CIC Occasional Paper No. 7 - Kazakhstan: Can it lead the way?

December 2004

“As the largest, most stable and prosperous Central Asian state, Kazakhstan casts a long shadow not just on neighbouring countries, but across the Caucasus and beyond.”

Richard Armitage, US Deputy Secretary of State
Washington, 27th April 2004.

“Overall, the development of Kazakhstan has been quite amazing.”

Yuriko Shoji, UN Resident Coordinator to Kazakhstan
Almaty, 2nd December 2004



Introduction

Can Kazakhstan achieve the ambition of President Nursultan Nazarbayev to become the unchallenged regional leader of Central Asia and a role model for transitional states? Despite the grudging nature of some Western comment, there is no doubt that Kazakhstan leads the way in specific areas. Among CIS states, it was the first to repudiate nuclear weapons, the first to pay off its debts to the IMF following economic reconstruction, the first to obtain a favourable credit rating, the first to build financial institutions approaching Western standards of efficiency and reliability, and the first to introduce a fully funded pension scheme for its citizens.

As a result of its oil wealth and prudent macro economic management, modern-day Kazakhstan is one of the fastest growing economies in the world. The Kazakh private sector now accounts for 70 per cent of GDP. Its GDP per capita, measured in purchasing power parity, is nearly twice that of Kyrgyzstan, Uzbekistan or Turkmenistan, and four times that of Tajikistan. Average dollar wages are $120 a month compared to $30 in the case of its southern neighbours, Uzbekistan and Kyrgyzstan. The Kazakhstan economy grew by 9.8 per cent in 2000, 13.12 per cent in 2001, 9.8 per cent in 2002, 9.2 per cent in 2003 and is set to rise by an estimated 9.5 per cent during 2004.

One of the keys to Kazakhstan’s economic success has been its ability to attract foreign inward investment: this surged to 13 per cent of GDP during the period 2001-2003 and is running at almost ten times the rate achieved by neighbouring countries.

Kazakhstan has also established an impressive record for promoting religious and ethnic tolerance in a region not famous in this regard.

These advances, accomplished in little more than a decade, have enabled Kazakhstan to beat off the leadership challenge of Uzbekistan, the largest of the Central Asian republics in terms of population. Uzbekistan based its hopes of regional hegemony on military strength and authoritarian rule. In the event, Kazakhstan’s programme of rapid economic development combined with gradual political reform has provided a more reliable vehicle for pursuing its ambitions. Even in the military sphere, Kazakhstan has now outstripped its rival: its defence budget has gradually overtaken that of Uzbekistan and it can now claim the largest and best equipped army in the region, both in terms of absolute numbers and operational efficiency.

Geo-strategic realities require that Kazakhstan maintains close relations with Russia (with whom it shares a 6,500 kilometre border), but the Kazakh president has also demonstrated shrewdness in managing relations both with the US (which has invested US$9 billion into Kazakhstan since Independence) and with China. The deployment of Kazakh army engineers in a mine-clearing role in Iraq demonstrates its readiness to pursue an independent line.

However, the question of whether Kazakhstan can achieve the dream of its president by exerting an influential role on the international stage cannot be answered without reference to the dire socio-economic conditions which exist in much of Central Asia.


The Regional Context

These have been aptly summarised by a recent article in the Journal of International Affairs :

“Population pressures, land scarcity, depletion of water resources, environmental degradation, widespread corruption, drug smuggling and addiction, growing inequality, extremely high unemployment and above all poverty and insecurity give Central Asians many sources for grievances.”

Such conditions provide recruitment opportunities for radical Islamists whose creed provides both a comprehensive explanation of why things have gone wrong and of what is to be done - even if the record of radical Islam in government, for example in Afghanistan and Iran, has been lamentable. However, with the collapse of communism Islamism has few serious ideological rivals, and certainly none which promise eternal life in Paradise. If the Kazakhstan government under Nazarbayev can steer a course that provides answers to the problems described above, it will have greatly diminished the appeal of radical Islam within its own borders and beyond, and its role as regional leader will be assured.

Presently there is little direct evidence of radical Islamic activity in Kazakhstan, which is defined in its constitution as “a democratic, secular and legal state.” It is clear, however, that Hizb ut-Tahrir (The Islamic Party of Liberation), a trans-national, radical political movement that aims to overthrow Western and Muslim governments and restore the Islamic Caliphate, has at least a toe-hold in the country. Earlier this year the Kazakh government detained a number of HT.I members for distributing extremist literature. This called for the overthrow of the present governments in post-Soviet Central Asia and their replacement by an Islamic Khilafah. On 10th December 2004, Reuters reported that a leading member of HT.I had been arrested in the southern Kazakh city of Shymkent and accused of inciting inter-ethnic and religious discord.

Although HT.I, which is based in London, does not directly involve itself in violence, its literature includes concrete recommendations about how to achieve its goals, including civilian insubordination. It also makes it abundantly plain that once conditions become propitious, individual Muslims must take up arms in order to overthrow existing heads of state and their governments

During the Stalinist era, the Kazakh state sought to destroy Islam, but this policy gradually gave way to less extreme measures aimed at restricting and controlling its influence. At Independence in 1991 there were 25 mosques. Today there are more than 1,500, but the growth of the Muslim faith has coincided with a spontaneous revival of religious faiths of many other kinds – especially Russian orthodoxy – without evident conflict between them.

Nevertheless, Kazakh officials have shown concern about the rise of radical Islam, especially HT.I which operates underground and about which relatively little is consequently known. In particular they are concerned about its potential to damage relations between the Kazakh and Russian populations within the country (the latter accounting for around a third of the total population), as well as between traditionalist and secular Kazakhs and between different regions in a country that includes more than 100 ethnic groups

In a recent article in the Journal of International Affairs, Edward W. Walker has suggested that the key to preventing the spread of radical Islam in the region is for the West to combine its present “war” on terrorism with attempts to foster tolerant governance in Muslim-majority countries “that prove of greater appeal than the harsh and intolerant practise of Islamists to Muslims around the world.”

“Above all,” he writes, “the West should make very effort not to present Muslims with a perceived choice between repressive secular governments supported by the West and repressive anti-Western governments run by Islamists – in other words, between Iran and Uzbekistan, or between the Taliban and Turkmenbashi [the name by which Saparmurat Niyazov, the leader of Turkmenistan, the most repressive of all the Soviet successor states, prefers to be known].

The emergence of a tolerant Central Asian state which was successful in economic and political terms would greatly diminish the risk that Central Asian populations will feel that just such a choice in being forced upon them. For this reason Kazakhstan, the largest and most stable of the Central Asian republics, does indeed cast a long shadow; if its succeeds in establishing itself as a successful and influential Central Asian leader, the benefits to the region’s inhabitants and to the West will be considerable. Failure is likely to be marked by a rise in radical Islam and a growing risk to the security of the region’s energy resources.


The building of Kazakh nationhood

The renaissance of traditional culture and the reworking of national myths has become an important stand in the building of Kazakh nationhood. These hark back to an age of nomadic pastoralists who roamed the steppes with their horses and herds, seemingly in perfect tune with their environment. Another element of ethno-nationalist tradition lays stress on the Kazakh’s harmonious relations with strangers and neighbours, although this is as much a reflection of the country’s diverse cultural mix and of contemporary geo-strategic realities as of its history.

Islam, as a cultural form, is regarded as an important element in the officially sanctioned national culture. Accordingly, the President, who once declared himself an atheist, now declares himself a believer. At the same time, Kazakhstan is depicted as a “Eurasian” society that bridges east and west. It is too soon to say how well the diverse but carefully constructed elements of this strategy are likely to cohere, but the need for unifying myths and ethno-national traditions is as obvious as the readiness of radical Islam to exploit any perceived moral or spiritual void.

The extent to which the multi-ethnic population of Kazakhstan shares the vision of its president is difficult to gauge. There are signs that it takes some pride from the fact of its relative economic superiority over other CIS states. Among an emergent middle class there is a gradual realisation that the Kazakh homeland - formerly no more than a Soviet backwater in the eyes of the world - is now perceived to have a potentially pivotal international role. After a long period during which Kazakh national culture was moribund and during which the Kazakh people sometimes found itself in a minority, it is a vision that an increasing number may come to find attractive. Whether or not they do will depend on whether economic and political progress is maintained and whether the oil boom can be shown to benefit the majority.


The Elimination of Poverty

The elimination of poverty is crucial to the success of the President’s ambitions. As in other Soviet successor states, inequalities of wealth have widened as a new breed of entrepreneurs has emerged; there are also huge gaps in the incomes and expectations between those employed in the oil sector and those in agriculture and service sectors of the economy. But following the economic turmoil of the 1990s, the position of the poorest sections of society has shown significant signs of improvement. According to UN figures, the poverty rate has fallen from five million or 39 per cent in 1998 to three million or 20 per cent in 2003 – the lowest poverty rate in the region; officials from the Kazakh Ministry of Economy and Budget Planning have suggested that the true figure may be even lower.

This compares with Tajikistan where, according to figures from the World Bank, 83 per cent of the population live below the poverty line; Kyrgyzstan, where the rate is 44 per cent; and Turkmenistan, where an estimated 58 per cent live below the poverty line despite that country’s considerable energy resources. According to a UN spokesman, Kazakhstan is now “well on the track to achieving its poverty and hunger reduction goals.”

Unemployment, identified as the major cause of poverty by the UN, fell steadily from 13.5 per cent in 2002 to 8.8 per cent in 2003, although a slight increase is projected for 2004.


Economics and politics

Kazakhstan’s ambition to play an international role is symbolised by its drive to claim the chairmanship of the OSCE in 2009, a bid which has inevitably served to increase international scrutiny of its record, particularly in the areas of human rights and democratic reform. Having met most of the terms which the US Secretary of State Colin Powell set out in a letter to the Kazakh President in November 2003 as a condition for US support, Kazakhstan may feel that it has done enough to claim a prize that it believes will enhance its international standing.

To some observers at least, the 19th September 2004 elections to the Majilis, the lower house of the Kazakhstan Parliament, have further strengthened that claim. How free and fair the elections were remains a matter of dispute, however. The OSCE monitoring team declared the elections to have fallen well below Western standards but conceded that they were “competitive” – a huge step forward whose significance the OSCE seemed curiously reluctant to acknowledge (see Occasional Paper No. 5).

Moreover, it is clear that the 2004 Election Law plainly represented a considerable advance on the old legislation. No less important was the fact that three of the twelve parties taking part in the election were genuine opposition parties; the election campaign passed off without reports of press intimidation; a large number of outside observers (more than 900) were able to monitor the voting and the election count; all parties were able to make their case on national television; and 59 per cent of those eligible to vote actually did so. Although there were many technical and procedural irregularities there were major steps forward on all the fundamental issues.

In the circumstances, providing that nothing occurs between now and 2009 to suggest that the political reform progress has gone into reverse and as long as the 2006 presidential election maintains the progress achieved in 2004, it would seem that Kazakhstan can be confident of winning the international recognition that its President seeks. There are some recent indications that progress towards democratic reform continues: on 10th December President Nazarbayev signed decrees introducing elections for akims (mayors) of villages and districts and a further decree extending the powers of the country’s Human Rights Ombudsman.

In the longer run, Kazakhstan’s ambitions to play a significant international role will depend on continuing economic success. Its achievements in attracting inward investment, in repaying debt and in devising a highly effective macro-economic policy have been widely acknowledged (see Occasional Paper No 1.) Almost uniquely among developing countries, it has avoided the worst aspects of the so- called ‘oil curse’, characterised by an exchange rate which makes imports cheaper and squeezes domestically produced goods out of markets at home and abroad. Ultimately, however, its success in continuing to eliminate poverty and to raise living standards will depend on its ability to diversify the economy before energy revenues begin to dwindle in 50 years time.

Beginning in 2000, there has been an encouraging increase in the manufacturing sector of the Kazakh economy, but critics have doubted whether the country’s Programme of Industrial and Innovative Development will achieve its ambitious goal of creating a technology-based high value economy or of attracting the necessary flows of foreign capital into the non-energy sector. It may well be that Kazakhstan has more to gain by promoting trade through continuing its programme of economic liberalisation, by developing the country’s infrastructure and by lowering tariffs in preparation for membership of the World Trade Organisation.


Conclusion

There is no shortage of international observers prepared to suggest that Kazakhstan possesses the potential to fill a leadership role, but their remarks are generally hedged with qualifications. Usually, the achievement of this goal is said to be conditional on further progress in the area of political or economic reform.

However, it should be recognised that the remarkable progress in some areas has served to increase expectations in relation to others. This in turn has been followed by Western criticism where this has either not been fulfilled or where progress has not been as rapid. In this respect, Kazakhstan is a victim of its own success and its own ambition: few countries have been expected to achieve so much in so many areas over such a short space of time. Perhaps because they are keenly aware of the scale of the challenge that Kazakhstan has set itself, it is notable that those observers best acquainted with the country as a result of having lived and worked there have been far more willing to acknowledge its successes and far more measured in their criticism than those less familiar with the its recent history.

The latter group most certainly includes the representatives of those NGOs concerned only with single issues, especially in the human rights area, who are consequently unable to judge the country’s progress in the round. Yuriko Shoji, UN Resident Coordinator to Kazakhstan, plainly belongs to the former category. She declared on 2nd December 2004: “… overall the development of Kazakhstan is quite amazing … Kazakhstan has every opportunity for becoming a true leader within the international community.”

Economic diversification is the last major barrier that Kazakhstan must surmount if the challenge of nationhood is to be met and its claims to leadership are to be securely based and long-lasting. Among the Central Asian republics, it is the only one to have combined rapid economic advance, religious and ethnic tolerance, gradual political reform and stability. It is greatly in the interests of both its immediate neighbours and the major powers that it should continue to succeed. The only beneficiaries of failure would be international terrorists.



Footnotes

1 See CIC Occasional Paper No. 1
2 For details of defence expenditure see The Military Balance 2003-4, IISS, London
3 Edward W. Walker, “Islam Islamism and Political Order in Central Asia”, Journal of International Affairs, Spring 2003
4 See Zeyno Baran (ed.) The Challenge of Hib ut-Tahir: Deciphering and Combating Radical Islamist Ideology, The Nixon Center, 2004
5 Edward W. Walker, “Islamism and Political Order in Central Asia.”
6 IRIN, 13th May 2004
7 IRIN, 2nd December 2004