Politics
BackFresh Start for Investments in Kazakhstan. Internal and External Risks
Dosym Satpayev, PhD in Political Sciences, Director of the Risk Assessment Group, Co-founder of the Alliance of Analytical Organizations of Kazakhstan
Iinternal political situation in the country
In the first half of the year 2014, the political situation in Kazakhstan has not undergone major changes. The internal balance of elite powers virtually remained the same and consists of two main groups: the family of the President and members of the "old guard". More interesting trend is the decline in activity of the traditional opposition in Kazakhstan, including some politicians, associated with the temporary departure from the political scene.
Earlier the party leaders - Amirzhan Kossanov and Bulat Abilov abandoned the political arena, then, a little later, Mukhtar Taizhan, one of the leaders of the National Patriotic Movement in Kazakhstan, announced his resignation. In general, we do observe an active wipe-out of the political field, which led some experts to talk about preparations for early parliamentary elections that are likely to happen before the designated deadline to 2016 presidential election year. By the way, it was 2014, when the pro-presidential party “Nur Otan” began to show an unusual activity at the information and the public fields.
Despite the fact that Kazakhstan has a long tradition of holding early parliamentary elections, another similiar scenario in the current political climate is justified only with a parallel strengthening of the role of Parliament in the political system of the country. This, in turn, results in the constitutional changes that should transform a presidential Republic into a presidential and parliamentary one. But even these measures will not be enough to turn the legislative branch into the “collective successor”, which in any case will be needed in the case of transfer of power. The main problem is the quality of the Kazakhstani parties, where the mostly artificial and unpopular quasi-parties are presented.
This is true for “Nur Otan”, which future seems unclear after the change of power. Therefore, an increase of the functional role of Parliament after the ordinary or extraordinary elections is possible, only when the credibility of the participating parties will be higher. In the meantime, the strengthening of selected elite in the Lower and Upper Houses of Parliament it can be observed; mostly, it is represented by Dariga Nazarbayeva, who recently obtained the post of vice-speaker of the Majilis, and Kasym-Zhomart Tokayev, appointed as the speaker of the Senate last autumn.
With regard to the presidential elections, in late October 2013, during the meeting with residents of the Kazakh city of Uralsk, President N. Nazarbayev stated that he feels good and is ready to take up his post until December 2016, when new presidential elections will take place. The decision of the Head of State regarding his participation in the presidential elections or the possibility of transferring the elections to another date are not clear.
In this regard, the President's initiative to develop a new national idea “An Eternal Country” is quite interesting. Apparently, the main target audience of the Head of State regarding this initiative are the Kazakhs themselves, who already make up the majority of the population (over 64%). The mere appearance of regular ideas for mobilizing the substantial part of society, if not the whole society, indicates that the Government is trying to improve its credibility, which has been seriously undermined this year. In particular, the devaluation of the national currency in Kazakhstan, in addition to the economic losses of many citizens, has also led to a sharp decrease of confidence in the Government.
It even provoked the organization of several unauthorized meetings in Almaty, which is a sign of social protest from the part of traditionally apolitical strata. At the same time, the protests in Almaty demonstrated the crisis of traditional opposition parties of Kazakhstan that, as a result of splits and scandals, have also lost the confidence of a substantial part of the opposition-minded society.
By the way, in order to minimize the negative effects of the devaluation, the President appealed to the major foreign and domestic companies, asking them to increase the salaries by 10%. Perhaps, it relates to the fact that according to the Federation of Trade Unions of Kazakhstan (FTK), since the beginning of 2013, there were 150 protests in the country, related to the labour disputes.
The major number of the conflicts took place at the enterprises with foreign participation in the mining industry, mainly because of the difference in salary rate for the equal work, paid to Kazakhstani and foreign workers. According to the Government, half of all the labour disputes in the first half of the year 2014 happened in Mangystau region. One conflict occurred in Astana, East Kazakhstan, North Kazakhstan, South-Kazakhstan, Almaty and Atyrau regions. The major causes of labour conflicts were identified as the workers ' demands for salary increase and its retarded payment. Thus, from the perspective of the
Government, a high proportion of labour disputes were observed in the oil and gas producing regions of the country. This, in turn, will provoke a further tightening the control over observance of labour legislation, including the foreign producing companies. To a certain extent, monitoring the labour disputes is a response of Kazakh authorities to events in Zhanaozen in 2011, which seriously damaged the reputation the Government.
Therefore, there is a large number of different protest groups, in the Kazakhstani society, even if they don’t share the same views. On the one hand, it is beneficial to the authorities, since the mobilization of the opposition forces would be a serious threat to the President.
On the other hand, the presence of protest attitudes indicates that conflicts of various sizes and for different reasons can flare up in the different regions of Kazakhstan. Despite the fact that according to the Kazakhstan’s office of Bureau for Human Rights and the rule of law, there is a decrease in the level of civil activism in the Republic. It seems disturbing that 85% of the demonstrations took place without the permission from the local authorities. In general, from October 2012 to September 2013, there were 119 peaceful meetings in the Republic. 74 of them had social andeconomic reasons, 45 - environmental and legal ones.
A "Trojan horse" for the political stability of Kazakhstan is an increase in number of citizens who participate in the military actions on the territory of other states. In particular, the new information shows that 16 citizen of Kazakhstan joined the organization “Islamic State of Iraq and the Levant”, operating in Syria. It should be noted that the information about the citizens of Kazakhstan, fighting on the side of the militants in Syria, for the first time was distributed last year.
At the same time, according to the experts, such Kazakhstani militants receive the financial assistance of supporters from within Kazakhstan. Last year, there were about 400 cases of terrorism financing, registered in Kazakhstan. Citizens of Kazakhstan and Syria have figured in the reports on military operations in Afghanistan and Pakistan. It is interesting to note out that Yerlan Idrissov, the Minister of Foreign Affairs of Kazakhstan, has recently disproved the information that citizens of Kazakhstan are also involved in the war in Ukraine on the side of separatists.
This information has been distributed by some Ukrainian Media. At the same time, it cannot be excluded that these 16 people were members of the group of citizens of Kazakhstan, who arrived to Syria last year. In any case, it is enough to be a cause of serious concern in Kazakhstan, which can significantly increase the terrorist risks in the event of a return of some of these people back into the Republic.
Government’s restructuring
One of the causes of the recent restructuring of the Government is an inefficient bureaucracy, which led to increased social tension in the society, is a bad background for a possible transfer of power, which is to take place in a more or less peaceful way, without revolutions and civil unrest. At the same time, if we assume that all these structural changes have been lobbied by the Prime Minister Karim Massimov, then, from the point of view of the formal nomenclature rules, it is the proof that the President still trusts him. As the Americans say, there is a constant fight for the eyes and ears of the President. A similar situation is observed in Kazakhstan. The ability to convince the President to eliminate several ministries indicates that the assigned person had the serious administrative resources.
The official reason for the reorganization was announced as a need in a more compact Government, in order to improve the business environment in Kazakhstan. In addition, there is a need to improve the efficiency of the State apparatus through reducing the overlapping functions of the different structures and the number of civil servants. By the way, the competitiveness of the economy report (Global Competitiveness Index 2013-2014), prepared by the World Economic Forum, ranks Kazakhstan as 31 among the countries with effective public spending, with score of 3.8 points. 1 point is assessed as extremely inefficient spending, 7 points - as extremely effective one. For comparison, Russia took the 99th place with 2.8 points.
In addition, the Government was required to work more efficiently in order to address the internal risks (unstable financial system, delaying the start of production at Kashagan, reduced investment, etc.) and external threats (sanctions against Russia, the economic slowdown in China, etc.) for the Kazakh economy.
As a result of the last reorganization of the Government, instead of the 17 ministries, 19 agencies, 54 committees, and 272 departments, there are now 12 ministries and about 30 committees in the government. At that the same time, 5 new ministries were created: the Ministry of national economy, Ministry of health and social development, Ministry of culture and sports, the Ministry of investment and development, as well as the Department of energy.
Ministry of national economy was headed by Yerbolat Dossayev, who was the Minister of economy and budget planning. Now the Ministry of economy and budget planning, the Ministry of regional development, the Agency for statistics, Agency for regulation of natural monopolies, Agency for protection of competition and Consumer protection agency joined the new Ministry. This appointment strengthens the position of Yerbolat Dossayev within the Government. On the other hand, taking in charge a large and solid budget, Yerbolat Dossayevwill now have more responsibilities for the work of all the State structures, presently being integrated to the Ministry of the national economy.
Another new mega-structure in the government is the Ministry of energy of Kazakhstan, headed by Vladimir Shkolnik. He occupied the position of the Director of the National Company Kazatomprom. Interestingly, in the late 90's, Vladimir Shkolnik once headed the Ministry of energy, industry and trade. Now the Ministry of oil and gas is a part of a new ministry. Also the new Ministry got the functions of formulation and implementation of State policy in the field of electricity and atomic energy, transferred from the Ministry of industry and new technologies.
In addition, his Ministry received a part of the functions from the Ministry of environment and water resources, as well as from the Ministry of economy and budget planning. This shows a clear career improvement for Vladimir Shkolnik, as he will now supervise all the country's energy sector that is facing a lot of problems, ranging from electricity shortages to the stagnation in the oil and gas industry.
The creation of another major Ministry for investment and development, that includes the Ministry of industry and new technologies, the Ministry of transport and communications, Agency for communication and information, as well as the national space agency, is also quite interesting.
The Ministry was headed by Asset Issekeshev, who was not only a Minister of industry and new technologies, but also the Vice Prime Minister. The fact that the emphasis in the new Ministry was placed on investments, says that the attraction of foreign investments into the economy of Kazakhstan and, first of all, into the industrial-innovation sphere, again becomes a priority for the Government. Asset Issekeshev now oversees the entire sector of the real economy, which also makes him vulnerable to any failures in the implementation of certain public economic projects. Although the mere fact that he strengthened his position in the Government, shows that the President, in General, is satisfied with his work as the Minister of industry and new technologies. This is despite the fact that the implementation of the country’s program of forced industrial-innovative development was evaluated negatively not only by experts, but also by the members of Parliament.
The simultaneous strengthening of power and even greater increase of faced Tamara Duyssenova, whose Ministry of labour and social protection is now a part of the Ministry of health. As a result, a new Ministry of health and social development was created, which will now be one of the major recipients of budget funds, since in recent years the Government has increased social expenditures. Tamara Duyssenova won the Presidency of this important Ministry, the establishment of which raises quite a lot of questions.
However, the effectiveness of the work of the Ministry of health and social development is likely to be weak, as the Ministry of health, as well as the Ministry of labour and social protection that existed before, was always included in the category of the most inefficient State structures. As a result of the merger, there is a risk of further bureaucracy and slowness in the work of the new Ministry, which would affect the mood in the society, since social and health care sector is in direct contact with the citizens of the country.
Another new State structure is the Ministry of culture and sports of the Republic of Kazakhstan, headed by the former Minister of culture Arystanbek Mukhamediuly. This new Ministry includes the Ministry of culture, the Agency for religious affairs, as well as the Agency for sports and physical culture. One of the tasks of the new Ministry is to conduct active ideological work among the population.
Interesting news is that the Agency for fighting against economic and corruption crimes (financial police) of the Republic of Kazakhstan was liquidated. Its functions were transferred to the new Agency for civil service and anti-corruption affairs. The Agency was headed by Kairat Kozhamzharov, who worked as a Secretary of the Security Council of Kazakhstan, and, before that, headed the financial police. Thus, apparently, the financial police did not disappear, but only changed the signboard. Moreover, Kairat Kozhamzharov even increased his power, because the Agency for civil service affairs took an active part in the development and implementation of the administrative reform. In addition, some of the issues of economic and financial offences will also be transferred to the Ministry of finance.
As for the Prime Minister, he now has only two deputies, instead of four. These two are Bakytzhan Sagintayev and Gulshara Abdykalikova. The former is in charge of the economic and budget planning, and the latter - of the human development, i.e., social structures functioning.