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ALLIANCE OF ANALYTICAL ORGANIZATIONS KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009
ALLIANCE OF ANALYTICAL ORGANIZATIONS KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009

ALLIANCE OF ANALYTICAL ORGANIZATIONS

KAZAKHSTAN:

ANNUAL REPORT ON THE DEVELOPMENT

OF SOCIETY AND STATE

2009

ALMATY

2010

UDC 32

BBK 66.0

К 14

К 14

KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009 / ALLIANCE OF ANALYTICAL ORGANIZATIONS, FRIEDRICH EBERT FOUNDATION. – ALMATY, 2010. – 176 p.

ISBN 978-601-278-116-8

The annual analytical report ‘Kazakhstan: Annual Report on the Development of Society and State 2009’ is the result of collective efforts of representatives of Kazakhstan’s analytical community. The authors of this annual report were driven by the necessity to create a new platform for information, primarily for government agencies in need of adequate and relevant information with regard to the political and socio-economic development of Kazakhstan. At the same time they aimed to set a new standard of scientific research that includes scientists from varying differ- ent areas of research. The paper at hand has established a basis for further joint interdisciplinary research. Key sections of our report address most significant events, tendencies and trends in the de- velopment of the political elite, party system, interethnic relations, foreign policy, economic and nancial spheres of the republic and the well-being of Kazakhstani society.

Coordination: Dosym Satpayev, Tolganay Umbetaliyeva Translation: N. Bisenov Proofreading: K. Buck, B. Hrdy

The Friedrich Ebert Foundation (“FES”) is not responsible for opinions and evaluations expressed in this edition.

ISBN 978-601-278-116-8

UDC 32

BBK 66.0

© Alliance of Analytical Organizations Friedrich Ebert Foundation, 2010

CONTENTS

INTRODUCTION

 

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THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

 

1.1. The political elite of Kazakhstan: A fight of “bulldogs under the carpet” General features of the modern political elite of Kazakhstan·

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Specifics of intra-elite relations in 2009·

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Conflicts between power-wielders·

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So-called “third force” factors·

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Conclusions and recommendations

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1.2. Kazakhstan’s party system: set-up of main forces Evaluation of positioning and achievements of the leading ‘People’s Democratic Party Nur Otan’·

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Background party players·

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Opposition parties·

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Conclusions and recommendations

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1.3. Kazakhstan’s interethnic situation: dynamics and trends· Negative aspects within Kazakhstan’s interethnic and ethno-political spheres·

situation·

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Prospects for the development of Kazakhstan’s ethno-political and interethnic

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Conclusions and recommendations

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KAZAKHSTANI CITIZENS' PERCEPTION OF THE COUNTRY'S SOCIO-POLITICAL

 

AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

2.1. The economic crisis and Kazakhstan’s socioeconomic situation in its citizens’ views

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2.2. Public opinion about the government’s management of the crisis

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2.3. Kazakhstani citizens’ view on Kazakhstan’s party system and political situation

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2.4. Conclusions and recommendations

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KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

 

3.1. The economic crisis in Kazakhstan in 2008/2009 and government anti-crisis measures

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3.2. Main indicators of Kazakhstan’s economic development in 2009

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3.3. Possible scenarios of economic development in 2010

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3.4. Conclusions and recommendations

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Appendices

 

Declaration of the Establishment of the Alliance of Analytical Organizations

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Regulations of the Alliance of Analytical Organizations

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INTRODUCTION

Conclusions drawn from the Second Congress of Political Analysts of Kazakhstan, held in Almaty on 23 September 2009, show that despite the presence of experienced and very qualified experts specializing in the spheres of political and economic analyses and despite the great num- ber of research organizations working in the field, the analytical market of Kazakhstan has been

developing unevenly. Observers, including potential consumers of analytical products, assess this ‘market’ quite critically.

In particular, one of the major problems is the research community’s total lack of any sig-

nificant influence on the political decision-making process and the formation of public opinion in the country. The reason for this being disunity among experts and analysts because of selective relations between them. In order to overcome negative trends and to consolidate the country’s “analytical community” on 20 October 2009 a number of leading analytical research organiza- tions founded the Alliance of Analytical Organizations (AAO). The main aim of this Alliance is to develop and express a common position with regard to questions concerning the socio-political and economic development of Kazakhstan and to form a respective political agenda. By these means, members of the Alliance seek to make the country’s research community a powerful mediator between the government and society and a think tank to address pressing issues of the country’s political and socioeconomic development.

A further step in this direction is the presentation of our analysis “Kazakhstan: Annual Re-

port on the Development of Society and the State” which is a result of the concerted work of representatives of the country’s analytical community. The authors of this annual report are con- vinced there is a necessity to open a new channel of information for government agencies above all. The latter need adequate and accurate information concerning Kazakhstan’s political and socioeconomic development. Our current project therefore aims to set new standards to liaise between different areas of study. We are convinced that our joint efforts for this project have laid the foundation for future interdisciplinary studies. Key chapters of the report at hand discuss the most important events, tendencies and trends in the development of the country’s political elite, its party system, interethnic relations, foreign policy, financial and economic spheres and the social wellbeing of society. We hope our report will be useful for university students and teachers alike, for research organizations, government agencies, non-governmental organizations, diplomats and anybody interested in Kazakhstan’s political and socioeconomic development.

Alliance of Analytical Organizations February 2010

CHAPTER 1 THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

CHAPTER 1

THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN:

MAIN TRENDS AND DEVELOPMENTS IN 2009

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 1.1. THE POLITICAL ELITE OF KAZAKHSTAN: A FIGHT

1.1. THE POLITICAL ELITE OF KAZAKHSTAN:

A FIGHT OF “BULLDOGS UNDER THE CARPET”

ABSTRACT

by Assessment Risks Group

Political stability in Kazakhstan, more than anything else, means stability of relations within the political elite. Key factors ensuring this stability are:

a) the alignment of forces between rival pressure groups within a system of checks and balances; b) the president’s ability to keep the situation under control, preventing one rival group from gathering strength to such an extent that it might make claims to expand its political and economic interests.

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claims to expand its political and economic interests. 6 G ENERAL FEATURES OF THE MODERN POLITICAL

GENERAL FEATURES OF THE MODERN POLITICAL ELITE OF KAZAKHSTAN

its inner close and closed proximity, and the outside wide gap between elite and population; its rigid hierarchy; its heterogeneity.

Furthermore, the main fight within the elite is not about the right to further ideals and ideas for state and social development, but about the right to extend influence on the head of state and other power groups. The only guarantor of stability within the political system is the country’s president. Not only has the global financial and economic crisis had a significant impact on the posi- tioning of forces within Kazakhstan’s elite, it has also boosted the latest redistribution of power that started back in 2007 after a conflict with then-Ambassador Rakhat Aliyev. This is to say that that a renewed, second wave of intra-elite conflicts was observed in 2007- 2009, and that his gave rise to talk about the beginning of a serious fight for power among the presidential entourage. One main result was ensuing discussion about the possibility of lifelong presidency for the ‘leader of the nation’ which was launched deliberately by pro-presidential circles. Despite the fact that each of these groups maintained their own view on strengthening the legitimacy of the existing presidential system, including by means of extending the current rst president’s stay in power, the majority of the political and business elite does not imagine their future without the present system of power relations anyway. In fact, they would prefer life presidency of the incumbent. With regard to a possible successor, in the current state of affairs it would be hard to summon support for other political players. At the same time, the destruction of Rakhat Aliyev’s group, the weakening of some repre- sentatives of the old guard and the serious pressure on the Young Turks and representatives of the national business elite have temporarily destroyed the intra-elite balance in favor of other power groups and power-wielding structures. In addition, the president continued to preserve his control over the elite through the consolidation of political, economic and information resources under the umbrella of the following controlling structures:

the Samruk-Kazyna national welfare fund (national companies and banks),

Arna Media and Nur Media (the media),

the Civil Alliance (NGOs),

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 • Nur Otan (the party ‘system’), • the

Nur Otan (the party ‘system’),

the Atameken business association (medium-sized and major businesses).

Yet another peculiarity of the year 2009 was the country’s leadership’s take on the ‘prin- ciple of manageable tension’ which has enabled the use of radical measures against unwelcome economic and political players and thus a further strengthening of state control over all spheres of public life. Hence, state paternalism has slowly but surely started spilling from the political sphere into the economy. This has given to a general trend of the transformation of oligarchic capitalism into a nomenclature monopoly. Even though this trend should have led to the redistri- bution of property to the state’s benefit, it really enabled certain power groups to adjust the politi- cal and economic space in a way to make their ends meet.

SPECIFICS OF INTRA-ELITE RELATIONS

IN 2009

Conflict potential was present within the Kazakhstani political elite throughout the whole of 2009 and it could cause new clashes between different elite groups in the future, increasing political risks in Kazakhstan. Other reasons for new conflicts are:

OBJECTIVE:

the absence of a long-term stable balance between elite groups;

reduced economic opportunities;

the prevalent situational approach and uncoordinated personnel policy;

the evident process of a maturation of the elite who demand greater freedoms.

SUBJECTIVE:

notorious rumours about an early transfer of presidential powers and potential succes- sors;

the present state of permanent psychological tensions among the political elite caused by frequent government reshuffles and detentions of high-ranking officials accused of cor- ruption. We have observed several power groups’ attempts ill-using the fight against corruption in or- der to strengthen their own positions. Moreover tensions within the elite stem from the detentions of high-ranking officials, and many observers have reported their impression of a respective purposeful purge of the government. The initiators of this purge, however, are not clearly visible and reference to presidential orders lacks credentials because first and foremost detentions gathered momentum with the deterioration of the socioeconomic situation in the country. This furthers the impression that the fight against corruption in Kazakhstan is part of the aforementioned ‘manageable tension.’ We can distinguish two main explanations for the fight against corruption having gained momentum in 2009 which – again – may significantly alter the balance between power groups. 1. The initial orders to intensify efforts in the fight against corruption were given by the president himself. In doing so he killed two birds with one stone. First, he diverted public atten- tion from his inefficient anti-crisis policies towards the fight against corrupt high-ranking officials (– the ones who are not part of his entourage). Second, the president made the elite understand that he was in uncontested and full control of the situation, and that he set the rules of the game. 2. In the current situation of economic crisis, access to funds is diminishing. This forces many groups to launch attacks against their rivals, including the use of state agencies for law- enforcement.

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forces many groups to launch attacks against their rivals, including the use of state agencies for

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 8 In this context, hits were directed against

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OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 8 In this context, hits were directed against

In this context, hits were directed against a group known as the Youth Turks that unites politicians and businessmen. The group emerged during the 1990s and was originally supported by the president. It was precisely this group that suffered sizeable losses as a result of Mukhtar Ablyazov and Margulan Seisembayev’s flight abroad and the detention of Mukhtar Dzhakishev, even though it has to be said that during the renewed fight for a “place in the sun” other elite groups also discovered the vulnerability of their positions. This is shown by the temporary de- parture of Bulat Utemuratov, by the corruption suits filed against subordinates of the mayor of Astana Imangali Tasmagambetov, and by the detentions of subordinates of former mayor of Asta- na Askar Mamin. The vulnerability of the elite is further demonstrated by the arrests of Deputy Defence Minister Kazhimurat Mayermanov, of the chairman of the Ministry for Agriculture’s Water Resources Committee, Anatoliy Ryabstev, and of two other officials of this ministry who had worked under the supervision of former Agriculture Minister Akhmetzhan Yesimov for abuse of office. The conviction of former Environmental Protection Minister Nurlan Iskakov and a cor- ruption scandal in the Statistics Agency which forced its Chairwoman Anar Meshimbayeva to resign might not have been the last evictions to report. In general, a preliminary analysis of the government ‘purge’ shows that in some cases initia- tors tested and in other cases openly threatened positions of certain influential representatives of

the elite. However, interestingly, this has had an opposite effect. The bureaucratic apparatus is in

a state of acute tension and frustration because it does not understand the reason for the sudden

change of the rules of the game. In the past, definite loyalty to political authorities was the ac- cepted method of payment to clear any “debts” whatsoever, but this has stopped working now. As

a result, the bureaucratic apparatus has started losing trust in the high ranks of power.

At the moment, certain power groups have reached critical resource potential. This is to say that the combined potential of these groups has reached a level that hinders the supreme power altering the overall system. While the highest echelons of power may still destroy an individual power group, they can no longer impinge crucial influence on the system as such. A coup d’état, however, is not yet on the cards, because any implementation of such a negative scenario would need, in addition to power-wielding structures, a political leader. – A person who is compe- tent and respected in the country, who can assume government functions and shoulder political responsibility for the period of a “temporary regime” (until regular elections). This remains unclear. As a result, the president is the main guarantor who can prevent a coup d’état. The president is still enjoying high popularity ratings among the population; moreover any attempt to overthrow him is doomed, especially since no political figure has emerged to rival President Nursultan Nazarbayev. Any rebellion of the elite is impossible until a strong and firm power group with a charismatic leader emerges from the Kazakhstani political system to challenge the president’s power. As a result, the incumbent is still enjoying a high level of legitimacy in the eyes of the elite which reduces the risk of a possible coup d’état. By the same token, the elite are not capable of assessing the efficiency of a coup d’état. Still far too high political and economic costs are at stake with possible outcomes remaining unknown. However, this does not rule out underground preparations of all main power groups to realize their projects by installing a successor. This is one of the reasons for conflict potential continuing to be preserved within the elite, so this may cause new clashes between different power groups. A remarkable classification of Kazakhstan’s post-Soviet elite has been provided in ‘Obsh- chestvennaya Pozitsiya’, a newspaper that published an article titled ‘Kazakhstan’s elite: who rules us’ on 25 November 2009. In this article, the newspaper noted for example that ‘representa- tives of the “first generation of the post-Soviet elite” (let us call it “the elite of decline”) who con- stituted the highest echelons of the Soviet apparatchiks are persistently clinging to the power and resources they have… The new elite are experiencing selection processes based on two genera-

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 tions. The first of these is a hybrid

tions. The first of these is a hybrid generation which has incorporated both Soviet values and the values of the information era. At the same time, its representatives have been actively involved in business and have gained work experience in the civil service sector. The second generation who calls itself technocrats consists of typical representatives of bur[eaucrat-busi]nessmen… The main channel for them to join the elite is a career in the civil service…’

CONFLICTS BETWEEN POWER-WIELDERS

Confrontations between various power-wielding structures became serious in 2009. In par- ticular, this is illustrated by the confrontation between the National Security Committee (KNB), the financial police, the prosecutor-general’s office and the Ministry of Internal Affairs. It resulted in high-profile detentions of officers of these structures during the whole year. In Atyrau, the national security department brought a procedure against two officials of the regional prosecutor’s office who were suspected of extorting a bribe. In turn, the prosecutor’s office opened cases against three KNB officers, allegedly for letting detained pilferers escape. In the same city, again in Atyrau, a fight broke out between officers of the traffic and financial police departments. In Almaty, a serious conflict erupted between the KNB and the financial police when financial police officers were taken into custody outside one of the KNB buildings in Almaty while sitting in their car, taking pictures of all people entering and leaving the KNB building. In addition, there was a conflict between traffic police officers and financial police of- ficers in Almaty. In November, KNB officers arrested the deputy chief of the Almaty city finan- cial police department, Aydyn Zhanteleyev, for alleged drug abuse. Later on, the charge against Mr Zhanteleyev was dropped because of procedural violations on the part of the KNB officers. Simultaneously, the management of the Almaty city KNB department was sacked, but this was not officially linked to the criminal case against Mr Zhanteleyev, even though there might be invisible, yet direct links between the instances. A certain blow to the KNB was a press confer- ence by Zhamila Dzhakisheva, wife of the detained head of Kazatomprom, Mukhtar Dzhakishev, that drew public attention to Amangeldi Shabdarbayev. Moreover making the video of the inter- rogation of Mukhtar Dzhakishev accessible to everyone on internet platforms is part of the game played by power groups, like many open conflicts between the powerful within the system. All this demonstrates that, first, all named events represent the tip of the iceberg the hidden underwater part of which consists of more violent and covert frictions between different power groups. These groups are linked to either one power-wielding structure or the other. Second, com- petition between different power-wielding structures to expand their powers and to strengthen their positions has become fierce in the country. Third, in the name of fighting corruption these structures have received quite wide-ranging powers to purge the elite. Fourth, it is not ruled out that there was an attempt to use the law-enforcement agencies in the new redistribution of prop- erty. It is worth noting that each of these structures tried to convince the president that only their particular structure was the most efficient body to fight corruption, simultaneously pursuing a campaign to discredit its respective rivals.

SO-CALLED THIRD FORCEFACTORS

When analyzing intra-elite relations one needs to pay attention to what we call “third force”

factors. This “third force” does not formally belong to the opposition. Instead, it is situated within the elite, representing a union of individuals or several influential power groups. However, the third force may purposefully provoke conflicts in society to achieve its several aims. These are:

1. Destroy their potential rivals;

2. Force the opposition and the government to clash;

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its several aims. These are: 1. Destroy their potential rivals; 2. Force the opposition and the

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 3. Improve its own status in the eyes

3. Improve its own status in the eyes of the president as the only force he can rely on;

4. Survey public opinion about various scenarios of their potential coming to power, includ-

ing through spreading rumors (most recent ones being about an illness and even the death of the

president);

5. Create and manage social, interethnic and other conflicts.

It should be noted that experts differ on how they define and thus identify the third force. In theory, we can categorize almost all influential pressure groups as the ‘specific power group from within the president’s entourage.’ We can thus see that almost all groups in question are playing against one another and may constitute this force. It is, however, most likely precisely the group that benefited most from crushing Rakhat Aliyev and his people and from weakening the old guard and the Young Turks. We can assume that as political uncertainty will grow further, the third force factor will have a greater influence on socio-political processes in the country.

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influence on socio-political processes in the country. 10 C ONCLUSIONS AND RECOMMENDATIONS PROBLEMS FOR THE

CONCLUSIONS AND RECOMMENDATIONS

PROBLEMS FOR THE PRESIDENTIAL VERTICAL

The head of state once said that ‘oligarchic capital is strangling its competitors. Having

amassed money, such capital is vigorously jostling for power. And at that point in time, the state should take measures.’ This notion is relevant in a situation where some elite groups, pursuing only their particular interests, are playing an anti-social, anti-system and even anti-presidential game. They normally do so under the cover of state-run establishments, including the law-en- forcement structures. In this context, we can single out a number of key problems for the presi- dential power that stem from the situation sketched out above.

1. Experts have noted that as a rule the ‘present power groups are interested not in the conti-

nuity of the presidential course but only in the question of their vertical and horizontal transforma- tion in case of the head of state’s departure. The former means adjustment of the status of a group in the power hierarchy (i.e. exerting influence on a new president and the executive as a whole). The latter means a change in the group’s resource potential (i.e. redistribution of property).’

2. Constantly fighting for a place in the sun, these groups are gradually starting to come out

of the shadow and enter public scene, involving the public sphere in their intra-elite showdowns.

As a result, being in a constant state of fierce confrontation and media wars, they destabilize the elite and discredit the head of state, notoriously hiding behind his good name.

3. Prioritizing their parochial interests, these power groups are trying to replace state institu-

tions by creating their own “network of loyalty” from their appointees. They are thus conducting

a deliberate policy aimed at reducing the influence of government structures such as the presiden- tial administration, the Security Council and the Assembly of the People of Kazakhstan.

4. Establishing relations at a regional level, power groups are in effect fixing their bureau-

cratic territories, which can provide them with significant support when time is ripe.

5. We can already see now that in anticipation of the forthcoming replacement of the ruling

elite, the elite of a new generation that relies on its own capital has been formed around potential leaders.

6. If apparatchiks and oligarchic groups preserve their dominance, it will be hard for the

president to decide whom to support. Parties are still weak. NGOs are trying to stay out of poli- tics. The above described power-wielding structures have already discredited themselves. The bureaucratic apparatus is increasingly involved in interdepartmental showdowns. Influential shadow players still believe in their ability to agree on everything, settle disputes, divide powers, the spheres of business behind the scenes and everything will be fine. If we assume that the efficiency of any political system depends on the existence of ba- sic institutions which ensure social reproduction and appropriate socialization, i.e. people’s in-

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 volvement in politics, we realize that Kazakhstan lacks

volvement in politics, we realize that Kazakhstan lacks these institutions. The institutions that formally bear the names of political institutions in Kazakhstan are not really political institutions as such because of their problems “outperforming institutionalization.” This is a characteristic of many post-Soviet countries. Why is this so? Practically all political and social institutions in Kazakhstan exist not like institutions but more in a way resembling “organizations”, “alliances” or “associations.” The system of institutions does not coincide with the system these associa- tions. Moreover, the country’s political system is borne by merely one “leg” as the incumbent president and hence the vertical of power are adjusted to linear decisions only. However, this state of affairs cannot last forever. His, the permanent “arbiter’s,” arrangements have started to grow weaker, especially when other props of the system are elite groups gathering around this main centre of decision-making. This gives rise to significant problems and threatens the devel- opment of the very state.

PROBLEMS FOR THE STATE

1. Deformation of the executive. The crucial point here is the widening gap between po-

litical and civil servants, between the country’s leadership, between mid- and low levels of the executive branch in the given situation of dominance of certain power groups. The danger is that a “deformation” of the vertical may result in covert or open acts of sabotage against the imple- mentation of government programs. This might lead to a widening gap and misunderstandings

between central and local executive bodies. The present regional elites are dissatisfied with their levels influence on the processes of decision-making on statewide level. Regions think that they have too many obligations before the centre, and that they enjoy fewer rights than power groups in Astana.

2. “The syndrome of temporariness” is what we call the widespread preservation of the

corruption mentality with a significant part of Kazakhstani bureaucrats which is beneficial to

power groups in terms of exerting control over those bureaucrats.

3. Interdepartmental rivalry between government institutions is closely linked to intra-

elite processes and the practice of entwisting business and government. Shadow groups’ interests

are given preference over the state’s own interests. This conglomerate creates conditions for new interdepartmental wars in turn.

4. Reduction of the bureaucratic apparatuses’ loyalty to the current regime. For mid-

and lower level civil servants any change in power has both negative and positive effects to it.

Negative effects are to do with a growing threat of instability. Positive effects can be found in the new and enhanced career prospects a change in power offers. In the given situation of limited “social elevation” and higher disappointment, a positive stance towards change in power may dominate in this group of civil servants, especially when powerful groups from within the presi- dent’s entourage try to monopolize supreme power.

5. Representatives of the elite, as a rule, pursue their parochial interests. This is why

they are not involved in developing the strategic course for the country’s advance. They also

do not have an ideological influence on political life in Kazakhstan. The problem lies in the de- ideologization of the elite.

6. There are key intra-elite contradictions within any thinkable model of mobiliza-

tion. There is always confrontation between the supreme power as an initiator of moderniza- tion processes on the one hand, and the bureaucratic apparatus, a virtual instrument of modern- ization, on the other. When the apparatus is under the control of pressure groups, the state is in danger. In the short-term future (one or two years), intra-elite relations will be defined only by the president’s ability to keep them under control. The “Rakhat Aliyev factor” will make elite groups more cautious in expressing their political ambitions.

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control. The “Rakhat Aliyev factor” will make elite groups more cautious in expressing their political ambitions.

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 R ECOMMENDATIONS General speaking, at the present stage

RECOMMENDATIONS

General speaking, at the present stage of the political development of Kazakhstan, the ruling elite should clearly define which of the following three types the political system of Kazakhstan belongs to: 1) mobilizing; 2) conservative; 3) modernizing (i.e. open to political reforms). This will define the level of the political system’s legitimacy in the future. All this is to show that Ka- zakhstan is facing two possible scenarios of political development.

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facing two possible scenarios of political development. 12 THE BEST-CASE SCENARIO INCLUDES • political

THE BEST-CASE SCENARIO INCLUDES

political modernization;

the emergence of new channels to recruit members of the political elite from;

increasing the number and quality of existing points of access to the process of political decision-making;

drawing a clear line between business and politics;

the appointment of heads of local executive bodies by means of elections;

increasing the middle class;

more active involvement of Kazakhstan in the global economic and political spheres which automatically increases requirements for the civil service;

the establishment of electoral forms of supporting government institutions;

the adoption of an effi cient mechanism of succession to power;

the diversifi cation of the economy (including, fi rst, low prices for raw material plus good management; and second, good prices for raw material plus good management). Results: decreasing political risks and risks for investment in Kazakhstan; facilitating a switch from a state of “stable instability” to a state of stable development.

THE WORST-CASE SCENARIO INCLUDES

the preservation of a closed political system;

an oligarchic form of corporate culture;

the political elite’s dominant role in relations with business. New confrontation between the business elite and apparatchiks;

a limited number of points of access to the process of political decision-making;

limited channels to recruit members of the political elite from;

the preservation of the economic model based on raw materials (fi rst, low prices for raw material plus bad management; and second, good prices for raw material plus bad man- agement). Results: further high level of political risk and risk for investment in the country; political and economic crisis; violent change of the political elite with unpredictable consequences.

BEST SCENARIOS FOR A SWITCH FROM OLIGARCHIC CORPORATE CULTURE TO CORPORATE MANAGEMENT

1. Both attempts to either conserve oligarchic corporate culture and/or to instead change it hastily or radically pose a similar threat to the stable development of Kazakhstan. Kazakhstan still lacks a systematic and stable mechanism to solve intra-elite contradictions. This mechanism should tackle the problems at the level of political institutions instead of the currently dominant informal relations between individual power groups and political figures.

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

2. It is possible that the succession of power needs a scenario of removing certain less efficient

groups and bringing in a new generation of managers. Such a scenario, however, is possible only in case of replacing the dominance of oligarchic groups by a professional and efficient government apparatus.

3. The country needs a system that can solve problems of regional and sectoral levels without

the president’s involvement, while strong presidential power is preserved. This could be done by in-

creasing the efficiency of government and political institutions in a way the president could rely on.

4. Projected changes should include both the very system of government-building and the

functioning of government on the one hand, and the nature and practices of relations between gov- ernment, elite and society on the other. The quality and extent of changes will depend on “who”

(which forces) and “which scenario” (which group interests) will be involved in the expected trans- formation. The main aim of the makeover should be a switch from stability based on personality to stability based on efficient political institutions.

5. Obviously, in the given situation of a weak civil society the existence of the outlined mech-

anism would become an important factor of regulation in crucial questions of Kazakh statehood. These questions concern the establishment of a real rule of law, the inviolability of the institution

of private property and the fight against corruption. Not only does the absence of a regulator com- plicate the solution of the issue of ensuring succession, but it also creates serious conditions for permanent destabilization of the government-political and socio-political space in the long-term. Efficient implementation of any political reform needs three conditions:

the economic basis, because political reforms in poor countries are more likely to fail than to succeed;

political will which is not defined by situational interests but strategic aims of political development;

consistency, because political reforms are long-term projects.

Finally, it is necessary to create a good mechanism to maintain the balance between a strong

presidential power, a strong civil society and competitive business. Consequently, political re- forms should be accompanied by the principle of the ‘five P’s.’ These are:

Political institutions

Parliamentary reform

Party reforms

Process of decentralization

Political succession.

POLITICAL INSTITUTIONS

The main danger is that in case of a possible change of power there will be no competent political institution which could act as a safety net. At the moment, only the presidential power

can perform this role. However, deliberate support of the weakness of other political institutions threatens to move political fighting beyond the boundaries of law towards the sphere of new shadow games and violence, should the current government grow weaker. In order to escape from the trap of “outperforming institutionalization” and in order to im- plement continuity of the political course it is necessary to modernize and strengthen five main factors for the stability of government. These are:

a fully-fledged and competent civil society which is interested in the preservation of long- term political stability through a mechanism of reforming the existing political system.

a strong and competitive party system based on the principle of the supremacy of the constitution;

a high-professional bureaucratic apparatus (instead of situational conservatism), con- trolled by civil society;

power-wielding structures (the army plus intelligence services) controlled by society (in- stead of corrupted generals);

structures (the army plus intelligence services) controlled by society (in- stead of corrupted generals); 13

13

structures (the army plus intelligence services) controlled by society (in- stead of corrupted generals); 13

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 • a middle class (instead of nouveaux-riches and

a middle class (instead of nouveaux-riches and “new poor”) as the main guarantor of social stability.

PARLIAMENTARY REFORM

One of the main aims of political reform is to create an efficient system of checks and balances. This is impossible to do without increasing the role of parliament in the country’s government sys- tem. However, it should not be ruled out that the final aim of political reforms might be the establish- ment of a unicameral parliament. This is not an end in itself. However, the present division of the supreme legislative body into two chambers in the unitary state, too, is rather a “political insurance” for the government itself than a real contribution to improving the law-making process. At the same time, this does not mean the creation of a parliamentary system when neither the necessary favorable political conditions nor a party system are in place yet.

PARTY REFORM

Unfortunately, from the very beginning of the process of forming a party system, artificial obstacles to party activities prevailed over impartial laws to increase political involvement through party channels. The party system is now subordinated to the political system, and the ruling elite do not know what to do with it. It seems that is already too late to ban parties, while encouraging them to be active is dangerous. This situation defines limited capacities and unfulfilled opportuni- ties for Kazakh political parties to take part in drafting a program of political reform. The main aim of party reform is to create efficient channels for parties to influence the political process:

14

channels for parties to influence the political process: 14 • through parliament; through a mechanism of

through parliament;

through a mechanism of rotating the political elite; through active cooperation with other civil society institutions the potential of which has not been tapped yet. However, party architectonics in the country will not be stable until the number of artificial parties is cut and they are replaced by “conventional” electoral parties. Their transformation into

a real instrument of representation of social interests is possible in the following four situations:

1. Reforming the entire electoral system, not its individual elements.

2. Increasing the functional role of a multi-party parliament.

3. Developing a pluralistic media space which will open access for all parties to national

media outlets.

4. Decreasing the spheres of influence of power groups because a weak party system is

influenced by powerful and active lobby groups and vice versa. That is why it is no surprise that these groups often have much greater influence on the process of political decision-making than our “ersatz parties” in Kazakhstan.

PROCESS OF DECENTRALIZATION

creating effi cient local self-government institutions;

budget decentralization.

POLITICAL SUCCESSION

One of the final aims of political reform is to reduce the personality factor in ensuring stabil- ity and sustainability of the political system:

defining strategic, not situational priorities of political development;

developing a mechanism of rotating the political elite through party channels;

partner relations with the opposition, as a fully-fledged participant of the political pro- cess, not as a decoration;

political consensus on strategic issues of economic and political development between the main political forces.

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 1.2. KAZAKHSTAN’S PARTY SYSTEM: SET-UP OF MAIN FORCES

1.2. KAZAKHSTAN’S PARTY SYSTEM:

SET-UP OF MAIN FORCES

ABSTRACT

by The Alternative Centre for Topical Research

Complicated and ambiguous processes in the public and political life of Kazakhstan dur- ing the year 2009 have reflected the activities of political parties and noticeably improved their mutual relations. There are now 10 parties in the country, eight of them officially registered with the Ministry of Justice, one of them preparing for re-registration due to the change of its name (the Azat na- tional social democratic party) and one remaining unregistered because of the authorities’ delib- erate delaying of due procedures (the Alga! people’s party). In terms of ideology and policies that are determined by the acting parties’ attitude towards the official political course, they can be divided into the following groups

1. The ruling ‘Nur Otan’ People’s Democratic Party which is headed by President Nursultan

Nazarbayev.

2. Parties showing great loyalty to official policy. At present, they are the Auyl social and

democratic party, the Party of Patriots of Kazakhstan and the Rukhaniyat party.

3. Parties hesitating between supporting official policy and expressing their discontent with

certain political moves by the authorities. They can be described as moderate opposition to the

authorities. These may include the Adilet democratic party, the Ak Zhol democratic party and the Communist People’s Party of Kazakhstan.

4. Parties showing maximum discontent with official policy and other parties speaking in

favor of fundamental political reforms, thus remaining in opposition to the country’s leadership. These include the Azat national social and democratic party (Azat NSDP), which was set up in 2009 by a merger of the NSDP and the Azat democratic party, the Communist Party of Kazakh- stan and the Alga! people’s party.

EVALUATION OF POSITIONING AND ACHIEVEMENTS OF THE LEADING ‘PEOPLES DEMOCRATIC PARTY NUR OTAN

The analysis of Nur Otan’s activities shows that it is not a ruling party in the full sense of the word regardless of the president’s chairmanship of the party. In any case, the country’s policy is being determined beyond this party’s institutional bodies. As a result, cultural and social events predominate in the party’s activities. Obviously, the fact that the president as a key and dominating element of the country’s po- litical system stipulates that Nur Otan is secondary not only to him but also to the mechanisms of implementing supreme power held by him, including, first of all, the presidential administration. In these circumstances, the party becomes a mere tool serving the ruling elite’s policy, specifi- cally the goals and interests of the president personally as their leader. As the only party in the Mazhilis and with its dominance in the Senate, Nur Otan does not determine priority legislative directions of its parliamentary faction. As a result, MPs mostly consider laws that only the government drafts and proposes. Under these conditions, MPs func- tion independently from the party’s central office. A similar situation is observed in the country’s regions, where members of local legislatures depend more on governors than on the party leader-

15

in the country’s regions, where members of local legislatures depend more on governors than on the

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 16 ship. In such a state of affairs,

16

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 16 ship. In such a state of affairs,

ship. In such a state of affairs, Nur Otan has virtually no chance to participate in political deci- sion-making processes and control their implementation at all the levels of the political system. At the same time, Nur Otan’s central office and its former deputy chairman, Darkhan Kale- tayev, whose term of office ended on 19 November 2009, made a series of moves to raise the position and role of the country’s political and governmental system in an appropriate period. First of all, Nur Otan took over the role of a main entity to conduct a political dialogue with other public and political organizations on behalf of the current authorities. For this purpose, par- ty functionaries used the president’s calls on political forces to consolidate in order to overcome the financial and economic crisis and its consequences which the president voiced in his annual state-of-the-nation address entitled ‘Through the crisis towards renewal and development.’ This move resulted in the signing of a memorandum to ensure social and political stability in the crisis situation on 13 March 2009 at the initiative of Nur Otan. Apart from Nur Otan, other parties, including Adilet, Auyl, Rukhaniyat, the Party of Patriots of Kazakhstan and the Com- munist People’s Party of Kazakhstan also signed this document. The Ak Zhol party joined the memorandum on 6 April. On this basis, an inter-party council including the seven parties was set up and it held six sessions between April and October 2009 to consider significant issues related to the development of Kazakhstan’s society and government. In this case, the actual division of the country’s political party spectrum into two basic groups, the parties loyal to the authorities led by Nur Otan and their opponents, should be consid- ered as an advantage for the government. At the same time, though the given memorandum pro- vides for ‘the making of concerted efforts’ and ‘the implementation of joint projects,’ there has been no serious action observed by the parties concerned. This circumstance once again proves limited the opportunities of Nur Otan which is acting within strict bounds drawn by the president and his administration. Second, Nur Otan functionaries are actively using the fight against corruption for their own purposes, aiming to take control of activities of the government and its bodies. The party’s na- tional council for fighting corruption, headed by Senator Oralbay Abdykarimov, is being used for this purpose. Between February and October 2009, this body held five sessions, including with the heads of law-enforcement bodies. At the same time, the relevant law-enforcement agencies under the president’s personal command are continuing to play a key role in the fight against corruption. In this case, Nur Otan only has to exclude those officials that made a slip and their accomplices from the private sector respectively and launch every possible propaganda campaign. In addition, the party’s anti-cor- ruption activities are increasingly taking the form of a short-lived campaign, substituting actual deeds by empty words. A telling example for this was the initiative initiated by the head of the expert commission under the national public council for fighting corruption, Mirbulat Kunbayev, to introduce a badge reading ‘I am against corruption.’ This was criticized by the party’s central office. Third, Nur Otan has made attempts to allocate its leading positions in view of the country’s government. For this purpose, party functionaries used specific mechanisms of developing new ideas (such as the Innovative Committee, the Orleu economic club) and party control which is also exerted by Nur Otan’s parliamentary faction in the Mazhilis of parliament. With respect to the ‘new ideas,’ one should also take into account the industrial and innovative development pro- gram for 2010-2014. In what concerns ‘party control,’ there were three hearings of a government report about the results of anti-crisis measures in 2009. The last hearing took place in the form of the faction’s expanded meeting in the party’s central office on 19 October involving Darkhan Kaletayev. At the meeting, Kaletayev harshly criticized the government for shortcomings in the implementation of the low-interest loans program for students and in cooperation between the party and certain government bodies. Fourth, as part of the ideological and propaganda work, Nur Otan’s central office and Mr Kaletayev personally have started discussing a fundamentally new view on the role and position

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

of the incumbent president, Nursultan Nazarbayev, in the development of Kazakh statehood in the country’s modern history. The status of the nation’s leader, which was officially given to the president by the adoption of the constitutional law on the nation’s leader, has become the back- bone of this activity. However, neither the government nor the president personally have officially supported this initiative. The replacement of the party’s first deputy chairman on 19 November has proved this indirectly. The former governor of the Karaganda Region, Nurlan Nigmatullin, took over the position of Darkhan Kaletayev, who was appointed managing director of the Samruk-Kazyna national welfare fund. By some estimates, the replacement of the actual leader of Nur Otan was the result of a com- petition between the presidential administration, namely its head Aslan Musin, and the party’s central office, especially Darkhan Kaletayev, for exerting influence on the political system and on the president personally. Specifically, functionaries of the presidential administration might not at all like party members’ attempts to reinforce their control over the government and the nega- tive statements uttered by some of party members against the idea of Nursultan Nazarbayev’s life presidency. Apparently, the party’s abovementioned shortcomings and mistakes together with excessive publicity, including frequent speeches in the media, have also damaged Mr Kaletayev’s standing. At the same time, the decision concerning the current leadership of Nur Otan should not

be linked to a subjective factor related to the party’s first deputy chairman. It is evident that the existence of this party in Kazakhstan’s political arena is solely provided by the support from the current authorities and the country’s president. Moreover, support depends to a great extent on the party’s readiness and ability to be the president’s efficient tool to implement his policy. In this context, in his speech in front of Nur Otan’s 12th extraordinary congress on 15 May 2009, Mr Nazarbayev assigned the party the following key tasks. The implementation of these determines Nur Otan’s prospects for development in the near future in many respects

1. The development of the party’s new program for the time until the year 2020. Apparently,

this time round the party must have a strategic plan for the country’s development in the given period, considering Nur Otan’s role and position in this process, but not just a program of slogans

and promises. At the same time, the party must attract ‘all of the country’s intellectual forces’ to this work. Officials of its central office have been assigned to form the think tank generating ideas for the country’s leadership.

2. Strengthening of the party’s leading members and work with the personnel within the

party in general. In this area, the main emphasis is to be made on increasing ‘leadership quali- ties,’ party functionaries’ level of professionalism and the party’s level of discipline, and also on improving the work of the party’s control committee. It is also obvious that the president has

made it “clear in a veiled way” to the current party leaders that it was time for them to boost their influence on relations among deputies of representative bodies of all levels.

3. The livening of the party’s policy and organizational work. The most remarkable moment

in this context is that ‘the government and governors should regularly consult the party leader-

ship in making decisions.’ Among other party activities, the president specified the adoption of an efficient system of reacting to the population’s problems; fighting corruption; creating public councils to consider and resolve social conflicts; establishing a network of public associations similar to a party; and ‘consolidating Kazakhstani society for a long-term period.’

4. Managing the work in order ‘to form a correct system of values in society.’ In this case,

the party’s ideological work must aim ‘to promote a system of intellectual and moral values in society,’ develop among the youth values of interethnic accord, patriotism, and intolerance to ex- tremism, nationalism, law violations and crimes. In addition, Nur Otan has been assigned to join the implementation of the Path to Europe program. However, the president is likely to maintain double standards with regard to his own party. On the one hand, he is giving the party and its functionaries a sort of carte blanche to expand and

to his own party. On the one hand, he is giving the party and its functionaries

17

to his own party. On the one hand, he is giving the party and its functionaries

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 strengthen their positions in the political system. On

strengthen their positions in the political system. On the other hand, the president is virtually not allowing Nur Otan to go beyond limits, where the party cannot run its own activities indepen- dently. Therefore, shortcomings in Nur Otan’s work are conditioned by systematic factors rather than by mistakes and omissions by the party’s previous functionary. In addition, the post of first deputy chairman has become a target in the fight between leading power groups.

18

a target in the fi ght between leading power groups. 18 B ACKGROUND PARTY PLAYERS As

BACKGROUND PARTY PLAYERS

As for the parties that are loyal and semi-loyal to the authorities, such as Auyl, Rukhaniyat, the Party of Patriots of Kazakhstan and the Communist People’s Party of Kazakhstan, there have been observed no activities on their part in 2009 that attracted wider public attention. Thereby, these parties are demonstrating their unchangeable tactics to make themselves known mainly during election campaigns and “to make a pause” in periods between elections. Also, they are firmly integrating into the system of inter-party relations which was created by the authorities. In particular, the leaders of these parties are taking active part in the work of the abovementioned Inter-Party Council and the Public Chamber under the Mazhilis of the Kazakh parliament. But

in general, adhering to the indicated line and without solid organizational-personnel and mate- rial resources, these parties had in fact started long ago to play the role of extras in the country’s political arena. Adilet became noticeably active in the country’s public and political life in 2009. Particu- larly, this party adopted seven statements and two addresses over a wide range of issues about Kazakh society and the state. In its ideology and propaganda, Adilet mainly focuses on anti-crisis measures. At the same time, the party holds that these measures can be implemented beyond social and economic actions. This is evident from Adilet party members’ acknowledgement of introduc- ing constitutional reforms as a top priority condition for Kazakhstan to overcome the system crisis and to develop in the post-crisis period. Moreover, they regard the dissolution of the one-party Mazhilis followed by early parliamentary elections and the formation of a multi-party parliament as one of the most important measures in this reform. Obviously, Adilet desires not only to integrate into the political system, which is dominated by Nur Otan, but also to become the second parliamentary party in terms of deputy seats and the level of influence. For this reason, the party has chosen the tactics of moderate opposition to the government, remaining loyal as much as possible personally to the country’s president. Adilet sug- gests the president’s powers be enhanced by giving him the direct leadership of the government as

a unique political compensation for ending the one-party parliament. It is not out of the question

that party Chairman Maksut Narikbayev’s personal friendship with Nursultan Nazarbayev is also taken into account somewhere. Despite its evident activity, the Adilet party is not yet able to join a potential group of the country’s top three leading parties. In any event, social studies by various analytical organizations have shown the party’s low rating. Most likely, this is due to the party’s low activity in the past which resulted in a low electoral rating during the 2004 and 2007 parliamentary polls, and in its hesitation between pro-government and opposition parties. The Ak Zhol democratic party lets us see a very different picture of its activities. Despite its

relative low-level activity and the lack of tangible results of its work in 2009, this party frequently ranks second in the polls, steadily following Nur Otan in various public opinion ratings. However,

it is most likely that its well-known and established brand is playing a key role in this case. In gen-

eral, the impression is that Ak Zhol has decided to distance itself from the country’s most urgent political topics and issues. In the political realm, Ak Zhol continues to occupy an inconsistent position. In February 2009, the party proposed a program for political modernization in Kazakhstan. The program harshly criticized the government and the ruling party for integrating the overall political system into the

Nur Otan party structures. However, as noted above, Ak Zhol has virtually become a political ally

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 of Nur Otan in April by joining the

of Nur Otan in April by joining the memorandum on ensuring social and political stability during the economic crisis. Trying to overcome the downward trend of its image caused by its political inconsistency, seeking a new niche within the spectrum of political parties, and hoping to attract potential sup- porters, Ak Zhol has actively utilized national patriotic moods lately. A telling example for this is the blueprint for a new policy on ethnic minorities in Kazakhstan 2010–2020 that was drafted by the party in September 2009. This document is written in the spirit of “educated” ethnocentrism, combining the acknowledgement of the priority of the state-forming Kazakh ethnic group and the ethnic diversity of Kazakhstani society.

OPPOSITION PARTIES

As for opposition parties, including Azat, the Communist Party and Alga!, their activities in 2009 were characterized by wavering between two opposite trends, namely consolidation and disuniting. Still, many of the previous and not very successful attempts to unite the country’s opposition forces show that nothing, except for subjective factors, can seriously put off this process. In particular, the forum of Kazakhstan’s democratic opposition forces on 11 April 2009 be- came yet another serious attempt to break the atmosphere of misunderstanding and disagreement between these parties. According to the forum’s resolution, the four relevant parties (Note: the Azat democratic party was still active then) acknowledge that ‘the disunity among the opposition’ is not only supported by ‘government agencies’ purposeful efforts’ but also by ‘personal ambi- tions and conflicting interests of groups’ which is intolerable. However, the resolution adapted by the forum discussed the merger into some kind of ‘sin- gle political organization’ but not at all into a party. On the other hand, the establishment of such a party seems to be a more or less effective move ahead of a parliamentary election. But there is still a lot of time until the next election and it is unlikely that there will be an early election. This is why it seems that, if they start setting up a single party to participate in the 2012 election, there is reason to believe that it would split and dissolve before this election. Rumors about new disputes among the opposition forces started to spread almost imme- diately following the forum. This time round, a statement made by Azat party chairman Bulat Abilov at the Aytpark discussion club represented the stumbling block. Abilov had said he was ready to become the leader of a united opposition and the opposition’s single presidential candi- date under certain circumstances in the future. This statement by the Azat party leader caused a negative reaction by the other three opposition parties’ leaders. Moreover, despite the fact that not all of the opposition politicians claim to be the leader in this political camp, they are definitely not ready to concede this seats to their colleagues. The analysis of relations among the opposition forces shows that Alga! and the Communist Party oppose a possible union more than the others. The latter, by all appearances, do not wish to abandon their name, which has a long political history and remains an attractive factor for citizens feeling nostalgic about the social wellbeing of the Soviet period. As for Alga!, by some estimates, this party’s position is a result of its affiliation with one of the leading representatives of the domestic business elite, Mukhtar Ablyazov. This fact once again proves subjective factors’ negative impact on the union of Kazakhstan’s opposition. In any event, the named parties venture some form of overarching consolidation as a non- party organization. Statements uttered by both the Communist Party and Alga! on 20 March 2009 about the establishment of a political bloc called the Government of the People was one of the rst steps in this direction. Later, on 16 June, the leaders of these parties, Serikbolsyn Abdildin and Vladimir Kozlov respectively, and the chairman of the former National Social and Democratic Party, Zharmakhan

19

and Vladimir Kozlov respectively, and the chairman of the former National Social and Democratic Party, Zharmakhan

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 20 Tuyakbay, announced their union as part of

20

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 20 Tuyakbay, announced their union as part of

Tuyakbay, announced their union as part of the bloc of democratic forces called For a Just Ka- zakhstan (FJK). In fact, the matter was about the recommencement of the latter’s activities. Fol- lowing this move, a general meeting of the FJK was held in Almaty on 8 August. The meeting formed the governing bodies and determined general tasks of the bloc. The actual resumption of the FJK’s activities which had been suspended since spring 2006 caused unequivocal reactions. On the one hand, one can observe consolidation moves among cer- tain parts of the opposition forces under the aegis of union which has quite a solid history and a great experience of cooperating with parties and conducting election campaigns. In addition, the FJK remains a legal entity and none of its members or, at least, leaders, has left it. On the other hand, the revival of the FJK, first of all, once again revealed the disunity and discord among the opposition forces as the Azat party did not join the other parties. Secondly, the FJK’s prospects look doubtful in terms of its member parties’ preparation for the next or possible early parliamentary election. This fact is linked to the ban on political parties to set up election blocs that has been introduced in election law. This could be overcome by uniting FJK members into one party. However, they are making no progress in this direction. Moreover, the simultane- ous existence of the FJK and the Government of People proves the disintegration, rather than consolidation, of the opposition parties. In this case, it is not out of the question that the FJK may fall apart again in the run-up to a parliamentary election, and that its member parties will start acting separately. To a certain extent, the merger of the NSDP and Azat into one party has confirmed these ex- pectations. The party’s unification congress was held on 24 October. As a result, the charter was amended and a new board of the united party was formed. In the latter, Zharmakhan Tuyakbay and Bulat Abilov were appointed co-chairmen and Amirzhan Kosanov secretary general. Interestingly, the leaders of the Communist Party and Alga! neither attended the unification congress as guests nor made any speeches in favor of the union at all. Considering the compli- cated and controversial personal and party relations, the opposition forces may separate into two relevant groups. This situation is fraught with further discord among the country’s opposition parties.

CONCLUSIONS AND RECOMMENDATIONS

In general, Kazakhstan’s party system in 2009 developed in the following directions. First of all, because of the opposition’s open apathy caused by their unsuccessful election campaigns in 2007, and because of their inability to build up consistent and long-term cooperation to achieve common goals and interests, they have noticeably lost their opportunities and capabilities to draw up their political “agenda.” During the present term, even the Nur Otan party, despite its official status, has to act strictly within the limits marked by the Ak Orda presidential palace. Second, the existing parties’ insufficient work and ties with the population, especially in the regions, are preventing them from using anti-crisis rhetoric which is prevailing in Kazakhstan now. Used properly, this rhetoric could otherwise increase the number of potential supporters and mobilize the electorate for future elections. In particular, against the backdrop of frequent cases of social discontent and protests in vari- ous strata and groups of the population, the opposition parties are demonstrating their inability to join and lead this process. The FJK staged a protest rally against ‘the authorities’ antisocial policy’ on 18 October 2009, but this move did not yield any serious consequences for the coun- try’s further political development due to weak preparations, its small number of participants and its failure to seize the action on a nationwide scale. Third, the public and political activity of any given party creates the impression that these activities are mainly conditioned by the fact that the parties and their leaders are expecting Ma- zhilis to be dissolved and an early election to be held. It would be reasonable for the most inter-

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

ested parties to prepare and implement two strategies: one for the participation in scheduled elec- tion due in 2012, and the second strategy for an early election as forecast by experts. Otherwise, these parties seriously risk focusing on pointless aspects and missing out on possible political dividends when they are available. Fourth, the alignment of forces in the opposition camp and the nature of relations among its gures, as well as relations between them and the authorities, prove the growing discord between the parties. To a certain extent, this tendency is evident from occasional observations of the par- ties’ mutual reproaches and complaints that are being published by media outlets somehow as- sociated with the parties in question. This situation is more relevant for major political opponents, which is not the case for the parties in question, or, on sole and private instances between like- minded people. It is also obvious that the opposition parties and movements are creating both positive and negative precedents in their consolidation process. Because of this, they are making this process endless and rendering the unions and coalitions established as part of the process temporary and unsteady. Fifth, the crisis situation in the country revealed a number of social problems which virtu- ally failed to meet adequate reaction by the existing political parties. Therefore, in order to fill their policy and organizational vacuum, interested figures and organizations are quite actively working together with appropriate social groups. In particular, the Kazakhstan-2012 people’s movement was established in Almaty on 20 May 2009 to represent the interests of individual investors in housing projects, mortgage borrow- ers, of unemployed and houseless people. Its distinguished leaders include the chairman of the Talmas public movement, Aynur Kurmanov, and the leader of the Ak Auyl company’s individual investors in housing projects, Amangeldi Shormanbayev. On 22 July, hundreds of activists of the Kazakhstan-2012 movement staged an unsanctioned rally in front of the city administration, de- manding solutions to urgent social and economic problems. Their basic slogans read ‘Houses for People!,’ ‘Plants for Workers!’ and ‘Dismiss the Government!’ Another area of activity of Kazakhstani society which faces a risk of being politicized in an undesirable fashion is interethnic relations. A group of national patriots headed by the leader of the Memlekettik Til movement, Mukhtar Shakhanov, spoke against the doctrine of Kazakhstan’s national unity which was initiated by the Assembly of the People of Kazakhstan and the country’s president personally. At a press conference in Almaty on 25 November, Shakhanov and his fel- lows virtually presented an ultimatum to the authorities, demanding that the latter abandon the document. Otherwise, they intended to stage an open-ended hunger strike. It is not out of the question yet that in the wake of these examples of political moves by relevant figures and groups to protect both interests of groups of the population which suffered from the economic crisis and the country’s native population, these groups may set up political parties in the near future. In this case, one should expect that the opposition circles and, most importantly, their new ideological and propaganda trends will grow wider. On the basis of all these considerations, Kazakhstan’s political party system can be evalu- ated as being subject to its own crisis processes. Nur Otan is the ruling party in name only and totally dependent on the support by current authorities and the president. The other parties are incapable of compensating for the lack of access to official mechanisms of participating in politi- cal decision-making procedures and of shaping public opinion by suggesting to a significant part of the population serious and attractive proposals that can serve as an alternative to the official policy. Moreover, the activities of all of them without exception are not strategic and large-scale but of situational nature.

RECOMMENDATIONS

Combined, all of the above mentioned factors do not promote a steady functioning of Ka- zakhstan’s political party system. The best way out of this critical situation is to establish a real

of Ka- zakhstan’s political party system. The best way out of this critical situation is to

21

of Ka- zakhstan’s political party system. The best way out of this critical situation is to

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 22 dialogue between the authorities and all of

22

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 22 dialogue between the authorities and all of

dialogue between the authorities and all of the political parties, as well as between the parties themselves, and to search for acceptable opportunities for all sides to ensure their participation in developing and making political decisions. Specific measures in this respect can be

drafting and adopting a law on the legal status, rights, duties and the sphere of activities of political opposition as an institution of the country’s political system;

amending legislative acts concerning activities of political parties and other public asso- ciations which should aim to simplify their registration with the state and to expand their rights to take part in the process of exercising state power and forming government. In particular, it is recommended that the minimum number of party members should be cut from 40,000 to 10,000 people. State registration of public associations should not bear a permissive nature, but be used for record purposes;

amending election legislation to ensure the involvement of all existing political parties in electoral commissions of all levels;

ensuring free expression of views and positions in the media of different forms of owner- ship for all parties and other socio-political organizations, including the provision of air time on radio, television and in the press owned by the state;

offering socio-political organizations the right to submit official inquiries to government bodies (excluding cases relating to state secrets) and to receive competent responses;

organizing consultations between government and leaders of political parties on political and administrative reforms, drafting and amending of the constitution, improving election legislation, organizing elections for various government bodies, defining the main aspects of interethnic and inter-religious relations, of foreign policy and of ensuring national se- curity;

• involving all existing political parties in drafting government programs, blueprints, laws, bylaws and so on;

involving leaders of all existing political parties in various official events organized by central and local government bodies.

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 1.3. KAZAKHSTAN’S INTERETHNIC SITUATION: DYNAMICS AND

1.3. KAZAKHSTAN’S INTERETHNIC SITUATION:

DYNAMICS AND TRENDS

by The Kazakhstani Centre for Humanitarian and Political Studies

ABSTRACT

The situation in the realms of interethnic and ethno-political issues was quite positive and stable in Kazakhstan in 2009. This is proven by the results of an opinion poll conducted among experts by the Kazakhstani Centre for Humanitarian and Political Studies between August and October 2009 in northern, southern, eastern and western Kazakhstan. The basic focal points of the poll were Pavlodar, Shymkent, Ust-Kamenogorsk and Aktau. The poll involved 98 experts. The ethnic make-up of respondents was 40 ethnic Kazakhs, 25 ethnic Russians, six ethnic Uz- beks, four Uyghurs, four Tatars, three Chechens, three Azeris and representatives of other ethnic groups. The discussion of the Kazakh government’s doctrine on national unity in the country has become very acute. The doctrine was drafted by the Assembly of the People of Kazakhstan. Tak- ing into account the significance of this document, it is very interesting to listen to all sides which have their positions on the issue.

POLL RESULTS

The majority of experts (85 respondents or 86.7%) assessed the situation in the sphere of interethnic relations in their regions as ‘favorable,’ including 48 experts (48.9%) who regarded interethnic relations in their regions as ‘good.’ At the same time, the poll showed that there was a hidden tension in the interethnic and ethno-political spheres of Kazakhstan. First, 42 experts or 42.8% assessed interethnic relations in their regions not as ‘good’ but as ‘rather good.’ There are reasons to suggest that this sort of answer reflects the lack of confidence and uncertainty regarding the interethnic situation in Kazakhstan. Second, only 28 experts (28.5%) assessed the ethno-political situation in Kazakhstan as favorable, while 55 experts (56.1%) said it was ‘calm.’ This shows that over a half of the experts polled do not feel optimistic about the ethno-political situation in the country. This is confirmed by other answers given by experts. During the poll respondents were asked the question ‘What kind of measures do you think have to be taken to reduce interethnic tensions’ which was designed to find out about interethnic tension in Kazakhstan. Forty experts (40.8%) said that various rights (ethno-cultural, socioeco- nomic, political and so on) of non-titular ethnic groups in the regions should not be discriminated against. Moreover 59 experts or 60.2% said that non-titular ethnic groups were discriminated because of language, and that their rights to occupy high-raking government jobs were being violated. The poll also showed that 34 respondents (34.6%) said that the likelihood of interethnic or religious conflicts destroying tranquility and civil peace in Kazakhstan was high (they allocated six out of ten possible points). Most respondents (59 people or 60.2%) thought the ethno-political situation was not fa- vorable but calm, i.e. relatively favorable, while only 28 experts (28.5%) assessed it as favor- able. The remaining 11 experts (11.2%) believed the ethno-political situation in Kazakhstan was either uncertain or tense. A significant number of experts pointed to the high likelihood of non-titular ethnic groups making their ethno-political demands. Thirteen experts said that the

23

the high likelihood of non-titular ethnic groups making their ethno-political demands. Thirteen experts said that the

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 24 probability of this was between 50% and

24

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 24 probability of this was between 50% and

probability of this was between 50% and 70%, while another five experts said the probability was more than 30%. Third, a poll of experts conducted by the Kazakh Centre for Humanitarian and Political Stud- ies in Shymkent, Aktau, Ust-Kamenogorsk and Pavlodar in the third and fourth quarters of 2009 showed the gradual deterioration of interethnic relations. The growing ethnic intolerance of minor- ities is based on their further ethnic, cultural and social isolation from the majority of the popula- tion, while ethnic Kazakhs were dissatisfied about the government’s ethno-political policy and the way in which socioeconomic problems were extrapolated into the sphere of interethnic relations. It should also be noted that interethnic tension and sometimes separatist moods can regularly be observed among both dispersed and compactly-living ethnic groups. The situation in western and southern Kazakhstan – in the Atyrau, Mangistau and South Kazakhstan Regions – is alarming. Cases of ethnic intolerance took place in these regions. In western Kazakhstan the local popula- tion has hostile attitudes towards Caucasian ethnic groups and ethnic Kazakhs from other regions, whereas all kinds of clashes happen between ethnic Kazakhs and ethnic Uzbeks in the country’s south. Local residents said that interethnic relations were tense in South Kazakhstan Region’s Say- ram and Maktaaral Districts on the border with Uzbekistan. Similar trends were observed in east- ern Kazakhstan where large-scale conflicts almost broke out between ethnic Kazakhs and Chech- ens in 1994 and 2004. The poll showed that the main risk zone in the East Kazakhstan Region was Ust-Kamenogorsk and its suburbs where interethnic relations in society were tense. Fourth, the Kazakh Centre for Humanitarian and Political Studies conducted field studies in South Kazakhstan Region’s Sayram District and Almaty Region’s Uygyr District. These stud- ies showed that there was a high level of hidden tension which might grow into an open conflict between ethnic Uzbeks and ethnic Kazakhs on the one hand, and Uyghurs and ethnic Kazakhs on the other at any time. Fifth, the survey and content analysis of regional media’s coverage of interethnic relations in Kazakhstani society established that media outlets had published negative articles in the sphere of interethnic relations. The media of some northern regions of Kazakhstan topped this list. It turned out that these articles focused mainly on the local population’s discontent with the govern- ment’s ethno-political policy. Sixth, a high potential of emigration moods is observed in Kazakhstani society. Moreover, highly educated and professional citizens of Kazakhstan who can afford relocation were more in- clined to emigrate from the country. In the early 1990s, emigrant moods dominated among ethnic minorities, whereas now these moods increasingly often preoccupy ethnic Kazakhs. The following cases of open opposition to the government’s official ethno-political policy took place in the country in the past few years. First, national patriotic moods and opposition to the official policy on minorities have grown mainly among ethnic Kazakhs in the past two years. On 20 September 2009, supporters of the introduction of the Kazakh language into all spheres of public life in Kazakhstan held a meeting in Almaty’s Respublika Sarayy palace. Various demands showing the Kazakh intelligentsia and opposition’s discontent about the minority policy were made at this meeting. Moreover, the opposition started working closely with Kazakh national patriotic organizations in this sphere which means that the opposition is focusing on nationalistic organizations of ethnic Kazakhs. Second, the opposition started a trend to oppose the government in the sphere of interethnic relations. For example, the opposition Azat national social democratic party and Kazakh nation- alistic organizations stepped up activities in this sphere. The forum of active supporters of the de- velopment of the Kazakh language was backed by a number of opposition organizations, includ- ing the Azat party, the Ult Tagdyry (Fate of the Nation) movement and others. The meeting issued an appeal to President Nursultan Nazarbayev which contained 10 points. The main demands were the adoption of a new law on state language, opposition to the term “Kazakhstani nation” and the condemnation of the idea of trilingualism in Kazakhstan.

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 Third, organizations of ethnic Russians are also actively

Third, organizations of ethnic Russians are also actively working in Kazakhstan’s ethno- political sphere. The Russkiye (Russians) Foundation started issuing some sort of Russian ID cards to “compatriots” living abroad on 9 July 2009. At the initial stages these cards will be is- sued to citizens of Ukraine, Kazakhstan, Moldova and the Baltic states. Even though Moscow did not support the foundation’s initiative officially, the fact of issuing these cards cannot but raise concern, especially when a poll conducted by the www.russians.kz website showed that 86% of respondents (1,427 people) supported the idea of holding these cards as a moral proof of their connections with Russia.

NEGATIVE ASPECTS WITHIN KAZAKHSTANS INTERETHNIC AND ETHNO-POLITICAL SPHERES

Let us now move on to discuss the main negative aspects of Kazakhstan’s interethnic and eth-

no-political spheres. First, there is no clearly formulated comprehensive blueprint of Kazakhstan’s policy on minorities. This situation helped the government maneuver in this sphere, i.e. allowed it to change its policy according to the situation. However, this factor has now become the main reason for tension in Kazakhstan’s ethno-political sphere because it

a) allows different, often mutually exclusive, approaches to pursuing a policy on minorities

to clash among, above all, the ruling elite;

b) makes it clear that the government does not have a clear understanding of the development

of the policy on minorities and its implementation;

c) confuses the activities of government agencies in the ethno-political and interethnic spheres;

d) is one of the reasons for minorities’ uncertainty about their future in Kazakhstan;

e) creates grounds for politicizing issues of the interethnic sphere;

f) reduces the willingness of Kazakhstan’s minorities to integrate and take part in nation-

building. Second, there is no special body that fulfils or coordinates the country’s ethno-political policy. Since it is not a government body, the Assembly of the People of Kazakhstan cannot legitimately coordinate the work of government institutions, and, first of all, local executive bodies to fulfill the current provisions of the policy on minorities. Third, principles, symbols and values have not yet been developed to unite and consolidate Kazakhstan’s ethnic minorities into one nation. As a result, processes of identification by citizen- ship are very slow. This problem stems from the incomplete consolidation of the state-forming Kazakh ethnos. This is demonstrated by the example of the constant infighting within the ethnos for economic, power and media resources (manifestations of tribalism), and regionalism, includ- ing the division between urban and rural Kazakhs. This means the titular ethnic group is still at a stage of a switch from ethnicity to a consolidated political society. Fourth, recent clashes between different ethnic groups living in Kazakhstan were a result of the inefficient government policy in the interethnic sphere. The fact that these conflicts do take place in Kazakhstan from time to time allows us to suggest that there is permanent hidden tension in relations between the peoples of Kazakhstan. This happens because interethnic conflicts are solved only after they break out without measures to prevent them. Moreover, there are grounds to believe that interethnic clashes become possible as a result of corruption and other shortcom- ings of government agencies when they pursue socioeconomic interests of one ethnic group at the expense of another. This was the case in the incidents in Aktau, Tengiz and Kazatkom. In these conflicts local ethnic Kazakhs blamed the authorities for failing to protect their socioeconomic rights. Fifth, there are language and personnel problems. These problems are to do with ethnic Ka-

zakhs’ dissatisfaction with the pace of the adoption of the Kazakh state language and its status on

25

with ethnic Ka- zakhs’ dissatisfaction with the pace of the adoption of the Kazakh state language

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 26 the one hand, and the Slavic ethnic

26

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 26 the one hand, and the Slavic ethnic

the one hand, and the Slavic ethnic groups’ concerns about the status of Russian and a switch in the language of paperwork to Kazakh on the other. In addition, both ethnic Kazakhs and minori-

ties are dissatisfied with their social statuses. The former believe that their socioeconomic interests are being damaged, while the latter think that their constitutional rights to access to the political processes (government decision-making) are being limited. This problem is threatening to become a factor of divisions not only in Kazakhstani society as a whole but also among the elite of ethnic Kazakhs. Sixth, further socioeconomic and political problems are the following.

1. The opinion poll of experts showed that 22 experts (22.4%) thought that socioeconomic

problems may worsen the situation in the interethnic sphere in any region to a greater extent be- cause the current economic crisis has already sharpened socioeconomic and ethno-political moods of various ethnic groups of Kazakhstan.

2. 42 experts (42.8%) think that the redistribution of power and property has a high prob-

ability (from 6 to 10 points on a 10-point scale) to cause violation of civil peace and tranquility in Kazakhstan, while 49 experts (50%) said that poverty and unemployment had the highest prob- ability doing so (from 7 to 10 points). Poor socioeconomic conditions, high crime rates and corruption in the law-enforcement agen- cies may create favorable conditions for the emergence of interethnic conflicts within society. Seventh, interethnic clashes may be caused by criminal face-offs. Most recent conflicts were rst sparked among young people in criminal showdowns, but later turned into ethnic clashes. We think that the emergence of the last two types of conflicts in Kazakhstan is helped by sev- eral circumstances. First, ethnic minorities, as a rule, concentrate significant trade assets in their hands, which means they become middlemen between producers and consumers, employers and employees, owners and lessees, the elite and grassroots. As a result, the minority in question gets hold of a dominant economic and social position compared to a majority. Even in the 1960s-1980s, when there was no great gap in personal incomes, ethnic minorities dominated the trade, services and supply spheres. This ensured higher real term incomes for them compared to the local, mostly ethnic Kazakh population involved in the healthcare, education and production spheres. Quick social and ethnic differentiation in the transitional period increased social and interethnic tension. The Soviet system used to stop social and interethnic conflicts at the initial stage of their develop- ment by force, including interethnic conflicts at personal level, whereas because of the weakening political regime and material differentiation which started in the late 1980s interethnic clashes became frequent. Any of these clashes could cause an interethnic conflict. Describing ethnic mi- norities’ quick adaptation to market relations, D Dorokhov, Ye Palyutina and V Dyatlov coined the term ‘trade minorities.’ Second, the specifics of Kazakhstan’s reality are that interethnic conflict as a rule does not break out because of the economic dominance of minorities, but as a result of the improper social behaviour of young people from ethnic minorities with respect to the youth of the ethnic majority, i.e. to ethnic Kazakhs. Many cases of criminal showdowns involving young people from ethnic minorities have taken place in Kazakhstan. The analysis of conflicts (from conflicts in the late 1980s to the one that took place only two years ago) between young ethnic Kazakhs and young people from ethnic minorities showed this. The situation is complicated by a negative stereotype of young people from Caucasus ethnic minorities whose behaviors are often treated as inappropri- ate or marginal by other young people. Therefore, complicated relations between young people from Caucasus minorities and young ethnic Kazakhs have become the target of widespread criti- cism and assume prominent place within the population’s discontent about crime levels of Cauca- sus ethnic groups in general. This renders the native population feel disadvantaged, which in turn only intensifies tension around ethnic minorities and projects negative attitudes towards all ethnic minorities, which ‘have

adopted their own rules,’ while ‘we are being robbed in our own town.’ This sort of concerns is

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 temptingly simple and convenient: the trader robs not

temptingly simple and convenient: the trader robs not because he is a dishonest person, but be- cause he is ‘not ours’ and the local population allegedly falls victim to ill-intentioned outsiders. This is how the mechanism of forming negative racial stereotypes works. In our situation all this points to the social isolation of young people from certain ethnic minorities from the majority of young people. At the same time, despite all this, factors which cause interethnic conflicts in Kazakhstan are episodic. They do not manifest clearly and publicly. In many cases, interethnic tension is latent and appears not in physical violence but in hard-to-spot phenomena such as ethno-cultural isolation, ethnic and social isolation, economic competition and the high level of mutual distrust between ethnic groups. For example, when a socially closed ethnic group without strength and power re- frains from open expression of its discontent and avoids open conflict, there is still a conflict, even though it is not an open conflict.

PROSPECTS FOR THE DEVELOPME]NT OF KAZAKHSTANS ETHNO-POLITICAL AND INTERETHNIC SITUATION

The analysis of the present ethno-political situation in Kazakhstan allows us to conclude that

it will further develop according to the following two possible scenarios if the present policy on

ethnic minorities remains in place

1. POLITICIZATION OF CURRENT ISSUES IN KAZAKHSTAN’S ETHNIC SPHERE

27

1.1. Organizations of ethnic Russians will increase their involvement in the country’s poli-

tics. All conditions have been created for organizations of ethnic Russians in Kazakhstan to make their political demands. Russia supports the activities of Russian organizations in Kazakhstan.

It is quite possible that this strategy of the Russian government is prompted by its treatment of

significant Russian diasporas as a basis for its geopolitical presence in CIS countries. Earlier on, Moscow tried to encourage the migration of those it regards as compatriots to Russia, whereas now, judging by all accounts, it will also support Russian diasporas in CIS countries (especially when the Russian government’s program to encourage the voluntary movement of ‘compatriots’ to Russia is failing). Moreover these processes will find favorable conditions in Kazakhstan be- cause the Russians’ loss of their status as the nation-forming ethnic group of the USSR is still a serious reason for their poor perception of Kazakhstan’s independence. This also explains ethnic Russians’ high level of readiness to politically oppose Kazakhstan’s ethno-political policy. As

a result, it is quite possible that the “Russian issue” will become both one of the backbones of Russian-Kazakh relations and their bargaining chip.

1.2. Kazakh national patriotic organizations will become active in using the ethnic Kazakh

population’s discontent with the government’s policy on minorities. Ethnic Kazakhs now make up a majority in almost all regions. Moreover the ethnic Kazakh population is growing not only because of ethnic Kazakh immigration but also thanks to natural growth. These circumstances will become the main reasons for the further deterioration of the socioeconomic conditions in rural areas in Kazakhstan and, consequently, the socioeconomic state of the ethnic Kazakh popu-

lation prevailing there. This factor will increase

1.2.1. the native people’s discontent with the government’s policy on ethnic minorities;

1.2.2. tension in relations between ethnic Kazakhs and other ethnic groups whose socioeco-

nomic interests coincide with those of rural ethnic Kazakhs. Important factors that can worsen interethnic relations in Kazakhstan include the growing tension among some ethnic Kazakhs which is being formed as a response to the social and eco-

include the growing tension among some ethnic Kazakhs which is being formed as a response to

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 nomic stratification of society. This means that the

nomic stratification of society. This means that the existing disproportions in the distribution of social chances and material wealth, and a socio-cultural gap between urban and rural areas which are interpolated by some ethnic Kazakhs into the ethnic ground help shift existing tension into the sphere of interethnic relations. As a result, interethnic tension is growing among marginalized groups of ethnic Kazakhs who have moved from villages into towns. This tension is now translat- ing into a growth in political demands set before the country’s government. However, the growth in discontent will be directed against the government’s policy on ethnic minorities which, ethnic Kazakhs believe, does not meet the ethnic Kazakh majority’s social and economic demands. The side effect of opposing the policy on minorities is the growing psychological aggressiveness of some ethnic Kazakhs towards other ethnic groups which, they think, for various reasons have managed to obtain ‘better’ socioeconomic opportunities than ethnic Kazakhs. Thus, in the given situation where there is no system of early diagnostics and prevention of interethnic tension and conflicts in society, any potential conflicts and tension in the interethnic sphere will be reduced to the ethno-political sphere. Moreover, there is a probability that any potential interethnic tension in rural areas and suburbs of major cities and regional centers which have attracted many rural ethnic Kazakhs will be caused by deteriorating socioeconomic conditions.

1.3. These factors may help reformat Kazakhstan’s party and political vessels and fill it with

new content. It is becoming clear now that in the near future the radical wing of the opposition

will oppose the government precisely in the ethno-political sphere. These circumstances mean that the success of the government’s measures will soon depend in large part on its ability to meet the ethnic Kazakh majority’s ethno-political demands.

1.4. The growing political participation of organizations of ethnic Russians may become a

28 precedent for similar actions by other ethnic minorities in Kazakhstan. In this context, a particular

danger is posed in districts where ethnic Uzbeks and Uyghurs live compactly, especially when nationalist-minded Uyghurs are advocating the idea of self-rule through creating conditions for the establishment of administrative and cultural autonomy in Kazakhstan. It should not go un- noticed that during the clashes between young ethnic Kazakhs and young Uyghurs in Shelek and Malybay some Uyghurs put forward nationalist ideas and separatist slogans.

put forward nationalist ideas and separatist slogans. 2. INCREASE IN INTERETHNIC TENSION AND ITS POTENTIAL CHANGE

2. INCREASE IN INTERETHNIC TENSION AND ITS POTENTIAL CHANGE TO A STAGE OF OPEN CONFLICT

2.1. The escalation of ethno-political moods among the people of Kazakhstan may lead to

the emergence of numerous hotbeds of interethnic conflicts. The growth of political demands by organizations of ethnic Russians and Kazakh national patriotic movements will mutually encour- age and increase tension and conflict potential, above all, between ethnic Russians and ethnic Kazakhs. When there is no system of preventing interethnic tension and conflicts, any potential

clashes and tension in the interethnic sphere will be reduced to the ethno-political sphere. In other words, clashes will be caused by political demands of ethnic groups of Kazakhstan which are in- volved in confrontation between one another. There exists a higher probability that any potential tension in relations between ethnic groups will take place because of the deterioration of the so- cioeconomic situation in rural areas and suburbs of major cities and regional centers which have attracted many rural ethnic Kazakhs. These problems of the policy on minorities and the ethno- political sphere of Kazakhstan may well become the main reason for a deterioration of the ethno- political situation in the country and a decline in the government’s reputation in the near future.

2.2. Ethno-political problems will lead to ethnic isolation. This process will most likely

be reflected in a growth in the level of confrontation between cultures of Kazakhstan’s ethnic groups. There are good reasons to argue that this situation is emerging already. First, the govern- ment apparatus is mostly made up of representative of one ethnic group. In this situation, dissatis- ed groups of the population will often be blaming shortcomings of the government system, such

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 as the lack of professionalism of officials, corruption

as the lack of professionalism of officials, corruption and abuse of power, on the ethnic affilia- tion of officials. Second, according to the theory and practice of ethno-political research, ethnic isolationism will inevitably increase ethnic phobias, prejudices and clashes of ethnic and cultural values. And third, many opinion polls have shown everyday racism to be widespread in Kazakh- stan. It should be noted that according to the theory of ethnology and ethno-psychology, racism at the everyday level takes place mostly due to the emergence of ethno-cultural and ethno-political cracks caused by cultural and language contradictions.

CONCLUSIONS AND RECOMMENDATIONS

1. Results achieved in Kazakhstan’s nation-building sphere allow us to speak about a certain

level of stability in interethnic relations. The main factor for interethnic stability in Kazakhstan is the maintenance of the balance of interests between ethnic groups living in the country. This prevents any privileged status on the grounds of ethnicity and discrimination against ethnic feel- ings.

2. Kazakhstan is now searching for a national idea which aims to adumbrate a state and po-

litical nation with a huge economic potential and leading position in the world. The implementa-

tion of this idea may drastically solve the issue of minorities in Kazakhstan.

3. The formation of a nation-state in the political context crucially depends on whether the

elite and masses and all ethno-political groups living on the territory have interests in common.

The quality of the nation’s elite is also an important issue with the main criterion being its com- petence to properly assess social processes and reform them in a desired way.

4. Structural changes in Kazakhstani society seem to approach an edge where it becomes

necessary to specify values and set social norms and rules of the game which help maintain the

balance and stabilize all subsystems of society, namely the economy, politics, the social and cul- tural spheres and the sphere of interethnic relations.

5. In the medium-term future Kazakhstan will have serious chances of survival and devel-

opment only in case of minorities’ consolidation around the main ethnic group. The creation of

a united nation is a long-term task. It is necessary that each ethnic group, occupying their place and preserving and developing their folk cultures, is firmly integrated into the main component of the population along the principle of “one country – one people.” In other words, the creation of a modern state which has a multicultural population is impossible without a political union of ethnic minorities around the main ethnic group. This consolidation should be conscious and should aim to maintain a common legal and economic space and the joint protection of common interests on the international arena.

6. In actual fact, Kazakhstan’s experience in the sphere of interethnic relations which is in

tune with the experience of other countries shows that it is hard to efficiently regulate interethnic relations without the real consolidation of ethnic groups and the adoption of a preventive ethnic policy.

7. The ethno-political situation in Kazakhstan is now entering a problematic zone where the

continuation of the current direction of the policy on minorities may politicize interethnic issues and increase the potential of interethnic conflicts.

8. Kazakhstan’s ethnic Kazakhs and ethnic Russians will most likely show dissatisfaction

with the government’s ethno-political policy.

9. The inconsistent and non-coordinated nature of government agencies’ activities in the

ethno-political sphere help increase tension in Kazakhstan’s interethnic sphere in many ways.

10. The absence of a comprehensive, clear policy on ethnic minorities presents the main

reason for the government’s inefficient work in the ethno-political sphere.

11. Kazakhstan practically lacks a policy for preventing interethnic tension and conflicts.

12. Problems of the policy on minorities seem to lead to a situation where interethnic con-

29

tension and confl icts. 12. Problems of the policy on minorities seem to lead to a

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 fl icts and tension will unavoidably be of

icts and tension will unavoidably be of an an ethno-political nature. This means clashes will take place because of confrontation between political claims of Kazakhstan’s ethnic groups against one another. 13. The main media which will be involved in ethno-political and interethnic conflicts in the near future will consist of ethnic Kazakhs and ethnic Russians living in Kazakhstan. There is a high probability that tension between ethnic Russians and ethnic Kazakhs may become long-term and stable and be based on cultural confrontation. 14. Problems of the policy on minorities and troubles in Kazakhstan’s ethno-political sphere may soon become of the main reasons for the decline of the government’s reputation and its ap- proval ratings.

30

government’s reputation and its ap- proval ratings. 30 R ECOMMENDATIONS SYSTEMATIC MEASURES Specifying the tasks

RECOMMENDATIONS

SYSTEMATIC MEASURES

Specifying the tasks and functions of ethno-cultural centers in solving the stated problem of ‘ensuring the account of diverse ethnic interests in the state’s policy on minorities’ which is defined in the legislation (Statute on the Assembly of the People of Kazakhstan, adopted on 16 April 2002); Systematic analysis of the interests and resources of Kazakhstan’s largest ethnic groups, and following from there a definition of (potential) conflicts of interests between ethnic groups, main interethnic contradictions, and furthermore drafting and implementing measures to coordinate interests of ethnic groups; Instead of the situational approach to solving emerging and worsening interethnic conflicts currently followed in Kazakhstan, attention should be shifted to the capabilities of expert examination of conflicts. Experts would be able to realize a great amount of analytical, explanatory and corrective work in the regions; Expert examination of conflicts also means the creation of a system of early diagnostics, monitoring and management of potential conflicts to demonstrate the central government is capable of preserving stability in Kazakhstan’s interethnic relations and of preventing the “ethnic card” being played; An authorized body to unite all ethnic groups living in Kazakhstan should be set up by the Assembly of the People of Kazakhstan. Emphasis should be placed on strengthening integration, uniting and partner efforts. Integration, union and partnership do not mean the rejection of ethnic cultures, identities and traditions here. They mean instead shifting the stress to more common basic human ideals such as human rights, values, and putting collective interests over personal ones (i.e. over narrowly-defined economic, specific political and ethno-cultural interests); Adopting draft proposals for Kazakhstan’s policy on minorities and for the law about this policy. The absence of these documents is one of the main reasons for the currently inefficient work of the government in the realm of preventing and regulating interethnic conflicts among society and within the ethno-political sphere. Creating a specialized government body with the sole aim to fully realize the official policy on minorities and to unite all ethnic groups living in the country. These functions and tasks are dispersed now and their implementation is not systematic in any way. While Kazakhstan’s Security Council and the Kazakhstani presidential administration supervise and coordinate the activities of government agencies and public and political organizations in the sphere of interethnic relations, various elements of the policy on minorities are implemented at different levels by the law-enforcement agencies, national security bodies, the Kazakhstani Ministry of Culture and Information and by regional, district and town departments for internal policy.

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

SPECIFIC MEASURES

MAIN TRENDS AND DEVELOPMENTS IN 2009 SPECIFIC MEASURES The application of all powers of the government,

The application of all powers of the government, local government bodies, the Ministry of Labor and Social Protection and its regional departments, the prosecutor-general’s office and trilateral commissions on social partnership to do with the observance of labor legislation to prevent the discrimination of Kazakhstani workers by foreign investors (entrepreneurs); The adoption of efficient and regular control over foreign investors’ fulfillment of their contract obligations to improve the qualifications of Kazakhstani workers and train them to replace foreign low-qualified workforce and line managers. An analysis of reasons for foreign construction companies’ dominance in the country’s construction market (while major foreign companies and government agencies conclude contracts), the adoption of a mechanism to ensure Kazakhstani construction companies’ priority to provide services to government agencies and foreign companies which meet their quality and other requirements.

In addition, the following measures should be adopted depending on their applicability:

1. IN THE SPHERE OF MONITORING AND RESEARCH

To adopt a system of training specialists and conducting research on the problems of peace and tolerance, violence and conflicts, including as part of the disciplines of social psychology, ethnology, sociology, political science and history;

To create interdisciplinary centers, groups and public journals, special publications and methodological

literature on problems of tolerance for specialists and a wider audience; To create research groups and structures to monitor public opinion, interethnic relations and the activities of political, public and religious organizations to detect critical situations and draft recommendations to solve them;

To increasingly use the press, radio and television to relay modern scientific findings about the role and significance of cultural traditions and intercultural dialogue.

2. IN THE SPHERE OF PUBLIC ORGANIZATIONS AND OTHER ENTITIES OF CIVIL SOCIETY

Political parties and movements should formulate principles and positions on tolerance and the prevention of extremism in Kazakhstani society in their programs based on constitutional and moral norms; Political parties and movements are advised to draft criteria and requirements to expel members who support extremist ideas and activities and to prevent the latter from occupying managerial posts; Form additional channels for cooperation between government agencies and political parties with ethnic groups and their public and political organizations; Religious communities and organizations should expand their activities to prevent violence and conflicts in society and among those who have suffered forms of violence or discrimination and among those who are exposed to xenophobia and ultra-radical ideologies; Create community, district and town commissions or committees to monitor interethnic relations and react to critical situations in due course; Attract community leaders, the elderly, religious leaders and respected citizens to solve conflicts, including talks as representatives of people’s diplomacy and observers and guarantors of the observance and fulfillment of accords agreed on.

3. IN THE SPHERE OF IDEOLOGY

Formulate an ideological basis for uniting ethnic groups of Kazakhstan to achieve national unity, incorporating civil and historical-cultural values and symbols of ethnic Kazakhs that are important

31

national unity, incorporating civil and historical-cultural values and symbols of ethnic Kazakhs that are important 31

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 for Kazakhstani society to develop national pride and

for Kazakhstani society to develop national pride and prestige (for example, achievements in sport, cinema, literature and arts); Preserve multiculturalism and identities of Kazakhstan’s ethnic groups as the valuable basis of interethnic piece and accord and support patriotism to help Kazakhstan’s ethnic groups unite into a civil nation; Open “one country – one nation” columns in national newspapers to discuss problems of ethnic groups of Kazakhstan and the preservation of interethnic and inter-religious harmony and Kazakhstan’s historical and cultural values; Set up an incentive system of grants helping expand works devoted to fully and more appropriately reflect on processes of ethno-cultural union in Kazakhstan, on problems of uniting ethnic groups and on the preservation of interethnic and inter-religious dialogue; Regularly monitor press and electronic media outlets, websites and literature and products of the entertainment industry (computer games, films and cartoons) to detect any attempts to incite racial, ethnic or religious enmity and hatred and calls for violence; To avoid mentioning the ethnicities of characters in media reports; Offer all-round support to children’s and youth media outlets to instill tolerance and patriotism.

32

youth media outlets to instill tolerance and patriotism. 32 4. IN THE SPHERE OF EDUCATION Teach

4. IN THE SPHERE OF EDUCATION

Teach Kazakh and Russian on a parity basis in schools and preschool establishments and create a system of teaching these languages in schools and universities; Conduct education work with children and their parents about principles of religious tolerance and harmony, including children and teenagers; React to negative stereotypes, interethnic dissonances and personal humiliation of people of different ethnic and racial background among children and young people; Stop activities and ban symbols of separatist and extremist groups and organizations in schools and universities; Send pupils and students on trips to expand their knowledge about the country and its peoples; Promote arts based on various folk traditions and cultural heritage and create modern multimedia products to unite Kazakhstan’s ethnic groups into one cultural and language space; For specialists and government education bodies to draft methodological recommendations for schools to foster patriotism among schoolchildren and instill negative attitudes towards violence and interethnic intolerance in them; Promote arts based on Kazakhstan’s folk traditions and create modern multimedia products about the commonalities of the cultural heritage of the people of Kazakhstan. Regularly conduct Days of the Unity of the People and the Common Ground of the Cultures of Kazakhstan’s ethnic groups and widely use the opportunities to integration offered by ethnic and folk holidays (Nauryz, Maslenitsa (Pancake Day), Sabantuy and others) by celebrating them publicly.

5. IN THE SPHERE OF GOVERNMENT

For parliament to amend the laws on language, on education, on the media and on public associations in a way to harmonize interethnic and inter-religious relations in the country; Increase the attention government agencies with respect to the apt and fair solution of socioeconomic, cultural and language problems to avoid their politicization on an ethnic basis; Consistently ensure constitutional rights that guarantee the equality of citizens regardless of race and ethnicity and that assure the freedom of religion;

CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009

Ensure efficient judicial practices to prevent and punish incitement of ethnic and religious hatred and discord; Train civil servants, including the police, in the sphere of interethnic relations and in methods of ghting group social tension and conflicts and teach them specifics of working with their ethnically and religiously diverse population; Promote civil, historical and cultural values that are common to all ethnic groups of Kazakhstan and support patriotism, helping the establishment of a civic nation; Consistently and generally thwart any manifestation of intolerance and violence and prosecute those

who commit ethnically or religiously motivated violence; Create a state public administration system of monitoring interethnic relations and preventing extremist

deeds. Also advance the work of human rights commissions, ombudsmen, NGOs, cultural centers for minorities (based on the state social order) and the Assembly of the People of Kazakhstan; Create an anti-crisis group and draft a preventive strategy of urgent measures to prevent emergency situations caused by interethnic tension; Improve legislation and directives in the sphere of internal migration, protect internal migrants’ rights, help internal migrants and ethnic Kazakh immigrants in towns socialize and adopt a set of measures to reduce risks likely to occur with chaotic internal migration; Draft practical measures to create regional and urban centers for the employment of internal migrants, taking into account the needs of urban labor markets (i.e. migration terminals and databases of job vacancies); Draft preventive measures to eliminate economic causes of illegal external migration by stopping illegal activities of commercial structures offering services of illegal employment, documentation and legalization of foreign citizens; Nominate representatives of ethnic minorities who speak fluent Kazakh for post of the civil service.

citizens; Nominate representatives of ethnic minorities who speak fluent Kazakh for post of the civil service.

33

citizens; Nominate representatives of ethnic minorities who speak fluent Kazakh for post of the civil service.
CHAPTER 2 KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO-POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF

CHAPTER 2

KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO-POLITICAL AND SOCIOECONOMIC SITUATION

(FINDINGS OF SOCIOLOGICAL SURVEYS)

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) 2.2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S

2.2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO-POLITICAL AND SOCIOECONOMIC SITUATION

(FINDINGS OF SOCIOLOGICAL SURVEYS)

by The Central Asian Foundation for Developing Democracy

ABSTRACT

The global financial crisis which broke out in 2008 differs in its dimension from other simi- lar incidents and is more or less affecting all countries. It severely concerns developing countries where the national community has not been established yet and the government institutions are weak or dysfunctional. Therefore, experts believe that the main consequence of this crisis is the reconsideration of the functions of all significant political and economic entities with regard to the development of the crisis and its withdrawal It is well-known that one of the first countries hit by the crisis was Kazakhstan. The crisis showed its first signs in 2007 and grew stronger in 2009. This is why our given task was to ana- lyze how the financial crisis affected the everyday life of Kazakhstani citizens; the population’s predominant mood; the origins of the economic crisis and the possible date of its ending; and nally the correlation between the activist and paternalist behaviors among the country’s popula- tion. Furthermore, it was also valuable to find out how the population evaluated the government’s anti-crisis measures and the political situation in general. For the analysis we used information obtained through an opinion poll that the Central Asian Foundation for Developing Democracy conducted in February-March and August-September 2009. The poll was carried out in 14 regions and the two biggest cities — Almaty and Astana. The first poll involved 1,192 respondents and the second one 1,197 respondents adumbrating a group of adults representative of the population by sex, age and place of residence. In addition, the project used other data collected by polling companies that were published in the press, including the Kazakhstani Institute for Social and Economic Information and Fore- casts’ report ‘Barometer of Crisis 2009’. The poll was carried out in Kazakhstan’s eight regions – Almaty, Mangistau, North Kazakhstan, South Kazakhstan, West Kazakhstan, East Kazakhstan, Karaganda, and in Almaty. Multistage and quota sampling was used and the total number of re- spondents was 1,400.

2.1. THE ECONOMIC CRISIS AND SOCIOECONOMIC SITUATION IN THE PERCEPTION OF THE KAZAKHSTANI CITIZENS

The following social indicators, based on the respondents’ positive, neutral and negative responses, were used in the poll: level of contentment with life, evaluation of the economic situ- ation in the country, evaluation of the family’s living standard, and evaluation of the political situation. The collected information allows us to analyze the dynamics of the population’s social state during the whole year. The opinion poll shows a certain fall in the social state indicators in accordance with socio- logical measurements, but although various factors show various dynamics it still can be noticed that Kazakhstani society is gradually adapting to the crisis situation. As the poll shows, there can be observed fluctuations in the respondents’ evaluation of the economic situation in the country. In the spring 26% of Kazakhstani citizens believed that

35

evaluation of the economic situation in the country. In the spring 26% of Kazakhstani citizens believed

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) the situation in the country was stable but their number

the situation in the country was stable but their number reduced to 15.7% in the second poll. Whereas the number of respondents, who noted the economic crisis in the country, grew by 17%, in the first poll only 41.7% of the respondents said that the country’s economy was in a state of crisis, their number grew to 58% in the second poll. This indicates a growth in the level of social concern.

Table 1. Results of the evaluation of the country’s economic situation in %

36

the evaluation of the country’s economic situation in % 36 12,8 6,9 26,0 15,7 27,1 34,8
12,8 6,9 26,0 15,7 27,1 34,8 14,6 23,2 19,5 19,4
12,8
6,9
26,0
15,7
27,1
34,8
14,6
23,2
19,5
19,4

Economic growth

Economic situation is stable

The country’s economic situation is unstable, before a crisis

Crisis

No comment

0,0

situation is unstable, before a crisis Crisis No comment 0,0 5,0 10,0 March 2009 15,0 20,0

5,0

10,0

March 2009

15,0 20,0 September 2009
15,0
20,0
September 2009

25,0

30,0

35,0

At the same time, the results of the poll prove that the country’s population is not inclined to blame the crisis on the authorities. The majority of Kazakhstani citizens do not desire to criticize the authorities’ actions as they believe the authorities are capable of resolving issues related to the crisis. Even though more than the half of the respondents did not observe any positive change in overcoming the crisis, they expect that anti-crisis measures will yield results soon. In this context, the majority of the respondents believe that the economic crisis in Kazakh- stan is a result of external reasons and this is why the country’s leadership is partially responsible for the state of affairs in the country. But it should not be ruled out that eventually, as the crisis grows, these estimates may retreat to the background and it is possible that the president and the government will be blamed, above all for their ineffective moves to overcome the crisis. What is more, these tendencies can already be traced back in the respondents’’ replies. At present, Almaty city’s residents have critical opinion. According to the institute’s report (KISEP) 56.6% of Almaty’s residents believe that the government is inefficient in implementing its anti-crisis program. About a third of the population in Karaganda (29.1%), in the region of West Kazakhstan (31.4%), North Kazakhstan (28.4%) and East Kazakhstan (29.4%) also believe that the government’s anti-crisis actions are not efficient. Despite the fact that the Southern re- gions suffered from the crisis to a greater extent people in these regions are continuing to estimate the implementation of the program positively. The above-mentioned facts show that the popula- tion’s complaints about the government increased, which is linked to the growing prices of food and public utilities and the growing unemployment rate.

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) But anyway, the financial crisis affected the majority of

But anyway, the financial crisis affected the majority of the country’s population (70.9%). Although it has to be mentioned, that the impact was assessed as ‘partial’. Only a fourth of the country’s population said that they did not feel the economic crisis. However, despite the deterio- rating financial situation, Kazakhstani citizens have optimistic expectations about the duration of the current financial crisis. The majority of the country’s population believes that there will be positive changes of the situation in the near future and considers that the crisis will continue for another two-three years at most and one year at least. Only a tenth of the country’s population (9.6%) have the opinion that the crisis is long term and do not expect the crisis to end soon. Nevertheless, the poll established that the financial crisis’ impact on the country’s economy was negative. The dominating part of the population considers that the crisis will definitely af- fect them. The respondents sharing this viewpoint are divided depending on the scale of conse- quences: 34.9% said the crisis would impact the entire economy of the country, 37.4% believe that negative consequences will appear in separate sectors of the economy. Although these mass estimates of the economic situation in the country may be abstract and rely mainly on background information, the index of self-evaluation of the financial state pro- vides information about how families do feel.

Table 2. Levels of the population’s contentment in %

70,9 Satisfied 63,9 21,1 Dissatisfied 26,2 8 No comment 9,9 0 10 20 30 40
70,9
Satisfied
63,9
21,1
Dissatisfied
26,2
8
No comment
9,9
0 10
20
30
40
50
60
70
80
March 2009
September 2009

The polls show a steady fall in the level of contentment with life and the current families’ living standard. A significant part of society was affected by the crisis but these assessments changed rather moderately. About 70% of the population was satisfied with their lives in Febru- ary and March 2009, whereas the September poll established that this index reduced to 63.9%. Consequently, the number of those, who were not satisfied with their lives, grew to 21.1% and 26.2% respectively. Changes in life contentment are observed in almost all regions. The worst indicators were found in Zhambyl (73.3% and 54.3%), Almaty (69.9% and 57.9%), East Kazakhstan (63.5% and 52.7%) and South Kazakhstan (79.9% and 71.5%). The population in the northern regions

37

East Kazakhstan (63.5% and 52.7%) and South Kazakhstan (79.9% and 71.5%). The population in the northern

suffered less and in the Kostanay Region this indicator is improving contrary to the nationwide trend. The March poll put the level of life contentment at 45.9% whereas the autumn poll showed the indicator had grown to 52.1%.

Table 3. Levels of the population’s contentment in % listed by regions (oblast’)

Akmolinsk

Aktyubinsk

Almaty

Atyrau

East Kazakhstan

Zhambyl

Western Kazakhstan

Karaganda

Kostanay

Kyzyl-Orda

Mangystau

Pavlodar

North Kazakhstan

South Kazakhstan

Almaty (city)

Astana

59,1 65,3 61,4 77,8 57,9 69,9 75,7 88,7 52,7 63,5 54,3 73,3 70,3 72,8 65,6
59,1
65,3
61,4
77,8
57,9
69,9
75,7
88,7
52,7
63,5
54,3
73,3
70,3
72,8
65,6
76,1
52,1
45,9
78,3
83,7
69,4
68,5
64,7
64,4
63,4
78,8
71,5
79,9
58,8
65,3
66,9
61,4
0,0
20
40
60
80
100
September 2009
March 2009

At the same time, the significance of social and psychological parameters, such as personal life prospects, confidence or the lack of confidence in future, is growing under the crisis circum- stances. In this respect, an alarming fact is that the majority of the population remains pessimistic about prospects and hopes for improvement in their lives. However, these assessments of the economic situation did not visibly affect the level of op- timism in the country. While optimists accounted for 45.3% in the first poll, the index ranging be- tween 35% and 55% in the regions, the number of optimists grew to 46.3% at the end of the year. Although it is remarkable, that the level of optimists did not remain the same in all the regions.

Table 4. Distribution of answers to the question ‘How do you feel about the future?’
Table 4. Distribution of answers to the question
‘How do you feel about the future?’ in %
45,3
I am confident and optimistic
46,3
I am calm, although I do not expect
advantages for myself
28,4
22,5
16,5
I am uneasy
18,4
3,9
I am afraid
6,2
5,9
No comment
6,5
0
10
20
30
40
50
March 2009
September 2009
CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO-
POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL
SURVEYS)

This index reduced in a number of regions, particularly in Mangistau (57.9% and 49.3%) and Pavlodar Regions (52.3% and 50.7%) and in Astana (55.7% and 51.7%). The number of opti- mists grew in the Atyrau Region, where optimists accounted for a third of the population (37.6%) in spring and 44.5% in autumn. The high level of optimism influences the strategy of behavior chosen by Kazakhstani citi- zens in the crisis situation. So a third of the country’s people show an activist model of behavior, that is that they rely on their own strengths in resolving crisis-caused problems. Representatives of this group are known for their rational activist position on the government’s functions to pro- tect the population in the crisis situation: ‘The government must only create conditions for every- one to independently resolve his or her problems.’ According to the poll, 46.2% of the country’s people ‘maintain’ the active behavior dur- ing the crisis, first of all, looking for additional sources of income. In the second poll this group accounted for 39% of the respondents. Moreover, 14.6% of the respondents in the first poll and 12.7% in the second one said that they would change their occupations, and 4.7% and 6.6% re- spectively will apply to an employment bureau and other social services. At the same time, the other part of Kazakhstani citizens maintains passive behavior — 43.8% (in the first poll) and 48.9% (in the second one) will economize money and cut their needs if their nancial situation deteriorates. A radical and irreconcilable way of behavior is typical of respec- tively 11.3% and 13.2% of the respondents. This group confidently said that they would protest. A larger part of the population (55.1%) more or less relies on the government’s help to re- solve crisis-caused problems. Nevertheless, the majority of these people just partially hope that the government will resolve the country’s crisis-related problems. In general, 45.9% of the coun- try’s population, which is almost half of Kazakhstan’s citizens, is confident, that the government should help the population to resolve the crisis-caused problems. Thus, one can say that among Kazakhstan’s population dominates a paternalistic attitude because the majority of the people rely on the government to resolve the main crisis-related problems.

39

attitude because the majority of the people rely on the government to resolve the main crisis-related

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) Under these circumstances, ‘quiet’ forms of protest,

Under these circumstances, ‘quiet’ forms of protest, such as expressing negative reaction to some or other measures in a close circle of the kith and kin, are very common. This is what 24% of the respondents in the first poll and 26.5% in the second one thought. A part of the protesters, who appeal to government’s help, are principally not interested in acting radically. In both polls, the number of those, who were geared up for radical moves was insignificant: only 9.6% and 12.7% of the respondents in the two polls respectively were ready to take part in protest actions to assert their rights.

40

to take part in protest actions to assert their rights. 40 Table 5. Distribution of answers

Table 5. Distribution of answers to the question ‘How will you express your dissatisfaction?’ in %

I participate in protests in order to stand up for my rights

I am going to express my negative opinion, but I will not participate in protests

No, I will never participate in protests, even if there are reasons for it

There are no reasons to protest

No comment

12,7 9,6 26,5 24,1 30,2 34,7 25,9 28,7 4,7 2,9 0 10 20 30 40
12,7
9,6
26,5
24,1
30,2
34,7
25,9
28,7
4,7
2,9
0 10
20
30
40
September 2009
March 2009

At the same time, a majority that means a third of the people categorically refused to take part in protest actions, which was the reaction of 34.7% and 30.2% of the respondents in the first and second polls respectively. Another third of Kazakhstani citizens did not have any reasons for protesting at all. They accounted for 28.7% of the respondents in the spring poll and 25.9% in the autumn poll. The basic reasons that can cause protests include food price increases (36.3% and 31.7%), large-scale redundancies (22.5% and 27.3%) and unreasonable increases of public utility charg- es (15.6% and 19.9%). These three reasons were the leading main reasons during the year. There was a little decrease of the ‘increase of food price’ indicator, which is most likely linked to the respondents’ ‘submission’ to further price increases in the crisis situation. It is also important to mention that the factor of ‘ethnic discrimination’ appeared in the group of the most acute problems. In the first poll, about 15.9% of the respondents noted this problem, whereas in the second probe 11.8% still believed, that this problem remains topical and acute. It is still unclear whether the fall of the index was accidental or whether it proves some long-term trend.

A

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) Table 6. Distribution of answers to the question ‘What may

Table 6. Distribution of answers to the question ‘What may cause your discontent?’ in %

Increase of food prices

Unreasonable rise of charges for public utilities

Mass unemployment

National Discrimination

Illegal actions of police authorities

Irresponsibility of local authorities

Carelessness and amateurishness of medical workers

No causes

Other causes

No comment

31,7 36,3 19,9 15,6 27,3 22,5 11,8 15,9 8,2 5,9 15,3 7,5 9,8 11,6 14,5
31,7
36,3
19,9
15,6
27,3
22,5
11,8
15,9
8,2
5,9
15,3
7,5
9,8
11,6
14,5
10,9
6,9
5,8
8,8
10,5
0
10
20
30
40
September 2009
March 2009

Thus, the results of the poll show the deterioration of the social situation (despite the high level of optimism and expectations to overcome the crisis in the near future). The country’s south- ern regions suffered most from the crisis and as is generally known these regions are subsidized and the majority of low-income population live in these regions. Thanks to the high level of opti- mism, the level of protest mood is low. In general, the number of people, who are ready to stage rallies, is small and Kazakhstani citizens prefer to express dissatisfaction with their conditions in peaceful ways.

BOUT??

2.2. PUBLIC OPINION ABUT THE GOVERNVENTS MANAGEMENT OF THE CRISIS

The studies of the social mood show that the economic crisis has not acquired a nature that could threaten the country’s social and political stability yet. Nevertheless, there exists some pro- test potential in society that may grow and finally pose threats and risks. However, the scale of these tendencies is still insignificant.

41

that may grow and finally pose threats and risks. However, the scale of these tendencies is

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) 42 The dynamics of these mood trends during the year

42

SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) 42 The dynamics of these mood trends during the year show

The dynamics of these mood trends during the year show that the expectation of a quick way out of the crisis coupled with the hope that the president and the government would manage to achieve positive changes decreased. Positive and optimistic estimates, which had been made at the beginning of the year, became pessimistic at the end of the year. Despite high officials’ pledges that the crisis has already reached the bottom and things have started to improve, people became deeply skeptical about the government’s ability to improve the economic situation. Undoubtedly, not only possible scenarios of economic development but also the efficiency of the official policy on different population groups, which suffer from the crisis, determine the people’s reaction to the crisis. The opinion polls show that people still trust the authorities. The citizens’ trust is, as is generally known, a special source of the government’s authority and at the same time an indicator of its efficiency. It should be noted that the trust people show depends mainly on the government branches and levels and officials heading them. Based on the polls, it can be said that the people trust the executive bodies more than the representative. According to the poll results, the majority of the country’s population positively assesses the work of the president and the government as their shares ranged from 87.8% (in the first poll) to 75.6% (in the second one) the president and from 71.2% to 63.6% the government respectively. There is also great confidence in central government bodies and overall in the president, who received 72.3% and 69.8% of the respondents’ votes, while the respondents’ trust in the govern- ment ranged from 55.9% to 48.7%. As for the regions, there generally was a high level of confidence in President Nazarbayev, ranging from 66.7% to 78.5%, followed by the government, which received fewer votes. The government’s work was criticized in Southern Kazakhstan (Almaty, Zhambyl and Southern Ka- zakhstani Regions). But undoubtedly, the deteriorated social mood influenced and affected these assessments. As mentioned in the first section of the annual report financial security deteriorated in the country’s southern regions, which led to a fall in the social mood. At the same time, the results of the polls make it possible to maintain that the Kazakhstani’s mass consciousness believes that the government should play the dominant role in economy, the politics and the management of property. This idea remains very steady and makes it possible to assume that there will be no significant changes in this field in the near future. People still regard the government as the key body for regulating society. However, deci- sions and actions by government institutions are not enjoying public support but at the same time they are not causing mass protests. Probably, the given situation is a result of the authorities’ abil- ity to create public confidence in the success of their policy. That is why the people approve of the government’s anti-crisis program. According to the poll results Kazakhstani citizens are complaining about the efficiency of the government system. This mainly relates to the institutions, which were designed to express and protect the citizens’ interests. The polls show that the institutions designed to act in favor of society, which is to express and represent the citizens’ interests, enjoy less support from the people than the executive bodies do. In the people’s eyes the work of the representative bodies, public organizations and politi- cal parties is least efficient. These organizations are coping with their tasks and responsibilities to the least degree. On average, about 50% of people have confidence in the two chambers of parliament; a third of Kazakhstan’s citizens trust political parties and a little over 30% trust the non-governmental sector. Results listed by regions show that representative bodies enjoy the least confidence: in the Almaty Region (23.2%), the Zhambyl Region (48.3%), the Eastern Kazakhstan Region (30.2%), the Southern Kazakhstan Region (19.6%) and the Kostanay Region (13.5%). At the same time, it should be noted that respondents’ confidence in the media grew from 42.3% in the first poll to 58.4% in the second one.

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

A low rating of confidence was observed regarding judicial bodies. Less than a half of the

respondents, that is 42.5% do not have confidence in the judicial system and 37.8% do not have confidence in the law-enforcement bodies. These data may indicate the fact that on the one hand

the respondents are not well informed about the activities of bodies designated to represent and protect the citizens’ interests on the other that these activities are absent.

A quite low level of confidence was taken down for institutions representing the local gov-

ernment, which are the regional, city, town and district administrations. The rating of confidence in these bodies ranged from 32.3% to 43.6%. The least confidence in regional bodies was ob- served in the Almaty Region (28.3%), the Zhambyl Region (32.8%) and the East Kazakhstan Region (25.4%). Correspondingly, public confidence in regional governors was low in the Al- maty Region (21%), the Zhambyl Region (38%), the East Kazakhstan Region (42%) and the Mangistau Region (44%), whereas the confidence in the governors of the Aktobe Region (77%), the Kyzylorda Region (76%), the North Kazakhstan Region (74%) and the Karaganda Region (71%) was high. At the same time, the opinion that local government bodies are inefficient is turning into some sort of axiom for all the strata and groups of the population. Respondents of different ages and income, who live in various settlements and show completely different views, negatively as- sessed the work of local bodies. Representative is also that the assessments of the activities of regional administrations do not depend on how well people are familiar with the activities of the officials, that is whether they base their assessment on their personal relations with local administrative bodies or whether they simply know about them by hearsay and therefore assess their activities ‘approximately’ or

‘roughly’. Responses received during focus group discussions prove that respondents, who coped with officials’ activities personally and those, who learnt about their activities by hearsay or from the media, assessed the activities of governors and mayors nearly equally. Because of this, one may conclude that the majority of ordinary citizens have a fixed im- age of the local authorities as an inefficient institution. The image of the authorities’ ‘chronic’ inefficiency is not changing in any way regardless of improvements or deterioration of people’s wellbeing, positive or negative economic moves and positive experiences between citizens and the authorities. These characteristics were observed during the past several years. In other words, local bodies remain inefficient for the people and the people associate local officials with dishon- orable bad bureaucrats. Moreover, the population considers that the local authorities are sluggish mainly because the efforts that they put into resolving problems on local level often yield inadequate results. As

a consequence people regard local bodies as structures, which oppose them and what is more ignore their problems.

According to opinions voiced during focus group discussions, respondents believe that there

is virtually no way of upholding their rights and interests in court. They also believe that it is im-

possible to settle disputes and discords with local authorities except for using informal contacts, ‘private connections’, ‘necessary friends’, etc. Due to that people regard themselves as isolated from the authorities and regard local bodies as bulky and sluggish.

Respondents also shared the opinion that the population did not have any influence on the work of local authorities. Undoubtedly, this situation emerged because other institutions designed

to be an alternative to government structures are weak. Above all, this relates to legislative bod- ies, political parties and the judiciary.

In addition to that it should also be stated that Kazakhstani citizens are focused on central

government bodies, whereas they do not regard local authorities as decision-making political forces. Since local government bodies do not draw the agenda, nor they determine ways of further development, they are treated as institutions that are designated to implement pro- grams developed by the government and the presidential administration. This allows local authorities to remain isolated from the public contrary to central government bodies and that

This allows local authorities to remain isolated from the public contrary to central government bodies and

43

This allows local authorities to remain isolated from the public contrary to central government bodies and

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) is why the population believes that there is no other

is why the population believes that there is no other institution that is more efficient than the president’s will. Summarizing it should be paid attention to the point that the crisis situation demands a more efficient government, because the respondents believe that the efficiency of the government and its officials is very low at present. The economic crisis aggravated this problem. Local govern- ment bodies’ real status became significantly lower than their official status. This situation makes local authorities lose their influence on society and this is especially fraught with serious conse- quences during a period of crisis. It is highly possible that the situation will get out of control, if the economic situation deteriorates further.

2.3. KAZAKHSTANI CITIZENSVIEWS ON KAZAKHSTANS PARTY SYSTEM AND POLITICAL SITUATION

44

K AZAKHSTAN ’ S PARTY SYSTEM AND POLITICAL SITUATION 44 From the country’s citizens point of

From the country’s citizens point of view the parties and political system were sufficiently stable and inertial in 2009. Even more at the beginning of the year the authorities did not take any steps that could prove their intentions to democratize the social and political situation in the country. This kept political stability indicators unchanged during the whole year. Moreover, negative expectations from the crisis did not prompt the citizens to rethink their confidence in the authorities. As a result, the polls showed that most people could not see any signs of the political crisis in the country. A larger part of the citizens (64.3% and 68.7%) believes that the economic and political situations in the country are developing in the desired direction, there is a due order and nothing is threatening democratic achievements. The opinion polls established that society was ready to support the authorities passively and trust them. It is not ruled out that the general opinion about

Table 7. Rating of the prominence of the political parties in %

Democratic People's Party 'Nur Otan'

Democratic Party of Kazakhstan ‘Ak Zhol’

National Social-Democratic Party (NSDP)

Kazakhstani Social-Democratic Party ‘Auyl’

Communist People’s Party of Kazakhstan

Communist Party of Kazakhstan

Democratic Party of Kazakhstan ‘Аzат’

Democratic Party ‘Adilet’

Party 'Rukhanyat'

Party of the Patriots of Kazakhstan

People's Party 'Alga'

Did not vote

71,8 76,5 37,9 41,7 0,7 0,9 2,9 2,6 3,8 2,7 4,7 5,5 3,2 1,8 0,7
71,8
76,5
37,9
41,7
0,7
0,9
2,9
2,6
3,8
2,7
4,7
5,5
3,2
1,8
0,7
0,6
0,2
0,3
0,3
0,3
0,5
0,6
11,1
9,3
0,0
20
40
60
80
September 2009
March 2009
Table 8. Distribution of answers to the question ‘What political party would you vote if
Table 8. Distribution of answers to the question ‘What political party would you
vote if an election were to be held today?’ in %
67,8
Democratic People's Party 'Nur Otan'
62,4
3,2
Democratic Party of Kazakhstan ‘Ak Zhol’
4,3
2,6
National Social-Democratic Party (NSDP)
2,2
1,6
Democratic Party of Kazakhstan ‘Аzат’
1,8
0,9
Kazakhstani Social-Democratic Party ‘Auyl’
1,2
0,9
Communist People’s Party of Kazakhstan
0,6
2
Communist Party of Kazakhstan
1,8
0,6
Party of the Patriots of Kazakhstan
0,5
0,4
Party 'Rukhanyat'
0,3
0,4
People's Party 'Alga'
0,4
6,7
Did not vote
8,6
12,8
No comment
15,9
0,0
20
40
60
80
45
September 2009
March 2009
CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO-
POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL
SURVEYS)

the political situation was based on the premise that many respondents did not wish to disclose their true political views to interviewers, fearing to be ‘misunderstood’ or for other reasons. Just a small number of respondents (12.6% and 15.8%) said that there was a need for re- forms of evolutionary character. Other respondents (6.7% and 9.5%) were not satisfied with the current policy. It should be noted that the specific gravity of this group is not high. The polls’ results also show that there were certain noticeable shifts in the public opinion. In particular, the need for security was replaced by the need for stability. Most likely, this explains the greater approval of the president, who personifies for Kazakhstan’s citizens the hope for security guar- antees. Taking the stabilization trend the vector itself is of course positive. Although under Ka- zakhstan’s current circumstances this trend is becoming increasingly excessive in conservatism with every passing year. Obviously, the key factor in determining the public opinion about the social and political sit- uation in 2009 was the public’s specific level of contentment with life and its individual aspects. The presidential administration, which is the main regulator of political processes, also made a contribution by establishing the manageable party system. The categories, which limit the system and which were established by the presidential administration such as ‘manageability’, ‘the presi- dent’s high rating’ and ‘the dominant party’, reflected in the public opinion in 2009. In the respondents’ opinion, the pro-presidential party Nur Otan remained dominant among the other parties and preserved its large electorate basis. On average, about 65% of respondents were ready to vote for it. Indisputably, the support for Nur Otan is motivated by the fact that potential voters usually associate it with the authorities and the president. Although logically, considering the economic crisis in the country, increases in food prices and the growing unem- ployment, the ruling party’s rating should have reduced at least by several points.

food prices and the growing unem- ployment, the ruling party’s rating should have reduced at least

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) During the whole year there could also be observed a

During the whole year there could also be observed a significant growth in the people’s dis- trust of political parties and their alienation from them. The attitude of many Kazakhstani citizens can be not only described as distrustful but also as sharply negative at times. Moreover, Nur Otan is the party of the officials and the negative attitude towards officials still remained in society. However, the Nur Otan party was on top of the rating and kept the absolute leadership during the whole the year. Of course, the fact that a respondent chose a certain party during the poll does not mean that this citizen will vote for that party. In addition, elections in our country are becoming more like a ritual and they are not regarded as a tool that influences the political future. Nevertheless, the party’s continuing high rating can be explained by the fact that the party has not managed to master the functions of the dominant party yet and to become a dominant party in people’s opinion. Nur Otan still has to fulfill this task in the future. At the same time, despite the fact that the party is part of the ruling regime, it legalizes political decisions through its channels and provides more or less control over the lawmaking body. In addition it should also be mentioned that Nur Otan, which was the absolute leader in the political arena during the year, in so far exceeding even its closest opponent, began to retire from the problematic segments of society. It became obvious that it is gradually quitting to be the party of the socially vulnerable groups and this is why the party should target specific social groups, their problems and demands in its information campaign.

Table 9. Distribution of answers to the question ‘Which political parties are taking an active role in the socio-political life of your region/ city?’ in %

46

in the socio-political life of your region/ city?’ in % 46 Democratic People's Party 'Nur Otan'

Democratic People's Party 'Nur Otan'

Democratic Party of Kazakhstan ‘Ak Zhol’

National Social-Democratic Party (NSDP)

Communist People’s Party of Kazakhstan

Communist Party of Kazakhstan

Kazakhstani Social-Democratic Party ‘Auyl’

Party 'Rukhanyat'

Democratic Party of Kazakhstan ‘Аzат’

Party of the Patriots of Kazakhstan

People's Party 'Alga'

Did not vote

No comment

75,5 71,6 8,3 7,5 4,9 3,9 0,9 1,8 4,7 3,7 2,1 1,9 1,9 1,3 1,8
75,5
71,6
8,3
7,5
4,9
3,9
0,9
1,8
4,7
3,7
2,1
1,9
1,9
1,3
1,8
2,6
1,2
1,1
0
0,1
4,5
8,7
25,6
19,8
0,0
20
40
60
80
September 2009
March 2009

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

The Ak Zhol party ranked second following Nur Otan during the year. As a result of the polls, its supporters accounted for the average of 3.7% of respondents. Though the party with such a level of support was not able to reach the 7% barrier, it was still popular among the popula- tion. The party’s popularity rating did not change significantly compared to other parties, so that it reached quite high results; 41.7% (in the first inquiry) and 37.9% (in the second inquiry) of the respondents said that they know the party. In the public opinion the party usually shows opposition only within certain limits so that it does ‘not harm’ the ruling party. Nevertheless, the party slowly but steadily lost its position because its potential is exclusively based on its past activities. The other opposition parties, in the respondents’ opinion, did not show activity in 2009. They were not active and purposeful enough and their short-term activity, which could be ob- served early in the year, quickly turned into political inactivity. As a result, the polls show that none of the opposition parties managed to claim reputation and citizens’ confidence and it seems that they will not be able to gain importance. To a great extent this was the result of the opposition parties’ lack of attention to acute socioeconomic problems of a significant part of the public. The respondents also noted that certain discord between the opposition parties also decreased the citizens’ confidence in these parties. According to this, one has to stress that the nuances of the opposition parties’ positions are not able to attract a broad support and that their slogans, programs and proposals are poorly targeted. As is known people are not interested in distinguishing the tiny differences in the par- ties’ positions. However, despite significant difficulties of objective and subjective nature, the opposition continued her pointwise work during the year. In detail, NSDP and Azat party united, which al- lowed the latter to go beyond the narrow limits of its own-caused self isolation positioning itself as national and patriotic party. At present, the united party is demonstrating big political opposition ambitions and claims high repute but the party has slim prospects. Even with the united electorate, the new party has little chances of overcoming the 7%-barrier and there are not enough grounds to assume that it will manage to increase its electorate significantly within a short period. In general, the political parties’ influence is very limited, as they have no influence on the public opinion. Certainly, today parties form an integral part of political life but they can only indirectly express the interests of different social groups. Undoubtedly, a key role plays the space, which the authorities left for other parties except Nur Otan. But there is simply no place for de- veloping attractive brands that could be popular in society. The opinion polls also prove that many people are not inclined to support any party and are mainly focused on their private perception of the candidates. This is why the declared party sym- pathies in modern times mostly indicate the population’s general perception of specific leaders and stereotypes but not their readiness to demonstrate rational electoral behavior. The influence by political parties including Nur Otan on the social and political situation was extremely limited during the year: consequently the people’s interest in parties decreased. As the parties had no aim, on which they could focus their efforts, they found themselves deprived of the real sense of their work and continued to use the merger as the main subject. Connected to that it was more than obviously, that political programs have no significance for the parties’ cur- rent existence because these political programs were simply not designated for implementation. In addition, it has to be mentioned that almost all parties’ activities bypassed the real inter- ests and problems of social groups. More often the parties acted simply spontaneously and their attempts to use the crisis situation in order to implement their political goals were quite episodic. So there is no need to speak about the parties’ real influence on government bodies. Thus, based on the polls, it can be concluded that no political party firmly determined the political climate in 2009. This also concerns the Nur Otan party, which has a mixed and contra- dicting electorate and has a significant central space in the political spectrum. The basic reason

a mixed and contra- dicting electorate and has a significant central space in the political spectrum.

47

a mixed and contra- dicting electorate and has a significant central space in the political spectrum.

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) was that there was no topical or general space for

was that there was no topical or general space for parties to unite and cooperate. The Nur Otan’s proposal about life presidency, as part of the leader of the nation project, did not receive any re- sponse from party members and government circles and disappeared gradually. Moreover, it did not influence the year’s political agenda in any way. As a result, the opposition parties continued to fade away in the population’s view. During the crisis year, no new party was set up in the country. The president himself still managed to keep his rating, but a certain role played the regime’s control over the mass media, above all the television, where critic of the president is more or less forbidden. Although the activities of the Nur Otan party on the political level did not end, the people’s social mood did not get represented in these activities.

48

social mood did not get represented in these activities. 48 2.4. C ONCLUSIONS AND RECOMMENDATIONS From

2.4. CONCLUSIONS AND RECOMMENDATIONS

From the authorities’ viewpoint the economic crisis in the country already started to grow, whereas the country’s population has just started to experience the crisis. It seems that the au- thorities and society are starting to exist in different information spaces, which bears the danger that they lose the contact between each other. The opinion polls made it possible to record the gradual increase of the clash between the image, the reality presented by the authorities and the social mood. While the media, following the single ideological setting, constantly stress that the worst of the crisis is already left behind and that they are working to overcome its consequences, an absolutely contrary opinion appears in society. This emerging gap may negatively affect the social and political situation in the coun- try. First of all, the gap between the social mood and the media image, which is provided by the authorities, is sharply reducing the authorities’ chance to really influence society. This is devalu- ing one of the authorities’ basic administrative resources. Secondly, the people may gradually lose confidence in the authorities, which undermines the basis of belief that the government’s current anti-crisis measures will really work. From the political viewpoint, this is a quite alarming tendency, which is confirmed by the sharp fall in reputation of the authorities among population of different social and economic backgrounds. Particularly, the poll results show that regional government bodies’ reputation is low. Moreover, the polls prove that the first spontaneous reaction to the crisis was a significant reduction in individual consumption, which obviously affects the government’s opportunity to cope with the crisis and its consequences. This forces the population to design their own program to overcome the consequences of the economic crisis, for instance social protest. Although the level of protest availability is not high now, the population decreases its ex- penses on food, home appliances, clothes and holidays. However, this condition may not last very long and the population’s discontent may take active and aggressive forms. It is not excluded that Nur Otan’s high political rating may change all of a sudden, which the authorities would not ap- prove of.

2.5. RECOMMENDATIONS

Despite the widespread opinion that the country’s crisis began due to external factors, a relative majority of respondents believe that the structures, which allow overcome the crisis, are situated inside the country. A Majority of people believe that actually Kazakhstan’s leadership is responsible for overcoming the crisis. Therefore it is reasonable to pay attention to the government’s activities, which directly influence the social mood, especially the solution of social issues. That is why special emphasis should be laid on the country’s social development, which means to draft social programs in ac- cordance with the key areas of the government’s activities.

CHAPTER 2. KAZAKHSTANI CITIZENS’ PERCEPTION OF THE COUNTRY’S SOCIO- POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)

ENHANCING THE GOVERNMENT’S SOCIAL POLICY

In 2009, the situation was more or less certain for the main part of the population, but as economic recovery is not visible for the ordinary citizen the next year apparently will be difficult. The crisis will inevitably unite certain parts of the population as a result of unemployment. This will make the majority of adults unemployed, which deprives them of their basic sources of in- come. Undoubtedly, the purchasing power will weaken. So the government’s main task will be to maintain social and political stability in the country, due to the fact that social processes are the basic indicator for the efficiency of economic reforms. At present, the social sphere is weakly reflected on the government’s anti-crisis policy and its information campaign. The labor market does not receive any stabilization assistance. In order to keep the social stability in the crisis situation, the government should conduct a wider social policy. At Nur Otan’s congress in May the president of Kazakhstan said that the social sphere remains a central issue of the anti-crisis program and that the government was not reducing social expenses and is undertaking every possible social responsibility. That is why it is necessary to strengthen the social content of the anti-crisis program in 2010. In particular there is a need to actively cover an employment strategy for the population because the employment problem is one of the key challenges posed by the crisis. Thus, financial sup- port should be provided for those, who lost their jobs. As a consequence it is necessary to draft a program for retraining specialists and creating new jobs. But in order to do this it is necessary to actively involve local authorities in this program and to include them in mechanisms to meet social interests. This will increase the reputation of regional administration in the view of the population. At the same time, there is a need to draft an elaborate program for supporting also other groups of the population because the crisis will increase social inequality among the population. Therefore, priority should be given to professional retraining, creating additional jobs and orga- nizing public works.

INFORMATION POLICY

The polls show that there is a growing imbalance between the implementation of the infor- mation policy and the real social mood. It is obvious that a positive coverage of the crisis situa- tion and the government’s policy play an essential role in the information policy. However, if the positive side is stressed too much it might easily end as bad joke and the government will, above all, lose the population’s confidence in its activities and its information. Consequently, this might cause social protests, which destabilize the situation in the country. With regard to this the govern- ment should run a modest information policy and report problems as well. At the same time, the government should pay greater attention to the population’s acute prob- lems by promoting social problems in the information policy: e.g. what measures is the govern- ment undertaking to reduce the crisis’s impact on each citizen, what opportunities to overcome the crisis are available and what measures are more efficient. It is necessary to report about social policies of other countries, especially from Russia and European countries and about the measures taken to resolve social problems in these countries. At the same time, the government’s informa- tion policy must focus on creating a calm psychological climate in the country. As a consequence the nature and content of official and independent media reports should be balanced. At present, the state-run media casts only positive news reports, whereas independent TV channels are mainly focused on negative information. Therefore, it is necessary to narrow the existing imbalance in order to reduce the adverse effect on the population.

Therefore, it is necessary to narrow the existing imbalance in order to reduce the adverse effect

49

Therefore, it is necessary to narrow the existing imbalance in order to reduce the adverse effect
CHAPTER 3 KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3

KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

by Institute for Economic Strategies – Central Asia (INES-CA))

CRISIS?

3.1. THE ECONOMIC CRISI IN KAZAKHSTAN IN 2008/2009 AND GOVERNMENT ANTI-CRISI MEASURES

The government has drafted an anti-crisis program exclusively to replace bank loans to fund the country’s economy. That is why it quickly and efficiently managed to solve the problem of the dwindling demand for the partially restoring rates of the loan. The new strategy means a more nationalized and planned path of the development of the economy. The government’s responsibility increases, but so do the risks.

The Kazakhstani government adopted the anti-crisis program in October 2008 when the second wave of the crisis engulfed the country after the global prices of raw materials slumped. Before that, in the first half of 2008, the economy on the contrary benefited from high oil prices, which at first allowed the government to deny the crisis. The first wave of the Kazakhstani crisis lasted from August 2007 to September 2008. It was caused by the sudden closure of sources of foreign capital, which immediately affected the loans of local borrowers, decreased the property prices and reduced the activity in the construction, retail and services sectors. A sharp speculative growth in prices of oil and other raw materials pushed inflation up to almost 20%, which reduced the real-term incomes of the population. The slump in property prices and the tightening of loan conditions worsened banks’ loan portfolios and caused large-scale protests by mortgage holders. Previously, the suspension of construction projects gave rise to a protest movement of individual investors in construction projects. The reduced demand also decreased the import, which was growing at higher rates than exports, and the customs payments in the budget. The manufacturing sector suffered from the decline in the construction industry (later in the food sector) due to the falling demand and investment. Cold weather conditions forced metal producers to cut the output. The government’s anti-crisis mea- sures were mostly aimed at stabilizing the exchange rate of the national currency, at providing urgent aid packages to the construction and banking sectors, at increasing social spending and at imposing export duties on raw materials. The government also drafted a worst-case scenario in case of further declines in prices of raw materials. By the end of summer 2008 the global econo- my went into recession, which pushed the prices of raw materials down. The actual monopoly of Kazakhstan’s commercial banks in funding the local economy (with an underdeveloped securities’ market and not very diversified foreign investments) caused prob- lems all over the country, so that the anti-crisis program was drafted to replace bank loans to fund the country’s economy. This explains why Kazakhstan’s government offered a large aid package to banks – over 20% of the GDP. E.g. these sums compare with loans issued by commercials banks in pre-crisis 2007: about $ 20bn (about 20% of GDP in 2008). Out of $ 10bn $ 3bn were allocated for the property sector, $ 1bn directly for buying 25% stocks in Kazakhstan’s four major banks – Kazkommertsbank, BTA Bank, Halyk Bank and Alliance Bank, $ 3bn were invested in the bank loan sector to support economy and business and three times $ 1bn was allocated through the ‘Samruk-Kazyna’ national welfare fund for new loan programs on favorable terms for the small and medium-sized businesses, the agricultural sector and the innovative-industrial sector.

51

terms for the small and medium-sized businesses, the agricultural sector and the innovative-industrial sector. 51

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 In addition to the actual $ 4bn aid

In addition to the actual $ 4bn aid for banks (it was arranged, that the funds given to the

52

for banks (it was arranged, that the funds given to the 52 banks must be returned

banks must be returned to the government) a plan to stabilize the economy and the financial sec- tor in 2009-2010 was drafted. The government also set up the Distressed Assets Fund to improve local banks’ loan portfolios by buying out doubtful assets and in order to manage them. The problem concerning the banks was getting more complicated due to the fact that it was not only necessary to issue loans but to cope with their huge foreign debts, which more than doubled government assistance (the banking sector’s foreign debt stands at about $ 40bn, which has to be returned mainly in 2009-2011). Between October and the end of 2008 the government tried to systemize its actions in the banking sphere. It amended legislation in order to enable the government to hold stocks of banks. However, the conditions of its purchase and the assessment of 25% stocks of the banks were controversial and non-transparent. The government’s acquisi- tion of capital of BTA Bank and Alliance Bank was complicated by a conflict with the former shareholders, which led to lawsuits against the managements of these banks. The government’s claims against these banks were prompted by their huge foreign debts, excessive loaning in for- eign countries and high-risk loan portfolios. Attempts to solve the issue of foreign debts formally through restructuring lasted on in 2009. In reality many international creditors were inclined to recover their losses from the investment in Kazakhstani banking debt apparatus via certificates of deposit insurance. Major creditors did not agree with the proposed restructuring plan because it envisaged an over 80% discount on the value of the actual debt. The future of BTA Bank and Al- liance Bank remains the most serious unresolved problem of the Kazakhstani anti-crisis program.

Moreover, the government failed to improve these banks and so tarnished its reputation in inter- national investment circles. On the other hand, the nationalization of the banks made it possible to preserve the temporary imaginary stability of the financial system. Ensuring stability in the monetary sphere was interpreted as particular success. Despite of a heated debate the devaluation of the national currency did not lead to widespread bankruptcies as it had been feared before. In need for help the National Bank devalued the national currency (Tenge) against the US dollar by 20% and fixed a new rate. A reduced demand and partial price control helped avoid a jump in inflation. Separate concern caused the administration of the anti-crisis program in the financial sector. As investigations into financial crimes showed their scale, suggestions were made that the Na- tional Bank and the Financial Monitoring Agency (AFN) should merge. At present the National Bank is still responsible for managing the monetary-credit policy in times of the global crisis, while the AFN is still accountable for regulating the country’s financial sector. The construction sector started to reassess the value of suspended construction facilities, but

private investors are still responsible for completing a majority of private projects. The govern- ment fixed the minimum housing price at $1,000 per sq m in Almaty and $700-800 in Astana. Commercial banks were involved in refinancing mortgages and other mortgage programs. Furthermore the government also adopted a set of other measures. It increased the volume of government agencies and national companies’ purchases of goods and services from small and medium-sized businesses and forced the public sector to cut costs, freeze non-core activities and suspend some infrastructure and construction projects. The government announced that it would conduct structural reforms of the economy by amending the Budget, Administrative and Tax Codes. Tax burden was increased in the extractive sector and eased in the non-extractive sector. Corporate income tax will be gradually reduced from current 30% to 15% in 2011 and VAT to 12%. Even though this means great losses for the budget, the government expected enterprises to invest freed-up funds in production in the situa- tion of limited loaning.

A separate program was adopted to expand employment and retrain employees, for which

the government allocated another $ 1bn to create at least expected 350,000 jobs. It is hard to es-

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

timate the efficiency of the program to cope with unemployment because jobs are created tempo- rarily, numbers are exaggerated and the problem of unemployment is mainly structural: there are shortages of high-skilled vacancies as well as specialists, while low-skilled jobs are in principle sufficient. The government also worked with major industrial enterprises to avoid job cuts, but this work was only partially efficient. In the social sphere the government did not make pledges it could not deliver, all the more with a budget deficit that is going to reach 3.5% of GDP. The three-year budget plans to postpone the former regularly increased social allowances, pensions and student grants till 2011. The government also focuses on the development of the infrastructure. It started with the construction of the Kazakhstani part of the Western China — Western Europe road worth KZT 800bn, the construction of the Beyneu-Bozoy-Akbulak gas pipeline worth KZT 465bn and the reconstruction of the Atyrau oil refinery for KZT 371.9bn. Under the Roadmap plan the govern- ment is building and repairing public facilities as well as modernizing infrastructure with empha- sis on the energy sphere in order to raise employment rate. As a result of the anti-crisis program the importance of its main operator – the ‘Samruk- Kazyna’ national welfare fund, which unites different bodies being responsible for separate and sectoral programs, increased. The fund controls all financial flows as well. The anti-crisis pro- gram is not only financed by the budget but also by funds of the National Fund, pension assets and government securities (which are on the rise and this may include potential risks). All in all, the anti-crisis program managed efficiently and quickly to solve the problem of the falling demand by stressing on the resumption of loans for the major sectors of economy. An increase in prices of oil and raw materials in the second-half of 2009 also stimulated recovery. The accumulation of foreign exchange reserves and a low public debt helped to ensure macroeco- nomic stability and to preserve the investment-grade rating. On the other hand, anti-crisis measures mainly had operational character and had been cho- sen due to the need of prompt response but not to create a new economic order, which could rule out similar crises in the future. This means that the stability of the domestic economy was ensured only by funding the falling demand. System problems as inadequate liquidity, low levels of per- sonal savings, lack of diversification in the economy, reliance on foreign investment and global prices of raw materials so remain unresolved. Obviously, Kazakhstan’s economy needs a more powerful stimulation of the demand than the current anti-crisis program. The decrease in bank loans from about 70% of GDP in 2008 to 60% in 2009 may continue in 2010 and the government program will not be able to replace the banks for a long time. That is why the government is expanding the Roadmap plan in order to develop infrastructure facilities, which is expected to increase employment, the consumer de- mand and contracts for small and medium-sized businesses. The Roadmap plan emphasizes on cooperation with the population, which makes the quality of regional government services espe- cially important. However, the roadmap focuses only on the ‘infrastructure’ segment of small and medium-sized businesses and workforce. Therefore the government is now drafting tasks and ways of solving them. This is a more na- tionalized and planned way of the development of the economy. From 1 January 2010 a five-year plan forced industrial and innovative development will be started, which again emphasizes the role of the state in planning and stimulating economy. The Roadmap plan of the industrialization of Kazakhstan and the scheme of the rational location of production capacities are being drafted for private investors, so the government is not only defining priority sectors for investment but is also offering all-round assistance, including joint funding and public-private partnership. Seven prior- ity spheres were chosen for the country’s industrialization: the agricultural sector and food pro- cessing; the development of the construction sector and production of construction materials; the oil refining and development of infrastructure in the oil and gas sector; the development of metal-

materials; the oil refining and development of infrastructure in the oil and gas sector; the development

53

materials; the oil refining and development of infrastructure in the oil and gas sector; the development

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 54 lurgy and production of finished metal products;

54

KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 54 lurgy and production of finished metal products; the

lurgy and production of finished metal products; the chemical and pharmaceutical industry; power engineering; the development of transport and telecommunication infrastructure. This list did not change since the times of the cluster program and the state’s direct involvement in these projects will increase risks because of insufficient corporate management and widespread corruption. The government will try to develop the domestic market and support local producers more specifically. For this purpose it is going to use the Customs Union of Russia, Belarus and Ka- zakhstan. Kazakhstan has long been liberal in its foreign trade policy (the single customs tariff is higher than Kazakhstan’s previous customs duties) and the authorities intend to ensure greater stability in the post-crisis situation. Their desire to diversify and ensure the development of non- extractive industries and increase investment and market niches for local businessmen and pro- ducers may lead to protectionism in trade. And this policy of import substitution will spread to foreign countries, including China. Other benefits will be gained in logistics due to the abolition of barriers and the opportunities for corruption will reduce costs for transporters. Thanks to a favorable regime trade between the three countries will sharply grow and foreign investment will increase, as it will be profitable to set up joint ventures in the expanded single market. Reli- ance on foreign investment increased somewhat thanks to major loans from foreign countries — $10bn from China, $5bn from South Korea and about $2bn from Gulf countries. The state’s role remains strong in the financial sector and even though will fence competition from global financial institutions it is very unlikely that the government will manage to quit the capital of the four major banks, as promised at the start of the anti-crisis program. As a result, the role and responsibility of the state in Kazakhstani economy is growing rap- idly and so are the risks. If the current crisis was a crisis of the private sector, the increased impor- tance of the state would enhance the chances of a sovereign crisis in case that the negative trends in global economy persist (the so-called ‘third wave of the crisis’). The increased risk, associated with the government, will at the same time have direct impact on the access to international credit resources.

3.2. MAIN INDICATORS OF KAZAKHSTANS ECONOMIC DEVELOPMENT IN 2009

Economic statistics for 2009 showed certain recovery in investment related to anti-crisis funds and a growth in oil prices, but the economy will still be smaller compared to the previous year.

Problems in the sphere of small and medium-sized businesses and the financial sector remain unresolved. Kazakhstan’s GDP reached KZT 6,400bn in the first half of 2009 may insignificantly grow in the second half of the year and may total KZT 14,500bn in 2009 (about $95bn). The real-term decline will be at 2% compared to 2008. The government maintains favorable forecasts (GDP reaching KZT 16,000bn) and tries to fulfill the political task to prevent economic decline and violation of their positive 10 year statistics. The Ministry of Economy and Budget Planning fore- casts an economic growth between 0.1% and 0.3% in 2009. This forces the government to stay in close contact with the major companies, whose contribution to the GDP is significant, in order to increase the economy. The IMF forecasts a 2% decline and the EBRD expects the economy to fall by 1.3%. Nevertheless, forecasts became favorable in the second quarter of 2009 as the rates of de- cline slowed down. Investment and agricultural production increased (the 2009 harvest was bum- per but problems arose because of low prices and low demand). The construction, retailing and transportation sectors fell by about 10% compared to the last year but the depth of decline was re- duced. The situation remains serious in the industry, whose share of the GDP fell by 8 percentage points to 28.7% in the first half of 2009. Because of this and due to the fact that the growth rates

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 in industry are about one percentage point lower

in industry are about one percentage point lower this year compared to the previous year, hopes that the GDP will not decrease are very slim. However, there are hopes for a gradual recovery in the near future but growth rates will be modest between 2% and 3%.

16,00

14,00

12,00

10,00

8,00

6,00

4,00

2,00

0,00

-2,00

-4,00

Effective growth of GDP, %

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010*
2000
2001
2002
2003
2004 2005
2006
2007
2008
2009*
2010*

* forecast

Costs increased by 4–5% in industry, while they fell in the manufacturing sector by about 9%. Oil and gas output also increased thanks to production growth at Tengizchevroil and CNPC- Aktobemunaygaz. The size of the industrial sector will hardly exceed the 2008 figure. The mining sector fell significantly in the first quarter (by 43% in monetary terms) due to lower global prices of raw materials and future recovery will not compensate these losses. A deep fall is continuing in the metal, food, construction, chemical and machine-building sectors. The main problem in the manufactory sector is the falling consumer demand and the very limited access to loans. In order to support business entities in the manufacturing sector the government is drafting a special program to refinance the loans of manufacturers. This program was developed by the Damu Fund.

Index

of actual

volume

%

Production of industry output

7000

6000

5000

4000

3000

2000

1000

0

bn Tenge 2007 2008 2009 forecast
bn Tenge
2007
2008
2009 forecast

55

actual volume % Production of industry output 7000 6000 5000 4000 3000 2000 1000 0 bn

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 Investment is thanks to the growth in foreign

Investment is thanks to the growth in foreign investment expected to exceed KZT 4,000bn or $26bn-27bn in 2009, which is only insignificantly higher than last year. Foreign investment, the share of which almost doubled to over 40%, efficiently replaced loans, which share decreased to 10% (about 20% in the past). Investment in housing construction fell back by more than12% after nine months in 2009 compared to 2008. On the other hand shows the sector distribution of investments, that main changes took place in the sphere of infrastructure. Priority sectors for in- vestments remain the mining, transportation and telecom sectors, whose share increased by more than 55% in total. Foreign investment from countries like China, South Korea, Russia and France had a positive impact on the balance of payment. Foreign direct investment in Kazakhstan holds at $5.2bn for the first half of 2009. These investments are mainly focused on the oil and gas sector (75% of total foreign investment).

56

oil and gas sector (75% of total foreign investment). 56 Investments in basic capital, bn Tenge

Investments in basic capital, bn Tenge

4500 4000 3500 3000 2500 2000 2005 2006 2007 2008 2009 forecast
4500
4000
3500
3000
2500
2000
2005 2006
2007
2008
2009 forecast

One of the most problematic sectors is to issue credits for the construction, where the rapid development once made a sizeable contribution to economic growth. In total the construction sector is estimated to be 8-9% below 2008. Investment in housing construction has been falling for the past two years. There are hopes for the long-awaited recovery in 2010, which might be in- dicated by the housing prices in Almaty, the country’s largest city, where prices practically did not change since summer 2009. It is more than likely, that the postponed demand, which accumulated until now, pushes the property market upwards.

The prices for habitation in Almaty (USD per sq m)

4000

3500

3000

2500

2000

1500

1000

500

0

Average price for an offer, USD per sq m increase, % 01.10.2003 01.04.2004 01.10.2004 01.04.2005
Average price for an offer, USD per sq m
increase, %
01.10.2003
01.04.2004
01.10.2004
01.04.2005
01.10.2005
01.04.2006
01.10.2006
01.04.2007
01.10.2007
01.04.2008
01.10.2008
25.03.2009
01.07.2009
12.08.2009
23.09.2009
02.12.2009

20,0%

15,0%

10,0%

5,0%

0,0%

-5,0%

-10,0%

-15,0%

-20,0%

-25,0%

-30,0%

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 Lower oil prices directly affected Kazakhstan’s foreign

Lower oil prices directly affected Kazakhstan’s foreign trade and all operations related to it. Both exports and imports decreased by about a third compared to 2008 (exports to non-CIS countries and imports from CIS countries suffered most). Foreign trade surplus fell by 70% (in the first nine months of 2009). Oil and gas exports increased, while exports of metals and wheat fell considerably. The value of iron and steel decreased by almost 60%, while non-ferrous metals only by 40%.

Foreign trade, bn USDі

80000 7000 6000 5000 4000 3000 2000 1000 0 2003 2004 2005 2006 2007 2008
80000
7000
6000
5000
4000
3000
2000
1000
0
2003
2004
2005
2006
2007
2008
2009 forecast
Export
Import
Profit/deficit

A decrease in the rate of inflation became a positive moment in 2009, but the annual price growth will be between 7% and 8%, which is quite high compared with other countries. Inflation increased due to hikes in prices of foodstuffs and consumer goods. Foreign trade experienced a significant deflation of prices of both exports and imports. The producer price index fell by 20% compared to 2008. Inflation was reduced due to a decline in economic growth, lower demand and shortages of liquidity. The government took measures to develop fair competition and avoid unjus- tified price increases.

Inflation grapf

25 80 60 20 40 15 20 10 0 5 -20 0 -40 2007 2008
25
80
60
20
40
15
20
10
0
5
-20
0
-40
2007
2008
2009
CPI, % change
CPI (manufacturer prices), % change
The Kazakhstani central budget was running a deficit. According to forecasts, budget deficit
is expected to total KZT 574bn (about $3.8bn) in 2009, or 3.5% of GDP. Tax payments accounted
for 60% of budget revenue and transfers from the National Fund for 35%. Kazakhstan’s first three-
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct

57

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 year budget for 2009-2011 had been revised several

year budget for 2009-2011 had been revised several times due to changes in forecasts of oil prices, which were expected to top $40 per barrel in 2009 and $50 in 2010-2011. Even though budget deficit was within comfortable limits compared with the country’s Forex reserves, it shows that the state stretched resources to fund the economy. Budget deficit may jump to 5% of the GDP if oil prices dip further. This will increase risks associated with the state. In 2010-2012 the budget will not receive targeted transfers from the National Fund and the policy to replenish its assets will be continued.

State budget, bn Tenge

3845,00 2845,00 1845,00 845,00 155,00 Revenue Expenses Deficit/profit 2007 2008 2009 forecast
3845,00
2845,00
1845,00
845,00
155,00
Revenue
Expenses
Deficit/profit
2007
2008
2009 forecast

58

Expenses Deficit/profit 2007 2008 2009 forecast 58 Statistics show the continuing stability in the social

Statistics show the continuing stability in the social sphere. On average real-term personal incomes posted an insignificant growth of 1-2% (due to lower inflation). However, the living standards fell due to limited access to consumer loans, the falling value of assets (in addition to lower housing prices, the dollar value of property also decreased because of devaluation) and the unevenness of the distribution of incomes and high social vulnerability. The unemployment rate ranged between 6% and 7%, but statistics do not reflect the real situation in the employ- ment sphere, that is latent unemployment and changes in the segment of self-employed people. Moreover, fewer people register themselves as unemployed due to low benefits and strict crite- ria. If the government increases unemployment benefits, the number of registered unemployed may rise. Possibly, the peak of redundancies has not yet been reached and there may be another wave of job cuts by employers, who reviewed and corrected their long-term plans in 2009 (for example, in the financial sector). The government intends to channel sizeable funds into the social sphere in 2010 (increasing public-sector wages and student grants). The social spending of the central budget in 2010–2012 accounts for 40% of total spending, which makes the budget socially-oriented. The sphere of small and medium-sized businesses, which earlier developed well in the trade and services sectors, continued to experience great difficulties due to the slump in demand. The government’s programs for funding small and medium-sized businesses were not that successful because they mostly aimed to fund earlier-obtained loans, the bulk of which were already losses and did not meet strict qualification requirements. High interest rates, strict requirements for debt security and fear of government control decreased the efficiency of government programs. Financial indicators deteriorated dramatically. Profits of registered enterprises remain positive, but they more than halved compared with the previous year. The share of loss-making enterprises exceeded 40% of the total number of enterprises. Major export-oriented enterprises benefited from the devaluation of the Tenge and the abolition of export customs duties as part of the gov- ernment’s anti-crisis program.

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 Problems in the financial sector also remained unresolved

Problems in the financial sector also remained unresolved in 2009. The talks on restructur- ing foreign debts of BTA Bank and Alliance Bank may lead to new financial injections from the already expense-burdened state. Alliance Bank has better prospects, as the government intends to turn it into an operator of its loan programs. The situation concerning BTA Bank is much more

complicated because of the bank’s size and its network of foreign assets. Nevertheless, the market is optimistic that the government will preserve both banks and assume responsibility over them.

A major issue remains how quickly the banks will be able to resume loans and whether there

are more sustainable sources of funding for this, such as personal and corporate deposits. Unfor- tunately, it is unlikely that reliance on foreign funds will quickly be overcome and this situation limits banks’ prospects to increase the loans. Despite the National Bank’s support in liquidity of the banking sector, such as cutting refinancing rates and reserve requirements (helped by modest inflation), the government will still try to limit foreign borrowing. Moreover, the defaults of the country’s two major banks had a negative impact on its international standing and may compli- cate access to global capital in the future. Banks’ foreign liabilities decreased by $ 7.6bn in the first nine months of 2009, after banks paid off loans attracted from non-residents. The problem of bad loans remained topical and ac- cording to estimates their share may jump to 50% by the end of 2009, although this trend is slow- ing down.

Quality of loans of the Kazakhstan banks

70,0%

60,0%

50,0%

40,0%

30,0%

20,0%

10,0%

0,0%

62,1% 51,2% 21,0% 20,0% 12,6% 10,0% 6,7% 2,5% 4,3% 2,1% 2,1% 2,4% 1,5% 1,5% Standard
62,1%
51,2%
21,0%
20,0%
12,6%
10,0%
6,7%
2,5%
4,3%
2,1%
2,1%
2,4%
1,5%
1,5%
Standard
Doubtful 1st
Doubtful 2nd
Doubtful 3rd
Doubtful 4th
Doubtful 5th
Bad
category
category
category
category
category
01.11.2009
01.11.2008

Despite problems, the Kazakhstani banking system has managed to avoid a credibility crisis so far, as the deposit basis is relatively stable, loan processes are under way and new players are continuing to emerge. But the government plans to change the rules of the game in the financial sector and to ensure greater stability for local banks. In particular, a new blueprint for the devel- opment of the financial system envisages measures to increase the share of Kazakhstani goods

and services in infrastructure projects with the support of foreign capital and to set restrictions on the share of liabilities before non-residents in banks’ total liabilities.

In the foreign exchange sphere the growing oil prices will strengthen the Tenge, but instabil-

ity in the financial sector does not rule out negative scenarios. The National Bank forecasts the appreciation of the national currency by the end of 2009. Current account balance is still negative and current account deficit was $ 3.4bn in the first nine months of 2009, which is much lower than in the previous year.

59

account deficit was $ 3.4bn in the fi rst nine months of 2009, which is much

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 60 Balance of payments of Kazakhstan, mil USD

60

KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 60 Balance of payments of Kazakhstan, mil USD 15000,00

Balance of payments of Kazakhstan, mil USD

15000,00

10000,00

5000,00

0,00

-5000,00

-10000,00

2005 2006 2007 2008 2009 forecast Running General balance Account operations with capital account
2005
2006
2007
2008
2009 forecast
Running
General balance
Account operations with capital
account

40,00

30,00

20,00

10,00

0,00

-10,00

-20,00

-30,00

-40,00

-50,00

The oil and gas sector was boosted by higher oil prices and foreign investment (China’s purchase of the major Mangistaumunaygaz oil company). The main risks in the sector are posed by new delays in oil extraction in the Kashagan field and the underdevelopment of trans- port infrastructure. This affects not only associated sectors, but also the entire economy as a whole. Generally, the Kazakhstani economy continued to suffer from structural shortcomings, the lack of diversification and the reliance on foreign markets. Only weak recovery has been ob- served so far and it may be offset by external shocks. In all spheres of the economy deep negative

th tons

Gas and oil output

90000 5500 5000 85000 4500 80000 4000 75000 3500 70000 3000 65000 2500 60000 2000
90000
5500
5000
85000
4500
80000
4000
75000
3500
70000
3000
65000
2500
60000
2000
2005 2006
2007
2008
2009 болжам
Raw oil, incl. gas concentrate, th tons
Output of raw oil and natural gas, bn Tenge

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 changes took place, which take time to overcome.

changes took place, which take time to overcome. In the consumer, construction and financial sector and in the sphere of small and medium-sized businesses positive trends over the next three years will grow slowly and unsteadily.

3.3. POSSIBLE SCENARIOS OF ECONOMIC DEVELOPMENT

IN 2010

Scenarios of the development of the Kazakhstani economy are usually based on pessimistic,

standard or optimistic oil prices. However, in the next three years Kazakhstan’s economy will also depend on access to global capital, structural changes in the banking sector, the foreign market conditions and domestic competitiveness, which are closely connected to the membership in the Customs Union. Oil will remain the main resource of global economy and that is what makes Ka- zakhstan’s future promising.

A planned increase in oil output due to the commissioning of new fields (there are high

risks of new delays in oil extraction at Kashagan, which should treble the country’s oil output), the development of new transport routes (the Kazakhstani Caspian Transportation System), the development of local service companies and the higher share of Kazakhstani goods and services in investment projects will expand the spheres benefiting from the flow of petrodollars, espe- cially through financial institutions. In restoring the activities of local banks they will however face fierce competition from foreign players. This will encourage demand and support associated sectors (construction, imports, retailing, services, transport and telecommunication). Neverthe- less the reliance on oil will still be strong, because major foreign investment will be placed in the energy sphere and the development of the manufacturing sector will be limited (despite the establishment of the Customs Union and foreign investors’ high interest in the united market). On the contrary, the raw material component will grow further because of the high global demand for raw materials.

1) BASIC SCENARIO 60% PROBABILITY

Oil prices are higher than $60 per barrel –metal prices rise

Recovery of global capital markets

Slow recovery of the banking sector, but it is likely that at least one of the country’s top 10 banks will go bust

Membership of the Customs Union will initially drive prices up, creates shortages of con- sumer goods and decreases import payments to the budget

High infl ation, the appreciation of the Tenge and high interest rates

High government spending

The government based the budget on an oil price of $60 per barrel in 2009 and $50-70 in 2010. This is a quite optimistic scenario and its realization will help the Kazakhstani economy to have a positive growth in 2010 thanks to an increment of the value of the extractive sector. How- ever, the recovery of demand will be slow and subtle because government funds will remain the main source of liquidity. The economizing of funds will damage major infrastructure projects and the technological lag will worsen. Social problems like high unemployment, insolvent borrowers and housing problems will become important. In the foreign economic sphere regionalism will increase, new joint projects will boost the agricultural sector, which might progress intensively. A specific impulse might receive joint machine-building (developed by the government) and logis- tics (new transport routes).

61

impulse might receive joint machine-building (developed by the government) and logis- tics (new transport routes). 61

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 2) WORST-CASE SCENARIO – 30% PROBABILITY • Oil

2) WORST-CASE SCENARIO – 30% PROBABILITY

Oil prices are lower than $40 per barrel – low metal prices

The second wave of the crisis in global capital markets

Crisis in the banking system and the bankruptcy of several of the country’s top 10 banks

Membership of the Customs Union causes trade disputes, bankrupts certain local produc- ers, increases prices and reduces customs payments to the budget

Devaluation of the Tenge and capital fl ight

Very high unemployment and social discontent

Huge budget defi cit and risks to sovereign ratings

This scenario was considered by the government and it forecasts economic decline in Ka- zakhstan both in 2009 and 2010. Economic growth will rise from 1.6% in 2011 to 2.6% in 2014. The falling global demand and prices of Kazakhstan’s main export items will reduce exports and budget revenue. The forced bankruptcy of one of the four major nationalized banks will worsen the state budget. The devaluation of the Tenge, panic among the population and capital flight will undermine government guarantees (including on government securities), causing a wave of de- faults but this time in the public sector. The government will have to sequester budget spending and to expand foreign borrowing (sovereign foreign debt) from the Asian Development Bank and the World Bank.

62 3) BEST-CASE SCENARIO – 10% PROBABILITY

World Bank. 62 3) BEST-CASE SCENARIO – 10% PROBABILITY • Oil prices are higher than $80

Oil prices are higher than $80 per barrel

Recovery on global capital markets

Recovery in the banking sector through radical reforms in the sector

Membership of the Customs Union considerably increases trade, foreign investment and encourages the development of the manufacturing sector

High infl ation, the appreciation of the Tenge and high interest rates

High budget revenue

If oil prices remain high for a long time the demand may increase, especially stimulated by efficient reforms in the financial sector, which enable to significantly increase loans (e.g. mergers of banks and the establishment of a major state-run credit institution). The state budget will in- crease social spending. Foreign investment will grow and become diversified, giving a knock-on effect to the economy in general. Foreign currency flows will strengthen the Tenge, improve the profitability of local financial instruments and boost the property and construction sector.

3.4. CONCLUSIONS AND RECOMMENDATIONS

Kazakhstan’s long-term priority is to ensure a sustainable economy, which relies little on such volatiles as oil prices. Taking into account the small domestic market and the limited oppor- tunities for large-scale industrialization, it is necessary to focus on the services sector. The trade and intermediation sphere should be expanded at the expense of technological and knowledge- intensive services, which are competitive on a regional scale. But nevertheless main markets will remain Russia, China as well as the countries of Central Asia and the Caucasus. The production of goods should be based on the use of natural advantages such as raw materials but should also guarantee high processing.

CHAPTER 3. KAZAKHSTAN’S FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

Economic policy should be freed from too populist and ambitious rhetoric and should aim at a pragmatic spending of public funds, which will become the basis of economic recovery. This pragmatism includes the optimization of the public spending, the establishment of strict control over it including the fight against corruption at all levels and the thorough and efficient monitor- ing of the programs’ implementation. At this point the mechanisms of public control will be of great use. The government should ensure greater transparency in its work through allowing the public to control its programs. In situations of a cutback of foreign funding sources it is necessary to cooperate with the population to increase their savings. This may be done by strengthening the population’s trust in the government and the financial sector, by developing the securities market offering incentives to both investors and issuers, which on the one hand guarantee transparency of companies and safety of investment and on the other hand avoid affiliation, political interference in business and other risks associated with the state. In the financial sector it is necessary to set up major credit institutes (possibly, by merging banks) to ensure the best synergy of credit resources, to create an efficient state credit mechanism of specialized, micro-credit, branch-wise and regional loan programs and to increase incentives for syndicated loans for major projects. It will be important to expand financial products, to estab- lish a security basis by government guarantees and other mechanisms, to back interest rates for priority sectors and to offer soft loans for real-sector enterprises. Moreover it is necessary for the Distressed Assets Fund to continue the stabilization of the banking sector. Serious work should be done to improve international reputation and investment incentives through additional preferences and guarantees. The creation of major projects with a great knock- on effect may efficiently improve the economic environment. That is why major tax incentives should be given, excessive bureaucracy should be removed, infrastructure and the quality of local government should be improved and the stability of legislation should be ensured in order to at- tract such projects. It is also necessary to revise labor legislation and not to interfere in the flow of qualified foreign workers. The government itself can create major growth points by continuing the Roadmap program and the modernization of domestic industry, transportation infrastructure and agriculture. Pur- poseful and careful manipulation of state purchases in these spheres may also improve the condi- tions for an increase of the domestic demand and speed up modernization and diversification of the Kazakhstani economy. In the industrial and innovative sphere a switch should be made to more specified and basic projects via simplification of mechanisms of technology transfer, creation of a large-scale pro- duction even on a lower technical level and ensuring close ties in the development of science, education and the business circles. In the social sphere demand may be sharply increased by a radical increase of the income in the public-sector, especially of the education and healthcare workers. Their incomes almost did not benefit from the economic boom of the past years and are chronically too low. An increase of unemployment benefits may clarify the situation with the self-employed and increase the number of people registered as jobless, and so may have a positive impact on their consecutive employ- ment and on the stability of incomes. The regionalization of foreign economic ties within the Customs Union should not impede active cooperation with the international community and the transfer of advanced technologies, scientific progress and high quality services. If the strategy changes and the services sector be- comes more important than the industrial sector, the globalised market will become important for developing the country’s human capital. As models for development should serve industrialized countries like Canada and Australia, not Dubai (with risks of speculative booms) or Southeast Asia (where workforce is very cheap). Kazakhstan may become competitive through boosting the com- petitiveness of its population, which can be done through cooperation with developed countries.

boosting the com- petitiveness of its population, which can be done through cooperation with developed countries.

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boosting the com- petitiveness of its population, which can be done through cooperation with developed countries.
APPENDICES DECLARATION OF THE ESTABLISHMENT OF THE ALLIANCE OF ANALYTICAL ORGANISATIONS 64 We, the representatives

APPENDICES

DECLARATION OF THE ESTABLISHMENT OF THE ALLIANCE OF ANALYTICAL ORGANISATIONS

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OF THE ALLIANCE OF ANALYTICAL ORGANISATIONS 64 We, the representatives of Kazakhstan’s analytical

We, the representatives of Kazakhstan’s analytical community, clearly conscious of the need for our consolidation, professional self-identification and production of high scientific standards, declare the establishment of the Alliance of Analytical organizations (AAO), whose aims are:

To hold a consolidated position on topical issues of the country’s social, political and economic development and to draft a political agenda based on this To improve our social role as mediator, intermediary and ‘think tank’ in order to discuss and resolve the most topical and acute issues on the country’s political and socio-economic development and to analyze external factors that influence this development To develop the Kazakh-language segment of Kazakhstan’s analytical market in all possible ways To test a new model of professional synthesis and scientific cooperation focused on the interests of the entire analytical community of Kazakhstan To unite intellectual, organizational and financial resources of the members of the AAO and other interested representatives of Kazakhstan’s analytical community to implement joint projects To establish a balance between theoretical and applied research by conducting fundamental studies To create conditions for closer cooperation in Kazakhstan’s analytical community To reach an international level of research activities and to establish constructive relations with foreign analytical communities To participate in improving the training of young experts for Kazakhstan’s analytical market To create a single electronic database of results of research activities in basic education sectors. The alliance is open to any interested analytical organization of Kazakhstan.

LIST OF AAO MEMBER ORGANIZATIONS

Assessment Risks Group Dosym Satpayev

The Alternative Centre for Topical Research Andrey Chebotaryov

‘The Cultural Front’ public association Nurlan Yerimbetov

The Institute for Economic Strategies – Central Asia Aitolkyn Kourmanova

The Altynbek Sarsenbayuly Foundation Aydos Sarym

The Central Asian Foundation for Developing Democracy Tolganay Umbetaliyeva

The Centre for Military and Strategic Studies Sergey Fedoseyev

The Kazakh Centre for Humanitarian and Political Activities Yesenzhol Aliyarov

Almaty, 20 October 2009.

REGULATIONS OF THE ALLIANCE OF ANALYTICAL ORGANIZATIONS 1. G ENERAL REGULATIONS 1. The Alliance of

REGULATIONS OF THE ALLIANCE OF ANALYTICAL ORGANIZATIONS

1. GENERAL REGULATIONS

1. The Alliance of Analytical Organizations (AAO) is a voluntary association of legal enti-

ties involved in research and information-analytical activities in the field of social, political and economic knowledge.

2. The ААО is not a legal entity.

3. In its activities, the ААО follows these Regulations and resolutions, which were adopted

by its members on a collective basis.

2. BASIC AIM OF THE AAO

The AAO’s basic aim is to express its members’ consolidated position on urgent issues on the country’s social, political and economic development and to draft a political agenda based on that.

3. BASIC TASKS OF THE AAO

The AAO’s basic tasks are:

1. To improve our social role as mediator, intermediary and ‘think tank’ in order to discuss

and resolve the most topical and acute issues on the country’s political and socio-economic de- velopment and to analyze external factors that influence this development.2. To develop in the Kazakh-language segment of Kazakhstan’s analytical market all possible ways.

2. To test a new model of professional synthesis and scientific cooperation focused on the

interests of the entire analytical community of Kazakhstan.

3. To unite intellectual, organizational and financial resources of the AAO members and oth-

er interested representatives of Kazakhstan’s analytical community to implement joint projects.

4. To establish a balance between theoretical and applied research by conducting fundamen-

tal studies.

5. To create conditions for closer scientific cooperation in Kazakhstan’s analytical com-

munity.

6. To reach an international level of research activities in basic areas and to establish con-

structive relations with foreign analytical communities.

7.

To participate in improving the training of young experts for Kazakhstan’s analytical

market.

8.

To create a single electronic database of results of research activities in basic education

sectors.

4. BASIC PRINCIPLES OF THE AAO’S ACTIVITIES

1. Commitment to research impartiality, professional competence, high professional stan-

dards and research honesty, as well as the prevention of deliberate distortion of facts in any cir-

cumstances.

2. Refusal of actions that discredit social, political and economic research disciplines and

affect the reputation of Kazakhstan’s analytical community.

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social, political and economic research disciplines and affect the reputation of Kazakhstan’s analytical community. 65
3. Prevention of the prevalence of ideological, corporate and personal preferences that may impede the

3. Prevention of the prevalence of ideological, corporate and personal preferences that may

impede the establishment of truth during theoretical and applied research.

4. Argumentativeness and consistency in defending one’s views.

5. Prevention of plagiarism, which is incompatible with experts’ social, political and eco-

nomic research.

6. Active demonstration of professional solidarity to protect our colleagues, their research

activities and their results from any external infringement and pressure.

7. Contribution to the development of a pluralistic intellectual field as the generator of ideas,

which are necessary for efficient development of the government and society.

8. Clear understanding of professional and moral responsibility for results of research works

and proposals.

5. BASIC FORMS AND AREAS OF THE AAO’S ACTIVITY

The AAO’s activities are:

1. To develop and introduce to the public the annual analytical report ‘Kazakhstan: Annual

Report on the Development of Society and the State’;

2. To create a discussion and analytical club and determine its activities;

3. To organize and hold research and practical conferences, seminars, roundtables, news

conferences, lectures, discussions and other public events;

4. To develop and adopt informational and analytical documents that include the AAO’s as-

sessment of urgent issues related to Kazakhstan’s political, social and economic development;

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political, social and economic development; 66 5. To create the alliance’s website and its activities; 6.

5. To create the alliance’s website and its activities;

6. To implement other joint projects aimed at the AAO’s basic goals and tasks;

7. To hold regular organizational meetings.

6. FOUNDERS OF THE AAO

The AAO’s founders are the following research and analytical organizations:

1. Assessment Risks Group.

2. The Institute for Economic Strategies – Central Asia.

3. The Kazakhstani Centre for Humanitarian and Political Situations.

4. The Cultural Front public association.

5. The Altynbek Sarsenbayuly Foundation.

6. The Alternative Centre for Topical Research.

7. The Centre for Military and Strategic Studies.

8. The Central Asian Foundation for Developing Democracy.

7. PARTICIPATION IN THE AAO

1. Proxies and authorized representatives of legal entities, which do research and analytical

work in the socio-political and economic sphere can participate in the AAO’s work.

2. The ААО is open to new members.

3. The AAO accepts new members based on recommendation by one or more AAO founders.

4. The number of members of the AAO is not limited.

5. Membership of the AAO discontinues if:

5.1. A member voluntarily refuses to participate in the AAO;

5.2. A member of the AAO stops its activities as a legal entity;

5.3. The ААО stops its work.

8. ORGANIZATION OF ACTIVITIES OF THE AAO

8. O RGANIZATION OF ACTIVITIES OF THE AAO 1. The AAO conducts its activity based on

1. The AAO conducts its activity based on the distribution of responsibilities between its

members, considering their voluntary wishes and their duty to support each other.

2. Current and future fields of the AAO’s activity are determined by its members through

mutual agreement during the weekly session.