Kazakhstan Chamber of Commerce in the USA

KazCham


Kazakhstan at 20

Posted on December 18, 2011 by Alex

Martha Brill Olcott, Carnegie Endowment, December 12, 2011

Kazakhstan celebrates the twentieth anniversary of independence on December 16, the celebration of a declaration made just days before the formal dissolution of the Soviet Union. The subsequent two decades should render obsolete designations like “newly independent” or “post-Soviet” for the states that emerged from the collapse of the U.S.S.R. All are distinct countries to be judged in their own right.

This is particularly true for Kazakhstan, which has made a smooth transition from a Soviet-republic to a middle income country. A top ten oil producer rich in other natural resources, Kazakhstan devised a foreign direct investment policy designed to foster economic diversity and advance a multifaceted foreign policy.

Its new capital Astana has become an important and neutral international meeting place, moving Kazakhstan closer toward realizing President Nazarbayev’s goal of being a bridge between Europe and Asia.

While the slow pace of political reform has frustrated Kazakhstan’s pro-democracy activists, under the leadership of its four-term president Kazakhstan has seen no major strife despite its ethnic diversity.

These achievements notwithstanding, tough tests lie ahead. The country’s economy is dependent on foreign direct investment and therefore sensitive to global economic risks. More importantly, the strength of Kazakhstan’s political system has yet to be tested as the country has yet to experience a transfer of power from its founding president. Only when this occurs—and it is inevitable—will Kazakhstan have completed its final transition from independence.

A Cautious Beginning Sets the Stage for the Future

Well-endowed with human and natural resources but wary of the risks associated with individual statehood, Kazakhstan did not declare independence until there was no hope that the Soviet Union could be saved.

The challenges Kazakhstan faced were formidable, but its ability to respond has created a solid foundation upon which to build.

Economic Challenges After Independence

Kazakhstan shared a 7000-kilometer border with Russia, and its economy and basic infrastructure—especially in the north—was completely integrated with that of Russia. Russia’s economic collapse created unemployment and hyperinflation in Kazakhstan, which was part of the ruble zone until 1994.

But the severity of this crisis strengthened the hand of economic reformers in Kazakhstan and encouraged the introduction of macro- and micro-economic reforms at a faster pace than in Russia. More attractive terms for foreign economic investment, especially in the oil and gas sector, were offered as well. Russia’s 1998 economic crisis led to further differentiation of the two economies.

Security Challenges After Independence

Kazakhstan inherited the world’s fourth largest nuclear arsenal. Nazarbayev’s decision to give up these weapons brought him international stature. The choice to dispose of them with Washington’s help, and with Moscow’s approval, served as a defining moment in the U.S.-Kazakh and in the Kazakh-Russian relationships. Since then, Kazakhstan has been a vocal supporter of nuclear disarmament initiatives and the peaceful use of uranium.

Infrastructure Security Challenges After Independence

Kazakhstan is at a disadvantage as a land-locked state several thousand miles from the nearest open port. To compensate it has taken advantage of all the bilateral and multilateral funding available for infrastructure improvements. As a result, Kazakhstan enjoys the modern port of Aktau on the Caspian, improved roads and rails to link Kazakhstan’s principle cities (many previously accessible only via Russia), and enhanced transit links with China.

This improved infrastructure has made Kazakhstan an important transportation corridor in NATO’s Northern Distribution Network for supporting military operations in Afghanistan.

Social Challenges After Independence

Kazakhstan inherited a Soviet-era social welfare system on the brink of collapse. In response it overhauled its pension system, giving citizens the choice of private and public plans. It modernized health care and education systems, with private sector services now existing alongside public ones. The entire population can access coverage from the social welfare net, although the quality of services is not yet uniform across the country.

Ethnic Challenges After Independence

Home to a hundred nationalities at the time it declared its independence, Kazakhstan had an ethnic Russian population two-thirds the size of its ethnic Kazakh one.

In marked contrast to the Caucasus, Kazakhstan experienced no bloodshed at independence. While a large number of Russians left, the majority accepted Kazakh citizenship. One reason for this was the government’s commitment to build a multi-ethnic and multi-confessional secular state in which Kazakh would be the national language, but in which Russian would remain a language of international communication.

Political Challenges After Independence

The collapse of the Soviet Union occurred in part because of popular demand for political participation and government accountability. Kazakhstan’s survival required a loyal citizenry, one which accepted the legitimacy of Kazakhstan as a state and respected the authority of its government.

But Kazakhstan’s citizens wanted very different and potentially conflicting things. For ethnic Kazakhs the creation of Kazakhstan was a form of nationhood restored, but for all the rest Kazakhstan was simply the territorial unit in which they lived.

The country’s demographics served to reinforce the basic conservatism of Kazakhstan’s political leadership, which was also shaped by a Soviet mindset holding that leaders understand the will of the people better than the population itself. Traditional Kazakh culture, which awards respect to elders, also reinforced this mentality. All this has led to a go-slow approach to political and social change. Because the majority of the voting age population had the same socialization, it is hard to say whether or not the majority of Kazakhstan’s citizens are dissatisfied with the country’s political system—critical though they may be about specific policies.

Corruption and Independence

The division of assets at the time of independence led to crony capitalism, which reached the top echelons of power. But over the past decade Kazakhstan has sought to emulate many of the best practices of resource rich states. Kazakhstan has a sovereign wealth fund and shares in strategic state enterprises are now managed more transparently and some are internationally traded. Additionally, all government enterprises are under the supervision of Samruk-Kazyna, a national development and investment agency. Kazakhstan participates in the Extractive Industry Transparency Initiative. Prosecution of government officials for corruption has increased, although, as the Kazakh government itself admits, a lot more needs to be done.

Geopolitical Challenges After Independence

Kazakhstan’s independence has always depended on Moscow’s tacit acceptance of its right to survive. This support was not a given twenty years ago, as northern Kazakhstan was viewed as part of “historic Russia.”

But through a combination of Nazarbayev’s skills and Russia’s weakness under Boris Yeltsin’s rule, Moscow’s influence in Kazakhstan was reduced to a point where both Kazakhstan’s independence and its territorial integrity became non-negotiable. Today, even a resurgent Russia would find it difficult to challenge either.

Kazakhstan now has an international presence. In recent years Kazakhstan has chaired the Organization of Security and Cooperation in Europe, the Islamic Cooperation Organization, and was the founder of the Conference on Interaction and Confidence Building Measures in Asia, whose chairmanship is now exercised by Turkey.

Kazakhstan has joined Russia’s customs union and the two countries are considering steps for further integration. But unlike twenty years ago cooperation between them can no longer be on the basis of Moscow’s “diktat.”

What Will the Next Ten Years Bring?

With a confidence sparked by the challenges already met, Nazarbayev and Kazakhstan’s leadership have laid out an ambitious agenda for the next ten years designed to make Kazakhstan one of the 50 top economies in the world.

Kazakhstan is sure to face further challenges in meeting these targets. Most striking is that of political transition. While the face of the governing Kazakh elite grows more youthful every year, power must still eventually pass from Nazarbayev to a new leader and from the current elite to a generation raised in independent Kazakhstan.

There are likely to be differences in values between generations, not just among the elite but within the population, and the kind of political institutional choices Kazakhstan makes in the next few years could make it easier for the country to withstand a possible values gap.

A multi-party system, a stronger parliament, a cabinet of ministers, and a prime minister answerable to parliament, are all ways to smooth the process of generational change. Nazarbayev and other key members of the country’s leadership are committed to the goal of expanding political competition. In the past five years all of these institutions have begun to be strengthened, but it is not clear that they will develop into democratic institutions quickly enough to serve as effective counterweights for Kazakhstan’s future presidents, who are unlikely to enjoy the same political support as its founding leader. Expanding the arenas of political competition could help insulate the government from the impact of social shocks as well.

Helped in part by its large national sovereign wealth fund, Kazakhstan was able to weather the 2008 global economic crisis without major social dislocation. Financial resources now partly depleted, it would be harder to respond as vigorously to a downturn in today’s global economy.

Kazakhstan remains vulnerable to drops in commodity prices that are needed to create the revenues used to support economic diversification programs. These revenues help pay for the programs of educational innovations and training designed to prepare the next generation of Kazakhstan’s workforce to be gainfully employed in a diversified economy.

Geopolitical trends are also difficult to predict. The next decade could see a revanchist Russia, a run-away Chinese economy in search of more economic space, a Europe turning inward to preserve its Union, a United States seriously weakened by only partially successful foreign wars, civil wars, and international conflicts in the Middle East, and a rise in global jihadist movements.

Any of these would have consequences for Kazakhstan. But given its twenty-year track record in successfully dealing with the unexpected, one can be optimistic that Kazakhstan’s leaders will find ways to manage any of the geopolitical, political, economic, and social challenges that they may need to confront.

SOURCE: http://www.kazakhembus.com/index.php?mact=News,cntnt01,detail,0&cntnt01articleid=809&cntnt01origid=90&cntnt01category_id=6&cntnt01returnid=90

Print Friendly

Leave a Reply




↑ Top