KAZAKHSTAN’S ECONOMIC PROPOSALS REVEAL FEARS ABOUT POLITICAL INSTABILITY
At the end of May, Kazakhstan hosted two important economic events – the 25th Council of Foreign Investors meeting and the Fifth Astana Economic Forum. On these two occasions, the country’s president, Nursultan Nazarbayev, announced upcoming changes in public policy with regard to foreign companies working on Kazakhstan’s lucrative energy market and formulated several proposals concerning the state of the world economy. However, apart from purely economic thoughts, the Kazakh leader also addressed a political message reflecting his preoccupation with the recent wave of instability in certain authoritarian countries.
BACKGROUND: From the very start of the world financial crisis in 2008, Kazakhstan’s president has been active in devising practical solutions aimed at remedying the inherent flaws of the global economic system. In February 2009, he published his first keynote article titled “Clues to the crisis,” in which he called for the establishment of a new international currency capable of putting an end to what Nazarbayev viewed as the “dollar imperialism.” A few months later, a second article was published under the title “The fifth way,” unequivocally hinting at the universal nature of Nazarbayev’s proposals believed to represent an efficient cure to all economic difficulties engendered by the current crisis. Interestingly, both articles were featured in prominent Russian newspapers, reflecting the importance Nazarbayev attributes to the media outreach of his innovative ideas.
Although neither of these suggestions has ever been seriously examined by contemporary policymakers, Nazarbayev has continued to preach the creation of an international currency or several regional currencies whose purpose would be to create normal economic relations between participating nations. One of the ways to “normalize” such relations, in Nazarbayev’s view, would consist in transferring the responsibility for currency issues to a supranational organization, whereas the emission of U.S. dollars is currently exercised by the Federal Reserve System, the central bank of the U.S..
As regards foreign businesses in Kazakhstan, especially on the Caspian Sea, Nazarbayev has consistently claimed that these should pay more attention to the development of the Kazakh economy, instead of redirecting their oil and gas profits back to the West. In order to demonstrate the seriousness of its intentions, the Kazakh Government launched a series of judicial proceedings on the grounds of purported administrative inconsistencies or environmental violations. In early 2011, the Karachaganak Petroleum Operating (KPO) was fined US$ 143 million for unduly provided customs preferences.
One year earlier, the KPO and two other foreign companies, Agip and TengizChevrOil, collectively had to pay over US$ 3 million in fines for the breach of environmental legislation. Apart from these measures, Kazakh authorities also enacted a policy to increase the state’s stake in national companies. Thus, the country’s richest person, Vladimir Kim, had to sell 11 percent of his shares in Kazakhmys Plc to Kazakhstan’s Government in October 2010. Earlier this year, Nazarbayev confirmed this policy course by mentioning in his speech before the Parliament that his government is interested in further recovering some previously privatized assets.
IMPLICATIONS: In a meeting with foreign investors on May 22, 2012, Kazakhstan’s president further elaborated on his vision for the future development of the country with external assistance. He called for the implementation of an ambitious investment project, called the New Silk Road, which is aimed at creating on Kazakh territory the largest business and transport hub in Central Asia. By 2020, Kazakhstan should double its current transit potential slated to grow up to 50 million tons of cargo on an annual basis. Moreover, President Nazarbayev warned that foreign companies working in the oil and gas sector would now have to invest in the construction of modern industrial infrastructure in order to be able to renew their operating permits or to participate in the exploration of other deposits. He even cited such role models as the French oil giant Total, currently engaged in the establishment of a training institute for future welders or Chevron, whose money has recently sponsored the creation of a pipe manufacturing plant in Kazakhstan’s west.
As Nazarbayev finally remarked, “[what you are doing] is not sufficient. We are asking for increased participation. This is a subject of more discussions and we will see together what is good for Kazakhstan and for you.” As a means of encouragement, Nazarbayev suggested establishing a special “green corridor” for most exemplary investors and introducing single-window shops with a view to accelerating administrative procedures.
The ensuing Astana Economic Forum, which gathered more than 8,000 participants from 90 countries, including 12 Nobel laureates in economics and four representatives of Foreign Policy’s “Top 100 Global Thinkers” list, presented Nazarbayev with another opportunity to propound his ideas. Beside his recurrent criticism of neoliberal policies for causing the economic collapse, the Kazakh leader said that international institutions, such as the IMF or the World Bank, were inefficient as long as relations between nations remained unbalanced.
Judging that the experience of the Arab spring was far from positive, Nazarbayev suggested following the path of evolution, not revolution, because the latter “slows down economic development, complicates interstate relations and creates even bigger problems.” He also called on the international community to stick to the principles of global tolerance and trust, preferring diversity to uniform ideas preached by some world powers. Justice and equality should be applied to every case of decision-making since, in Nazarbayev’s view, only consensus can guarantee peace and stable growth. Finally, Kazakhstan’s president expressed his conviction that the world should liberate itself from the destructive psychology of the Cold War and start to live in the framework of “constructive multi-polarity.” By using this term, Nazarbayev advised to refrain from any forms of “geopolitical snobbery” and to cultivate intellectual and ideological diversity.
As some experts noted, this year’s rhetoric voiced at one of Astana’s most important public gatherings clearly differed from past occasions, where discussions had centered almost exclusively on the issue of jumpstarting crisis-stricken economic machines. The recent crisis has shown the multiple weaknesses of both resource-dependent countries living off their oil rent and their regimes, based in most cases on the authoritarian rule of a single leader and his close associates. Nazarbayev’s harsh words about the inefficiency of West-brokered measures and the need to respect all countries’ individual paths preceded his praise of the ongoing regional integration in Central Asia, with the prospect of creating a Eurasian Union by 2015. They also addressed his direct concerns about the stability of his own country, at a time when Kazakhstan’s closest ally, the Russian Federation, is being accused by the West of using its influence to sustain the Assad regime in Syria.
CONCLUSIONS: Known for its desire to play a more visible role on the international stage, Kazakhstan is often said to punch above its weight, especially in the economic realm, since the country is not part of the G20 or any other authoritative grouping. However, apart from this crisis-driven rhetoric, President Nazarbayev’s words are also revealing with regard to his own fears about the stability of his regime and the impact of current economic problems on the country’s domestic situation. The Arab spring phenomenon is unanimously considered a serious challenge to the survival of ruling elites in Russia, Kazakhstan or countries with similar systems. Through its calls for the respect of diverse political and economic models, Astana joins Moscow in defending a different system than the one offered by Western liberalism and pluralism. This creates even bigger incentives for both capitals and their regional partners to cooperate in building a robust supranational entity based on the idea of shared prosperity without substantial modifications of current political realities.
AUTHOR’S BIO: Georgiy Voloshin is an independent analyst on Central Asian affairs and a researcher for Wikistrat, a geopolitical consultancy. He is currently based in France.