Kazakhstan Plans Vast Expansion of Payments to Elderly, Students and State-Sector Employees

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: