FREE GEOPOLITICAL NEWSLETTER

kazakhstan  

For current reports go to EASY FINDER

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)

Books on Kazakstan

 




Update No: 318 - (28/06/07)

President for life
The parliament in Kazakstan has obligedly abolished all term limits on the duration of a presidency. The president can stand for re-election as many times as he likes.

Few doubted that this would be the case in practice. It is now a matter of principle. Nursultan Nazarbayev is president for life, if he so wants. He might as well drop the 'Nur' from his first name and call himself Sultan Nazarbayev instead.

He is keen to keep his son-in-law out of the reckoning for the succession at all events (see below).

The need of a new thematic
He needs a new theme to justify his pertinacity in power. He has found one.

The Kazaks are keen to differentiate themselves from the Russians, their 'protector's' hitherto. They are scarcely regarded as more than an appendage of their mentor to the north, despite their massive energy and mineral wealth.

The Kazak president has some imagination. He knows that his country is extraordinarily rich, but land-locked. He has found the solution. Expand to the west.

The construction of the Suez Canal changed history, uniting the Mediterranean Sea with the Persian Gulf and obviating the need for the long haul round the Cape of Good Hope. So did that of the Panama Canal, linking the Atlantic and Pacific Oceans at their most vital junction. 

Now comes the idea of the Eurasian Canal to rival either of them in significance, bringing Central Asia into Europe. 

Kazakstan Proposes Caspian-Black Sea Canal 
President Nazarbayev has proposed building a canal between the Caspian Sea and the Black Sea to ease Central Asian trade with world markets. He has proposed to ship its oil from the Caspian to the Black Sea. "A navigable, Eurasian canal linking the Caspian and Black Seas could be crucially important," Nazarbayev said. 

Nazarbayev was addressing a conference audience immediately after Russian President Vladimir Putin had exhorted his neighbours to intensify their economic cooperation. However, Nazarbayev appeared intent to distance himself from such a goal. "Integration isn't a goal in itself," Nazarbayev said, but should rather be driven by "objective causes." 

He went on to deliver a thinly-veiled criticism of Russia's stranglehold on the export routes for Kazak oil. The Russian government is currently blocking an expansion of the Caspian Pipeline Consortium's Tengiz-Novorossisk pipeline, which is the main route of Kazak oil to world markets. "If there are no alternative export routes, we'll have to look for them," Nazarbayev said. "Our region is rich in resources, but we have to deliver them to market, and we will naturally develop the routes that are most favourable to us." 

Nazarbayev also attacked the ineffectiveness of the Commonwealth of Independent States, the loose grouping of newly independent republics set up in the wake of the Soviet Union's collapse. 

"Centrifugal forces have proved stronger than our efforts to integrate," Nazarbayev said. 

Russia's trade with its former Soviet neighbours has nonetheless picked up sharply in recent years, its imports from the CIS doubling since 2001 to more than $24 billion in 2006. However, they now account for only 15% of Russia's imports, compared to a share of more than 30% a decade ago. 

Central Asia's Dutch Disease 
The International Crisis Group on June 11th distributed its new report on stability risks in the Central Asian countries that are extracting hydrocarbons - Kazakstan, Turkmenistan and Uzbekistan.

ICG believes that the main problem for the Stans is "the Resource Curse" - hydrocarbons can become a source of destabilization, if petrodollars are spent inadequately by the authorities of these countries.

Experts say that Kazakstan (occupying the 7th place in the world with its oil reserves), handles its incomes better than its neighbours. But they also warn of the future problems:

"More has been spent on Pharaoh-like projects such as the new capital, Astana, than on healthcare or education. Growth has been impressive but the wealth gap has widened faster. The economy remains undiversified, manufacturing has been stunted by an over-valued currency and the whole country will be subject to a shock if energy prices come down", the report reads. 

Earlier, the World Bank also voiced concerns over the prospects of development of some countries, including Kazakstan. In particular, WB was alarmed by the overheating of the economy and by the large extent of its external borrowings.

ICG report also contains recommendations for the European Union, which will adopt a new EU Strategy in Central Asia within the next few weeks. In this Strategy, as expected, energy issues and "neutral" environmental and educational topics will prevail over the problems of democracy.

"If the Western countries continue to turn a blind eye to the human rights record of the region, counting on short-term benefits, they risk greater instability in Central Asia that will aggravate their energy and security problems in the long run", ICG expert Charles Esser says.

                                        ******

The following is a most penetrating overview of the Kazak predicament anent Nazarbayev:-

Kazakstan's powerful president
Jun 8th 2007
From the Economist Intelligence Unit ViewsWire
Rakhat Aliyev, the Kazak president's son-in-law, is facing extradition from Austria on charges of kidnapping and extortion. Mr Aliyev's precipitous fall from grace is the second event to shake Kazakstan's political scene in the past month, coming as it did just several weeks after parliament amended the constitution to remove the term limit on President Nursultan Nazarbayev. The two developments underline that Mr Nazarbayev is far from ready to relinquish power.

The decision to waive the term limit on Mr Nazarbayev, enabling him to stay in office after his current term runs out in 2012, was barely discussed by parliament and faced virtually no opposition. A largely rubber-stamp body, parliament is dominated by Mr Nazarbayev's supporters, following the merger of various pro-presidential parties in 2006. Ironically, the constitutional amendments were introduced in the context of broader changes aimed ostensibly at devolving some of the powers currently enjoyed by the president to the legislature. These changes were the result of year-long discussions by a constitutional committee, set up by Mr Nazarbayev partly in response to international criticism of his failure to implement democratic reforms.

Unacceptable criticism
Notably, one of the most vocal opponents of the decision was Mr Aliyev's father-an MP and a prominent member of the president's Nur Otan (Light-Fatherland) party-who denounced the move, warning that it was a step backwards for democratisation. Mr Rakhat Aliyev himself also sharply criticised the decision. Shortly afterwards, two media outlets associated with Mr Aliyev and his wife, Dariga Nazarbayeva, were suspended by the Kazak authorities for three months for apparently violating the country's language laws.

Mr Aliyev was stripped of his official position as Kazakstan's ambassador to Austria, and placed under criminal investigation for his alleged involvement in the kidnapping earlier this year of several senior officials at one of the country's major banking institutions, Nurbank, in which he is a major shareholder. In early June he was arrested by the Austrian authorities and released on police bail, pending a decision on whether to extradite him. Mr Aliyev has denied the charges, describing them as politically motivated, and attributing them to the fact that he had recently informed Mr Nazarbayev that he intended to contest the presidency in 2012.

Cultural learnings of Austria
Mr Aliyev is no stranger to political controversy. He has already served one term as ambassador to Austria, in 2001, following claims that he was preparing to instigate a coup against Mr Nazarbayev. Evidence of the alleged coup was never publicised; a more likely explanation for his exile from Kazakstan was that it was precipitated by competing business interests, notably those close to Timur Kulibayev (also Mr Nazarbayev's son-in-law), who heads a rival political faction in Kazakstan.

Allowed to come back to Kazakstan in 2005, Mr Aliyev's return to favour seemed assured when he was appointed deputy minister of foreign affairs. However, the subsequent 18 months proved a difficult time for him and Ms Nazarbayeva, a leading political figure in her own right. In 2006 Ms Nazarbayeva was forced to merge her party, Asar (Together), with the president's party-apparently an attempt to neutralise her as a political force. The authorities also announced plans to increase the state's share in Ms Nazarbayeva's Khabar media network from just over 50% to full ownership (although as of mid-2007 this had not yet occurred), signalling the president's displeasure with her often outspoken criticism of his government's policies.

A new political scandal hit the country in late 2005-early 2006 when two prominent opposition figures, both critics of Mr Nazarbayev, were murdered. A senior official close to the then speaker of the Senate, Nurtay Abykayev, was convicted of the killing of the second, following which Ms Nazarbayeva called publicly for Mr Abykayev to resign, on the grounds that he was the immediate superior of the convicted murderer.

Having apparently weathered the controversy created by subsequent allegations by a member of the security services that Mr Aliyev had been involved in the killing (Mr Aliyev successfully sued the intelligence officer for libel), in January 2007 he became embroiled in the Nurbank scandal. Shortly afterwards Mr Nazarbayev appointed him as ambassador to Austria, a move that was probably already planned but that the president had to bring forward. Any hope that Mr Nazarbayev had that the move to Austria would isolate Mr Aliyev from domestic politics was dashed, however, as the allegations against his son-in-law refused to die down.

Making a point, at home and abroad
However much the Nurbank scandal (see our archives) which involves the murder of one bank official and other evil actions. It was seen to be damaging the presidential circle's reputation, the decision to initiate an international arrest warrant against Mr Aliyev was nevertheless unexpected. Notwithstanding Mr Aliyev's claim that his presidential aspirations were the catalyst for his arrest, it is likely that there is a combination of motives.

Mr Aliyev's presidential ambitions were undoubtedly a factor; together with his wife he headed one of Kazakstan's main political factions, and was widely believed to be jockeying for power, in the event that Mr Nazarbayev were to leave office. If he did in fact confirm to Mr Nazarbayev earlier this year that he intended to contest the presidency, this presumably came at a time when the president was preparing to alter the constitution to remove the limits on his term. Mr Nazarbayev might have perceived the threat that Mr Aliyev would spend the next five years strengthening his position to contest the election as too high to risk, and therefore decided to act now to remove him from the political arena.

Another reason why Mr Nazarbayev might have decided to act now against Mr Aliyev was that the ongoing scandal at Nurbank was damaging Kazakstan's aspirations to chair the Organisation for Security and Co-operation in Europe (OSCE) in 2009-Mr Aliyev's diplomatic remit in Vienna included the promotion of Kazakstan's bid. At their meeting in late 2006 the OSCE postponed until their next summit in 2007 a decision on whether to award Kazakstan the chair, following concerns among some Western members that the country's democratic record was incompatible with this role.

Many of the political and administrative reforms under discussion in Kazakstan in 2007 are believed to have been instigated partly in response to this criticism, although these are by and large cosmetic, and are unlikely to lead to the more pluralistic and participatory political system that some members of the OSCE had pushed for. That caveat notwithstanding, the controversy surrounding Mr Aliyev could not have been helping Kazakstan's bid; by contrast, the Kazak authorities could use the president's decision to hold him to account as an example of their willingness to address corruption at the highest levels.

Don't discount Dariga
A potential risk for Mr Nazarbayev now is that Austria rules against Mr Aliyev's extradition, for example if it were to judge that he would not receive a fair trial in Kazakstan; Mr Aliyev has already sought political asylum in Austria. In this scenario, Mr Aliyev could become a focus for some form of opposition in exile-although Mr Nazarbayev will probably take comfort from the fact that Mr Aliyev is a highly unpopular figure in Kazakstan, and would not necessarily be able to rally sufficient support behind him.

Mr Aliyev's fall from grace raises interesting questions about what will happen to his wife, Ms Nazarbayeva, and their political and business rival, Mr Kulibayev. The absorption of Ms Nazarbayeva's party into the president's party in July 2006 and subsequent actions against her media interests suggest that her political star is waning. However, Ms Nazarbayeva has proved resilient to setbacks, and is likely to do so again, particularly if she decides to distance herself from her husband. In the past many of her political ideas have resonated with parts of the elite, but her association with the universally unpopular Mr Aliyev has prevented her from gaining much open support. That said, the notion of a dynastic succession is unlikely to command as broad a backing in Kazakstan as, for example, in Azerbaijan, where in 2003 the elite proved willing to endorse the transfer of the presidency from Heydar Aliyev to his son, Ilham.

Advantage Kulibayev?
The arrest of Mr Aliyev both strengthens Mr Kulibayev and, potentially, serves as a warning not just to him, but to other political figures that might be harbouring presidential ambitions. As Mr Aliyev and Ms Nazarbayeva have seen their political fortunes tarnished over the past year, so those of Mr Kulibayev have apparently been rising. He was appointed head of the board of the state oil and gas giant, Kazmunaygaz, in June 2006, and in January 2007 one of his allies, Karim Masimov, was promoted to the post of prime minister.

Nevertheless, Mr Kulibayev's prospects have not been entirely positive, and it is likely that should he redirect his ambitions from business to politics, he too will face difficulties. A political party with which he is associated, Atameken, has still not been able officially to register. The party, which in its opening congress in late 2006 said that it supported Mr Nazarbayev, represents Kazakstan's growing entrepreneurial class and has the eradication of corruption in the economy as one of its principal aims.

This segment of society probably represents one of the main risks to Mr Nazarbayev, given rising dissatisfaction among private businesses with the pace of reforms to the economy and business environment, as well as the entrenched position of the state in many economic sectors, against which private enterprises find it impossible to compete. Were Mr Kulibayev to win the support of Kazakstan's businessmen, he could potentially present a credible challenge to Mr Nazarbayev by the time of the next election whenever that might happen. 

Even if Mr Nazarbayev does not intend to stand again for the presidency, his decision to act now against Mr Aliyev indicates that he is far from ready to step down from politics yet. The arrest of Mr Aliyev serves as a warning to other pretenders to the throne that even the highest members of the elite are vulnerable. Regardless of Mr Nazarbayev's intentions in 2012, he has made it clear that he will tolerate no challenge in the coming years.

« Top

ENERGY

TengizChevroil to transport oil to Georgia by rail


TengizChevroil, which is developing the Tengiz and Korolevskoye fields in Kazakstan's Atyrau region, has proposed transporting 20 million tonnes of oil by rail from the Tengiz field through Azerbaijan to Georgian ports on the Black Sea over the next five years, Interfax News Agency quoted Arif Askerov, head of Azerbaijani State Railways, as telling journalists.
"TengizChevroil has suggested transporting 20 million tonnes (of oil) by rail from Azerbaijan to Georgia's Black Sea ports over the next five years. A final agreement has yet to be reached on this issue, but talks are being held," he said.
In addition, experts from the transportation agencies of Azerbaijan, Georgia and Kazakstan are carrying out marketing research to increase cargo transport along the Aktau-Baku-Poti/Batumi route, he said.
"In particular, the possibility of transporting sulphur, metals, coal and other cargoes from Kazakstan through Azerbaijan is being considered. Tariffs on the transit of Kazak oil and oil products through Azerbaijan and Georgia are also being reviewed. The sides intend to make the tariffs appealing to attract cargo to this transport corridor," Askerov said. Oil shipments via Azerbaijani State Railways are to grow 13.3 percent to 17 million tonnes in 2007, he said.

Kazatomprom to start supplying fuel pellets

Kazakstan's national nuclear corporation Kazatomprom plans to start supplying fuel pellets and powders to China in two years, Mukhtar Dzhakishev, Kazatomprom's president, said, Interfax News Agency reported. "I hope we'll start supplying China in two years," Dzhakishev said.
In the meantime, Kazatomprom expects to obtain the necessary certification for the pellets and powders produced by its Ulba Metals Plant, he said. "We need to certify these products for the reactors used in China today, in particular Guangdong Nuclear Power," Dzhakishev said.
Kazatomprom and China Guangdong Nuclear Power Holding (CGNPC) signed an agreement on broader strategic cooperation in Beijing on May 24th. They said they would cooperate in the production of nuclear fuel for Chinese power plants and provide raw materials for China's developing atomic energy industry.
"Yes, we agreed that Kazatomprom would supply Chinese power plants. This is an exception, when China lets a foreign company in," Dzhakishev said.
In time, Kazatomprom and China intend to work together in fuel assembly production. "The joint production of fuel assemblies is possible in time - either with the Guangdong corporation or with Kazatomprom's participation as a shareholder in existing fuel plants," Dzhakishev said.
Dzhakishev could not say when these plans might come to fruition. "It all depends on a whole range of procedures due to take place in China, like the restructuring of the nuclear industry there. China is due to reach a decision, and after that it will be possible to say when we can move forward in this issue. For now we're looking at powders and pellets, and we'll decide on assemblies once the Chinese nuclear industry's restructuring is in motion," Dzhakishev said.
Dzhakishev said Kazatomprom would meet the requirements of the Chinese corporation, which was looking to control half of the Chinese nuclear power market. "China plans to build another 31 reactors and have 40 in all, but it's clear that these plans could be revised and that the figure could be far higher," he said. Dzhakishev said that Kazatomprom would stop exporting natural uranium in time and ship nuclear fuel abroad.

Trans-Anatolian pipeline bets on Kazak oil supplies

In line with the diversification efforts for oil supplies, it seems that the Baku-Tbilisi-Ceyhan (BTC) pipeline has become a catalyst for other projects. After BTC, plans to construct the Bourgas-Alexandroupolis pipeline that had been suspended for almost 13 years are finally back on line. The main purpose of this project is to unclog the busy Bosporus Straits. Also brought back to life and actively debated is the Odessa-Brody-Plock oil pipeline that plans to carry Caspian oil to Central Europe, New Europe reported.
Meanwhile, Turkey has just started construction of another oil pipeline that will bypass the Bosporus: Samsun-Ceyhan. This project is called Trans-Anatolian Pipeline Project (TAP). It is implemented by two oil companies: Turkish Calik Enerji and Italian ENI.
It's worth noting that all the existing and proposed oil pipelines going through the territory of the other countries are designed to include Kazak oil.
"The Trans-Anatolian pipeline is a very risky project, as it has started without any signed oil supply guarantees. It is known though that it is being built with the future Kashagan resources in view, where the commercial production of oil is expected to be postponed again, until 2011. The project managers have shown a combative spirit by starting the project in such conditions," the Executive Director for Oil Refining and Petrochemistry of KazMunaiGas, Shuhrat Danbai, told New Europe.
The Trans-Anatolian pipeline will be 555 kilometres long. It will go through the territory of only one country, Turkey, and it will connect two sea ports, Samsun, on the Black Sea, and Ceyhan, on the Mediterranean Sea. The cost of the project is estimated at US$1.5-2 billion. Design capacity - 50 million tonnes of oil per year. The pipeline is expected to become operative in 2010.
The first to announce the news about a concrete plan to build the Trans-Anatolian pipeline was the Turkish Prime-Minister, Tayyip Erdogan, at the opening ceremony of the Baku-Tbilisi-Ceyhan pipeline in July of last year.
He then said the new pipeline could receive Russian and Kazak oils. "Turkey is inviting all countries that can supply oil to this pipeline, and Russia and Kazakstan are the first among those invited. We expect these two countries to provide their oil to Samsun-Ceyhan, the purpose of which is to substantially unclog the Strait of Bosporus," the Turkish premier said. 
But, considering the fact that Russia is planning to build its own pipeline, Bourgas-Alexandroupolis, it is unlikely that the Trans-Anatolian pipeline can count on Russian oil. As far as Kazakstan is concerned, both Bourgas- Alexandroupolis and BTC are counting on its resources. The Bourgas- Alexandroupolis pipeline, for which the Caspian Pipeline Consortium is going to be expanded, will receive crude from Russia and Kazakstan. BTC is currently receiving Azeri crude. In the future, according to an agreement between Azerbaijan and Kazakstan, Kazak oil should flow into it. 
In such a case, a reasonable question arises: Are there prospects for the Trans-Anatolian pipeline to be filled considering that the Kashagan oil that it is designed for may be delayed for an undefined time?
There may be enough oil for all three pipelines -- Baku-Tbilisi-Ceyhan, Bourgas-Alexandroupolis, and Samsun-Ceyhan, specialists believe. "According to the calculations of the Turkish side, the Black Sea region may have a balance of 240 million tonnes of oil, and according to our company - 180 million tonnes. But in any event, these volumes will be sufficient to operate both the Bourgas-Alexandroupolis pipeline, the design capacity of which is 35 million tonnes with future expansion up to 50 million tonnes, and the 50 million tonne Trans-Anatolian pipeline. That is, the two pipelines will use 50 million tonnes each. The remaining 80 million tonnes will go through the Bosporus - such is the throughput capacity of the Strait. Therefore, there should be enough oil under any political scenario. Even the rough calculations confirm the viability of the new project," the KazMunaiGas representative told New Europe.
So, all parties involved hope that there will be enough crude for all and that the earlier announced plan of Kazakstan to produce 150 million tonnes by 2015 do not remain only a declared intention considering the Kashagan delays and the frustrated hopes for the other field - Kurmangazy.

KazMunaiGas E&P to acquire 50% of CITIC Canada Petroleum 

KazMunaiGas E&P has received from its parent company, KazMunaiGas, an option to acquire a 50 per cent stake in CITIC Canada Petroleum (formerly Nations Energy Company Ltd), KazMunaiGas E&P said in a statement, Interfax News Agency reported.
The company should exercise the option by September 1st 2007, by mutual agreement the deadline may be extended. "Kazakstan is a priority region of operations and the option to acquire Karazhanbasmunay is another example of our aspiration to expand our resource base on beneficial terms for the company. We are working in close cooperation with CITIC and are planning to exercise the option and complete the deal by the end of 2007, after a careful analysis of all aspects of the deal, and on conditions that the deal is approved by the board of directors," KazMunaiGas E&P Director General Askar Balzhanov was quoted as saying in the press release, cited by Interfax. At the end of December 2006 KazMunayGas and China's CITIC Group signed an agreement on the principles for acquiring 50 per cent of shares in Nations Energy. Based on a value for 100 per cent of shares in that company of US$1.9 billion, the 50 per cent stake is worth US$955 million.

KazMunaiGas eyes large oil company in Europe

Kazak national oil and gas company, KazMunaiGas, hopes to acquire a large company in Europe in the near future, with several oil refineries and a network of filling stations, company First Vice President, Zhaksybek Kulekeev, said, Interfax News Agency reported.
"Our plans include the purchase of a good, large asset in several countries in Europe. This company should have three oil refineries and up to three thousand filling stations," he said. Kulekeev did not disclose the name of the country or the country where it is located, or the possible timeframe for the deal. "At the moment we are holding talks, bargaining. In the near future we will announce both the country and the company," he said.

Kazatomprom's net profit soars in 2006

Kazakstan's national nuclear company, Kazatomprom, made 47.22 billion tenge in net profit in 2006, four times more than in 2005 (11.92 billion tenge).
The officially published unaudited consolidated report indicates that revenue from the sale of products and services in 2006 amounted to 39.55 billion tenge (compared with 26.38 billion tenge in 2005), with costs at 26.58 billion tenge (compared with 16 billion tenge in 2005), Interfax News Agency reported.
The company's assets grew to 137.34 billion tenge from 63.095 billion tenge, equities reached 78.187 billion tenge from 31.6 billion tenge, and the charter capital was 7.98 billion tenge compared with 7.896 billion tenge in 2005.
Kazatomprom is Kazakstan's national exporter of uranium and other dual-purpose materials. It is wholly owned by the energy and mineral resources ministry.

« Top

FOREIGN COOPERATION

Turkmenistan, Kazakstan sign long-term agreement 

Turkmen President, Gurnbanguly Berdimuhammedov, and his Kazak counterpart signed a package of bilateral agreements on May 28th-29th in Astana, which aim to deepen Turkmen-Kazak interaction. Foreign Minister, Rashid Meredov, reported it at the Cabinet of Ministers meeting, Turkmenistan.ru reported. 
It was predicted that a long-term treaty on cooperation in the trade and economic sphere till 2020 as well as a number of intergovernmental and interdepartmental documents would be signed in Astana. Agreements reached during the summit in Turkmenbashi regarding, first of all, laying of the East-Caspian gas pipeline and new North-South transport corridor will be furthered.

« Top

TELECOMMUNICATIONS

KazakTelecom increases IFRS net to 9.29 billion tenge 

KazakTelecom boosted net profit to International Financial Reporting Standards (IFRS) to 9.29 billion tenge in the first quarter of 2007, up 12 percent from 8.289 billion tenge in the same period of last year, Kazakstan's national telecoms provider said in a financial statement.
Sales revenue grew to 28.503 billion tenge in 2006, from 26.378 billion tenge in 2005. Assets grew to 242.152 billion tenge from 231.882 billion tenge during the quarter. Liabilities fell to 88.877 billion tenge from 95.019 billion tenge. Equity increased to 153.276 billion tenge from 136.862 billion tenge.
KazakTelecom is the leading telecommunications operator in Kazakstan. Samruk Holdings owns a 52 percent state stake in the company.

« Top

 

 

« Back

 


 
Published by 
Newnations (a not-for-profit company)
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com