Kazakhstan Annual Report On Development of Society and State 2009

ALLIANCE OF ANALYTICAL ORGANIZATIONS
KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009
ALMATY 2010
UDC 32 BBK 66.0 14
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KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009 / ALLIANCE OF ANALYTICAL ORGANIZATIONS, FRIEDRICH EBERT FOUNDATION. ALMATY, 2010. 176 p.
ISBN 978-601-278-116-8
The annual analytical report Kazakhstan: Annual Report on the Development of Society and State 2009 is the result of collective efforts of representatives of Kazakhstans analytical community. The authors of this annual report were driven by the necessity to create a new platform for information, primarily for government agencies in need of adequate and relevant information with regard to the political and socio-economic development of Kazakhstan. At the same time they aimed to set a new standard of scientic research that includes scientists from varying different areas of research. The paper at hand has established a basis for further joint interdisciplinary research. Key sections of our report address most signicant events, tendencies and trends in the development of the political elite, party system, interethnic relations, foreign policy, economic and nancial spheres of the republic and the well-being of Kazakhstani society. Coordination: Dosym Satpayev, Tolganay Umbetaliyeva Translation: N. Bisenov Proofreading: K. Buck, B. Hrdy The Friedrich Ebert Foundation (FES) is not responsible for opinions and evaluations expressed in this edition. UDC 32 BBK 66.0 Alliance of Analytical Organizations Friedrich Ebert Foundation, 2010
ISBN 978-601-278-116-8
CONTENTS
INTRODUCTION ...................................................................................................................................2
Chapter 1 THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009 1.1. The political elite of Kazakhstan: A ght of bulldogs under the carpet General features of the modern political elite of Kazakhstan .....................................................4 Specics of intra-elite relations in 2009 ......................................................................................5 Conicts between power-wielders...............................................................................................6 So-called third force factors .....................................................................................................7 Conclusions and recommendations ..............................................................................................8 1.2. Kazakhstans party system: set-up of main forces Evaluation of positioning and achievements of the leading Peoples Democratic Party Nur Otan ...................................................................................................................................10 Background party players .......................................................................................................... 11 Opposition parties......................................................................................................................12 Conclusions and recommendations ............................................................................................13 1.3. Kazakhstans interethnic situation: dynamics and trends Negative aspects within Kazakhstans interethnic and ethno-political spheres ........................15 Prospects for the development of Kazakhstans ethno-political and interethnic situation ........16 Conclusions and recommendations ............................................................................................17 Chapter 2 KAZAKHSTANI CITIZENS' PERCEPTION OF THE COUNTRY'S SOCIO-POLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS) 2.1. The economic crisis and Kazakhstans socioeconomic situation in its citizens views ......................18 2.2. Public opinion about the governments management of the crisis .....................................................19 2.3. Kazakhstani citizens view on Kazakhstans party system and political situation .............................20 2.4. Conclusions and recommendations.....................................................................................................21
Chapter 3 KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009 3.1. The economic crisis in Kazakhstan in 2008/2009 and government anti-crisis measures ...................22 3.2. Main indicators of Kazakhstans economic development in 2009 .....................................................23 3.3. Possible scenarios of economic development in 2010 ........................................................................24 3.4. Conclusions and recommendations.....................................................................................................25
Appendices Declaration of the Establishment of the Alliance of Analytical Organizations .........................................26 Regulations of the Alliance of Analytical Organizations ...........................................................................27 Information about the charter members of the Alliance of Analytical Organizations ..............................28
INTRODUCTION
Conclusions drawn from the Second Congress of Political Analysts of Kazakhstan, held in Almaty on 23 September 2009, show that despite the presence of experienced and very qualied experts specializing in the spheres of political and economic analyses and despite the great number of research organizations working in the eld, the analytical market of Kazakhstan has been developing unevenly. Observers, including potential consumers of analytical products, assess this market quite critically. In particular, one of the major problems is the research communitys total lack of any signicant inuence on the political decision-making process and the formation of public opinion in the country. The reason for this being disunity among experts and analysts because of selective relations between them. In order to overcome negative trends and to consolidate the countrys analytical community on 20 October 2009 a number of leading analytical research organizations founded the Alliance of Analytical Organizations (AAO). The main aim of this Alliance is to develop and express a common position with regard to questions concerning the socio-political and economic development of Kazakhstan and to form a respective political agenda. By these means, members of the Alliance seek to make the countrys research community a powerful mediator between the government and society and a think tank to address pressing issues of the countrys political and socioeconomic development. A further step in this direction is the presentation of our analysis Kazakhstan: Annual Report on the Development of Society and the State which is a result of the concerted work of representatives of the countrys analytical community. The authors of this annual report are convinced there is a necessity to open a new channel of information for government agencies above all. The latter need adequate and accurate information concerning Kazakhstans political and socioeconomic development. Our current project therefore aims to set new standards to liaise between different areas of study. We are convinced that our joint efforts for this project have laid the foundation for future interdisciplinary studies. Key chapters of the report at hand discuss the most important events, tendencies and trends in the development of the countrys political elite, its party system, interethnic relations, foreign policy, nancial and economic spheres and the social wellbeing of society. We hope our report will be useful for university students and teachers alike, for research organizations, government agencies, non-governmental organizations, diplomats and anybody interested in Kazakhstans political and socioeconomic development. Alliance of Analytical Organizations February 2010
CHAPTER 1 THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009
CHAPTER 1. THE DOMESTIC POLITICAL SITUATION OF KAZAKHSTAN: MAIN TRENDS AND DEVELOPMENTS IN 2009
1.1. THE POLITICAL ELITE OF KAZAKHSTAN: A FIGHT OF BULLDOGS UNDER THE CARPET
by Assessment Risks Group
ABSTRACT
Political stability in Kazakhstan, more than anything else, means stability of relations within the political elite. Key factors ensuring this stability are: a) the alignment of forces between rival pressure groups within a system of checks and balances; b) the presidents ability to keep the situation under control, preventing one rival group from gathering strength to such an extent that it might make claims to expand its political and economic interests.
GENERAL FEATURES OF THE MODERN POLITICAL ELITE OF KAZAKHSTAN

its inner close and closed proximity, and the outside wide gap between elite and population; its rigid hierarchy; its heterogeneity. Furthermore, the main ght within the elite is not about the right to further ideals and ideas for state and social development, but about the right to extend inuence on the head of state and other power groups. The only guarantor of stability within the political system is the countrys president. Not only has the global nancial and economic crisis had a signicant impact on the positioning of forces within Kazakhstans elite, it has also boosted the latest redistribution of power that started back in 2007 after a conict with then-Ambassador Rakhat Aliyev. This is to say that that a renewed, second wave of intra-elite conicts was observed in 20072009, and that his gave rise to talk about the beginning of a serious ght for power among the presidential entourage. One main result was ensuing discussion about the possibility of lifelong presidency for the leader of the nation which was launched deliberately by pro-presidential circles. Despite the fact that each of these groups maintained their own view on strengthening the legitimacy of the existing presidential system, including by means of extending the current rst presidents stay in power, the majority of the political and business elite does not imagine their future without the present system of power relations anyway. In fact, they would prefer life presidency of the incumbent. With regard to a possible successor, in the current state of affairs it would be hard to summon support for other political players. At the same time, the destruction of Rakhat Aliyevs group, the weakening of some representatives of the old guard and the serious pressure on the Young Turks and representatives of the national business elite have temporarily destroyed the intra-elite balance in favor of other power groups and power-wielding structures. In addition, the president continued to preserve his control over the elite through the consolidation of political, economic and information resources under the umbrella of the following controlling structures: the Samruk-Kazyna national welfare fund (national companies and banks), Arna Media and Nur Media (the media), the Civil Alliance (NGOs),
Yet another peculiarity of the year 2009 was the countrys leaderships take on the principle of manageable tension which has enabled the use of radical measures against unwelcome economic and political players and thus a further strengthening of state control over all spheres of public life. Hence, state paternalism has slowly but surely started spilling from the political sphere into the economy. This has given to a general trend of the transformation of oligarchic capitalism into a nomenclature monopoly. Even though this trend should have led to the redistribution of property to the states benet, it really enabled certain power groups to adjust the political and economic space in a way to make their ends meet.
SPECIFICS OF INTRA-ELITE RELATIONS IN 2009

Conict potential was present within the Kazakhstani political elite throughout the whole of 2009 and it could cause new clashes between different elite groups in the future, increasing political risks in Kazakhstan. Other reasons for new conicts are:
OBJECTIVE:
the absence of a long-term stable balance between elite groups; reduced economic opportunities; the prevalent situational approach and uncoordinated personnel policy; the evident process of a maturation of the elite who demand greater freedoms.
SUBJECTIVE:
notorious rumours about an early transfer of presidential powers and potential successors; the present state of permanent psychological tensions among the political elite caused by frequent government reshufes and detentions of high-ranking ofcials accused of corruption. We have observed several power groups attempts ill-using the ght against corruption in order to strengthen their own positions. Moreover tensions within the elite stem from the detentions of high-ranking ofcials, and many observers have reported their impression of a respective purposeful purge of the government. The initiators of this purge, however, are not clearly visible and reference to presidential orders lacks credentials because rst and foremost detentions gathered momentum with the deterioration of the socioeconomic situation in the country. This furthers the impression that the ght against corruption in Kazakhstan is part of the aforementioned manageable tension. We can distinguish two main explanations for the ght against corruption having gained momentum in 2009 which again may signicantly alter the balance between power groups. 1. The initial orders to intensify efforts in the ght against corruption were given by the president himself. In doing so he killed two birds with one stone. First, he diverted public attention from his inefcient anti-crisis policies towards the ght against corrupt high-ranking ofcials ( the ones who are not part of his entourage). Second, the president made the elite understand that he was in uncontested and full control of the situation, and that he set the rules of the game. 2. In the current situation of economic crisis, access to funds is diminishing. This forces many groups to launch attacks against their rivals, including the use of state agencies for lawenforcement.
Nur Otan (the party system), the Atameken business association (medium-sized and major businesses).
In this context, hits were directed against a group known as the Youth Turks that unites politicians and businessmen. The group emerged during the 1990s and was originally supported by the president. It was precisely this group that suffered sizeable losses as a result of Mukhtar Ablyazov and Margulan Seisembayevs ight abroad and the detention of Mukhtar Dzhakishev, even though it has to be said that during the renewed ght for a place in the sun other elite groups also discovered the vulnerability of their positions. This is shown by the temporary departure of Bulat Utemuratov, by the corruption suits led against subordinates of the mayor of Astana Imangali Tasmagambetov, and by the detentions of subordinates of former mayor of Astana Askar Mamin. The vulnerability of the elite is further demonstrated by the arrests of Deputy Defence Minister Kazhimurat Mayermanov, of the chairman of the Ministry for Agricultures Water Resources Committee, Anatoliy Ryabstev, and of two other ofcials of this ministry who had worked under the supervision of former Agriculture Minister Akhmetzhan Yesimov for abuse of ofce. The conviction of former Environmental Protection Minister Nurlan Iskakov and a corruption scandal in the Statistics Agency which forced its Chairwoman Anar Meshimbayeva to resign might not have been the last evictions to report. In general, a preliminary analysis of the government purge shows that in some cases initiators tested and in other cases openly threatened positions of certain inuential representatives of the elite. However, interestingly, this has had an opposite effect. The bureaucratic apparatus is in a state of acute tension and frustration because it does not understand the reason for the sudden change of the rules of the game. In the past, denite loyalty to political authorities was the accepted method of payment to clear any debts whatsoever, but this has stopped working now. As a result, the bureaucratic apparatus has started losing trust in the high ranks of power. At the moment, certain power groups have reached critical resource potential. This is to say that the combined potential of these groups has reached a level that hinders the supreme power altering the overall system. While the highest echelons of power may still destroy an individual power group, they can no longer impinge crucial inuence on the system as such. A coup dtat, however, is not yet on the cards, because any implementation of such a negative scenario would need, in addition to power-wielding structures, a political leader. A person who is competent and respected in the country, who can assume government functions and shoulder political responsibility for the period of a temporary regime (until regular elections). This remains unclear. As a result, the president is the main guarantor who can prevent a coup dtat. The president is still enjoying high popularity ratings among the population; moreover any attempt to overthrow him is doomed, especially since no political gure has emerged to rival President Nursultan Nazarbayev. Any rebellion of the elite is impossible until a strong and rm power group with a charismatic leader emerges from the Kazakhstani political system to challenge the presidents power. As a result, the incumbent is still enjoying a high level of legitimacy in the eyes of the elite which reduces the risk of a possible coup dtat. By the same token, the elite are not capable of assessing the efciency of a coup dtat. Still far too high political and economic costs are at stake with possible outcomes remaining unknown. However, this does not rule out underground preparations of all main power groups to realize their projects by installing a successor. This is one of the reasons for conict potential continuing to be preserved within the elite, so this may cause new clashes between different power groups. A remarkable classication of Kazakhstans post-Soviet elite has been provided in Obshchestvennaya Pozitsiya, a newspaper that published an article titled Kazakhstans elite: who rules us on 25 November 2009. In this article, the newspaper noted for example that representatives of the rst generation of the post-Soviet elite (let us call it the elite of decline) who constituted the highest echelons of the Soviet apparatchiks are persistently clinging to the power and resources they have The new elite are experiencing selection processes based on two genera-
CONFLICTS BETWEEN POWER-WIELDERS

Confrontations between various power-wielding structures became serious in 2009. In particular, this is illustrated by the confrontation between the National Security Committee (KNB), the nancial police, the prosecutor-generals ofce and the Ministry of Internal Affairs. It resulted in high-prole detentions of ofcers of these structures during the whole year. In Atyrau, the national security department brought a procedure against two ofcials of the regional prosecutors ofce who were suspected of extorting a bribe. In turn, the prosecutors ofce opened cases against three KNB ofcers, allegedly for letting detained pilferers escape. In the same city, again in Atyrau, a ght broke out between ofcers of the trafc and nancial police departments. In Almaty, a serious conict erupted between the KNB and the nancial police when nancial police ofcers were taken into custody outside one of the KNB buildings in Almaty while sitting in their car, taking pictures of all people entering and leaving the KNB building. In addition, there was a conict between trafc police ofcers and nancial police ofcers in Almaty. In November, KNB ofcers arrested the deputy chief of the Almaty city nancial police department, Aydyn Zhanteleyev, for alleged drug abuse. Later on, the charge against Mr Zhanteleyev was dropped because of procedural violations on the part of the KNB ofcers. Simultaneously, the management of the Almaty city KNB department was sacked, but this was not ofcially linked to the criminal case against Mr Zhanteleyev, even though there might be invisible, yet direct links between the instances. A certain blow to the KNB was a press conference by Zhamila Dzhakisheva, wife of the detained head of Kazatomprom, Mukhtar Dzhakishev, that drew public attention to Amangeldi Shabdarbayev. Moreover making the video of the interrogation of Mukhtar Dzhakishev accessible to everyone on internet platforms is part of the game played by power groups, like many open conicts between the powerful within the system. All this demonstrates that, rst, all named events represent the tip of the iceberg the hidden underwater part of which consists of more violent and covert frictions between different power groups. These groups are linked to either one power-wielding structure or the other. Second, competition between different power-wielding structures to expand their powers and to strengthen their positions has become erce in the country. Third, in the name of ghting corruption these structures have received quite wide-ranging powers to purge the elite. Fourth, it is not ruled out that there was an attempt to use the law-enforcement agencies in the new redistribution of property. It is worth noting that each of these structures tried to convince the president that only their particular structure was the most efcient body to ght corruption, simultaneously pursuing a campaign to discredit its respective rivals.
SO-CALLED THIRD FORCE FACTORS

When analyzing intra-elite relations one needs to pay attention to what we call third force factors. This third force does not formally belong to the opposition. Instead, it is situated within the elite, representing a union of individuals or several inuential power groups. However, the third force may purposefully provoke conicts in society to achieve its several aims. These are: 1. Destroy their potential rivals; 2. Force the opposition and the government to clash;
tions. The rst of these is a hybrid generation which has incorporated both Soviet values and the values of the information era. At the same time, its representatives have been actively involved in business and have gained work experience in the civil service sector. The second generation who calls itself technocrats consists of typical representatives of bur[eaucrat-busi]nessmen The main channel for them to join the elite is a career in the civil service
3. Improve its own status in the eyes of the president as the only force he can rely on; 4. Survey public opinion about various scenarios of their potential coming to power, including through spreading rumors (most recent ones being about an illness and even the death of the president); 5. Create and manage social, interethnic and other conicts. It should be noted that experts differ on how they dene and thus identify the third force. In theory, we can categorize almost all inuential pressure groups as the specic power group from within the presidents entourage. We can thus see that almost all groups in question are playing against one another and may constitute this force. It is, however, most likely precisely the group that beneted most from crushing Rakhat Aliyev and his people and from weakening the old guard and the Young Turks. We can assume that as political uncertainty will grow further, the third force factor will have a greater inuence on socio-political processes in the country.
CONCLUSIONS AND RECOMMENDATIONS

PROBLEMS FOR THE PRESIDENTIAL VERTICAL
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The head of state once said that oligarchic capital is strangling its competitors. Having amassed money, such capital is vigorously jostling for power. And at that point in time, the state should take measures. This notion is relevant in a situation where some elite groups, pursuing only their particular interests, are playing an anti-social, anti-system and even anti-presidential game. They normally do so under the cover of state-run establishments, including the law-enforcement structures. In this context, we can single out a number of key problems for the presidential power that stem from the situation sketched out above. 1. Experts have noted that as a rule the present power groups are interested not in the continuity of the presidential course but only in the question of their vertical and horizontal transformation in case of the head of states departure. The former means adjustment of the status of a group in the power hierarchy (i.e. exerting inuence on a new president and the executive as a whole). The latter means a change in the groups resource potential (i.e. redistribution of property). 2. Constantly ghting for a place in the sun, these groups are gradually starting to come out of the shadow and enter public scene, involving the public sphere in their intra-elite showdowns. As a result, being in a constant state of erce confrontation and media wars, they destabilize the elite and discredit the head of state, notoriously hiding behind his good name. 3. Prioritizing their parochial interests, these power groups are trying to replace state institutions by creating their own network of loyalty from their appointees. They are thus conducting a deliberate policy aimed at reducing the inuence of government structures such as the presidential administration, the Security Council and the Assembly of the People of Kazakhstan. 4. Establishing relations at a regional level, power groups are in effect xing their bureaucratic territories, which can provide them with signicant support when time is ripe. 5. We can already see now that in anticipation of the forthcoming replacement of the ruling elite, the elite of a new generation that relies on its own capital has been formed around potential leaders. 6. If apparatchiks and oligarchic groups preserve their dominance, it will be hard for the president to decide whom to support. Parties are still weak. NGOs are trying to stay out of politics. The above described power-wielding structures have already discredited themselves. The bureaucratic apparatus is increasingly involved in interdepartmental showdowns. Inuential shadow players still believe in their ability to agree on everything, settle disputes, divide powers, the spheres of business behind the scenes and everything will be ne. If we assume that the efciency of any political system depends on the existence of basic institutions which ensure social reproduction and appropriate socialization, i.e. peoples in-
PROBLEMS FOR THE STATE
1. Deformation of the executive. The crucial point here is the widening gap between political and civil servants, between the countrys leadership, between mid- and low levels of the executive branch in the given situation of dominance of certain power groups. The danger is that a deformation of the vertical may result in covert or open acts of sabotage against the implementation of government programs. This might lead to a widening gap and misunderstandings between central and local executive bodies. The present regional elites are dissatised with their levels inuence on the processes of decision-making on statewide level. Regions think that they have too many obligations before the centre, and that they enjoy fewer rights than power groups in Astana. 2. The syndrome of temporariness is what we call the widespread preservation of the corruption mentality with a signicant part of Kazakhstani bureaucrats which is benecial to power groups in terms of exerting control over those bureaucrats. 3. Interdepartmental rivalry between government institutions is closely linked to intraelite processes and the practice of entwisting business and government. Shadow groups interests are given preference over the states own interests. This conglomerate creates conditions for new interdepartmental wars in turn. 4. Reduction of the bureaucratic apparatuses loyalty to the current regime. For midand lower level civil servants any change in power has both negative and positive effects to it. Negative effects are to do with a growing threat of instability. Positive effects can be found in the new and enhanced career prospects a change in power offers. In the given situation of limited social elevation and higher disappointment, a positive stance towards change in power may dominate in this group of civil servants, especially when powerful groups from within the presidents entourage try to monopolize supreme power. 5. Representatives of the elite, as a rule, pursue their parochial interests. This is why they are not involved in developing the strategic course for the countrys advance. They also do not have an ideological inuence on political life in Kazakhstan. The problem lies in the deideologization of the elite. 6. There are key intra-elite contradictions within any thinkable model of mobilization. There is always confrontation between the supreme power as an initiator of modernization processes on the one hand, and the bureaucratic apparatus, a virtual instrument of modernization, on the other. When the apparatus is under the control of pressure groups, the state is in danger. In the short-term future (one or two years), intra-elite relations will be dened only by the presidents ability to keep them under control. The Rakhat Aliyev factor will make elite groups more cautious in expressing their political ambitions.
volvement in politics, we realize that Kazakhstan lacks these institutions. The institutions that formally bear the names of political institutions in Kazakhstan are not really political institutions as such because of their problems outperforming institutionalization. This is a characteristic of many post-Soviet countries. Why is this so? Practically all political and social institutions in Kazakhstan exist not like institutions but more in a way resembling organizations, alliances or associations. The system of institutions does not coincide with the system these associations. Moreover, the countrys political system is borne by merely one leg as the incumbent president and hence the vertical of power are adjusted to linear decisions only. However, this state of affairs cannot last forever. His, the permanent arbiters, arrangements have started to grow weaker, especially when other props of the system are elite groups gathering around this main centre of decision-making. This gives rise to signicant problems and threatens the development of the very state.
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RECOMMENDATIONS
General speaking, at the present stage of the political development of Kazakhstan, the ruling elite should clearly dene which of the following three types the political system of Kazakhstan belongs to: 1) mobilizing; 2) conservative; 3) modernizing (i.e. open to political reforms). This will dene the level of the political systems legitimacy in the future. All this is to show that Kazakhstan is facing two possible scenarios of political development.
THE BEST-CASE SCENARIO INCLUDES
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political modernization; the emergence of new channels to recruit members of the political elite from; increasing the number and quality of existing points of access to the process of political decision-making; drawing a clear line between business and politics; the appointment of heads of local executive bodies by means of elections; increasing the middle class; more active involvement of Kazakhstan in the global economic and political spheres which automatically increases requirements for the civil service; the establishment of electoral forms of supporting government institutions; the adoption of an efcient mechanism of succession to power; the diversication of the economy (including, rst, low prices for raw material plus good management; and second, good prices for raw material plus good management). Results: decreasing political risks and risks for investment in Kazakhstan; facilitating a switch from a state of stable instability to a state of stable development.
THE WORST-CASE SCENARIO INCLUDES
the preservation of a closed political system; an oligarchic form of corporate culture; the political elites dominant role in relations with business. New confrontation between the business elite and apparatchiks; a limited number of points of access to the process of political decision-making; limited channels to recruit members of the political elite from; the preservation of the economic model based on raw materials (rst, low prices for raw material plus bad management; and second, good prices for raw material plus bad management). Results: further high level of political risk and risk for investment in the country; political and economic crisis; violent change of the political elite with unpredictable consequences.
BEST SCENARIOS FOR A SWITCH FROM OLIGARCHIC

CORPORATE CULTURE TO CORPORATE MANAGEMENT
1. Both attempts to either conserve oligarchic corporate culture and/or to instead change it hastily or radically pose a similar threat to the stable development of Kazakhstan. Kazakhstan still lacks a systematic and stable mechanism to solve intra-elite contradictions. This mechanism should tackle the problems at the level of political institutions instead of the currently dominant informal relations between individual power groups and political gures.
2. It is possible that the succession of power needs a scenario of removing certain less efcient groups and bringing in a new generation of managers. Such a scenario, however, is possible only in case of replacing the dominance of oligarchic groups by a professional and efcient government apparatus. 3. The country needs a system that can solve problems of regional and sectoral levels without the presidents involvement, while strong presidential power is preserved. This could be done by increasing the efciency of government and political institutions in a way the president could rely on. 4. Projected changes should include both the very system of government-building and the functioning of government on the one hand, and the nature and practices of relations between government, elite and society on the other. The quality and extent of changes will depend on who (which forces) and which scenario (which group interests) will be involved in the expected transformation. The main aim of the makeover should be a switch from stability based on personality to stability based on efcient political institutions. 5. Obviously, in the given situation of a weak civil society the existence of the outlined mechanism would become an important factor of regulation in crucial questions of Kazakh statehood. These questions concern the establishment of a real rule of law, the inviolability of the institution of private property and the ght against corruption. Not only does the absence of a regulator complicate the solution of the issue of ensuring succession, but it also creates serious conditions for permanent destabilization of the government-political and socio-political space in the long-term. Efcient implementation of any political reform needs three conditions: the economic basis, because political reforms in poor countries are more likely to fail than to succeed; political will which is not dened by situational interests but strategic aims of political development; consistency, because political reforms are long-term projects. Finally, it is necessary to create a good mechanism to maintain the balance between a strong presidential power, a strong civil society and competitive business. Consequently, political reforms should be accompanied by the principle of the ve Ps. These are: Political institutions Parliamentary reform Party reforms Process of decentralization Political succession.
POLITICAL INSTITUTIONS
The main danger is that in case of a possible change of power there will be no competent political institution which could act as a safety net. At the moment, only the presidential power can perform this role. However, deliberate support of the weakness of other political institutions threatens to move political ghting beyond the boundaries of law towards the sphere of new shadow games and violence, should the current government grow weaker. In order to escape from the trap of outperforming institutionalization and in order to implement continuity of the political course it is necessary to modernize and strengthen ve main factors for the stability of government. These are: a fully-edged and competent civil society which is interested in the preservation of longterm political stability through a mechanism of reforming the existing political system. a strong and competitive party system based on the principle of the supremacy of the constitution; a high-professional bureaucratic apparatus (instead of situational conservatism), controlled by civil society; power-wielding structures (the army plus intelligence services) controlled by society (instead of corrupted generals);
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a middle class (instead of nouveaux-riches and new poor) as the main guarantor of social stability.
PARLIAMENTARY REFORM
One of the main aims of political reform is to create an efcient system of checks and balances. This is impossible to do without increasing the role of parliament in the countrys government system. However, it should not be ruled out that the nal aim of political reforms might be the establishment of a unicameral parliament. This is not an end in itself. However, the present division of the supreme legislative body into two chambers in the unitary state, too, is rather a political insurance for the government itself than a real contribution to improving the law-making process. At the same time, this does not mean the creation of a parliamentary system when neither the necessary favorable political conditions nor a party system are in place yet.
PARTY REFORM
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Unfortunately, from the very beginning of the process of forming a party system, articial obstacles to party activities prevailed over impartial laws to increase political involvement through party channels. The party system is now subordinated to the political system, and the ruling elite do not know what to do with it. It seems that is already too late to ban parties, while encouraging them to be active is dangerous. This situation denes limited capacities and unfullled opportunities for Kazakh political parties to take part in drafting a program of political reform. The main aim of party reform is to create efcient channels for parties to inuence the political process: through parliament; through a mechanism of rotating the political elite; through active cooperation with other civil society institutions the potential of which has not been tapped yet. However, party architectonics in the country will not be stable until the number of articial parties is cut and they are replaced by conventional electoral parties. Their transformation into a real instrument of representation of social interests is possible in the following four situations: 1. Reforming the entire electoral system, not its individual elements. 2. Increasing the functional role of a multi-party parliament. 3. Developing a pluralistic media space which will open access for all parties to national media outlets. 4. Decreasing the spheres of inuence of power groups because a weak party system is inuenced by powerful and active lobby groups and vice versa. That is why it is no surprise that these groups often have much greater inuence on the process of political decision-making than our ersatz parties in Kazakhstan.
PROCESS OF DECENTRALIZATION
creating efcient local self-government institutions; budget decentralization.

POLITICAL SUCCESSION
One of the nal aims of political reform is to reduce the personality factor in ensuring stability and sustainability of the political system: dening strategic, not situational priorities of political development; developing a mechanism of rotating the political elite through party channels; partner relations with the opposition, as a fully-edged participant of the political process, not as a decoration; political consensus on strategic issues of economic and political development between the main political forces.
by The Alternative Centre for Topical Research
ABSTRACT
Complicated and ambiguous processes in the public and political life of Kazakhstan during the year 2009 have reected the activities of political parties and noticeably improved their mutual relations. There are now 10 parties in the country, eight of them ofcially registered with the Ministry of Justice, one of them preparing for re-registration due to the change of its name (the Azat national social democratic party) and one remaining unregistered because of the authorities deliberate delaying of due procedures (the Alga! peoples party). In terms of ideology and policies that are determined by the acting parties attitude towards the ofcial political course, they can be divided into the following groups 1. The ruling Nur Otan Peoples Democratic Party which is headed by President Nursultan Nazarbayev. 2. Parties showing great loyalty to ofcial policy. At present, they are the Auyl social and democratic party, the Party of Patriots of Kazakhstan and the Rukhaniyat party. 3. Parties hesitating between supporting ofcial policy and expressing their discontent with certain political moves by the authorities. They can be described as moderate opposition to the authorities. These may include the Adilet democratic party, the Ak Zhol democratic party and the Communist Peoples Party of Kazakhstan. 4. Parties showing maximum discontent with ofcial policy and other parties speaking in favor of fundamental political reforms, thus remaining in opposition to the countrys leadership. These include the Azat national social and democratic party (Azat NSDP), which was set up in 2009 by a merger of the NSDP and the Azat democratic party, the Communist Party of Kazakhstan and the Alga! peoples party.
EVALUATION OF POSITIONING AND ACHIEVEMENTS OF THE LEADING PEOPLES DEMOCRATIC PARTY NUR OTAN
The analysis of Nur Otans activities shows that it is not a ruling party in the full sense of the word regardless of the presidents chairmanship of the party. In any case, the countrys policy is being determined beyond this partys institutional bodies. As a result, cultural and social events predominate in the partys activities. Obviously, the fact that the president as a key and dominating element of the countrys political system stipulates that Nur Otan is secondary not only to him but also to the mechanisms of implementing supreme power held by him, including, rst of all, the presidential administration. In these circumstances, the party becomes a mere tool serving the ruling elites policy, specically the goals and interests of the president personally as their leader. As the only party in the Mazhilis and with its dominance in the Senate, Nur Otan does not determine priority legislative directions of its parliamentary faction. As a result, MPs mostly consider laws that only the government drafts and proposes. Under these conditions, MPs function independently from the partys central ofce. A similar situation is observed in the countrys regions, where members of local legislatures depend more on governors than on the party leader-
1.2. KAZAKHSTANS PARTY SYSTEM: SET-UP OF MAIN FORCES
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ship. In such a state of affairs, Nur Otan has virtually no chance to participate in political decision-making processes and control their implementation at all the levels of the political system. At the same time, Nur Otans central ofce and its former deputy chairman, Darkhan Kaletayev, whose term of ofce ended on 19 November 2009, made a series of moves to raise the position and role of the countrys political and governmental system in an appropriate period. First of all, Nur Otan took over the role of a main entity to conduct a political dialogue with other public and political organizations on behalf of the current authorities. For this purpose, party functionaries used the presidents calls on political forces to consolidate in order to overcome the nancial and economic crisis and its consequences which the president voiced in his annual state-of-the-nation address entitled Through the crisis towards renewal and development. This move resulted in the signing of a memorandum to ensure social and political stability in the crisis situation on 13 March 2009 at the initiative of Nur Otan. Apart from Nur Otan, other parties, including Adilet, Auyl, Rukhaniyat, the Party of Patriots of Kazakhstan and the Communist Peoples Party of Kazakhstan also signed this document. The Ak Zhol party joined the memorandum on 6 April. On this basis, an inter-party council including the seven parties was set up and it held six sessions between April and October 2009 to consider signicant issues related to the development of Kazakhstans society and government. In this case, the actual division of the countrys political party spectrum into two basic groups, the parties loyal to the authorities led by Nur Otan and their opponents, should be considered as an advantage for the government. At the same time, though the given memorandum provides for the making of concerted efforts and the implementation of joint projects, there has been no serious action observed by the parties concerned. This circumstance once again proves limited the opportunities of Nur Otan which is acting within strict bounds drawn by the president and his administration. Second, Nur Otan functionaries are actively using the ght against corruption for their own purposes, aiming to take control of activities of the government and its bodies. The partys national council for ghting corruption, headed by Senator Oralbay Abdykarimov, is being used for this purpose. Between February and October 2009, this body held ve sessions, including with the heads of law-enforcement bodies. At the same time, the relevant law-enforcement agencies under the presidents personal command are continuing to play a key role in the ght against corruption. In this case, Nur Otan only has to exclude those ofcials that made a slip and their accomplices from the private sector respectively and launch every possible propaganda campaign. In addition, the partys anti-corruption activities are increasingly taking the form of a short-lived campaign, substituting actual deeds by empty words. A telling example for this was the initiative initiated by the head of the expert commission under the national public council for ghting corruption, Mirbulat Kunbayev, to introduce a badge reading I am against corruption. This was criticized by the partys central ofce. Third, Nur Otan has made attempts to allocate its leading positions in view of the countrys government. For this purpose, party functionaries used specic mechanisms of developing new ideas (such as the Innovative Committee, the Orleu economic club) and party control which is also exerted by Nur Otans parliamentary faction in the Mazhilis of parliament. With respect to the new ideas, one should also take into account the industrial and innovative development program for 2010-2014. In what concerns party control, there were three hearings of a government report about the results of anti-crisis measures in 2009. The last hearing took place in the form of the factions expanded meeting in the partys central ofce on 19 October involving Darkhan Kaletayev. At the meeting, Kaletayev harshly criticized the government for shortcomings in the implementation of the low-interest loans program for students and in cooperation between the party and certain government bodies. Fourth, as part of the ideological and propaganda work, Nur Otans central ofce and Mr Kaletayev personally have started discussing a fundamentally new view on the role and position
of the incumbent president, Nursultan Nazarbayev, in the development of Kazakh statehood in the countrys modern history. The status of the nations leader, which was ofcially given to the president by the adoption of the constitutional law on the nations leader, has become the backbone of this activity. However, neither the government nor the president personally have ofcially supported this initiative. The replacement of the partys rst deputy chairman on 19 November has proved this indirectly. The former governor of the Karaganda Region, Nurlan Nigmatullin, took over the position of Darkhan Kaletayev, who was appointed managing director of the Samruk-Kazyna national welfare fund. By some estimates, the replacement of the actual leader of Nur Otan was the result of a competition between the presidential administration, namely its head Aslan Musin, and the partys central ofce, especially Darkhan Kaletayev, for exerting inuence on the political system and on the president personally. Specically, functionaries of the presidential administration might not at all like party members attempts to reinforce their control over the government and the negative statements uttered by some of party members against the idea of Nursultan Nazarbayevs life presidency. Apparently, the partys abovementioned shortcomings and mistakes together with excessive publicity, including frequent speeches in the media, have also damaged Mr Kaletayevs standing. At the same time, the decision concerning the current leadership of Nur Otan should not be linked to a subjective factor related to the partys rst deputy chairman. It is evident that the existence of this party in Kazakhstans political arena is solely provided by the support from the current authorities and the countrys president. Moreover, support depends to a great extent on the partys readiness and ability to be the presidents efcient tool to implement his policy. In this context, in his speech in front of Nur Otans 12th extraordinary congress on 15 May 2009, Mr Nazarbayev assigned the party the following key tasks. The implementation of these determines Nur Otans prospects for development in the near future in many respects 1. The development of the partys new program for the time until the year 2020. Apparently, this time round the party must have a strategic plan for the countrys development in the given period, considering Nur Otans role and position in this process, but not just a program of slogans and promises. At the same time, the party must attract all of the countrys intellectual forces to this work. Ofcials of its central ofce have been assigned to form the think tank generating ideas for the countrys leadership. 2. Strengthening of the partys leading members and work with the personnel within the party in general. In this area, the main emphasis is to be made on increasing leadership qualities, party functionaries level of professionalism and the partys level of discipline, and also on improving the work of the partys control committee. It is also obvious that the president has made it clear in a veiled way to the current party leaders that it was time for them to boost their inuence on relations among deputies of representative bodies of all levels. 3. The livening of the partys policy and organizational work. The most remarkable moment in this context is that the government and governors should regularly consult the party leadership in making decisions. Among other party activities, the president specied the adoption of an efcient system of reacting to the populations problems; ghting corruption; creating public councils to consider and resolve social conicts; establishing a network of public associations similar to a party; and consolidating Kazakhstani society for a long-term period. 4. Managing the work in order to form a correct system of values in society. In this case, the partys ideological work must aim to promote a system of intellectual and moral values in society, develop among the youth values of interethnic accord, patriotism, and intolerance to extremism, nationalism, law violations and crimes. In addition, Nur Otan has been assigned to join the implementation of the Path to Europe program. However, the president is likely to maintain double standards with regard to his own party. On the one hand, he is giving the party and its functionaries a sort of carte blanche to expand and
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strengthen their positions in the political system. On the other hand, the president is virtually not allowing Nur Otan to go beyond limits, where the party cannot run its own activities independently. Therefore, shortcomings in Nur Otans work are conditioned by systematic factors rather than by mistakes and omissions by the partys previous functionary. In addition, the post of rst deputy chairman has become a target in the ght between leading power groups.
BACKGROUND PARTY PLAYERS

As for the parties that are loyal and semi-loyal to the authorities, such as Auyl, Rukhaniyat, the Party of Patriots of Kazakhstan and the Communist Peoples Party of Kazakhstan, there have been observed no activities on their part in 2009 that attracted wider public attention. Thereby, these parties are demonstrating their unchangeable tactics to make themselves known mainly during election campaigns and to make a pause in periods between elections. Also, they are rmly integrating into the system of inter-party relations which was created by the authorities. In particular, the leaders of these parties are taking active part in the work of the abovementioned Inter-Party Council and the Public Chamber under the Mazhilis of the Kazakh parliament. But in general, adhering to the indicated line and without solid organizational-personnel and material resources, these parties had in fact started long ago to play the role of extras in the countrys political arena. Adilet became noticeably active in the countrys public and political life in 2009. Particularly, this party adopted seven statements and two addresses over a wide range of issues about Kazakh society and the state. In its ideology and propaganda, Adilet mainly focuses on anti-crisis measures. At the same time, the party holds that these measures can be implemented beyond social and economic actions. This is evident from Adilet party members acknowledgement of introducing constitutional reforms as a top priority condition for Kazakhstan to overcome the system crisis and to develop in the post-crisis period. Moreover, they regard the dissolution of the one-party Mazhilis followed by early parliamentary elections and the formation of a multi-party parliament as one of the most important measures in this reform. Obviously, Adilet desires not only to integrate into the political system, which is dominated by Nur Otan, but also to become the second parliamentary party in terms of deputy seats and the level of inuence. For this reason, the party has chosen the tactics of moderate opposition to the government, remaining loyal as much as possible personally to the countrys president. Adilet suggests the presidents powers be enhanced by giving him the direct leadership of the government as a unique political compensation for ending the one-party parliament. It is not out of the question that party Chairman Maksut Narikbayevs personal friendship with Nursultan Nazarbayev is also taken into account somewhere. Despite its evident activity, the Adilet party is not yet able to join a potential group of the countrys top three leading parties. In any event, social studies by various analytical organizations have shown the partys low rating. Most likely, this is due to the partys low activity in the past which resulted in a low electoral rating during the 2004 and 2007 parliamentary polls, and in its hesitation between pro-government and opposition parties. The Ak Zhol democratic party lets us see a very different picture of its activities. Despite its relative low-level activity and the lack of tangible results of its work in 2009, this party frequently ranks second in the polls, steadily following Nur Otan in various public opinion ratings. However, it is most likely that its well-known and established brand is playing a key role in this case. In general, the impression is that Ak Zhol has decided to distance itself from the countrys most urgent political topics and issues. In the political realm, Ak Zhol continues to occupy an inconsistent position. In February 2009, the party proposed a program for political modernization in Kazakhstan. The program harshly criticized the government and the ruling party for integrating the overall political system into the Nur Otan party structures. However, as noted above, Ak Zhol has virtually become a political ally
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OPPOSITION PARTIES
As for opposition parties, including Azat, the Communist Party and Alga!, their activities in 2009 were characterized by wavering between two opposite trends, namely consolidation and disuniting. Still, many of the previous and not very successful attempts to unite the countrys opposition forces show that nothing, except for subjective factors, can seriously put off this process. In particular, the forum of Kazakhstans democratic opposition forces on 11 April 2009 became yet another serious attempt to break the atmosphere of misunderstanding and disagreement between these parties. According to the forums resolution, the four relevant parties (Note: the Azat democratic party was still active then) acknowledge that the disunity among the opposition is not only supported by government agencies purposeful efforts but also by personal ambitions and conicting interests of groups which is intolerable. However, the resolution adapted by the forum discussed the merger into some kind of single political organization but not at all into a party. On the other hand, the establishment of such a party seems to be a more or less effective move ahead of a parliamentary election. But there is still a lot of time until the next election and it is unlikely that there will be an early election. This is why it seems that, if they start setting up a single party to participate in the 2012 election, there is reason to believe that it would split and dissolve before this election. Rumors about new disputes among the opposition forces started to spread almost immediately following the forum. This time round, a statement made by Azat party chairman Bulat Abilov at the Aytpark discussion club represented the stumbling block. Abilov had said he was ready to become the leader of a united opposition and the oppositions single presidential candidate under certain circumstances in the future. This statement by the Azat party leader caused a negative reaction by the other three opposition parties leaders. Moreover, despite the fact that not all of the opposition politicians claim to be the leader in this political camp, they are denitely not ready to concede this seats to their colleagues. The analysis of relations among the opposition forces shows that Alga! and the Communist Party oppose a possible union more than the others. The latter, by all appearances, do not wish to abandon their name, which has a long political history and remains an attractive factor for citizens feeling nostalgic about the social wellbeing of the Soviet period. As for Alga!, by some estimates, this partys position is a result of its afliation with one of the leading representatives of the domestic business elite, Mukhtar Ablyazov. This fact once again proves subjective factors negative impact on the union of Kazakhstans opposition. In any event, the named parties venture some form of overarching consolidation as a nonparty organization. Statements uttered by both the Communist Party and Alga! on 20 March 2009 about the establishment of a political bloc called the Government of the People was one of the rst steps in this direction. Later, on 16 June, the leaders of these parties, Serikbolsyn Abdildin and Vladimir Kozlov respectively, and the chairman of the former National Social and Democratic Party, Zharmakhan
of Nur Otan in April by joining the memorandum on ensuring social and political stability during the economic crisis. Trying to overcome the downward trend of its image caused by its political inconsistency, seeking a new niche within the spectrum of political parties, and hoping to attract potential supporters, Ak Zhol has actively utilized national patriotic moods lately. A telling example for this is the blueprint for a new policy on ethnic minorities in Kazakhstan 20102020 that was drafted by the party in September 2009. This document is written in the spirit of educated ethnocentrism, combining the acknowledgement of the priority of the state-forming Kazakh ethnic group and the ethnic diversity of Kazakhstani society.
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Tuyakbay, announced their union as part of the bloc of democratic forces called For a Just Kazakhstan (FJK). In fact, the matter was about the recommencement of the latters activities. Following this move, a general meeting of the FJK was held in Almaty on 8 August. The meeting formed the governing bodies and determined general tasks of the bloc. The actual resumption of the FJKs activities which had been suspended since spring 2006 caused unequivocal reactions. On the one hand, one can observe consolidation moves among certain parts of the opposition forces under the aegis of union which has quite a solid history and a great experience of cooperating with parties and conducting election campaigns. In addition, the FJK remains a legal entity and none of its members or, at least, leaders, has left it. On the other hand, the revival of the FJK, rst of all, once again revealed the disunity and discord among the opposition forces as the Azat party did not join the other parties. Secondly, the FJKs prospects look doubtful in terms of its member parties preparation for the next or possible early parliamentary election. This fact is linked to the ban on political parties to set up election blocs that has been introduced in election law. This could be overcome by uniting FJK members into one party. However, they are making no progress in this direction. Moreover, the simultaneous existence of the FJK and the Government of People proves the disintegration, rather than consolidation, of the opposition parties. In this case, it is not out of the question that the FJK may fall apart again in the run-up to a parliamentary election, and that its member parties will start acting separately. To a certain extent, the merger of the NSDP and Azat into one party has conrmed these expectations. The partys unication congress was held on 24 October. As a result, the charter was amended and a new board of the united party was formed. In the latter, Zharmakhan Tuyakbay and Bulat Abilov were appointed co-chairmen and Amirzhan Kosanov secretary general. Interestingly, the leaders of the Communist Party and Alga! neither attended the unication congress as guests nor made any speeches in favor of the union at all. Considering the complicated and controversial personal and party relations, the opposition forces may separate into two relevant groups. This situation is fraught with further discord among the countrys opposition parties.

In general, Kazakhstans party system in 2009 developed in the following directions. First of all, because of the oppositions open apathy caused by their unsuccessful election campaigns in 2007, and because of their inability to build up consistent and long-term cooperation to achieve common goals and interests, they have noticeably lost their opportunities and capabilities to draw up their political agenda. During the present term, even the Nur Otan party, despite its ofcial status, has to act strictly within the limits marked by the Ak Orda presidential palace. Second, the existing parties insufcient work and ties with the population, especially in the regions, are preventing them from using anti-crisis rhetoric which is prevailing in Kazakhstan now. Used properly, this rhetoric could otherwise increase the number of potential supporters and mobilize the electorate for future elections. In particular, against the backdrop of frequent cases of social discontent and protests in various strata and groups of the population, the opposition parties are demonstrating their inability to join and lead this process. The FJK staged a protest rally against the authorities antisocial policy on 18 October 2009, but this move did not yield any serious consequences for the countrys further political development due to weak preparations, its small number of participants and its failure to seize the action on a nationwide scale. Third, the public and political activity of any given party creates the impression that these activities are mainly conditioned by the fact that the parties and their leaders are expecting Mazhilis to be dissolved and an early election to be held. It would be reasonable for the most inter-
ested parties to prepare and implement two strategies: one for the participation in scheduled election due in 2012, and the second strategy for an early election as forecast by experts. Otherwise, these parties seriously risk focusing on pointless aspects and missing out on possible political dividends when they are available. Fourth, the alignment of forces in the opposition camp and the nature of relations among its gures, as well as relations between them and the authorities, prove the growing discord between the parties. To a certain extent, this tendency is evident from occasional observations of the parties mutual reproaches and complaints that are being published by media outlets somehow associated with the parties in question. This situation is more relevant for major political opponents, which is not the case for the parties in question, or, on sole and private instances between likeminded people. It is also obvious that the opposition parties and movements are creating both positive and negative precedents in their consolidation process. Because of this, they are making this process endless and rendering the unions and coalitions established as part of the process temporary and unsteady. Fifth, the crisis situation in the country revealed a number of social problems which virtually failed to meet adequate reaction by the existing political parties. Therefore, in order to ll their policy and organizational vacuum, interested gures and organizations are quite actively working together with appropriate social groups. In particular, the Kazakhstan-2012 peoples movement was established in Almaty on 20 May 2009 to represent the interests of individual investors in housing projects, mortgage borrowers, of unemployed and houseless people. Its distinguished leaders include the chairman of the Talmas public movement, Aynur Kurmanov, and the leader of the Ak Auyl companys individual investors in housing projects, Amangeldi Shormanbayev. On 22 July, hundreds of activists of the Kazakhstan-2012 movement staged an unsanctioned rally in front of the city administration, demanding solutions to urgent social and economic problems. Their basic slogans read Houses for People!, Plants for Workers! and Dismiss the Government! Another area of activity of Kazakhstani society which faces a risk of being politicized in an undesirable fashion is interethnic relations. A group of national patriots headed by the leader of the Memlekettik Til movement, Mukhtar Shakhanov, spoke against the doctrine of Kazakhstans national unity which was initiated by the Assembly of the People of Kazakhstan and the countrys president personally. At a press conference in Almaty on 25 November, Shakhanov and his fellows virtually presented an ultimatum to the authorities, demanding that the latter abandon the document. Otherwise, they intended to stage an open-ended hunger strike. It is not out of the question yet that in the wake of these examples of political moves by relevant gures and groups to protect both interests of groups of the population which suffered from the economic crisis and the countrys native population, these groups may set up political parties in the near future. In this case, one should expect that the opposition circles and, most importantly, their new ideological and propaganda trends will grow wider. On the basis of all these considerations, Kazakhstans political party system can be evaluated as being subject to its own crisis processes. Nur Otan is the ruling party in name only and totally dependent on the support by current authorities and the president. The other parties are incapable of compensating for the lack of access to ofcial mechanisms of participating in political decision-making procedures and of shaping public opinion by suggesting to a signicant part of the population serious and attractive proposals that can serve as an alternative to the ofcial policy. Moreover, the activities of all of them without exception are not strategic and large-scale but of situational nature.
RECOMMENDATIONS
Combined, all of the above mentioned factors do not promote a steady functioning of Kazakhstans political party system. The best way out of this critical situation is to establish a real
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dialogue between the authorities and all of the political parties, as well as between the parties themselves, and to search for acceptable opportunities for all sides to ensure their participation in developing and making political decisions. Specic measures in this respect can be drafting and adopting a law on the legal status, rights, duties and the sphere of activities of political opposition as an institution of the countrys political system; amending legislative acts concerning activities of political parties and other public associations which should aim to simplify their registration with the state and to expand their rights to take part in the process of exercising state power and forming government. In particular, it is recommended that the minimum number of party members should be cut from 40,000 to 10,000 people. State registration of public associations should not bear a permissive nature, but be used for record purposes; amending election legislation to ensure the involvement of all existing political parties in electoral commissions of all levels; ensuring free expression of views and positions in the media of different forms of ownership for all parties and other socio-political organizations, including the provision of air time on radio, television and in the press owned by the state; offering socio-political organizations the right to submit ofcial inquiries to government bodies (excluding cases relating to state secrets) and to receive competent responses; organizing consultations between government and leaders of political parties on political and administrative reforms, drafting and amending of the constitution, improving election legislation, organizing elections for various government bodies, dening the main aspects of interethnic and inter-religious relations, of foreign policy and of ensuring national security; involving all existing political parties in drafting government programs, blueprints, laws, bylaws and so on; involving leaders of all existing political parties in various ofcial events organized by central and local government bodies.
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by The Kazakhstani Centre for Humanitarian and Political Studies
ABSTRACT
The situation in the realms of interethnic and ethno-political issues was quite positive and stable in Kazakhstan in 2009. This is proven by the results of an opinion poll conducted among experts by the Kazakhstani Centre for Humanitarian and Political Studies between August and October 2009 in northern, southern, eastern and western Kazakhstan. The basic focal points of the poll were Pavlodar, Shymkent, Ust-Kamenogorsk and Aktau. The poll involved 98 experts. The ethnic make-up of respondents was 40 ethnic Kazakhs, 25 ethnic Russians, six ethnic Uzbeks, four Uyghurs, four Tatars, three Chechens, three Azeris and representatives of other ethnic groups. The discussion of the Kazakh governments doctrine on national unity in the country has become very acute. The doctrine was drafted by the Assembly of the People of Kazakhstan. Taking into account the signicance of this document, it is very interesting to listen to all sides which have their positions on the issue.
POLL RESULTS
The majority of experts (85 respondents or 86.7%) assessed the situation in the sphere of interethnic relations in their regions as favorable, including 48 experts (48.9%) who regarded interethnic relations in their regions as good. At the same time, the poll showed that there was a hidden tension in the interethnic and ethno-political spheres of Kazakhstan. First, 42 experts or 42.8% assessed interethnic relations in their regions not as good but as rather good. There are reasons to suggest that this sort of answer reects the lack of condence and uncertainty regarding the interethnic situation in Kazakhstan. Second, only 28 experts (28.5%) assessed the ethno-political situation in Kazakhstan as favorable, while 55 experts (56.1%) said it was calm. This shows that over a half of the experts polled do not feel optimistic about the ethno-political situation in the country. This is conrmed by other answers given by experts. During the poll respondents were asked the question What kind of measures do you think have to be taken to reduce interethnic tensions which was designed to nd out about interethnic tension in Kazakhstan. Forty experts (40.8%) said that various rights (ethno-cultural, socioeconomic, political and so on) of non-titular ethnic groups in the regions should not be discriminated against. Moreover 59 experts or 60.2% said that non-titular ethnic groups were discriminated because of language, and that their rights to occupy high-raking government jobs were being violated. The poll also showed that 34 respondents (34.6%) said that the likelihood of interethnic or religious conicts destroying tranquility and civil peace in Kazakhstan was high (they allocated six out of ten possible points). Most respondents (59 people or 60.2%) thought the ethno-political situation was not favorable but calm, i.e. relatively favorable, while only 28 experts (28.5%) assessed it as favorable. The remaining 11 experts (11.2%) believed the ethno-political situation in Kazakhstan was either uncertain or tense. A signicant number of experts pointed to the high likelihood of non-titular ethnic groups making their ethno-political demands. Thirteen experts said that the
1.3. KAZAKHSTANS INTERETHNIC SITUATION: DYNAMICS AND TRENDS
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probability of this was between 50% and 70%, while another ve experts said the probability was more than 30%. Third, a poll of experts conducted by the Kazakh Centre for Humanitarian and Political Studies in Shymkent, Aktau, Ust-Kamenogorsk and Pavlodar in the third and fourth quarters of 2009 showed the gradual deterioration of interethnic relations. The growing ethnic intolerance of minorities is based on their further ethnic, cultural and social isolation from the majority of the population, while ethnic Kazakhs were dissatised about the governments ethno-political policy and the way in which socioeconomic problems were extrapolated into the sphere of interethnic relations. It should also be noted that interethnic tension and sometimes separatist moods can regularly be observed among both dispersed and compactly-living ethnic groups. The situation in western and southern Kazakhstan in the Atyrau, Mangistau and South Kazakhstan Regions is alarming. Cases of ethnic intolerance took place in these regions. In western Kazakhstan the local population has hostile attitudes towards Caucasian ethnic groups and ethnic Kazakhs from other regions, whereas all kinds of clashes happen between ethnic Kazakhs and ethnic Uzbeks in the countrys south. Local residents said that interethnic relations were tense in South Kazakhstan Regions Sayram and Maktaaral Districts on the border with Uzbekistan. Similar trends were observed in eastern Kazakhstan where large-scale conicts almost broke out between ethnic Kazakhs and Chechens in 1994 and 2004. The poll showed that the main risk zone in the East Kazakhstan Region was Ust-Kamenogorsk and its suburbs where interethnic relations in society were tense. Fourth, the Kazakh Centre for Humanitarian and Political Studies conducted eld studies in South Kazakhstan Regions Sayram District and Almaty Regions Uygyr District. These studies showed that there was a high level of hidden tension which might grow into an open conict between ethnic Uzbeks and ethnic Kazakhs on the one hand, and Uyghurs and ethnic Kazakhs on the other at any time. Fifth, the survey and content analysis of regional medias coverage of interethnic relations in Kazakhstani society established that media outlets had published negative articles in the sphere of interethnic relations. The media of some northern regions of Kazakhstan topped this list. It turned out that these articles focused mainly on the local populations discontent with the governments ethno-political policy. Sixth, a high potential of emigration moods is observed in Kazakhstani society. Moreover, highly educated and professional citizens of Kazakhstan who can afford relocation were more inclined to emigrate from the country. In the early 1990s, emigrant moods dominated among ethnic minorities, whereas now these moods increasingly often preoccupy ethnic Kazakhs. The following cases of open opposition to the governments ofcial ethno-political policy took place in the country in the past few years. First, national patriotic moods and opposition to the ofcial policy on minorities have grown mainly among ethnic Kazakhs in the past two years. On 20 September 2009, supporters of the introduction of the Kazakh language into all spheres of public life in Kazakhstan held a meeting in Almatys Respublika Sarayy palace. Various demands showing the Kazakh intelligentsia and oppositions discontent about the minority policy were made at this meeting. Moreover, the opposition started working closely with Kazakh national patriotic organizations in this sphere which means that the opposition is focusing on nationalistic organizations of ethnic Kazakhs. Second, the opposition started a trend to oppose the government in the sphere of interethnic relations. For example, the opposition Azat national social democratic party and Kazakh nationalistic organizations stepped up activities in this sphere. The forum of active supporters of the development of the Kazakh language was backed by a number of opposition organizations, including the Azat party, the Ult Tagdyry (Fate of the Nation) movement and others. The meeting issued an appeal to President Nursultan Nazarbayev which contained 10 points. The main demands were the adoption of a new law on state language, opposition to the term Kazakhstani nation and the condemnation of the idea of trilingualism in Kazakhstan.
NEGATIVE ASPECTS WITHIN KAZAKHSTANS INTERETHNIC AND ETHNO-POLITICAL SPHERES

Let us now move on to discuss the main negative aspects of Kazakhstans interethnic and ethno-political spheres. First, there is no clearly formulated comprehensive blueprint of Kazakhstans policy on minorities. This situation helped the government maneuver in this sphere, i.e. allowed it to change its policy according to the situation. However, this factor has now become the main reason for tension in Kazakhstans ethno-political sphere because it a) allows different, often mutually exclusive, approaches to pursuing a policy on minorities to clash among, above all, the ruling elite; b) makes it clear that the government does not have a clear understanding of the development of the policy on minorities and its implementation; c) confuses the activities of government agencies in the ethno-political and interethnic spheres; d) is one of the reasons for minorities uncertainty about their future in Kazakhstan; e) creates grounds for politicizing issues of the interethnic sphere; f) reduces the willingness of Kazakhstans minorities to integrate and take part in nationbuilding. Second, there is no special body that fulls or coordinates the countrys ethno-political policy. Since it is not a government body, the Assembly of the People of Kazakhstan cannot legitimately coordinate the work of government institutions, and, rst of all, local executive bodies to fulll the current provisions of the policy on minorities. Third, principles, symbols and values have not yet been developed to unite and consolidate Kazakhstans ethnic minorities into one nation. As a result, processes of identication by citizenship are very slow. This problem stems from the incomplete consolidation of the state-forming Kazakh ethnos. This is demonstrated by the example of the constant inghting within the ethnos for economic, power and media resources (manifestations of tribalism), and regionalism, including the division between urban and rural Kazakhs. This means the titular ethnic group is still at a stage of a switch from ethnicity to a consolidated political society. Fourth, recent clashes between different ethnic groups living in Kazakhstan were a result of the inefcient government policy in the interethnic sphere. The fact that these conicts do take place in Kazakhstan from time to time allows us to suggest that there is permanent hidden tension in relations between the peoples of Kazakhstan. This happens because interethnic conicts are solved only after they break out without measures to prevent them. Moreover, there are grounds to believe that interethnic clashes become possible as a result of corruption and other shortcomings of government agencies when they pursue socioeconomic interests of one ethnic group at the expense of another. This was the case in the incidents in Aktau, Tengiz and Kazatkom. In these conicts local ethnic Kazakhs blamed the authorities for failing to protect their socioeconomic rights. Fifth, there are language and personnel problems. These problems are to do with ethnic Kazakhs dissatisfaction with the pace of the adoption of the Kazakh state language and its status on
Third, organizations of ethnic Russians are also actively working in Kazakhstans ethnopolitical sphere. The Russkiye (Russians) Foundation started issuing some sort of Russian ID cards to compatriots living abroad on 9 July 2009. At the initial stages these cards will be issued to citizens of Ukraine, Kazakhstan, Moldova and the Baltic states. Even though Moscow did not support the foundations initiative ofcially, the fact of issuing these cards cannot but raise concern, especially when a poll conducted by the www.russians.kz website showed that 86% of respondents (1,427 people) supported the idea of holding these cards as a moral proof of their connections with Russia.
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the one hand, and the Slavic ethnic groups concerns about the status of Russian and a switch in the language of paperwork to Kazakh on the other. In addition, both ethnic Kazakhs and minorities are dissatised with their social statuses. The former believe that their socioeconomic interests are being damaged, while the latter think that their constitutional rights to access to the political processes (government decision-making) are being limited. This problem is threatening to become a factor of divisions not only in Kazakhstani society as a whole but also among the elite of ethnic Kazakhs. Sixth, further socioeconomic and political problems are the following. 1. The opinion poll of experts showed that 22 experts (22.4%) thought that socioeconomic problems may worsen the situation in the interethnic sphere in any region to a greater extent because the current economic crisis has already sharpened socioeconomic and ethno-political moods of various ethnic groups of Kazakhstan. 2. 42 experts (42.8%) think that the redistribution of power and property has a high probability (from 6 to 10 points on a 10-point scale) to cause violation of civil peace and tranquility in Kazakhstan, while 49 experts (50%) said that poverty and unemployment had the highest probability doing so (from 7 to 10 points). Poor socioeconomic conditions, high crime rates and corruption in the law-enforcement agencies may create favorable conditions for the emergence of interethnic conicts within society. Seventh, interethnic clashes may be caused by criminal face-offs. Most recent conicts were rst sparked among young people in criminal showdowns, but later turned into ethnic clashes. We think that the emergence of the last two types of conicts in Kazakhstan is helped by several circumstances. First, ethnic minorities, as a rule, concentrate signicant trade assets in their hands, which means they become middlemen between producers and consumers, employers and employees, owners and lessees, the elite and grassroots. As a result, the minority in question gets hold of a dominant economic and social position compared to a majority. Even in the 1960s-1980s, when there was no great gap in personal incomes, ethnic minorities dominated the trade, services and supply spheres. This ensured higher real term incomes for them compared to the local, mostly ethnic Kazakh population involved in the healthcare, education and production spheres. Quick social and ethnic differentiation in the transitional period increased social and interethnic tension. The Soviet system used to stop social and interethnic conicts at the initial stage of their development by force, including interethnic conicts at personal level, whereas because of the weakening political regime and material differentiation which started in the late 1980s interethnic clashes became frequent. Any of these clashes could cause an interethnic conict. Describing ethnic minorities quick adaptation to market relations, D Dorokhov, Ye Palyutina and V Dyatlov coined the term trade minorities. Second, the specics of Kazakhstans reality are that interethnic conict as a rule does not break out because of the economic dominance of minorities, but as a result of the improper social behaviour of young people from ethnic minorities with respect to the youth of the ethnic majority, i.e. to ethnic Kazakhs. Many cases of criminal showdowns involving young people from ethnic minorities have taken place in Kazakhstan. The analysis of conicts (from conicts in the late 1980s to the one that took place only two years ago) between young ethnic Kazakhs and young people from ethnic minorities showed this. The situation is complicated by a negative stereotype of young people from Caucasus ethnic minorities whose behaviors are often treated as inappropriate or marginal by other young people. Therefore, complicated relations between young people from Caucasus minorities and young ethnic Kazakhs have become the target of widespread criticism and assume prominent place within the populations discontent about crime levels of Caucasus ethnic groups in general. This renders the native population feel disadvantaged, which in turn only intensies tension around ethnic minorities and projects negative attitudes towards all ethnic minorities, which have adopted their own rules, while we are being robbed in our own town. This sort of concerns is
PROSPECTS FOR THE DEVELOPME]NT OF KAZAKHSTANS ETHNO-POLITICAL AND INTERETHNIC SITUATION

The analysis of the present ethno-political situation in Kazakhstan allows us to conclude that it will further develop according to the following two possible scenarios if the present policy on ethnic minorities remains in place
1. POLITICIZATION OF CURRENT ISSUES IN KAZAKHSTANS ETHNIC SPHERE
1.1. Organizations of ethnic Russians will increase their involvement in the countrys politics. All conditions have been created for organizations of ethnic Russians in Kazakhstan to make their political demands. Russia supports the activities of Russian organizations in Kazakhstan. It is quite possible that this strategy of the Russian government is prompted by its treatment of signicant Russian diasporas as a basis for its geopolitical presence in CIS countries. Earlier on, Moscow tried to encourage the migration of those it regards as compatriots to Russia, whereas now, judging by all accounts, it will also support Russian diasporas in CIS countries (especially when the Russian governments program to encourage the voluntary movement of compatriots to Russia is failing). Moreover these processes will nd favorable conditions in Kazakhstan because the Russians loss of their status as the nation-forming ethnic group of the USSR is still a serious reason for their poor perception of Kazakhstans independence. This also explains ethnic Russians high level of readiness to politically oppose Kazakhstans ethno-political policy. As a result, it is quite possible that the Russian issue will become both one of the backbones of Russian-Kazakh relations and their bargaining chip. 1.2. Kazakh national patriotic organizations will become active in using the ethnic Kazakh populations discontent with the governments policy on minorities. Ethnic Kazakhs now make up a majority in almost all regions. Moreover the ethnic Kazakh population is growing not only because of ethnic Kazakh immigration but also thanks to natural growth. These circumstances will become the main reasons for the further deterioration of the socioeconomic conditions in rural areas in Kazakhstan and, consequently, the socioeconomic state of the ethnic Kazakh population prevailing there. This factor will increase 1.2.1. the native peoples discontent with the governments policy on ethnic minorities; 1.2.2. tension in relations between ethnic Kazakhs and other ethnic groups whose socioeconomic interests coincide with those of rural ethnic Kazakhs. Important factors that can worsen interethnic relations in Kazakhstan include the growing tension among some ethnic Kazakhs which is being formed as a response to the social and eco-
temptingly simple and convenient: the trader robs not because he is a dishonest person, but because he is not ours and the local population allegedly falls victim to ill-intentioned outsiders. This is how the mechanism of forming negative racial stereotypes works. In our situation all this points to the social isolation of young people from certain ethnic minorities from the majority of young people. At the same time, despite all this, factors which cause interethnic conicts in Kazakhstan are episodic. They do not manifest clearly and publicly. In many cases, interethnic tension is latent and appears not in physical violence but in hard-to-spot phenomena such as ethno-cultural isolation, ethnic and social isolation, economic competition and the high level of mutual distrust between ethnic groups. For example, when a socially closed ethnic group without strength and power refrains from open expression of its discontent and avoids open conict, there is still a conict, even though it is not an open conict.
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nomic stratication of society. This means that the existing disproportions in the distribution of social chances and material wealth, and a socio-cultural gap between urban and rural areas which are interpolated by some ethnic Kazakhs into the ethnic ground help shift existing tension into the sphere of interethnic relations. As a result, interethnic tension is growing among marginalized groups of ethnic Kazakhs who have moved from villages into towns. This tension is now translating into a growth in political demands set before the countrys government. However, the growth in discontent will be directed against the governments policy on ethnic minorities which, ethnic Kazakhs believe, does not meet the ethnic Kazakh majoritys social and economic demands. The side effect of opposing the policy on minorities is the growing psychological aggressiveness of some ethnic Kazakhs towards other ethnic groups which, they think, for various reasons have managed to obtain better socioeconomic opportunities than ethnic Kazakhs. Thus, in the given situation where there is no system of early diagnostics and prevention of interethnic tension and conicts in society, any potential conicts and tension in the interethnic sphere will be reduced to the ethno-political sphere. Moreover, there is a probability that any potential interethnic tension in rural areas and suburbs of major cities and regional centers which have attracted many rural ethnic Kazakhs will be caused by deteriorating socioeconomic conditions. 1.3. These factors may help reformat Kazakhstans party and political vessels and ll it with new content. It is becoming clear now that in the near future the radical wing of the opposition will oppose the government precisely in the ethno-political sphere. These circumstances mean that the success of the governments measures will soon depend in large part on its ability to meet the ethnic Kazakh majoritys ethno-political demands. 1.4. The growing political participation of organizations of ethnic Russians may become a precedent for similar actions by other ethnic minorities in Kazakhstan. In this context, a particular danger is posed in districts where ethnic Uzbeks and Uyghurs live compactly, especially when nationalist-minded Uyghurs are advocating the idea of self-rule through creating conditions for the establishment of administrative and cultural autonomy in Kazakhstan. It should not go unnoticed that during the clashes between young ethnic Kazakhs and young Uyghurs in Shelek and Malybay some Uyghurs put forward nationalist ideas and separatist slogans.
2. INCREASE IN INTERETHNIC TENSION AND ITS POTENTIAL CHANGE TO A STAGE OF OPEN CONFLICT
2.1. The escalation of ethno-political moods among the people of Kazakhstan may lead to the emergence of numerous hotbeds of interethnic conicts. The growth of political demands by organizations of ethnic Russians and Kazakh national patriotic movements will mutually encourage and increase tension and conict potential, above all, between ethnic Russians and ethnic Kazakhs. When there is no system of preventing interethnic tension and conicts, any potential clashes and tension in the interethnic sphere will be reduced to the ethno-political sphere. In other words, clashes will be caused by political demands of ethnic groups of Kazakhstan which are involved in confrontation between one another. There exists a higher probability that any potential tension in relations between ethnic groups will take place because of the deterioration of the socioeconomic situation in rural areas and suburbs of major cities and regional centers which have attracted many rural ethnic Kazakhs. These problems of the policy on minorities and the ethnopolitical sphere of Kazakhstan may well become the main reason for a deterioration of the ethnopolitical situation in the country and a decline in the governments reputation in the near future. 2.2. Ethno-political problems will lead to ethnic isolation. This process will most likely be reected in a growth in the level of confrontation between cultures of Kazakhstans ethnic groups. There are good reasons to argue that this situation is emerging already. First, the government apparatus is mostly made up of representative of one ethnic group. In this situation, dissatised groups of the population will often be blaming shortcomings of the government system, such

1. Results achieved in Kazakhstans nation-building sphere allow us to speak about a certain level of stability in interethnic relations. The main factor for interethnic stability in Kazakhstan is the maintenance of the balance of interests between ethnic groups living in the country. This prevents any privileged status on the grounds of ethnicity and discrimination against ethnic feelings. 2. Kazakhstan is now searching for a national idea which aims to adumbrate a state and political nation with a huge economic potential and leading position in the world. The implementation of this idea may drastically solve the issue of minorities in Kazakhstan. 3. The formation of a nation-state in the political context crucially depends on whether the elite and masses and all ethno-political groups living on the territory have interests in common. The quality of the nations elite is also an important issue with the main criterion being its competence to properly assess social processes and reform them in a desired way. 4. Structural changes in Kazakhstani society seem to approach an edge where it becomes necessary to specify values and set social norms and rules of the game which help maintain the balance and stabilize all subsystems of society, namely the economy, politics, the social and cultural spheres and the sphere of interethnic relations. 5. In the medium-term future Kazakhstan will have serious chances of survival and development only in case of minorities consolidation around the main ethnic group. The creation of a united nation is a long-term task. It is necessary that each ethnic group, occupying their place and preserving and developing their folk cultures, is rmly integrated into the main component of the population along the principle of one country one people. In other words, the creation of a modern state which has a multicultural population is impossible without a political union of ethnic minorities around the main ethnic group. This consolidation should be conscious and should aim to maintain a common legal and economic space and the joint protection of common interests on the international arena. 6. In actual fact, Kazakhstans experience in the sphere of interethnic relations which is in tune with the experience of other countries shows that it is hard to efciently regulate interethnic relations without the real consolidation of ethnic groups and the adoption of a preventive ethnic policy. 7. The ethno-political situation in Kazakhstan is now entering a problematic zone where the continuation of the current direction of the policy on minorities may politicize interethnic issues and increase the potential of interethnic conicts. 8. Kazakhstans ethnic Kazakhs and ethnic Russians will most likely show dissatisfaction with the governments ethno-political policy. 9. The inconsistent and non-coordinated nature of government agencies activities in the ethno-political sphere help increase tension in Kazakhstans interethnic sphere in many ways. 10. The absence of a comprehensive, clear policy on ethnic minorities presents the main reason for the governments inefcient work in the ethno-political sphere. 11. Kazakhstan practically lacks a policy for preventing interethnic tension and conicts. 12. Problems of the policy on minorities seem to lead to a situation where interethnic con-
as the lack of professionalism of ofcials, corruption and abuse of power, on the ethnic afliation of ofcials. Second, according to the theory and practice of ethno-political research, ethnic isolationism will inevitably increase ethnic phobias, prejudices and clashes of ethnic and cultural values. And third, many opinion polls have shown everyday racism to be widespread in Kazakhstan. It should be noted that according to the theory of ethnology and ethno-psychology, racism at the everyday level takes place mostly due to the emergence of ethno-cultural and ethno-political cracks caused by cultural and language contradictions.
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icts and tension will unavoidably be of an an ethno-political nature. This means clashes will take place because of confrontation between political claims of Kazakhstans ethnic groups against one another. 13. The main media which will be involved in ethno-political and interethnic conicts in the near future will consist of ethnic Kazakhs and ethnic Russians living in Kazakhstan. There is a high probability that tension between ethnic Russians and ethnic Kazakhs may become long-term and stable and be based on cultural confrontation. 14. Problems of the policy on minorities and troubles in Kazakhstans ethno-political sphere may soon become of the main reasons for the decline of the governments reputation and its approval ratings.
RECOMMENDATIONS
SYSTEMATIC MEASURES
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Specifying the tasks and functions of ethno-cultural centers in solving the stated problem of ensuring the account of diverse ethnic interests in the states policy on minorities which is dened in the legislation (Statute on the Assembly of the People of Kazakhstan, adopted on 16 April 2002); Systematic analysis of the interests and resources of Kazakhstans largest ethnic groups, and following from there a denition of (potential) conicts of interests between ethnic groups, main interethnic contradictions, and furthermore drafting and implementing measures to coordinate interests of ethnic groups; Instead of the situational approach to solving emerging and worsening interethnic conicts currently followed in Kazakhstan, attention should be shifted to the capabilities of expert examination of conicts. Experts would be able to realize a great amount of analytical, explanatory and corrective work in the regions; Expert examination of conicts also means the creation of a system of early diagnostics, monitoring and management of potential conicts to demonstrate the central government is capable of preserving stability in Kazakhstans interethnic relations and of preventing the ethnic card being played; An authorized body to unite all ethnic groups living in Kazakhstan should be set up by the Assembly of the People of Kazakhstan. Emphasis should be placed on strengthening integration, uniting and partner efforts. Integration, union and partnership do not mean the rejection of ethnic cultures, identities and traditions here. They mean instead shifting the stress to more common basic human ideals such as human rights, values, and putting collective interests over personal ones (i.e. over narrowly-dened economic, specic political and ethno-cultural interests); Adopting draft proposals for Kazakhstans policy on minorities and for the law about this policy. The absence of these documents is one of the main reasons for the currently inefcient work of the government in the realm of preventing and regulating interethnic conicts among society and within the ethno-political sphere. Creating a specialized government body with the sole aim to fully realize the ofcial policy on minorities and to unite all ethnic groups living in the country. These functions and tasks are dispersed now and their implementation is not systematic in any way. While Kazakhstans Security Council and the Kazakhstani presidential administration supervise and coordinate the activities of government agencies and public and political organizations in the sphere of interethnic relations, various elements of the policy on minorities are implemented at different levels by the law-enforcement agencies, national security bodies, the Kazakhstani Ministry of Culture and Information and by regional, district and town departments for internal policy.
The application of all powers of the government, local government bodies, the Ministry of Labor and Social Protection and its regional departments, the prosecutor-generals ofce and trilateral commissions on social partnership to do with the observance of labor legislation to prevent the discrimination of Kazakhstani workers by foreign investors (entrepreneurs); The adoption of efcient and regular control over foreign investors fulllment of their contract obligations to improve the qualications of Kazakhstani workers and train them to replace foreign low-qualied workforce and line managers. An analysis of reasons for foreign construction companies dominance in the countrys construction market (while major foreign companies and government agencies conclude contracts), the adoption of a mechanism to ensure Kazakhstani construction companies priority to provide services to government agencies and foreign companies which meet their quality and other requirements. In addition, the following measures should be adopted depending on their applicability:
1. IN THE SPHERE OF MONITORING AND RESEARCH
To adopt a system of training specialists and conducting research on the problems of peace and tolerance, violence and conicts, including as part of the disciplines of social psychology, ethnology, sociology, political science and history; To create interdisciplinary centers, groups and public journals, special publications and methodological literature on problems of tolerance for specialists and a wider audience; To create research groups and structures to monitor public opinion, interethnic relations and the activities of political, public and religious organizations to detect critical situations and draft recommendations to solve them; To increasingly use the press, radio and television to relay modern scientic ndings about the role and signicance of cultural traditions and intercultural dialogue.
2. IN THE SPHERE OF PUBLIC ORGANIZATIONS AND OTHER ENTITIES OF CIVIL SOCIETY
Political parties and movements should formulate principles and positions on tolerance and the prevention of extremism in Kazakhstani society in their programs based on constitutional and moral norms; Political parties and movements are advised to draft criteria and requirements to expel members who support extremist ideas and activities and to prevent the latter from occupying managerial posts; Form additional channels for cooperation between government agencies and political parties with ethnic groups and their public and political organizations; Religious communities and organizations should expand their activities to prevent violence and conicts in society and among those who have suffered forms of violence or discrimination and among those who are exposed to xenophobia and ultra-radical ideologies; Create community, district and town commissions or committees to monitor interethnic relations and react to critical situations in due course; Attract community leaders, the elderly, religious leaders and respected citizens to solve conicts, including talks as representatives of peoples diplomacy and observers and guarantors of the observance and fulllment of accords agreed on.
3. IN THE SPHERE OF IDEOLOGY
Formulate an ideological basis for uniting ethnic groups of Kazakhstan to achieve national unity, incorporating civil and historical-cultural values and symbols of ethnic Kazakhs that are important
SPECIFIC MEASURES
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for Kazakhstani society to develop national pride and prestige (for example, achievements in sport, cinema, literature and arts); Preserve multiculturalism and identities of Kazakhstans ethnic groups as the valuable basis of interethnic piece and accord and support patriotism to help Kazakhstans ethnic groups unite into a civil nation; Open one country one nation columns in national newspapers to discuss problems of ethnic groups of Kazakhstan and the preservation of interethnic and inter-religious harmony and Kazakhstans historical and cultural values; Set up an incentive system of grants helping expand works devoted to fully and more appropriately reect on processes of ethno-cultural union in Kazakhstan, on problems of uniting ethnic groups and on the preservation of interethnic and inter-religious dialogue; Regularly monitor press and electronic media outlets, websites and literature and products of the entertainment industry (computer games, lms and cartoons) to detect any attempts to incite racial, ethnic or religious enmity and hatred and calls for violence; To avoid mentioning the ethnicities of characters in media reports; Offer all-round support to childrens and youth media outlets to instill tolerance and patriotism.
4. IN THE SPHERE OF EDUCATION
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Teach Kazakh and Russian on a parity basis in schools and preschool establishments and create a system of teaching these languages in schools and universities; Conduct education work with children and their parents about principles of religious tolerance and harmony, including children and teenagers; React to negative stereotypes, interethnic dissonances and personal humiliation of people of different ethnic and racial background among children and young people; Stop activities and ban symbols of separatist and extremist groups and organizations in schools and universities; Send pupils and students on trips to expand their knowledge about the country and its peoples; Promote arts based on various folk traditions and cultural heritage and create modern multimedia products to unite Kazakhstans ethnic groups into one cultural and language space; For specialists and government education bodies to draft methodological recommendations for schools to foster patriotism among schoolchildren and instill negative attitudes towards violence and interethnic intolerance in them; Promote arts based on Kazakhstans folk traditions and create modern multimedia products about the commonalities of the cultural heritage of the people of Kazakhstan. Regularly conduct Days of the Unity of the People and the Common Ground of the Cultures of Kazakhstans ethnic groups and widely use the opportunities to integration offered by ethnic and folk holidays (Nauryz, Maslenitsa (Pancake Day), Sabantuy and others) by celebrating them publicly.
5. IN THE SPHERE OF GOVERNMENT
For parliament to amend the laws on language, on education, on the media and on public associations in a way to harmonize interethnic and inter-religious relations in the country; Increase the attention government agencies with respect to the apt and fair solution of socioeconomic, cultural and language problems to avoid their politicization on an ethnic basis; Consistently ensure constitutional rights that guarantee the equality of citizens regardless of race and ethnicity and that assure the freedom of religion;
Ensure efcient judicial practices to prevent and punish incitement of ethnic and religious hatred and discord; Train civil servants, including the police, in the sphere of interethnic relations and in methods of ghting group social tension and conicts and teach them specics of working with their ethnically and religiously diverse population; Promote civil, historical and cultural values that are common to all ethnic groups of Kazakhstan and support patriotism, helping the establishment of a civic nation; Consistently and generally thwart any manifestation of intolerance and violence and prosecute those who commit ethnically or religiously motivated violence; Create a state public administration system of monitoring interethnic relations and preventing extremist deeds. Also advance the work of human rights commissions, ombudsmen, NGOs, cultural centers for minorities (based on the state social order) and the Assembly of the People of Kazakhstan; Create an anti-crisis group and draft a preventive strategy of urgent measures to prevent emergency situations caused by interethnic tension; Improve legislation and directives in the sphere of internal migration, protect internal migrants rights, help internal migrants and ethnic Kazakh immigrants in towns socialize and adopt a set of measures to reduce risks likely to occur with chaotic internal migration; Draft practical measures to create regional and urban centers for the employment of internal migrants, taking into account the needs of urban labor markets (i.e. migration terminals and databases of job vacancies); Draft preventive measures to eliminate economic causes of illegal external migration by stopping illegal activities of commercial structures offering services of illegal employment, documentation and legalization of foreign citizens; Nominate representatives of ethnic minorities who speak uent Kazakh for post of the civil service.
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CHAPTER 2 KAZAKHSTANI CITIZENS PERCEPTION OF THE COUNTRYS SOCIO-POLITICAL AND SOCIOECONOMIC SITUATION
(FINDINGS OF SOCIOLOGICAL SURVEYS)
(FINDINGS OF SOCIOLOGICAL SURVEYS)

by The Central Asian Foundation for Developing Democracy
ABSTRACT
The global nancial crisis which broke out in 2008 differs in its dimension from other similar incidents and is more or less affecting all countries. It severely concerns developing countries where the national community has not been established yet and the government institutions are weak or dysfunctional. Therefore, experts believe that the main consequence of this crisis is the reconsideration of the functions of all signicant political and economic entities with regard to the development of the crisis and its withdrawal It is well-known that one of the rst countries hit by the crisis was Kazakhstan. The crisis showed its rst signs in 2007 and grew stronger in 2009. This is why our given task was to analyze how the nancial crisis affected the everyday life of Kazakhstani citizens; the populations predominant mood; the origins of the economic crisis and the possible date of its ending; and nally the correlation between the activist and paternalist behaviors among the countrys population. Furthermore, it was also valuable to nd out how the population evaluated the governments anti-crisis measures and the political situation in general. For the analysis we used information obtained through an opinion poll that the Central Asian Foundation for Developing Democracy conducted in February-March and August-September 2009. The poll was carried out in 14 regions and the two biggest cities Almaty and Astana. The rst poll involved 1,192 respondents and the second one 1,197 respondents adumbrating a group of adults representative of the population by sex, age and place of residence. In addition, the project used other data collected by polling companies that were published in the press, including the Kazakhstani Institute for Social and Economic Information and Forecasts report Barometer of Crisis 2009. The poll was carried out in Kazakhstans eight regions Almaty, Mangistau, North Kazakhstan, South Kazakhstan, West Kazakhstan, East Kazakhstan, Karaganda, and in Almaty. Multistage and quota sampling was used and the total number of respondents was 1,400.
2.1. THE ECONOMIC CRISIS AND SOCIOECONOMIC

SITUATION IN THE PERCEPTION OF THE KAZAKHSTANI CITIZENS
The following social indicators, based on the respondents positive, neutral and negative responses, were used in the poll: level of contentment with life, evaluation of the economic situation in the country, evaluation of the familys living standard, and evaluation of the political situation. The collected information allows us to analyze the dynamics of the populations social state during the whole year. The opinion poll shows a certain fall in the social state indicators in accordance with sociological measurements, but although various factors show various dynamics it still can be noticed that Kazakhstani society is gradually adapting to the crisis situation. As the poll shows, there can be observed uctuations in the respondents evaluation of the economic situation in the country. In the spring 26% of Kazakhstani citizens believed that
CHAPTER 2. KAZAKHSTANI CITIZENS PERCEPTION OF THE COUNTRYS SOCIOPOLITICAL AND SOCIOECONOMIC SITUATION (FINDINGS OF SOCIOLOGICAL SURVEYS)
2.2. KAZAKHSTANI CITIZENS PERCEPTION OF THE COUNTRYS SOCIO-POLITICAL AND SOCIOECONOMIC SITUATION
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the situation in the country was stable but their number reduced to 15.7% in the second poll. Whereas the number of respondents, who noted the economic crisis in the country, grew by 17%, in the rst poll only 41.7% of the respondents said that the countrys economy was in a state of crisis, their number grew to 58% in the second poll. This indicates a growth in the level of social concern.
Table 1. Results of the evaluation of the countrys economic situation in %
Economic growth
12,8 6,9 26,0 15,7 27,1 34,8 14,6 23,2 19,5 19,4
Economic situation is stable
The countrys economic situation is unstable, before a crisis
Crisis
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No comment
0,0
5,0 March 2009
10,0
15,0
20,0
25,0
30,0
35,0
September 2009
At the same time, the results of the poll prove that the countrys population is not inclined to blame the crisis on the authorities. The majority of Kazakhstani citizens do not desire to criticize the authorities actions as they believe the authorities are capable of resolving issues related to the crisis. Even though more than the half of the respondents did not observe any positive change in overcoming the crisis, they expect that anti-crisis measures will yield results soon. In this context, the majority of the respondents believe that the economic crisis in Kazakhstan is a result of external reasons and this is why the countrys leadership is partially responsible for the state of affairs in the country. But it should not be ruled out that eventually, as the crisis grows, these estimates may retreat to the background and it is possible that the president and the government will be blamed, above all for their ineffective moves to overcome the crisis. What is more, these tendencies can already be traced back in the respondents replies. At present, Almaty citys residents have critical opinion. According to the institutes report (KISEP) 56.6% of Almatys residents believe that the government is inefcient in implementing its anti-crisis program. About a third of the population in Karaganda (29.1%), in the region of West Kazakhstan (31.4%), North Kazakhstan (28.4%) and East Kazakhstan (29.4%) also believe that the governments anti-crisis actions are not efcient. Despite the fact that the Southern regions suffered from the crisis to a greater extent people in these regions are continuing to estimate the implementation of the program positively. The above-mentioned facts show that the populations complaints about the government increased, which is linked to the growing prices of food and public utilities and the growing unemployment rate.
Table 2. Levels of the populations contentment in %
70,9
Satised
63,9
21,1
Dissatised
26,2
8
No comment
9,9
10 March 2009
20
30
40
50
60
70
80
September 2009
The polls show a steady fall in the level of contentment with life and the current families living standard. A signicant part of society was affected by the crisis but these assessments changed rather moderately. About 70% of the population was satised with their lives in February and March 2009, whereas the September poll established that this index reduced to 63.9%. Consequently, the number of those, who were not satised with their lives, grew to 21.1% and 26.2% respectively. Changes in life contentment are observed in almost all regions. The worst indicators were found in Zhambyl (73.3% and 54.3%), Almaty (69.9% and 57.9%), East Kazakhstan (63.5% and 52.7%) and South Kazakhstan (79.9% and 71.5%). The population in the northern regions
But anyway, the nancial crisis affected the majority of the countrys population (70.9%). Although it has to be mentioned, that the impact was assessed as partial. Only a fourth of the countrys population said that they did not feel the economic crisis. However, despite the deteriorating nancial situation, Kazakhstani citizens have optimistic expectations about the duration of the current nancial crisis. The majority of the countrys population believes that there will be positive changes of the situation in the near future and considers that the crisis will continue for another two-three years at most and one year at least. Only a tenth of the countrys population (9.6%) have the opinion that the crisis is long term and do not expect the crisis to end soon. Nevertheless, the poll established that the nancial crisis impact on the countrys economy was negative. The dominating part of the population considers that the crisis will denitely affect them. The respondents sharing this viewpoint are divided depending on the scale of consequences: 34.9% said the crisis would impact the entire economy of the country, 37.4% believe that negative consequences will appear in separate sectors of the economy. Although these mass estimates of the economic situation in the country may be abstract and rely mainly on background information, the index of self-evaluation of the nancial state provides information about how families do feel.
37
suffered less and in the Kostanay Region this indicator is improving contrary to the nationwide trend. The March poll put the level of life contentment at 45.9% whereas the autumn poll showed the indicator had grown to 52.1%.
Table 3. Levels of the populations contentment in % listed by regions (oblast)

59,1 65,3 61,4 77,8 57,9 69,9 75,7 88,7 52,7 63,5 54,3 73,3 70,3 72,8 65,6 76,1 52,1 45,9 78,3 83,7 69,4 68,5 64,7 64,4 63,4 78,8 71,5 79,9 58,8 65,3 66,9 61,4
0,0 20 September 2009 40 March 2009 60 80 100
Akmolinsk Aktyubinsk Almaty Atyrau East Kazakhstan Zhambyl Western Kazakhstan Karaganda Kostanay Kyzyl-Orda Mangystau Pavlodar North Kazakhstan South Kazakhstan Almaty (city) Astana
At the same time, the signicance of social and psychological parameters, such as personal life prospects, condence or the lack of condence in future, is growing under the crisis circumstances. In this respect, an alarming fact is that the majority of the population remains pessimistic about prospects and hopes for improvement in their lives. However, these assessments of the economic situation did not visibly affect the level of optimism in the country. While optimists accounted for 45.3% in the rst poll, the index ranging between 35% and 55% in the regions, the number of optimists grew to 46.3% at the end of the year. Although it is remarkable, that the level of optimists did not remain the same in all the regions.
I am condent and optimistic
45,3 46,3 28,4 22,5 16,5 18,4 3,9 6,2 5,9 6,5
I am calm, although I do not expect advantages for myself
I am uneasy
I am afraid
No comment
10 March 2009
20
30
40
50
September 2009
This index reduced in a number of regions, particularly in Mangistau (57.9% and 49.3%) and Pavlodar Regions (52.3% and 50.7%) and in Astana (55.7% and 51.7%). The number of optimists grew in the Atyrau Region, where optimists accounted for a third of the population (37.6%) in spring and 44.5% in autumn. The high level of optimism inuences the strategy of behavior chosen by Kazakhstani citizens in the crisis situation. So a third of the countrys people show an activist model of behavior, that is that they rely on their own strengths in resolving crisis-caused problems. Representatives of this group are known for their rational activist position on the governments functions to protect the population in the crisis situation: The government must only create conditions for everyone to independently resolve his or her problems. According to the poll, 46.2% of the countrys people maintain the active behavior during the crisis, rst of all, looking for additional sources of income. In the second poll this group accounted for 39% of the respondents. Moreover, 14.6% of the respondents in the rst poll and 12.7% in the second one said that they would change their occupations, and 4.7% and 6.6% respectively will apply to an employment bureau and other social services. At the same time, the other part of Kazakhstani citizens maintains passive behavior 43.8% (in the rst poll) and 48.9% (in the second one) will economize money and cut their needs if their nancial situation deteriorates. A radical and irreconcilable way of behavior is typical of respectively 11.3% and 13.2% of the respondents. This group condently said that they would protest. A larger part of the population (55.1%) more or less relies on the governments help to resolve crisis-caused problems. Nevertheless, the majority of these people just partially hope that the government will resolve the countrys crisis-related problems. In general, 45.9% of the countrys population, which is almost half of Kazakhstans citizens, is condent, that the government should help the population to resolve the crisis-caused problems. Thus, one can say that among Kazakhstans population dominates a paternalistic attitude because the majority of the people rely on the government to resolve the main crisis-related problems.
Table 4. Distribution of answers to the question How do you feel about the future? in %
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Under these circumstances, quiet forms of protest, such as expressing negative reaction to some or other measures in a close circle of the kith and kin, are very common. This is what 24% of the respondents in the rst poll and 26.5% in the second one thought. A part of the protesters, who appeal to governments help, are principally not interested in acting radically. In both polls, the number of those, who were geared up for radical moves was insignicant: only 9.6% and 12.7% of the respondents in the two polls respectively were ready to take part in protest actions to assert their rights.
Table 5. Distribution of answers to the question How will you express your dissatisfaction? in %
I participate in protests in order to stand up for my rights
12,7 9,6
I am going to express my negative opinion, but I will not participate in protests
26,5 24,1
No, I will never participate in protests, even if there are reasons for it
30,2 34,7
40
There are no reasons to protest
25,9 28,7
No comment
4,7 2,9
10
20
30
40
September 2009
March 2009
At the same time, a majority that means a third of the people categorically refused to take part in protest actions, which was the reaction of 34.7% and 30.2% of the respondents in the rst and second polls respectively. Another third of Kazakhstani citizens did not have any reasons for protesting at all. They accounted for 28.7% of the respondents in the spring poll and 25.9% in the autumn poll. The basic reasons that can cause protests include food price increases (36.3% and 31.7%), large-scale redundancies (22.5% and 27.3%) and unreasonable increases of public utility charges (15.6% and 19.9%). These three reasons were the leading main reasons during the year. There was a little decrease of the increase of food price indicator, which is most likely linked to the respondents submission to further price increases in the crisis situation. It is also important to mention that the factor of ethnic discrimination appeared in the group of the most acute problems. In the rst poll, about 15.9% of the respondents noted this problem, whereas in the second probe 11.8% still believed, that this problem remains topical and acute. It is still unclear whether the fall of the index was accidental or whether it proves some long-term trend.
AB
Increase of food prices
31,7 36,3 19,9 15,6 27,3 22,5 11,8 15,9 8,2 5,9 15,3 7,5 9,8 11,6 14,5 10,9 6,9 5,8 8,8 10,5
0 10 20 30 40
Unreasonable rise of charges for public utilities
Mass unemployment
National Discrimination
Illegal actions of police authorities
Irresponsibility of local authorities
Carelessness and amateurishness of medical workers
No causes
Other causes
No comment
September 2009
March 2009
Thus, the results of the poll show the deterioration of the social situation (despite the high level of optimism and expectations to overcome the crisis in the near future). The countrys southern regions suffered most from the crisis and as is generally known these regions are subsidized and the majority of low-income population live in these regions. Thanks to the high level of optimism, the level of protest mood is low. In general, the number of people, who are ready to stage rallies, is small and Kazakhstani citizens prefer to express dissatisfaction with their conditions in peaceful ways.
BOUT??
2.2. PUBLIC OPINION ABUT THE GOVERNVENTS

MANAGEMENT OF THE CRISIS
The studies of the social mood show that the economic crisis has not acquired a nature that could threaten the countrys social and political stability yet. Nevertheless, there exists some protest potential in society that may grow and nally pose threats and risks. However, the scale of these tendencies is still insignicant.
Table 6. Distribution of answers to the question What may cause your discontent? in %
41
42
The dynamics of these mood trends during the year show that the expectation of a quick way out of the crisis coupled with the hope that the president and the government would manage to achieve positive changes decreased. Positive and optimistic estimates, which had been made at the beginning of the year, became pessimistic at the end of the year. Despite high ofcials pledges that the crisis has already reached the bottom and things have started to improve, people became deeply skeptical about the governments ability to improve the economic situation. Undoubtedly, not only possible scenarios of economic development but also the efciency of the ofcial policy on different population groups, which suffer from the crisis, determine the peoples reaction to the crisis. The opinion polls show that people still trust the authorities. The citizens trust is, as is generally known, a special source of the governments authority and at the same time an indicator of its efciency. It should be noted that the trust people show depends mainly on the government branches and levels and ofcials heading them. Based on the polls, it can be said that the people trust the executive bodies more than the representative. According to the poll results, the majority of the countrys population positively assesses the work of the president and the government as their shares ranged from 87.8% (in the rst poll) to 75.6% (in the second one) the president and from 71.2% to 63.6% the government respectively. There is also great condence in central government bodies and overall in the president, who received 72.3% and 69.8% of the respondents votes, while the respondents trust in the government ranged from 55.9% to 48.7%. As for the regions, there generally was a high level of condence in President Nazarbayev, ranging from 66.7% to 78.5%, followed by the government, which received fewer votes. The governments work was criticized in Southern Kazakhstan (Almaty, Zhambyl and Southern Kazakhstani Regions). But undoubtedly, the deteriorated social mood inuenced and affected these assessments. As mentioned in the rst section of the annual report nancial security deteriorated in the countrys southern regions, which led to a fall in the social mood. At the same time, the results of the polls make it possible to maintain that the Kazakhstanis mass consciousness believes that the government should play the dominant role in economy, the politics and the management of property. This idea remains very steady and makes it possible to assume that there will be no signicant changes in this eld in the near future. People still regard the government as the key body for regulating society. However, decisions and actions by government institutions are not enjoying public support but at the same time they are not causing mass protests. Probably, the given situation is a result of the authorities ability to create public condence in the success of their policy. That is why the people approve of the governments anti-crisis program. According to the poll results Kazakhstani citizens are complaining about the efciency of the government system. This mainly relates to the institutions, which were designed to express and protect the citizens interests. The polls show that the institutions designed to act in favor of society, which is to express and represent the citizens interests, enjoy less support from the people than the executive bodies do. In the peoples eyes the work of the representative bodies, public organizations and political parties is least efcient. These organizations are coping with their tasks and responsibilities to the least degree. On average, about 50% of people have condence in the two chambers of parliament; a third of Kazakhstans citizens trust political parties and a little over 30% trust the non-governmental sector. Results listed by regions show that representative bodies enjoy the least condence: in the Almaty Region (23.2%), the Zhambyl Region (48.3%), the Eastern Kazakhstan Region (30.2%), the Southern Kazakhstan Region (19.6%) and the Kostanay Region (13.5%). At the same time, it should be noted that respondents condence in the media grew from 42.3% in the rst poll to 58.4% in the second one.
A low rating of condence was observed regarding judicial bodies. Less than a half of the respondents, that is 42.5% do not have condence in the judicial system and 37.8% do not have condence in the law-enforcement bodies. These data may indicate the fact that on the one hand the respondents are not well informed about the activities of bodies designated to represent and protect the citizens interests on the other that these activities are absent. A quite low level of condence was taken down for institutions representing the local government, which are the regional, city, town and district administrations. The rating of condence in these bodies ranged from 32.3% to 43.6%. The least condence in regional bodies was observed in the Almaty Region (28.3%), the Zhambyl Region (32.8%) and the East Kazakhstan Region (25.4%). Correspondingly, public condence in regional governors was low in the Almaty Region (21%), the Zhambyl Region (38%), the East Kazakhstan Region (42%) and the Mangistau Region (44%), whereas the condence in the governors of the Aktobe Region (77%), the Kyzylorda Region (76%), the North Kazakhstan Region (74%) and the Karaganda Region (71%) was high. At the same time, the opinion that local government bodies are inefcient is turning into some sort of axiom for all the strata and groups of the population. Respondents of different ages and income, who live in various settlements and show completely different views, negatively assessed the work of local bodies. Representative is also that the assessments of the activities of regional administrations do not depend on how well people are familiar with the activities of the ofcials, that is whether they base their assessment on their personal relations with local administrative bodies or whether they simply know about them by hearsay and therefore assess their activities approximately or roughly. Responses received during focus group discussions prove that respondents, who coped with ofcials activities personally and those, who learnt about their activities by hearsay or from the media, assessed the activities of governors and mayors nearly equally. Because of this, one may conclude that the majority of ordinary citizens have a xed image of the local authorities as an inefcient institution. The image of the authorities chronic inefciency is not changing in any way regardless of improvements or deterioration of peoples wellbeing, positive or negative economic moves and positive experiences between citizens and the authorities. These characteristics were observed during the past several years. In other words, local bodies remain inefcient for the people and the people associate local ofcials with dishonorable bad bureaucrats. Moreover, the population considers that the local authorities are sluggish mainly because the efforts that they put into resolving problems on local level often yield inadequate results. As a consequence people regard local bodies as structures, which oppose them and what is more ignore their problems. According to opinions voiced during focus group discussions, respondents believe that there is virtually no way of upholding their rights and interests in court. They also believe that it is impossible to settle disputes and discords with local authorities except for using informal contacts, private connections, necessary friends, etc. Due to that people regard themselves as isolated from the authorities and regard local bodies as bulky and sluggish. Respondents also shared the opinion that the population did not have any inuence on the work of local authorities. Undoubtedly, this situation emerged because other institutions designed to be an alternative to government structures are weak. Above all, this relates to legislative bodies, political parties and the judiciary. In addition to that it should also be stated that Kazakhstani citizens are focused on central government bodies, whereas they do not regard local authorities as decision-making political forces. Since local government bodies do not draw the agenda, nor they determine ways of further development, they are treated as institutions that are designated to implement programs developed by the government and the presidential administration. This allows local authorities to remain isolated from the public contrary to central government bodies and that
43
is why the population believes that there is no other institution that is more efcient than the presidents will. Summarizing it should be paid attention to the point that the crisis situation demands a more efcient government, because the respondents believe that the efciency of the government and its ofcials is very low at present. The economic crisis aggravated this problem. Local government bodies real status became signicantly lower than their ofcial status. This situation makes local authorities lose their inuence on society and this is especially fraught with serious consequences during a period of crisis. It is highly possible that the situation will get out of control, if the economic situation deteriorates further.
2.3. KAZAKHSTANI CITIZENS VIEWS ON KAZAKHSTANS

PARTY SYSTEM AND POLITICAL SITUATION
44
From the countrys citizens point of view the parties and political system were sufciently stable and inertial in 2009. Even more at the beginning of the year the authorities did not take any steps that could prove their intentions to democratize the social and political situation in the country. This kept political stability indicators unchanged during the whole year. Moreover, negative expectations from the crisis did not prompt the citizens to rethink their condence in the authorities. As a result, the polls showed that most people could not see any signs of the political crisis in the country. A larger part of the citizens (64.3% and 68.7%) believes that the economic and political situations in the country are developing in the desired direction, there is a due order and nothing is threatening democratic achievements. The opinion polls established that society was ready to support the authorities passively and trust them. It is not ruled out that the general opinion about
Table 7. Rating of the prominence of the political parties in %

Democratic People's Party 'Nur Otan' Democratic Party of Kazakhstan Ak Zhol National Social-Democratic Party (NSDP) Kazakhstani Social-Democratic Party Auyl Communist Peoples Party of Kazakhstan Communist Party of Kazakhstan Democratic Party of Kazakhstan z Democratic Party Adilet Party 'Rukhanyat' Party of the Patriots of Kazakhstan People's Party 'Alga' Did not vote 0,0
71,8 76,5 37,9 41,7 0,7 0,9 2,9 2,6 3,8 2,7 4,7 5,5 3,2 1,8 0,7 0,6 0,2 0,3 0,3 0,3 0,5 0,6 11,1 9,3
20 September 2009 40 60 March 2009 80
Democratic People's Party 'Nur Otan' Democratic Party of Kazakhstan Ak Zhol National Social-Democratic Party (NSDP) Democratic Party of Kazakhstan z Kazakhstani Social-Democratic Party Auyl Communist Peoples Party of Kazakhstan Communist Party of Kazakhstan Party of the Patriots of Kazakhstan Party 'Rukhanyat' People's Party 'Alga' Did not vote No comment 0,0
67,8 62,4 3,2 4,3 2,6 2,2 1,6 1,8 0,9 1,2 0,9 0,6 2 1,8 0,6 0,5 0,4 0,3 0,4 0,4 6,7 8,6 12,8 15,9
20 September 2009 40 60 March 2009 80
the political situation was based on the premise that many respondents did not wish to disclose their true political views to interviewers, fearing to be misunderstood or for other reasons. Just a small number of respondents (12.6% and 15.8%) said that there was a need for reforms of evolutionary character. Other respondents (6.7% and 9.5%) were not satised with the current policy. It should be noted that the specic gravity of this group is not high. The polls results also show that there were certain noticeable shifts in the public opinion. In particular, the need for security was replaced by the need for stability. Most likely, this explains the greater approval of the president, who personies for Kazakhstans citizens the hope for security guarantees. Taking the stabilization trend the vector itself is of course positive. Although under Kazakhstans current circumstances this trend is becoming increasingly excessive in conservatism with every passing year. Obviously, the key factor in determining the public opinion about the social and political situation in 2009 was the publics specic level of contentment with life and its individual aspects. The presidential administration, which is the main regulator of political processes, also made a contribution by establishing the manageable party system. The categories, which limit the system and which were established by the presidential administration such as manageability, the presidents high rating and the dominant party, reected in the public opinion in 2009. In the respondents opinion, the pro-presidential party Nur Otan remained dominant among the other parties and preserved its large electorate basis. On average, about 65% of respondents were ready to vote for it. Indisputably, the support for Nur Otan is motivated by the fact that potential voters usually associate it with the authorities and the president. Although logically, considering the economic crisis in the country, increases in food prices and the growing unemployment, the ruling partys rating should have reduced at least by several points.
Table 8. Distribution of answers to the question What political party would you vote if an election were to be held today? in %
45
During the whole year there could also be observed a signicant growth in the peoples distrust of political parties and their alienation from them. The attitude of many Kazakhstani citizens can be not only described as distrustful but also as sharply negative at times. Moreover, Nur Otan is the party of the ofcials and the negative attitude towards ofcials still remained in society. However, the Nur Otan party was on top of the rating and kept the absolute leadership during the whole the year. Of course, the fact that a respondent chose a certain party during the poll does not mean that this citizen will vote for that party. In addition, elections in our country are becoming more like a ritual and they are not regarded as a tool that inuences the political future. Nevertheless, the partys continuing high rating can be explained by the fact that the party has not managed to master the functions of the dominant party yet and to become a dominant party in peoples opinion. Nur Otan still has to fulll this task in the future. At the same time, despite the fact that the party is part of the ruling regime, it legalizes political decisions through its channels and provides more or less control over the lawmaking body. In addition it should also be mentioned that Nur Otan, which was the absolute leader in the political arena during the year, in so far exceeding even its closest opponent, began to retire from the problematic segments of society. It became obvious that it is gradually quitting to be the party of the socially vulnerable groups and this is why the party should target specic social groups, their problems and demands in its information campaign.
Table 9. Distribution of answers to the question Which political parties are taking an active role in the socio-political life of your region/ city? in %
Democratic People's Party 'Nur Otan' Democratic Party of Kazakhstan Ak Zhol National Social-Democratic Party (NSDP) Communist Peoples Party of Kazakhstan Communist Party of Kazakhstan Kazakhstani Social-Democratic Party Auyl Party 'Rukhanyat' Democratic Party of Kazakhstan z Party of the Patriots of Kazakhstan People's Party 'Alga' Did not vote No comment
46
75,5 71,6 8,3 7,5 4,9 3,9 0,9 1,8 4,7 3,7 2,1 1,9 1,9 1,3 1,8 2,6 1,2 1,1 0 0,1 4,5 8,7 25,6 19,8
0,0 20 September 2009 40 March 2009 60 80
The Ak Zhol party ranked second following Nur Otan during the year. As a result of the polls, its supporters accounted for the average of 3.7% of respondents. Though the party with such a level of support was not able to reach the 7% barrier, it was still popular among the population. The partys popularity rating did not change signicantly compared to other parties, so that it reached quite high results; 41.7% (in the rst inquiry) and 37.9% (in the second inquiry) of the respondents said that they know the party. In the public opinion the party usually shows opposition only within certain limits so that it does not harm the ruling party. Nevertheless, the party slowly but steadily lost its position because its potential is exclusively based on its past activities. The other opposition parties, in the respondents opinion, did not show activity in 2009. They were not active and purposeful enough and their short-term activity, which could be observed early in the year, quickly turned into political inactivity. As a result, the polls show that none of the opposition parties managed to claim reputation and citizens condence and it seems that they will not be able to gain importance. To a great extent this was the result of the opposition parties lack of attention to acute socioeconomic problems of a signicant part of the public. The respondents also noted that certain discord between the opposition parties also decreased the citizens condence in these parties. According to this, one has to stress that the nuances of the opposition parties positions are not able to attract a broad support and that their slogans, programs and proposals are poorly targeted. As is known people are not interested in distinguishing the tiny differences in the parties positions. However, despite signicant difculties of objective and subjective nature, the opposition continued her pointwise work during the year. In detail, NSDP and Azat party united, which allowed the latter to go beyond the narrow limits of its own-caused self isolation positioning itself as national and patriotic party. At present, the united party is demonstrating big political opposition ambitions and claims high repute but the party has slim prospects. Even with the united electorate, the new party has little chances of overcoming the 7%-barrier and there are not enough grounds to assume that it will manage to increase its electorate signicantly within a short period. In general, the political parties inuence is very limited, as they have no inuence on the public opinion. Certainly, today parties form an integral part of political life but they can only indirectly express the interests of different social groups. Undoubtedly, a key role plays the space, which the authorities left for other parties except Nur Otan. But there is simply no place for developing attractive brands that could be popular in society. The opinion polls also prove that many people are not inclined to support any party and are mainly focused on their private perception of the candidates. This is why the declared party sympathies in modern times mostly indicate the populations general perception of specic leaders and stereotypes but not their readiness to demonstrate rational electoral behavior. The inuence by political parties including Nur Otan on the social and political situation was extremely limited during the year: consequently the peoples interest in parties decreased. As the parties had no aim, on which they could focus their efforts, they found themselves deprived of the real sense of their work and continued to use the merger as the main subject. Connected to that it was more than obviously, that political programs have no signicance for the parties current existence because these political programs were simply not designated for implementation. In addition, it has to be mentioned that almost all parties activities bypassed the real interests and problems of social groups. More often the parties acted simply spontaneously and their attempts to use the crisis situation in order to implement their political goals were quite episodic. So there is no need to speak about the parties real inuence on government bodies. Thus, based on the polls, it can be concluded that no political party rmly determined the political climate in 2009. This also concerns the Nur Otan party, which has a mixed and contradicting electorate and has a signicant central space in the political spectrum. The basic reason
47
was that there was no topical or general space for parties to unite and cooperate. The Nur Otans proposal about life presidency, as part of the leader of the nation project, did not receive any response from party members and government circles and disappeared gradually. Moreover, it did not inuence the years political agenda in any way. As a result, the opposition parties continued to fade away in the populations view. During the crisis year, no new party was set up in the country. The president himself still managed to keep his rating, but a certain role played the regimes control over the mass media, above all the television, where critic of the president is more or less forbidden. Although the activities of the Nur Otan party on the political level did not end, the peoples social mood did not get represented in these activities.
2.4. CONCLUSIONS AND RECOMMENDATIONS

From the authorities viewpoint the economic crisis in the country already started to grow, whereas the countrys population has just started to experience the crisis. It seems that the authorities and society are starting to exist in different information spaces, which bears the danger that they lose the contact between each other. The opinion polls made it possible to record the gradual increase of the clash between the image, the reality presented by the authorities and the social mood. While the media, following the single ideological setting, constantly stress that the worst of the crisis is already left behind and that they are working to overcome its consequences, an absolutely contrary opinion appears in society. This emerging gap may negatively affect the social and political situation in the country. First of all, the gap between the social mood and the media image, which is provided by the authorities, is sharply reducing the authorities chance to really inuence society. This is devaluing one of the authorities basic administrative resources. Secondly, the people may gradually lose condence in the authorities, which undermines the basis of belief that the governments current anti-crisis measures will really work. From the political viewpoint, this is a quite alarming tendency, which is conrmed by the sharp fall in reputation of the authorities among population of different social and economic backgrounds. Particularly, the poll results show that regional government bodies reputation is low. Moreover, the polls prove that the rst spontaneous reaction to the crisis was a signicant reduction in individual consumption, which obviously affects the governments opportunity to cope with the crisis and its consequences. This forces the population to design their own program to overcome the consequences of the economic crisis, for instance social protest. Although the level of protest availability is not high now, the population decreases its expenses on food, home appliances, clothes and holidays. However, this condition may not last very long and the populations discontent may take active and aggressive forms. It is not excluded that Nur Otans high political rating may change all of a sudden, which the authorities would not approve of.
48
2.5. RECOMMENDATIONS
Despite the widespread opinion that the countrys crisis began due to external factors, a relative majority of respondents believe that the structures, which allow overcome the crisis, are situated inside the country. A Majority of people believe that actually Kazakhstans leadership is responsible for overcoming the crisis. Therefore it is reasonable to pay attention to the governments activities, which directly inuence the social mood, especially the solution of social issues. That is why special emphasis should be laid on the countrys social development, which means to draft social programs in accordance with the key areas of the governments activities.
ENHANCING THE GOVERNMENTS SOCIAL POLICY
In 2009, the situation was more or less certain for the main part of the population, but as economic recovery is not visible for the ordinary citizen the next year apparently will be difcult. The crisis will inevitably unite certain parts of the population as a result of unemployment. This will make the majority of adults unemployed, which deprives them of their basic sources of income. Undoubtedly, the purchasing power will weaken. So the governments main task will be to maintain social and political stability in the country, due to the fact that social processes are the basic indicator for the efciency of economic reforms. At present, the social sphere is weakly reected on the governments anti-crisis policy and its information campaign. The labor market does not receive any stabilization assistance. In order to keep the social stability in the crisis situation, the government should conduct a wider social policy. At Nur Otans congress in May the president of Kazakhstan said that the social sphere remains a central issue of the anti-crisis program and that the government was not reducing social expenses and is undertaking every possible social responsibility. That is why it is necessary to strengthen the social content of the anti-crisis program in 2010. In particular there is a need to actively cover an employment strategy for the population because the employment problem is one of the key challenges posed by the crisis. Thus, nancial support should be provided for those, who lost their jobs. As a consequence it is necessary to draft a program for retraining specialists and creating new jobs. But in order to do this it is necessary to actively involve local authorities in this program and to include them in mechanisms to meet social interests. This will increase the reputation of regional administration in the view of the population. At the same time, there is a need to draft an elaborate program for supporting also other groups of the population because the crisis will increase social inequality among the population. Therefore, priority should be given to professional retraining, creating additional jobs and organizing public works.
INFORMATION POLICY
The polls show that there is a growing imbalance between the implementation of the information policy and the real social mood. It is obvious that a positive coverage of the crisis situation and the governments policy play an essential role in the information policy. However, if the positive side is stressed too much it might easily end as bad joke and the government will, above all, lose the populations condence in its activities and its information. Consequently, this might cause social protests, which destabilize the situation in the country. With regard to this the government should run a modest information policy and report problems as well. At the same time, the government should pay greater attention to the populations acute problems by promoting social problems in the information policy: e.g. what measures is the government undertaking to reduce the crisiss impact on each citizen, what opportunities to overcome the crisis are available and what measures are more efcient. It is necessary to report about social policies of other countries, especially from Russia and European countries and about the measures taken to resolve social problems in these countries. At the same time, the governments information policy must focus on creating a calm psychological climate in the country. As a consequence the nature and content of ofcial and independent media reports should be balanced. At present, the state-run media casts only positive news reports, whereas independent TV channels are mainly focused on negative information. Therefore, it is necessary to narrow the existing imbalance in order to reduce the adverse effect on the population.
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CHAPTER 3 KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009
by Institute for Economic Strategies Central Asia (INES-CA))
CRISIS?
3.1. THE ECONOMIC CRISI IN KAZAKHSTAN IN 2008/2009 AND GOVERNMENT ANTI-CRISI MEASURES
The government has drafted an anti-crisis program exclusively to replace bank loans to fund the countrys economy. That is why it quickly and efciently managed to solve the problem of the dwindling demand for the partially restoring rates of the loan. The new strategy means a more nationalized and planned path of the development of the economy. The governments responsibility increases, but so do the risks. The Kazakhstani government adopted the anti-crisis program in October 2008 when the second wave of the crisis engulfed the country after the global prices of raw materials slumped. Before that, in the rst half of 2008, the economy on the contrary beneted from high oil prices, which at rst allowed the government to deny the crisis. The rst wave of the Kazakhstani crisis lasted from August 2007 to September 2008. It was caused by the sudden closure of sources of foreign capital, which immediately affected the loans of local borrowers, decreased the property prices and reduced the activity in the construction, retail and services sectors. A sharp speculative growth in prices of oil and other raw materials pushed ination up to almost 20%, which reduced the real-term incomes of the population. The slump in property prices and the tightening of loan conditions worsened banks loan portfolios and caused large-scale protests by mortgage holders. Previously, the suspension of construction projects gave rise to a protest movement of individual investors in construction projects. The reduced demand also decreased the import, which was growing at higher rates than exports, and the customs payments in the budget. The manufacturing sector suffered from the decline in the construction industry (later in the food sector) due to the falling demand and investment. Cold weather conditions forced metal producers to cut the output. The governments anti-crisis measures were mostly aimed at stabilizing the exchange rate of the national currency, at providing urgent aid packages to the construction and banking sectors, at increasing social spending and at imposing export duties on raw materials. The government also drafted a worst-case scenario in case of further declines in prices of raw materials. By the end of summer 2008 the global economy went into recession, which pushed the prices of raw materials down. The actual monopoly of Kazakhstans commercial banks in funding the local economy (with an underdeveloped securities market and not very diversied foreign investments) caused problems all over the country, so that the anti-crisis program was drafted to replace bank loans to fund the countrys economy. This explains why Kazakhstans government offered a large aid package to banks over 20% of the GDP. E.g. these sums compare with loans issued by commercials banks in pre-crisis 2007: about $ 20bn (about 20% of GDP in 2008). Out of $ 10bn $ 3bn were allocated for the property sector, $ 1bn directly for buying 25% stocks in Kazakhstans four major banks Kazkommertsbank, BTA Bank, Halyk Bank and Alliance Bank, $ 3bn were invested in the bank loan sector to support economy and business and three times $ 1bn was allocated through the Samruk-Kazyna national welfare fund for new loan programs on favorable terms for the small and medium-sized businesses, the agricultural sector and the innovative-industrial sector.
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CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009
52
In addition to the actual $ 4bn aid for banks (it was arranged, that the funds given to the banks must be returned to the government) a plan to stabilize the economy and the nancial sector in 2009-2010 was drafted. The government also set up the Distressed Assets Fund to improve local banks loan portfolios by buying out doubtful assets and in order to manage them. The problem concerning the banks was getting more complicated due to the fact that it was not only necessary to issue loans but to cope with their huge foreign debts, which more than doubled government assistance (the banking sectors foreign debt stands at about $ 40bn, which has to be returned mainly in 2009-2011). Between October and the end of 2008 the government tried to systemize its actions in the banking sphere. It amended legislation in order to enable the government to hold stocks of banks. However, the conditions of its purchase and the assessment of 25% stocks of the banks were controversial and non-transparent. The governments acquisition of capital of BTA Bank and Alliance Bank was complicated by a conict with the former shareholders, which led to lawsuits against the managements of these banks. The governments claims against these banks were prompted by their huge foreign debts, excessive loaning in foreign countries and high-risk loan portfolios. Attempts to solve the issue of foreign debts formally through restructuring lasted on in 2009. In reality many international creditors were inclined to recover their losses from the investment in Kazakhstani banking debt apparatus via certicates of deposit insurance. Major creditors did not agree with the proposed restructuring plan because it envisaged an over 80% discount on the value of the actual debt. The future of BTA Bank and Alliance Bank remains the most serious unresolved problem of the Kazakhstani anti-crisis program. Moreover, the government failed to improve these banks and so tarnished its reputation in international investment circles. On the other hand, the nationalization of the banks made it possible to preserve the temporary imaginary stability of the nancial system. Ensuring stability in the monetary sphere was interpreted as particular success. Despite of a heated debate the devaluation of the national currency did not lead to widespread bankruptcies as it had been feared before. In need for help the National Bank devalued the national currency (Tenge) against the US dollar by 20% and xed a new rate. A reduced demand and partial price control helped avoid a jump in ination. Separate concern caused the administration of the anti-crisis program in the nancial sector. As investigations into nancial crimes showed their scale, suggestions were made that the National Bank and the Financial Monitoring Agency (AFN) should merge. At present the National Bank is still responsible for managing the monetary-credit policy in times of the global crisis, while the AFN is still accountable for regulating the countrys nancial sector. The construction sector started to reassess the value of suspended construction facilities, but private investors are still responsible for completing a majority of private projects. The government xed the minimum housing price at $1,000 per sq m in Almaty and $700-800 in Astana. Commercial banks were involved in renancing mortgages and other mortgage programs. Furthermore the government also adopted a set of other measures. It increased the volume of government agencies and national companies purchases of goods and services from small and medium-sized businesses and forced the public sector to cut costs, freeze non-core activities and suspend some infrastructure and construction projects. The government announced that it would conduct structural reforms of the economy by amending the Budget, Administrative and Tax Codes. Tax burden was increased in the extractive sector and eased in the non-extractive sector. Corporate income tax will be gradually reduced from current 30% to 15% in 2011 and VAT to 12%. Even though this means great losses for the budget, the government expected enterprises to invest freed-up funds in production in the situation of limited loaning. A separate program was adopted to expand employment and retrain employees, for which the government allocated another $ 1bn to create at least expected 350,000 jobs. It is hard to es-
timate the efciency of the program to cope with unemployment because jobs are created temporarily, numbers are exaggerated and the problem of unemployment is mainly structural: there are shortages of high-skilled vacancies as well as specialists, while low-skilled jobs are in principle sufcient. The government also worked with major industrial enterprises to avoid job cuts, but this work was only partially efcient. In the social sphere the government did not make pledges it could not deliver, all the more with a budget decit that is going to reach 3.5% of GDP. The three-year budget plans to postpone the former regularly increased social allowances, pensions and student grants till 2011. The government also focuses on the development of the infrastructure. It started with the construction of the Kazakhstani part of the Western China Western Europe road worth KZT 800bn, the construction of the Beyneu-Bozoy-Akbulak gas pipeline worth KZT 465bn and the reconstruction of the Atyrau oil renery for KZT 371.9bn. Under the Roadmap plan the government is building and repairing public facilities as well as modernizing infrastructure with emphasis on the energy sphere in order to raise employment rate. As a result of the anti-crisis program the importance of its main operator the SamrukKazyna national welfare fund, which unites different bodies being responsible for separate and sectoral programs, increased. The fund controls all nancial ows as well. The anti-crisis program is not only nanced by the budget but also by funds of the National Fund, pension assets and government securities (which are on the rise and this may include potential risks). All in all, the anti-crisis program managed efciently and quickly to solve the problem of the falling demand by stressing on the resumption of loans for the major sectors of economy. An increase in prices of oil and raw materials in the second-half of 2009 also stimulated recovery. The accumulation of foreign exchange reserves and a low public debt helped to ensure macroeconomic stability and to preserve the investment-grade rating. On the other hand, anti-crisis measures mainly had operational character and had been chosen due to the need of prompt response but not to create a new economic order, which could rule out similar crises in the future. This means that the stability of the domestic economy was ensured only by funding the falling demand. System problems as inadequate liquidity, low levels of personal savings, lack of diversication in the economy, reliance on foreign investment and global prices of raw materials so remain unresolved. Obviously, Kazakhstans economy needs a more powerful stimulation of the demand than the current anti-crisis program. The decrease in bank loans from about 70% of GDP in 2008 to 60% in 2009 may continue in 2010 and the government program will not be able to replace the banks for a long time. That is why the government is expanding the Roadmap plan in order to develop infrastructure facilities, which is expected to increase employment, the consumer demand and contracts for small and medium-sized businesses. The Roadmap plan emphasizes on cooperation with the population, which makes the quality of regional government services especially important. However, the roadmap focuses only on the infrastructure segment of small and medium-sized businesses and workforce. Therefore the government is now drafting tasks and ways of solving them. This is a more nationalized and planned way of the development of the economy. From 1 January 2010 a ve-year plan forced industrial and innovative development will be started, which again emphasizes the role of the state in planning and stimulating economy. The Roadmap plan of the industrialization of Kazakhstan and the scheme of the rational location of production capacities are being drafted for private investors, so the government is not only dening priority sectors for investment but is also offering all-round assistance, including joint funding and public-private partnership. Seven priority spheres were chosen for the countrys industrialization: the agricultural sector and food processing; the development of the construction sector and production of construction materials; the oil rening and development of infrastructure in the oil and gas sector; the development of metal-
53
54
lurgy and production of nished metal products; the chemical and pharmaceutical industry; power engineering; the development of transport and telecommunication infrastructure. This list did not change since the times of the cluster program and the states direct involvement in these projects will increase risks because of insufcient corporate management and widespread corruption. The government will try to develop the domestic market and support local producers more specically. For this purpose it is going to use the Customs Union of Russia, Belarus and Kazakhstan. Kazakhstan has long been liberal in its foreign trade policy (the single customs tariff is higher than Kazakhstans previous customs duties) and the authorities intend to ensure greater stability in the post-crisis situation. Their desire to diversify and ensure the development of nonextractive industries and increase investment and market niches for local businessmen and producers may lead to protectionism in trade. And this policy of import substitution will spread to foreign countries, including China. Other benets will be gained in logistics due to the abolition of barriers and the opportunities for corruption will reduce costs for transporters. Thanks to a favorable regime trade between the three countries will sharply grow and foreign investment will increase, as it will be protable to set up joint ventures in the expanded single market. Reliance on foreign investment increased somewhat thanks to major loans from foreign countries $10bn from China, $5bn from South Korea and about $2bn from Gulf countries. The states role remains strong in the nancial sector and even though will fence competition from global nancial institutions it is very unlikely that the government will manage to quit the capital of the four major banks, as promised at the start of the anti-crisis program. As a result, the role and responsibility of the state in Kazakhstani economy is growing rapidly and so are the risks. If the current crisis was a crisis of the private sector, the increased importance of the state would enhance the chances of a sovereign crisis in case that the negative trends in global economy persist (the so-called third wave of the crisis). The increased risk, associated with the government, will at the same time have direct impact on the access to international credit resources.
3.2. MAIN INDICATORS OF KAZAKHSTANS ECONOMIC DEVELOPMENT IN 2009

Economic statistics for 2009 showed certain recovery in investment related to anti-crisis funds and a growth in oil prices, but the economy will still be smaller compared to the previous year. Problems in the sphere of small and medium-sized businesses and the nancial sector remain unresolved. Kazakhstans GDP reached KZT 6,400bn in the rst half of 2009 may insignicantly grow in the second half of the year and may total KZT 14,500bn in 2009 (about $95bn). The real-term decline will be at 2% compared to 2008. The government maintains favorable forecasts (GDP reaching KZT 16,000bn) and tries to fulll the political task to prevent economic decline and violation of their positive 10 year statistics. The Ministry of Economy and Budget Planning forecasts an economic growth between 0.1% and 0.3% in 2009. This forces the government to stay in close contact with the major companies, whose contribution to the GDP is signicant, in order to increase the economy. The IMF forecasts a 2% decline and the EBRD expects the economy to fall by 1.3%. Nevertheless, forecasts became favorable in the second quarter of 2009 as the rates of decline slowed down. Investment and agricultural production increased (the 2009 harvest was bumper but problems arose because of low prices and low demand). The construction, retailing and transportation sectors fell by about 10% compared to the last year but the depth of decline was reduced. The situation remains serious in the industry, whose share of the GDP fell by 8 percentage points to 28.7% in the rst half of 2009. Because of this and due to the fact that the growth rates
Effective growth of GDP, %
16,00 14,00 12,00 10,00 8,00 6,00 4,00 2,00 0,00 -2,00 -4,00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* * forecast 2010*
Costs increased by 45% in industry, while they fell in the manufacturing sector by about 9%. Oil and gas output also increased thanks to production growth at Tengizchevroil and CNPCAktobemunaygaz. The size of the industrial sector will hardly exceed the 2008 gure. The mining sector fell signicantly in the rst quarter (by 43% in monetary terms) due to lower global prices of raw materials and future recovery will not compensate these losses. A deep fall is continuing in the metal, food, construction, chemical and machine-building sectors. The main problem in the manufactory sector is the falling consumer demand and the very limited access to loans. In order to support business entities in the manufacturing sector the government is drafting a special program to renance the loans of manufacturers. This program was developed by the Damu Fund. Production of industry output
55
Index of actual volume %
7000 6000 5000 4000 3000 2000 1000 0
bn Tenge
2007
2008
2009 forecast
in industry are about one percentage point lower this year compared to the previous year, hopes that the GDP will not decrease are very slim. However, there are hopes for a gradual recovery in the near future but growth rates will be modest between 2% and 3%.
Investment is thanks to the growth in foreign investment expected to exceed KZT 4,000bn or $26bn-27bn in 2009, which is only insignicantly higher than last year. Foreign investment, the share of which almost doubled to over 40%, efciently replaced loans, which share decreased to 10% (about 20% in the past). Investment in housing construction fell back by more than12% after nine months in 2009 compared to 2008. On the other hand shows the sector distribution of investments, that main changes took place in the sphere of infrastructure. Priority sectors for investments remain the mining, transportation and telecom sectors, whose share increased by more than 55% in total. Foreign investment from countries like China, South Korea, Russia and France had a positive impact on the balance of payment. Foreign direct investment in Kazakhstan holds at $5.2bn for the rst half of 2009. These investments are mainly focused on the oil and gas sector (75% of total foreign investment). Investments in basic capital, bn Tenge
4500 4000 3500 3000 2500 2000 2005 2006 2007 2008 2009 forecast
56
One of the most problematic sectors is to issue credits for the construction, where the rapid development once made a sizeable contribution to economic growth. In total the construction sector is estimated to be 8-9% below 2008. Investment in housing construction has been falling for the past two years. There are hopes for the long-awaited recovery in 2010, which might be indicated by the housing prices in Almaty, the countrys largest city, where prices practically did not change since summer 2009. It is more than likely, that the postponed demand, which accumulated until now, pushes the property market upwards. The prices for habitation in Almaty (USD per sq m)
4000 3500 3000 2500 2000 1500 1000 500 0 01.10.2003
01.04.2004 01.10.2004 01.04.2005 01.10.2005 01.04.2006 01.10.2006 01.04.2007 01.10.2007 01.04.2008 01.10.2008 25.03.2009 01.07.2009 12.08.2009 23.09.2009 02.12.2009
20,0% 15,0% 10,0% 5,0% 0,0% -5,0% -10,0% -15,0% -20,0% -25,0% -30,0%
Average price for an offer, USD per sq m
increase, %
Foreign trade, bn USD

80000 7000 6000 5000 4000 3000 2000 1000 0 2003 2004 2005 Export Import 2006 2007 Prot/decit 2008 2009 forecast
A decrease in the rate of ination became a positive moment in 2009, but the annual price growth will be between 7% and 8%, which is quite high compared with other countries. Ination increased due to hikes in prices of foodstuffs and consumer goods. Foreign trade experienced a signicant deation of prices of both exports and imports. The producer price index fell by 20% compared to 2008. Ination was reduced due to a decline in economic growth, lower demand and shortages of liquidity. The government took measures to develop fair competition and avoid unjustied price increases. Ination grapf
25 20 15 20 10 5 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 0 -20 -40 80 60 40
57
2007 CPI, % change
2008
2009
CPI (manufacturer prices), % change
The Kazakhstani central budget was running a decit. According to forecasts, budget decit is expected to total KZT 574bn (about $3.8bn) in 2009, or 3.5% of GDP. Tax payments accounted for 60% of budget revenue and transfers from the National Fund for 35%. Kazakhstans rst three-
Lower oil prices directly affected Kazakhstans foreign trade and all operations related to it. Both exports and imports decreased by about a third compared to 2008 (exports to non-CIS countries and imports from CIS countries suffered most). Foreign trade surplus fell by 70% (in the rst nine months of 2009). Oil and gas exports increased, while exports of metals and wheat fell considerably. The value of iron and steel decreased by almost 60%, while non-ferrous metals only by 40%.
year budget for 2009-2011 had been revised several times due to changes in forecasts of oil prices, which were expected to top $40 per barrel in 2009 and $50 in 2010-2011. Even though budget decit was within comfortable limits compared with the countrys Forex reserves, it shows that the state stretched resources to fund the economy. Budget decit may jump to 5% of the GDP if oil prices dip further. This will increase risks associated with the state. In 2010-2012 the budget will not receive targeted transfers from the National Fund and the policy to replenish its assets will be continued. State budget, bn Tenge
3845,00 2845,00 1845,00 845,00 155,00
Revenue 2007
Expenses 2008 2009 forecast
Decit/prot
58
Statistics show the continuing stability in the social sphere. On average real-term personal incomes posted an insignicant growth of 1-2% (due to lower ination). However, the living standards fell due to limited access to consumer loans, the falling value of assets (in addition to lower housing prices, the dollar value of property also decreased because of devaluation) and the unevenness of the distribution of incomes and high social vulnerability. The unemployment rate ranged between 6% and 7%, but statistics do not reect the real situation in the employment sphere, that is latent unemployment and changes in the segment of self-employed people. Moreover, fewer people register themselves as unemployed due to low benets and strict criteria. If the government increases unemployment benets, the number of registered unemployed may rise. Possibly, the peak of redundancies has not yet been reached and there may be another wave of job cuts by employers, who reviewed and corrected their long-term plans in 2009 (for example, in the nancial sector). The government intends to channel sizeable funds into the social sphere in 2010 (increasing public-sector wages and student grants). The social spending of the central budget in 20102012 accounts for 40% of total spending, which makes the budget socially-oriented. The sphere of small and medium-sized businesses, which earlier developed well in the trade and services sectors, continued to experience great difculties due to the slump in demand. The governments programs for funding small and medium-sized businesses were not that successful because they mostly aimed to fund earlier-obtained loans, the bulk of which were already losses and did not meet strict qualication requirements. High interest rates, strict requirements for debt security and fear of government control decreased the efciency of government programs. Financial indicators deteriorated dramatically. Prots of registered enterprises remain positive, but they more than halved compared with the previous year. The share of loss-making enterprises exceeded 40% of the total number of enterprises. Major export-oriented enterprises beneted from the devaluation of the Tenge and the abolition of export customs duties as part of the governments anti-crisis program.
Quality of loans of the Kazakhstan banks

70,0% 62,1% 60,0% 51,2% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0%
Standard Doubtful 1st category
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20,0% 12,6% 6,7% 2,1% 2,5%

Doubtful 2nd category 01.11.2009 Doubtful 3rd category
21,0% 10,0% 2,1% 1,5%

Doubtful 4th category
4,3%
1,5%
2,4%
Bad
Doubtful 5th category
01.11.2008
Despite problems, the Kazakhstani banking system has managed to avoid a credibility crisis so far, as the deposit basis is relatively stable, loan processes are under way and new players are continuing to emerge. But the government plans to change the rules of the game in the nancial sector and to ensure greater stability for local banks. In particular, a new blueprint for the development of the nancial system envisages measures to increase the share of Kazakhstani goods and services in infrastructure projects with the support of foreign capital and to set restrictions on the share of liabilities before non-residents in banks total liabilities. In the foreign exchange sphere the growing oil prices will strengthen the Tenge, but instability in the nancial sector does not rule out negative scenarios. The National Bank forecasts the appreciation of the national currency by the end of 2009. Current account balance is still negative and current account decit was $ 3.4bn in the rst nine months of 2009, which is much lower than in the previous year.
Problems in the nancial sector also remained unresolved in 2009. The talks on restructuring foreign debts of BTA Bank and Alliance Bank may lead to new nancial injections from the already expense-burdened state. Alliance Bank has better prospects, as the government intends to turn it into an operator of its loan programs. The situation concerning BTA Bank is much more complicated because of the banks size and its network of foreign assets. Nevertheless, the market is optimistic that the government will preserve both banks and assume responsibility over them. A major issue remains how quickly the banks will be able to resume loans and whether there are more sustainable sources of funding for this, such as personal and corporate deposits. Unfortunately, it is unlikely that reliance on foreign funds will quickly be overcome and this situation limits banks prospects to increase the loans. Despite the National Banks support in liquidity of the banking sector, such as cutting renancing rates and reserve requirements (helped by modest ination), the government will still try to limit foreign borrowing. Moreover, the defaults of the countrys two major banks had a negative impact on its international standing and may complicate access to global capital in the future. Banks foreign liabilities decreased by $ 7.6bn in the rst nine months of 2009, after banks paid off loans attracted from non-residents. The problem of bad loans remained topical and according to estimates their share may jump to 50% by the end of 2009, although this trend is slowing down.
Balance of payments of Kazakhstan, mil USD

15000,00 10000,00 5000,00 0,00 -5000,00 -10000,00
40,00 30,00 20,00 10,00 0,00 -10,00 -20,00 -30,00 -40,00 -50,00
2005
2006
2007
2008
2009 forecast
Running account
General balance
Account operations with capital
60
The oil and gas sector was boosted by higher oil prices and foreign investment (Chinas purchase of the major Mangistaumunaygaz oil company). The main risks in the sector are posed by new delays in oil extraction in the Kashagan eld and the underdevelopment of transport infrastructure. This affects not only associated sectors, but also the entire economy as a whole. Generally, the Kazakhstani economy continued to suffer from structural shortcomings, the lack of diversication and the reliance on foreign markets. Only weak recovery has been observed so far and it may be offset by external shocks. In all spheres of the economy deep negative
Gas and oil output

th tons
90000 85000 80000 75000
5500 5000 4500 4000 3500
70000 65000 60000 2005 2006 2007 2008 2009
3000 2500 2000
Raw oil, incl. gas concentrate, th tons
Output of raw oil and natural gas, bn Tenge
3.3. POSSIBLE SCENARIOS OF ECONOMIC DEVELOPMENT IN 2010

Scenarios of the development of the Kazakhstani economy are usually based on pessimistic, standard or optimistic oil prices. However, in the next three years Kazakhstans economy will also depend on access to global capital, structural changes in the banking sector, the foreign market conditions and domestic competitiveness, which are closely connected to the membership in the Customs Union. Oil will remain the main resource of global economy and that is what makes Kazakhstans future promising. A planned increase in oil output due to the commissioning of new elds (there are high risks of new delays in oil extraction at Kashagan, which should treble the countrys oil output), the development of new transport routes (the Kazakhstani Caspian Transportation System), the development of local service companies and the higher share of Kazakhstani goods and services in investment projects will expand the spheres beneting from the ow of petrodollars, especially through nancial institutions. In restoring the activities of local banks they will however face erce competition from foreign players. This will encourage demand and support associated sectors (construction, imports, retailing, services, transport and telecommunication). Nevertheless the reliance on oil will still be strong, because major foreign investment will be placed in the energy sphere and the development of the manufacturing sector will be limited (despite the establishment of the Customs Union and foreign investors high interest in the united market). On the contrary, the raw material component will grow further because of the high global demand for raw materials.
1) BASIC SCENARIO 60% PROBABILITY
61
Oil prices are higher than $60 per barrel metal prices rise Recovery of global capital markets Slow recovery of the banking sector, but it is likely that at least one of the countrys top 10 banks will go bust Membership of the Customs Union will initially drive prices up, creates shortages of consumer goods and decreases import payments to the budget High ination, the appreciation of the Tenge and high interest rates High government spending The government based the budget on an oil price of $60 per barrel in 2009 and $50-70 in 2010. This is a quite optimistic scenario and its realization will help the Kazakhstani economy to have a positive growth in 2010 thanks to an increment of the value of the extractive sector. However, the recovery of demand will be slow and subtle because government funds will remain the main source of liquidity. The economizing of funds will damage major infrastructure projects and the technological lag will worsen. Social problems like high unemployment, insolvent borrowers and housing problems will become important. In the foreign economic sphere regionalism will increase, new joint projects will boost the agricultural sector, which might progress intensively. A specic impulse might receive joint machine-building (developed by the government) and logistics (new transport routes).
changes took place, which take time to overcome. In the consumer, construction and nancial sector and in the sphere of small and medium-sized businesses positive trends over the next three years will grow slowly and unsteadily.
2) WORST-CASE SCENARIO 30% PROBABILITY

Oil prices are lower than $40 per barrel low metal prices The second wave of the crisis in global capital markets Crisis in the banking system and the bankruptcy of several of the countrys top 10 banks Membership of the Customs Union causes trade disputes, bankrupts certain local producers, increases prices and reduces customs payments to the budget Devaluation of the Tenge and capital ight Very high unemployment and social discontent Huge budget decit and risks to sovereign ratings This scenario was considered by the government and it forecasts economic decline in Kazakhstan both in 2009 and 2010. Economic growth will rise from 1.6% in 2011 to 2.6% in 2014. The falling global demand and prices of Kazakhstans main export items will reduce exports and budget revenue. The forced bankruptcy of one of the four major nationalized banks will worsen the state budget. The devaluation of the Tenge, panic among the population and capital ight will undermine government guarantees (including on government securities), causing a wave of defaults but this time in the public sector. The government will have to sequester budget spending and to expand foreign borrowing (sovereign foreign debt) from the Asian Development Bank and the World Bank.
3) BEST-CASE SCENARIO 10% PROBABILITY
62
Oil prices are higher than $80 per barrel Recovery on global capital markets Recovery in the banking sector through radical reforms in the sector Membership of the Customs Union considerably increases trade, foreign investment and encourages the development of the manufacturing sector High ination, the appreciation of the Tenge and high interest rates High budget revenue If oil prices remain high for a long time the demand may increase, especially stimulated by efcient reforms in the nancial sector, which enable to signicantly increase loans (e.g. mergers of banks and the establishment of a major state-run credit institution). The state budget will increase social spending. Foreign investment will grow and become diversied, giving a knock-on effect to the economy in general. Foreign currency ows will strengthen the Tenge, improve the protability of local nancial instruments and boost the property and construction sector.
3.4. CONCLUSIONS AND RECOMMENDATIONS

Kazakhstans long-term priority is to ensure a sustainable economy, which relies little on such volatiles as oil prices. Taking into account the small domestic market and the limited opportunities for large-scale industrialization, it is necessary to focus on the services sector. The trade and intermediation sphere should be expanded at the expense of technological and knowledgeintensive services, which are competitive on a regional scale. But nevertheless main markets will remain Russia, China as well as the countries of Central Asia and the Caucasus. The production of goods should be based on the use of natural advantages such as raw materials but should also guarantee high processing.
Economic policy should be freed from too populist and ambitious rhetoric and should aim at a pragmatic spending of public funds, which will become the basis of economic recovery. This pragmatism includes the optimization of the public spending, the establishment of strict control over it including the ght against corruption at all levels and the thorough and efcient monitoring of the programs implementation. At this point the mechanisms of public control will be of great use. The government should ensure greater transparency in its work through allowing the public to control its programs. In situations of a cutback of foreign funding sources it is necessary to cooperate with the population to increase their savings. This may be done by strengthening the populations trust in the government and the nancial sector, by developing the securities market offering incentives to both investors and issuers, which on the one hand guarantee transparency of companies and safety of investment and on the other hand avoid afliation, political interference in business and other risks associated with the state. In the nancial sector it is necessary to set up major credit institutes (possibly, by merging banks) to ensure the best synergy of credit resources, to create an efcient state credit mechanism of specialized, micro-credit, branch-wise and regional loan programs and to increase incentives for syndicated loans for major projects. It will be important to expand nancial products, to establish a security basis by government guarantees and other mechanisms, to back interest rates for priority sectors and to offer soft loans for real-sector enterprises. Moreover it is necessary for the Distressed Assets Fund to continue the stabilization of the banking sector. Serious work should be done to improve international reputation and investment incentives through additional preferences and guarantees. The creation of major projects with a great knockon effect may efciently improve the economic environment. That is why major tax incentives should be given, excessive bureaucracy should be removed, infrastructure and the quality of local government should be improved and the stability of legislation should be ensured in order to attract such projects. It is also necessary to revise labor legislation and not to interfere in the ow of qualied foreign workers. The government itself can create major growth points by continuing the Roadmap program and the modernization of domestic industry, transportation infrastructure and agriculture. Purposeful and careful manipulation of state purchases in these spheres may also improve the conditions for an increase of the domestic demand and speed up modernization and diversication of the Kazakhstani economy. In the industrial and innovative sphere a switch should be made to more specied and basic projects via simplication of mechanisms of technology transfer, creation of a large-scale production even on a lower technical level and ensuring close ties in the development of science, education and the business circles. In the social sphere demand may be sharply increased by a radical increase of the income in the public-sector, especially of the education and healthcare workers. Their incomes almost did not benet from the economic boom of the past years and are chronically too low. An increase of unemployment benets may clarify the situation with the self-employed and increase the number of people registered as jobless, and so may have a positive impact on their consecutive employment and on the stability of incomes. The regionalization of foreign economic ties within the Customs Union should not impede active cooperation with the international community and the transfer of advanced technologies, scientic progress and high quality services. If the strategy changes and the services sector becomes more important than the industrial sector, the globalised market will become important for developing the countrys human capital. As models for development should serve industrialized countries like Canada and Australia, not Dubai (with risks of speculative booms) or Southeast Asia (where workforce is very cheap). Kazakhstan may become competitive through boosting the competitiveness of its population, which can be done through cooperation with developed countries.
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APPENDICES
DECLARATION OF THE ESTABLISHMENT OF THE ALLIANCE OF ANALYTICAL ORGANISATIONS

We, the representatives of Kazakhstans analytical community, clearly conscious of the need for our consolidation, professional self-identication and production of high scientic standards, declare the establishment of the Alliance of Analytical organizations (AAO), whose aims are: To hold a consolidated position on topical issues of the countrys social, political and economic development and to draft a political agenda based on this To improve our social role as mediator, intermediary and think tank in order to discuss and resolve the most topical and acute issues on the countrys political and socio-economic development and to analyze external factors that inuence this development To develop the Kazakh-language segment of Kazakhstans analytical market in all possible ways To test a new model of professional synthesis and scientic cooperation focused on the interests of the entire analytical community of Kazakhstan To unite intellectual, organizational and nancial resources of the members of the AAO and other interested representatives of Kazakhstans analytical community to implement joint projects To establish a balance between theoretical and applied research by conducting fundamental studies To create conditions for closer cooperation in Kazakhstans analytical community To reach an international level of research activities and to establish constructive relations with foreign analytical communities To participate in improving the training of young experts for Kazakhstans analytical market To create a single electronic database of results of research activities in basic education sectors. The alliance is open to any interested analytical organization of Kazakhstan.
LIST OF AAO MEMBER ORGANIZATIONS
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Assessment Risks Group Dosym Satpayev The Alternative Centre for Topical Research Andrey Chebotaryov The Cultural Front public association Nurlan Yerimbetov The Institute for Economic Strategies Central Asia Aitolkyn Kourmanova The Altynbek Sarsenbayuly Foundation Aydos Sarym The Central Asian Foundation for Developing Democracy Tolganay Umbetaliyeva The Centre for Military and Strategic Studies Sergey Fedoseyev The Kazakh Centre for Humanitarian and Political Activities Yesenzhol Aliyarov Almaty, 20 October 2009.
REGULATIONS OF THE ALLIANCE OF ANALYTICAL ORGANIZATIONS

1. GENERAL REGULATIONS
1. The Alliance of Analytical Organizations (AAO) is a voluntary association of legal entities involved in research and information-analytical activities in the eld of social, political and economic knowledge. 2. The is not a legal entity. 3. In its activities, the follows these Regulations and resolutions, which were adopted by its members on a collective basis.
2. BASIC AIM OF THE AAO

The AAOs basic aim is to express its members consolidated position on urgent issues on the countrys social, political and economic development and to draft a political agenda based on that.
3. BASIC TASKS OF THE AAO

The AAOs basic tasks are: 1. To improve our social role as mediator, intermediary and think tank in order to discuss and resolve the most topical and acute issues on the countrys political and socio-economic development and to analyze external factors that inuence this development.2. To develop in the Kazakh-language segment of Kazakhstans analytical market all possible ways. 2. To test a new model of professional synthesis and scientic cooperation focused on the interests of the entire analytical community of Kazakhstan. 3. To unite intellectual, organizational and nancial resources of the AAO members and other interested representatives of Kazakhstans analytical community to implement joint projects. 4. To establish a balance between theoretical and applied research by conducting fundamental studies. 5. To create conditions for closer scientic cooperation in Kazakhstans analytical community. 6. To reach an international level of research activities in basic areas and to establish constructive relations with foreign analytical communities. 7. To participate in improving the training of young experts for Kazakhstans analytical market. 8. To create a single electronic database of results of research activities in basic education sectors.
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4. BASIC PRINCIPLES OF THE AAOS ACTIVITIES

1. Commitment to research impartiality, professional competence, high professional standards and research honesty, as well as the prevention of deliberate distortion of facts in any circumstances. 2. Refusal of actions that discredit social, political and economic research disciplines and affect the reputation of Kazakhstans analytical community.
3. Prevention of the prevalence of ideological, corporate and personal preferences that may impede the establishment of truth during theoretical and applied research. 4. Argumentativeness and consistency in defending ones views. 5. Prevention of plagiarism, which is incompatible with experts social, political and economic research. 6. Active demonstration of professional solidarity to protect our colleagues, their research activities and their results from any external infringement and pressure. 7. Contribution to the development of a pluralistic intellectual eld as the generator of ideas, which are necessary for efcient development of the government and society. 8. Clear understanding of professional and moral responsibility for results of research works and proposals.
5. BASIC FORMS AND AREAS OF THE AAOS ACTIVITY

The AAOs activities are: 1. To develop and introduce to the public the annual analytical report Kazakhstan: Annual Report on the Development of Society and the State; 2. To create a discussion and analytical club and determine its activities; 3. To organize and hold research and practical conferences, seminars, roundtables, news conferences, lectures, discussions and other public events; 4. To develop and adopt informational and analytical documents that include the AAOs assessment of urgent issues related to Kazakhstans political, social and economic development; 5. To create the alliances website and its activities; 6. To implement other joint projects aimed at the AAOs basic goals and tasks; 7. To hold regular organizational meetings.
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6. FOUNDERS OF THE AAO

The AAOs founders are the following research and analytical organizations: 1. Assessment Risks Group. 2. The Institute for Economic Strategies Central Asia. 3. The Kazakhstani Centre for Humanitarian and Political Situations. 4. The Cultural Front public association. 5. The Altynbek Sarsenbayuly Foundation. 6. The Alternative Centre for Topical Research. 7. The Centre for Military and Strategic Studies. 8. The Central Asian Foundation for Developing Democracy.
7. PARTICIPATION IN THE AAO

1. Proxies and authorized representatives of legal entities, which do research and analytical work in the socio-political and economic sphere can participate in the AAOs work. 2. The is open to new members. 3. The AAO accepts new members based on recommendation by one or more AAO founders. 4. The number of members of the AAO is not limited. 5. Membership of the AAO discontinues if: 5.1. A member voluntarily refuses to participate in the AAO; 5.2. A member of the AAO stops its activities as a legal entity; 5.3. The stops its work.
8. ORGANIZATION OF ACTIVITIES OF THE AAO

1. The AAO conducts its activity based on the distribution of responsibilities between its members, considering their voluntary wishes and their duty to support each other. 2. Current and future elds of the AAOs activity are determined by its members through mutual agreement during the weekly session. 3. The members sessions discuss matters related to the alliances goals and tasks. Each AAO member has the right to suggest any question for discussion. 4. In order to implement the AAO objectives and tasks its members can set up work groups, which can be formed by proxies representing any of the AAO members and by agreement any social, political or economic experts. 5. The AAO members can appoint project coordinators in order to implement joint projects. 6. Representatives of the AAO in relations with physical bodies and legal entities have to chosen from among its members to represent the AAOs interests. 7. The AAO members jointly implement the logistics of its activity by considering the appropriate resources of its members.
9. ADOPTION OF REGULATIONS OF THE AAO,

INTRODUCTION OF AMENDMENTS AND ADDENDA
1. These Regulations take effect immediately after its adoption by all current members of the AAO. 2. Amendments and addenda can be introduced to these Regulations based on suggestions by any AAO member and by agreement with the other members.
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10. SUSPENSION OF THE AAOS ACTIVITY

1. The AAO stops its activity if a corresponding decision is taken by its members. 2. Any member of the AAO can propose to stop the AAOs activity by providing justied motives of his proposal.
INFORMATION ABOUT THE FOUNDERS OF THE ALLIANCE OF ANALYTICAL ORGANIZATIONS
ASSESSMENT RISKS GROUP

Director Dosym Satpayev, PhD in Political Science. ASSESSMENTRISKS GROUPis a non-governmental, non-commercial research organization, which was set up in 2002. In order to implement its objectives and tasks, the Assessment Risks Group provides consultancy services and conducts research through the following activities: Assessment of levels of political, investment and other risks in Kazakhstan, Central Asia and the Caspian-littoral region. Monitoring, analysis and forecast of political, social and economic processes in Kazakhstan and other Central Asian countries as well as the Caspian region. Forming a database of experts in Kazakhstan and other Central Asian countries. Issuing print publications and preparing electronic publications. Organization and conduct of conferences, round-tables, research and practical seminars as part of the organizations basic activity areas. Making up documentaries on topical problems.
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BASIC CONSUMERS OF ANALYTICAL PRODUCTS OF THE ASSESSMENT RISKS GROUP

foreign investment companies; state-run and international organizations.
RESULTS OF THE ACTIVITY

The research project Business, Society and the Authorities: Confrontation and Partnership; The research project Domino Effect: Possible Consequences of an Earthquake in Almaty; The print publication Political Science in Kazakhstan. The State of Discipline; The regional analytical research Central Asias Illegal Market (with the support of the OSCE and the European Commissions Ofce in Kazakhstan); The preparation of the manual (published in Central Asia for the rst time): Rules of Surviving in Urban Terrorism (with the support of the German embassy in Kazakhstan); The organization and conduct of the two-day seminar How to lobby social interests in government bodies?; The organization of the summer university Introduction to the process of public policy and political analysis; The organization and conduct of the roundtable The Chinese factor in Kazakhstan: myths and the reality; The organization of the Central Asian conference Central Asias Black Market; The organization of the international conference The Problems of International Politics after 11 September, 2001 in cooperation with the Kazakhstan Institute of Management, Economics and Prognosis.
Organizer of the roundtable The Caspian Region: Borders of Confrontation in Kazakhstan, in cooperation with the ofce of the London-based Institute for War and Peace Reporting (IWPR). The shooting of the documentary 9 Points (2006).The documentary participated in the competition of the Stars of Shaken international lm festival. The shooting of the documentary lm Terrorism in Central Asia: New Wars of the New Epoch (2004).
CONTACT INFORMATION
Tel/fax: +7 727 392 74 09 arg@risk.kz www.risk.kz
THE ALTERNATIVE CENTRE FOR TOPICAL RESEARCH

Date of registration 29 August 2006 Director Andrey Chebotaryov, PhD in Political Science
STATUTORY GOAL
To assist in the formation of a stable environment in order to promote democratic relations, civil society and the market of analytical products in Kazakhstan by achieving and demonstrating results of research into these processes.
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STATUTORY TASKS
To conduct theoretical and applied research into public and political relations, processes and events in Kazakhstan and the countrys relations with foreign countries and international organizations. To develop optional social development concepts and programs and to introduce them to public and individuals and legal entities. To publish and distribute books, brochures, bulletins and other print products about results of research activity. To hold research and practical conferences, seminars, lectures, discussions on topical issues related to Kazakhstans social and political development.
PROJECTS AND MEASURES FULFILLED

13 March 2007 the international conference Social responsibility as the basis of the competitiveness of Kazakhstans business was held in Almaty toghether with the analytical magazine the World of Eurasia under the support of the Kazakhmys corporation. 29 May 2007 the roundtable Interethnic Relations in Kazakhstan was held jointly with the OgonyokKazakhstan in Almaty. 8 August 2007 the roundtable Parliamentary Election 2007: specicity, basic factors and possible results was held in Almaty. 23 August 2007 the international theoretical and practical seminar Interethnic Relations in Russia and Kazakhstan: the Present Situation and Prospects was held in Almaty jointly with Kazakh Centre for Humanitarian and Political Situations.
70
17 January 2008 the roundtable Topical Issues Related to Interethnic Relations in Kazakhstan: the National and Regional Aspects was held in Shymkent jointly with the Shymkent city ofce of the democratic peoples party Nur Otan. In April 2008 the analytical report Improving the Role and Importance of the Assembly of Kazakhstans People and Ethnic Cultural Centres in Implementing Kazakhstans Policy on Ethnic Minorities was elaborated with support of the Social Consortium of the Assembly of Kazakhstans People. May-December 2008 the research project The Political Transformation of the Republic of Kazakhstan in the Context of a Shift in the Administrative Elite was implemented with support of the Friedrich Ebert Foundations representative ofce (Germany) in Kazakhstan. June-December2008 the social projects Conduct of Measures to study the Problems of Forming a Competitive Nation and Conduct of Comprehensive Research to study the Basic Approaches for Improving the National Policy were implemented with support of the Kazakh Ministry of Culture and Information. 17 June 2008 the roundtable Modern Kazakhstan: Experience in Ensuring Interethnic Consent jointly with the East Kazakhstan Region Department for internal policy and the Kazakh Centre for Humanitarian and Political Situations. July-November 2008 the socially important project Information Campaign for the Prevention of Drug Addiction was implemented with the assistance of the Almaty city department for internal policy. 9 July 2008 the roundtable Astana as a Factor of Kazakhstans Social and Political Development: the History and the Present with the assistance of the Astana city department for internal policy and the Sprint Marketing and Communications company. 10 September 2008 the international conference Reforming Kazakhstans Tax Legislation: Trends and Expectations was organized in Astana with the assistance of the Astana city department for internal policy. 3 November 2008 the roundtable Ethno-political Trends in the Republic of Kazakhstan: Condition, Dynamics and Prospects for Integration was held in Almaty; 11 December 2008 the research and practical conference Civil Societys Development as a Condition for the Formation of a Competitive Nation in Kazakhstan was held in Astana with the assistance of the Ministry of Culture and Information of Kazakhstan and the Astana city department for internal policy. 16 June 2009 the roundtable Kazakhstans National Interests: Social Measurement was held toghether with the Institute of National Research in Almaty; 23 September 2009 the second congress of Kazakhstans political experts was organized in Almaty toghether with the Ministry of Culture and Information of Kazakhstan.
CONTACT INFORMATION
Tel: +7 701 384 26 41 alternativa_kz@mail.ru www.alternativakz.org
CENTRAL ASIAN FOUNDATION FOR DEVELOPING DEMOCRACY

Director Tolganay Umbetaliyeva, PhD in Political Science The foundations objective is to organize and implement research projects to analyze the situation in Kazakhstan and other Central Asian countries.
THE FOUNDATIONS TASKS

To expand cooperation and exchange of information among Central Asian countries; To establish a dialogue among expert communities in Central Asia; To reveal the strengths and weaknesses of Kazakhstans shaping image in Central Asian; To set up a dialogue with government bodies and others.
KEY AREAS OF ACTIVITY

Development and implementation of fundamental research and applied projects in the sphere of political science; Conduct of opinion polls; Publication of monographs; Conduct of conferences, roundtables; Analysis of political events in Kazakhstan and other Central Asian countries.
EXPERTS OF THE FOUNDATION IMPLEMENTED THE FOLLOWING PROJECTS
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Research projects Monitoring of the social-political and socioeconomic situation in Almaty between May and December 2009 amid the economic crisis. Customer is the Almaty city department for internal policy; The international research project Political regimes in the Republic of Kazakhstan and the Republic of Azerbaijan: comparative analysis. The project was implemented jointly with the Research Centre for East European Studies at the Bremen University (Germany) and the Public Finance Monitoring Center (Azerbaijan) in April 2009; The opinion poll Islamic Banking in Kazakhstan: Development Prospects between September and October 2009; The opinion poll The Populations Assessment of Government Programs: the rst part was conducted in February and March 2009; the second part in September 2009; the Foundations initiative project. Roundtables and conferences The roundtable The European Legal Practice in Fighting Corruption and Ensuring Access to the Media, which was jointly held with the Friedrich Ebert Foundation in September 2009; The roundtable The Almaty City Populations Social Mood in the Crisis Situation, which was held jointly with the Almaty city department for internal policy in August 2009; The conference Administrative Reform: Experience of Foreign Countries, which was held jointly with the Friedrich Ebert Foundation; Two roundtable entitled Political Reforms in Kazakhstan, which were held jointly with the Polyton discussion club between May and June 2007; The research project entitled International Experience in Conducting Political Reforms, which was held jointly with the OSCE in November 2006; The joint project with the Kazakh Ministry of Economy and Budget Planning Increasing the Efciency of Measures to Regulate Migration, October 2006.
CONTACTS
Ofce 1, 30A Shashkin Street, Almaty Tel/fax: +7 727 260 57 10, 263 52 83 caf.kz@mail.ru
KAZAKHSTANI CENTRE FOR HUMANITARIAN AND POLITICAL SITUATIONS

Date of registration 10 July 2007 Director Yesenzhol Aliyarov, PhD in Political Science
Areas of activity include the development of comprehensive target programs for the government as well as social and commercial bodies; the creation of Internet resources, the publication of books, brochures, bulletins, subject collections, research articles and other materials related to the social and humanitarian sciences; expert support to socially important programs, concepts, projects and initiatives; the development and promotion of programs, concepts, projects and initiatives in the area of social and humanitarian sciences; independent expert assessments of a wide range of socially important issues; the analysis of social, political and economic trends.
MAJOR IMPLEMENTED PROJECTS

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The Implementation of Measures to Advocate the Traditions, Cultures and the History of the Kazakh People, a social project ordered by the Kazakh Ministry of Culture and Information in 2008. Village City Migration and The New Emerging Urban Kazakh-language Culture, a social grant by the Soros-Kazakhstan Foundation in 2009. Grant from Astanas Department for Internal Policy for the organization of two roundtables on the topic The problems of Kazakhstans anti-crisis policy amid the global nancial and economic crisis in 2009.
CONTACT INFORMATION
Abay Street 68/74, Almaty Tel: +7 7272 375 77 55, +7 7272 375 88 18, +7 7272 375 88 18 gpcenter2007@gmail.com www.sarap.kz
INSTITUTE FOR ECONOMIC STRATEGIES CENTRAL ASIA (INES CA)

Director Aitolkyn Kourmanova Independent non-government think-tank set up in December 2005 in collaboration with Russias Institute for Economic Strategies. We do research on a full spectrum of topics, including foreign affairs, political economy, nance, consumer markets, strategic consulting and sociology using advanced tools and methodology.
WE OFFER THE FOLLOWING SERVICES:

Customer-tailored Research Strategic Consulting Central Asia MarketWatch www.marketwatch.kz Publishing Center Vox Populi (bimonthly magazine) Economic Strategies Central Asia (quarterly magazine) Books Social Projects Workshops and Lectures
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OUR PAST RESEARCH PROJECTS INCLUDE THE FOLLOWING:

February April 2007 development of selection criteria for the Bolashak Presidential scholarship, participation in the candidate selection board May 2007 present participation in the research panel on global development scenarios together with the Kazakh Government and the Russian Academy of Sciences August 2007 Contract for ADB Grant for Regional study on remittances in Central Asia and South Caucasus August 2007 Contract for ADB/CAREC research grants program with a proposal Mechanisms and Potential for Agricultural Commodities Trade in Central Asia September 2007 Contract for British Gas on the Study of Impact of Karachaganak Project on Kazakh Economy October 2007 Contract for Study of Perspectives for Aktau Port Industrial Zone May 2008 Contract for Soros on Social Policy of Oil Companies Video Film September 2008 Contract for SPK Tobol on Macro and Sectoral Strategy November 2008 Contract for Kazyna Invest on Macroeconomic Forecast and Telecom Market
WE OFFER OUR FOREIGN CLIENTS THE FOLLOWING PRODUCTS FROM OUR RISK SERVICE, CENTRAL ASIA MARKETWATCH
Central Asia Investment Bulletin Kazakhstan Monthly Economic and Banking Update Kazakhstan Quarterly Central Asia Country Risk Reports Market Studies and Market RatingsDaily Briengs
WE HAVE PUBLISHED THE FOLLOWING BOOKS:

Kazakhstan-2012: scenarios of the future. Invitation to a dialogue, 2006 Strategic matrix of Kazakhstan, 2007 Strategic matrix of Kyrgyzstan, 2007 Kazakh Strategy of Qinq Empire New Industrial Asia: Lessons for Kazakhstan Kazakhstan Breakthrough, author Roy Medvedev Kazakhstan Political Elite
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CONTACT INFORMATION:
155 Tazhibaeva Street, Almaty 050000 Kazakhstan Tel.: 7 (727) 250 24 55, fax: 7 (727) 250 24 54 info@inesnet.kz www.inesnet.kz
THE CULTURAL FRONT PUBLIC ASSOCIATION

Founded in 2005 Director Nurlan Yerimbetov, PhD in Political Science, founder and acting manager of PARK
OBJECTIVES AND TASKS

To support the development of the Kazakhstani culture sphere; To establish new intellectual areas for the discussion of actual problems.
yerimbetov@mail.ru
THE ALTYNBEK SARSENBAYULY FOUNDATION

Head of the Foundation Aydos Sarim Executive director Nurlan Sarsenbayev
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The Altynbek Sarsenbayuly Foundation was founded in summer 2006 in order to continue and develop the intellectual and spiritual heritage of the well-known public gure Altynbek Sarsenbayuly, who died tragically in February 2006. The Altynbek Sarsenbayuly Foundation is a non-commercial and independent think-tank, which meets advanced international practice. The Foundations goal is to promote and distribute the ideas of patriotism, democracy and freedom in Kazakhstans society. The Foundation was set up with the direct assistance of many friends of Altynbek Sarsenbayuly and his like-minded colleagues, students and relatives.
OBJECTIVES AND TASKS

To conduct research in sociology, political sciences, culture study and history; To organize seminars, conferences, roundtables on modern Kazakhstans urgent problems; To support the development of international research cooperation; To implement educational, analytical and publication activities. The Foundations board of guardians includes Murat Auyezov, Diyar Kunayev, Oraz Zhandosov, Saken Seyfullin and other well-known gures in Kazakhstan.
www.altynbek.kz
KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009 Translation: N. Bisenov Proofreading: K. Buck, B. Hrdy Layout, cover design: Natalya Kozhevnikova
Passed for printing 00.00.00. Edition format 60 84/8. Fonts Times, Arial. Size 9.5. Offset paper. Circulation 100 copies.

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ALLIANCE OF ANALYTICAL ORGANIZATIONS

KAZAKHSTAN: ANNUAL REPORT ON THE DEVELOPMENT OF SOCIETY AND STATE 2009

UDC 32 BBK 66.0 14

GENERAL FEATURES OF THE MODERN POLITICAL ELITE OF KAZAKHSTAN

SPECIFICS OF INTRA-ELITE RELATIONS IN 2009

CONFLICTS BETWEEN POWER-WIELDERS

SO-CALLED THIRD FORCE FACTORS

CONCLUSIONS AND RECOMMENDATIONS

PROBLEMS FOR THE STATE

BEST SCENARIOS FOR A SWITCH FROM OLIGARCHIC

creating efcient local self-government institutions; budget decentralization.

by The Alternative Centre for Topical Research

1.2. KAZAKHSTANS PARTY SYSTEM: SET-UP OF MAIN FORCES

BACKGROUND PARTY PLAYERS

CONCLUSIONS AND RECOMMENDATIONS

by The Kazakhstani Centre for Humanitarian and Political Studies

1.3. KAZAKHSTANS INTERETHNIC SITUATION: DYNAMICS AND TRENDS

NEGATIVE ASPECTS WITHIN KAZAKHSTANS INTERETHNIC AND ETHNO-POLITICAL SPHERES

PROSPECTS FOR THE DEVELOPME]NT OF KAZAKHSTANS ETHNO-POLITICAL AND INTERETHNIC SITUATION

CONCLUSIONS AND RECOMMENDATIONS

(FINDINGS OF SOCIOLOGICAL SURVEYS)

2.1. THE ECONOMIC CRISIS AND SOCIOECONOMIC

Table 1. Results of the evaluation of the countrys economic situation in %

Economic situation is stable

The countrys economic situation is unstable, before a crisis

5,0 March 2009

Table 2. Levels of the populations contentment in %

Table 3. Levels of the populations contentment in % listed by regions (oblast)

I am condent and optimistic

I am calm, although I do not expect advantages for myself

I participate in protests in order to stand up for my rights

I am going to express my negative opinion, but I will not participate in protests

There are no reasons to protest

Increase of food prices

Unreasonable rise of charges for public utilities

Illegal actions of police authorities

Irresponsibility of local authorities

Carelessness and amateurishness of medical workers

2.2. PUBLIC OPINION ABUT THE GOVERNVENTS

2.3. KAZAKHSTANI CITIZENS VIEWS ON KAZAKHSTANS

Table 7. Rating of the prominence of the political parties in %

2.4. CONCLUSIONS AND RECOMMENDATIONS

ENHANCING THE GOVERNMENTS SOCIAL POLICY

CHAPTER 3 KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

by Institute for Economic Strategies Central Asia (INES-CA))

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

3.2. MAIN INDICATORS OF KAZAKHSTANS ECONOMIC DEVELOPMENT IN 2009

Effective growth of GDP, %

Index of actual volume %

7000 6000 5000 4000 3000 2000 1000 0

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

Average price for an offer, USD per sq m

Foreign trade, bn USD

2007 CPI, % change

CPI (manufacturer prices), % change

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

CHAPTER 3. KAZAKHSTANS FINANCIAL AND ECONOMIC DEVELOPMENT IN 2009

Expenses 2008 2009 forecast