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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: 316 - (26/04/07)

The mighty Kazaks
The West is beholden to Kazakstan for oil and commodities galore; but Kazakstan is beholden to the West for investment and technology and the chance to escape from the shadow of Russia. This does give the West leverage over Kazakstan in a way that it is clear it has little, if any, over Uzbekistan.

But of course its energy and mineral muscle give Kazakstan colossal clout too on the world stage.

Kazakstan is expanding its foreign policy outlook, as energy profits transform the Central Asian state into an increasingly important creditor nation. Astana's aims are twofold: to secure energy transit and economic interests, and to boost Kazakstan's influence over regional geopolitical developments. 

Since gaining independence, Kazakstan has relied on a so-called multi-vector approach that seeks to develop strong ties with Russia, China, the United States, the European Union and Turkey. "The [official foreign policy] position of Kazakstan is to be a bridge, but from a historical and geographical point of view we are a corridor," said Didar Kassymova, a foreign policy lecturer at the Kazakstan Institute of Management, Economics and Strategic Research. 

Of late, Kazakstani officials have been tweaking the multi-vector approach, according to Anuar Ayazbekov, a research fellow at the Institute for Economic Strategies-Central Asia. "If the original connotation for the multi-vector policy was the maintenance of links with all great powers interested in Kazakstan, today a multi-vector foreign policy includes policies toward not only great or regional powers, but also towards smaller countries, such as Slovakia or Qatar," he said. 

Informality rather than formality is the rule
Kazakstan is also exploring closer relations with its neighbours. In an April 9 television interview, President Nursultan Nazarbayev repeated his call for a Central Asian union. Analysts are doubtful, however, whether current conditions are conducive to the formation of a regional economic bloc. "The problem is that Central Asian states are not ready for integration and not ready for cooperation, for many reasons. One reason is the way the [Central Asian] presidents personally relate to this," said Dosym Satpayev, the director of the Political Risks Assessment Group, an Almaty-based think tank. At present, Satpayev pointed out, Uzbekistan is shunning close relations with its neighbours, and Turkmenistan retains an "isolationist position," even after the death of that country's former leader, Saparmurat Niyazov. 

Nazarbayev indicated during his April 9 interview that Kazakstan's policy choices are being based on cold calculations. "We are only pursuing the interests of Kazakstan here. Here there is pure pragmatism in the interests of our people and country," he said. The country will not make decisions based solely on political considerations, he added. "Russia says: 'why are we going into Baku-Ceyhan?' The Americans say: 'why are we building a pipeline to China?' I shall explain: we are doing that not for political predilections, but because there is commercial benefit," Nazarbayev said. 

"If it is beneficial for us to transport all Kazakstan's oil and gas through Russia, we will go that way," the Kazakstani president continued. "If transportation via Baku-Ceyhan is 15 dollars cheaper, we will go that way. And if neither is beneficial, we will go to China." 

Kazakstan has already committed to the US-backed Baku-Tbilisi-Ceyhan oil pipeline and the Atasu-Alashankou route to China. Kazakstan is also eyeing a stake in the Russia-backed Burgas-Alexandroupolis route, and has expressed interest in the Odessa-Brody pipeline -- but only on condition that Russia is involved. Of late, Astana has additionally revived interest in building trans-Caspian oil and gas pipelines. 

From inward to outward foreign investment
For [other states'] geopolitical prospects, Kazakstan is just something in the middle," Kassymova, a foreign policy expert, said in an interview with EurasiaNet. "We have no other choice but to play these pipelines." 

Along with energy exports, foreign investment opportunities are starting to guide policy decisions, said Satpayev, the think tank director. "President Nazarbayev is now actively lobbying Kazakstan firstly as an economically-booming state, and secondly as a state that has money, and, consequently, [a state that can] invest that money in countries which don't have that money."

Kazakstan's investment of US$152 million in Georgia last year significantly boosted the importance of the Caucasian state for Kazakstan. 

Relations with Russia still vital
A few commentators have questioned why Kazakstan -- a key Russian ally in Eurasia -- is pursuing contacts with states that do not enjoy warm relations with Russia. After Nazarbayev met in March with Russia's president, Vladimir Putin, some reports in Russian and Kazakstani media hinted at a chill in bilateral relations. 

Many analysts in Kazakstan, however, believe that Kazakstani-Russian ties are still strong. "Bilateral relations between Kazakstan and Russia remain very cooperative and friendly," Ayazbekov, the research fellow, told EurasiaNet. "Kazakstan's interest in Georgia and Azerbaijan should be viewed through the prism of economics. … It is a false assumption that Kazakstan deliberately talks to countries that have an anti-Russian position." 

Nurlan Yezimbetov, a political scientist at the Alternativa think-tank, agrees: "I would not attach significance [to such reports]. ... I don't think Kazakstan would do anything [unnecessary] to spoil relations with Russia." 

But Satpayev is more circumspect: "We are competitors in the oil and gas sector." At the same time, he argues, Russia has a strong interest in maintaining good relations with Kazakstan. "For Putin, for the Russian Foreign Ministry, Kazakstan is an important partner. They [Russian officials] understand that in the former Soviet Union, Russia has few friends - very few friends. … Putin understands that Russia needs Kazakstan's support in Central Asia." 

Western pressure on media freedom helps
Kazakstan's media climate has come into the spotlight, as the Central Asian nation hosted the sixth annual Eurasian Media Forum. With Kazakstan pressing its bid to chair the Organization for Security and Cooperation in Europe in 2009, some regional experts believe that President Nursultan Nazarbayev's administration is willing to gradually expand the country's information space. 

The day before the April 19 opening of the three-day forum -- which attracted about 500 participants for discussions on media-related and geopolitical issues -- a new, more liberal draft media law was introduced in Kazakstan's parliament. The draft was prepared with input from local non-governmental organizations. Earlier versions of the legislation had twice been withdrawn from parliamentary debate. This time, local media observers are hopeful that the bill will gain parliamentary approval. "I think we are now on the threshold of fundamental new steps," Tamara Kaleyeva, the head of the Adil Soz (Free Speech) NGO, said during an interview with EurasiaNet. 

Nazarbayev's strong desire to secure the OSCE chair seems to be driving the media legislation process. Restrictions on freedom of speech were cited by OSCE officials when they opted to postpone a final decision on Kazakstan's bid until later this year The clear expectation of the OSCE leadership in Vienna is that Kazakstan will take action during this period to burnish its civil rights image. "It is a question of real, practical steps that are required for OSCE members to confirm Kazakstan's chairmanship," Kaleyeva said. 

The draft media law under consideration would ease restrictions on freedom of information and media registration, decriminalize libel and tighten up regulations on media monopolization. However, it would retain provisions that protect the president from insult. Earlier this year, the OSCE called for such laws to be abolished. Kaleyeva characterized the legislation as "not ideal, but realistic," adding that the retention of the defamation provisions protecting the president and other top officials was "a concession" made on the part of NGO activists. 

In another sign of liberalization, officials decided to withdraw draft legislation that would have expanded government oversight of the publishing industry, Information Minister Yermukhamet Yertysbayev revealed during an April 17 interview broadcast on Khabar TV. 

Despite these moves, journalism remains a hazardous profession in Kazakstan, a fact underscored by the ongoing search for a journalist who has been missing since late March. On April 18, Kazakstan's Union of Journalists called on police to step up the search for Oralgaisha Omarshanova, an investigative reporter for the Astana-based Zakon i Pravosudiye newspaper. Prior to her disappearance, Omarshanova wrote an article that suggested local officials and entrepreneurs might have had a role in provoking a clash involving ethnic Kazaks and ethnic Chechens. 

According to a report prepared by Adil Soz, 13 attacks on editorial offices and journalists were reported in 2006, down from 21 in 2005. Kaleyeva suggested that about half of the recorded incidents were most likely related to petty crime. But the report asserted that an increasing number of attacks in 2006 were linked to the professional activities of the victims. This year has seen additional instances of apparent retribution. In early April, for example, the offices of Lada, a newspaper in the western Kazakstani city of Aktau, were gutted by an arson attack. Staffers at the paper linked the incident to the newspaper's local news coverage. 

Media observers also say Kazakstani officials sometimes manipulate the judicial system in order to intimidate independent-minded reporters, and punish those who probe too deeply into government conduct. 

The Adil Soz report said 21 journalists were taken to court in 2006, up from 15 in 2005. Journalists sued by officials have traditionally stood little chance of winning their respective cases, Kaleyeva said. In addition, 120 journalists faced civil cases in 2006, in which a total of US$56 million in damages was sought, although only a small fraction of that amount was awarded. 

New legislation is a start, but if Kazakstani leaders want to promote a more open media environment, they also should encourage greater transparency in ownership, some analysts say. 

Kazakstan's media market is "still severely monopolized, and the actual owners of mass media [outlets] are normally unknown," the Adil Soz watchdog report stated. 

Individuals with close administration ties -- including Dariga Nazarbayeva, the president's daughter, and her husband, Rakhat Aliyev -- are known to be among Kazakstan's most influential media barons. However, in many cases, the ownership structures of media outlets are not open to public scrutiny. In addition, owners tend to utilize their properties to promote their own interests, rather than serve the public interest, Kaleyeva indicated. "In Kazakstan we have few really independent publications," she said. "They [media outlets] all have their owners, whose interests can clash with each other." 

Gulnar Assanbayeva, a journalism lecturer at the Kazakstan Institute of Management, Economics and Strategic Research, agreed with that assessment. "Unfortunately the level of trust [in the media] is very low, and this is mainly explained by the fact that the papers and journalists articulate the interests of their owners," she told 

Asked about the prospects for improvement in Kazakstan's media environment, Assanbayeva sounded an optimistic note. "I see light at the end of the tunnel… Any state, if it is interested in democratic development, must assure the development of the press," she said. 

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AVIATION

Shareholders to pump millions into Almaty airport


Shareholders in OJSC Almaty International Airport will invest US$100 million in the first stage of an international terminal, work on which is due to begin on April 16th, the Almaty city administration said, Interfax News Agency reported on April 9th. 
France's ADPi designed the terminal. The first stage, with 32,000-square metres and eight telescopic gangways and capable of handling 1,500 passengers per hour or two million per year, is due for completion by the end of 2008. The second stage, with 55,000 square metres and 24 telescopic gangways, will be able to handle four million passengers per year and should be completed in 2014. The adjacent Airport City will include a Marriot hotel, conference facilities, business centre, exhibition centre and cinemas. The existing terminal will serve domestic flights only once the new terminal opens. Another 10-kilometre approach road to the airport should be built by the end of this year. Almaty is Kazakstan's biggest city with a population of 1.5 million. 

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ENERGY

KazTransOil increases transportation 9% in Q1

Kazak oil transport company KazTransOil transported 11.086 million tonnes of oil in January-March 2007, up 9.1 per cent year-on-year, Interfax News Agency reported on April 9th.
KazTransOil Deputy General Director for Transportation, Sabr Yesimbekov, said the company's transportation targets were exceeded by four per cent. He said that freight turnover in the first quarter amounted to 7.576 billion tonnes, up 8.4 per cent year-on-year and 13 per cent over target. "The increase in oil transportation volumes through the company's pipeline system is due to an increase in production and supplies into the KazTransOil trunk pipeline system by oil companies. Also, given the close interconnection between oil transport systems in Kazakstan and in the Commonwealth of Independent States, an increase in cooperation between KazTransOil and pipeline companies in Russia, Ukraine and Belarus to transport and transit oil played an important role in increasing transport volumes," Yesimbekov said.

Kazakstan to consider alternative energy options

Kazakstan is a country which is rich not only in the traditional energy resources -- coal, oil, and gas – but in other clean energy resources -- sun, wind and water -- that it would be a sin not to use such opportunities to get electricity and heat. This is the belief of the specialists from the Foggy Albion who flew in to Astana to discuss the opportunities for the development of renewable energy in Kazakstan, New Europe reported.
Concerned with the security of energy supplies on one hand and with the greenhouse effect on the other, the European Union states have adopted, last month in Brussels, a new energy strategy to dramatically change their approach to the production of electric power and cut CO2 emission by 20 per cent. The use of alternative energy resources is becoming a priority in the national policy of many EU states, including Great Britain.
Kazakstan is one of the first states in the Caspian region that the European envoys have hurried to visit to discuss the prospects for the development of alternative energy. There is no shortage of reasons for such a visit.
First, Kazakstan today is the world’s third largest emitter of airborne CO2 relative to GNP (according to the International Energy Agency, in 2004, Kazakstan’s CO2/GNP emissions were six kilograms per US$). The energy sector is responsible for 80 per cent of those emissions, out of which 45 per cent are from the heat and electric power producers.
Second, thanks to its rich hydrocarbons reserves, Kazakstan is going to be one of the world’s five largest suppliers of energy resources.
Third, the economy of Kazakstan has been developing rapidly, and soon it may face an energy deficit of 600 megawatts, which can be covered by renewables rather than by imports.
“The purpose of our visit is to help Kazakstan to balance the growing demand for energy for economic development while reducing its airborne emissions,” explained Angus Miller, Caspian Energy Adviser, United Kingdom Foreign and Commonwealth Office, told New Europe in an interview in Astana. According to him, Great Britain is prepared to provide to Kazakstan, through the EU, its renewable energy expertise and technology.
However, as it has been said above, Kazakstan has large reserves of traditional energy resources. According to the Ministry of Energy, Kazakstan has oil reserves for 40 years, gas reserves for 80-85 years, and coal reserves for 200 years.
Asked what are the prospects for renewables in Kazakstan, Miller said Kazakstan has large reserves of oil, gas and coal, but they are not unlimited. “Since the signing of the UN Climate Change Protocol in 1997, Great Britain has been working on renewable energy sources. There have been many opponents and supporters of this development. Kazakstan is lucky in a sense – the time of discussions is over. Now, 10 years after, we have come to a clear conclusion: renewables play an important role for the entire mankind,” Miller said.
“Concerning the prospects for alternative sources of energy in Kazakstan, your country is a blessed land where in addition to the rich hydrocarbons resources 60 percent of the territory has the potential to use the energy of sun, wind, and water. And the more you use alternative energy, the more oil and gas you can save for export,” he added.
However, with all the above advantages of renewables, there are serious barriers for them in Kazakstan, high cost of production being the main one of them. For example, the wholesale price for traditional electric power today is three tenge/kWh, wind energy – eight to 10 tenge/kWh, solar energy 22 tenge/kWh, and biomass energy – six to 12 tenge/kWh. It makes renewables unattractive for the energy companies. 
"To remove financial and commercial hurdles, legislative support is needed," Miller said. “Also, in the disputes about prices, you should not forget that the alternative sources are important for the environment and therefore for the health of the people in your country and future generations. The world in the time of globalization has become small, and what happens in one part of the world affects the other. So it is our common problem."
All these proposals of the EU ind support from the Kazak lawmakers and government officials. For example, Member of Parliament Ravil Cherdabaev said during a “round table” with the UK specialists in the Majilis (lower chamber) of the Parliament: “To develop renewables in Kazakstan, it is necessary to adopt a government programme, otherwise many projects in this area will remain at the level of discussions. Alternative sources of energy should become a part of the national energy policy."
Today, however, according to the ministry of energy, 80 per cent of electric power is produced by coal stations, a little less than 20 per cent – by gas stations, and only 1.7 per cent – by hydro stations. Kazakstan is just taking the first steps in the development of renewables. The ministry of energy is in a process of active discussion of a wind power station project near Dzungarian Gates. Also, several hydro power stations have been included in the government’s priority projects. “But this is not enough!” – the home and foreign specialists agree. 
During the “roundtable,” Vice Minister of Energy and Mineral Resources Almasadam Satkaliev advised that the ministry had already initiated consideration of a special bill to support alternative energies. “In the bill, we have provided for all possible incentives, including tariff and tax benefits, grants and subsidies, to attract investors to this sector,” he said. 
In response to the question on how long it would take to pass such legislation, the minister said that it would depend on specific actions of the ministry and on future government support. “We already have a wind energy program that was adopted in 1999. It is designed until 2030. But if our bill is passed, it will provide impetus to the development of renewables," he added.

Kazakstan, Azerbaijan mull Odessa-Brody-Gdansk

Kazakstan would like to see the Odessa-Brody pipeline to be extended to Poland's Gdansk and wants Russia to be involved in talks on the project, President Nursultan Nazarbayev said. "By 2012-2014 Kazakstan will evolve into a major exporter of oil to international markets. But the projected twofold increase in oil extraction by 2012-2015 is making us seek new ways (of transporting it). An Odessa-Brody-Gdansk project would be a good alternative for us," Interfax News Agency quoted Nazarbayev as telling a joint news conference in Astana on March 29th after talks with Polish President, Lech Kaczynski. "I would like to make special mention of our interest in this (project.) And Russian organisations must be necessarily asked to participate," he said, Interfax News Agency reported.
"It's not a political, but an economic issue, because excess oil would be transported from Kazakstan through Russia," he said. "There is no railway running through the Caucasus. It must be built. A terminal must be built in Supsa and in Batumi. So, how could we transport (Kazak oil)? By increasing the handling capacity of the CPC north-Caspian pipeline," the Kazak president said.
"Therefore, we must take this issue seriously. If we do, by 2011-2012 we'll definitely put first oil through this oil pipeline (Odessa-Brody-Gdansk)," Nazarbayev said.
Nazarbayev said that "Kazak companies would like to buy oil refineries in Poland and to build a pipeline jointly, and to make investments and to have equity."
Meanwhile, Azeri Industry and Energy Minister Natik Aliyev said at a press conference on March 28th in Baku transportation of oil by Azeri state oil company SOCAR through the Odessa-Brody pipeline may become attractive if the company acquires a refinery in Ukraine.
"The question of Azerbaijan joining the Odessa-Brody is constantly brought up. However, we already have three oil pipelines to export our oil to the world markets: Baku-Novorossiisk, Baku-Supsa and the main export route - Baku-Tbilisi-Ceyhan. If we were to become the owner of some refinery in Ukraine, along with setting up our own chain of filling stations, then it will be profitable for SOCAR to transport its oil to Ukraine, with subsequent refining and sale of oil products," Aliyev said.
The minister said that at this stage Ukraine, if it wishes, might acquire on general terms, oil that Azerbaijan exports through Black Sea ports in Georgia and Russia, and transport it though the Odessa-Brody.
In another development regarding Odessa-Brody-Gdansk, Ukrainian Prime Minister
Viktor Yanukovich said Ukraine is examining the possibility of shipping oil through the Odessa-Brody pipeline to the town of Kralupy nad Vltavou in the Czech Republic.
"We are talking about launching it (the Odessa-Brody oil pipeline) as originally planned. We intend to make the first step in the direction of the Czech Republic to Kralupy," Yanukovich said at a joint press conference with European Commission Chairman Jose Manuel Barroso in Brussels on March 27th. "Today the issue is being coordinated with the owner of the section, Russia," he said.
In addition, Yanukovich confirmed Ukraine's interest in completing construction of the Odessa-Brody oil pipeline to Plock and Gdansk.
"Construction to Plock and Gdansk is the second stage in the pipeline's construction and it remains in our plans," he said.
According to Yanukovich, one of the first steps in the construction of the Odessa-Brody oil pipeline is the beginning of joint work on the Odessa-Brody-Kralupy project. "The solution of this issue will provide optimism to all participants in the projects, and this will be a real step toward putting the project into action," he said.
The Caspian nations partners in the project "are interested in this," he said. "We agreed with the Polish prime minister to jointly work in this direction," he said.
According to earlier reports, the prime ministers of Ukraine and Poland, Yanukovich and Jaroslaw Kaczynski, agreed on the project to ship oil through the Odessa-Brody oil pipeline to Kralupy, Czech Republic, in November 2006.

PetroKazakstan Kumkoil Resources production up

PetroKazakstan Kumkol Resources (PKKR, PetroKazakstan's extracting subsidiary) plans to produce 3.76 million tonnes of oil in 2007 compared with 3.714 million tonnes in 2006, PKKR Vice President Wei Yuxiang said at a news conference in Kyzylorda on March 28th, New Europe reproted.
The same amount of oil is likely to be extracted in 2007, Wei said, speaking about PetroKazakstan's overall production volume, including its share in Kazgermunai and Turgai Petroleum.
PetroKazakstan's overall production volume, including its 50 per cent shares in Kazgermunai and Turgai Petroleum was 6.834 million tonnes in 2006, up 24 per cent from 2005.
PetroKazakstan is an integrated energy company which prospects, extracts and exports oil in Kazakstan, and refines oil and sells petroleum products. Its main assets are the Shymkent oil refinery and the Kumkol group of oil fields.
Two-thirds of PetroKazakstan's shares are held by China National Petroleum Corporation's subsidiary CNPC International Ltd., and 33 per cent by Kazakstan's national company KazMunaiGaz. By agreement between the parties, these two companies run the Shymkent oil refinery on a parity basis.

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FOREIGN COOPERATION

Turkey, Kazakstan pledge to boost cooperation 

Kazak Minister of Foreign Affairs, Marat Tazhin, recently visited Turkey to strengthen cooperation with Turkey in various fields. Tazhin met with Turkish president, Ahmet Necdet Sezer, and Prime Minister, Recep Erdogan. During the meetings, both sides pledged to further boost their bilateral trade ties and tap economic, energy, investment and cultural cooperation, TurkishPress.com reported.
Turkish Foreign Minister Abdullah Gul hailed Turkey’s ties with the central Asian country, saying, “We attach great importance to our relations with Kazakstan.” On economic and commercial ties, Gul said, “Our trade volume exceeded USD 1.5 billion recently. Turkish businessmen and contractors have undertaken a series of important projects in Kazakstan. On the other hand, Kazak businessmen has begun investing in Turkey in the sectors of banking and tourism.” 
He stressed that they were planning to complete the Baku- Tbilisi-Erzurum natural gas pipeline this year. The pipeline links Azerbaijan’s Shah Deniz gas fields with eastern Turkey, allowing for further exports to Europe. “We also cooperate with Kazakstan in the fight against terrorism. We will continue supporting Kazakstan in international platforms. We support Kazakstan’s candidacy to the rotating presidency of Organisation of the Security and Cooperation in Europe (OSCE),” Gul added. For his part, Tazhin said Kazakstan considers Turkey as one of its most important partners in the Middle East and Asia.

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FOREIGN RELATIONS

Kazakstan sees Russia as strategic partner

Kazak President, Nursultan Nazarbayev, said that command of the Russian language is a valuable asset, since Russia remains Kazakstan's strategic partner. "We reject politicking and empty rhetoric. We can clearly see that Russia will remain our strategic partner for many years ahead," Interfax News Agency quoted Nazarbayev as telling members of the scientific community at his residence in Astana on March 27th.
"We have one language after all. Some intellectuals object to the Russian language being used so broadly. I think it is an enormous asset that Kazaks speak Russian so brilliantly - even better than Russians do," he said. "We are partners bound by history. I hope Russia sees Kazakstan in the same way," Nazarbayev said.

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RETAIL

IKEA planning to open mega shopping centre

Swedish furniture and home furnishings giant IKEA is planning to open a MEGA shopping centre in Kazakstan, Herman Gewert, the operations manager for IKEA Moscow and manager of the MEGA shopping centres, said at a conference on Russian retail trade organized by the Adam Smith Institute, Interfax News Agency reported.
The company is currently studying two potential construction sites in Kazakstan, he said. The first MEGA store is likely to open in Kazakstan in two-three years, Interfax quoted him as saying.
IKEA is planning to open some six MEGA shopping centres in Ukraine, as well, he said. The cost of building one shopping centre in the Russian regions is about US$100-150 million, he said.
IKEA will have invested US$ two billion in the Russian economy in the near future. The company plans to open 30 MEGA shopping centres in
Russia by 2011, he said. IKEA is not just interested in Russian cities with a population over one million, he said. IKEA currently has about 200 stores in 23 countries. The company had turnover of 14.8 billion Euro in the 2005 financial year.

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