After months of pressure on Kazakhstan’s currency, the central bank has moved to allow the tenge to slide – but avoided the large snap devaluation that doomsayers have long been predicting.
On July 15, the National Bank eased the corridor within which the tenge trades to allow it to drop by 5%, to 198 to the U.S. dollar.
Chief central banker Kayrat Kelimbetov explained, in remarks quoted by Tengri News, that the measure was adopted as the tenge was pushing the upper margin of the corridor of 170-188 tenge to the dollar that the bank had previously committed to enforcing.
There were no immediate signs of panic over the mini-devaluation in Kazakhstan, where the National Bank maintained its exchange rate at 186.8 tenge to the dollar and the currency closed at 187.05 on the Kazakhstan Stock Exchange on July 15. In exchange offices, the tenge was trading at around 187.5 to the dollar after the central bank’s announcement.
Financial analysts predict the slide will be gradual.
“The scenario of a sharp devaluation is not being considered, and in principle that’s correct,” economist Olzhas Khudaybergenov, a former adviser to Kelimbetov, wrote on his Facebook page.
Khudaybergenov predicted a slow depreciation of 0.5-1 tenge per month, with the currency reaching the upper limit of the new corridor (198 tenge) in about a year.
The calm with which the news was received contrasted with the last devaluation in 2014, when the tenge lost nearly 20% of its value in a single day, sparking public anger that escalated into small-scale unrest in Almaty.
The US government has secured the right to seize $300 million in allegedly illicit proceeds from an “international conspiracy” involving a relative of Uzbek strongman Islam Karimov.
A US Federal Court in New York issued the ruling July 9. The Department of Justice successfully argued that the seized funds are connected to a case involving alleged bribery and money laundering in Uzbekistan’s telecoms sector, Bloomberg reported.
The funds are in accounts in Belgium, Ireland, and Luxemburg held at Bank of New York Mellon, which declined to comment to EurasiaNet.org when the complaint was filed late in June.
The complaint alleges that illicit payments were made by two telecoms companies, Russia’s MTS and Amsterdam-based VimpelCom, to curry influence and secure favorable decisions to operate in Uzbekistan’s telecommunications sector.
VimpelCom is cooperating with the investigation, a spokesperson told EurasiaNet.org last month. MTS declined to comment.
The chief beneficiary, who is unnamed in the complaint, was a “close relative” of Karimov’s, the US complaint alleges. It characterizes the individual as “GOVERNMENT OFFICIAL A,” who previously “held several positions in the Uzbek government.”
Gulnara Karimova, the president’s eldest daughter who is under house arrest in Uzbekistan on corruption charges, has previously been named as a suspect in a money-laundering probe in Switzerland involving payments in Uzbekistan’s telecoms sector, which is linked to an ongoing bribery probe in Sweden.
Uzbek officials brushed aside criticism during a two-day session of a UN human rights panel, claiming that the international community is exaggerating some alleged abuses, such as forced sterilization and religious persecution.
The Uzbekistani delegation faced tough questions on a wide array of issues during the UN Human Rights Committee hearings on July 8-9. Forced and child labor in the cotton sector “were discussed at length,” a summary of proceedings posted on the UN committee’s website stated. Other issues raised included torture, gay rights, forced sterilization and freedom of speech.
Allegations of abuses were highlighted in a report published during the run-up to the UN review by the International Partnership for Human Rights, a Brussels-based NGO that asserted “fundamental rights and freedoms of individuals continue to be routinely violated in Uzbekistan.”
Islam Jasimov, a department head at Uzbekistan’s Prosecutor General’s Office, presented the government’s report. He defended Tashkent’s record on child labor, pointing to “progress” that “had been received very positively” by the International Labor Organization (ILO).
Since 2012, Tashkent has prohibited the use of child labor in the cotton harvest, but rights campaigners say this has simply shifted the burden to adults. Roughly 4 million were pressed into service to help gather the harvest last fall, according to the Cotton Campaign, a coalition pushing to end forced labor in the sector.
The US government wants to recover hundreds of millions of dollars in allegedly illicit funds that American prosecutors contend enriched a “close relative” of Uzbekistan’s strongman president, Islam Karimov.
A forfeiture complaint filed in US federal court in New York seeks the recovery of $300 million in assets “involved in an international conspiracy to launder corrupt payments” made in Uzbekistan’s telecoms sector, according to a copy of the complaint sent to EurasiaNet.org by the Department of Justice, which filed the case on June 29.
It alleges that illicit payments were made by two telecoms companies, Russia’s MTS and Amsterdam-based VimpelCom, to curry influence and secure favorable decisions from Uzbekistan’s government to operate in the lucrative telecommunications sector.
The alleged beneficiary is not named, but is identified as “GOVERNMENT OFFICIAL A,” and is further characterized as “a close relative of the President of Uzbekistan.” The unnamed beneficiary “held several positions in the Uzbek government” during the period in question (2004-2011), according to the complaint.
Gulnara Karimova, the president’s eldest daughter who is under house arrest in Uzbekistan on corruption charges, has previously been named as a suspect in a money-laundering probe in Switzerland involving payments in Uzbekistan’s telecoms sector. During the period in question, she held government positions, including as deputy foreign minister and ambassador to Spain and the United Nations in Geneva.
The lawsuit names two Karimova associates, and two shell companies they allegedly operated to funnel illicit funds: Gayane Avakyan, owner of Takilant, and Rustam Madumarov, owner of Expoline.
There is a bleak mood hanging over the editorial office of the Nakanune.kz website these days. The news site, which has won plaudits for its hard-hitting coverage in Kazakhstan’s beleaguered media environment, has run afoul of the country’s judicial system.
Astana places severe restrictions on civil liberties, including freedom of expression, conscience, and assembly, a United Nations rapporteur says in a report published following a visit to Kazakhstan earlier this year.
The country offers “very limited space for the expression of dissenting political views” and treats freedom of assembly “as a privilege or a favor rather than a right,” Maina Kiai, rapporteur on the rights to freedom of peaceful assembly and association, said in a report being presented to the United Nations in Geneva on June 17.
“A web of policy, practice and perception contributes to a general environment where engaging in political activities is difficult, discouraging and sometimes dangerous,” Kiai found. “Dissent may be criminalized and critical political expression is often portrayed as threatening the stability of the state.”
He expressed concern about the case of Kazakhstan’s most prominent prisoner, Vladimir Kozlov, jailed on charges of fomenting fatal violence in western Kazakhstan in 2011.
The rapporteur, who met the opposition leader behind bars during his January visit, “is seriously concerned that Mr. Kozlov’s ordinary political speech and association activities were deemed criminal incitement of social hatred,” the report stated.
The case “seems emblematic of a more general trend to marginalize political leaders voicing dissent,” it added.
A corruption scandal has engulfed a high-profile international exhibition that Astana is organizing, just as Kazakhstan enters the final stages of its bid to stage another prominent global event – the Winter Olympics.
Talgat Yermegiyayev, the chief organizer of Kazakhstan’s EXPO-2017 exhibition (which is due to be held in Astana in two years) has been placed under house arrest on suspicion of embezzlement, reports the Today.kz website.
The court ruling was issued on June 12, the day after President Nursultan Nazarbayev had fired Yermegiyayev from his position as chief executive of the Astana EXPO-2017 company, which is organizing the international exhibition. Nazarbayev’s administration has billed the event a major PR coup for Kazakhstan.
Another top EXPO official, Kazhymurat Usenov, who was in charge of the department overseeing construction of facilities for the exhibition, has also been placed under house arrest. He is suspected of embezzling 214 million tenge ($1.2 million) from the $385 million the state has allocated for the $3 billion event.
The corruption scandal has erupted as Kazakhstan enters the final stages in the race to stage the 2022 Winter Olympics, in which commercial capital Almaty is competing with Beijing to host the prestigious sporting event. A vote is due at the end of July.
UN Secretary General Ban Ki-moon has finished a weeklong tour of the five Central Asian states by appealing for them to improve their dismal human rights records. He called on the region’s autocrats to respect civil liberties, at the very least as a means to preserve stability.
“There is no peace without development. No development without peace. And neither is possible without a respect for human rights,” Ban told a meeting of students and officials in Turkmenistan, which campaigners describe as one of the world’s worst human rights abusers.
Speaking in Ashgabat on June 13, the last day of his tour, Ban pointed to concerns about a “deterioration of some aspects of human rights – a shrinking democratic space” across Central Asia.
Restrictions on freedoms might foster “an illusion of stability in the short-run,” he added, but ultimately threatened to create “a breeding ground for extremist ideologies.”
“Around the world, the way to confront threats is not more repression, it is more openness. More human rights,” he added.
A day earlier, in Uzbekistan, Ban had heeded calls by human rights campaigners to press Tashkent over the issues of forced labor and torture.
He acknowledged progress in eliminating the use of child labor, but urged the government to address “the mobilization of teachers, doctors and others in cotton harvesting,” and also “prevent the maltreatment of prisoners.”
Ban hailed “good laws” adopted in Uzbekistan to uphold the rule of law, but added that “laws on the books should be made real in the lives of people.”
Kazakhstan is poised to become part of the World Trade Organization (WTO) nearly two decades after it first applied to join. The Central Asian nation has completed entry talks that have been among the most “challenging” the global body has faced with any country.
Kazakhstan “finalized the negotiations of its WTO membership terms with WTO members at the Working Party meeting on Kazakhstan’s accession on 10 June,” the international trade body said in a statement issued the same day.
Farida Batyrbayeva, spokeswoman for Minister of Economic Integration Zhanar Aytzhanova, confirmed to EurasiaNet.org the completion of talks that started back in 1996.
Astana will not release details of the accession package until after a meeting in Geneva on June 22 at which the WTO’s 161 member states will consider formal approval of the draft accession package, Batyrbayeva added.
The WTO announcement came on the same day that the Agriculture Ministry had declined to put a date on Kazakhstan’s long-delayed accession, hinting at behind-the-scenes disagreements over agricultural subsidies.
The size of subsidies Kazakhstan would be permitted to retain for the agricultural sector – which contributes some 5 percent of GDP and employs around a quarter of the workforce – remained “unresolved,” as Kazakhstani negotiators tried to secure “the maximum possible domestic support,” the ministry told Tengri News on June 10, shortly before the WTO issued its statement on the completion of the accession talks.
Evidently, negotiators overcame the stumbling block to conclude the deal, which WTO Director-General Roberto Azevedo hailed as a “historic step.”
The accession talks with Kazakhstan were among “the most challenging negotiations” in the WTO’s 20-year history, the statement said.