I have heard from a number of my friends who work in the government-understandably they preferred to remain anonymous–that the government is doing something about government cars being used for personal purposes. However, the program they have put into place doesn’t seem to be optimal.

To the casual observer, this does seem like a really serious problem. You see cars with AV and AST license plates at the bazaar and at restaurants. A friend of mine says the classmate of his son is picked up from school every day by an AST car. The kid is six years old.

Why is this personal use of cars a problem, I hear you say? Well, first taxpayer money pays for that gas, those drivers’ salaries and repairs and maintenance on the cars. Government workers don’t have the right to take a taxi and then make me pay the bill, which is essentially what they do when they use government cars for unofficial use. And of course the more a car is used, the more maintenance it needs, and the better chances it will get into an accident. More things I have to pay for so Azamat the Lead Manager can show his girlfriend a good time.

Second, I believe it’s a gateway drug to corruption and abuse of power. If you let a civil servant use one piece of government property anyway he or she pleases, why are they going to draw the line at cars? Why not treat their office, their subordiantes, the computers, and other information and property they have access to as if it was their own? All at our expense. At the very least, it would be very hard to take someone seriously who fights against corruption and then uses their AV to drive their mother shopping at Astrikzhan.

Third,while KZ and AV cars are assigned to individuals, the AST (formerly ADM) cars are in a pool. Civil servants who have the right to use them must phone up the dispatcher and wait for an available car to come pick them up. If all the cars are busy, they have to wait longer. One can imagine situations where people who need a car for legitimate reasons wait while all the cars are busy taking people to night clubs and cafes!

So what is the solution? Lower the mileage limits on use of cars for civil servants? Strictly enforce those limits with surprise inspections? Limit the number of government cars available? Reduce the hours of availability? Not so much. Instead the government appears to have authorized members of Zhas Otan to ride with traffic police at night and stop government cars. (more…)

Yeah, lame post title. I haven’t written about the firing of Mukhtar Dzhakishev as head of Kazatomprom, Kazakhstan’s state uranium company. Dzhakishev. In and of itself this would be newsworthy because Kazatomprom can genuinely be called an internationally competitive country. Kazakhstan has been blessed with a lot of uranium but Dzhakishev has done a lot right in running the company and Kazatomprom is considered a major player in the uranium industry. Dzhakishev is also one of the few (possibly only) people who has worked in the same industry and the same job since independence. Whereas other government officials and businessmen seem to shift here and there every couple of year, Dzhakishev has been doing the same thing. Some of us had hoped his success would grab someone’s attention and create a new model here in Kazakhstan where experience
is valued.

So Dzhakishev’s removal was already newsworthy before the general prosecutor’s office announced they were arresting him for corruption; specifically he is accused of using shell companies to buy state-owned uranium mines for (presumably) himself and his friends. Dzhakishev is known to be close to Mukhtar Ablyazov, an opposition leader and ex-head of BTA Bank, who is also under investigation for corruption. Some claim that evidence that Ablyazov and Dzhakishev were working together came up during the investigation of BTA Bank. Others claim that the move is purely political; Dzhakishev’s friendship with an opposition member is simply unacceptable as the government tries to consolidate power and influence. Still others say the arrest is part of a larger campaign to weed out corruption, one that has already seen the removal of top management in Kazakh Temir Zholi and KazMunaiGas.

The reason I mention it now is an article by the AFP makes an intriguing point:

“Our information confirms the illegal tranfer of more than 60 percent of the state’s uranium deposits into the property of Dzhakishev and the companies he owned,” a KNB spokesman told reporters in the capital Astana.
Authorities did not explain how Dzhakishev managed to steal more than half of the country’s uranium deposits out from under the government’s nose. All uranium deals in Kazakhstan are heavily monitored and audited by the state.

The Contradictory State of Kazakhstan on RFE/RL. Perhaps most surprisingly, the article seems to imply that a lot of court cases brought against journalists for slander or dishonoring the government end up in small fines:

When he walked into a Kazakh appellate court last month, independent “Taszharghan” newspaper journalist Almas Kusherbaev fully expected the court to reduce a substantial fine over an article he had written about rising food prices….Much to the journalist’s surprise, however, the appellate court not only failed to reduce the penalty but instead increased the sum tenfold to around $200,000 — effectively closing down “Taszharghan.”

“Usually the procedure is that when you go to a higher level [court], they should be reviewing the decision in terms of the law, in terms of rights and reason — that is, looking at the expertise that led to the decision,” Kusherbaev told RFE/RL’s Kazakh Service. “But here it appears the ruling was reviewed as an appeal from the plaintiff, who had originally demanded more money.”

After the government takeover of BTA Bank, chairman of the board and long time opposition figure, Mukhtar Abliyazov, and his deputy Zhaksylyk Zharimbetov, were both fired. As an investigation began into misdeeds by BTA Bank, both fled the country. The General Prosecutor claims that Abilyazov laundered money through the bank by giving “credit” to front companies [RU].

The CEO, Roman Solodchenko, followed suit, fleeing with his family to London:

Roman Solodchenko, the former chairman of the executive committee of Kazakhstan’s BTA bank said that his family recently had to leave for Britain, in order to protect themselves from government repression.

He said that by leaving Kazakhstan he wanted to protest against the government and its “destructive measures that practically killed the bank.”

Solodchenko added that there was no need to inject billions of dollars into the bank, because there “was no need to save [it] at all.”

Bizarrely, BTA Bank claimed the day after he left that they did not know where he was and had not heard that he was planning to leave the country. He made a press statement in London, but he didn’t phone anyone at the bank to let them know he had fled?

Now we learn that 20 associates of Abilyazov have been arrested, presumably in connection with the investigations of BTA Bank. The government claims to have found evidence People on the street are suspicious of the sudden discovery of fraud at the bank. They wonder why these claims were brought up only after the bank was taken over. If the government was ignorant of these crimes, how did they discover them so fast? Normally it takes months and months to untangle evidence of money-laundering schemes. Finally, the claim that Abilyazov’s escape and the number of bad loans on the bank’s books prove his guilt are undermined by the fact that in this crisis, many loans turned bad and that Abilyazov was fired before he left the country.

We will see what all this means for the poor people who have money in the bank. For now, the investigation and the turnover in top management doesn’t seem to have affected normal banking business.

The proposed law on religion in Kazakhstan has been declared unconstitutional by the Constitutional Council, whose primary function is to rule on the constitutionality of draft laws. The President sent the controversial law to the council last month.

Interestingly, TOL reports that

On 11 February a deputy foreign minister told the Constitutional Council, a state body that ensures legislation is consistent with the constitution, that parts of the law would negatively affect Kazakhstan’s OSCE chairmanship next year, the Kazakhstan Today news service reported. The next day the council ruled that some of the provisions concerning freedom of worship and religious associations were unconstitutional.

Which indicates that the decision was based as much on political considerations as on actual constitutionality.

A bulletin released by the Kazakhstan Embassy to the US (Special Issue No. 5, On Rejected Amendments to Religious Law and Other Human Rights) , lists the following objections from the Constitutional Council:

• The amendments, in some parts, use the term “citizen” (meaning the citizens of Kazakhstan) thus restricting equal access to rights and freedoms by discriminating against legally operating foreigners and stateless persons and not allowing them to enjoy fully the privileges granted to all religious organizations
• The amendments did not provide clear definition of the term “religious freedom” but the underlying understanding of the term seemed to be inconsistent with the definition of the freedom of conscience enshrined in the Constitution of Kazakhstan. According to the Constitutional Council, the freedom of conscience includes the inalienable right to exercise freely one’s religion or do not exercise any religion at all. In this light, a part of the amendments saying that “…the right to exercise the freedom of religion can be limited by laws of the Republic of Kazakhstan…” was found to be unconstitutional.
• The amendments allowed the authorities to suspend the process of registration of religious groups “previously unknown in Kazakhstan”. The logic behind this regulation is clear – it would give the authorities additional time to gather more information about the groups in question and determine whether their activities are potentially dangerous and whether they have any links with extremist groups. Nevertheless, it was found to be violating the constitutional principle of universal equality before the law, since the same six month suspension period did not apply to other groups.
• Ambiguity of certain terms as well as differences between Kazakh and Russian texts of the draft created loopholes which could lead to violations of human rights and freedoms.

These objections do cover most of the criticisms of the new law indirectly. The primary criticism was that the law required a lengthy and intrusive registration process for religious groups in Kazakhstan, including a review by the government of a groups’ theological correctness. Secondarily, the law appeared to contain a number of loopholes that would allow the government to refuse, suspend or revoke registration for any reason, which could be abused by government officials.

The world news has covered this story pretty well. The President of Kyrgyzstan announced on a trip to Russia a few weeks ago that he would revoke the rights for the NATO airbase in Manas which has been serving coalition troops in Afghanistan. The US government responded with surprise as they had heard nothing before that announcement.The government of Kyrgyzstan quickly confirmed that it would close the base citing two reasons: first, the U.S. has consistently failed to pay rent in full and that a variety of incidents, including the shooting of a local truck driver, created ill will. Other observers have claimed that Russia resented a US/NATO presence in Russia views as its sphere of influence and offered Kyrgyzstan aid money in exchange for closing the base.

Registan has an interesting, and from the comments, controversial editorial by Jeffrey T. Renz, Clinical Professor of Law at the University of Montana. Renz is primarily targeting Alexander Cooley, whose editorial on Eurasianet argues that the US itself is to blame for losing Manas.

to the government buy out of banks.
Many seem to feel the government deliberately destabilized banks to allow them to take them over and use them.

Of course it is all rumors and speculation. However it is a bit sad that people can believe that their government is conspiring against them. Let’s hope for a day when the reputation of the government and business in this country is such that people will never believe such speculation. After all, one friend noted that it is a typical Soviet solution to problems–unify everything so you can control it. If the financial crisis was created by banks lending to each other, then you need to wipe out all the banks. Then they can’t lend to each other. Problem solved. So the government may in fact be doing what it thinks is best for the country. After all, all this started after the rather sudden appointment of Grigor Marchenko as chairman of the National Bank of Kazakhstan. Marchenko is an experienced hand, and while loyal to the President, many feel he left his post as advisor to the President for Halyk Bank 4 years ago when he was unhappy about some political decisions made within the government. So hopefully Marchenko looks to what is good for the economy.

What do you, dear readers, think about the buying of bank shares?

As part of its bailout project, the Kazakhstan government had planned to buy assets in commercial banks. After negotiations with Halyk Bank and Kazkommerstbank to take government money, attention has turned to BTA and Alliance Bank. Samruk-Kazyna, the newly formed holding that combines development holding Kazyna and Samruk holding, which owned the largest and most profitable national companies in Kazakhstan, will buy 78.14% of shares in BTA bank and pay 251 billion tenge ($2.1 billion), which many agree is a high price for the troubled bank. BTA recently paid back 250 million dollars worth of Eurobond debt but is rumored to owe more than 3 billion dollars to foreign creditors, more than any other bank in the country.

Interestingly, just Friday, BTA denied rumors that it would nationalize part of its assets, the Temir bank subsidiary. At the same time, they confirmed the original bailout deal, that the government would buy 25% of shares in BTA.
(more…)

Following up on the report that the leading party in Kazakhstan, Nur Otan might get a media outlet, it turns out that they have. Rauan Media Group includes Television channel Astana, RVS radio, NS radio NS, and the newspapers Turkestan, Izvestiya-Kazakhstan, Nur-Astana, Kiter and Aiken, all of them previously government-owned media outlets. It is now called Nur Media and 100% owned and financed by Nur Otan, the only party represented in Parliament, and the party led by the President of Kazakhstan.

A few highlights from an interview with Armanzhan Baitasov, General Director of Nur-Media [RU]: (more…)

Caravan, the weekly newspaper, has an article on the agricultural business in Kazakhstan, which is in serious crisis [RU]. In a follow-up interview with Kazakhstan Today, Anatoly Popelyushko, head of the Union of Food Producers in Kazakhstan, says thatprices in Kazakhstan are higher than prices in Europe [RU] for food. The articles are both in Russian so I’ll outline a few of the key points here as to why the agricultural industry is in serious trouble.

• Domestic agriculture “is not developing. In fact, the opposite,” Popelyushko said to Kazakhstan Today. Government investments are either misguided or ineffective. For example, the Development Bank of Kazakhstan invested $ 130 million in ethanol plants which use grain that can be sold abroad at a higher profit than the bio-ethanol. He also notes that, “Eight sugar refineries were built; only three are producing, and at only half their capacity. The rest can be taken down for scrap metal: they are unprofitable.” Regarding government actions to regulate and stabilize the wheat industry, Popelyushko says it was a failure. The system put into place had no effect on the market and while there was a bumper-crop of wheat, the price did not go down. It is unclear where any profits went, especially regarding companies that were created by the government. Furthermore, Caravan states that government subsidies for farm products are eaten up by the high price of imported goods.

• Furthermore, Popelyushko claims that the government deliberately does not do enough to regulate prices and that many products cost two to three times more than in Europe. Many of our products in Kazakhstan, cost two to three times more than in “expensive” Europe. (more…)