Parting with a year of pig,

Yaroslav Razumov

At the end of this year attempts to analyze the basic totals of going 2007 are much more difficult, but at the same time considerably easier than the ends of all the previous years during the Independence period of Kazakhstan. Let’s make bold to suppose, even to state that the going year has become the most sophisticated and important in testing the young country on its ability for real independent existence. Neither 1991, with its political “ancestral” dramatic quality, nor the 1994-1995s, the extremely difficult years in economic and social plan and nor even the 1998-1999s, when the economy of country was really under the threat could determine the real resources and immunity of Kazakhstan to the foreign trials on historical perspective. Only 2007, which has just appeared and the problems which has just been put in its period, can do it.

“Square meter” in the year of pig
It would be much easier to take the statistical figures, some citations from the international analytical works, address the famous experts to comments on it while trying to understand the totals of going year. The result would be perfectly good article claiming to analytics. However, first of all, we don’t have any total statistical figures and secondly, the experts most likely “lose their way” turning to the subject of perspective of housing market awhile commenting on our future. And it’s future continues to stay very unclear. This is how we get “the closed analytical circle”. It reminds us of Americans saying that whatever they talk at the end the subject would be the money. And here whatever the economic subject is, everything is led to divinations (exactly) about the future of “Square meter”. How can we get the analysis of socio-economic totals of development of Kazakhstan under such circumstances? It would be better to look at the question from another side. The best way would be attempts to comprehend all the passed way by the country during the Independence period without considering the totals of the year. The basic trends shown in the official statistics are more or less known to everyone; therefore, we shouldn’t take them into account.
How did Kazakhstan pass its 16 years of Independence? What were the problems facing it? How and at the expense of what and with what experience our society came to the current boundary of historical era. The supporters of historical symbolism have something to see in the current moment: the sixteen years, juvenile age is always the period of trials on vital capacity and strength, the time of demonstration of already achieved life’s wisdom or at least the readiness for that.

Childhood, adolescence… 
How were the results of each of the previous years of the new age evaluated in Kazakhstan?, namely during the period of exclusively positive processes in economic and social life of the country. Whoever it was who tried to sum up the development of Kazakhstan in those recent years, whether it was the expert supporting opposition or the expert supporting the authorities couldn’t decline one important thing: the verification of stable positive dynamics of economic and then social sphere. The most ardent critics of that time couldn’t ignore the doubtless progresses in the development of the country in those years. The major thing is not exactly in what year the economy of Kazakhstan became equal to the economy of former Kazakh SSR to the moment of collapse of USSR but that it happened. Another question is at the expense of what, but it happened. In the first approach, it is enough for analyzing the tendency of socio-economic dynamics. However, it is necessary to look back at the different phases of the last sixteen years for the much objective perspective view as possible.
“What was the childhood? It was the rather poor fate.
It was the social and economic degradation in all the directions, the collapse of all the usual system of functioning of society. It is still worth to mention and admire that at that time the social and other “children diseases” of Kazakhstan didn’t become dangerous and even didn’t take the form of irreversible disposition. And all this happened against the background of rapid creation of new forms of relations in society, revision of ownership! We were all very lucky then…
The transition of Kazakhstan from the early-childhood to adolescence happened rather indistinctly. Approximately in the middle of 1990s the official economic statistics began to fix, the experts supporting authorities to state, and newly-born professional political public relation experts to exaggerate the statements that “obvious positive tendencies” have appeared as if there were even some positive trends and the economic drop was stopped. Then this point of view raised doubts and even criticism from the most of famous experts. For example, Valentin Makalkin, Kanat Berentaev noted this: “As it is stated by the official statistics, if there had been real growth in economy in the middle of 1995s, something special, unusual, scaled should have happened. However, nothing of the kind happened; maybe, in fact, the speed of economic drop, which has begun at the end of 1980s, have been slackened. The crisis has clearly continued; for example, in 1994 the volume of investments in Kazakhstan has dropped to 29.55% from the level of 1991(“The financial news”, 14.03.1995). The author of this article has become the witness of public discussions with mentioned experts and their supporters with the pro-authority opponents for many times. Nobody has changed anyone’s mind. But I remember that in 1995 my relatives - budget workers have the same problems with the stability of getting the salary as in 1993.
In general, now looking from the top of gained experience it seems that economic “growth” of the middle 1990s was the first system and scaled promotion-campaign held by the authorities for domestic use. The authorities as a whole system, and that time’s Prime Minister were in great need of creating in the minds of people the mirage that there is a “light at the end of tunnel”. Because they needed time to do a lot of things in the field of unprecedented privatization in the history of the world, and the endurance of people approached to its end. Remember when the Karagandin miners, who were able for self-organization and active, wanted to come to the conference of Supreme Soviet of Almata in a body and express their dissatisfaction with economic situation? I remember how it was difficult to walk in the park around the old square because of the great number of cordons of policemen.
Now looking back at those times, especially the period between 1995 and 1998, it is difficult to estimate the real perspectives of that time’s processes in the economy of the country.
As a matter of fact, it was the most difficult-analyzing period of its development. Who knows what the result would be if there weren’t powerful; moreover, determining influence of external factors. In contrast to other post-soviet republics, Kazakhstan always had a whole “chain” of specific characters. Sometimes, they created danger of arising serious problems namely as in the field of ethnic relations during the period of collapse of Union, but frequently they gave the authorities advantage for wide maneuvering. Boris Rumer, the famous American expert writes about it in the following way:
“Let’s take into account the objective and the initially given  prerequisites of economic successes of Kazakhstan - the country with a territory of more than 2,7 million square meters with population of approximately 15 million; the 90% of which had a secondary and high education, the country with impressive reserves of oil, gas, uranium, gold, ore, ferrous and nonferrous metals with existing agrarian and building complexes, with developed Eurasian standards of transport infrastructure, with a multiple-discipline scientific-educational system and appropriate staff which Kazakhstan inherited from USSR.” The author writes that there hasn’t been any such country in Eurasia according to the level of initial terms for modification of economy of soviet time to the post-soviet one. (“Central Asia and South Caucasus. Vital problems”, the edition of B. Rumer, M., 2007).
As everybody knows, the history cannot stand conjunctive mood; therefore, there is no need to ask yourself a question of what those economic and social processes, which took place in the second half of 1990s could lead if there weren’t sharp external factors. In anyway, making assumptions is possible and sometimes useful. Most probably, the sharp economic crisis of the first post-soviet years would be changed with “continuous sluggish chronicle” The worsening in the social sphere would grow, as its stabilizing factors would be drained. Probably, it is enough to look at our neighbour-country - Kirghizia in order to know what would happen to our country if there weren’t unexpected “revolution of prices” of the energy resources on the world market in the last 8 years. Most of my colleagues argue about this viewpoint, but if there weren’t the stream of “petrodollars” into Kazakhstan economy we could find 10 principally-positive distinctions? The question is debatable.

Crisis of the awkward age
It would be unfair for 1998 to be forgotten by society and many experts. That was the time when we raced through the “disaster”…
It was the time when there was critically low and the smallest grain harvest in the history of agriculture of Kazakhstan.  Did it repeat next year, I wouldn’t have to sell but to import the grain. In that 1998 there was a peak of payments for the foreign borrowings of a State. Besides, the reserves were extremely little because the major attractive objects of industry have already been privatized and increasing the foreign debt was becoming politically dangerous which was clearly demonstrated by Yelsin regime, and above all this the rapid drop in the oil prices. I remember that in one of the international conferences in Almaty its foreign and our participants discussed that the net cost of oil extracted in our country could come to the level of unprofitableness. I also remember another example of then very difficult situation: The two guys were fighting on the bus-stop, the ticket collector and “stowaway”…
The crisis of the market of raw materials was whirling in the world, which could be seen from the price drop of oil and metals, and there was a full “emotional calm” in a state expert community and particularly among the officialdom. I remember that only the late Marat Kenjeguzin immediately responded to our offer to comment on the possibility of influence of world crisis on the economy of Kazakhstan through mass media. It was at the beginning of autumn of 1998. Soon the financial-economic systems of South-Eastern Asia, Russia, most of the countries of CIS, the largest economy of South America has collapsed. It seems that only the Kazakhstan financial system stood firm except the USA, the countries of Western Europe and China, namely the grants of world economy. It could be explained with the accepted model of economic development, as if found and realized successfully in Kazakhstan. Tenge saved its stability to dollar especially against the background of devaluation of all the currencies of CIS. The official explanation to this was traditional: unique native experience.
Meanwhile this stability turned out to be expensive for country itself, the payment balance of which was not in benefit of Kazakhstan. It seems that even according to official statements the red ink of foreign trade made up $700m. As a matter of fact this figure was more. Most of the economists supported the devaluation of tenge, but they weren’t responded. Because of such absurd situation on the money-market of country it has become possible to import almost everything from outside. I will come back to my personal recollections again (this journalistic “instrument” is frequently criticized by the academic experts, but it is more informative than the “figures” of statistics, which is frequently engaged).So some of my friends earned well of what they imported from Uzbekistan from the simple plastic dishes up to the bowls for dogs. Word of honour!
Under the pressure of its own producers, that time’s government of Kazakhstan had to take unprecedented step: to put the limits on the most of goods imported from Russia. By the way, this was the first time in the history when their consolidated opinion was rapidly responded by the authorities. The effect of such measure was certainly lower, but there was nothing to expect at that time.
That crisis is more instructive in that it has become the “laid hands” to a greater extent. The authorities didn’t offer the methods of struggle with the challenge of economy; on the contrary, they deteriorated it. Some experts noted in the following way: “The policy of authorities acted as one of the major factors of economic crisis” (“Central Asia: new tendencies in economy”, the ed. A.Dinkevich,m,1998).
In April of 1999 the Prime Minister Nurlan Balgimbaev announced the devaluation of national currency in his TV appeal. Tenge has “cheapened” for two times. Let me bring my personal recollections again: the emotion of confusion, depression almost took a ride in the buses, shops… The Kazakhstan is remembered television frames of panic in Moscow after the drop of rouble 8 months earlier because everybody thought that such couldn’t happen here.
Recently, in previous autumn, one of the chief officials in one of the economic structures of State is surprised in his article why Kazakhstan don’t bring their money to bank despite the stability of last and growing interest rates. The official explained it by the lack of economic thought of citizens. In fact, to our point most of the people still remember the “April shock” of 1999.
In spring of that year I wrote to the “Panorama” newspaper that world oil prices continue to stay at the same lower rate. The refrain of that material repeated the question, hung up in the air - what to do? Nobody in the country offered a clear reply to that question. After several weeks, the oil prices rose, and then rushed up…

The youth
Successfully passed “diseases of growth” are dangerous with such psychological phenomenon as youthful self-confidence. Our society faced with a given phenomenon “in its full length” in all the previous years, particularly in the 1st half of this decade.
Somewhere in 2001 that time’s head of State, Kasimjomart Tokaev noted: it is said that the economic growth which began in the country is based on the growth of oil prices; this factor really exists, but the point is not only on that…The Kazakhstan society just didn’t get the detailed “decoding” of the reasons for sudden economic growth. Of course there was a deviation from the murderous rigid-monetary policy(for what, by the way, most of the native economists, especially Berentaev and Markov struggled for long ago before that). But this deviation happened just at that time.
Meanwhile, the government was extremely engaged in a new suddenly appeared problem - the sharp shortage of oil in the native Oil Refinery Plants and accordingly the shortage of petrol and diesel fuel on the home market. We couldn’t solve it with market methods about the adherence of which we had much to say, so we had to press on exporter-companies by administrative methods through their access to export “pipe”.
The fact that the native economic prosperity is based primarily only on the world oil and metal prices has become the undisputable “public opinion”, only to the middle of this decade. The whole range of strategic and industry programs were accepted and then repudiated within this period. Has anyone ever seen the detailed analysis of the results of State policy on import replacement? Many experts will remember that the program about the development of petrochemical industry which was accepted two years ago and being successfully forgotten is the second one-the first has “died” ten years ago. It is the same with the program of development of pharmaceutical industry. Several years ago, during one of the previous premiers the official responsible for this field reported the following in a State conference: It is possible to raise the branch, but we need a range of political and administrative measures including some period of selective protectionism on the market of pharmaceutics. The official was reprimanded at that time-Kazakhstan will soon enter the WTO and he talks about protectionism. The program of branch “was put into a loss”.
The result: The country isn’t still in WTO and the share of our own producers on the market of pharmaceutics hardly reaches the 10% and according to many figures it is equal to zero. This branch situation is typical for many spheres of economy, especially in the sphere of production. The fact that economic resources which appeared in the country in 2000s were distributed unevenly inside the Kazakhstan economy, with a strong tendency towards commercial, financial and building sectors, under the circumstances of sharp and sometimes catastrophic shortage of facilities for the development of production, power industry, housing and communal services, education was clear from the middle of 2000s. The country more and more resembled the youth who strongly pays attention to the development of one side to the prejudice of many other sides. Naturally, there was no organic development. However the youth was given much…

The last Autumn
The 2007 has become the border in realizing the last conclusion. After the autumn of going year not any promotion-efforts are able to persuade about the right direction of development of country’s economy. It is absolutely obvious that there is a need for serious critical rethinking of all strategic sketches that make up the basement of socio-economic development of Kazakhstan. Still at the beginning of decade Minister of economy of that time’s government criticized the native experts for inability to give timely and qualified analysis of economic tendencies. Surprisingly, but two months ago the president of one of the largest Kazakhstan private companies practically repeated that. We only need to specify that these reproaches can be addressed to government officials themselves and business-society. The experts consider the current condition of Kazakhstan economy as a crisis, other experts consider it as a prior to crisis, but its principal difficulties are undisputable.
Why happened, what happened? To our point the main reason is in the shortage of serious experience of political and economic elite. It sounds paradoxically only for the first time. By the highest standards the Kazakhstan was very lucky up to now. The country passed the “infant” period due to large resources left from the USSR era and mass emigration of population, which “freed” the State from many responsibilities as social payments, necessities to create the job places and build new accommodations. The crisis of 1998 passed in a fast way due to the foreign state of affairs. The 2000s allowed not badly living at the expense of export profits and cheaper foreign credits. In other words, with the existence of foreign dramatic quality not any of the periods of existence of Independent Kazakhstan promoted the accumulation of serious and various planned experience of stable perspective-oriented, socio-economic development of country. The country and especially its elite “missed” all the real serious trials. This is how they attained their “passport” majority 16 years. All the problems-underdevelopment of social sphere especially the education; “flux” of separate spheres of economy to the prejudice of others, its diversification unmoved from its place; the wear of power infrastructure  intersected in the same time zone in a “year of pig”. This is basic total of 2007. In order to begin solving these failures we need to begin from the early childhood as it is approved by psychoanalysts.
It is most likely that they may “miss” and this time. Maybe the international financial markets will revive and at the expense of cheaper credits our banks will be able to solve their own problems together with the problems of property. But what will be next? Where is insurance that “The autumn of 2007” won’t return again?
In our opinion, the major lesson of going year is that we eventually and really need to begin doing the reanimation of our own productive sector as soon as possible. Naturally, it includes the problems of power. Only these directions can provide the fixed level of stability of national economy from the foreign blows and smooth the social problems; in other words to make the Kazakhstan economy grown-up eventually.