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KAZAKSTAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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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Update No: 315 - (29/03/07)

The travails of tyrannical power in an oil-rich state
The death in December of President Saparmurat Niyazov of Turkmenistan came as a shock to President Nursultan Nazarbayev of Kazakstan. It is not that he liked or admired the Turkmen crackpot. Indeed, he took him to be exactly what he wants to avoid. But it showed how fleeting is all temporal power and reminded him that there will be a succession problem one day in Kazakstan too.

The 'stans' are interdependent and instability in one threatens it in others. The situation in Kyrgyzstan two years on from the Tulip Revolution is hardly re-assuring either, with new troubles brewing.

The Kazak regime has the advantage of a massive oil and commodities boom. GDP is growing at around 10% per annum. But this is creating scope for enormous corruption. Kazakstan is in the Nigeria league for corruption. Scandals are implicating the president's extended family and entourage at a most sensitive time as various huge Kazak flotations are being made on the London Stock Exchange(LSE).

Political reshuffle involves president's son-in-law 
It is in this disturbing context that President Nazarbayev on February 9th abruptly removed his son-in-law, Rakhat Aliyev, as deputy foreign minister and dispatched him to Vienna to serve as Kazakstani ambassador to Austria. The move occurred days after Aliyev became embroiled in a controversy over the disappearance of two former bank executives. 

The presidential press service provided no reason for Aliyev's sudden departure for Vienna. Aliyev, 44, put a positive spin on the move, saying he would act as a diplomatic troubleshooter to advance Kazakstan's effort to chair the OSCE. "The president is sending me as ambassador to Austria and the OSCE to solve this task," Aliyev told the Kazakstan Today news agency. It will be Aliyev's second diplomatic tour in Austria. He first served as a diplomat in Vienna from 2002-2005. That appointment followed a political scandal in which several officials accused Aliyev of plotting to unseat Nazarbayev as president. 

Aliyev's departure comes amid an ongoing investigation into suspected financial impropriety at one of Kazakstan's leading banks, Nurbank. The affair has plunged the country's financial sector into controversy. Aliyev is perhaps the bank's highest-profile shareholder, and in connection with the financial probe, he adamantly denied allegations of unsavoury business practices. 

The accusations surfaced in early February, when the wives of two former senior Nurbank managers claimed their husbands had disappeared. The former chairman of the board, Abilmazhen Gilimov, and his deputy, Zholdas Timraliyev -- who both resigned from the bank in January -- had gone missing within the previous five days, their wives announced on February 5th, according to reports published by a variety of foreign and domestic news outlets, including The Associated Press. Gilimov had not returned after reporting for questioning to the financial police earlier that day, while Timraliyev had been missing since leaving for a Nurbank meeting on January 31st. It has since emerged that Gilimov is being questioned by law-enforcement agencies over financial wrongdoings at the bank, while Timraliyev is wanted by police. 

Timraliyev's wife, Armangul Kapasheva, alleges that prior to his disappearance, Timraliyev was kidnapped and subjected to violence and intimidation in an attempt to force him to ensure that management of a lucrative business centre in Almaty, Kazakstan's financial capital, passed to the president's son-in-law. Aliyev denies the charges. In an open letter to President Nursultan Nazarbayev, Kapasheva claims that Gilimov and her husband left their homes on January 18th thinking they were to accompany Aliyev on a business trip. Instead, she said, they were taken to a sauna complex and held against their will for 24 hours. Kapasheva alleged that her husband had been beaten up and threatened with death unless he ceded to the demands. 

Aliyev categorically denied the allegations. "The only thing in all these versions, theories and rumours which is true is that I am indeed a Nurbank shareholder. That is no secret to anyone," he said in remarks quoted by the Kazakstan Today news agency. "Everything else, including information about a supposedly missing former bank employee, is open slander resembling a carefully-planned act of provocation." Aliyev could not be reached for further comment. 

Gilimov and Timraliyev resigned from the bank on January 19th. Nurbank issued a press release announcing Gilimov's departure, giving no indication that the split was acrimonious. Gilimov was moving jobs and being replaced by his deputy, Gulmira Dzhumadillayeva, Nurbank said, thanking him for his contribution: "Under his management Nurbank entered and firmly consolidated itself in the top 10 banks in Kazakstan." 

On January 31st, Kapasheva reported her husband missing after he failed to return from a meeting with Dzhumadillayeva and Aliyev. The facts about what happened next -- which subsequently led to the arrests of several senior police officers -- are disputed.

Kapasheva says she encountered difficulties in reporting her husband missing, but in the evening a police rapid-reaction squad arrived at the bank, where her husband was thought to have gone earlier in the day. Bank security denied the officers access. In a press release on February 5th, Nurbank described the incident as an "attack on the bank's head office in Almaty." Allegations have been levelled that the officers were seeking to remove valuables and documents from the former managers' offices. 

When the rapid-reaction squad arrived at the bank, the financial police were already there conducting a search following allegations of financial impropriety. They say the rapid-reaction squad tried to hinder the process. 

"There has been an attempt by interested parties to cover up illegal actions by rapid-reaction squad officers, [who were at the bank] apparently in response to a statement received from Kapasheva," Almaty financial police chief Vladimir Kurbatov told a news conference on February 5th. 

Following the raid on Nurbank -- which declined to comment to EurasiaNet on the case -- the head of Almaty's rapid-reaction squad and the city's deputy police chief were arrested, and several dozen officers submitted resignations. Financial police are investigating a case involving abuse of office, though no charges have yet been brought. 

"We do have many questions for the former management of Nurbank," Kurbatov told the press conference. "More than 10 people are currently declining to appear before the investigation." He believes Timraliyev is on the run, and says the police have evidence that he called his wife to say so. 

Kapasheva does not deny that Timraliyev has been in touch, but believes it was at someone's instigation. "He has called," she told EurasiaNet. "I know it was his voice, but he was calling under pressure." 

The police case centres on a suspicious payment of 809 million tenge -- some US$6.5 million -- said to have been made on January 26th by Gilimov and Timraliyev. Kapasheva dismisses allegations of wrongdoing by her husband, questioning how he could have moved funds from the bank a week after he had resigned. "He wasn't working there then… His signature was not valid," she told EurasiaNet. 

Kurbatov insists that the financial police are keeping an open mind. "We have tried to show maximum objectivity and listen to all sides… [but] preliminary investigations are not going in favour of the former management," he said. 

As the investigation continues, the case is becoming increasingly politicised. MP Dariga Nazarbayeva, Aliyev's wife and the president's eldest daughter, says it is an economic matter. "These are more fabrications; this is an attempt now to take a normal criminal case onto a political level," Nazarbayeva told Kazakstan Today. 

Other members of Aliyev and Nazarbayeva's family are involved with Nurbank. Their 22-year-old son, Nurali Aliyev, was voted onto Nurbank's board on 15th January, and Aliyev's father, Mukhtar Aliyev, holds a 6.73 per cent share in the bank.

The Nurbank case has cast an unwelcome spotlight on the country's banking sector. Any damage to the sector's image is unwelcome at a time when Kazkommertsbank and Halyk Bank recently floated on the London Stock Exchange and are under investor scrutiny. Other Kazakstani banks are preparing to float shares on the LSE. 
Just a week before the controversy erupted, Kazakstan's banks held a publicity drive in London aimed at boosting their reputations and promoting themselves as responsible operators. The controversy casts a shadow on Kazakstan's investment climate as a whole, raising questions about the manner in which business disputes are settled. Observers will be closely watching the outcome of this case to see if a fair and transparent solution can be found. 

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AUTOMOBILES

Asia Auto to begin Chevrolet assembly

Kazakstan's Asia Auto plans this summer to begin production of Chevrolet vehicles, the company said in a press release. The assembly agreement was signed recently by Asia Auto President, Yerzhan Mandiyev, and GM Daewoo production director, Won-Kyung Suh, New Europe reported.
Asia Auto will first assemble the Chevrolet Lacetti, Epica, and Captiva and plans this year to produce 1,300 of them. GM Daewoo will supply the parts for assembly.
The first Chevrolet cars assembled in Kazakstan will be available for sale in July and will be sold through Asia Auto and Bipek Auto in Kazakstan.
Asia Auto was opened in 2003 when it began assembling the Niva for Russia's AvtoVAZ. It is the only importer and producer of Skoda cars in Kazakstan. The company can assemble up to four models simultaneously and has capacity for 45,000 cars a year.

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AVIATION & SPACE

Baikonur preparing for Anik F3 launch

The Baikonur Cosmodrome in Kazakstan is preparing for this year's first launch of a Proton-M launch vehicle that will put Canada's Anik F3 telecommunications satellite into orbit, the Khrunichev space research and production centre said in a press release, New Europe reported.
"Specialists from various departments of the Khrunichev centre have begun preparing the ground-based infrastructure of the cosmodrome and he launch vehicle according to the general schedule of the Anik F3 programme," the press release said.
The Anik F3 satellite is to arrive at the Baikonur centre on March 11, it said.
Anik F3 will provide a wide range of telecommunications, broadcasting, business communications and Internet-based services to users across North America. The satellite will be launched by ILS, Russian-US joint venture.

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ENERGY

Kazakstan may build oil refinery in Georgia

Kazakstan is considering building an oil refinery in Georgia, Kazak President Nursultan Nazarbayev told a news conference after talks with his Georgian counterpart Mikhail Saakashvili in Astana on March 6.
"Our energy and mineral resources ministry is considering the possibility of building an oil refinery in Georgia," he said. Saakashvili told the same news conference that the proposed refinery project may carry a price tag of up to US$ one billion.
"It is a huge project. It will cost up to US$ one billion. But it is increasingly important for the economy of Georgia and the region (the Caucasus) as a whole," the president said. The oil refinery may be built in Batumi using Kazak investment, he added.
Cooperation in the energy sector is a key element of Kazak-Georgian contacts, Nazarbayev said. National oil and gas company KazMunaiGaz is planning to build the oil refinery in the vicinity of the Batumi oil terminal, he said.

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FOREIGN COOPERATION

Astana, Moscow should focus on energy projects, Baikonur use 

Russia and Kazakstan should focus on bilateral cooperation in innovative projects in the fuel and energy sector, the effective use of the Baikonur Space Centre, the exploration of the Caspian region's resources and efforts to expand their mutual investment, Russian President Vladimir Putin said after Russian-Kazak talks in the Kremlin on March 19.
"We consider it important to concentrate efforts (in Russian-Kazak cooperation) on the most relevant areas of cooperation, primarily contacts in the energy sector," Interfax quoted him as saying.
The two countries' cooperation in "using the Baikonur Cosmodrome more effectively and exploring the Caspian area's resources" holds great promise, the president said. "Cooperation in the nuclear power sector is approaching qualitatively new frontiers," Putin said.
A March 19th meeting with key cabinet ministers addressed a project aimed at creating a nuclear centre in charge of uranium enrichment, he said. Kazak President, Nursultan Nazarbayev, confirmed his country's interest in contributing to the effort during the negotiations, he said.
Nazarbayev invited Putin to pay an official visit to Kazakstan this summer and discuss joint uranium mining and enrichment. "I have invited Vladimir Vladimirovich for an official visit to Kazakstan this summer," Nazarbayev said. "I think this will be another landmark event in our cooperation," he said. "We will start joint development of uranium deposits in Kazakstan, as well as joint enrichment and production of nuclear fuel." The nuclear fuel will be available to any countries wishing to develop peaceful atomic energy industries, Nazarbayev said.
The two leaders also discussed integration in the Commonwealth of Independent States (CIS) and EurAsEC. Russia believes that economic integration in the CIS could be boosted within the EurAsEC, with a single economic zone created afterwards. "We believe that it is within the EurAsEC that mutually beneficial economic integration of the Commonwealth countries can noticeably expand and a single economic area formed later," Putin said. He also said that Russia agreed with Kazakstan's position on eforming the CIS and developing a Eurasian economic community.
For his part, Nazarbayev again proposed forming a Eurasian economic union of states. "I think that a certain group of countries is ready for this," Nazarbayev said, adding that Europe had followed such a path and that Russia, Kazakstan and a number of other countries "certainly, have such opportunities." The EurAsEC was founded on October 10, 2000, by Belarus, Kazakstan, Kyrgyzstan, Russia and Tajikistan, which were joined later by Uzbekistan. Moldova, Ukraine and Armenia have observer status.

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FOREIGN INVESTMENT

Kazakstan invested over US$20bn abroad in 2-3 years

Kazak President, Nursultan Nazarbayev, has announced that Kazak companies planned to invest about US$300 million in the Georgian economy in 2006. "According to my information the investment plans of Kazak companies in Georgia totalled about US$300 million last year," he said at a joint press conference with Georgian President, Mikhail Saakashvili, after their talks in Astana on March 6th, New Europe reported.
"It is a different issue whether the money has been actually invested, but it is being channeled," Nazarbayev said. He was speaking about the investment of Bank TuranAlem in the overhaul of a hotel in Tbilisi and in several holidaymaking facilities on the Black Sea coast. He said the national oil and gas company KazMunaiGaz also had plans to make solid investments. "A KazMunaiGaz company, KazTransGaz, acquired gas distribution networks in Tbilisi. This is a very important issue," Nazarbayev said. He added that the oil and gas company is buying controlling shares in Batumi's seaport. "This will be a very impressive investment," he said. Nazarbayev said the current conditions in Georgia are very favourable for making business. He said that in the past two-three years Kazakstan has invested over US$20 billion in foreign countries.

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FOREIGN LOANS

ENRC could increase loan to US$1.5bn

Eurasian Natural Resources Corporation (ENRC, formerly Eurasian Industrial Association, EIA), which represents some of Kazakstan's biggest mining and metals companies, may raise a US$1.5 billion syndicated export loan facility instead of an originally planned US$1 billion, a source in banking circles said, Interfax News Agency reported.
ENRC said in December that it was seeking a five-year syndicated export loan facility of US$ one billion. ABN Amro Bank N.V., Barclays Capital and Deutsche Bank AG were mandated to arrange the loan. The source said the syndication, which began in January, is now closed. "The company is deciding how much to borrow," the source said.
ENRC Marketing AG will be the loan beneficiary and chrome corporation Kazchrome will guarantee the loan with revenue from exports of ferroalloys. The loan will be used for general corporate purposes, including the financing of ENRC's capital expenditure program to support the group's strategic growth plan.
Eurasian Natural Resources Corporation is a vertically integrated metals and mining group operating in Kazakstan. In 2005, Group revenues were in excess of US$ three billion and EBITDA was US$1.3 billion.

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FOREIGN TRADE

Russian-Kazak turnover up 30%

Russian-Kazak trade turnover reached US$12.8 billion, a 30 per cent increase compared to 2005, Chairman of the Federation Council's CIS affairs committee, Vadim Gustov, said at a conference entitled Kazakstan's International Cooperation: Status, Objectives and Perspectives in Astana on March 14th, New Europe reported.
A total of 70 per cent of bilateral trade is guaranteed thanks to border regions, he said, adding that the Russian parliament is going to pass a bill on cross border cooperation. The senator expressed hope that "a similar bill will also be passed in Kazakstan."

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HIV/AIDS

Kazakstan needs to tackle HIV/AIDS 

The pace at which the HIV/ AIDS virus is spreading in Kazakstan may soon start to pose a threat to national security, the country's chief epidemiologist, Anatoly Belonog, said at a meeting with senior Health Ministry officials in Astana on February 16th, New Europe reported. 
"Recent inspections by the prosecutor's office have shown that numerous violations continue to occur during blood preparation and transfusion procedures in a large number of medical institutions in the republic. Gross violations of the anti-epidemiological regime have been exposed in nearly half of the republic's blood transfusion organisations and one-third of all medical organisations," he said.
"We all need to considerably tighten control over medical organisations because this situation remains unfavourable in the republic, with HIV/AIDS rates growing 1.8 times last year," Belonog said. "Order must be restored in this issue as soon as possible", because "we have to regard this problem through the prism of the country's national security," he said.
The largest number of HIV/AIDS cases has been reported in the Karaganda and Pavlodar regions, Almaty, the east and south of the country. Kazakstan, a country with a 15.3 million population, has more than 7,000 HIV-infected people, according to the health ministry.

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MINERALS & METALS

Kazakmys boosts earnings in 2006

Kazakmys Plc boosted net profit 155 per cent in 2006 to US$1.403 billion, the London-listed, Kazakstan-based copper producer said in a statement, Interfax News Agency reported on March 15th. 
Revenue grew 94 per cent to US$5.046 billion. The corporation produced 405,000 tonnes of cathode copper last year, up 4.7 per cent from 2005, including 368,000 tonnes from its own concentrate. It sold copper for US$7,025 a tonne on average - 85 per cent more than in 2005.

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TRANSPORT

A joint railway project is planned with Kazakstan

Azerbaijan's Foreign Minister, Elmar Mammadyarov, will invite Kazakstan to join the construction of a railway linking Baku, Tbilisi and Kars during a visit to Astana on February 27th, New Europe reported.
"We want Kazakstan to join this project and we'll discuss this issue," Mammadyarov told the press on February 12th. The minister said he also wants to discuss prospects for broadening bilateral relations.
"Kazakstan has a new government, a new foreign minister and a new parliamentary speaker. We are working on new projects. But we'll first of all discuss Kazakstan's interest in the project to build the Baku-Tbilisi-Kars railway," Mammadyarov said.
The construction of the railway is being funded by the governments of Azerbaijan, Georgia and Turkey and will require US$420 million in investment. Under a credit agreement, Azerbaijan will extend a US$200 million loan to Georgia at one percent annually for 25 years to build the Georgian stretch. The project involves the construction of a 29-kilometre stretch and repairs for a 160-kilometre stretch running across Georgia and for a 76-kilometre stretch in Turkey, and the partial rehabilitation of the stretch across Azerbaijan.

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