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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: 309 - (26/09/06)

The Kazak conundrum
Kazakstan is the heart of former Soviet Central Asia. It is an enormous place, the size of Western Europe, which only looks small on the map in comparison to Siberia. It is of course the largest of the five 'stans,' with 60% of FSU mineral resources. It has a dictatorial regime, as they all do - but far from the most repressive. 
It is trying to give a lead to the others as they struggle to come to terms with modernity. It has the massive advantage of a booming economy- GDP has been growing at more than 10% per annum in this decade, based on the exportation of energy and other minerals.

The Astana-Washington axis
Washington is nurturing its loose alliance with oil-rich Kazakstan, the richest and most stable country in the region. Vice President Dick Cheney visited in May and praised President Nursultan Nazarbayev's record, despite what many analysts say is his authoritarian style. 
Nazarbayev is neither a nutcase like President Niyazov of Turkmenistan, nor a sadistic brute like President Karimov of Uzbekistan, reasons why he is welcome in the West. He came to Washington in September for the first time for five years, a poignant reminder of 9:11.
In the wake of the September 11th 2001 attacks, the US forged ahead with alliances throughout Russian-dominated Central Asia. Kazakstan became a close ally there. It even sent a small unit to join the coalition occupying Iraq. 
The Bush administration appears to duly appreciate the contributions made by the Kazak peacekeeping battalion (Kazbat) that was deployed to Iraq in 2003 and also the recent assurances by Deputy Kazak Defence Minister Bolat Sembinov that Kazakstan would not withdraw Kazbat from Iraq. Nazarbayev did not miss the opportunity to seek active US support in Kazakstan's drive for WTO membership and chairmanship of the OSCE.
As Washington's most reliable partner, in Central Asia over the last five years, Astana should get substantial support from Bush as a reward for this loyalty. Kazakstan stands out as the only country amongst its Central Asian neighbours that sent troops to a Muslim country, Iraq, more to please an important funder than to defend the cause of peace in a distant land. But the non-combat mission assigned to Kazbat, sparked little criticism from other Muslim countries, including Astana's Central Asian neighbours. Washington should also acknowledge Kazakstan's contributions in Afghanistan, such as training local personnel and providing financial support for the Afghan government.

The US push into Central Asia is foundering 
At first, the US push into Central Asia appeared to have few limits. Washington established military bases in Kyrgyzstan and Uzbekistan from where it could easily strike Afghanistan, while Russia, the long-time regional master, could only look on.
These alliances in the name of Washington's "war on terror" made for some unusual bedfellows. Not only did former communist states welcome US troops, but Washington ignored the region's authoritarianism, including what human rights experts describe as outright repression in Uzbekistan.
"But this period did not last long and it ended as soon as the US reverted to its other agenda - the mission to spread democracy throughout the world," said Dosym Satpaiyev, from the Risk Assessment Group.
The tide is turning. "In five years, (US) influence in Central Asia has developed incredibly and now we are seeing a major reversal." 
A turning point, Satpaiyev said, was the bloody repression in May 2005 in the eastern Uzbek town of Andijan, where human rights organisations say several hundred people were gunned down by troops.
Washington and its European allies piled pressure on Tashkent, while the Uzbek government claimed that the trouble in Andijan had been stirred up by the US and Islamist militants. Soon after, Tashkent ordered the closing of the US base on its soil and expelled a number of US-funded non-profit group.
Russia swiftly began to restore its temporarily lost links. "Moscow profited from the situation after having been forced for four years to watch its influence collapse along its borders," a Western diplomat in Tashkent said on condition of anonymity. 

Central Asian nations sign nuclear pact in Astana
Five nations in Central Asia have signed a nuclear-free-zone treaty that commits the region's rich uranium deposits to peaceful uses but leaves open loopholes that could allow Russia to transport nuclear weapons into Central Asia. 
It is the first mutual security pact among all five Central Asian nations, a group that has often quarrelled about security issues. 
By adopting the legally binding nuclear-free pact, the signatories - the former Soviet republics of Kazakstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan - agreed on September 8th that they would neither acquire nuclear weapons nor allow them within their borders. But the treaty does not cancel an agreement that the Central Asian nations signed in 1992 that allowed Russia to transport and deploy nuclear weapons in Central Asia under certain circumstances. 
The United States, Britain and France boycotted the signing ceremony because they objected to that aspect of the treaty, said embassy officials and participants in the negotiations. Only Russia and China sent representatives to Kazakstan to observe the signing. 
Central Asia contains no nuclear weapons, but Kazakstan was home to the world's fourth-largest nuclear missile arsenal in the wake of the Soviet Union's dissolution, with 176 missiles. Kazakstan voluntarily decommissioned its nuclear weaponry in the mid-1990s. 
Nuclear-free zones often are opposed by the large nuclear powers because they can limit the movement of military assets and expose military bases to intrusive inspections. 

Central Asia: Japanese premier visits energy-rich region
Japanese Prime Minister Junichiro Koizumi travelled to Central Asia on August 28th for the first visit to the region ever made by a Japanese head of government. 
The visit to Kazakstan and Uzbekistan is the culmination of more than a decade of effort by Japan to forge stronger links with the Central Asian republics. 
Tokyo's policy of economic engagement, coupled with low-profile political encouragement, has won praise from Central Asian leaders, leading Uzbek President Islam Karimov to describe Japan as a role model. 
Japan has given well over US$2 billion in economic and social aid to Central Asia since those republics gained independence from the Soviet Union. 

Energy From A Stable Source 
Of course, Japan's great need for energy resources makes Central Asia an attractive area to court. "Japan is very reliant upon imports of fossil fuels, oil, etc., and Japan has to look for as many markets as it can, to ensure that it can continue to have a good flow of resources, and these [Central Asian] nations obviously provide a further opportunity for that," notes Christopher Hood of London's Royal Institute of International Affairs. 
Presently, some 80 per cent of Japanese oil comes from the Middle East, a region threatened by war and instability. 
Japanese Ambassador to Kazakstan Tetsuo Ito has made clear Japan's preoccupation with Central Asian energy, saying, "We attach great importance to the abundance of natural resources in this region as a stable source of energy supply." 
Tokyo realizes that in order to secure resources successfully in the long term, it needs stable conditions in the exporting countries. Koizumi has shaped Japanese policy with this in mind, encouraging regional cooperation among Central Asian countries to increase their prosperity and therefore their stability. 

Beating Out Asian Rivals 
Analyst Hood sees Koizumi's trip as part of Japan's effort to be in a good position as competition increases with China and South Korea for Central Asian oil and gas. 
"Japan is trying to get in early to develop good relationships, so that basically it will not have all its eggs in one basket," he says. 
Tokyo is also interested in the possibility that cooperation in Asia could in future years lead to the formation of an Asian common market, like that provided in Europe by the European Union. 
"The creation of a common market in Central Asia would be very profitable for Kazakstan especially, and for other countries, including Japan," Ambassador Ito added.. 
Also, analyst Hood says the diplomatic row that has broken out between Japan, China, and the Koreas over Koizumi's visits to a World War II shrine has left the Central Asian states undisturbed. 
"I don't think they feel themselves to be threatened in the same way [as China and the Koreas] by a strong Japan, and I think in many respects that they probably benefit more from a strong Japan," Hood says. 

Japan Takes Independent Path 
Political analysts see Tokyo's engagement with Central Asia as a possible counterweight to the growing influence of the Shanghai Cooperation Organization (SCO), the regional grouping comprising China, Russia, and all the Central Asian states except Turkmenistan. 
Although lacking the long-time influence of Russia over Central Asia and the immediacy of China's presence, Japan has the leverage of its economic and financial power and is determined to secure a share in the region's natural resources, which would dilute China's possible dominance of the oil and gas in the area. 
Tokyo also aims to help swing the delivery possibilities for Central Asian energy southward -- away from Russia and China.

Kazakstani assassination trial concludes with guilty verdicts, questions continue
Guilty verdicts in a highly publicized trial in Kazakstan are not putting an end to the question: who killed opposition leader Altynbek Sarsenbayev? Government critics suggest that officials were eager to wrap up the trial so that it would not complicate President Nursultan Nazarbayev's upcoming visit to Washington. 
A Kazakstani court announced the convictions of the 10 defendants in the Sarsenbayev murder trial on August 31. The man alleged to have contracted the murder, Yerzhan Utembayev, the former chief of staff of the Kazakstani senate, received a 20-year prison term. The court gave a death sentence to the supposed killer, Rustam Ibragimov, a former Interior Ministry employee. However, the sentence is unlikely to be carried out given Kazakstan's moratorium on capital punishment. The eight other defendants - all linked to Kazakstan's security and interior forces - received prison sentences ranging from three to 20 years. 
Sarsenbayev, along with his driver and bodyguard, were killed execution-style in the mountains outside Almaty in February. Since then, the case has been a source of political tension in the energy-rich Central Asian state. Sarsenbayev, a one-time Nazarbayev lieutenant, had emerged as a leading opposition figure following a very public split with the president. 
According to the verdict read out at the trial's conclusion, Utembayev contracted Ibragimov to murder Sarsenbayev in revenge for a newspaper article making unflattering revelations about him. Ibragimov - who reportedly received US$60,000 for the job - then set up a death squad comprising rogue members of elite Kazakstani anti-terrorism units. The squad supposedly kidnapped Sarsenbayev and his aides, and delivered them to Ibragimov, who proceeded to kill the three men. 
The version of events set out in the court verdict is almost identical to the theory put forward by Interior Minister Baurzhan Mukhamedzhanov two weeks after the murders occurred. Much of the prosecution's case rested on Utembayev's early confession, backed up by a letter he, as a senior official, wrote to Nazarbayev after his arrest. In the letter, Utembayev said that his antipathy for Sarsenbayev prompted him to order the killing. Utembayev admits writing the letter, but now disavows its contents, saying he wrote it under duress. During the trialm, both leading defendants caused a sensation by recanting their confessions, and, instead, alleging a conspiracy involving top-level political leaders. 
In early August, Ibragimov implicated several high-level officials in the murder plot, including Nartay Dutbayev, the former security service chief who resigned over the revelation that security commandoes were involved in the murder, and Senate speaker Nurtay Abikayev - the man constitutionally in line to take power if anything happens to the president. Sarsenbayev's murder, Ibragimov claimed, was part of an elaborate plan to overthrow Nazarbayev, who is scheduled to travel to Washington later this month for an Oval Office meeting with US President George W. Bush. 
Dutbayev and Abikayev were not called to give evidence in court. Just over a week after the allegations were made, the judge abruptly halted the trial at the prosecution's request and began the summing up, without allowing time for the introduction of further evidence. The decision prompted Sarsenbayev's relatives to boycott the trial. An aide to Abikayev, Dastan Kadyrzhanov, cast doubt on Ibragimov's credibility. "This looks like another stage in a planned campaign to discredit a person who is part of the country's leadership," Kadyrzhanov said. 
Many observers - including opposition leaders, journalists and relatives of the victims - have found the court's version of events to be implausible. At an opposition-sponsored public hearing August 29, Sarsenbayev's brother, Rysbek, said that the court "has unfortunately not discovered on whose conscience lies the blood of" the murdered trio. 
Views on Ibragimov's coup-attempt allegations vary. Many have questioned why men whose power rests on Nazarbayev would conspire to carry out a coup. Opposition journalist Sergey Duvanov speculated that Sarsenbayev could have been abducted in order to force him to discuss a coup plot and film him doing so, with a view to discrediting the moderate opposition. "This was an act of provocation against the opposition; they wanted to spread terror against the opposition," Duvanov said at the August 29 hearing. 
Other speakers at the hearing voiced alarm that most of those convicted had close links to Kazakstan's security establishment. "A group set up to fight terrorism was used as a death squad," Rysbek Sarsenbayev said. The security services and police "present a major danger to society and the state," added Tolegen Zhukeyev, a co-leader of the True Ak Zhol opposition party. Zhukeyev was among those to characterize the murders as an "act of political terror." Participants at the hearing called for a new trial to be held in Almaty. The just-concluded trial took place in the town of Taldykorgan, about a three-hour drive from Almaty. Relatives of the victims and opposition leaders maintained the trial's remote location was designed to limit public scrutiny of the proceedings. 
There has been little official comment on the case and tellingly state media has barely reported on the trial! Many have questioned the state's apparent unwillingness to investigate allegations of higher-level involvement in the murders. This "indicates that people from Nazarbayev's closest entourage are behind the murders," Duvanov suggested at the hearing. 



Daewoo could start producing buses, parts

South Korea's Daewoo Bus Global Co is considering the possibility of setting up bus production in the eastern Kazak city of Semipalatinsk, Daewoo Bus Vice President, Yaung Jae Choi, said at a meeting with Nurlan Omarov, head of the municipal administration. Production could amount to 1,000 buses per year and could be set up on the core of a former steel plant that has recently undergone renovations, he said. Daewoo would also like to produce automotive parts for buses in the region. "A project aimed at setting up a car factory is currently being carried out in Semipalatinsk. In accordance with this project, production of Chinese mini-trucks is slated to begin on the core of the steel plant in the fall and the second goal is to produce Russian PAZ buses. Production will be launched at the end of this year or the beginning of next year. The third goal would be the production of Korean Daewoo buses in the middle of next year, if we keep pace, or the end of next year," Omarov said, Interfax News Agency reported.
"The company produces its products in a number of countries and will now set up production in Kazakstan. According to the information of our guests, they've received offers from Russia, Ukraine and Azerbaijan. But we are glad that they chose us," he said.



Fitch affirms Bank TuranAlem at foreign currency IDR BB+

Fitch Ratings has affirmed the ratings of Kazakstan's Bank TuranAlem (BTA) at foreign currency Issuer Default BB+, foreign currency Short-term B, local currency Issuer Default BBB- (BBB minus), local currency Short-term F3, Support 3 and Individual C/D, the ratings agency said in a press release, New Europe reported.
The Outlooks on the Issuer Default ratings (IDRs) are Stable, the release said. The IDR, Short-term and Support ratings reflect the moderate probability of support being forthcoming in case of need, from the Kazak authorities. The individual rating reflects the risks of the bank's rapid loan growth and ongoing CIS expansion, significant loan concentrations and certain weaknesses in the operating environment. However, it also considers BTA's substantial domestic franchise, reasonable performance and liquidity, quite diversified funding and fairly low market risk appetite. The support floors for BTA's IDRs depend on the sovereign's capacity and prosperity to provide support in the event of need. Upside for the support floors is capped at BBB- (BBB minus), given Fitch's view of the authorities' prosperity to support banks of BTA's size. The Stable Outlooks on BTA's IDRs reflect those on the sovereign's IDRs.

Moody's upgrades Kecic's insurance strength rating

Moody's Investors Service has upgraded the insurance financial strength rating of the State Insurance Corporation for the Insurance of Export Credit and Investment of Kazakstan (Kecic) to Baa1 from Ba1, Moody's said in a press release. 
The outlook on the new rating is stable. Headquartered in Almaty, Kazakstan, Kecic was founded in August 2003 and started operations in February 2004. It is 100 per cent owned by the Republic of Kazakstan and is mandated to be the primary provider of export credit insurance in the country, both commercial and political. In addition, Kecic is writing inward reinsurance business in the Kazak market. Commenting on the upgrade, Moody's said that a key factor that added positive pressure on the rating was the upgrade of Kazakstan's foreign currency bond rating to Baa2 from Baa3 on June 9th, 2006.

Fitch changes Kaztramoil's outlook to positive

Fitch Ratings has changed the Kazakstan-based oil pipeline monopoly company JSC KazTransOil's (KTO) Outlook to Positive from Stable, the agency said, New Europe reported.
KTO's Issuer Default rating (IDR) is affirmed at BB+ and Short-term rating at B. The Positive Outlook foresees a gradual improvement in KTO's credit ratios as the company begins to generate revenue from the newly completed Atasu-Alashankou pipeline and further reduces debt. Higher cash flow from operations, combined with lower capital expenditure, is expected to return the company to a positive free cash flow position in 2006.
KTO's free cash flow deteriorated in 2005 as a result of costs incurred by its joint venture with China's CNPC, the Kazakstan-Chinese pipeline LLP, for the construction of the Atasu-Alashankou trunk pipeline. KTO's IDR is supported by the strategic importance of the company to Kazakstan's oil transportation infrastructure. It owns and operates 6,486km of oil pipelines and controls at least 60 per cent of the total oil transportation volume. KTO, which is classified as a natural monopoly in Kazakstan, charges its customers a flat tariff for shipments through its pipeline. KTO has had stable tariffs since 2000, with an average of 2,413 tenges per tonne per 1,000km. For supplies to the domestic market, the company uses a discount ratio of 0.54. The amount of the tariff is set by the Anti Monopoly Agency of Kazakstan and is based primarily on KTO's costs for maintaining and operating the pipeline. As such, this regulated tariff regime means upside profit growth for the company is limited. However, Fitch notes the expected additional earnings from the new Atasu-Alashankou pipeline, as well as from an increase in water transportation tariffs. The additional crude oil transportation volumes of around 10 million tonnes should help to support the company's already existing customer base, which presently guarantees transit of up to 20 million tonnes of Kazakstan's oil via the Russian Transneft pipeline system per year. Of this volume of oil, 15m tonnes are allocated to the Atyrau-Samara pipeline and up to five million tonnes to the Makhachkala-Tikhoretsk pipeline. KTO's financial policy can be categorised as moderate.



AES to invest US$1bn in assets over 7 years

US energy corporation AES is planning to invest US$1bn over the next seven years in its assets in Kazakstan, said John Abbas, AES vice president for Kazakstan, Russia and Central Asia.
AES is planning to invest about US$1bn in Ekibastuz over the next seven years, Abbas told an international conference on bilateral cooperation between Kazakstan and the US. Abbas said once again that AES is concerned that uncertainly in regulating the electricity market and imperfect Kazak legislation could hinder the company's investment plans.

Kashagan project may be delayed until end 2009

The Kashagan oil field in Kazakstan's sector of the Caspian Sea might not go commercially on stream until the end of 2009 or start of 2010, Kazak Energy and Mineral Resources Minister Baktykozha Izmukhambetov told reporters. "Perhaps it (commercial oil production at Kashagan) can be expected at the end of 2009 or early 2010," Izmukhambetov said.
He said "technological processes" would be responsible for the delay. "This is a huge, unique field. Kazakstan has never done anything like this (large-scale commercial oil production in the Caspian). And there are other issues to do with safety at the site and some additional technological considerations have arisen in connection with this. Additional islands might even have to be built," the minister said.
The AGIP KCO consortium, which is developing Kashagan, is so far declining to comment on the start date. The consortium has said Kashagan contains to least seven-nine billion barrels of recoverable oil, and overall geological resources of 38 billion barrels.

KazMunaiGaz to raise more than 1bn on LSE

KazMuniaGaz, Kazakstan's state oil company, has announced its intention to launch an international listing on the London Stock Exchange and domestically on the Kazak Stock Exchange in the autumn, the Financial Times reported on Sept 4th.
The state is looking to raise significantly more than 1bn for its onshore exploration and production unit through a listing of up to 40 per cent of the business, according to bankers familiar with the sale.
The float will provide investors with an opportunity to buy into one of the fastest expanding oil industries in the world. Revenues at the exploration and production company, known as KMG E&P, have risen from US$1.2bn in 2003 to US$2.6bn (1.4bn) in 2005 while profit before tax has jumped from US$275m to US$1.07bn.
KazMunaiGaz is the third-biggest oil producer in the central Asian former Soviet republic with proved and probable oil reserves of 1.515bn barrels at the end of 2005. It pumps an average daily volume of 188,000 barrels in the Atyrau and Mangistau regions of western Kazakstan and is engaged in exploration activities in the same regions.
Many of KMG E&P's fields are said to be mature by industry observers. Offshore acreage in the Caspian Sea, where the real potential for production growth lies, has not been included in the unit's portfolio.
The company has appointed three western independent non-executives to the board to improve the perception of corporate governance - Paul Manduca, a non-executive director at a number of UK companies; Christopher Mackenzie, an investment banker; and Eddie Walshe, who has experience at BP and Britich Gas.
Banks underwriting the agreement are ABN Amro, Credit Suisse and Visor Capital, a Kazak investment bank.

Russia, Kazakstan agree terms for Orenburg venture

Russia and Kazakstan have agreed the terms of an intergovernmental agreement on cooperation to set up a joint venture based on Orenburg Gas Processing Plant. The Russian governments press service said that Russian Prime Minister, Mikhail Fradkov signed the corresponding directive on August 12th. The Russian Industry and Energy Ministry has been ordered to sign the corresponding agreement on behalf of the Russian government. The Kazak Energy and Natural Resource Ministry will coordinate the implementation of the agreement on the Kazak side. According to the document, authorised organisations from both countries - Gazprom and KazMunaiGaz - will set up a company with equal participation based at Orenburg Gas Processing Plant, New Europe reported.

Nazarbayev, Putin to sign deal to fund oil, gas processing JV

Russia and Kazakstan intend to sign a final agreement to set up an oil and gas processing joint venture in October, Kazak President, Nursultan Nazarbayev, said when meeting with Russian President, Vladimir Putin, in Sochi recently. "We will sign a deal on gas. It is virtually ready, and there are only a few details left to settle," he said, New Europe reported.
In addition, the two countries plan to sign an agreement on simplified border crossing and the establishment of joint customs checkpoints at a meeting of the chiefs of border agencies in Uralsk, Nazarbayev said. The signatories to the Common Economic Space have drawn up 38 documents, which "could be adapted to the EurAsEC (the Eurasian Economic Community), and then they could start real integration," Nazarbayev said.
Putin noted in reply that relations between the two countries are developing quite efficiently, including in the humanities area. The Russian and Kazak Foreign Ministries are also expanding cooperation "to coordinate their positions on the key international problems," he said.
"I really hope that Kazakstan will play its role on the international arena," Putin said, adding that he implied possible Kazakstan's presidency at the Organisation for Cooperation and Security in Europe (OSCE). "We will provide all possible support to Kazakstan's candidacy," he said.

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