EurasiaNet Business & Economics - Kazakhstan Plans Vast Expansion of Payments to Elderly, Students and State-Sector Employees

BUSINESS & ECONOMICS

KAZAKHSTAN PLANS VAST EXPANSION OF PAYMENTS TO ELDERLY, STUDENTS AND STATE-SECTOR EMPLOYEES
Dilyara Teshebayeva 5/05/05

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Taking advantage of the windfall generated by Kazakhstan’s developing energy sector, President Nursultan Nazarbayev’s administration is expanding expenditures on the elderly, students and state-sector employees. Some analysts say the rise in state spending is designed to "buy" the loyalty of key sectors of Kazakhstani society as the country prepares for a presidential election in 2006. A sampling of opinion among students indicates that the announcement has indeed raised Nazarbayev’s approval rating.

Nazarbayev first outlined his administration’s intentions in his February 18 state-of-the-nation speech. Since then, government officials have been working out the logistics of putting the president’s plans into practice. According to preliminary plans, pension increases and wage hikes of up to 30 percent are expected to take effect this summer. Among the state-sector employees who are expected to benefit are doctors, nurses and teachers. According to Nazarbayev, the pay hikes will be phased in over a two-year period.

University students appear to be the primary beneficiaries of government largesse. When the new academic year starts in September, the state will pick up the tab for tens of thousands of students entering universities. Returning undergraduates will have their student loans cancelled and receive scholarships to complete their studies. The highest-achieving students will enjoy a 300 percent hike in their stipends. In addition, the government will expand a program that enables select students to further their education abroad.

Overall, the Ministry of Finance estimates that the additional spending will amount to 106 billion tenge, or roughly USD $816 million. The country’s dynamic economic growth makes the vast increase in state expenditures possible. According to official statistics, Kazakhstan registered a 9.3 percent increase in GDP in 2004, after recording 9.1 percent growth the previous year. The country’s energy-sector is the engine driving the country’s rapid development.

Officials tend to portray the increased spending as a routine part of a long-term government development blueprint, covering the period from 1997-2030. Some observers, however, say the measures were specifically timed and targeted to bolster support for president at an extremely sensitive point in both the country’s and, more broadly, in Central Asia’s development course. Many Kazakhstani officials are wary that the popular passions that drove Kyrgyzstan’s revolution in March could spread to neighboring countries. [For background see the Eurasia Insight archives]. Increasing social spending in Kazakhstan could go a long way toward alleviating economic discontent, thus boosting the president’s political standing as he gears up for a re-election campaign. The spending increase could likewise decrease the chances that citizens might participate in anti-government protests. To help ensure that large-scale protests do not occur in connection with the presidential vote, legislators recently amended the Election Code to ban politically related demonstrations during the post-election period.

One Kazakhstani political analyst, Marat Asipov, indicated that it was not accidental that the Nazarbayev administration decided to lavish funds on students. Student-activist groups are widely credited with playing key roles in the revolutions, in Georgia and Ukraine in particular, that have occurred in the former Soviet Union over the last 18 months.

"They [officials] are afraid of [students] and that is why they buy [them] off," Asipov wrote in an April 7 commentary posted on the Vremya newspaper web site. "Students will be happy. Their parents, who will save hundreds of thousands of tenge, in this case will say: �thank you, dear government.’"

Asipov indicated that the spending increase was chiefly designed to encourage citizens to overlook problems connected with economic development, including widespread government corruption and a vast disparity in income distribution that has made a few enormously wealthy while the majority live near the poverty line. [For background see the Eurasia Insight archive]. In concluding his commentary, Asipov stated that "every person will [now] decide for himself/herself whether to keep quiet or not."

It would seem that reaction is being guided by bottom-line considerations. Students indeed seem genuinely grateful for the financial relief, and many appeared unconcerned with any possible political motivation behind the move. Gibadat Kuliyeva, an international affairs student at Almaty National University, expressed the belief that Nazarbayev’s main motivation was a desire to hasten the country’s development. "This [social spending] is a great way to change our society," Kuliyeva said. "During difficult times, the main thing people care about is how to earn money, feed their family and to feel secure."

Kairat Tnalin, an economics student at Karaganda State University, said the spending increase had raised Nazarbayev’s standing among students. "These reforms will make a [positive] difference in the opinion [of students] toward the president," Tnalin said. "There are some students who view it as a sop from the government, but the majority is happy." Askar Namazbayev, a graduate student in business administration who intends to study in Europe with government help, concurred, saying that pensioners and students were the two segments of society "most likely to change their position" toward Nazarbayev’s administration "because of their material interests."

According to a professor at Kokshetau State University, about 180 miles north of the capital Astana, many students will now feel obliged to support the presidential administration. Kazakhstani custom holds that "if somebody does you a favor, you do the same," said the professor, who spoke on condition of anonymity.

Several academics interviewed by EurasiaNet offered praise for Nazarbayev, saying the president was merely acting as any shrewd politician should to reduce the chances of instability and enhance his electoral position. Some expressed concern that the additional spending could stoke inflation in the country. "But we can’t criticize the president because all politicians do such things in an election campaign," the Kokshetau State professor said.

An economics professor at Al-Farabi National University in Almaty, who also asked for anonymity, suggested that the administration’s decision to increase social spending reaffirmed Nazarbayev’s position as the country’s preeminent politician. "He has great political will and charisma that other politicians cannot match," the professor said.

While beneficial to students, a sociology professor at Karaganda State University, voiced doubt that the state’s spending spree would improve the general quality of education. "The most important issue is education standards," the sociology professor said. "These reforms [the increase in social spending] will not change the situation in the education system." At the same time, the Karaganda State professor suggested that the spending increase could possibly raise the quality of Kazakhstan’s political discourse. "The reforms will make opposition parties think about their agenda more carefully," he said.

Editor�s Note: Dilyara Teshebayeva is an editorial intern at EurasiaNet’s office in New York.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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