Kazakhstan Opinions - The Times Of Central Asia

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What Bank Loan Data Can Tell Us About Kazakh Business in 2023

After being severely tested by the pandemic in 2020-21, several thousand companies in Kazakhstan closed due to decreased demand and supply chain disruptions. Though the problems of local businesses began long before the pandemic, the two years of lockdown wiped out many good players and made those that survived more dependent on government orders and projects. Overall, Kazakhstan has a primarily commodity-driven economy (crude oil, metals and petrochemicals account for the majority of export earnings), and the country's economic fortunes have tracked the prices of a short list of major commodity exports. Thus, the government finds it hard to diversify the economy. Oil price volatility affects the national currency, and the ups and downs in the tenge exchange rate versus hard currencies make it difficult to be in a business with an investment cycle longer than one and a half to two years, as you have lower revenues amid dollar investments. This is one of the reasons why launching long-term projects in the country is difficult when there are no guarantees of sales, while currency risks can hit any project. The government has been active in attracting foreign investment, offering state support and protection, but only relatively recently did it begin to pay the same attention to the demands of domestic investors. However, this is only the beginning of a very long journey towards reducing dependence on imports and expanding the range of exports to stabilize the economy. A debt-driven economy The share of the private sector in Kazakhstan is difficult to measure. If we take SMEs (small to medium-sized enterprises) as the core of private business, in different years it fluctuates between a range of 20-30% of GDP. However, since state capitalism is entrenched in the country, even among SMEs there are contractors working for state and quasi-state structures, receiving funds from state companies and agencies. One-hundred-percent private companies that do not depend on government contracts finance their operations from their own or borrowed capital. This is why, in a transparent economy like Kazakhstan’s, looking at loan data can reveal the main trends in business and which niches have not yet been occupied and could be interesting for investment by both foreign and local players. It is best to look at the country's economy through the loan portfolio of banks that are subject to international banking regulation, whose indicators meet an easily understandable standard. There is a caveat: in Kazakhstan there is also the Development Bank of Kazakhstan, which is not included in the table below. It is technically not a bank, but rather a development institution financed from the quasi-public sector by Baiterek National Management Holding, which receives budgetary funds. In addition, most extractive-industry companies in Kazakhstan – due to their high capital expenditures and the shallowness of the country’s financial market – raise funds in the U.K., Switzerland, the U.S. and Russia. Chinese banks rarely lend to 100%-Kazakh companies, limiting themselves to trade credits (in the form of equipment) or loans to joint ventures with Chinese...

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Creation of Kazakhstan–Azerbaijan “Supreme Interstate Council” Marks New Era of Cooperation

Diplomatic relations between Kazakhstan and Azerbaijan have developed dynamically since they were first established in August 1992, and have increased over the past 20 years, and grown especially since 2017. Over the last decade, the number of high-level visits in both directions have been rising to the point where they are now regular occurrences at an inter-ministerial level. That said, President Kassym-Jomart Tokayev’s state visit to Baku on March 11–12 represents yet another new phase in the two countries’ strategic partnership with a focus on trade, economic investment, and international cooperation. This new era is marked by the creation of their bilateral Supreme Interstate Council (SIC), a qualitatively recent development that will institutionalize and drive cooperation in new ways. (Readers should note here that the connotation of “Supreme” in this case signifies “high-level” rather than “having sovereign or autonomous power”. This is exactly the difference, respectively, between the Russian-language adjectives vysshii - literally “high-level” or “highest” - and verkhovnyi - the USSR’s Supreme Soviet, its highest legislative body, was verkhovnyi. This is a matter of choice of terms for translation. “Supreme” has been adopted following the usage of the countries concerned in their English-language public discourse, but it should not be misunderstood.) Although the Kazakhstan–Azerbaijan SIC has only just held its first meeting and is not yet fully institutionalized, it would seem from diplomatic indications that its activity is likely to resemble that of the Strategic Partnership Council (SPC) between Turkey and Azerbaijan. This latter forum was created in 2019 to subsume the two countries’ bilateral Strategic Cooperation Council, which was founded in 2010. Cooperation organized by this bilateral SPC broadly covers four issue areas: military-political and security issues, military and military-technical cooperation, humanitarian issues, and economic cooperation. These areas are listed in order of priority, meaning that the SPC and the SIC’s first focus is on cooperation related to military and security issue areas, plus other relevant issues that these may indicate. Nevertheless, cooperation in the humanitarian and economic spheres, which has been ongoing for some time, is sometimes folded into these top-priority areas within the existing consultative structures. The agreements signed at the November 2021 presidential summit between Kazakhstan and Uzbekistan had foreseen the formation of a bilateral SIC between them as well. Now that both these parties have ratified their Treaty of Allied Relations, also signed at that time, this SIC’s first meeting is scheduled for August of this year. Following the pattern of what is known about the SIC with Azerbaijan, it will be formally chaired by the two heads of state and organized by their respective foreign ministries. The speakers of their parliaments’ lower houses and representatives of security councils may join in the work as necessary. Thus, security and foreign-policy issues will be the main concern in the first instance. Nevertheless, like the SIC between Kazakhstan and Azerbaijan, the one between Kazakhstan and Uzbekistan is likely in the medium term to develop organizationally along the lines of the Turkish-Azerbaijani Strategic Cooperation Council, eventual transformation...

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Religion in the Cities of Kazakhstan – Opinion by Gulmira Ileuova

The research discussed in this article was conducted in July-August 2023 by the Strategy Center for Sociological and Political Studies Public Foundation in collaboration with the office of the Rosa Luxemburg Foundation in Central Asia. A total of 1,604 people were surveyed in six cities. Since the goal of the project was to study atheism and atheistic views, the choice of where to conduct the survey was made based on the latest census data, according to which the following regions/cities had the highest proportions of nonbelievers: Kostanay Region (4.84%), Mangystau Region (4.38%), Almaty (4.32%) and Shymkent (3.65%), versus an average across the whole country of 2.25%. Table 1. Religion of the population of Kazakhstan (%; census data) Muslim Orthodox Refused to answer Nonbeliever Kazakhstan overall 69.31 17.04 11.01 2.25 In cities 64.45 20.45 11.84 2.81 Of course, the term “nonbeliever” is not necessarily equivalent to the concept of “atheist,” but nevertheless we decided to start with these statistics with the goal of understanding the religious identities of city residents in the given areas and identifying the reasons contributing to the increased share of nonbelievers, including atheists. This study was conducted in cities at three administrative-territorial levels: so-called “cities of republic significance” (Almaty and Shymkent); regional capitals (Kostanay and Aktau); small towns (Rudny and Zhanaozen). The survey in these six cities showed that 72% considered themselves Muslim, 10% Orthodox and 4% atheist (Rudny 5.6%, Almaty 4.7%, Zhanaozen 4.5%, Kostanay 3.0%), while about 1% named other denominations (“protestant movements,” “Baptists,” “Jehovah’s Witnesses,” “New Life”). Twelve percent refused to answer the question, while 1% could not answer. Analyzing the responses to this question by age, we see that there are more atheists in the youngest age group of 18-24 years old at almost 5%, while in this same cohort, as well as in the 31-49 age group there is a higher proportion of Muslims (77% each, versus 65% in the 50+ group). A higher share of people over 50 are Orthodox Christians, while in this oldest group more people also refused to the question (17%). Thus, 87% of city dwellers who took part in the survey reported that they were followers of one religion or another. However, if we use the Dawkins spectrum (of theistic probability) – which we slightly modified for the purposes of this study – we see that among those surveyed only 77% were believers. Overall, only 48% were strong theists, absolutely convinced that God exists. Another 29% were uncertain that God exists but still assume so. Twenty percent classified themselves as agnostics – lacking a clear position on whether God exists or not – while 3% are atheists, strong or uncertain. Table 2. Which statement best reflects your position? (% of total respondents) Statement Share, % Decided theist (I am convinced that God exists) 47.9 Uncertain theist (I do not know for sure that God exists, but the probability is high, so I believe that he does) 29.4 Agnostic (I do not know whether God exists...

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Nurturing Global Partnerships – Opinion by the Minister of Science and Higher Education of the Republic of Kazakhstan, Sayasat Nurbek

Kazakhstan, a sprawling and culturally diverse nation nestled in Central Asia, has strategically embraced a multi-vector policy across its foreign relations, economic strategies, and governance. At the heart of this strategy lies Kazakhstan's multi-vector policy in education, a forward-thinking initiative that underscores the nation's commitment to diversification, international collaboration, and educational modernization. International partnerships form a cornerstone of Kazakhstan's educational framework, enriching its academic landscape and fostering innovation. The country has established strategic alliances with prestigious universities, research institutions, and governmental bodies worldwide. Through collaborative endeavors such as joint research ventures, student and faculty exchanges, the implementation of international educational programs, and the establishment of branches of foreign universities within Kazakhstan, the nation endeavors to harness global expertise and best practices to elevate the caliber of its education system. Multi-Vector Policy in Education Over the past year alone, Kazakhstan has witnessed the opening of eight foreign branches, bringing the total to twelve. The first foreign university established its branch is British De Montfort University. This university opened its doors for its students in 2021, offering educational programs for more than 500 students in such fields as finance, design and business. This branch attracted 16 million US dollars from foreign investors. Noteworthy among these initiatives is Kazakhstan's adoption of a strategic partnership model, which has yielded tangible outcomes. Kozybayev University's collaboration with the University of Arizona in 2022 is a prime example. With 589 students enrolled across ten specialties – spanning pedagogical, biotechnological, and IT domains – this partnership, supported by 1200 full scholarships from the government, signifies a concerted effort to enhance educational opportunities and foster interdisciplinary learning. Similarly, the formation of a consortium in 2022 with renowned German universities, operating under the auspices of the Caspian Engineering and Technology University named after Sh. Yesenov, underscores Kazakhstan's commitment to excellence in engineering education and technological innovation. Offering a diverse array of programs encompassing engineering fields, data management, artificial intelligence, and beyond, this consortium exemplifies Kazakhstan's proactive approach to equipping its citizens with cutting-edge skills and expertise. Established in 2023 at Zhubanov university, the Heriot Watt University branch offers an array of programs in vital fields such as petroleum engineering, electrical power engineering, and computer engineering, boasting an impressive enrollment of 286 students from 13 Kazakhstan regions. The Luban Workshop initiative at Serikbayev University exemplifies Kazakhstan's commitment to advancing its automotive education and training capabilities. This initiative, supported by foreign partners, aims to establish state-of-the-art laboratories specializing in automotive transport. These facilities will serve as a platform for incorporating modern Chinese technological advancements into the curriculum, thereby enhancing the quality of education for future automotive specialists. The project also seeks to foster academic and research collaborations with esteemed Chinese educational institutions, paving the way for the development of dual-degree programs, joint research projects, and other collaborative efforts that will enrich the automotive sector's expertise and innovation. The advent of artificial intelligence (AI) has sparked discussions about its potential impact on the workforce and society at large. In response to this...

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Exclusive: Breaking Down Kazakhstan’s Claims Against International Oil Consortiums

The total amount of claims brought against the consortiums, North Caspian Operating Company (NCOC) and Karachaganak Petroleum Operating (KPO) is the largest in the history of Kazakhstan. In March 2023, PSA LLP, the authorized state institution overseeing these projects, brought forward claims in international arbitration in relation to Kashagan and Karachaganak for $13.5 billion and $3.0 billion, respectively. In addition, the Atyrau Region environmental regulator filed a claim for $5.1 billion against the NCOC consortium for storing too much sulfur on site, discharging wastewater without treatment, etc. The claims of PSA LLP cover the period 2010-19 and relate to the oil consortiums’ costs for carrying out large projects, as well as tenders and insufficient work completed. The shareholders of NCOC, which is developing the offshore Kashagan Field, include: KMG Kashagan (16.877% stake), Shell Kazakhstan Development (16.807%), Total EP Kazakhstan (16.807%), Agip Caspian Sea (16.807%), ExxonMobil Kazakhstan (16.807%), CNPC Kazakhstan (8.333%) and INPEX North Caspian Sea (7.563%). Their total investments over the period have not been disclosed, but, according to various estimates, exceed $60 billion – meaning the state is currently calling into question about 23% of all costs. The KPO consortium is Shell (29.25%), Eni (29.25%), Chevron (18.0%), Russia’s Lukoil (13.5%) and Kazakhstan’s state-owned KazMunayGas (10.0%). Investments in this oil and gas condensate field are estimated at $27 billion, hence the filed claim is significantly smaller both in absolute terms and as a percentage of costs, standing at about 11%. A production sharing agreement was signed in 1997 for Karachaganak and in 1998 for Kashagan, with the contracts to be in effect for 40 years. In 2022, the sole participant in PSA LLP became Samruk-Kazyna Trust Corporate Fund, part of the state holding National Welfare Fund Samruk-Kazyna, while Kazakhstan’s Ministry of Energy is currently entrusted to run PSA LLP. NCOC and KPO dominate the industry through control of three fields. Tengiz, Kashagan and Karachaganak are the largest oil and gas fields in Kazakhstan. The country’s oil and gas condensate production in 2023 amounted to 89.9 million tons (about 1.8 million barrels per day), with the share of the “three whales” – as these projects are called – accounting for 67% of oil production: Tengiz with 28.9 million tons, down 1% versus the 2022 level; Kashagan with 18.8 million tons, a 48% increase; Karachaganak with 12.1 million tons, up 7% year-on-year. The stabilization contract for Tengiz was one of the first signed at the dawn of Kazakhstan’s independence in 1993, also for a term of 40 years, meaning it should be the first to expire in 2033. The shareholders of the Tengizchevroil JV are Chevron (50%), ExxonMobil (25%), KazMunayGas (20%) and Lukoil (5%). After completion of its FGP (Future Growth Project), Tengiz should produce about 900,000 barrels per day, a significant figure even by world standards. It is surprising that Kazakhstan has not yet raised or voiced any claims against TCO, even though the FGP budget has swelled from an initial $12 billion to $25 billion – due to the addition...

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Time for the U.S. to Cement a “Nuclear-Weapon-Free” Central Asia

The Central Asian Nuclear-Weapon-Free Zone (CANWFZ) Treaty, which came into force in 2009, represented a significant advance in international efforts to limit nuclear proliferation. Initiated by the five Central Asian countries—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—it aims to enhance regional and global security by guaranteeing that the region remains free of nuclear weapons. In May 2014, all five Permanent Members of the UN Security Council signed a Protocol to the CANWFZ Treaty (the permanent five include China, France, Russia, the United Kingdom and the United States, who also happen to be five signatories of the 1968 Non-Proliferation Treaty, or NPT, that have nuclear weapons). This Protocol legally binds them not to use or to threaten to use nuclear weapons against any of the CANWFZ signatories – i.e., the above-listed five Central Asian countries. As the 10th anniversary of the signing of the 2104 Protocol approaches, it is unfortunate that the United States is the only signatory that has not yet ratified it. The CANWFZ Treaty continues to enhance regional security in Central Asia amidst current international tensions and remains a pillar of regional security that deters threats and strengthens global norms. As a gesture of support for the region's nuclear-weapon-free status, U.S. Senate’s ratification of the Protocol would ultimately enhance U.S.’ credibility on the international stage, solidify its strategic commitment to Central Asia at a critical time, and demonstrate that it will continue to pursue a more secure and stable world. It would also be a significant nod towards Kazakhstan's leadership in nuclear disarmament and the country's pro-active stance against nuclear proliferation. The significance of Kazakhstan’s enhanced role Although it took three more years to enter into force, the CANWFZ Treaty was signed in 2006 in the Kazakhstani city of Semei (formerly Semipalatinsk), which used to host Soviet nuclear tests and is located less than 1,400 kilometres away from the Chinese test site at Lop Nor. The USSR conducted over 450 nuclear tests, both underground and atmospheric, at Semipalatinsk between 1949 and 1989. These tests were carried out with scant regard for the health and safety of the local population or the environmental ramifications. The area continues to bear the scars of this era, with elevated levels of cancer, birth defects and other radiation-induced illnesses persisting amongst the population. In response to the devastating impact of nuclear testing, a profound anti-nuclear sentiment took root in Kazakhstan. This culminated in the formation of the civil-society 'Nevada–Semipalatinsk' movement, inspired by similar groups seeking to close U.S. nuclear sites in the state of Nevada. This movement was a pioneering effort in the late 1980s that united Kazakhstan's citizens in opposition to nuclear tests. The Nevada–Semipalatinsk movement was amongst the first (if not the very first) major anti-nuclear movements in the USSR, and its momentum helped drive Kazakhstan towards independence. After its independence in 1991, Kazakhstan inherited the world's fourth largest nuclear arsenal and has cooperated with the West to dismantle it while also preventing the Soviet era nuclear material left on its soil...