Whither Kazakhstan?

The Specter of a "Colored Revolution"Kazakhstan's scheduled December 4, 2005 presidential election brings two major questions into focus for this Central Asian state.

Furthermore, Nazarbayev's popularity, like that of President Putin in Russia, is generally seen as high (around 70-80% in some recent polls conducted by the Kazakh government).[6] He also enjoys the reputation in the region of being the most accomplished of the transitional post-Soviet leaders. In the waning years of the USSR, Nazarbayev was touted as a potential Vice President or Prime Minister for Soviet President Mikhail Gorbachev.[7] And, in August 2005, after Nazarbayev announced that he would run for president again, Gorbachev commended his former protégé for having "the most successful model of society in the post-Soviet space" and for his achievements in implementing socio-economic reforms.[8]

Gorbachev's praise was not given lightly. Since the collapse of the Soviet Union in 1991, the Kazakhstan government under Nazarbayev's tutelage has done a lot of things right. On the economic front, Kazakhstan's performance over the last five years has been impressive. Nazarbayev is not in the situation of former Presidents Eduard Shevardnaze of Georgia, or Askar Akayev of Kyrgyzstan, as they faced election cycles in 2003 and 2005 at the helm of impoverished countries. Between 2000-2004, Kazakhstan recorded an average rate of GDP growth of 10.36% that far exceed neighboring Russia's 6.86% in the same period. Per capita incomes have grown from $1,229 in 2000 to $2,699 in 2004; and there has been significant progress in poverty reduction, with the proportion of the population living below the subsistence minimum now at around 16%, down from just over 30% of the population in 2000.[9] The World Economic Forum's 2005 "Growth Competitiveness Index Rankings" report ranks Kazakhstan as the most competitive of the post-Soviet states, in 61st place out of 117 countries ranked, with the next regional state, Azerbaijan, coming in at 69th, and Russia lagging behind in 75th place.

Admittedly, much of Kazakhstan's good fortune is due to the happy confluence of a rapid increase in world oil prices since 1999 and the steady development of the country's considerable energy resources since the early 1990s. Kazakhstan's energy resources are the largest in the Caspian Sea region, with its offshore Kashagan field alone ranking as the largest new oil field discovered outside the Middle East, and the fifth largest oil field in the world in terms of reserves. Kazakhstan's gas reserves also put it among the top 20 countries in the world, equivalent in size to Canada and Kuwait. Oil production--which stood at 1.22 million barrels per day in 2004--now accounts for about 50% of Kazakhstan's export revenues, and approximately 30% of state budget revenues, and Kazakhstan is poised to become a major world oil exporter with production levels of as much as 3.5 million barrels per day projected by the government for 2015.[10]

More Than Oil and Gas

But oil and gas are not the whole story. Privatization and other important structural reforms like the extensive overhaul of the banking sector have also been accomplished. The private sector now employs 60% of Kazakhstan's workforce and accounts for 85% of economic activity.[11] Kazakhstan has even forged ahead in implementing many of the tough social reforms that have thus far stymied Russian reformers--such as the creation of a national mortgage system to support the development of the private housing market, which Kazakhstan implemented in 1998; and the creation of private pension funds in 1997-1999. Kazakhstan also set up a National Oil Fund in 2001, which Russia did not introduce until 2004.[12] Kazakhstan is now in the process of introducing communal services reform, and unlike Russia, where the monetization of state benefits brought thousands of pensioners out onto the streets across the country in January 2005, Kazakhstan has experienced few social upheavals in response to its reform program. Kazakhstan's successes on these fronts, and the speed in which many of the reforms have been carried out, have earned it glowing and admiring reports in the Russian press.[13] And, during a visit to Astana in March 2004, several senior Kazakh officials made a point of letting me know (with considerable satisfaction) that I had just missed running into Russian presidential advisor, Economist Andrei Illiaronov, who had been on one of his frequent trips to the Kazakh capital to "see what to do and how to do it!"


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