EurasiaNet Business & Economics - Nazarbayev Seeks to Close Kazakhstani Political Sphere by Opening Economy

BUSINESS & ECONOMICS

NAZARBAYEV SEEKS TO CLOSE KAZAKHSTANI POLITICAL SPHERE BY OPENING ECONOMY
Ibragim Alibekov 11/18/04

Kazakhstani President Nursultan Nazarbayev has driven his political opponents out of parliament. Now he is trying to drive them out of business.

Nazarbayev launched a campaign in early November designed to greatly curtail the influence of Kazakhstan’s oligarchs, or entrepreneurs who run many of the country’s largest conglomerates. Some of those being targeted are key financial backers of opposition political parties, including Ak Zhol and Democratic Choice of Kazakhstan (DCK).

In a speech delivered at the newly elected parliament’s opening session on November 3, Nazarbayev depicted the oligarchs as intent on monopolizing the economy and squashing all competitors. "About 10 mega-holdings . . . control more than 80 percent of the Kazakhstani economy," the president said. "They, as a rule, are against the appearance of competitors. That is why they are obstacles for the development of small and mid-size business." Among the conglomerates identified as stifling development are some of the nation’s leading banks, the state oil and gas company KazMunaiGaz, and the Eurasian Industrial Association. Another conglomerate labeled as a mega-holding was the Khabar media empire, which is run by the president’s daughter, Dariga Nazarbayeva.

Criticisms leveled by the president against conglomerates ranged from tax evasion to the mishandling of investor relations. As a result, Nazarbayev contended, Kazakhstan’s stock market has failed to meet its potential. To correct the situation, the president has suggested that conglomerates shed some of their non-core holdings. He additionally proposed that an undefined number of state holdings be created to include "strategically important and big state companies." Other firms may be put up for auction.

Critics say Nazarbayev’s stated aim š ensuring the economic sector is open to greater competition š is disingenuous. They point out that many of the president’s family members, friends and political associates possess vast business holdings, but they do not seem to be the primary targets of the anti-oligarch campaign. The real aim of the campaign, critics assert, is to deny opposition parties the financial ability to compete in the upcoming presidential election, scheduled for 2006. Nazarbayev has indicated he will seek another seven-year term.

Economic growth, fueled by the country’s sprawling oil and natural gas industries, has been robust of late. The Kazakhstani economy, for example, expanded by 9.5 percent in 2003, marking the highest growth rate in the Commonwealth of Independent States. As warnings resound that the national economy is energy-heavy, however, emphasis has been placed on developing economic sectors where investment and income have lagged behind.

Still, politics appears to shape Nazarbayev’s agenda for change. Political power, the president told parliamentarians, is the oligarchs’ end goal. "Oligarchic capital strangles its competitors. After collecting money and strength, they start to strive for power," Nazarbayev said.

That declaration appears to be a direct strike against Ak Zhol, a centrist party made up largely of influential businesspeople, and the only opposition party to win a seat in parliament in the September 19 elections. [a href="http://www.eurasianet.org/departments/insight/articles/eav092704a.shtml" class="linktext">For additional information see the Eurasia Insight archive].

Already, the presidential administration has implied that Kazkommertsbank, a private bank with close ties to Ak Zhol, could be a prime target in the anti-oligarch campaign.

Presidential political adviser Ermukhamet Ertysbayev, in an interview with the Interfax news agency, described bank chairman Nurzhan Subkhanberdin as a Kazakhstani "Khodorkovsky." Ertysbayev was referring to Mikhail Khodorkovsky, the founder of Russian energy company Yukos, who was imprisoned by Russian authorities in 2003 on charges of tax fraud and evasion. Many observers believe the charges to be politically motivated, designed to punish the erstwhile energy mogul for his financial support of Russian President Vladimir Putin’s political opponents.

Kazakhstani legislators, many of them perceived to be beholden to Nazarbayev for their positions, are reportedly considering a bill to tighten regulations on political lobbying activity. One specific aim of the legislation would be to install checks on the ability of conglomerates and "various elite groups" to influence politics. "In the transition period, in the post-Soviet area," Ertysbayev told Interfax, "any attempt from the oligarchs to influence . . . the president, the parliament and the government can result in serious political cataclysms."

Ertysbayev described the move against oligarchs as "the logical end" to the country’s anti-monopolization laws. However, those rules are unlikely to be applied to Nazarbayev supporters, opposition supporters contend. In trying to draw attention to the politicized nature of the anti-oligarch campaign, the opposition paper Respublika said in a front-page commentary November 12 that the president’s de-monopolization efforts could give Kazakhstanis a chance "to see how the government will put monopolists and their protectors from the head of state’s inner circle in their place."

The September parliamentary elections, which international observers criticized as unfair, gave Nazarbayev an overwhelming legislative majority. The leading pro-presidential party, Otan (Fatherland), holds 50 of the 77 seats in Kazakhstan’s Majilis, or parliament, with the remainder in the hands of parties sympathetic to the president. The one opposition member to win a parliamentary seat, Alikhan Baimenov, co-chairman of Ak Zhol, refused to accept his mandate in a protest against the vote-rigging. Another potential source of criticism, Zharmakhan Tuyakbai, a member of Otan, resigned in October as speaker of the Majilis after the presidential administration failed to act on demands for an investigation of alleged election violations. [For additional information see the Eurasia Insight archive].

Nazarbayev seems set to use his super-majority to pass legislation that, some observers say, is designed to bolster his popular appeal in advance of the presidential election. A top point on the legislative agenda is the creation of a social security system, Nazarbayev indicated during a November 15 speech at a conference of business executives in Almaty. The president is also pushing for a significant boost in salaries for doctors and teachers in 2005.

Editor‰s Note: Ibragim Alibekov is the pseudonym for a Kazakhstan-based reporter and analyst.

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.

The views expressed in this publication do not necessarily represent the position of the Open Society Institute and are the sole responsibility of the author or authors.