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www.kazakhstan-embassy-us.org

Vol. 3, No. 36, September 25, 2002

Politics

Senator Nunn praises Kazakhstan President's

contribution to global non-proliferation

New human rights ombudsman confirmed

Economy

Kazakhstan, first in CIS, gets investment

ratings from Moody's

Kazakhstan rated 21st in United Nations

foreign investment survey

ChevronTexaco plans to invest $3 billion in

Kazakhstan in 2003-05

President calls for small business support

Kazakhstan plans to reduce refinancing rate Sen. Sam Nunn presents a medal to

and inflation

President Nursultan Nazarbayev in the

presidential office in Astana on

Monday September 23, 2002

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DO YOU KNOW THAT...

...Kazakhstan's population of 15 million people consists of more than 130 ethnic groups representing 46 faiths and confessions who live peacefully together.

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POLITICS

Senator Nunn praises Kazakhstan President's contribution to global non-proliferation

Presents medal made of destroyed Soviet and American missile warheads

On Monday September 23, former U.S. Senator San Nunn presented President Nursultan Nazarbayev in Astana with a medal in recognition of his contribution to the cause of global non-proliferation.

"It was a pleasure for me on behalf of myself and Senator Lugar to present President Nazarbayev with a symbolic medal that was made out of decommissioned Soviet and American missile warheads," Sen. Nunn said. Sen. Nunn, together with Senator Richard Lugar (R-IN), cosponsored the legislation at the beginning of the 1990s to establish the Cooperative Threat Reduction program to fund disarmament of weapons of mass destruction in the former Soviet Union.

"I don't know any other political leader neither in the former Soviet Union, nor in any other country of the world, who contributed so greatly to the cause of disarmament," Sen. Nunn said.

President Nazarbayev made critical decisions to shut down the Semipalatinsk nuclear test site in 1991, and to renounce weapons of mass destruction Kazakhstan inherited from the USSR, including more than 1,100 nuclear warheads, early in 1992. Since its independence in 1991, Kazakhstan has been true to its commitment to disarmament and non-proliferation, and has been working with the U.S. and others to relieve itself of that unwanted legacy.

Sen. Nunn currently is the co-chairman and the chief executive officer of the Nuclear Threat Initiative (NTI), funded by Ted Turner, that aims to help non-proliferation efforts in the world. The NTI presently conducts a number of projects in Kazakhstan related to decommissioning and cleaning facilities of production, storage and testing of nuclear, chemical and biological weapons.

New human rights ombudsman confirmed

First time such office established in Kazakhstan

In a decree issued on September 19, President Nazarbayev established the Office of the Human Rights Ombudsman in Kazakhstan, which is in keeping with the President's statements earlier this year. The Office is to expand and strengthen further the system of human rights protection in Kazakhstan.

Mr. Nazarbayev proposed to appoint Bolat Baykadamov, formerly secretary of the presidential human rights commission, as the first Ombudsman in Kazakhstan. On September 20, committees on legislative work and legal reform of the Senate and the Majilis approved the appointment of Mr. Baykadamov, 56, who spent several years in the sphere of human rights protection.

The new statute specifically stipulates the independent status of the Ombudsman, and makes it illegal to interfere with his actions. The Ombudsman has the right to obtain on demand the information from government agencies, to visit military detachments, prisons and to introduce proposals to bring to account those responsible for violating the human rights. In addition to the new position, a special human rights center will open to support the Ombudsman.

ECONOMY

Kazakhstan, first in CIS, gets investment ratings from Moody's

Country experiences surge of foreign direct investment and export growth, agency says

On September 19 Moody's Investors Service upgraded Kazakhstan's foreign currency rating for government foreign currency bonds from Ba2 up by two notches to Baa3. Moody's also upgraded Kazakhstan's foreign currency bank deposit rating to Ba1 and the government's long-term local currency rating to Baa1. All ratings have a "stable" outlook.

Powered by its energy and non-ferrous metal production sectors, Kazakhstan is experiencing a surge of foreign direct investment and export growth, strengthening its foreign currency reserves, the Moody's said. Construction of new pipelines will dramatically improve market access to gas and oil exports so that volume growth in the medium-to-long term will more than compensate for price volatility.

"The economy will eventually diversify into pipeline and machinery sectors, followed by development of food processing and machinery for construction and infrastructure," Moody's said in its report.

Moody's also praised Kazakhstan's comprehensive pension reform. Kazakhstan also has a small but stable banking system with a deposit-insurance scheme in place.

Kazakhstan is having a budget surplus, thanks to high oil prices and improved collection of taxes. A portion of the surplus is directed to the government's National Fund that is designed to help fill any budget hole in the future. Moody's said Kazakhstan's further economic health depended on the progress on privatization, the ability to withstand currency appreciation and the narrowing of income gap in the country.

Kazakhstan became the first country in the Commonwealth of Independent States, a successor grouping of former Soviet republics, to reach an investment grade status. Market analysts believe this will allow Kazakhstan to tap into a wider pool of investors who will be more open to investing into the investment-graded market.

Kazakhstan rated 21st in United Nations foreign investment survey

140 UN member states surveyed by UNCTAD

According to a new United Nations survey of foreign investment in national economies, that studied 140 UN members, Kazakhstan was rated 21st. The report by the UN Commission for Trade and Development based their rating index on each country's ratio in global investment flow and its share of global GNP. Belgium and Luxembourg were the highest rated, followed by Hong Kong and China.

Total investments in subsurface projects in Kazakhstan totaled $3.1 billion in the first six months of 2002. Foreign investment accounted for 87% or $2.7 billion of overall investments, while domestic investment totaled $402.8 million. 75% of investments from January to July were in oil production operations, while only 25% or $688.2 million was invested in exploratory studies.

ChevronTexaco plans to invest $3 billion in Kazakhstan in 2003-05

"Economy develops well, the Government controls projects well," CEO says

Kazakhstan and the entire Caspian region is an important source of hydrocarbons for the world, and therefore the company will continue its activity in the republic based on economic indicators, ChevronTexaco Chairman and CEO David O'Reilly told journalists after a meeting with President Nursultan Nazarbayev in Astana on Monday 23.

"Over the past 10 years Kazakhstan has achieved remarkable results. Earlier this year Kazakhstan was recognized as a market economy country, last week Kazakhstan got an investment rating from Moody's. This is in recognition of the fact that economy develops well, and the Government controls projects well," Mr. O'Reilly said.

Mr. O'Reilly noted that during the meeting with the Kazakhstan president he presented ChevronTexaco board members to the Kazakhstan leader. He called these board members major U.S. business people, who wished to come to Kazakhstan to familiarize themselves with the investment climate here.

Mr. O'Reilly said that over the past 10 years ChevronTexaco invested a total of $3.4 billion in the Kazakh economy. In 2003-2005, the company plans to invest another $3 billion in projects to develop the Tengiz oil field in Western Kazakhstan.

Currently, oil production at Tengiz amounts to 12.5 million tones annually. After the completion of the investment project to expand the production capacity, annual oil production by the joint venture, Tengizchevroil, at the field will increase by 7 million tonnes.

ChevronTexaco has been the first large foreign investor in Kazakhstan, working in the country since 1993. At the moment ChevronTexaco owns a 50% share in Tengizchevroil, 20% in Karachaganak Integrated Organization (developing the field of the same name in Western Kazakhstan) and a 65% share in a joint venture to develop the North Buzachi field. ChevronTexaco also has the largest private stake in the Caspian Pipeline Consortium that runs the pipeline from Kazakhstan to Russia's Black Sea port of Novorossiisk.

President calls for small business support

Urges removal of restrictions and simplification of tax procedures

Speaking to a business forum in Astana on September 18, President Nursultan Nazarbayev called on the government to make "crucial decisions" to create favorable conditions for small businesses in Kazakhstan. The president specifically urged the removal of restrictions in relevant legislation and the

simplification of tax procedures and registration processes for small businesses. He also suggested a nine-month moratorium beginning next year on small business inspections by tax police.

Kazakhstan plans to reduce refinancing rate and inflation

Decrease to 6% anticipated by 2005

By 2005 the Kazakhstan government plans to decrease the refinancing rate to 6%. According to Prime Minister Tasmagambetov, the refinancing rate will remain at 8% in 2002, drop to 7% in 2003, 6.5% in 2004 and 6% in 2005. The government simultaneously plans to reduce the inflation rate. Mr. Tasmagambetov recently stated in Astana that the inflation rate will remain at 5.8% in 2002, equal 5.9% in 2002, drop to 5.4% in 2004 and finally settle at 5% in 2005. Mr. Tasmagambetov said macroeconomic indicators would improve due to anticipated 8% industrial production growth in 2003.

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For more news and information visit us at www.kazakhstan-embassy-us.org

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