Kazak Leader Acts to Head Off Future Challenge

Monday, 21 February, 2005

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IWPR staff

To an outsider, Kazak president Nursultan Nazarbaev’s recent attack on big business might look like a reversal of the policies he has conducted over the past decade, in which corporations have taken control of large swathes of the economy.

But analysts interviewed by IWPR argue that in reality it’s part of a series of steps he is taking outflank potential rivals ahead of a presidential election expected around the end of 2005.

Nazarbaev’s decision to convene the new parliament ahead of time is being seen as another demonstration that he is in total control of the political process and plans to stay one step ahead.

The parliament – specifically the lower house elected on September 9 – is packed with supporters of the pro-Nazarbaev party Otan. The opposition bloc got only one seat – and Ak Jol co-chairman Alikhan Baimenov has renounced it as a protest against alleged ballot-rigging.

The legislature should have convened for the first time at the beginning of December, but Nazarbaev called its first meeting a month early, on November 3.

The president used his opening address to the deputies to accuse what he called “oligarchs” of a multiplicity of sins from tax evasion to a lack of transparency and competition.

"About 10 mega-holdings control almost 80 per cent of Kazakhstan's total gross domestic product," he said.

That would have been no revelation to the assembled politicians: Kazakstan’s mineral-resource based economy is centred around a few big industries that are controlled by either by the government itself or by state-sanctioned corporations

Anyone puzzled by the president’s apparent volte face had to wait for clarification from presidential adviser Yermukhamet Yertysbaev, who told the Interfax news agency, "What the president meant is that the 10 financial and oligarchic groups in Kazakstan which control 80 per cent of the economy should in no way influence decision-making in the government and in parliament."

In other words, the problem is not owning massive economic assets, it’s using one’s financial clout to build up an independent power-base.

Nikolai Kuzmin from the Reputatsia think tank explained how Kazakstan’s “mega-holdings” have diversified from a particular industrial base to make acquisitions in other sectors. For some, the next step is to acquire a media arm, generally newspapers rather than the more controlled radio and television. After that, they might sponsor a political party.

At that point, Kuzmin says, they count as “influence groups”.

Not all the oligarch groups try to muscle in on the political sphere. Those with good ties to the Nazarbaev administration know their place, and the president’s remarks were probably not meant for them. The Eurasian Industrial Association, for example - a conglomerate which includes major firms in the mining, metals and energy industries – is owned by Alexander Mashkevich, seen as a close ally of the president.

Political analyst Andrei Chebotarev believes that the real targets were more likely to lie elsewhere. “Most probably he meant those financial-industrial groups which are trying to pursue their own activities independently of the authorities.

“The Kazkommertsbank group may be one of them. In the past it has been subjected to similar criticism by presidential adviser Yertysbaev, who has said openly that Kazkommertsbank is lobbying for its own interests and that it is working closely together with the Ak Jol party to pursue them.”

Kazkommertsbank is based around the commercial bank of the same name, which has established itself with a solid international reputation and is the dominant player in corporate lending in Kazakstan. The country’s dynamic financial sector tends to be led by young, reform-minded technocrats rather than the older Soviet generation of bureaucrats turned businessmen.

A number of analysts say Nazarbaev’s broadside against bad oligarchs, and his decision to rally a loyal parliament around him, are a direct reaction to the way the parliamentary election went.

If his supporters have just won a landslide victory, the opposition failed to win more than one seat, and no strong rival has emerged to contest next year’s presidential election, why should Nazarbaev be so worried about his future?

One explanation is that while he has had few problems in marginalising traditional opposition parties – principally the Democratic Choice of Kazakstan, DCK and the Communist Party – senior politicians who walk away from his administration could pose a bigger threat.

The most important recent case is the departure of the speaker of parliament, Jarmakhan Tuyakbay.

Tuyakbay – who was also high up in Otan – resigned from both party and parliament last month, delivering a very public critique of the way the election had been run and dismissing it as a “farce”.

In previous elections, it was the opposition and the international community which complained about unfair elections, and while Nazarbaev may have found such criticism uncomfortable, he could ultimately afford to ignore it.

An attack from a man who in constitutional terms had been only three steps away from the presidency was much more biting, and caused a sensation in Kazak political circles.

The defection of Tuyakbay followed the resignation earlier this year of the minister for emergency situations, Zamanbek Nurkadilov, who is now aligned with the opposition.

Tuyakbay has now placed himself firmly outside the presidential camp. His move has given rise to some speculation that he might seek alliances with political or business groups.

In the view of Dosym Satpaev, director of the Risk Assessment Group, the speaker’s resignation might have served as a wake-up call for the president, showing that schisms within the regime can produce powerful dissidents who may go on to build coalitions with anti-government groupings.

For ex-officials thinking of building a powerbase ahead of next year’s election, Ak Jol – a party based on an economic reform platform rather than visceral hostility to the Nazarbaev regime - may offer the most promising political vehicle. The party has already raised its profile by calling for a referendum to annul the election. And it has moved to form a broad coalition with the DCK and the Communists.

According to Satpaev, groups with political ambitions who are associated with Kazkommertsbank could approach Tuyakbay to front an election challenge to Nazarbaev in the presidential ballot. Another alternative is Ak Jol co-chairman and former information minister Altynbek Sarsenbaev.

The president’s apparent sense of urgency becomes more understandable if one assumes there is some truth in rumours that he is considering early elections.

At the moment, the presidential vote is expected at the beginning of 2006, as Nazarbaev’s current term expires at the end of next year and by law the election should then take place within 30 days.

Satpaev thinks the president may well get the new parliament to push through a constitutional amendment legitimising an earlier date.

“From the president’s perspective… an election should be held before either the opposition, or any other potential players who are only now emerging from the political shadows, have time to unite and come up with their own possible successor,” said Satpaev.

Chebotarev’s conclusion is that Nazarbaev is sending out a message to Kazakstan’s main political actors, to the effect that “the leadership is in control and that should the need arise, it has the capacity to deal with anyone.”