Azat (formerly Nagyz Ak Zhol) announced this week a plan to resolve the financial crisis.

The opposition party highlighted the crisis as resulting in a decline in industries unrelated to oil and mining, a stagnant retail market, a decrease in real income for 70% of the population, and causing issues in tax collection. They have called for the Prime Minister, Karim Masimov, to step down due to his “incompetence”.

They also called for the end of unnecessary expenses. The president made a similar request in his Address to the People of Kazakhstan earlier this year. However, the opposition includes construction of prestige projects in Astana on its list, as well as special military organizations. They say this will lead to $2 billion in savings which can be put into salaries and pensions. Another $7 billion they suggest should be taken from the National Oil Fund (which was created to be used in the case of financial crises but as yet has not been touched) and put into the economy.

The government should also pay for renovation of infrastructure, repairs of apartment buildings and highway construction, according to Azat. At the moment much of that work is done by government contract to private companies. However PPP (Public-Private Partnerships) have plagued the government for years because there is no clear understanding of what it means. The Prime Minister recently called for a brainstorming session on this topic.

Finally the opposition party called for the National Bank to cancel its requirements for commerical banks to hold reserves equal to their credit, so that more loans and credit can be accessed by the people.

For a mostly negative review of this plan, see Adam Kesher’s post on Neweurasia.

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.

For the past two weeks, there has been quite a bit of coverage on TV and in the print media about the increases in prices of bread in Central Asia. This week, in Kazakhstan the issue came to a head and was brought to the government’s attention. Some report that in Shimkent a leposhka (flat Uzbek bread) which used to cost 35 tenge or about 25 cents can cost up to 100 tenge or 80 cents. Already the Communist Party, Ak Zhol, Auyl and Rukhaniyat (all opposition parties), as well as the Social Democratic Party have released statements calling on the government to intervene. The leader of the Trade Union Federation also weighed in saying that in general, increases in food and utility prices have outstripped inflation, and that further the government underreports the rate of inflation.

I know the Western reader is wondering how the price of bread could possibly be a serious problem. The Western reader has never been to a cafeteria here where people pile 4 or 5 slices of bread onto their tray. Where construction workers buy shopping carts full of bread loaves to lunch on. Where most snack food consists of some variation on meat-filled pastries. Let us not forget that beshbarmak, the national dish served at almost every celebration or formal dinner, consists of wheat-noodles. In short, bread is a staple food in Kazakhstan, eaten with every meal and eaten by some in substitute of a meal. It is also the sort of thing that people find hard to accept as being expensive. Therefore sharp rises in prices impacts people strongly and also will be hard to explain away. It is precisely the sort of thing that could lead to serious protests against the government, overturning the official claim that the economy is strong and people live comfortably. (more…)

There was an interesting development in an otherwise typical first meeting of the new government.

The new Prime Minister set his agenda which includes improving civil service and the administration of the government, as well as various economic issues, and continuing key projects under Akhmetov, which was all to be expected.

A photo was taken of the new government, as it usually is.

What was odd was that the head of NurOtan was present (more…)

Parliament voted unanimously to approve the next Prime Minister of Kazakhstan, Karim Massimov.

UPDATE: Strangely, the President announced that Akhmetov will become Minister of Defence. Usually this is a post that does not change, and while other former-PMs serve as Ministers (Tokayev for example who was Minister of Foreign Affairs), it surely will be odd for him to report to his former deputy, particularly as no love is lost between them. Watercooler talk had expected him to move to the board of Samruk or some other well-paid and not politically key role. The other announcement is that Musin, who was made Minister of the Economy only a month or so ago, will become Deputy Prime Minister. His star is definitely rising. From city akim to Minister to Deputy Prime Minister in such a short time, particularly when he was deeply unpopular as akim and his ‘promotion’ was prompted by rioting while the President was visiting his oblast!

The session of Parliament started at 10am today (Wednesday the 10th) to name the new PM has resulted for the moment. So far there is only anti-climatic news from yesterday evening.

The Party NurOtan has chosen a candidate, and the Parliament voted to approve that candidate. Who is it? That is a secret. Now, presumably the Parliament had not yet voted officially by the time of the article, but since NurOtan holds an overwhelming majority in the Parliament of about 90%, they have likely already gurarenteed their votes.

In a press-conference last night, the only thing NurOtan would say is that the new Prime Minister of Kazakhstan will be a strong leader and an economist: (more…)

Some of the coverage on the resignation of the Prime Minister which is particularly note-worthy.

• Adam Kesher’s article on the Russian website of kazakhstan.neweurasia.net is notable for its depth.
  He also notes, unlike other sources, that someone who may step into a government-role (as minister or vice-minister perhaps) is Grigor Marchenko, former advisor to the President, and one of the architects of the economic-financial system of independent Kazakhstan, and currently working for Khalik Bank. As Kesher also puts it, “he did not hide his conflict with Akhmetov.” Akhmetov didn’t hide it either.
  (more…)

Daniyel Akhmetov stepped down as Prime Minister on Monday, after returning to work from a two-week vacation. His request to the President cited personal reasons, and most people believe he just got tired of the position and the accompanying stress. He was one of Kazakhstan’s longest serving Prime Ministers, staying in office for a good 3 years and it seemed like every December, rumours were spread that he would step down. In fact, there was a scare a few months ago in the PM’s office when it appeared that his staff was packing up. But that turned out to be either premature or entirely false.

Now what happens? Usually when the PM resigns, or after the Presidential elections, the government steps down (all the Ministers and top advisors). Then after a few days, the President with the approval of Parliament confirms a new PM and Ministers. Some people shuffle around, some people may stay in their current post and depending on the new PM and his team, some people may jump around quite a bit. Candidates for the PM are nominated by the President and approved by the Parliament. Usually the Parliament approves the first-choice, but as I remember from the Constitution if they reject three candidates, the President can dismiss the Parliament.

As for who is next, (more…)

Yesterday at a meeting of the party of Otan, the party that holds the majority in Parliament and the party of the President two major decisions were made:

1) Otan will change its name to NurOtan. While Nur means “sunlight” in Kazakh, and Otan means “fatherland”, no one can doubt that the name change refers to the President, Nursultan Nazarbayev. The President holds a great deal of official and unofficial power and perhaps the name change is just acknowledging the status quo. One does wonder though if the lesson of Turkmenbashi’s death holds no lessons for Kazakhstan, that man is mortal, that in 2012 (barring a new Constitution) a new President will be elected, and that therefore putting all your eggs in one leader is not wise.

2) The Civic Party and the Agrarian Party both merged within Otan, following Asar’s lead earlier this year. Yesterday’s announcement adds 262 000 new members to the already almost 500 000 strong party. According to the RFE/RL, the Civic Party was the second-largest party in Kazakhstan.

Bakhytzhan Zhumagulov, the acting deputy chairman of Otan, said a large political party is a necessity for a country with big plans, and he said the example of other countries proved this.

“World experience shows that when a country is faced with massive economic and social tasks only a very strong party can provide an effective strategy of development,” he said. “The examples of Japan, Switzerland, Singapore, and other countries are well known and have been often cited.”

And as Zhumagulov noted at the party congress, the addition of the two parties gives Otan a vast majority in parliament. “Our faction — which after today’s merger now holds 90 percent of the seats in parliament — has significantly improved its work in recent years, both in the quantity and the quality of its contributions to the legislative process,” he said.

Cynical Westerners might also site the example of the Soviet Union in which one party ruled and lines between the nation, the government and the party were blurry if they existed at all, leading to a culture of corruption, tyranny, and suppression of human rights to an ideology. (more…)