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
December 2, 2005                                            No. 23
Industrial and Innovation Strategy:
New Business Opportunities

September 9, 2005
Hotel del Coronado
San Diego, CA
Wall Street Journal Europe
December 2, 2005

A Model for Central Asia

Mr. Socor is a senior fellow at the Washington-based Jamestown Foundation,
publishers of the Eurasia Daily Monitor.

Kazakhstan's president, strongman Nursultan Nazarbayev, will almost certainly be returned to power on Sunday, when the country heads to the polls. His rule of this vast Central Asian country, held since the fall of the former Soviet Union, has prioritized stability. But thankfully, Mr.
Nazarbayev is driven by economic incentives that will hopefully move the country along a democratic path in coming years.

To understand Kazakhstan's trajectory, it is essential to place the country's elections in a historical and regional context. Prior to 1991, Kazakhstan was a vast repository of deported people and home to a massive collapse of a continental-scale experiment in collectivized agriculture. She suffered huge demographic losses to her indigenous population and endured ecological disasters caused by fallout from Moscow's nuclear blasts and missile flights at Kazakh testing ranges. Moscow seized all income from Kazakhstan's oil and gas production; but, fortunately, it was barely able to scratch the surface of her immense energy reserves.

Fortunately, Kazakhstan is now on the road to prosperity from extreme poverty, thanks to the development of those reserves by Western consortiums. Kazakhstan attracts more foreign direct investment per capita than any other former Soviet-ruled country. Kazakhstan readily agrees to
Western ownership of mineral deposits, which makes it (along with Azerbaijan) an exception among oil-rich states. Kazakhstan's private banking system is also regarded as a regional example for Central Asia and beyond.

Kazakhstan is also -- remarkably, after the Soviet oppression of ethnicity and faith -- an Asian model of ethnic and religious tolerance, with various groups, houses of worship, and languages mingling without incident. For the first time in two generations, Kazakhs are now again in the majority. Mr. Nazarbayev is promoting an overarching, civic-secular identity for all
ethnicities and denominations to guarantee long-term stability. While democratic institutions are in an early stage of development, a multi-party system has taken shape, and the print media offer differing interpretations of events, though television is state-dominated. As in most countries with
no prior concept of democracy, opposition parties are pressing for a faster opening of the political system than the authorities deem prudent.

In many ways, Kazakhstan looks like a success compared to its neighbors. To its south, Turkmenistan -- under Russian pressure -- has shut out the West from access to the country's world-class reserves of natural gas, while Uzbekistan, the region's strategic linchpin, has just evicted the U.S. military from the country and signed (almost overnight) an alliance treaty
with Russia. On Kazakhstan's southeastern border, the unreformed Kyrgyzstan has been thrown into violent chaos by a botched "color revolution" that reduced U.S. influence there, while increasing the Kremlin's.To Kazakhstan's north, across the world's longest land border, Russia is
returning to political autocracy and projecting its influence into Central Asia. To the east, China is aggressively competing for direct access to oilfields in Kazakhstan, seeking to divert those fields' output away from the global market. Kazakhstan is keen to maintain good relations with both
of these great-power neighbors, but looks to the United States to balance them. And it looks to American and West European companies to develop Kazakhstan's oil and gas reserves for export to international markets.

That's no small deal. Kazakhstan currently produces some 50 million tons of oil annually, but its richest fields are yet to come fully on stream. Oil output is projected at approximately 100 million tons by 2010 and at least 150 million tons annually by 2015 and thereafter. Volumes of such magnitude can restrain prices on international energy markets and simultaneously help
reduce Europe's excessive dependence on Middle Eastern and Russian supplies. Moreover, Kazakhstan's large potential as a natural gas exporter is only now beginning to attract serious attention.

In sum, Kazakhstan is now the only country in Central Asia that advances -- in its own national interest -- all three basic goals of U.S. and allied policies toward Central Asian countries: access to energy supplies, cooperation against terrorism and related threats, and economic and
political reforms in its incremental, but eventual -- transition to democracy. U.S. President George Bush acknowledged Kazakhstan's progress in an unusually warm letter to Mr. Nazarbayev recently, after two years of spotty attention to Kazakhstan in Washington and in the wake of policy setbacks in Kyrgyzstan and Uzbekistan. Mr. Bush encouraged a clean
presidential election, in the interest of advancing the development of democratic institutions, while boosting the authorities' legitimacy and international credibility.

Sunday's presidential election will be intensely scrutinized by international observers. U.S. and European expectations are high. But regardless of the outcome, foreigners should view this election as a stage in a continuing learning process and acknowledge the likely improvements in
comparison to past elections. Western acknowledgment of such improvements
provides a strong incentive -- and failure to recognize, a disincentive -- to continuing advances on a long and unfamiliar road to democracy for this Western-friendly country of strategic import.

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