected to be Zharmakhan Tuyakbai, a leader of the For a Just Kazakstan opposition movement. 
Over the past two years, the democratic process has proven dangerous to incumbents in Central Asia and the Caucasus. Disputed votes in Georgia, Ukraine and Kyrgyzstan prompted regime-change in each country, a process commonly referred as the "colour revolutions." But political observers in Kazakstan say that Nazarbayev and his supporters have studied the political lessons, and have implemented a comprehensive blueprint to avoid a repetition of revolutionary events in Kazakstan. 
Nazarbayev has so far implemented his political plan flawlessly, some political analysts say. As a result, he appears to be virtually unbeatable. Political analysts Vladimir Solovyev and Alexander Sidorov, writing in a commentary published by the Kommersant daily on September 8th, noted that Tuyakbai "is entering the election fight in not his best form and has little hope of winning." Kazakstan, like other nations in Central Asia, has a history of rigged elections. But Nazarbayev's popularity seems sufficiently strong at this stage that he could easily win a free-and-fair vote, some observers say. 
One commentary, published in late August by the Russian RIA Novosti news agency, characterized Nazarbayev's strategy as the "colourless evolution." It appears specifically designed to neutralize the forces that produced revolutionary change in Georgia, Ukraine and Kyrgyzstan. 
Moving up the election date is an important component of the president's political strategy, as it gives the opposition little time to find its rhythm and mount an effective presidential campaign. 
Keeping the opposition off balance is a major component of the presidential strategy, some analysts say. Since the country's parliamentary elections in 2004, the government has maintained political pressure on opposition parties that is designed to keep Nazarbayev critics fragmented. 
For much of 2005, opposition-oriented media outlets have faced considerable official scrutiny, some being hit with huge fines in libel cases involving government agencies -- cases that presidential critics insist are politically motivated. Observers say the government has also resorted to outright intimidation, noting several incidents last spring in which thugs tried to disrupt opposition political activity. 
Perhaps the most important aspect of Nazarbayev's re-election strategy centres on social policy. Taking advantage of Kazakstan's oil-and-gas wealth, the government has massively increased spending on social programs and education. The rise in state spending is designed in large measure to alleviate a major source of discontent - poverty - which has served as the catalyst for the revolutions in Georgia, Ukraine and Kyrgyzstan. 
Nazarbayev has also taken care in recent months to engage directly with voters by travelling extensively across the country. In early September, for example, Nazarbayev made a campaign-style visit to Almaty that received extensive coverage on state television. At a September 6 appearance at a hospital, Nazarbayev said the government would pay "special attention" to improving healthcare in coming years. A day earlier, during a meeting with business leaders, Nazarbayev stressed job creation. "Your work will improve peoples' lives," the president told the assembled entrepreneurs. "They will get jobs and income." 

The US is cosying up to Nazarbayev
The last key aspect of Nazarbayev's strategy concerns foreign policy. The Kazakstani government in recent weeks has sought to bolster relations with the United States, which is widely suspected in Central Asia of acting as the sponsor of the "color revolutions." In late August, Foreign Minister Kasymzhomart Tokayev visited Washington, where he reaffirmed Kazakstan's support for the US-led military operations in Iraq and Afghanistan. US officials, including Secretary of State Condoleezza Rice and Secretary of Defence Donald Rumsfeld, reciprocated by praising the Kazakstani government as a reliable strategic partner. 
In addition, presidential supporters sought to use a September 6th visit to Almaty by former US chief executive Bill Clinton to bolster Nazarbayev's re-election bid. Clinton was in Kazakstan ostensibly to promote an anti-HIV/AIDS initiative, but pro-presidential television reports hinted that the visit provided a tacit US endorsement of Nazarbayev's candidacy. Many media outlets emphasized Clinton's praise of Kazakstan's economic performance. "Bill Clinton's visit ... is of particular significance," said one report broadcast by Khabar Television on September 7th. "Washington has confirmed once again who it counts on." 

The colour revolutions
Nazarbayev has not been afraid to directly and publicly address the issue of the colour revolutions. In a live television broadcast in late August, Nazarbayev took questions via telephone from citizens. When one asked about the possibility of the colour revolution phenomenon spreading to Kazakstan, Nazarbayev countered that the country was too prosperous to experience such upheaval. He also warned that an attempt to promote radical political change could wreck Kazakstan's economic growth. "I am reminded of the brilliant quote by Victor Hugo: 'Poverty gives birth to revolutions and revolutions give birth to poverty," Nazarbayev said. He went on to urge citizens not to read opposition newspapers, and maintained that his government was the best guarantor of continued prosperity. "Only a blind man cannot see how much Kazakstan has changed [for the better]," he said. 
"We of course wish these countries [Georgia, Ukraine and Kyrgyzstan] success. But all this [the colour revolution phenomenon] started because 80 percent of their populations lived below the poverty line," Nazarbayev added. "And so far [since the revolutions] there is no improvement." 

Chinese beat India for Kazak oil fields
China's biggest state-owned oil company announced recently that it would pay US$4.18bn for a Canadian oil company with substantial reserves in Kazakstan, China's largest foreign acquisition yet, the International Herald Tribune reported.
China National Petroleum Corp. out bid India's state-owned Oil & Natural Gas Corp. in reaching a deal to acquire PetroKazakstan. The bidding under-lined growing competition for oil resources by the two most populous countries, both of which are rapidly increasing their imports.
PetroKazakstan's acceptance of the CNPC bid is a consolation prize for China's oil industry. Another state-controlled Chinese company, China National Offshore Oil Corp., or Cnooc, withdrew its US$18.5bn offer for the US producer Unocal on Aug 2nd following strong opposition in Congress.
But the tangled history of past Chinese oil investments in Kazakstan cast a possible shadow on the deal.
Kazakstan has passed a law declaring its right to pre-empt the sale of any oil property in the country. That low was the basis for many questions from analysts and journalists.
Bernard Isautier, the company's chief executive, said that while Kazakstan could pre-empt the sale of assets within the country, it could not block the sale of PetroKazakstan itself.
"We are not speaking about a sale of assets where pre-emptive tights would apply," he said. "We don't expect any problem in that regard."
In Astana, the capital of Kazakstan, Mikhail Dorofeyev, head of the media department of KazMunaiGaz, the state oil company and industry regulator, said by telephone that the company would have no comment on the announcement.
The recent deal may benefit from increasingly close relations between the Kazak and Chinese governments, which have both suppressed Islamic fundamentalism along their long common border, sometimes drawing criticism from human rights group.
CNPC has worked closely with the Kazak government on several projects. But a publicly traded subsidiary of CNPC, PetroChina, has stirred controversy in the Central Asian country by bringing in large numbers of Chinese workers instead of hiring locals.
Cnooc and the third of China's three state-owned oil companies, China Petroleum & Chemical, known as Sinopec, had tried and failed to buy into Kazakstan's huge Kashagan field two years ago. Their initial agreements to buy stakes were pre-empted by foreign operators in the field, who invoked clauses in commercial agreements for the oil field in an attempt to buy the stakes for themselves.
The Kazak government then invoked a legal pre-emption, claiming a partial stake for itself.
PetroKazakstan, based in Calgary, Alberta, but managed from Windsor, England, is a considerably smaller company than Unocal, and it does not have Unocal's extensive natural gas reserves or reputation for high technology. Nonetheless, it commanded a price of US$55 a share in the deal recently, a premium of 21.1 per cent to the stock's closing price on the New York Stock Exchange.
In the oil industry, "China has consistently been willing to overpay for assets - it's more of a security issue for them than the absolute price," said John Kuzmik, a partner and China specialist at Baker Botts, a Houston energy law firm. Oil & Natural Gas Corp. reportedly bid US$3.6bn.
PetroKazakstan's main asset lies in its full ownership of one oil field, Kumkol South, and half-ownership of two smaller ones, Kumkol North and Germunaigaz. The company has managed to develop those fields even though they are locked in the heart of Central Asia.
"It is a jewel - you look at the way they increased production," said Vincent Noual, a specialist in Central Asian oil in the Geneva offices of HIS Energy, a consulting firm.
PetroKazakstan has had a series of legal skirmishes with Lukoil of Russia, its main partner in the oil fields. Lukoil's main pipeline from Kazakstan into Russia is already full, but CNPC is expected to finish at the end of this year a pipeline from Kazakstan into China.
The pipeline was originally planned to carry oil from other Chinese-owned oil fields in Kazakstan but will have plenty of extra capacity to carry oil from PetroKazakstan as well, Noual said.
The recent deal represents a huge payday for PetroKazakstan's investors and the company's chief executive, Bernard Isautier.
PetroKazakstan used to be Hurricane Hydrocarbons, which was bankrupted in 1999 by low oil prices. But the company still held one superb investment: its stakes in the Kazak oil fields, purchased for just US$120m in 1996 when Hurricane bought the assets of Yuzhneftegaz, a Kazak state-owned oil company.
After the bankruptcy filing, Isautier joined the business, led the company out of bankruptcy, bought 88 per cent of a large Kazak refinery for US$51m, and began investing US$143m to develop the oil fields. As oil prices soared and the value of the Kazak oil fields with them, PetroKazakstan's relations with the Kazak government deteriorated. The government and the company have been locked in extensive legal battles over issues like the company's flaring - or burning off - of natural gas, which the government wants to see shipped to markets instead.
Citigroup advised CNPC on the deal while Goldman Sachs advised PetroKazakstan. Citigroup has agreed to provide CNPC with a letter of credit for the entire value of the deal, with the state-owned Chinese oil company not borrowing any money from other Chinese government agencies.
Cnooc's plan to finance much of its bid for Unocal with borrowings from a government-controlled bank had fanned opposition to that deal in Congress over the summer.
The complex deal has an unusual feature that will allow Isautier, 62, to remain active in Central Asian oil deals. He had said last spring that he planned to retire this autumn, and the company disclosed in late June that it had been approached by potential buyers.
CNPC agreed to pay US$54 in cash for each share and put US$76m, worth another US$1 a share, into a new company that is to be spun off to PetroKazakstan shareholders and led by Isautier.

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BankTuranAlem opens first Tbilisi branch 

Kazak BankTuranAlem (BTA), which holds assets of US$5.5bn, opened a branch office in Tbilisi, the Georgian capital, on August 23rd, Kazinform reported. 
BTA has already invested in the reconstruction of hotel Iveria in downtown Tbilisi into a five-star hotel.
The Silk Road Group is BTA's major partner in Georgia. BTA has already set up branches in Moscow, Kiev, Yerevan and Shanghai. Among the major shareholders of BTA are the EBRD and IFC.
The delegation of the bank met with the head of National Bank of Georgia, Roman Gotsiridze, who discussed with the delegation the economic peculiarities in Georgian regions, the central bank's press service reported. "A regional banking strategy was less apparent in the interests of foreign banks entering Georgia so far," Gotsiridze was quoted as saying.
Gotsiridze said it would be interesting for the Kazak bank to work on the development of the regional banking system. "The representation office is part of a strategy - 'One bank, one account, the whole CIS'- which calls for the creation of a bank network of our strategic partners, for servicing economic interests of neighbour countries," said Bank TuranAlem's financial chief Erik Sultankulov. Besides, the financial sector, BTA said that Kazakstan is also interested in many other projects in Georgia, including the Batumi port, oil infrastructure, and the energy sector. The Kazak bank paid US$2.5m to buy 49 per cent of the shares of what is now BTA Silk Road Bank in March. BTA Silk Road Bank plans to work in real estate and mortgage business. 
The presidents of both countries agreed to develop economic relations between their states during Georgian President Mikhail Saakashvili's visit to Kazakstan last March. 
Kazak President Nursultan Nazabayev had said then that no political or economic obstacles could disturb the relations between the states. For his part, Saakashvili said it is important for Georgia to be a partner with Kazakstan.

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S&P raises Kazaktelecom rating to BB 

Standard & Poor's Ratings Services announced on August 19th that it has raised its long-term corporate credit rating on Kazaktelecom (OJSC) (KTC), the incumbent fixed-line telecommunications operator in the Republic of Kazakstan, to BB from BB-, reflecting the company's improving performance. The outlook is stable. According to S&P's credit analyst, Lorenzo Sliusarev, the upgrade indicates that KTC's business position is improving with continued dominant market shares in key segments, network quality and capabilities has also improved and the economic dynamics in Kazakstan is positive. The rating of KTC also reflects KTC's strengthened financial profile, New Europe reported.
The rating remains constrained by the evolving market structure and changing regulatory environment in the Kazak telecoms sector, the ongoing liberalisation of long-distance services, and increasing competition. KTC's continuing network investments and its sizeable dividend payouts-combined with plans to establish its own mobile franchise-limit the prospective strength and flexibility of its financial profile.
Sliusarev added that S&P has predicted that KTC's improved business profile including the competitive advantage of owning a modern nationwide fibre-optic network and manageable exposure to financial risk provide the company with the means to manage through the ongoing market and regulatory restructuring and increasing competition.

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China's CNPC offers US$4bn for PetroKazakstan 

China's national oil company CNPC has entered an agreement to buy competitor PetroKazakstan for an estimated US$4.18bn, a CNPC spokesperson announced in Beijing recently, New Europe reported. 
CNPC bid to pay US$55 for each share of PetroKazakstan which is listed in Canada. The purchase price amounting to around 21 per cent over the current market value beat an offer by India's Oil and Natural Gas Corporation (ONGC) of between US$3.4bn and US$3.6bn. 
PetroKazakstan shareholders must still approve the purchase by a two-thirds majority at a meeting to be held in October. 
Ownership of the Calgary-based PetroKazakstan, which controls about 12 per cent of the oil production in Kazakstan, is part of a push by Chinese oil companies to secure worldwide energy resources in light of increasing demand in China, second only to the US in oil consumption. 
Kazakstan has access to as much as 3 per cent of the world's oil reserves, and the purchase fits in with CNPC's plans to build a pipeline for the transport of oil from Kazakstan to China. 
The purchase was made by CNPC International (CNPCI), a wholly- owned subsidiary of CNPC, ranked 10th among the world's top 50 oil companies with operations in more than 20 countries and a yearly production of 35 million tonnes of oil. 
The agreement comes just weeks after the failed bid by China National Offshore Oil Corporation's (CNOOC) to buy US oil company Unocal.

7-mo Kazak oil output grows 1%, gas 49%

Kazakstan edged oil production up 0.9 per cent year-on-year in January-July to 28.888 tonnes, the national statistics agency said recently, Interfax News Agency reported.
Gas condensate production rose 43.6 per cent to 6.775m tonnes and natural gas production jumped 49.3 per cent to 9.29bn cubic metres (bcm). Kazakstan produced 5.835bcm of commercial gas, up from 5.731bcm a year previously. Kazakstan raised oil and gas condensate exports 12.1 per cent year-on-year in the first half of the year to 28.134m tonnes, the state statistics agency told Interfax. Value of exports rose 78 per cent to 8.055bn Euro. Natural gas exports fell 24.7 per cent to 7.418bcm and 31.3 per cent to 193.3m Euro. Gas imports fell 12.9 per cent to 5.709bcm and 6.6 per cent to 192m Euro.

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Baltika brewery invests above US$4m in Kazakstan 

Baltika brewery has invested into the economy of Kazakstan for the past three years above US$4m, Kazinform recently reported. 
Baltika has been supplying the market of Kazakstan since 2000. Last year the brewery opened its affiliate in Almaty. The volume of the company's sales in Kazakstan for the year of 2004 was 30 million litres of beer. So far, Baltika brewery delivers its produce to 38 states of the world.

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India reviews ties with Kazakstan

India and Kazakstan explored ways to bolster mutual cooperation in oil and energy areas during foreign office consultations held in the Kazak capital Astana recently, Kazinform reported. 
Negotiations were held between the Secretary of the Indian Ministry of External Affairs, Rajiv Sikri and Kazak Deputy Foreign Minister Vladimir Skolin and Foreign Affairs Minister Kassymzhomart Tokaev were also present during the meeting. The Kazak side assured it would help OVL-Mittal Enterprise, a joint venture floated by ONGC Videsh Ltd. Indian Petroleum Minister Mani Shankar Aiyar is likely to visit Almaty in October to attend the Kazakstan international oil and gas exhibition.
The Kazak energy minister will also visit New Delhi to take part in the Asian Energy Conference proposed to be held in November. Indian Minister of External Affairs K Natwar Singh recently visited Kazakstan for the Shanghai Cooperation Organisation summit in which India was, for the first time, granted observer status.

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