Kazakhstan: Country Profile
Political Situation
Kazakhstan was the last of the former Soviet
republics to declare independence in December 1991, and is the
most ethnically heterogeneous, comprising some 130 different
nationalities. Nevertheless, it has been extremely successful
since the collapse of the Soviet Union in maintaining political
stability, harmonious interethnic relations and, more recently, in
achieving sustained economic growth. Indeed, it is the only one of
the five central Asian republics that has not been the site of
serious ethnic, religious, or political violence in the
post-Soviet period.
This relative stability and economic
development can be attributed to two main factors:
-
The first is the rich oil and natural gas
reserves in the west of the country, and offshore in the Caspian
Sea, which have attracted some $34 billion in Foreign Direct
Investment since 1991, and which have therefore inspired
Kazakhstan’s recent economic boom. - The second is the pragmatic manner in which President
Nazarbayev has overseen the country’s transition towards a
secular, capitalist society whilst maintaining a relatively high
level of social cohesion.
Recent Developments:
In recent years, there have been a number of
developments in the human rights situation in Kazakhstan. One of
the most notable changes was the announcement of an open-ended
moratorium on the death penalty at the end of December 2003.
Reforms of the prison and judicial systems are also ongoing,
whereas an independent Ombudsman’s office, with a mandate to work
on economic and social rights, was established in 2002.
Such positive developments have, however, often
been overshadowed by well-publicised crackdowns on media outlets,
opposition groups, and non-governmental bodies that have been
critical of government policies and corruption. New legislation,
such as the 2003 Law on Political Parties, has made it more
difficult for opposition parties to operate legally. The law
obliged all parties to re-register, whilst raising the
registration threshold to 50,000 signatures, and representation in
all 14 districts of Kazakhstan.
Relations between the government and the
opposition have become more tense in the aftermath of the
political revolutions that have swept through Georgia, Ukraine
and, most recently, the Kyrgyz Republic. In January 2005, the
crackdown on opposition groups was taken a step further by the
banning of the Democratic Choice of Kazakhstan. It has also been
expanded to deal with other potential voices of discontent such as
the media and foreign NGOs. In May 2005, Kazakhstan’s Ministry of
Culture, Information and Sports ordered the closure of the
independent newspaper ‘Respublika’, the source of frequent
articles critical of government policies, whilst tax charges were
filed against the Soros-foundation Kazakhstan. Moreover, in July
2005, two laws were given legislative approval that would severely
restrict the operational capacity of international NGOs by
significantly tightening government oversight of financial
interactions between local NGOs and international organisations,
and banning local NGOs from funding political parties. In August,
these laws were ruled unconstitutional by the Constitutional
Court.
The Presidential elections were held on
December 4th 2005. Elections returned Mr Nazarbayev for a
further and third seven-year term with over 90% of the votes.
The main opponent was Zharmakhan Tuyakbai. The former Speaker of
Parliament lead a movement called ‘For a Fair Kazakhstan’ which
was arguing in particular for an independent re-examination of
the privatisation deals, and contracts involving the country’s
leading resource industries, which he contended are illegally
benefiting officials close to the President’s family, and
thereby damaging the national economy.
The opposition protested that the ballot had
been rigged and the OSCE stated that “the election did not meet
a number of OSCE commitment and other international standards
for democratic elections.”
President Nazarbayev arranged a referendum in
1995 that extended his term of office and expanded his
presidential powers: only he can initiate constitutional
amendments, appoint and dismiss the government, dissolve
Parliament, call referenda at his discretion, and appoint
administrative heads of regions and cities. The current
government dominates all political life in the country, limiting
the options available to the electorate.
Previous parliamentary elections in September
2004 and elections for regional representative bodies (maslikhats)
in 2003 failed both to meet international standards.
Kazakhstan still has a long way to go before
it can achieve the standards of the OSCE, over which it has
ambition to preside in 2009.
Foreign Policy
Kazakhstan is an active member of the UN, OSCE
and other international organisations and supports multilateral
efforts to face up to global threats such as terrorism, drug
trafficking and the proliferation of weapons of mass destruction.
In its relations with the leading global and
regional powers, Kazakhstan has shown itself keen to pursue a
multi-vector foreign policy. Its cultural tolerance and the
political pragmatism demonstrated by President Nazarbayev have
allowed it to preserve a fine balance in the relationship between
Russia, China and the US, all of whom are vying for increased
influence in the central Asian sub-region. Indeed, in his State of
the Nation Address on February 18th 2005, the President
emphasised Kazakhstan’s continuing ‘activist, multifaceted and
balanced’ foreign policy, placing priority on relations with
Russia, China, the United States and the European Union in that
order.
Regional cooperation:
From the EU’s perspective, Kazakhstan
represents a reliable partner for promoting its objective of
regional stability through regional cooperation in central Asia.
Indeed, it must form the cornerstone of any such initiative, given
its relative economic strength (Kazakhstan accounts for two-thirds
of the GDP for the whole central Asian region), and its leading
position within the region. On the other hand, however, Kazakhstan
has, like Uzbekistan, been on occasions uncooperative towards the
Kyrgyz Republic and Tajikistan on easing trade and transit
restrictions for goods and seasonal migrant workers on their way
to Russia (sometimes out of fear of drug trafficking).
At present, Kazakhstan is a member of the
following regional/sub-regional organisations:
-
Central Asia Cooperation Organisation: First
established in 1994 as the Central Asian Economic Community to
promote economic integration between the four Central Asian
republics. Rechristened as the CACO in 2002, Russia was included in
May 2004. In October 2005, the decision was taken to merge the
organisation with the Eurasian Economic Community.
-
Conference for Interaction and
Confidence-Building measures in Central Asia (CICA): 16 state
pan-Asian security organisation established under Almaty Treaty
of June 2002
-
Eurasian Economic Community: Established in
October 2000 to include Russia, Ukraine, Belarus, Kyrgyz
Republic, Kazakhstan and Tajikistan. Moldova and Ukraine gained
observer status in 2002. Interesting organisation as it
incorporates states from both sides of Caspian Sea, and thereby
linking central Asian states still covered by PCAs with those
now covered by the ENP. Merged with CACO as of October 2005.
-
Shanghai Cooperation Organisation:
Established in 2001 and brings together the four central Asian
states (Kazakhstan, Kyrgyz Republic, Uzbekistan and Tajikistan)
with China and Russia.
In spite of the plethora of regional
integration initiatives, and the vast range of issue areas for
cooperation, however, concrete results have so far been modest.
Nonetheless, the need for greater regional cooperation to deal
with areas of mutual vulnerability, particularly in the energy and
environmental sectors, remains unabated.
Economy, Trade and Investment:
Kazakhstan holds the leading economic position
in Central Asia. During the last five years (2000-2004), the
economy has been growing at an average annual rate of 10%, one of
the fastest in the world. Income per capita, at the end of 2005,
is expected to rise to around $3200, some 75% higher than in 2000.
Kazakhstan’s economic boom is closely linked to
the rich oil and gas resources in the west of the country, and
offshore in the Caspian Sea. At present, Kazakhstan produces 1.1
million barrels per day of crude oil, but intends to triple this
output in the next 10 years with 80% being exported. This increase
will mainly come from the exploitation of three huge oilfields:
Tengiz, Karachaganak, and Kashagan. It is also on the cusp of
becoming a significant producer of natural gas. Indeed, it is
estimated that the country’s GDP, which in 2004 stood at $40.7
billion, will double in size by 2008, and triple by 2015, as a
result of increased oil and natural gas production.
The sustained high growth rates recorded in
recent years are also reflected in the increased inflows of
foreign direct investment (FDI) into Kazakhstan. Since
independence, it has attracted some $34 billion of outside
investment, giving it the highest FDI per capita rate amongst all
CIS countries. In both 2003 and 2004, FDI passed the $2 billion
mark.
Much of the increased attractiveness of
Kazakhstan as a destination for foreign investment can also be
attributed to the relative success with which its government has
restructured its centrally-planned economy to move towards a more
free-market based system. Its successes in this regard include:
The creation, almost from scratch, of a
sophisticated financial services sector (the most advanced in
the former Soviet Union)
Introduction of a private pension plan
Privatisation of the electricity industry.
Civil service reforms
Decentralisation to give greater autonomy to
local government in its 14 administrative provinces.
Creation of a National Oil Stabilization
Fund, which has hitherto accumulated more than $ 4 billion in
oil revenue savings.
President Nazarbayev has also taken advantage
of Kazakhstan’s oil and gas wealth to massively increase
government funding of health, education and social welfare
programmes. Indeed, a $2.5 billion rise in spending in these
sectors is planned for the period 2005-8. The government has also
demonstrated an increasing willingness to innovate in the sphere
of science and technology, including the launch of an expanded
three-year Space programme worth some $350 million.
In spite of these achievements, a number of
challenges remain to be dealt with if Kazakhstan is to maintain
its current high rates of growth, FDI and government spending.
Diversifying the Economy: The Kazakh
economy is currently heavily dependent on its energy resources,
with oil and fuel products accounting 63% of the country’s
exports in 2004. The distribution of FDI by sector is similarly
unbalanced, with 46% going to the oil and gas sector, and only
0.03% to agriculture.
Competitiveness of non-oil exports: As
a result of increased oil (and natural gas) exports, and
significant capital inflows, particularly into the energy
sector, the tenge is appreciating 8.4% a year against the
dollar, making it difficult for other exports to remain
competitive, and thereby hampering diversification.
Income inequalities: Although GDP per
capita is estimated to have risen by 75% since 2000, the overall
poverty rate remains relatively high (16-17%), and exceeds 25%
in some rural regions. To counteract this, greater investment is
needed in capital resources in the agricultural sphere.
EU-Kazakhstan bilateral
relations:
The
Partnership and Cooperation Agreement
(PCA) with Kazakhstan, initially signed in January 1995, has been
the legal framework for EU-Kazakhstan bilateral relations since it
entered into force at the start of 1999. In 2002, dialogue between
the two sides was expanded by including Energy and Transport
issues in the mandate of the existing Subcommittee on Trade and
Investment (forming a new TIET subcommittee, and by establishing a
new Subcommittee on Justice and Home Affairs (JHA). 2005 has seen
the sixth meetings of both the Cooperation Committee (6th April,
Brussels), and the Cooperation Council (19th July, Brussels), as
well as the fourth meeting of both the TIET and JHA subcommittees
(Nov 17th and 18th).
The seventh Cooperation Committee was held in
Astana in April 2006 and on July 18th 2006, the eighth
Cooperation Council will be held in Brussels.
With the PCA now being in its sixth year, its
implementation is becoming ever more important. The Community’s
technical assistance programme, Tacis, is now focusing more
explicitly on PCA implementation projects in Central Asia.
With the EU major revision of cooperation
instruments under negotiation for 2007-2013, Kazakhstan should
benefit from the Development Cooperation and Economic
Cooperation Instrument (DCECI). To ensure continuity with the
regional cooperation programme 2000-2006 and the associated
assistance under TACIS Regional Programme, Kazakhstan may also
benefit from funding through the European Neighbourhood Policy
Instrument (ENPI) Eastern Regional Programmes on the basis of
Art 27 of the ENPI Regulation.
Aside from the PCA, other bilateral agreements are in force
between EU and Kazakhstan. These include:
- Steel Agreement: In operation 2002-4, but currently
under renegotiation. Autonomous measures are in place for 2005.
- Nuclear Safety: Agreement between Euratom and
Kazakhstan on cooperation in the field entered into force in
June 2003
- Nuclear Fusion: Cooperation agreement signed in
November 2002 and subsequently ratified.
- Peaceful use of nuclear energy: Cooperation
agreement currently under negotiation
The EU is represented in Kazakhstan by 11
Member State Embassies (Czech Republic, France, Germany, Greece,
Hungary, Italy, Lithuania, Netherlands, Poland, Spain and United
Kingdom, as well as a
Commission Delegation accredited to
Kazakhstan, the Kyrgyz Republic and Tajikistan. Belgium will have
an embassy in Astana in the course of 2005.
The Community’s co-operation strategy towards
the Central Asian region is set out in the
Commission’s Strategy Paper for Central
Asia 2002-2006.
Political relations
The EU has a vital role to play from Astana’s
perspective as a balancer between the rival energy and
geopolitical interests that Russia, China and the US have in
Kazakhstan and the surrounding sub-region. Whilst recognising the
geographical (and cultural) distance separating the country from
the EU, Kazakhstan’s Foreign Ministry has expressed interest in
the new European Neighbourhood Policy (ENP). It has also proposed
to develop Kazakhstan’s bilateral foreign policy with EU member
states through the broader framework of its policies towards the
EU. This means that relations with the EU will be given precedence
over those with individual member states.
From the European Union’s perspective,
Kazakhstan represents not only an important source of energy
outside of the Middle East, but equally a guarantor of stability
in Central Asia, and a potentially long-term strategic partner in
the region. The EU considers Kazakhstan to be a trusted partner
for achieving the objective of contributing to regional stability
in Central Asia by promoting better cooperation among the
countries of the region.
Bilateral trade relations
Kazakhstan is by far the EU’s largest trading
partner in Central Asia. Bilateral trade between the two totals
will exceed €10 billion (0.3% of total EU trade) in 2005, with the
EU running a bilateral trade deficit of €2.5 billion. This is
greater than the combined bilateral trade that the EU enjoys with
the other four central Asian countries, and three southern
Caucasus states put together.
Exports from Kazakhstan to the EU are mainly
made up of mineral products (fuel accounts for 85.4% of total EU
imports from Kazakhstan), other raw materials and heavy
industrial goods, including iron and steel and chemical products.
A new EC-Kazakhstan agreement on trade in
certain steel products was signed on 19th July 2005. This
agreement sets quantitative limits for some flat steel products
and will apply until 31st December 2006. It gives Kazakh steel
producers larger opportunities as the quantitative limits were
increased by 70% for 2005 and will reach a level of 205 000 tons
in 2006.
Kazakhstan has also applied to the European
Commission to be granted ‘market economy’ status, and this
request is currently under review by relevant services.
See for more detailed information on bilateral trade the
European Commission’s external trade
website.
Foreign investment
Foreign Direct Investment from the EU has
constantly increased since the early 1990s such that, by 2002, the
EU had for the first time overtaken the US as the leading source
of FDI in Kazakhstan. This position was confirmed in 2003, with
38.8% of total FDI coming from the EU, mostly from the UK, Italy
and the Netherlands, the seats of leading oil companies. Over the
last six years, Kazakhstan has witnessed unprecedented FDI growth
rates in the last six years (from $1.8 billion in 1999 to $4
billion in 2004). This has meant that Kazakhstan’s FDI/GDP ratio
has amounted to 7%, one of the highest ratios in the world. 80 to
90% of total FDI goes to the oil and natural gas sector, including
not only large oil projects, but also a wide range of other
activities supplying the oil and gas sectors (transport, services,
infrastructure equipment and engineering) where many other EU
companies are represented. EU investments in sectors unrelated to
oil are relatively limited in comparison – but include banking,
agro-business and metals.
WTO accession
Kazakhstan is presently working towards
accession to the World Trade Organisation, an aspiration which the
European Community is actively supporting through technical
assistance (Tacis) for the necessary reform efforts. WTO accession
should provide an opportunity to reduce existing trade barriers
and push forward internal reforms.
EU Assistance
The Community’s co-operation strategy towards
the Central Asian region is set out in the
Commission’s Strategy Paper for Central
Asia 2002-2006. A new Strategy Paper for
Central Asia for 2007-2013 is under elaboration.
The EU has provided assistance totalling €
1,132 million to the countries of Central Asia over the period
1991-2004. Out of this, € 516 million has been provided through
the Tacis programme.
Kazakhstan has received € 159.5 million
through Tacis national allocations since 1991.
The situation with respect to the most recent
Action Programmes (AP) Tacis, FSP and EIDHR is the following:
EC assistance to Kazakhstan 2001-2005: Main
instruments
|
TACIS |
EIDHR |
DIPECHO-Central Asia -
(Disaster Preparadness) |
Total bilateral
Kazakhstan |
|
Track I
Central Asia |
Track II
PCA/Tempus
Kazakhstan |
Micro-projects
Kazakhstan |
Regional
Central Asia |
|
|
2001 |
n.a. |
15 |
1,120 |
0,500 |
|
16,12 |
2002 |
11 |
6,3 |
0,500 |
0,520 |
0,8 |
6,8 |
2003 |
15 |
6,3 |
0,350 |
|
|
6,65 |
2004 |
14 |
6,3 |
0,300 |
1,00 |
0,5 |
6,6 |
2005 |
15 |
6,5 |
n.d. |
n.d. |
|
6,5 |
Total |
45 |
40,4 |
2,270 |
2,02 |
1,3 |
42,670 |
From the budgetary year 2002 onwards, the Tacis
assistance for Kazakhstan is based on the Strategy Paper 2002-2006
and the Indicative Programme 2002-2004 for Central Asia, which are
based on the following “three-track” approach, consisting of 1) a
regional programme, 2) nationally identified regional priorities
and 3) poverty alleviation.
From 2007 onwards, the EU assistance will be based on the
Strategy Paper 2007-2013 and the Indicative Programme 2007-2010.
The areas of priorities at the national level will the following:
Promotion of Central Asia regional cooperation and good
neighbourly relations
Poverty reduction and increased living standards
Support for good governance and economic reform.
At the regional level, the projects will focus on:
- Energy, transport networks and market integration
- Environment
- Border and migration management: the fight against
organised crime and customs
- Education, science and people to people activities.
Success stories
In Kazakhstan, Tacis has reached very positive
results in projects implemented in the following sectors: public
administration reform, support for the development of local
governance, SME development and support for NGO development.
A good example of an individual highly
successful project is the assistance to the Customs Dogs
Training Centre in Almaty, which now trains customs dog
handlers from other countries in Central Asia and thus
contributes significantly to the fight against drugs.
Another example is the Tacis project to
raise sanitary standards in laboratories in the fish industry
in Atyrau on the Caspian coast. This project subsequently
enabled Kazakhstan to resume its export of caviar and other
fishery products to the EU in 2002.
Important regional Justice and Home Affairs
programmes from which Kazakhstan benefits are the Border
Management Inititiative for Central Asia (BOMCA) and the Central
Asia Drugs Action Plan (CADAP), which are two major EC
contributions to regional stability and the fight against drug
trafficking and hence, indirectly, terrorism.
For a full list of current EU-funded projects
in Kazakhstan, please consult the Delegation website.
Basic Data on Kazakhstan:
Independence: 16 December 1991 (from
Soviet Union)
Constitution: Adopted by national referendum on 30th August
1995
Legal System: based on civil law system
Suffrage: 18 years of age: universal
Executive Branch: President Nursultan
Nazarbayev, re-elected on 4th December 2005 for a third seven-year
term. The President is the chief of state, and appoints both the
Prime Minister (currently Daniyal Akhmetov since 13th June 2003)
and the Council of Ministers.
Legislative Branch: Bicameral parliament
comprising the Senate (39 seats; 7 senators are appointed by the
President; the remaining 32 are popularly elected to serve
six-year terms, two from each of the 14 oblasts, Astana and
Almaty), and the Majilis (77 seats: members are popularly elected
to serve five-year terms, with 10 selected from the winning
party’s lists.) The last elections for the Majilis were held on
19th September and 3rd October 2004, with the ruling Otan party
winning 42 seats.
Government type: Republic
Capital: Astana
Area: 2,717,300 km2
Population: 15,185,844 (July 2005 est)
Population growth rate: 0.3% (2005 est.)
Life expectancy at birth: 66.55 (UN, 2005.)
Net migration rate: -3.34 migrant(s)/1,000 population (2005
est.)
Ethnic groups: Kazakh 53.4%, Russian 30%, Ukranian 3.7%,
Uzbek 2.5%, German 2.4%, other 8% (1999 census)
Religions: Islam, Russian Orthodox, small protestant
minority
Languages: Kazakh (state language), Russian (official
language)
See for a fuller set of social and economic indicators the
World Bank country fact sheet for
Kazakhstan.
Latest update: June 2006
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