President Pledges an End to Monopolies

Kazakstan’s energy and rail sector monopolies are in danger of simply being divided among powerful businessmen when they are restructured rather than opened up to real competitors more likely to strengthen the economy.



During his annual address to the nation on February 28, President Nursultan Nazarbaev announced the need to “restructure the largest monopolies and develop competition” in the oil and gas, electricity and railway industries.



NBCentralAsia economic observers say that properly implemented, the president’s proposals could pave the way for a competitive environment and small-scale entrepreneurship in key economic sectors. This would contribute to stable economic growth.



“In a demonopolised economy, small and medium-sized businesses are the backbone of growth, since they are more flexible and innovative,” said political scientist Maxim Kaznacheyev, who believes that Nazarbaev’s plan will help the economy grow.



However, Kaznacheyev is concerned that demonopolisation could assume political rather than economic dimensions, and turn into an exercise in property redistribution if there are no laws and regulations to govern the process. There is a danger that corporate raiders will move in to exploit the change, and concern that top managers in the monopolist companies are linked with government officials.



“The problem with the demonopolisation process is that it’s bound up with the aspirations of elite groups to [gain a share] when state assets are being divided up,” said Kaznacheyev. “The president and the government should set out clear criteria that draw clear dividing lines between the needs of economic development and the interests of competing elite groups.”



Analyst Oleg Sidorov says these risk factors will be a major challenge for the government, as financial groupings representing senior politicians as well as business interests move in to take over denationalised companies.



Despite these risks, Kazakstan-based experts are in favour of breaking up the monopolies, as long as it is done fairly and transparently, because the state is no longer in a position to supervise the firms it owns or to regulate their pricing policies.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)