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President Nazarbayev Calls for New Stage of Accelerated Economic, Political Reforms, Drastic Upgrade in Life Quality

President Nursultan Nazarbayev delivered
his annual state of the nation address,
“Kazakhstan on the road to accelerated
economic, social and political
modernization”, to the people of Kazakhstan
on February 18, 2005.

This landmark and defining document has
summed up results of the past decade of
the country’s development, and offered a
program of wide ranging political and
economic reforms and drastic upgrading of
the quality of life for the people of
Kazakhstan in the immediate future. The
address has defined Kazakhstan’s foreign
policy priorities and confirmed the country’s
continuing commitment to nonproliferation of
weapons of mass destruction and the fight
against terrorism.

Excerpted below are key messages from the address. Its full text is available here.


Kazakhstan Today

We have every right to be proud of what we have accomplished.

By doubling our GDP, we will together build another Kazakhstan.
We have built a functioning market economy. We put our faith in a radical market reform of our economy, introduced expedited market reforms, and passed the necessary legislation.
Ten years ago, our GDP per capita was barely over US$700; by the end of 2004 it was US$2,700, and the economic forecast for this year will put our GDP per capita beyond the US$3,000 threshold.

I believe that by 2010 our GDP per capita can exceed US$5,800, and reach the level of the Czech Republic, Hungary, Poland, and Malaysia. By 2015, we should be at $9,000 per capita GDP. Based on purchasing power parity indicators, we have already come close to this level.

We expected to double our GDP by 2010 from the year 2000 level. I am confident we can reach this goal by 2008.

We have attracted about US$30 billion in foreign direct investment. This is an enormous achievement. Today investors know Kazakhstan as a reliable partner guaranteeing stability and mutually beneficial cooperation.

International experts have recognized the financial system of Kazakhstan as one of the most advanced.

Kazakhstan was first among the CIS countries to establish a National Fund for stable social and economic development, which will reduce our vulnerability to external shocks.

By now the National Fund has accumulated US$5.3 billion. Our total gold and foreign currency reserves, including the National Fund, exceed US$14 billion.

We have consistently pursued a policy of open trade. In 2004, our foreign trade approached US$33 billion, with a trade surplus of US$7 billion, which is three times the level of 1994.

According to the World Bank classification, Kazakhstan now belongs to the group of middle income countries.

When one compares the quality of life indicators over the last ten years, we can see the average income has grown almost fivefold; monthly salaries have increased by about 6 times; the minimum wage has gone up 25 times; average monthly pension by 4.6 times; and personal and average per capita bank deposits by 35 and 37 times, respectively. Compared to 2003, state expenditures on guaranteed free health care have risen 1.7 times.

In a record short time, we have built a new capital city in the very heart of our nation.
For the first time in our history, we have established an independent state founded on principles of Western democracy.
We knew that democracy cannot be decreed; it can only be gained by labor and passion. We have attained major results in political liberalization. Let me just point out the following accomplishments:












Ten years ago all of these were a dream; today it seems as if we always had it this good.

All this progress, underpinned by a strong institution of the presidency, has made it possible to overcome the legacy of the bygone era and to grow at a higher rate than most members of the Commonwealth [of Independent States].

Together we have created a strong foundation for our progress towards establishing a free economy and a free nation.
We have transformed Kazakhstan into a regional leader, a respected international partner, an active participant in the global fight against terrorism, drug trafficking, and nuclear proliferation.
We have chosen the path of demilitarization and nuclear disarmament, and in the process we have become a guarantor of regional stability in the eyes of the world community.

Kazakhstan has voluntarily shut down the Semipalatinsk nuclear test site. We have set an example for the world by renouncing the world’s fourth largest nuclear missile arsenal.

Kazakhstan is a founding member and an active participant in the integration processes in Eurasia.


Kazakhstan’s Tomorrow

On our agenda today is a new milestone in the economic and political development of the country, its further modernization and democratization.

Therefore, my continued efforts will be directed toward:










The policy of accelerated economic and social modernization of Kazakhstan should bolster Kazakhstan’s leading position in economic and social development, and thereby enable our economy to attract capital, investments, technology and know-how, and highly skilled labor.

Kazakhstan should join the ranks of efficiently developing economies while ensuring a high standard of living for our population.
We have begun to implement a Strategy of Industrial and Innovation Strategy, which seeks to diversify our economy. The future belongs to this Strategy.

Our strategic aim is to join the ranks of competitive economies. Therefore, the government and the private sector should build a partnership based on mutual trust and benefit.

We should create a fundamentally new ideology of development for small and medium sized enterprises.

Our pending accession to the World Trade Organization presents new challenges to the competitiveness of domestic agriculture. It is imperative that as we go forward we pay particular attention to industrializing agricultural production through the implementation of cluster initiatives in the production and processing of agricultural raw materials.

We should create a depth of talent for the high technology and research based industries of the future.  We have to take all the necessary steps to enhance technical and professional education at all levels.

First of all, we should develop technical professions. From 2008 we should shift to a 12 year school education.

An important part of our strategy is to provide a decent living standard for the most vulnerable members of our society, children, mothers, and the elderly. The government will not spare resources in addressing their problems.

From this year on we are implementing a three year program of further advancement of social reforms aimed at developing a three level system of social protection. It is grounded in a clear philosophy: First, there are basic social benefits guaranteed by the state. Second, there is a mandatory social insurance. And finally, there are the voluntary savings of citizens, which in the future will become their supplemental social income. In the future, these three sources will ensure dignity in retirement for our citizens.

Another key task is to speed up solving the problem of housing. This year we are starting to implement a national housing program. It will double the volume of construction.

Starting this year we have begun the implementation of the Program of Further Social Reforms for the period 2005-2007, which will have a positive effect on the interests of almost every family.

From July 1, 2005, we will begin paying all pensioners a supplementary basic pension in the amount of 3,000 Tenge regardless of their employment history, salary, or accrued pension. Therefore, the minimum monthly pension will reach 9,200 Tenge, and the average pension will reach more than 12,000 Tenge.

As early as July 1, 2005 we should double the amount of scholarships paid to university and secondary level vocational training school students. 

We will help our best and brightest to go and study abroad. Every year, within the framework of the “Bolashak” (The Future) program, 3,000 of our best students will receive scholarships from the national budget to study at the leading universities of the world.

In order to implement the system of state guarantees of student loans issued by commercial banks, we need to appropriate 2 billion Tenge within 5 years, including 600 million Tenge as early as this year.

From July 1, 2005 it is necessary to raise the wages of public sector employees such as doctors, teachers, cultural and social services workers by 32% on average, and from 2007 to raise them by another 30% on average.

On the whole, wages should go up both in the public and private sectors. Therefore, from July 1, 2005 the minimum wage should be increased to 9,200 Tenge.

I believe that as early as July 1, 2005 it is necessary to increase the wages of civil servants, just as of other public service employees,  by 32% on average, and from 2007 by an additional 30%, gradually closing the gap between wages in the public and private sectors.


All these years we have been moving toward democratization following the principle of “economy first, politics second”. Our joint achievements allow us to launch comprehensive efforts in many directions to further modernize our political system and develop democracy.
Today I offer a package of initiatives, the National Program of Political Reforms. The Program constitutes a unified coherent approach to reforming political, social, and public institutions. The essence of this approach is to further democratize Kazakhstan in line with the traditions and principles of Western democracies.

This national program of political reforms should be implemented only on the basis of a dialogue with the entire society. The year 2005 should go down in history as a year of dynamic progress in political reforms and of the nationwide policy debate about these reforms. The process should be very transparent and public and involve all the citizens of Kazakhstan, including prominent figures, leading opinion makers, and representatives of the national elite.

I do not exclude the possibility of inviting international experts and respected political figures from Western democracies.

I charge the National Commission on Democratization and Civil Society with the responsibility to coordinate the discussion of the National Program of Political Reforms.


It is imperative to make maximal use of the current Constitution. Our Constitution is recognized in the world as appropriate to the basic tasks of a democratic society.

What has our country’s Constitution, adopted by the people, given us? An effective two-chamber Parliament – the legislative power of the country. The Constitution endowed it with the right to approve a budget for the country, and to oversee its execution. 

The Parliament, by majority vote, gives its consent to the appointment of a Prime Minister, and Chairman of the National Bank. It has the right to pass a “no confidence” vote in the Government, to insist on the Government’s resignation, and to relieve any minister of their duties.

Political parties are represented in the Parliament. The Parliament has the right to introduce amendments to the country’s Constitution.

Members of the Government regularly report back to the chambers of Parliament. The Senate elects judges of the Supreme Court, gives its consent to the appointment of the Prosecutor General and the Chairman of the National Security Committee.

In our country the President, members of Parliament, and members of maslikhats (regional assemblies), are elected by free and secret ballot.

Such important state organs as the Constitution Council, and the Audit Committee are formed on an equal footing by the President, the Majilis and the Senate. The Central Election Commission is elected by the Majilis based on nominations by the President. A necessary system of checks and balances has been established.

The challenge now is to ensure the clear use of rights granted by the Constitution.


It is essential to continue the reform of executive power in the direction of further decentralization, regulating and increasing the effectiveness of the system of state government.

We have taken definite steps toward decentralizing the system of executive power and created conditions for introducing elections of akims (mayors).  In August of this year, we will conduct pilot elections of akims of districts of oblasts, and of the cities of Astana and Almaty. We will begin, in phases, the elections of akims in rural districts, villages, and settlements, a process that will be completed in the year 2007.

At the same time, it is imperative that the Government develop and introduce for consideration by Parliament legislative bills which complete the process of dividing power among the levels of state government.

Transparency of executive power must become the norm.

The further deepening of administrative reforms is imperative. It is necessary to raise the effectiveness of the work of the Government

There should be created an effective, and most importantly, an optimally staffed state apparatus.

It is imperative to accelerate the introduction of e-Government. It is essential to improve administrative services of the state, and reduce the bureaucracy of government.


The process of political modernization requires, first of all, the strengthening the political authority of the legislative branch of government. This can and must be done within the framework of the current Constitution. Its potential has not been exhausted.

It is necessary to discuss the advisability of strengthening the role of both chambers of Parliament in the formation of the Central Election Commission, the Constitution Council, and the Audit Committee.

We should carry out a detailed and carefully thought out study of the mechanisms for forming the Government on the basis of a parliamentary majority and approval of candidates for ministers in charge of social and economic issues by oversight committees.

It is also imperative to provide for a broadening of powers of maslikhats (regional assemblies).


We are on the threshold of full scale reforms of the judicial system, corresponding to generally accepted standards in the democratic community.  We have work to do on the following tasks:








I want to draw particular attention to the question of the independence and integrity of judges. We must do what we can so that bribery in the judicial sphere is not only morally unacceptable, but economically disadvantageous as well. A judge should value their place on the bench and know that if they violate the law or professional ethics, they will lose not only the right to be part of the civil service, but also their entire benefits package.


It is worthwhile to discuss the importance of further improvement in our election laws.

I am instructing the Central Election Commission (CEC) to conduct a serious analysis of shortcomings in the legal safeguards in our election process. In the course of 2005 the CEC should develop and introduce appropriate proposals for improving the quality of election mechanisms, which must fully conform to international standards and the level of development of our society. Only with such an approach do I see a consistent implementation of a policy of securing the free and guaranteed expression of the will of all citizens.


Of primary importance is the future development of guarantees of rights and freedoms of the citizens of Kazakhstan, freedom of speech, freedom of assembly, and the right to express political will.

Freedom of speech is one of the fundamental conditions for the continued democratic development of Kazakhstan. In independent Kazakhstan, no individuals are convicted for political reasons.


Kazakhstan was one of the first post Soviet states to pass anticorruption legislation and to enter international conventions. Time has passed, the situation has changed, and legislation requires thorough analysis and improvement. We must revise all the regulations that wittingly or unwittingly create conditions conducive to corrupt actions by officials.

We must completely separate business from the civil service.

We must create comprehensive “one-stop” public service centers, where in one location it is possible to get a passport, a tax ID number, a driver’s license, etc; sharply reduce the number of licenses and permits; develop an Ethics Code for civil servants prohibiting them from engaging in private business or lobbying for companies. The salary of civil servants should be raised to a level comparable to salaries earned in private business.

Everything I mentioned can be realized within the framework of the Constitution now in force.

I propose to complete this package of measures over the 2005 to 2007 period.


Kazakhstan in the Modern World

Our priorities remain unchanged: an activist, multifaceted and balanced foreign policy able to confront the challenges of the 21st Century and aimed at pursuing the longterm national interests.

We put priority on the development of cooperation with Russia, China, the United States and the European Union. We attach great importance to relations with the leading countries of Asia and the Middle East.

In our strategic interest is the effort to expedite accession to the World Trade Organization on terms that take full account of our interests. 

Kazakhstan attaches great importance to the Shanghai Cooperation Organization, to reforming the CIS and the Eurasian Economic Community, and to proceeding with the establishment of the Single Economic Space.

Our engagement with the OSCE remains important for us across the entire spectrum of its activities. We take very seriously Kazakhstan’s bid to chair the organization in 2009. Today’s initiatives are also aimed at achieving this goal. 

Kazakhstan is regarded in the world as a regional power possessing a strong economy and a solid position in the international community. We should value this status and apply additional effort to strengthening the standing of our country in the modern world.

I would like to draw your attention to threats of the 21st Century, which can pose a serious obstacle for further economic, political, and social modernization.

First, the spreading of instability and religious extremism in the region.

Second, unabated drug trafficking which for geographic reasons goes through Kazakhstan. We will cooperate as actively as before with all the nations and international bodies working to solve these problems.

Among the threats of the 21st century, international terrorism is a matter of special concern. An effective struggle against this international evil requires joint efforts by the entire international community.

This is our philosophy in dealing with the issue of Kazakhstan’s participation in the antiterrorist coalition and in sending our army engineer detachment to take part in stabilizing Iraq.

Active measures are also undertaken at home: the Supreme Court has banned four terrorist organizations. We have also passed a Law on Fighting Extremist Activities.

To meet the challenge of the escalating terrorist threat, we are ready to move to a new level of coordination and joint efforts among all the regional powers and concerned countries.

All of the world’s religions have left their mark on Kazakh soil, which explains why intolerance and religious fanaticism are alien to us. This spiritual tradition, this openness to the Word of God in any form is one of the most important foundations of interfaith accord in Kazakhstan. We are known throughout the world for our tolerance, interethnic and interfaith accord and dialogue. The growing peacemaking potential of our country should be preserved and nurtured with great care. 

We have a choice between remaining an eternal supplier of raw materials for the world economy and waiting patiently for the arrival of the next imperial master or pursuing genuine economic integration of the Central Asian region. I propose the latter.

Our further regional integration will lead to stability, regional progress, and economic, military and political independence. I therefore propose to create a Union of Central Asian States. We share economic interests, cultural heritage, language, religion, and environmental challenges, and face common external threats. We should direct our efforts towards a closer economic integration, a common market and a single currency.

The day has come for us to embark on a new and indispensable path that the next generations of equal peoples in this region will follow after us.


Conclusion

As you can see, we still have a lot to accomplish.

I urge all citizens of Kazakhstan and all political associations to close their ranks for the sake of our common progress and the future of our country.

We should build a society of maximum opportunities where individual freedom is respected, where those who cannot provide for themselves are taken care of, where all work is valued, where motherhood and childhood are protected, where retirees are given every support, and where veterans and defenders of the motherland are respected.

We should build a free and tolerant society where every citizen of Kazakhstan, regardless of their ethnic or religious background, is free to practice the culture, customs, and religion of their choice.

We should build a society where law enforcement bodies ensure peace and order, and where businesspeople have every opportunity to put their ideas to work.

We should build a society valuing the honor, dignity and reputation of everyone; where high morality, ethical standards and spiritual values thrive.

This is the path leading Kazakhstan to the ranks of developed and prosperous nations of the world.

I am confident that the people of Kazakhstan will support me in these undertakings, that they will demonstrate initiative, and want to see our plans realized.


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Kazakhstan's Echo

A publication of the Embassy of Kazakhstan
to the USA and Canada with views and comments on developments in and around Kazakhstan
www.kazakhembus.com
February 23, 2005                                            No. 13
President Nazarbayev delivers his address at a joint session of Kazakhstan’s Parliament in Astana on February 18, 2005.
KAZAKHSTAN
Industrial and Innovation Strategy:
New Business Opportunities



September 9, 2005
San Diego, CA