Kazakhstan at 25

In 2016, Kazakhstan and most of the states of the former Soviet Union celebrated their 25th independence anniversaries. This year marked not only a quarter-century of Kazakhstan’s independence but also the 23rd anniversary of the national currency, the tenge, and the fifth anniversary of the deadly clashes between police and oil workers in the western city of Zhanaozen, which shocked the international community and scared both people and authorities in Kazakhstan.

On December 16, 1991 Kazakhstan declared its independence and left the Soviet Union. It was the last Soviet republic to do so. On December 1, prior to the declaration of independence, there were national presidential elections with only one candidate: Nursultan Nazarbayev. He won 98.78 percent of the votes and continues to rule the country to this day, making him the longest-ruling president in the former Soviet Union.

The Early Path to Independence

The path to Kazakhstan’s independence did not begin in 1991; it started 30 years ago, in 1986. In 1984, a hopeful young communist named Nursultan Nazarbayev had been promoted to chairman of the Council of Ministers by Dinmukhamed Kunayev, first secretary of the Central Committee of the Kazakh Communist Party, with the approval of Moscow. Nazarbayev was seen as Kunayev’s possible successor. Despite the promotion by Kunayev, in 1986 Nazarbayev delivered a speech taking aim at Kunayev’s brother, who headed the Academy of Sciences; the speech was viewed as nothing short of a criticism of Kunayev’s policies in the Kazakh Soviet Socialist Republic. Kunayev and Nazarbayev looked to Moscow to settle the score.

Kunayev was dismissed from his position on December 16, 1986. The decision to replace him with Gennady Kolbin, who had never before lived in the Kazakh SSR, was made in just 18 minutes. The quick decision led to mass protests in the capital of the Kazakh SSR, Alma-Ata (now Almaty). People demanded that either Kunayev return or another locally-raised leader be installed instead of the Moscow-appointed Kolbin. The protest was brutally suppressed. Protesters were persecuted and labeled negatively as Kazakh nationalists. Kolbin served as first secretary of Kazakhstan until 1989.

The 1986 protests are considered a milestone for independence in modern Kazakhstan. Despite this, none of the active participants of the 1986 protests won any position in official power structures. Nazarbayev’s role was unclear, but it is known that he appeared during the protests to talk to the people in the streets, who were mostly students, asking them to leave the square and go back to their dorms.

In June 1989 Nazarbayev was appointed first secretary of the Kazakh Central Committee, and in 1990 he was appointed the first president of the Kazakh SSR. After the collapse of the Soviet Union in 1991, Kazakhstan was literally “catapulted to independence,” as Central Asian expert Martha Brill Olcott once formulated.

The Last to Leave

Kazakhstan was the last republic to formally leave the Soviet Union, on December 16, 1991. On December 12, the Supreme Soviet of the Russian Federation had ratified the Belavezha Accords, renouncing the 1922 Union Treaty, recalled its deputies from the Supreme Soviet of the USSR, and exited the Union. Four days later, Kazakhstan came around to declaring independence.

This is still an interesting factoid for many observers, who wonder why Kazakhstan was last. There might be a few reasons. First of all, the personality of the president himself can be an answer. Nazarbayev has always been a cautious ruler and preferred to wait until things were clear. Kazakhstan’s ruling elite was in abeyance, pending a reaction from Russia to the wave of independence declarations. In September 1991, two months prior to the declaration of independence, there had been separatist clashes in Uralsk in western Kazakhstan, bordering with Russia, between Kazakhs and Cossacks. If Kazakhstan left the USSR, its leaders feared the act might be regarded as negative toward the Soviet regime, which Nazarbayev still supported, and might result in losing some of the northern territories of the country.

As Dmitri Furman pointed out in Boris Z. Rumer’s 2005 book, Central Asia at the End of the Transition, “[Nazarbayev] preserved his posture as a defender of the Soviet regime and portrayed all his actions to secure the independence of Kazakhstan as involuntary.”

Close relations with Russia, in many aspects not just economic, also may explain the hesitation to impulsively leave the USSR. Mariya Y. Omelicheva in her 2010 book Counterterrorism Policies in Central Asia stated that “Kazakhstan has been more integrated with Russia than any other post-Soviet country, based on cultural and linguistic factors and perceptions of belonging to the same Eurasian space.” This is still noticeable, especially because Russian mass media dominates the Kazakh informational space due to lack of competitiveness on the part of Kazakh media. Moreover, many elderly people in Kazakhstan remain nostalgic about the Soviet Union.

Independent Kazakhstan’s Early Days

Kazakhstan after the USSR inherited a stagnating planned economy, broken economic ties with the other Soviet republics, as well as considerable security uncertainties and concerns about territorial integrity.

“Kazakhstan has come a long way; it is by now the leading economy in the [Central Asian] region, [with] the highest per capita income. Certainly, the oil wealth has been put in good use and living standards have risen over the years very significantly. So Kazakhstan 25 years later is very different,” Jüha Kähkönen, deputy director of Middle East and Central Asia Department of the International Monetary Fund (IMF), told The Diplomat in Almaty.

And this is true. Kazakhstan writ large has much more now than it had 25 years ago. Once it was one of the fastest-growing economies and it remains one of the top oil producers. Those were hard-won gains. Its first years of independence were characterized by hyperinflation and constant budget deficits, then later from 1996 to 1999 Kazakhstan’s economy was hit by the Asian financial crisis, which broke in 1997, and Russian economic crisis in 1998. Privatization and crucial reforms were in urgent need throughout the 1990s.

The national currency, the tenge, was introduced in November 1993 as the economy faced hyperinflation and rapid devaluation. In 1992, annual inflation reached almost 3,000 percent. The Soviet ruble had no value already. Creation of a national currency helped to partially solve the hyperinflation problem. The currency would be devalued four times and eventually set to a free float in 2015. In 1993, one U.S. dollar was equal to 4.75 tenge. As of writing, it fluctuates from 340 to 345 tenge per dollar. In 2015, Bloomberg rated the Kazakh tenge as the second worst-performing currency of the year, after the Azerbaijani manat.

In a move to bring life to abandoned factories and enterprises, mass privatization began in 1994, with the second prime minister of Kazakhstan, Akezhan Kazhegeldin. Kazhegeldin later moved into the opposition in 1997; he and his supporters had disagreements with Nazarbayev about power distribution and the country’s economic course. Kazhegeldin later was charged with corruption during the privatization years and left Kazakhstan, seeking asylum in the United States. It is believed that he currently resides in Europe. Kazhegeldin occasionally gives interviews to Kazakh and international journalists. In one of his last interviews to Novaya Gazeta Kazakhstan on October 27, 2016, he said Kazakhstan “has disappointed” the United States because it “gave too many promises, hence, high expectations, which were not met.”

Although for several years after 2000 Kazakhstan’s GDP was growing faster than any other post-Soviet country, there was a widening wealth gap. Studies show that there were only modest state investments in social development during this period of high growth. Nevertheless, in two decades Kazakhstan managed to become a middle-income country with its GDP per capita rising from $1,512 in 1991 to $13,612 in 2013, thus gradually raising the standards of living for many Kazakhs.

However, the authorities failed to diversify the economy in the boom years. The export of natural resources still plays a significant role in the country's economy.

“Kazakhstan is a classic raw material economy with basically 80 percent dependence on oil prices. If oil prices fall, our economy is under pressure,” Galim Khusainov, economist and chief executive officer at BRB Invest LLP, says.

The growth of the Kazakh economy really began in the late 1990s. The creation and implementation of complex liberal economic reforms boosted the economy despite relatively low oil prices. As oil prices steadily rose, the government’s involvement into the economy became more pronounced. In 2000, Kazakhstan created a sovereign wealth fund – similar to Norway’s but without the same level of transparency and accountability – for savings from oil revenue and as a backup account to stabilize the economy when needed. Local experts claim that high oil prices resulted in structural imbalances in the economy, despite rapid GDP growth.

Almaty-based economist Zharas Akhmetov said that in the early days of economic reforms, the government kept out of the economy and moved to reduce its presence. “But from 2004 it started to increase its share, influenced [the] economy directly or indirectly, and abandoned or freezed many liberal reforms,” he said.

“We lost the moment. We did not develop other sectors of [the] economy because money from oil was enough for everything: salaries, pensions, infrastructure, construction of Astana,” economist Galim Khusainov told The Diplomat. “Now, when we sobered up, we see that there were big structural imbalances in [the] economy. This is because government too heavily influences the economy,” he added.

Kazakh authorities had lost their initial motivation to reform the economy and began to follow a rentier state model.

Kazakhstan’s Diplomacy and Politics

Combining both economic and security concerns, one of the main issues for newly independent Kazakhstan was a stockpile of nuclear rockets inherited from the USSR. Kazakhstan needed foreign investments and also guarantees from nuclear countries about sovereignty and territorial integrity. In 1994, Project Sapphire, a then-top secret mission, orchestrated the transport of 600 kilograms of highly enriched uranium to the United States. This voluntary denuclearization helped Kazakhstan gain international recognition and created a peaceful image of Kazakhstan’s foreign policy as a dedicated non-nuclear state.

In 1992, Kazakhstan became a member of the United Nations and the Organization for Security and Cooperation in Europe (OSCE). In 1995, it became a full-fledged member of the Organization of Islamic Cooperation (OIC). In the ensuing two decades it held prominent posts in all these international organizations. Kazakhstan chaired the OSCE in 2010, then the OIC in 2011, and won a seat as non-permanent member in the UN Security Council in 2016. When it joins the UNSC in 2017, Kazakhstan will become the first Central Asian country to do so.

Kazakhstan has expended a lot of diplomatic efforts to support good relations with other countries, its so-called multi-vector foreign policy. Relative to its neighbors – Russia and China – Kazakhstan is economically small and not very populous. It is the ninth-largest country in the world by area, but with its population only now creeping toward 18 million it remains near the bottom of population density rankings. Kazakhstan’s main strategic partners have always been Russia, China, and the United States, and to lesser extent the EU and Turkey.

Developing diplomatic relations with democratic countries led to some liberalization and the democratization of public space in comparison with the Soviet Union period. However, after some time the state reasserted control over the economy and the media sphere; laws to give more authority to the government and the president, in particular, were passed. Nazarbayev continues to dominate the political sphere, faced only with weak opposition and few independent mass media outlets.

Yevgeny Zhovtis, Kazakhstan’s leading human rights activist, says there is nonetheless progress in terms of political rights and civil liberties in independent Kazakhstan, if compared to Soviet Kazakhstan.

“If we compare with the Soviet Union, then of course there is a lot of progress achieved, especially in the beginning, with political rights and civil liberties. Despite limited political opposition, there are still some independent mass media, individual journalists, and human rights organizations left,” Zhovtis said. “In comparison to the Soviet Union there is more freedom.”

But in comparison to Georgia, Ukraine, and the the Baltic states – Latvia, Lithuania, and Estonia – Kazakhstan is far behind.

When it comes to political opposition, 2016 also marks the 15th anniversary of the creation of the Democratic Choice of Kazakhstan (DVK) Party, and the 10th year since the death of Altynbek Sarsenbayev, a former journalist and then minister of information who turned to the opposition in the early 2000s.

After Kazhegeldin – the country’s second prime minister, who moved to the opposition in 1997 – left Kazakhstan, there were a growing number of opposition parties and movements created in the early 2000s. Opposition parties split and quarreled. In 2002, the Ak Zhol Democratic Party split from the DVK, which had been formed in 2001 by critics of Nazarbayev. Some experts claim that the divide and arguments within the opposition were orchestrated by the authorities. Rakhat Aliyev, Nazarbaeyv’s son-in-law, who eventually turned to opposition and committed suicide in an Austrian jail in 2015, told local media that the DVK was sanctioned by Nazarbayev to get rid of him.

Some individual politicians who joined the opposition met terrible ends. In November 2005, Zamanbek Nurkadilov, former mayor of Almaty and minister of emergency situations, was found dead in his own house with two bullets in his chest and one in his head. The official version deemed his death a suicide.

Three months later, in February 2006, another prominent opposition politician, former Minister of Information Altynbek Sarsenbayev, was found dead together with his driver and guard. In both cases, supporters said the deaths were politically-motivated murders resembling executions.

For many in the political realm, the rapid loss of two opposition leaders was a clear signal: oppose the president at your own risk.

The gradual increase of presidential power began with the dissolution of the Supreme Soviet (what the legislative branch was termed at the time) in 1993. A flawed election created a new parliamentary body but it, too, was dissolved. Nazarbayev ruled by decree through 1995, pushing early economic reforms. In 1995 Kazakhstan adopted a new constitution, which along with other provisions allowed the president to order parliamentary elections at will. In 2010, Nazarbayev was given the official status of “Leader of the Nation” by parliament and the constitutional council, though he refused to sign the document.

Despite harsh repressions and family scandals, Nazarbayev remains popular among Kazakhs. The long-implemented policy of “economics first, politics later” worked well until the latest economic crisis – most notably fallen oil prices – hit the country.

The economy started to slow down in 2014, but the government artificially supported the economy until it set the tenge to float freely in August 2015. Prior to that, the government decided to call early elections in April 2015. Nazarbayev was again elected as president with 97 percent of votes.

2016 has been a tough year for Kazakhstan, which faced an economic slowdown, rising inflation, mass protests across the country against land code changes, and two violent attacks. The concept of stability and peace in Kazakhstan has been shaken. Many experts noted that all these years the government focused more attention on international politics rather than solving internal problems, which are now starting to become visible: people’s discontent, problems of violent extremism, economic crisis, and the upcoming uncertainty about the transfer of power in Kazakhstan. 

Future Challenges

Power transition in Kazakhstan is definitely one of the most important future challenges that might affect the whole Central Asian region. Power is highly personified in Kazakhstan and peaceful transition and succession of power is a matter of concern for citizens, foreign investors, and regional powers. The death of Uzbekistan’s Soviet-era leader, Islam Karimov, earlier this year focused attention on Kazakhstan, Nazarbayev, and what will come after the eventual passing of the final Soviet-era leader.

Most experts and ordinary people find it extremely hard to predict what post-Nazarbayev Kazakhstan will look like.

“We need to see how [the] political construction of Kazakhstan will look after [the] current president finishes his political career, which vector of development will be chosen, how much it will be inclined toward democracy,” rights activist Yevgeny Zhovtis said.

Dosym Satpayev, Ph.D., political scientist and director of the Risks Assessment Group, said that Kazakhstan couldn’t create a political system based on strong political institutions within a short 25 years, except with a strong presidential vertical – which poses questions about future stability.

“It is not so important how and when the head of the state leaves the political arena. Everything will depend on the elite’s ability to negotiate in the absence of supreme arbitre,” Satpayev said.

Satpayev draws parallels with the scenario unfolding in Uzbekistan, and what happened in Turkmenistan, which faced a transition of power in 2006 when its first president, Saparmurat Niyazov, died and was replaced by current President Gurbanguly Berdymukhamedov. At the same time, Kazakhstan has its own peculiarities.

“[A] peculiarity is that we, unlike two other countries, have oligarchic groups with powerful financial resources. At the same time [a] similarity of [the] transfer of power is that it will be decided in an undemocratic way, through intra-elite deals among influential players,” Satpayev concluded. The main concern is the peaceful transition of power and political stability because “any serious conflict inside the country might result in losing our sovereignty,” Satpayev added.

Oil Prices and Neighbors

Oil prices and overall economic growth have never been as important as they are now. Once the tenge was set to free float in 2015, any drop or increase in oil prices influences its fluctuations. News outlets now regularly report global oil prices. The latest data from Kuandyk Bishimbayev, Kazakhstan’s economy minister, states that GDP growth in the first 9 months of 2016 was 0.4 percent, whereas annual GDP growth in 2015 was 1.2 percent.

“0.4 percent GDP growth does not say anything. It may grow or may not. [The] situation is not catastrophic yet; it can be fixed,” economist Zharas Akhmetov said. “But the time missed is missed forever. We need to create favorable conditions for economic growth and competitive environment without ‘favorites’ because they, by definition, generate inefficiency.”

Another related issue is the Eurasian Economic Union, which is led by Russia – Kazakhstan, Belarus, Armenia, and Kyrgyzstan follow. Kazakh businesses and the public in general have mixed feelings about the EEU, fearing it may provoke imperial encroachments from Russia. In addition, Russia is currently under economic sanctions and this creates certain difficulties for other states in the EEU. Kazakhstan’s economy indirectly suffers from Russia’s troubles. Possible loss of economic sovereignty, imperial revanche from Russia, and the overarching need to trade with Russia are contradictory trends within the EEU, and that is why the Kazakhs are somewhat reserved about its future prospects.

“Our entry into the Eurasian Economic Union already limited the room for maneuver in terms of implementation of our economic policy. Thus, we have lost some economic sovereignty,” Dosym Satpayev said.

Terrorism

Kazakhstan has positioned itself for a long time as an exemplar of peace and stability in the region close to unstable Afghanistan. However, events in 2016 show this is no longer necessarily the case and the threats do not stem from Afghanistan.

This summer on June 5, a group of men attacked a gun shop in Aktobe, a city in western Kazakhstan, and then targeted a National Guard base and police. The attack continued for two days and was officially regarded as a terrorist act. A month later on July 18, in Almaty, the former capital and financial heart of Kazakhstan, an armed man started a shooting spree. Also targeting law enforcement officials, he killed 10 people and was sentenced to death recently, despite the fact that capital punishment is under a moratorium in Kazakhstan.

Following these attacks, the parliament passed more restrictive laws and government plans to ban Salafism, a deeply conservative branch of Islam. According to the authorities, the men involved in both attacks were followers of Salafism.

There was some level of scepticism from experts whether to regard these attacks as terrorist acts or not. In these particular cases (and most cases in Kazakhstan) the attackers targeted mostly official representatives – security forces and police – perhaps out of revenge, as was the case in Almaty according to investigation materials and testimonies. However, there is a new element of radicalization of local citizens linked to Syria, as seemed to be the case in Aktobe.

Indeed, a more active phase of terrorist and terrorist-like activity started in 2011, in the southern city of Taraz. A man carried out an armed attack which ended in a suicide bombing, killing eight people – five members of local security forces, two civilians, and the attacker. Official versions called it a terror attack. 

In the period of 2011-2012, according one report, there were 14 attacks regarded as terrorist acts in Kazakhstan, and the overall death toll reached 70.

Many political scientists and experts have warned that terrorism will thrive if the government continues to become more repressive: when people are not given the opportunity to protest on certain political, economic, or social issues, some of them turn to increasingly radical measures. In 2011, a highly restrictive law about religious activity passed in Kazakhstan that required registration of religious organizations and prohibited distribution of religious materials, and perhaps helped fuel the rise of attacks from so-called religious extremists.

Looking back at 25 years of independence, it’s clear the path was a difficult one. Some lessons were learnt quickly, some not at all; risks were both taken and arduously avoided, and mistakes were made. As Kazakhstan continues to move forward, there is still a lot of room for improvement left.