At the same time President Nazarbayev claims a place within the top-50 leading nations of the world table in ten years time (RIA Novosti), well-known Kazakh economist Bulat Khussainov has written a new book about Kazakhstan in an ever more globalised world economy, reports Kazinform. One of his policy recommendations:

In particular, he recommends elevating the home export structure in favor of value added goods.

Much has been said about Kazakhstan’s problems with relying too heavily on the export of hydrocarbon resources, with all related problems usually lumped together under the term ‘Dutch Disease’. In essence, the problem with a country deriving a large portion of its GDP from oil and gas revenues is that its appreciated currency makes other sectors in the economy less competitive.

Nazarbayev has announced some of his key priorities for further economic reform:

He also called tax reform a key priority, noting that increased tax collection and simpler tax laws would give a much-needed boost to business and international trade.

Other steps to be taken include the implementation of a flexible monetary policy to cushion the economy against inflation and the raising of the fuel sector’s efficiency, Nazarbayev said.

“Every deposit should be viewed as a potential base for the development of private enterprise. Along with producing oil and natural gas, we must [work] to transform the country into an oil services cluster, using Norway as an example,” he said.

So, the Kazakh government tries to diversify its economy by actively encouraging investment in other domains, preferably those with a high value-added component. It has therefore promoted the establishment of high-technology parks around the country, realising that it is crucially important for growth within the small- and medium-sized enterprises sector.

The sectors beyond the extractive industries need to account for larger a chunk of total GDP in order to reach sustainable levels of growth not only in output, but also in employment. The oil and gas sector may account for about 16-17% of GDP, but only for 1% of employment (check this BISNIS video for more information on that). Besides the social implications of such an uneven distribution of ‘oil-benefits’, it is also not helpful in creating an affluent middle class beyond of what we can see now on the streets of Almaty and Astana.

The World Bank has a great overview of this debate here. As I am writing a thesis on the wider field this year, I probably won’t be able to refrain from posting on this debate once in a while.

Kazakh opposition leader Ghalymzhan Zhaqiyanov was released from prison 14 January after serving a little under half of his seven year sentence. His release is expected to give a boost to the opposition, and he pledged to continue advocating reform after his release.

It seems that mixed signals are coming from Kazakhstan; several days ago it was reported that the opposition was continuing to be persecuted after the election. The release of Zhaqiyanov is obviously a step in the right direction. Time will tell if opposition leader Bulat Abilov will be persecuted further, and/or incarcerated.

There is a fine line between steady reform, and sitting on the fence in an effort to placate all sides while retaining as much power as possible. The latter would be more of the same. It is not entirely clear which avenue Nazarbayev will pursue now that his rule is more or less assured in the near future.

Nod to Nathan for the tip.

While few disagree that the Kazakh election was seriously flawed, editorials and opinion pieces have, for the most part, been fairly positive and optimistic, as have governments around the world. The elections had serious irregularities, but were an improvement over past elections, and are the best that Central Asia has yet seen.

Some go on to argue that the irregularities are not a result of any direction on the part of the central government. Instead, overzealous regional officials, all competing to please their beloved president, have an incentive to skew results even though Nazarbayev was doing what he could to ensure a more fair election.

As observers, it is difficult to know for sure what Nazarbayev had in mind for the election, and to what extent he tried to ensure their fairness (or, alternatively, encouraged fraud through his silence). With an international consensus (more or less – for extensive debate over how fair the elections were, look here and here) that the elections left much room for improvement, Nazarbayev’s actions after the fact are probably more indicative of the role he played (or didn’t play) in ensuring their fairness. If Nazarbayev truly did intend a fairer poll than the one that took place, in the coming months we should see a strong push for the rule of law, and elimination of corruption.

Initial indicators, however, are not looking good. IWPR reports:

Although Nursultan Nazarbaev’s landslide victory in the December presidential election appeared to make his position more unassailable than ever, pressure on the opposition has been stepped up since then.

As Nazarbaev was inaugurated on January 11, he embarked on a seven-year term in office with no strong political rivals even on the horizon. So his administration might have been expected to show a little magnanimity towards an opposition that had effectively been marginalised for the foreseeable future.

But instead, in the weeks following the December 4 election the authorities have shown even greater determination than usual to slap down their opponents – and keep them down. Signs of the pressure include the failure to release one opposition figure Galymzhan Zhakiyanov, and attempts to prosecute another, Bulat Abilov.

More information is necessary for a fair judgment to be made (after all, he was only just inaugurated), but if Nazarbayev really desired a fair election, and is serious about reform, he had better push early, and push hard.

Transitions Online has a very interesting interview with a Kazakh journalist about media freedom in the country. The journalist’s comments are mixed- both optimistic and sobering:

The Good

[The Kazakh media] will publish any political view, but like any media, it obeys the laws and cannot be completely reactionary or revolutionary. Regardless, well-grounded criticism is always published. The government initially tried to block it, but that problem was solved because everyone sprung to the defense of the website. Now it is freely accessible and updated quite often.

Unlike my colleague from Uzbekistan, we can receive information from a number of sources, both official and completely unofficial. So you can say that media is a business nowadays in Kazakhstan. The development of the media is no longer as unlimited as it was in the first years.

From the financial side, our newspapers are more or less profitable. They are certainly not all alike. There are newspapers that take a neutral stance toward the government, there are those that are in strong opposition, and there are those that quite openly voice the official opinion. There are some less reputable tabloids where you can read anything at all.

Very recently there was a law passed regarding the national security of the Republic of Kazakhstan. Currently newspapers can only be closed if it’s a court decision, but a certain provision of that law allowed a publication to be closed by state prosecutors. Immediately, it caused a very strong reaction in the media environment. Under that law, it would be possible not only to just close opposition newspapers but also newspapers that simply write something negative about the local government. So under public pressure, this provision was dropped.

The Bad

Though the situation nowadays is not of media monopoly, publications are coming together as syndicates and conglomerates. Something to note is that the largest media syndicate is owned by Dariga Nazarbayeva, the president’s daughter.

… opposition media in Kazakhstan face the possibility of being closed at any moment. They’re not profitable publications. You don’t buy them at any newspaper stand; in Almaty and Astana there are special places where you can buy those newspapers. They have their websites on the Internet, but it’s harder to access this media.

The newspapers never close in the way that they just come and close it. They are usually sued, and then face bankruptcy, after which they have no choice but to shut down. There was a newspaper called Soldat that published an article about one of the ministers so the minister sued them. The court ruled that they should pay the minister a million and a half dollars, which is a formidable amount, so they closed.

There is lots of other interesting information in the article, and the whole thing is worth a read.

The Kazakh journalist seems to be rather optimistic about the future of Kazakhstan’s media, all things considered. At a recent panel at the Heritage Foundation, US officials voiced concerns that the media in Kazakhstan is uniformly pro-government. Kazakh officials seemed to acknowledge this as true at the event, saying that many newspapers are completely independent, yet publish pro-government opinions by choice.

While the Kazakh interviewee references that this is true, she also paints a more subtle picture of media outlets voicing criticisms of specific policies, but still positive toward the government. She notes that the truth is probably somewhere between the extreme views that dominate the headlines, and the predominance of more measured, moderate articles in the future will be indicative of Kazakhstan’s maturity and development.

Check out KZ Blog for an account of the presidential inauguration proceedings as he observed on TV in Kazakhstan.

For those interested, here is some background info on the on-going festival from various sources. IslamOnline says:

The word `Eid comes from the word `awd meaning “return.” `Eid means a specific kind of return: days in which the previous state of prosperity of a community returns after the miseries it was facing, which are known as the days of `Eid.

Eid ul-Adha is second in the series of Eid festivals that Muslims celebrate. It is also referred to as the “Big Bayram” (from Turkish) or “Big Feast”. Eid ul-Adha is celebrated by Muslims all over the world as a tribute to those who are completing their pilgrimage in Mecca on that day.

On this day Muslims sacrifice animals which have been deemed Halaal, or fit for sacrifice. They not only eat the meat themselves but distribute it amongst their neighbours, relatives and the poor and hungry.

It is celebrated on the 10th day of the month of Dhul Hijja of the lunar Islamic calendar, after Hajj, the annual pilgrimage to Mecca in Saudi Arabia. This happens to be 70 days after the end of the month of Ramadan.

While Eid ul-Fitr is considered to be one day, Eid ul-Adha is supposed to be four days, with the prayer being on the first day. Likewise, Eid ul-Fitr has the prayer on the first and only day.

During this day, men, women, and children are expected to dress in their finest clothing. The charitable instincts of the Muslim community are demonstrated during Eid ul-Adha by the concerted effort to see that no impoverished Muslim is left without sacrificial food during this day. Coming immediately after the Day of Arafat (when Prophet Muhammad pronounced the final seal on the religion of Islam), Eid ul-Adha gives concrete realisation to what the Muslim community ethic means in practice.

Eid ul-Adha is known as Hari Raya Haji in Singapore and Malaysia, and Tabaski in West Africa.

Source: Free Dictionary

Read the full story »

What sounded like wild speculation yesterday turns out to be true: His Highness Sayyid Haitham bin Tariq Al Said, Oman’s minister of heritage and culture, did talk to the Kazakh government about oil, at least that’s what I suspect:

Well, the report on Times of Oman yesterday did omit the fact that accompanying the minister of heritage and culture was the Sultanate’s minister of oil and gas, Dr Mohammed bin Hamad Al Romhi.

Wouldn’t it have been a little bit suspicious only to send a minister of culture to the inauguration of oil-dorado’s President?

Also, on a more serious note, watch a short video on Nazarbayev’s inauguration here. As usual, the problem with Euronews is that the commentary on the English version of the video is entirely different from the German one.

As reported widely on this blog, incumbent Nursultan Nazarbayev won Kazakhstan’s presidential elections in a landslide last December. Now it is time for a proper ceremony to mark the start of another seven-year term in office. And many illustrous figures will follow Astana’s invitation and attend tomorrow’s celebrations.

And mind you, but Nazarbayev will probably be fed up to the back teeth about oil by the end of them.

Russian President Putin arrived today and will talk to Nazarbayev about energy mainly. Putin will also take some time to have a tête-à-tête with Ukrainian President Viktor Yushchenko, the first time both meet after their countries’ gas conflict.

Meanwhile, China sends along Vice-President Zeng Qinghong, whose delegation might as well sign a deal on a new pipeline if they’re already around.

Afghan President Karzai will also discuss petroleum-related projects with the Kazakh government, as will Georgian President Saakashvili. Poland also wants to talk about oil and gas, and Latvia as well.

It is in this light that my assumption might not be far-fetched that His Highness Sayyid Haitham bin Tariq Al Said, minister of heritage and culture from the Sultanate of Oman will mainly talk about oil when he’ll meet his Kazakh counterpart.

neweurasia recommends to shorten the presidential term to, say, 3 years so that fruitful events like tomorrow’s inauguration can take place more frequently. The hydrocarbon sector will be delighted, and 3.6 million barrels a day is also quite an ambitious target.

Meanwhile, government megaphone kazinform has more details on tomorrow, highlights President Nazarbayev’s achievements, and ends on a heart-warming note.

The high-ranking guests arriving to participate in the solemn ceremony note warmth and hospitality of the host country. People of Kazakhstan are known for their hospitableness and peaceableness (…)

The procedure of honoring of the re-elected leader is not divulged. The numerous delegations are accommodated at the exclusive hotels of the capital in expectation of the significant event. The guests do not doubt the ceremony will be conducted on a noble scale.

Let the following years of Nursultan Nazarbayev’s administration be the period of prosperity!

Finally, prosperity!

In response to this IHT editorial mentioned on this blog before, here some of my thoughts:

There some kind of feeling of grandeur in the city of Almaty.

Yes. A sense of grandeur or… a complex?

“Almaty” badly digested the impoverishment right after the Soviet crash and now that things take off again it tries to compensates that with a fixation on having the biggest, the flashiest, the most expensive etc. etc. I just spent 1.5 months in Kazakhstan and it really stroke me: “see we have this just like in Europe and that just like in the US…” It’s a bit like the attitude of a provincial who became rich but is frustrated because he is not taken seriously by the urban high society.

Life in this part of Kazakhstan provides the illusion of prosperity.”

Actually, you don’t have to go walk that far from the Gucci and Lancôme boutiques in Almaty to find that “other Almaty” – one that few expats and correspondents know. One that technically starts south of Gogol köshesi and the Zeliyonii Bazar and then spreads to the southern suburbs.

It is there that you’ll find the masses of impoverished rural migrants who try to eke out a living a petty traders, day labourers etc. A group whose life changed little compared to 1997 when I first came to Kazkahstan.

The real faultline in this country is no longer between Kazakhs and Russians but between those who benefited form the Nazarbayev reign (that group include a number of ethnic Russians) and those who have not (or did but see further amibitions blocked).

Although a topic tremendously prone to speculation, I thought the following piece of news is interesting nevertheless. Kazakhstan’s oil and gas reserves are again the subject of glorious news.

According to deputy director of the Department for the Petroleum Industry of Kazakhstan’s Power and Mineral Resources Ministry Amantay Suyesinov, proven reserves are now estimated at 30 billion barrels.

The US government energy watchdog, the EIA (usually not a very pessimistic organisation), stated in 2005 that proven and probable oil reserves combined would account for a maximum of only 29 billion barrels.

So, what happened here? The good mood because of recent oil findings may have spilt over to oil estimates: Now, the Kazakh authorities believe that there could be as much as a whopping 124.3 billion barrels of oil onshore and offshore the Caspian Sea. That would put Kazakhstan among the five oil-richest countries in the world.

Despite all this speculation, another point mentioned by Mr Suyesinov is a little more tangible, and no less spectacular: According to the official, the envisaged daily output in 2015 is set to the target of 3.6 million barrels a day.

How much is a barrel of oil worth at current prices? $63.33 on US markets as of now. The Kazakh government, under very favourable terms for the oil extractor, gets little more than 60% of each barrel sold. According to my calculator, that would add up to 140 million dollars a day (using current prices), or around 51 billion dollars a year.

Comparing this amount of money to news like this (bottom of the post), it makes one wonder about the fairness of natural resource endowment.