Kazakhstan: Realities and Challenges

Lecture by Ambassador Kanat Saudabayev of Kazakhstan

at Yale University

New Haven, Connecticut
February 20, 2007

(prepared remarks)

It is a great honor and privilege for me to speak today at the world famous Yale University, the alma mater of so many great leaders, including the current President of the United States and his father.

First: a complicated ethnic and demographic situation where more than 100 ethnic groups lived in the country, ethnic Kazakhs were a minority in their own country, and where the collapse of the Soviet Union had already led to ethnically based bloodshed. Second: the raw material slant of the economy and the fact that Kazakhstan trailed most other former Soviet republics in terms of social and economic development. Third: the heavy burden of industrial military complex left behind by the USSR, including the world’s fourth largest nuclear arsenal. Fourth: two environmental catastrophes, one around the Semipalatinsk nuclear test site where the Soviets carried out almost 500 nuclear tests, and another around the Aral Sea which was shrinking because of clumsy Soviet policies. Finally, the most serious challenge was the lack of experience as an independent state.

Such were the situation and forecasts 15 years, and now let us consider what happened in reality.

The key word important for understanding the history of modern Kazakhstan is the word choice. The choices our people have been making and the choices our President has been making.

The first such choice was the election on December 1, 1991, which became a fateful event. On that day, our people joined together to elect Nursultan Nazarbayev as the first President of Kazakhstan entrusting him with their fate and future at this critical moment in history. That wise and fair choice determined the modern history of our country.

The most important domestic priorities for President Nazarbayev have become preserving peace and harmony in our multi-ethnic home, radical market reforms and openness to foreign investment, and continued democratization. Today, the proofs that this choice was right are obvious.

Fifteen years in historical terms is but an instant, but for Kazakhstan, in terms of the depth and scope of reforms, these years became equal to an epoch. All the institutions of a sovereign state have been established in Kazakhstan in these years, as we preserved the country’s stability and integrity. Fundamental social, economic and political reforms were implemented.

Kazakhstan became one of the very few former Soviet republics which avoided ethnic and religious bloodshed. Moreover, as a predominantly Muslim country, Kazakhstan has become an internationally recognized model of tolerance which is especially timely in our world today. It was only fair that the late Pope John Paul II called Kazakhstan “an example of harmony between men and women of different origins and beliefs.”

We have laid down the foundations for democracy, created an efficient system of checks and balances and ensured the separation of powers. We are holding competitive elections regularly, and political life and civil society are developing rapidly. A dozen political parties are active in Kazakhstan with a total membership of 1.5 million people. There are more than 5,000 NGOs and the numbers of independent news media are growing. All of these create conditions for healthy competition and translate into political stability which needed so strongly during transitions.

Thanks to the creation of market oriented laws, privatization of more than 85 percent of our economy, freeing up of entrepreneurial initiative and the attraction of more than 45 billion dollars in foreign investment, Kazakhstan has become the most successful example of economic development in the Commonwealth of Independent States. During the past seven years, Kazakhstan’s economy has been growing 10 percent annually on average. Today, our gross domestic product is larger than the economies of all the other countries of Central Asia and the Caucasus combined. Kazakhstan became the first country in the CIS recognized by the United States as a market economy country. Our country’s new capital city of Astana, drawing admiration across the world for its beautiful architecture and rapid construction, has become a symbol of Kazakhstan’s booming development. Instead of being at the bottom of social and economic indicators in the CIS, Kazakhstan now ranks first.

Most importantly, for the first time in the many centuries of sometimes tragic history we are feeling ourselves free citizens of a free nation. The mentality of our people has changed irreversibly as they embrace ideals of democracy and principles of free market. Today, almost a third of our gross domestic product is produced by small and medium sized businesses which employ more than one million people, almost 20 percent of our workforce. These people are the foundation of a fledgling middle class in Kazakhstan and a guarantee that our democratic and market reforms will not be reversed.

All of our achievements gave international experts reasons to talk about a Kazakh way of development for nations in transit as it shows that it is possible to build market economy and democracy in a predominantly Muslim state which only recently freed itself from the yoke of totalitarianism. I believe the story of creating Kazakhstan’s statehood is very timely as a model for development of other countries in similar conditions, and perhaps, it should become a subject for more detailed studies, including by scholars at Yale.

Kazakhstan’s people and leadership have shown the same farsightedness and wisdom in foreign policy.

One of the first and most important decisions of President Nazarbayev was the choice for a non-nuclear weapons future of Kazakhstan. Fifteen years ago, as Kazakhstan stood at the threshold of independence, it was President Nazarbayev who had to make the most difficult decision about the future of the nuclear arsenal in Kazakhstan, which included more than 1,000 nuclear warheads and 100 intercontinental ballistic missiles.

As is known, when the Soviet Union collapsed, nuclear weapons were left in Russia, Belarus, Ukraine and Kazakhstan. While Russia became the legal successor to the USSR, and there were no major questions regarding Belarus and Ukraine and the choice they will make about their nuclear weapons since these were and are European countries with predominantly Slavic and Christian populations, the situation with Kazakhstan was different.

Located in Asia and with a largely Muslim population, our country faced much larger temptation and had to deal with very eloquent tempters. In the first days of our independence, Kazakhstan had no lack of foreign emissaries who urged our President to keep the nuclear weapons, saying, ‘you will be the first and only Muslim country with nuclear weapons, and the world will respect you and will have to reckon with you.’ I was witness to such visits and heard arguments of those tempters about Boeing plane loads of dollars. The considerable part of Kazakhstan’s elite at that time was also in favor of keeping the nuclear arsenal. Therefore, it is fair to say today that the renunciation of nuclear weapons was a courageous and historic choice of President Nursultan Nazarbayev himself. His decision has from the beginning defined Kazakhstan as a responsible partner for the international community, an active proponent of disarmament and nonproliferation of weapons of mass destruction.

Being located in the center of Eurasia next to such powerful neighbors as Russia and China and being a landlocked country, Kazakhstan, it seemed, was also in avulnerable geopolitical situation. However, in this area too, Kazakhstan has made the only correct choice opting for a principle of keeping equal distance from the centers of influence. We put that principle into the foundation of our multi-vectored foreign policy and the course toward comprehensive integration into the civilized international community.

Thanks to such choice and masterful diplomacy, our young state was able to achieve a balance of interests between the major world powers. We have built equal and respectful relations with leading countries. We resolved border issues with neighboring countries, including Russia and China. This feat crowned the many centuries of efforts by our ancestors to preserve and protect our homeland and allowed, for the first time in history, to finalize our statehood. Finally, we have built relations of strategic partnership with the United States of America which have become a major factor in the balance and stability in our region.

In general, the energetic foreign policy of President Nazarbayev allowed Kazakhstan to avoid being left on the sidelines of international politics. In addition to the historic non-nuclear choice, I am talking about such important initiatives as the Conference on Interaction and Confidence Building Measures in Asia, which brings together 18 Asian nations with half of the world’s population and a quarter of the world’s economy, as well as the Congress of Leaders of World and Traditional Religions which has become a valuable platform for dialog between leaders of Islam, Christianity, Judaism, Buddhism and other religions. These initiatives have received wide international recognition and have become an important contribution to the modern peace building processes and ensuring global and regional security.

In sum, during the past 15 years, under the prudent leadership of President Nursultan Nazarbayev, Kazakhstan, from being one of the worst off fragments of the former Soviet empire has become an economically strong and dynamically developing democratic nation and a recognized leader in Central Asia. Such assessments are shared in the world. In one of his messages to our leader President George W. Bush wrote, “The stability and prosperity that your country enjoys stand as a model for other countries of the region.”

Having described the realities of modern Kazakhstan, I would like to turn to challenges we are facing.

Kazakhstan, of course, is known for its gigantic reserves of oil, natural gas, uranium and other mineral resources. Kazakhstan’s extractable reserves are estimated at 100 billion barrels of oil and 200 trillion cubic feet of natural gas. Kazakhstan holds one third of the world’s reserves of uranium and is number one in the world on that score. It is our raw material sector which received the lion’s share of foreign investment, and it is the same sector where we expect major investment in the near future. Oil production in Kazakhstan, currently standing at 1.3 million barrels a day of which more than one million is exported, will grow to 3.5 million barrels daily by 2015 of which three million will be exported. This will make Kazakhstan one of the largest exporters of oil.

Such statistics may be good news for us and the United States which is interested in diversifying sources of energy, but it also presents a serious challenge for us.

In the 1990s, we recognized that if such trends were to continue, there is a risk of the so called Dutch disease and of an imbalance in our economic development. That’s why the choice was made to diversify the economy and develop an ambitious Strategy of Industrial and Innovative Development up to the year 2015. This strategy provides for the use of existing scientific, technical, industrial and natural potentials for the development of industries such as biotechnology, petro-chemistry, peaceful nuclear energy, transportation and logistics as well as agribusiness.

In 2000, we set up a National Fund to accumulate excess revenues from extractive industries. This way, Kazakhstan is learning to live without total dependence onoil money. As of today, the Fund holds more than 14 billion dollars invested in long term treasury bills of the US, Europe and Japan.

Finally, it was the aspiration to prevent raw material sectors from dominating our economy and avoid technological lagging behind by Kazakhstan that in 2006 made President Nazarbayev announce a new strategy of making Kazakhstan one of the world’s 50 most competitive countries. This strategy envisions the creation of maximally beneficial internal and external conditions for the development of non-raw material sectors as well as the realization of a number of breakthrough projects in new industries.

One of the most important goals under the strategy is integration into the global economy, first of all, through joining the World Trade Organization. We expect to conclude accession negotiations with our main trading partners, including the US, this year. We are confident such plans can be realized as we received the support from Washington, expressed by presidents Nazarbayev and Bush in their joint statement in September 2006.

Kazakhstan’s efforts to increase competitiveness are already being recognized internationally. The World Economic Forum raised Kazakhstan’s rankings from 61st to 56th in its annual competitiveness ratings for 2006. We are eager to continue moving forward creating favorable environment for businesses, including through serious administrative reform.

Being in such a respected university, I would be remiss if I don’t talk about another important direction of our work modernize Kazakhstan. I am talking about the presidential scholarship program Bolashak, which means future, through which hundreds of Kazakh youngsters have been able to receive education in leading universities of the world, including in the US. Since last year, the number of bolashakers has grown from 100 to 3,000 annually, and today, just in the United States, almost 1,000 people are working toward their bachelors, masters and PhDs in many fields. Bolashakers don’t just receive the best knowledge from the best professors. Upon their return to Kazakhstan, they take up leading positions in the government and the private sector, where they become a driving force for rapidly developing Kazakhstan, bringing new ideas, values of democracy and the spirit of enterprise. Kazakhstan’s bolashak, future, is truly theirs, and we expect there will be Bolashak graduates of Yale among future leaders of Kazakhstan.

I also would like to say a few words about the situation in Central Asia and challenges we are facing there.

First of all, there is one special trait of Kazakhstan which I would like to stress and that is its interesting geographic and, sort of, geo-mental position. Located both in Asia and Europe, and for millennia being on the crossroads of civilizations, Kazakhstan became a truly Eurasian nation which unites both Asian qualities such as strong feelings of family and the respect and care for the elderly, and European, such as the spirit of freedom and enterprise. So, Kazakhstan can be called an Asia in Europe and a Europe in Asia, and we try to bring our best to the development of both.

I already said Kazakhstan is a recognized leader in the political and economic development of the region. Although this is a pleasant thing, we cannot be complacent. We cannot be happy and relaxed when our regional home is besieged by problems such as the lack of sustainable economic development, growth in drug trafficking and of Islamic fundamentalism. That is why, we intend, in the good will cooperation with our regional neighbors, to react to these challenges and apply our resources to make our region stable and prosperous in the long run. The rich and great past of our region which contributed greatly to the development of the world as the heart of the Great Silk Road and which gave mankind such renowned thinkers as Al Farabi and Avicenna, gives us confidence that the future of the region will also be bright.

Therefore, you see that during the years of independence Kazakhstan has steadily moved forward through all the hardships of the transitional period and is playing an increasingly important role in the region and in the world.

Now, I would like to talk about the mutual importance of Kazakhstan and the United States and about the need to strengthen our cooperation further.

During the 15 years of Kazakhstan’s independence, our two countries have built the relations of true strategic partnership based on common values of democracy, progress and prosperity. This partnership encompasses such key areas as nuclear nonproliferation, energy and ensuring sustainable development in Central Asia.

In partnership with the United States under the Nunn-Lugar program, Kazakhstan rid itself from the unwanted nuclear legacy becoming a responsible model of nuclear disarmament and nonproliferation. With the trends in the world today, it is impossible to overestimate the importance of Kazakhstan’s example  which has proven that in renouncing nuclear weapons countries gain and do not lose and that a country’s real might is based not on the feared weapons of mass annihilation but on the strength of moral principles of peace.

Equally important is the example of Kazakhstan as a moderate and tolerant Muslim nation which is respected both in the Muslim world and in the world at large. The world should undoubtedly be interested in this and should more actively rely on Kazakhstan’s potential for reducing tensions in the international community and strengthening the dialog between Islam and the West.

Furthermore, Kazakhstan is a reliable ally of the United States in the war on terrorism and in restoring Afghanistan and Iraq. Kazakhstan is seriously interested in ensuring peace and stability in Afghanistan and intends to participate in its economic revival in a meaningful way. Our republic is the only country in Central Asia and one of the very few Muslim countries to send troops to Iraq. Our soldiers have already destroyed more than four million pieces of deadly ordnance there. Today, they continue carrying out their noble mission in tough conditions sharing their expertise with hundreds of Iraqi soldiers.

Kazakhstan and the United States are bound together by very strong economic ties, and here too intensive work will be needed to build on the success in the future. American companies are the largest investors in Kazakhstan’s economy with investments exceeding 15 billion dollars. There are more than 400 U.S. companies and joint ventures with American participation in our country. Bilateral trade in 2006 amounted to almost two billion dollars. All these indicators are growing annually and will continue to grow, especially in the energy sector, as we develop Kazakhstan’s rich energy resources. However, in light of Kazakhstan’s course toward diversification of the economy it will be important to realize the potential for cooperation with American private businesses in the areas of new technologies. We are especially interested in the possibility of attracting American investments and technologies in sectors beyond oil and gas such as biotechnology, IT and telecommunications, construction, manufacturing, agriculture, education and healthcare.

At the same time, as production of oil and gas expands, Kazakhstan will continue to search for alternative routes for exports, and in this area it will also be important for Kazakhstan to have continued support from the United States.

The understanding of Kazakhstan’s importance is reflected in growing political ties between our countries. The proof is seen in the radical expansion of bilateral cooperation in all areas, and the many visits to Kazakhstan in recent years by high ranking US delegations, including members of Congress, Cabinet secretaries and Vice President Richard Cheney, another Yale graduate.

The most important stage in our bilateral relations was the September 2006 visit to Washington by President Nazarbayev. The unprecedented two-hour meeting between Presidents Nazarbayev and Bush during that visit was mostly devoted to what our countries can do to ensure security and progress not only for their peoples, but for the world in general. The visit demonstrated Washington’s full support for Kazakhstan’s efforts to expedite its social, economic and political development.

So, our countries are bound together by close relations. During the next decades, when you and those in your generation will take the helm in the United States, their importance will only grow.

Having accumulated a powerful political and economic capital, Kazakhstan is poised for an important breakthrough in its development. In the words of Shakespeare, Kazakhstan is living in a moment of tide, “which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries.”

We understand this very well and are eager to use this historical opportunity fully. We are making the choice toward building a strong, prosperous and internationally respected regional power which will be a source of rightful pride for our children. I believe we will achieve this goal working together with our friends and partners abroad. And I believe that many of the future leaders of the United States present here today will become an important part of this inspiring story of success.

I am pleased to see here so many young people, undoubtedly also future American leaders, who are sincerely interested in Kazakhstan. I am grateful to Central Asia Society for organizing today’s lecture. I also would like to praise the idea of this society to have a Summer in Kazakhstan for 15 students, and I am sure the summer of 2007 will be an unforgettable time for them.

Today, I would like to talk about the real Kazakhstan, not the version of it represented, or rather, misrepresented in the movie Borat by British comedian Sacha Baron Cohen. I would like to talk about realities and challenges of modern Kazakhstan, about why Kazakhstan is important for the United States, why the United States is important for Kazakhstan and why we should waste no efforts into strengthening and expanding cooperation.

When Kazakhstan regained its independence in December 1991, many experts believed it was doomed to failure. There were a lot of reasons for such pessimism.
(AP Photo/Bob Child)
Ambassador Kanat B. Saudabayev, speaks to an audience at the end a speech at Yale University in New Haven, Connecticut, Tuesday, February 20, 2007.