The 2007. Test for strength

Dosim Satpaev

The last year of “Pig” has justified its name and has become surprisingly uneasy. The 12 months of 2007, which have just entered the history, were as larded with different events, as the Christmas turkey with apples. At the same time, some of these events without any doubts determined the path of political and economic development of the country for the future.
The beginning of year has already been full of insinuations at definite tendencies. It is enough to bring as an example the appointment of new Prime-Minister in the person of Karim Masimov, who changed on this position Danial Ahmetov occupying this position for a long time.  Karim Masimov began his activity rather lively that is frequently typical for all the beginners on this position. The distinction was that he was the first person to begin the practice of attending all the key Ministries, as it is said, in order to meet with collective and the important point to create the setting for more effective work. From the outside, it resembles the bypass of fruit and vegetable base by the stock keeper in order to see what “fruits” and in what condition he has received from the previous owner. After the ministries, this bypass has continued in the regions of Kazakhstan as well. The ministries’ and regional “fruits” themselves prepared for worse. They acted properly because it was known for everyone that Karim Masimov has received cart blanche from President for carrying out more rapid administrative and socio-economic reforms. The appointment of Masimov to the position of Chairman of new State committee of modernizing economy is clear evidence of that.
However, the staff of government has got renewed slightly although it has experienced the definite changes during the year including the unfavorable economic circumstance. By the way, the new Prime-Minister has spoken about the threat of “overheating” of economy and competitiveness of the country since his appointment in a presented socio-economic program of government for 2007-2009. The Prime-Minister supposed that the economy of Republic is developed on the terms of large inflow of foreign currency, the increase of volume of foreign borrowings of real and banking sectors and foreign investments as well, which puts inflation pressure on the economy and the tenge’s rate of exchange towards strengthening. It was noted as well that the financial stability of economy under the threat as the expansion of credit portfolio at the expense of foreign funds can negatively reflect on the quality of banks’ assets and existing subjects in case of slowdown of economy’s growth and deterioration of world markets’ current situation. But it is strange that as it turned out subsequently knowing about these problems, the government reacted negatively to their real emergence that led to debriefings in the regular meeting of Security Council of RK.
The financial problems of August clearly showed the presence of crisis of system of public administration as a result of it’s over centralization. Its specific character is that the government is afraid to take the responsibility while taking decisions and expects commands from above. In addition, as it proved to be most of our Ministers including Prime cannot work on terms of crisis processes. It is not surprising that since the 90s all the staff of government worked in the regime of the greatest favour when the budgeted deficit lowered, the country got profits from selling the raw materials and the permanent growth of prices for hydrocarbons led to the increase of gold and foreign currency reserves of country. It weakened the officials and to some extent led to euphoria. The feeling of euphoria in its turn damps the feeling of reality. At the same time, the government members themselves couldn’t put diagnosis of “ill” in the person of our economy. As a result, some people offered the money enema, some offered the surgical interference of government in the activity of some economic players, and others supported the strict financial diet.
But in case of force majeure not the performance and the ability to distribute the resources, but the creativity, the ability to take the right strategic decisions quickly plays the major role. But all our officials have been engaged in distributing the funds and coping with the budgets which by the way they weren’t successful at. It can be seen from the permanent problem of  unused budget funds in the ministries and in their offices from where Karim Masimov decided to take those $4b n, which the President ordered to find for saving the building market, banking system, smaller and medium business and also the State’s infrastructural projects.
At the same time, the undue response to arisen problems led to the fall of ratings of most of our banks from the side of international rating agencies, that evoked the anger in administration of the country, which has already used to economic euphoria and dithyrambs about the domestic financial system although from the point of view of economic development of Kazakhstan, this slight financial shaking did everyone good –and the government, and the bank structures, and the building sector. We need to be able to make the sweet lemonade from our own lemon. What happens with country at the present time can be considered as a slight chill because of new infection. The government most likely found the money for “medicine” at the sum of $4b n dollars. Besides, all this can be seen as a trial for our financial system for strength, which would lead to the immunity of economy and antirecessionary experience of government. Such experience is wor th much.
There is not much optimism  in administrative reforms as well, which was also the extra point of the beginning if Karim Masimov’s activity. Already at the beginning of year he took the aim of increasing the responsibility of state structures for realization of approved socio-economic programs. There are not still clear replies for two natural questions: 1. “According to what criteria the effectiveness of all bureaucratic staff will be defined in Kazakhstan?”. 2. “Who will be engaged in it?” Everything is much easier in business as here the effectiveness is defined with the concept of “commercial profit”. Most probably, with state structures of power it would be “the social profit” namely, the growth of population’s confidence in authorities as a whole although it seems impossible after the rapid increase of prices for the goods and products, after the failure of State housing program and the increase of inflation. It has even come to such point that the Chairman of Board of State Bank of RK Anvar Saydenov, in one of his comments said with anger that the economic behaviour of most of Kazakhstan doesn’t absolutely conform to the rational behaviours of market “Homo economicusa”. Well on the one hand Saydenov needs to understand that he doesn’t have other nation. Then it means that something should be done with this “Homopostsoveticusom”. But how we can speak about the “market Homo economicus” when we have not full market economy as it has been before.  Practically in all post-soviet States we can see classical oligarchic capitalism, and the Kazakhstan is not exception.
It should be noted that, at the beginning of 2007 the socio-economic program of government and the administrative reforms were just the part of annual message of president to the nation of Kazakhstan, which has become the principal strategic document of government up to 2008. The annual message of president to the nation of Kazakhstan always attracts special attention. There are several reasons for that. First of all, it is a kind of political ritual, when once in a year the unity of power and the nation is demonstrated, explaining the society where and why it moves. Secondly, it is easy to follow through the message the tendency of political and economic development of Kazakhstan, as it is a kind of ideological document, which sets up red flags for everyone. Thirdly, the attitude to the message of President is not always unique as the different social and political groups see the priorities of development of republic according to themselves.
Frankly speaking, the message of 2007 had much common with the speeches of President for recent two years. As it was then, the major emphasis in 2007 and in the coming years was made on the necessity of establishing the competitive economy, by making the particular person responsible for it. Moreover, the great number of social promises was made in the annual message because of election period. We can say that the realization of a given message would be rather hard test for the administration of Karim Masimov in a new year, as it is supposed that there would be quite a considerable burden on the budget of the country because the date of fulfillment of these promises would be 2008.At the same time, the social conflicts of last year showed very clearly that “the Kazakhstan economic miracle” wasn’t felt by everyone. And before transferring to the “smart economy” it would be good to consolidate the positions of “social-oriented economy”.
The political part of annual president’s message contains ten tasks only nine of which were given to the competence of government as the eight task about the political reforming has been under the control of president since its beginning. As the parliamentary elections and constitutional amendments show this control was proved to be harder than expected.
Everything has begun from the constitutional amendments, which officially transformed the presidential republic into presidential-parliamentary where the lower house has begun forming only according to proportional system, and the government has likely increased its accountability before the deputies. But the most important constitutional amendment was the regulation that the president has the constitutional right to stay on his position for unlimited   term of office. Most likely, it must have had calmed the elite, some representatives of which as it turned out has begun to think about their political future after 2012.
It can be said that the emergence of this amendment practically stopped the process of becoming the strict presidential vertical in Kazakhstan and gave the Head of the country temporary carte blanche for determining the succession of his direction and search a man who can provide it. In addition, at the end of 2007 another reason for thinking about the mechanism of succession of power was given by Russia. The nomination of Dmitri Medvedev as a candidate for presidential elections and his subsequent announcement about the possible role of Vladimir Putin as a prime-minister has already arisen the squall of comments and expert judgments not only among the Russian political and expert community but also in Kazakhstan. There is nothing to be surprised, if we consider the fact that in contrast to Russia our republic hasn’t yet passed the test for strength in connection with the change of supreme power. At the same time, the whole carrousel of comments passed by the simple idea that it has become more usual to discuss about the successors practically in all post-soviet countries than discuss about competitive elections, which frequently act as decorations for legal registration of transfer of power. Whoever would be the successor of Nazarbaev he should be “colourless” as any successor against a background of figure of “the father of nation”. There is a lot of imaginary and real “fathers” in the post-soviet territory. Any successor shouldn’t be so strong to represent the threat for established system, the former “patron” and existing elite balance of strength, and at the same time not so weak in order not to be eaten by other representatives of elite. The popularity not charisma is approved.
Although Russia has learned something from Kazakhstan. It is enough to bring as an example the decision of Vladimir Putin to connect him with “United Russia”.
The XI special congress of National-public party “Nur Otan” has been held not long before when the 2 important events took place. First of all, the president took political decision about officially heading the “Nur Otan”, when the legal ground was prepared after the alterations in the constitution. All this was the formality, as this party had been established with the direct assistance of the Head of State. Now the president made it clear for everyone that he and the party are united from this moment. This in its turn is a plus for “Nur Otan” itself because it acquired the most powerful newsmaker and promoter in the person of Head of State. But the president himself understood that the staff of party was in great need of renewal. Despite the fact that Bahytdjan Djumagulov has saved his position in a supervisory personnel, he was given only two party managers. This is the second interesting point of congress. Now Kayrat Kelimbetov and Sergei Gromov, the members of “Nur Otan” have become the deputies of Djumagulov. To all appearances, the chief deputy will be responsible for the financial condition of party. The second deputy will work, with the tongue of politic technologists, in the “field” directly controlling the current party activity. As for Djumagulov himself, he will be given the role of party newsmaker as a person who is “able to work with mass media” according to the words of president.
It was evident that the first roles in the party weren’t given to Dariga Nazarbaeva and the people who were directly or indirectly associated with Rahat Aliev, the person of now former son-in-law of President, whose conflict with the president of the country and his circle can be considered as the major political event of last year.
As usual, everything has begun from commonplace struggle for ownership and financial resources. Then the conflict has passed to informational war and permanently took its political colour.
First of all, maybe the president didn’t like that Rahat Aliev has again become the reason for new conflicts inside elite. It was in 2001, and then in 2006 after the death of Altynbek Sarsenbaev. If we consider that the one of the key factors of political stability in Kazakhstan is the preservation of balance of strength among the influential groups of pressure, then the violation of this balance lowers the ability of president to keep the situation under his control without allowing any of the competing groups to strengthen to such degree that they would claim their rights to expand their political and economic interests. Of course, in contrast to Russia, where there was a strong influence of oligarchs on the process of taking political decision, the strict presidential vertical has never weakened in Kazakhstan, which kept elite under strict control. And any attempt to escape from the presidential guardianship has frequently been punished harshly. Here we can remember his unambiguous hint which he has made clear to all “shady players”  long ago. Particularly, on the opening of the first session of the parliament of third convocation, the president mentioned about “10 mega-holding companies”, that control 80% of all GDP of Kazakhstan and confuse the transparency and the competitiveness in home market as well. At that some of them, according to the president’s word, strive eagerly to power. What makes to draw attention is that the president for the first time used the word “oligarchs” referring to them, intentionally enclosing this word with negative meaning.     
Secondly, right after the constitutional changes in one of the foreign mass media Rahat Aliev gave interview against the amendment, which lifted the limitations on term of office for the first President. Most probably, that this announcement was made by Rahat Aliev because he has already had plans to participate in presidential elections of 2012. He himself informed about it in his recent address. To all appearances, the introduction of this amendment could spoil his plans for future.
It turns out that from the point of view of elite the political ambitions of Rahat Aliev have become dangerous for political stability of the country. As for the perspectives of all this conflict situation then there wouldn’t be less replies to the question “What is next?” than the question “Why?” Some people doubt that the criminal case of Rahat Aliev won’t reach the court. Others consider that Rahat Aliev will not want to return to Kazakhstan at all and will stay abroad. If worst comes to worst there is a probability that he may join the opposition against president, which would be undesirable version taking into account the value of Aliev as a bearer of specific information. At best for the authorities, he can just temporarily “lie to the bottom” in order to wait till the restless times for him will pass. Moreover, as the Kazakhstan experience indicates, to be wanted on the international level doesn’t mean to lie to the bottom as it had been, for instance, in the case of former Head of FOMS, who is being searched at the present time, but they can’t find or don’t even try to do it very much.
It would be undesirable for the authorities of Kazakhstan if Rahat Aliev turns into some analogue of Kazakhstan Berezovski. In addition, the point that connects him with Berezovski not only the fact that they could hide from criminal case behind the European justice, but also the fact that they have serious political ambitions, which won’t let them abandon it in order to write memoirs. There was a danger that Rahat Aliev like Berezovski could begin active informational campaign of discrediting the existing power in Kazakhstan. Moreover, Aliev is more dangerous because in contrast to Berezovski, who practically didn’t have serious compromising evidence against Putin because he had worked only with the late Yelsin, the son-in-law of president Nazarbaev has something to say and to show about the existing power. At the same time, as in the case of Berezovksi the chances of extradition of Aliev from Europe to Kazakhstan have melted like the snow under the March sun.
Three things are obvious in any circumstances. First of all, the positions of Rahat Aliev in elite have weakened seriously as he didn’t gain the allies inside the country; on the contrary, he made many enemies. Secondly, those representatives of elite who now try to fill the niche of influence formed after Aliev including the participation in the project “successor” have become winners of the situation. Thirdly, the president once again has shown that he is ready to take extreme measures not depending on kindred or other relations for the sake of saving the political stability and order inside the elite. And this is good lesson for other representatives of the “Family”, as it is said, “One shouldn’t rush ahead of people who know better”. The situation with Rahat Aliev made the president not trust in his circle as well as in family members. It means that the process of strengthening the presidential control of FPG will continue. Besides the reduction of the number of political parties in Kazakhstan was one of the aims of minimizing the participation of Kazakhstan oligarchs in direct or indirect support to those or other political forces.
As for the society, being mainly the spectators of this enthralling political action, as it is not odd; it has also got its winning bonus. It turned out that in a great number of competing oligarchic groups, who form peculiar oligarchic pluralism, there are not only minuses but there is also a considerable plus. Permanently struggling for the place under the sun, they constantly come out of shade to the public field and sometimes appeal to the social opinion. And the last conflict in the elite has shown that the era of lobby and hidden decision of any problems has already passed. The fact that some of representatives of the elite began to use the mass media actively in their dismantling indicates that the previous, traditional instruments of adjustment of a difference is not effective at all. The war of compromising evidences clearly showed it, in which some representatives of the elite appeared flaring up first in network spaces of Kazakhstan, and then in some of regional printing media.
Against a background of continuing dismantling with son-in-law, the parliament elections have passed without any sparks, which has brought only one sad surprise. Neither the Kazakhstan opposition , nor the moderate “Ak Jol” party, certainly nor the more strict National socio-democratic party has entered lower house of parliament although even if the opposition entered the parliament, it would hardly exert influence on the change of the path of political system of the country. At the same time, according to ideologists from authorities, if it was possible for the party of president to get less votes than the Head of State in recent presidential elections. The election campaign was the good reason for the opposition to maintain its political form. In the end, there will be a time when the part of the elite will decide anyway to stake on oppositional forces in their struggle for power. Namely therefore, the opposition should not only exist on the political backyards, getting angry with everyone in a row, but demonstrate its militant mood.
However, we should remember that these elections were not the final result, but just the part of phases of political development of the country. As for the winner party, then it found itself in a double position. On the one hand, there is a full control over parliament, on the other hand, the party “NurOtan” is not solid and inside it the struggles of local significance among the different groups and fractions for the control over the same committees may begin. At the same time the authorities created such model, in which the one-party parliament exists and practically one-party government doesn’t predict any serious conflicts up to the expression of vote of censure to government. There are two reasons for that. First of all, the parliament expressed its support for the government of Karim Masimov too quickly, subsequently took the responsibility for all his activity till the elections. Secondly, in case of conflict of government with parliament only the president has the last word to say. On terms of established overpresidential system in Kazakhstan, the public exchange of fire between government and parliament is necessary for president to create the illusion of active political discussion in the country.
On the whole, all these changes are cosmetic and do not touch the basement itself of political system of Kazakhstan, where the key decisions of economic and political development of the country, and the manpower policy are directly taken by the president. Now with the existing absolutely loyal parliament consisting of the party which includes many officials from the government as well, the president has just consolidated his power and excluded the possible surprises. It can be said that actually the formation of his own model of supporting the power came to an end with these elections in Kazakhstan, in which the president and his administration are the producers and the chief actors of this political theatre.
The life in investment sphere of Kazakhstan was more lively, where the government of the country began operations on all fronts in its conflict with the foreign investors in the person of consortium “Agip KCO”. But here the interesting point is not the fact of raid on one of the largest foreign investors, but the tendency itself if the temporary interval from 1991 to 2002 can be called the period of regime of favouring the attraction of foreign investors and their activity. By the way, exactly in this period Kazakhstan lost its control practically over all large deposits of oil and gas by leasing them to the foreign companies. Now already since 2002 till the present time we observe the policy of introduction of investment parity and toughening the control over investors.
What makes us to surprise is the recovery of our authorities’ sight, which after the decade detected all these ecological and customs violations that took place at the clear toleration of the officials themselves. And the big mistake of investors has become the fact that they accepted the rules of this game and they themselves knowingly did these violations getting used to the “blindness” of our officials. Now these officials successfully use these “jambs” as a powerful instrument of pressure. As it is said the cat doesn’t always get Mardi gras! By the way, the informational   speaking-trumpet of the western business “Financial times” implied it, which raised the interesting subject of the end of era of oil and gas dinosaurs and the beginning of new era of power mammals in which the Kazakhstan companies took their place. The most interesting information for Kazakhstan is the data of the consulting agency “PFC Energy” which calculated that only 7% of world reserves of oil and gas is fully open for the western companies. At that, only the 12% is controlled by the National oil companies, that are ready for carrying on the joint development of the deposits and 65% of national oil companies either grant inconsiderable access to its resources or don’t grant any at all. To all appearances, Kazakhstan is et in these 12%. But recently the approved amendments in the Law “about bowels and bowel usage” brought in alarm in investment society which considered that the republic had decided to enter the frightening 65% finally. Certainly, these fears are just beyond especially after that when our officials now already offer to cancel this form of investment activity in Kazakhstan at all like SRP, which was so favourable among the foreign companies. But against a background of reduction of reserves on old fields, the western investors don’t desire to leave the perspective Kazakhstan mineral resources to Russia and China. On the other hand, the withdrawal of the biggest western oil and gas companies wasn’t profitable for Kazakhstan despite the growth of ambitions of “Kaz-MunaiGas”. And if we return to the publications of the “Financial Times” then the newspaper with full seriousness notes that in order to survive all the western oil and gas companies should offer what their national competitors cannot do. First of all, the speech is about the insurance of international market entry to international market and here for example Kazakhstan could make a concession to investors only in exchange for the access to their traditional markets and infrastructure. By the way, it is done actively and competently by “Kazatomprom” which in exchange for the access of Kazakhstan uranium fields has got market entry to Chinese, Japanese, and American market. Secondly, there is a possibility of development of the hard fields including namely such places as Kashagan. By the way, the interesting point is that the company “Eni” had the experience of making concessions to the national governments, as it was done in Libya where it has recently renewed its contracts on more beneficial terms for the government. Then the accusations of Kazakhstan for “the resource nationalism” are more likely game for the public and the western companies in anyway are ready to make a compromise.
The fact that draws attention is that during the scandalous dismantling about Kashagan and the passing of new amendments in Law “about bowels and bowel usage” there appeared a new point of view that this whole process arose nonrandom and by using such method the government of Kazakhstan wants to lobby the nomination of republic for the post of Chairman of OSCE. In order to confirm it, we can bring as an example the visit of Italia’s Prime Minister Romano Prodi to Kazakhstan , where except the decision of problems with the company “Eni”, he has also announced about the his support of Kazakhstan nomination in OSCE. It is obvious that there aren’t and haven’t been any direct connections between these events. But the decision of OSCE to grant the post of Chairman of this organization to Kazakhstan in 2010 surprised most of the people and in any way made people speak about the possible deal “oil for the democracy”.
In any case, the decision made in Madrid is not the victory of Kazakhstan diplomacy, as some people rush to announce because not only the insistence of Kazakhstan but also many other factors affected this decision. We can try to sum up those of them, which have been more popular in discussions of local and foreign experts.
First of all, the appearance of serious threat of split in OSCE, along the line of “Westerners”, the supporters of accordance of all the democratic standards and “Post soviet”, headed by Russia and Kazakhstan, which make emphasis on the necessity of reforming OSCE towards the reduction of its role in the sphere of control for election and other political processes. By the way, it was vivid here that Russia showed the extreme activeness in pushing our nomination which leads to the thought of Moscow’s desire to use Kazakhstan as extra instrument  for realization of its new foreign political doctrine. Its main point comes to setting its own rules of game at the international scene with assistance of economic instruments in the person of those power resources as well as military-political steps.
Secondly, there is a split inside the European States themselves which make up the main body of OSCE. It came out so that most of them really didn’t want to spoil the relations with Kazakhstan, first of all, because of their unconcealed interest in power. Particularly, recently Kazakhstan and European Commission have signed the memorandum about mutual understanding in the field of power engineering. Moreover, the Declaration of power partnership was signed by USA and our republic yet in December of 2001. It is not surprising that most of them saw this “phantom of hydrocarbons” in Madrid during the discussion of Kazakhstan’s nomination.
Thirdly, there was a fear of some European States and USA that the refusal to Kazakhstan will take us to the arms of Russia and China. On the one hand, it is quite a pared-down construction taking into account that Astana in contrast to the same Tashkent doesn’t like to make jerks in its foreign policy based on current political situation by changing its partners rapidly. We have already become the hostages of our own multiple vector power, which as it turned out, brings more advantages than disadvantages. On the other hand, the OSCE was really in a rather difficult situation. The unconditional refusal to Kazakhstan could fully blow up the position of this State among most of the CIS countries. The support of republic could hit as well at the image of organization in the opinion of some European States that anyway criticize OSCE at flabbiness in defending its democratic principles.
Fourthly, the opinions of more active lobbyists of Kazakhstan from the range of European States, particularly the Germany, could become more or less persuasive. The point was that the presidency will give new stimulation to the reforms of Kazakhstan due to the responsibility which is laid on the authorities by this post.
We can suppose that in the opinion of Kazakhstani elite, the occupation of this post will allow to raise the international status of Kazakhstan, which will be able to present as the biggest regional player which should be respected. In addition, they will not have to make excuses for Borat because the republic will have good opportunity to correct its ambiguous image.
At the same time, Astana should clearly see that the presidency in OSCE is the stick with two ends because the post of chairman of this international organization doesn’t only give honour and respect, but also lays the serious obligations on the country. It is impossible to avoid the international scandal and infamy if these obligations aren’t met. Besides, some experts, particularly the mentioned Yevgeni Zhovtis gives quite a based opinion about the possible conflicts of Kazakhstan as a chairman with other post-soviet countries that supported it. Astana will have to choose, either to make the most of the OSCE members against itself, most of which, by the way, enter that list of 50 competitive countries of the world, where we are so willing to enter, or to have conflicts with colleagues from CIS, which will press on Kazakhstan from the point of view of subordination of OSCE with its political tasks.
As a whole, the last year has been interesting and hard simultaneously because it tested the political and economic system of the country for strength. We achieved success in some places, and in some places there were continuous disappointments. But what has been done already belongs to history. As for us, we can only reap the fruits of our labour whether they are bitter or sweet.