Even in the nature of its economic and political problems, Kazakhstan mirrors Russia and Ukraine rather than its Central Asian neighbors. The flip side of the development of Kazakhstan’s energy resources underscores this very clearly. As in the case of Russia, where oil and gas are now seen as the country’s greatest strategic assets, in Kazakhstan energy resources are viewed as the key to modernization and Kazakhstan’s establishment as a future regional power. Currently in Russia, however, soaring world oil prices have led to an unprecedented influx of energy export revenues into the state budget, increasing the role of the state in politics and the economy, and stifling the further development of political pluralism and private-sector innovation as the government begins to drive major investment decisions. The Russian energy industry is also being stripped of revenues that would otherwise be reinvested in its long-term development to diversify the rest of the economy––running the dual risks of a future downturn in the oil and gas sectors if production and energy prices fall, and a broader collapse of the economy if government subsidies for other industries then disappear.[1]

As a major oil producer with a similar post-Soviet economic profile, Kazakhstan runs the risk of catching this new “Russian disease,” where heavy-handed centralization and over-bearing statism loom on the horizon. Indeed, just like in Russia, economic nationalism is on the rise in Kazakhstan. Western investors in the oil and gas sector are feeling the squeeze through the stealth repeal (with new taxes and fines rather than canceled contracts) of some of the favorable terms for investment by international energy companies in the 1990s; and the Kazakhstan government has announced that it wants more “strategic control” over the development of its energy resources.[2] In terms of state spending, in President Nazarbayev’s addresses to Kazakhstan’s people and parliament on both February 18, 2005 and September 1, 2005, he outlined an extensive array of government budgetary expenditures for increasing public sector wages and payments, new public housing programs, and developing small and medium businesses, as well as a whole series of new reforms.[3] One Kazakh official commented to me in a candid moment in March 2005 that he feared that, with the state’s coffers bulging with money, the government was now trying to do too much, too fast, and without adequate preparation––risking the quality of reforms in the quantity of spending.

Unfortunately, Kazakhstan also runs the risk of becoming, like Russia, a victim of its own success. The World Bank’s March 2005 country economic memorandum on Kazakhstan––Getting Competitive, Staying Competitive: The Challenge of Managing Kazakhstan’s Oil Boom––encapsulates the dilemma in its title. Kazakhstan’s construction, banking, service, and retail sectors are booming. But, as the World Bank’s report underscores, most consumer goods are imported, and the manufacturing and agricultural sectors are respectively stagnant and declining. The oil and gas sector accounts for nearly 80% of industrial output, with exports in all other industries holding flat since 1997, defying government efforts to diversify the economy. One of the most precarious sectors is housing construction, which shows every sign of overheating, fueled by the injection of large sums of oil money into the economy, and further encouraged by the massive building project of the new capital in Astana.

Beyond encouraging a construction boom, relocating the capital over 1,000 kilometers north to Astana has had some other downsides. It has moved the focal point of Kazakhstan’s population into the geographic region of Western Siberia––a move equivalent to shifting the United States’ capital from Washington, DC to Greenbay Wisconsin, or Russia’s capital from Moscow to Irkutsk on Lake Baikal in Siberia. Astana is on average 10 degrees Celsius colder than Almaty, which is significant when one considers the additional costs involved in constructing new buildings of glass and steel to withstand the ravages of the elements and of keeping these buildings heated in the winter. Keeping buildings cool in the summer is also an issue. Although Astana holds the distinction of being the world’s “coldest” capital city, the region around it experiences dramatic annual temperature swings from minus 30-35 degrees Celsius in the winter to plus 30-35 Celsius in the summer.[4] The plans for Astana envisage growing the city from an initial size of 250,000 (before it was designated as the capital) to 1.2 million over the next several years. Its current population stands officially at around 600,000, and many of the buildings designed for and under construction in the city would not look out of place in the Persian Gulf states like Dubai and Qatar––including a dramatic steel, glass and stone pyramid, designed by world-renowned British architect Sir Norman Foster, to house a new religious and cultural center.[5]

Like many of Russia’s Siberian cities, Astana also suffers from problems of remoteness. Travel between Astana and Almaty and the relatively densely populated south of the country is difficult. Almaty remains the natural communications hub for Kazakhstan as well as a hub for the rest of Central Asia because of its location close to the borders with Kyrgyzstan and Uzbekistan. It still attracts most international flights, although the government is trying to redirect them toward Astana to the great irritation of the southern elite and many in the international community in Almaty. Flights between Almaty and Astana, although increasing in frequency, are often over-booked, and the only alternative travel option is by rail––a journey that can take as long as 20 hours between the two cities. For now, the technocratic governing elite in Astana is cut-off from rest of country, with much of the country’s international presence and civil society (and the main political opposition) still concentrated in Almaty. Astana was created to solve one set of problems, but like Russia––which moved its capital from Moscow to St. Petersburg, and then back again––Kazakhstan now has two capitals, Astana and Almaty, with very different profiles.

Kazakhstan shares other dilemmas with Russia, including an aging population and the kind of general demographic decline associated with the lower birth rates of developed industrial states. Like Russia, Kazakhstan has lower life expectancy and higher than normal adult mortality rates, which have been linked to the stresses attendant at the collapse of the USSR as well as poor dietary and healthcare practices.[6] In fact, the Slavic population in Kazakhstan’s north, shows the same poor health profile and low life expectancy as the Russian population it borders in the Urals and western Siberian, while birthrates have been higher among the ethnic Kazakh in the south. Kazakhstan’s government has set ambitious targets for population growth from 15 million in 2005 to 20 million in 2015, including introducing programs for the migration of 4.5 million “Oralmans,” or ethnic Kazakhs, from neighboring countries of Central Asia, Turkey, Mongolia, and China. Although 374,000 “Oralmans” have “returned” to Kazakhstan in recent years, the bulk of Kazakhstan’s population growth is currently the result of illegal migration into Kazakhstan from the rest of Central Asia as well as China.[7]

Economic migrants are attracted to Kazakhstan by the prospect of low-skilled jobs in the growing construction and service sectors. For example, the Kazakh government itself suggested (during interviews I conducted in Astana on this subject in March 2004) that Kazakhstan may presently have as many as a million illegal migrants, working either temporarily or permanently in the country. Officials from the Migration Agency and the Presidential Administration indicated that, according to their estimates, there are at least 500,000 people from Uzbekistan alone working illegally in Kazakhstan, with most working in the southern agricultural regions on the Kazakh-Uzbek border and in construction in Astana. As a further illustration, the local government in Almaty estimates that as many as 100,000 migrants from neighboring Kyrgyzstan come to work in the region every summer.[8] Shanty towns have sprung up on the outskirts of Astana, Almaty, and other cities, creating social pressures and a new underclass that the Kazakh government has not yet devised policies to deal with. The concentration of new wealth in cities like Astana and Almaty have also exacerbated existing economic disparities among Kazakhstan’s far-flung regions, increasing domestic political tensions.

In large part, as already noted, many of these issues are a mark of the success of Kazakhstan’s post-Soviet transition. Modernization and rapid economic development of the kind that Kazakhstan is experiencing always bring new social problems, as well as demands for more change––especially political change. Although the Bolashak program has been very successful in bringing a new generation of people into positions of power, Nazarbayev’s is still an aging regime held in place by what is essentially an old Soviet elite. Nursultan Nazarbayev may have been the most successful of the former Soviet leaders who inherited a new state, but he is still a Soviet holdover. And unlike in many other states, including Russia and Ukraine, there has been no post-Soviet transition of executive power in Kazakhstan. If Nazarbayev completes his third term in 2012, he will have been in power for almost a quarter of a century. All of which raises the question of how to create the mechanisms to bring in an entirely new president and leadership in the near future.

The Kazakh parliament, which is now generally seen as tightly controlled by the executive branch, has not yet emerged as a route to the upper echelons of power. Presidential preference (enlightened as it may be at times) is still seen in Kazakhstan as the way ahead. If Nazarbayev is re-elected in December 2005, the top job will be locked in for the next seven years. And, with decisionmaking authority centralized in the presidential administration, Kazakhstan has all the basic conditions for a ruinous round of infighting over the question of a successor—very similar to the waning days of Boris Yeltsin’s regime in Russia, and to the drama unfolding again in Russia as President Putin approaches the end of his term in 2008.

Frustration with the Nazarbayev regime is already bubbling up to the surface of politics. There have been numerous splits in the ruling elite over the last several years, illustrated by the defection, ostracizing, and even imprisonment of political figures once close to Nazarbayev, including former Prime Minister Akezhan Kazhegeldin, and Galimzhan Zhakiyanov, the former Governor of Pavlodar, and a sometime protégé of the Kazakh President. Both were accused of corruption after publicly parting ways with the President and entering the opposition, with Kazhegeldin ending up in exile abroad, and Zhakiyanov jailed for several years.[9] The Zhakiyanov case, although shrouded in a great deal of intrigue, is particularly striking, as Zhakiyanov was, in the late 1990s, viewed within the Kazakh government as a rising star, designated by the President for greater things. He moved rapidly in this period from the head of the Agency for Control Over Strategic Resources to the governorship of Pavlodar, a key province on the Russian border. His equally rapid demise suggests that some of the members of Nazarbayev’s “anointed” young generation may have pushed for too much power, too fast and too early for the President’s preferences.

The Kazakh opposition is now filled with people who have been in power, or close to the center of power, and have had the opportunity of participating in the running of the country, but who have felt stifled by Nazarbayev’s heavy top-down control, or disillusioned with the lack of political and economic opportunity. These include figures like Oraz Zhandosov, the former Deputy Prime Minister, Finance Minister, and Chairman of the Central Bank of Kazakhstan, once seen as one of Nazarbayev’s “young Turks,” spearheading the country’s reform program; and Zharmakhan Tuyakbay, a former Nazarbayev loyalist and ruling party member, the former Prosecutor General and Speaker of Parliament, who parted ways with Nazarbayev after accusing the government of manipulating the outcome of Kazakhstan’s last round of parliamentary elections.

At the founding congress of the opposition movement “For a Just Kazakhstan” in March 2005, the opposition parties and leaders present selected Tuyakbay as their candidate to contest the presidential election. The opposition leaders at the meeting also paid tribute to Kazhegeldin––who was reported to be funding the new movement from exile––and to Zhakiyanov, who was portrayed as the symbol of the opposition, the outcast martyr, suffering for his convictions.[10] However, the fact that the opposition includes such formerly influential figures, all of whom entertain their own ambitions for the “top job,” has also tended to lead to infighting. The various opposition movements have repeatedly split into competing factions and the coalition “For a Just Kazakhstan” is a precarious one.[11]

As in Russia and other post-Soviet states, the opposition to Nazarbayev may be fractious, but it is genuine, and it is also complicated by its links to the Nazarbayev “family” and political “clan.” References to the Nazarbayev family (his actual immediate and extended family) are usually the issue that raise the most direct comparisons with the other Central Asian states––especially Kyrgyzstan and Uzbekistan, where presidential family members have been active in politics and business. In Kyrgyzstan, the corruption and venality of President Askar Akayev’s family, and his coterie’s attempts to manipulate the 2004 parliamentary elections with a view to enabling Akayev to stay in power longer than the constitution permitted, were the main triggering events for the protests and eventual overthrow of the government. Akayev’s son, Aidar, and daughter, Bermet, both ran in the parliamentary elections in district races where prominent members of the opposition had been excluded, and won their seats before the elections were overturned by subsequent events. In Kazakhstan, Nazarbayev’s family and associates are increasingly visible in key business sectors. Nazarbayev’s eldest daughter, Dariga, has her own political party in addition to significant media holdings; and her husband, Rakhat Aliev––Nazarbayev’s son-in-law––was appointed as a new First Deputy Foreign Minister in July 2005, having formerly served as Ambassador to Austria and Deputy Chairman of the National Security Committee.[12] Immediately after Akayev’s overthrow, many people in Kyrgyzstan and Kazakhstan speculated that these similarities would have an impact on public perceptions of Nazarbayev’s legitimacy.[13]

The surface similarities between the Akayev and Nazarbayev families, however, do not tell the whole story of public perceptions. Based on my interviews in Kazakhstan over the last two years, there is a general sense among the Kazakh elite that Nazarbayev’s family is more restrained in its activity than its counterparts in Kyrgyzstan or elsewhere in the region. While not minimizing the extent of the problem, several of my interlocutors described the situation in the following general manner: although members of Nazarbayev’s family may “always try to get a piece of the action they don’t control,” they are “more modest” and “wiser”[14] in their approach; they have a “sense of proportion;” “they don’t flaunt themselves too much.” They are seen to leave space for others outside their immediate circle to develop and grow businesses and make money. As one seasoned Western observer noted, Nazarbayev sets the tone at the top. His “clan” still seems to have a sense of the importance of developing the country and of not stripping its assets at the population’s expense. This is not “Sukharto’s Indonesia” (which is how several Western observers in Bishkek described Akayev’s Kyrgyzstan in its waning years).[15]

In Kyrgyzstan, in 2004-2005, the general perception, in contrast, was that no-one could do business without the Akayev family––and given the small size of Kyrgyzstan and its economy, the family’s intervention had become all-consuming. In Kazakhstan, corruption and cronyism may be serious problems but they are not overwhelming. Kazakhstan is large and its economy is growing. There is more of the proverbial pie (while the economy keeps growing) for everyone to share, even if the Nazarbayev family takes the biggest piece.

In this regard, there is also a general sense in Kazakhstan, at the public and the elite level, that the opposition is “not all that much better.” Many Kazakh professionals outside the government presume that the opposition––especially given the fact that many of its members were once in Nazarbayev’s inner circle––is just as corrupt, or potentially as corrupt, as “the family.” Members of the Kazakh elite are also relatively well-informed about events elsewhere in the region, and the evident disillusionment in Ukraine and Georgia, and especially in Kyrgyzstan, with the “colored revolutions” has tempered desires for a radical change in leadership Kazakhstan. In my interviews in March 2005, beyond the opposition party leaders, many Kazakhs in civil society and the media in Astana and Almaty expressed a great deal of skepticism about the outcomes of the “colored revolutions” in Ukraine and Georgia––where they saw one group of insider political elites simply being exchanged for another. And the unfolding events in Kyrgyzstan that were, at the time, heading toward the overthrow of Askar Akayev were generally seen as a “bunt”––more a riot than a replay of the “Orange” and “Rose” revolutions in Ukraine and Georgia. There was considerable alarm in Almaty (which unlike Astana is very close to Bishkek) at the widespread looting and criminality in Kyrgyzstan that accompanied Akayev’s flight from the country.

Although against the backdrop of the other political upheavals in Eurasia in 2003-2005, the December 2005 presidential elections in Kazakhstan may appear to be a turning point, it seems unlikely that Kazakhstan will follow the path blazed by Georgia, Ukraine and Kazakhstan under current circumstances. It is difficult to conceive that the Kazakh population will rally around the opposition in the weeks leading up to the election––unless there is some kind of massive provocation that sharply undercuts Nazarbayev’s legitimacy. Nazarbayev remains popular, neither the population nor a large group of the elite is disaffected at this juncture, and the opposition, in spite of its attempts to present a united front, lacks a coherent political platform––with the exception of a proposed new draft of the Kazakhstan Constitution.[16] By pulling the election date forward from 2006 to December 2005, the government also removed the advantage from the opposition, leaving them with essentially only three months (September to November) to campaign for their presidential candidate.

The fact that Kazakhstan is a huge state geographically, with two capitals, a small population, no clearly defined periphery, and major differences between north and south, as well as between rural and urban areas, makes it very difficult for the opposition to campaign across the country and offer a compelling alternative to Nazarbayev. And Nazarbayev is still “delivering” for the people of Kazakhstan in 2005. In contrast, Shevardnadze, Kuchma and Akayev were no longer delivering much for their populations. And, in many respects, at this juncture, the “colored revolutions” in Georgia, Ukraine, and Kyrgyzstan have not met the high expectations that were invested in them––especially in Kyrgyzstan where the new government seems to have fallen into protracted crisis with political assassinations and rumors of criminal groups infiltrating politics at the highest levels. The Orange Revolution in Ukraine has been upturned by the dismissal of Prime Minister Yulia Timoshenko and her team in September 2005 after months of bickering and infighting; and the bloom is off the Rose Revolution in Georgia.

In both Georgia and Ukraine, the much-praised new governments of Mikheil Saakashvili and Viktor Yushchenko got huge boosts in legitimacy and trust by simply becoming the new governments, and replacing the bankrupt and despised regimes of Eduard Shevardnadze and Leonid Kuchma. In Georgia, after several initial bold moves to tackle corruption and completely dismantle and revitalize Georgia’s predatory traffic police, domestic economic reform is dragging and Saakashvili’s government has become bogged down in military adventures in the separatist republic of South Ossetia and foreign policy confrontations with Russia. Few people in Georgia, have seen their material well-being and daily lives improve and the public dissatisfaction has returned.[17] If Saakashvili cannot meet the expectations of the population, then his government’s legitimacy will be a rapidly depreciating asset. Likewise, President Yushchenko in Ukraine saw his popularity drop precipitously, as his government turned on itself and became paralyzed. Almost 15 years after the end of the Soviet Union, simply being a Ukrainian or Georgian leader that can claim to be separate and independent from Moscow is no longer sufficient. And no matter what “color” a new government is perceived to be, it has to deliver.

In looking ahead, Nazarbayev’s legitimacy and popularity as President after December 2005 will also depend on his ability to keep delivering. This is not just an issue of ensuring continued improvement in the economic well-being of the population, although this is an important element. As Mikhail Gorbachev also noted in August 2005––when commenting on Nazarbayev’s decision to run for a third presidential term––Nazarbayev must keep on opening up the political system to opposition and minority views, and expand pluralism for Kazakhstan to move ahead.[18] The big test for President Nazarbayev and his government will come after the December presidential election as they look ahead to 2012 and consider how to conduct the future succession of executive power. At this stage, President Nazarbayev seems to have a clear preference for the kind of transfer of power from Presidents Yelstin to Putin in Russia in 2000, with a selected successor rather than the chaotic change of power in Georgia, Ukraine, and Kyrgyzstan. But Nazarbayev’s considerable legacy would be squandered if he followed too much of the Russian path in ensuring this succession, by taking further steps to crack down on the opposition, NGOs, and the media, instead of strengthening the existing electoral and institutional democratic processes in the period leading up to 2012. A crackdown on the alternative views and institutions to the presidential administration would both undercut Kazakhstan’s position as one of the leading post-Soviet states and increase Astana’s current isolation from the rest of the country.

Without a more dynamic political system, Kazakhstan cannot expect to continue its soaring economic growth indefinitely. As the population becomes increasingly politically sophisticated in Kazakhstan, Nazarbayev must offer adequate and alternative avenues of political participation and expression for a larger number of people. And he must continue to provide opportunities for advancement for the young educated elite, he has spent so much effort in cultivating over the last several years. Kazakhstan needs a genuine opposition and an emancipated and active parliament in addition to a strong executive branch. If there are no meaningful political institutions to convey and mediate the population’s opinions and demands over time, people will eventually take to the streets to protest if there is a downturn in the economy or some other crisis that increases the perception of hardship or cuts into the perceptions of Nazarbayev’s legitimacy. Russia’s social benefits protests in January 2005 underscore this fact––as do events in Georgia, Ukraine, and Kyrgyzstan.

In conclusion, although the “colored revolutions” of the last two years do not set the course for Kazakhstan in December 2005, they do have some lessons for President Nazarbayev for January 2006 to December 2012. He should not take public opinion or his current popularity for granted. Shevardnaze, Kuchma, and Akayev, were all popular in the early years of their presidencies and were seen as progressive reformers. And, after this December, he should not try to stay in power beyond the currently constitutionally-mandated term. The people of Kazakhstan need to be able to see a different future that extends beyond the person and presidency of Nursultan Nazarbayev.

[1] For a more detailed discussion of these issues see Fiona Hill, Energy Empire: Oil, Gas and Russia’s Revival, London: The Foreign Policy Center, 2004.

[2] Based on interviews with local representatives of international oil companies in Almaty in March 2005 and United Financial Group (Moscow) 2005 reports on the energy sector in Russia and Kazakhstan.

[3] “Kazakhstan on the Road to Accelerated Economic, Social and Political Modernization,” February 18, 2005, and “Kazakhstan’s Way Forward: Stability, Modernization and Prosperity,” September 1, 2005.

[4] For a detailed discussion of the problems associated with cold and remote cities in Russia and Siberia, see Fiona Hill and Clifford Gaddy, The Siberian Curse: How Communist Planners Left Russia out in the Cold, Washington DC: Brookings Institution Press, 2003.

[5] Hugh Pearman, “Foster Designs the Pyramid of Peace,” The Sunday Times (London), February 20, 2005.

[6] Average life expectancy in Kazakhstan dropped to 61.7 years in 2002 from 67.73 in 1992.

[7] Information from interviews with the Kazakhstan Migration Agency, Presidential Administration, and the Kazakhstan Center for Systems Research in Astana in March 2004

[8] Natal’ya Berzhbitskaya, “Lyudi v dvizhenii nuzhdayutsya v podderzhke,” Kazakhstanskaya Pravda, March 19, 2004.

[9] Martha Olcott has a detailed discussion in Kazakhstan: Unfulfilled Promise of the struggles between President Nazarbayev and the Kazakhstan parliament and the various rifts within the political elite in the late 1990s. See Chapter 4, “Trying Pluralism and Abandoning It,” pp.87-127.

[10] Information taken from personal notes at the meeting.

[11] See, for example, Marat Yermukanov, “Kazakh Opposition in Disarray as Decisive Battle Looms,” The Jamestown Foundation Eurasia Daily Monitor, Volume 2, Issue 72, April 3, 2005.

[12] Marat Yermukanov, “Nazarbayev Lines up his Men Ahead of Election Campaign,” The Jamestown Foundation Eurasia Daily Monitor, Volume 2, Issue 150, August 2, 2005.

[13] Especially since, at one point, Akayev’s son was married to Nazarbayev’s younger daughter, and the Nazarbayev family are reported to have significant investments in Kyrgyzstan.

[14] Strictly speaking, the Russian word my interlocutors in these private interviews used was “vospitannyy” or “well brought-up.”

[15] This reference came up repeatedly in interviews.

[16] Household surveys carried out by the World Bank in conjunction with the Brookings Institution in December 2004 show generally high levels of satisfaction with the situation in the country across Kazakhstan.

[17] General conclusions from interviews in Tbilisi in July 2005.

[18] Interfax, August 25, 2005.