Yesterday, the 28th, a Ministry of Emergency Situations helicopter crashed in Kyzylorda oblast while surveying damage being done to the mostly desert area by unexpected floods. Five passengers were killed and thirteen others, including the akim of Kyzylorda were injured.

And they told me Feb 29th was an unlucky day.

The New York Times has a nice article up on how Kazakhstan feels about Mongol’s nomination. There’s a little confusion here–the NYT doesn’t seem to realize that Sergei Bodrov, the director and co-writer, is Russian. Nonetheless there’s great content here about Kazkahstan’s film industry and national pride. And of course we all have our fingers crossed as Oscar Night starts in about 24 hours!

EDIT: Unfortunately, Mongol lost to The Counterfeiters, an Austrian movie about a group of prisoners in a Nazi concentration camp who are used as part of a plot to counterfeit US and UK currency in order to flood the Allied markets and cause financial collapse. It was Austria’s first Oscar win.

Frank Giustra, the businessman who is making headlines for his alleged deal with Kazakhstan government officials in order to get uranium rights, has put out a press release listing the inaccuracies that the Bloomberg Press Service has made in covering the story. Among the errors Giustra cites:

Bloomberg: Giustra was negotiating with the Kazakhstan government to buy controlling stakes in three uranium mines.

Fact: The negotiations were with private companies, not the government…

Bloomberg: In November, 2005, Giustra flew back to Kazakhstan for another meeting with the President of Kazakhstan to get the uranium deal back on track.

Fact: There was no such meeting.

Bloomberg: Giustra stipulated that funds donated by him or Canadian mining companies to the Clinton Giustra Sustainable Growth Initiative, which is aimed at fighting poverty and building sustainable economies in developing countries, be deployed where he does most of his business.

Fact: The work of the initiative is, in fact, global, with a particular focus on helping local economies where mining takes place. In other words, the world’s mining sector is giving something back that can be sustained long after mining is finished. There is no “stipulation” that funds be spent only in countries where Giustra has business interests. In fact, of the several programs being introduced on March 1, only one will be in a country where Giustra is doing business.

Giustra also criticized in general terms the New York Times article which broke the story as being inaccurate. However he does not directly dispute the basic facts that he met once with Nazarbayev and President Clinton, that his company acquired uranium rights in Kazakhstan, or that he has made large donations to Clinton’s charity.

The Bloomberg story, like those in both The New York Times and The Wall Street Journal, contains errors of fact, uses innuendo, and omits key facts, either intentionally or through a lack of due diligence, to construct an article designed to suggest improprieties in the relationship where none exist.

The head of KazAtomProm in a recent interview also gave a similar response to the effect that something happened, but it was nothing illegal. He alleged that the American journalists who claim impropriety were paid by someone trying to defame Hilary Clinton and her Presidential campaign.

In a government meeting this week, Prime Minister Massimov assured the cabinet of ministers that work to renegotiate contracts with foreign investors will continue and that abrogations will be made on new contracts.

…officials announced that they would no longer negotiate production sharing agreements, or PSAs, which tend to be favored by international energy conglomerates because they tend to clearly outline taxation obligations. Prime Minister Karim Masimov said that all existing PSAs between Kazakhstan and foreign entities would be honored. The rule would only apply to new investors, he added.

What is more, oil companies are not to be the only targets of renegotations. Steel giant Arcleor Mittal whose mines have come to public attention for disasters that killed miners late last year and in 2006, is under pressure as well:

“The owner has been warned that if measures are not taken to assure safety the question of revoking rights to subsoil use will be raised,” Emergencies Minister Vladimir Bozhko – who heads a commission investigating a January accident at ArcelorMittal’s Abay mine which killed 30 workers - told the cabinet.

In fact it would appear that high profile companies are not the only victims of the government strategy to regulate foreign investors.

Energy Minister Sauat Mynbayev added to the pressure on investors by stating during the session that Kazakhstan had abrogated nearly 100 contracts in 2007. Government monitoring of 831 firms found that just over half were fully meeting their financial obligations, Mynbayev said, while 97 companies were meeting less than a third of them.

“These 97 contracts have to date been broken off. Notification has been sent to a further 182 [companies] about violations of contractual obligations and licensing conditions,” Mynbayev said. The ministry did not immediately respond to a request for clarification about which companies were implicated, but Kazakhstani analysts suggested most were probably minor subcontractors.

The mass investigation and cancellation of contracts may be aimed at reconciling breaches of contract, safety violations, and unfair terms of contracts made early in Kazakhstan’s independence. However some note cynically that in some cases violations years ago are being cited only today as reasons for canceling contracts. Critics note that likely this means that either monitoring institutions are not doing their job or that earlier informal arrangements were made to ensure that the government overlooked violations.
Others believe that the government is essentially nationalizing its resource industries by canceling contracts that do not give the government enough control or a big enough profit share.

Steppe Magazine already in its 3rd edition published a nice little article on blogging in Central Asia by Ben Paarman. This blog got a little review!

Well-written and entertaining blog…Offers real value and insight

I am very pleased to be worthy of notice and such kind words.

And I should note that Steppe Magazine is a very good read and has breathtakingly beautiful photos!

Frank Giustra, the businessman who came to the public light as allegedly getting a boost from President Clinton in order to enter the Kazakhstan uranium market, is defending himself.

From The Globe and Mail article:

Mr. Giustra denied the suggestion that Mr. Clinton had in any way paved the way for the successful deals. Both transactions were well advanced at the time of the meetings and both sets of assets were purchased from private sellers and not the government, he said.

“I have business dealings all over the world. There are two countries where I have had business dealings and have visited with the president - Kazakhstan and Colombia. If people want to draw conclusions, let them. President Clinton has not helped me in any of my business dealings, period. End of story,” he said.

As for donations made to Clinton’s charity, Mr. Giustra says his business goal is to make money in order to give it to charity and there is nothing shady about it. “I’m choosing to give my money away as part of the CGSGI effort and that’s the way I’m going to live my life. People can think whatever they want about it,”

One week after the Address to the People of Kazakhstan, the Prime Minister announced that this year Kazakhstan will investigate all existing contracts with foreigners in the area of resource-exploitation i.e. mining and oil and gas. The government will void all contracts with companies that have violated the terms and the resources or rights to access will return to the State.

“Your instruction to return fields held by unscrupulous natural resource users to the state will be fulfilled during the course of this year,” Mr Massimov told a government meeting chaired by Mr Nazarbayev.

Furthermore no new contracts will be signed until a new tax code is passed.
Some view this as a chance to correct errors made in the early days of independence when foreign companies took advantage of Kazakhstan’s inexperience. Others see it as an excuse to nationalize more industries and keep more profit in Kazakhstan, or possibly consolidate more profit in certain individuals’ hands.

Most interestingly, of the 834 licenses for exploitation to be investigated, the government expects to find half of them in violation according to the Financial Times article. Does that mean decisions have already been made? Does the government already have a list of violations but has yet to enforce them?

The President announced the need for both a new tax code and for the state to have more control in natural resource industries in his address last Wednesday.

Thanks to Registan.net for pointing me to this article on problems with US AID funding for Central Asia:

Aid for almost every country in the former Soviet Union will be falling in 2008, under the current foreign affairs budget released by the US State Department. Much of the planned US assistance will go toward helping independent-minded states in the region resist Russian efforts to reassert its dominance in the Caspian Basin and elsewhere. Even so, some Washington experts lament the drop-off in aid, and describe the dwindling budgets in recent years as “monuments to weak analysis, inter-agency pettiness, and trite bureaucratic formuli.”

Overall, the budget for the Freedom Support Act, which provides aid to former Soviet states, is $346 million for fiscal year 2009, which actually starts on October 1, 2008. That is down from $396 million in fiscal 2008, and $452 million the year before that.

It’s interesting to note because one of the sponsors of the Freedom Support Act was John McCain, who will likely be the Republican nominee for President. So perhaps the Central Asia crowd should be cheering for McCain who has paid some attention to the region. On the other hand, Barak Obama is widely believed to be more of an internationalist and perceived to have sympathy for Muslim countries, having been raised in Indonesia. Perhaps he will be more willing to dole out aid to developing countries and to sympathize with the common rhetoric of Western democracy balanced with Asian values that is rife throughout this region. Hilary Clinton, on the other hand, seems to have a more shameful link to the region via ex-President Clinton who seems happy to do business deals here to help out his buddies and lend credence to regional leaders by talking to them.

I’d be interested in what you readers think. Which US Presidential candidate is best for Central Asia?

According to the nomad.su the car of the Russian ambassador to Kazakhstan was shot at in Astana on the 7th of February from the balcony of an apartment building near the Russian Embassy. According to the story (originally broadcast on Channel 31 ) four 15-year olds are under suspicion. The teenagers and their parents claim that the kids were playing around and had no intention of shooting the Embassy or the car. In the nomad.su story, the teenagers claim they were under physical and psychological duress, though it isn’t clear by whom or for what reason. Obviously the authorities are afraid that this can cause a “diplomatic scandal” between Kazakhstan and Russia. The car was damaged, but Ambassador Bocharnikov appears to be unhurt. The Ambassador has made no statement regarding the incident.

According to a sign outside of Congress Hall, the local concert hall, Ace of Base is playing Astana! The big bands usually go to Almaty. Most recently the Scorpions did Almaty. But big Russian bands like Chaif and Time Machine, not to mention pop stars like Zhanna Friske come to Almaty with some regularity. Astana’s scene is usually limited to local bands and well-known Kazakhstani artists, unless there is some sort of festival in which case they can get bigger names up here. Presumably ticket sales just aren’t good enough here in this city of 600,000, where many people are at work nights and weekends anyway. So while some people are posing the question of what did Astana did to draw an international act like Ace of Base, I wonder what Ace of Base did to have to settle for Astana.

Note: the concert poster on the right is for the Almaty show.