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Vol. 2, No. 12, April 10, 2002

Special Feature: the 2nd Eurasian Economic Summit, Almaty, April 8-9, 2002

Summit focuses on future development scenarios for the region

President Nazarbayev calls for closer cooperation in Eurasia in security and economy...

... says there are a number of major challenges facing the region

... confirms Kazakhstan's commitment to sanctity of contracts

World Bank President lauds Kazakhstan's growth, sets new tasks

EBRD President says Bank set to expand its operations in the republic

Other news

Majilis ratifies UN Convention against Transnational Organized Crime

Supreme Court rules in favor of U.S.-based Parker Drilling Co.

Dennis Tito, first "space tourist" and US millionaire, visits Kazakhstan to launch new stamps

SPECIAL FEATURE: THE 2ND EURASIAN ECONOMIC SUMMIT, ALMATY, APRIL 8-9

Summit focuses on future development scenarios for the region

On April 8-9, Almaty, the largest city and financial center of Kazakhstan, hosted more than 500 political and business leaders from around the world for the 2nd biannual Eurasian Economic Summit, «Sustaining Growth in Uncertain Times", held under the auspices of World Economic Forum in Davos.

The summit focused primarily on the eight core countries five of them in Central Asia and three in the Caucasus of the region. It also paid close attention to the surrounding area (China, Iran, Russia and Turkey) and other nations (Afghanistan, India and Pakistan) that play an important role in the region.

At the end of the summit, experts concluded that the region would not face serious upheavals in the next decade, but warned that considerable problems were posed by the situation in Afghanistan, border disputes among the nations and drug trafficking. In terms of economic development, Kazakhstan is considered to be having the best prospects with GDP growth of 8-10 percent annually. Although prognoses of Davos forums are not intended to be scientific, investors tend to take them into account while making investment plans.

(For more information about the summit visit www.weforum.org )

·President Nazarbayev calls for closer cooperation in Eurasia in security and economy...

In a wide-ranging opening speech at the summit, President Nazarbayev called for closer cooperation between the Eurasian nations and nations beyond the region in the areas of security, economic development and trade in order to build a safer and more prosperous place.

"We have to be thankful to all the members of the U.S.-led antiterrorist coalition for successful operations that restored peace in Afghanistan and improved the situation in Central Asia. That was a step of utmost importance. But it was only a first one. For the military action must be followed by concrete actions aimed at economic development of the region," Mr. Nazarbayev stated.

He said this issue bears strategic implications for stability and security of Central Asia and called upon the leaders to support the international assistance to reconstruct Afghanistan and its economy. "By helping the Afghans, we help ourselves," the President declared.

"In the long term none of the countries in the region will be able to build a closed and prosperous economy to the envy of poor neighbors. Differences in quality of life among neighboring countries are always dangerous; they cause illegal migration, smuggling and a number of other political and even military problems. Only through joint efforts will we be able to create effective mechanisms for mutually beneficial partnership and overcome all obstacles," the President concluded.

...says there are a number of major challenges facing the region

In his speech, President Nazarbayev outlined a series of challenges political and business leaders in the region and beyond need to address.

The first one is "to continue efforts to create effective security system in Central Asia and in Asia as a whole". He quoted the Shanghai Cooperation Organization (SCO), that was created last year and includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, and the Kazakhstan's initiative of Conference on Interaction and Confidence-Building Measures in Asia (CICA), currently including 16 members, as providing mechanisms and forums for achieving such objectives.

The second challenge is "to prevent the Caspian region from possible cataclysms". "The Caspian is an important strategic region in Eurasia, holding one of the richest hydrocarbon reserves. The largest world companies participate in developing its oil resources. It should become a region of peaceful integration and economic cooperation," the President said. He stressed that stability and security of this region would be ensured if "the discussions on Caspian pipeline projects are not to be politicized." The President called on the five littoral states to resolve the legal status of the Caspian Sea and to preserve its environment.

Noting that Kazakhstan, holding one of the world's top ten oil reserves, is expected to considerably increase its output over the years, President Nazarbayev said that "it is necessary to resolve the issues of construction of export pipeline system that would allow in approximately 10 years to increase the production to 200 million metric tons a year." He said Kazakhstan was "ready for broad partnership with all interested nations".

Another challenge, in Mr. Nazarbayev's words, was to "strengthen global and regional nuclear security." "Central Asia today is a non-nuclear enclave surrounded by nuclear-weapons powers and so-called "threshold countries". This worrying geopolitical reality urgently calls for further strengthening the non-proliferation regime," he said.

"Kazakhstan urges the international community to take decisive measures to prevent spreading of nuclear weapons, to establish a modernized system of international control over its proliferation, and to completely ban nuclear testing," the President declared.

...confirms Kazakhstan's commitment to sanctity of contracts

In his other remarks, President Nazarbayev said Kazakhstan was witnessing impressive economic growth of 10 percent annually for the third year in a row and was entering a phase of sustainable social and economic development.

"Kazakhstan was recognized as market economy country both by the European Union and the United States. This is recognition of the success of our reforms," he said. "Principles of our relations with foreign partners are unshakable. They are the invariability and stability of the signed contracts and firm balance of economic interests of the parties".

World Bank lauds Kazakhstan's growth, sets new tasks

Speaking to Reuters on the sidelines of the Eurasian Economic Summit on April 7, World Bank President James Wolfensohn praised Kazakhstan's robust economic growth, but urged to cut overdependence on oil and to fight poverty.

Economists consider Kazakhstan the leader in market reforms in the post-Soviet 12-member CIS, and last month the U.S. officially granted the country market economy status. GDP rose 9.8 percent in 2000 and another 13.2 percent last year. GDP is expected to rise 7 percent this year. Inflation is at single-digit levels and foreign direct investment has reached $18 billion since independence in 1991.

After meeting with President Nursultan Nazarbaev and Prime Minister Imangali Tasmagambetov separately on Sunday, Mr. Wolfensohn said: "I think everyone that I have spoken to is concerned about the overdependence on natural resources, in particular oil." Oil accounts for a half of Kazakhstan's exports and one third of its budget revenues.

President Nazarbayev said the government and World Bank were currently working on a $700 million three-year cooperation program to combat poverty and support small business, medicine, agriculture and education. Kazakhstan became member of the World Bank in July 1992; up until now the bank approved $1.885 billion for 22 projects in Kazakhstan.

EBRD President says bank to expand its operations in the republic

Speaking to reporters following his meeting with President Nazarbayev in Almaty on April 9, Jean Lemierre, President of European Bank for Reconstruction and Development, said the bank plans to invest $300 million in 2002 in Kazakhstan, up from $180 million invested in 2001. The increase "demonstrates quality of the investment climate and stability of macro-economic situation in the republic", he noted.

He said the EBRD would help Kazakhstan's government in diversifying the economy, pledging "large investment" into the economy outside oil and gas sector. "This year will be very important for the banking sector in Kazakhstan," the EBRD chief said, noting that the bank intends "to expand program of trade assistance, particularly for small and medium-sized businesses." "Over the past 4 years we issued 23,000 loans for small businesses in Kazakhstan totaling $160 million. All of these work fine, which speaks about good business environment," he noted.

Mr. Lemierre said his meeting with the president focused on the need to further improve the investment climate. Mr. Lemierre said that President Nazarbayev confirmed "clear willingness to move toward greater transparency and to combat corruption." On a general note, the EBRD chief said, "the business climate is improving and investors understand that. This is a country in which you can invest".

OTHER NEWS

·Majilis ratifies UN Convention against Transnational Organized Crime

·On April 3, 2002, the Majilis, the lower house of Kazakhstan's parliament, ratified the UN Convention on the fight against transnational organized crime. Presenting the bill to the Majilis, vice minister of internal affairs Ergali Merzadinov said the convention had been signed by 140 states and ratified by the eight nations.

It promotes international cooperation in the sphere of prevention, uncovering and prosecuting transnational organized crime. It relates to such crimes as participation in an organized criminal group, money laundering, corruption and obstruction of justice, Mr. Merzadinov said.

The Majilis's vote came only a day after President Nazarbayev set up a new high-level anti-corruption and ethics commission, which bolstered Kazakhstan's efforts on uprooting corruption as the country moves to further improve its standing as one of most advanced nations in the area.

Supreme Court rules in favor of U.S.-based Parker Drilling Co.

The Supreme Court of Kazakhstan has ruled in favor of Parker Drilling Company in a $29 million tax suit on April 1, the RFE/RL reported the same day.

The Ministry of State Revenues has assessed the Kazakh branch of the company with $29 million in added taxes based on the assessment that the $100 million received by Parker Drilling from its customer, Offshore Kazakhstan International Operating Consortium, in reimbursement for capital expenditures incurred by Parker in carrying out its work, was taxable income. Parker countered that the reimbursement was not taxable under Kazakhstan-United States treaty on avoiding double taxation. The company won the case in an Astana city court, the ministry later appealed to the Supreme Court, which now upheld the lower court decision and dismissed approximately $27 million of the ministry's total tax assessment. The Supreme Court ruled in favor of the ministry on other issues, the net effect of which is an assessment of approximately $2.3 million against Parker Drilling. However, since Parker is currently in an overpaid position with respect to its Kazakhstan taxes, management anticipates there will be little if any tax liability as a result of this decision. President and CEO Robert Parker said, "Our company's long-term commitment to Kazakhstan has been reinforced throughout this legal process."

Dennis Tito, first "space tourist" and US millionaire, visits Kazakhstan to launch new stamps

Dennis Tito is in Kazakhstan this week for meetings and the launch of new Kazakhstan post stamps commemorating the flight with the first ever space tourist on board. The crew included Colonel Talgat Musabayev, a Kazakh-born Russian cosmonaut, the captain, Yuri Baturin, the flight engineer, and Mr. Tito. Their historic week-long flight from Baikonur launching site in central Kazakhstan to the International Space Station took place in the spring of 2001.

Dennis Tito, visiting Kazakhstan at the invitation of President Nazarbayev, said after their meeting on April 10 that they discussed ways to further develop space tourism as well as Kazakhstan-United States relations, which, he said, were "constantly improving".

At a news conference in Almaty the same day to launch new postal stamps Dennis Tito said his company, Space Adventures, was helping other people to become space tourists. Later this month the second space tourist, South African Internet magnate Mark Shuttleworth, is scheduled to lift off from Baikonur at a price of $ 20 million, the same amount Mr. Tito paid last year. Mr. Tito said he was working to help the third space tourist, either a male rock singer, a high-ranking NASA employee or another woman, to make a trip to the ISS, and said it was important to make Kazakhstan's Baikonur open for tourism.

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News Bulletin of the Embassy of the Republic of Kazakhstan

(Compiled from own sources and various agencies' reports)

Contact persons: Roman Vassilenko, Aibek Nurbalin

Tel.: (202) 232- 5488 ext. 104, 115

Fax: (202) 232- 5845