QR Briefing: 2/8/2023
Author: Richard Spooner
Feb 8, 2023
CPC's new feature, QR Briefing, is a summary and analysis of events and trends in the Republic of Kazakhstan (RK). With the decision to switch Kazakh language to a Latinized alphabet, which will be implemented in stages from 2023-2031, the country's name is now being rendered as Qazakstan, and Qazak Republic (QR) is gaining momentum, especially among young people, as a new acronym for the country, replacing RK, to resonate with President Tokayev's rebranding of the country as Jana (new) Qazakstan.
Alikhan Smailov Criticizes Akimats for Failing to Stabilize Food Prices
Kazakhstani Prime Minister Alikhan Smailov announced on February 6 his government’s commitment to keep inflation under 9.5% through the end of 2023. “I consider this aim achievable, given active effort by all regional administrations to stabilize food prices. We have stockpiled food products from last year's harvest. Therefore, vegetables and other products must be provided at stable prices,” the Prime Minister stated. He added that regional Akims have been provided with all the necessary levers to contain inflation, yet prices keep growing. “Akimats are not working effectively, they are taking too formal an approach, and we see negative results. For example, why are onions so expensive? We grow a sufficient amount in-country, but to reduce the rise in prices, we were forced to take emergency measures and impose a ban on exports,” Smailov argued.
“Regions have been given the means to create food reserves to stabilize favorable prices, but this has not been accomplished. Algorithms and recommendations were sent to all Akimats to improve the work of their regional commissions. In fact, we have to force the regions to hold these meetings ‘under pressure,’ yet we still do not get the desired results. Once again, I want to emphasize that the stabilization of food prices is one of the most important tasks of the Government and local executive bodies. We have already said that in the event results are lacking, appropriate decisions will be made,” Smailov stated, in a not-so-subtle hint at possible personnel changes.
PM Smailov Touches on Problematic Issues of Doing Business Within the EAEU
At a Prime Minister-level meeting of the Eurasian Economic Union (EAEU) on February 3 in Almaty, Alikhan Smailov noted that, despite growth in several economic indicators and the absence of customs barriers, the EAEU’s potential is not being realized to the fullest and that there are still elements of bottlenecking at internal EAEU borders. Smailov called the seamless flow of trade a priority, stressing that accelerated automation of information exchange will increase the competitiveness of EAEU economies and give additional impetus to the development of transit potential. According to the Prime Minister, key topics that require attention include agreements on access to infrastructure and digitalization of procurement.
Smailov also cited the need for systemic measures to ensure food security. "It is necessary to focus on financing joint projects to produce food products, including greenhouses, feedlots, and storage infrastructure, and to eliminate artificial barriers to trade," the Prime Minister emphasized. Russian Prime Minister Mikhail Mishustin recalled that the presidents of the EAEU member states agreed to create a new mechanism for preferential financing of priority projects. He called for this assistance to be made available to businesses as soon as possible. Prime Minister of Belarus Roman Golovchenko invited Kazakhstan to participate in the Eurasian Electric Bus project, which involves organizing the production of critical components, control systems, and energy storage systems.
The heads of government signed several documents aimed at accelerated rail and multimodal transportation of food, and the development of integrated information systems. After the signing, Mishustin stated that the EAEU has approved rules for members’ access to and transmission of electricity.
Industry Associations Make Common Cause for Protection of Local Manufacturers
On January 19, a briefing was held in Almaty to announce the creation of Qazaqstanda Jasalgan (‘Made in Kazakhstan’), a self-proclaimed movement for economic nationalism. Among the organizers were businesspeople from various sectors of the economy representing the interests of around 100,000 employees.
The main reason given for the creation of the new association is the lack of interest displayed by ministers, officials, and legislators in the development of domestic industry.
The founders emphasize that support for the Kazakhstani manufacturer should be a top priority of government agencies. “Our entrepreneurs almost every day face the arrogance of officials. Sometimes it feels as if they are allocating money for the implementation of a government program from their own pockets, and not from the budget. It is not uncommon to hear that Kazakh companies are incompetent, but we are capable of producing a lot of what is purchased abroad,” said Aibek Barysov, Chairman of the Association of Defense Industry Enterprises.
Kanat Ibrayev, President of the Association of Furniture and Woodworking Enterprises, noted that the actions of the authorities are often difficult to explain logically. According to him, during the pandemic, when many countries around the world were supporting domestic producers, hundreds of enterprises in Kazakhstan were deprived of such support, which ultimately led to massive layoffs.
“Moreover, our country introduced a ban on the budget-funded purchase of domestically produced office furniture, and our business experienced a sharp decline. A government program is being implemented to build 400 schools and hundreds of billions of tenge have been allocated, yet we can't participate in this program. We cannot produce desks, tables, chairs, and so on for new schools because of this ban. We have lost 4,000-4,500 jobs in our industry alone because our officials defend the interests of importers,” Ibrayev said, shrugging his shoulders.
QazTextile Industry Chairman Gulmira Uakitova emphasized that the government of Kazakhstan needs to increase local content in state purchases. “Protection of the domestic investor plays an important role. We have many examples where Kazakh companies enter into long-term contracts with government organizations, investing capital in construction of the required infrastructure, and then these contracts are simply terminated, with no logical explanation,” she asserted.
She also cited an example where officials do not want to order uniforms for Kazakhstan’s army from Kazakh manufacturers, explaining that domestic products are worse in quality. “It's just absurd! We have the results of testing by independent laboratories showing our uniforms are no worse than foreign ones, and in many respects even better,” says Ms. Uakitova.
When asked about the effectiveness of the Atameken National Chamber of Entrepreneurs, the activists stressed that they don’t sense much interest in their problems from that organization. “Atameken is more like a bureaucracy that has actually merged with the government agencies. We don't see any concrete help.”
The organizers of the new association stress that they came together to draw the attention of government agencies to the problems of Kazakh manufacturers. And they stressed that they are ready to participate in various working groups together with the authorities to remove obstacles to the development of domestic producers; but they emphasized that if they were not heard by the government authorities and legislative deputies, then they would have to organize themselves into a political party to defend their interests. “We, as businesspeople, do not want to go into politics. However, if deputies and officials continue to impede the development of domestic entrepreneurs and manufacturers, then we will have no choice,” Aibek Barysov said.
The Runup to Majilis Elections on March 19
Since January 19, when President Tokayev dissolved the Majilis (national parliament) and set new elections for two months later, seven political parties have successfully registered with the central electoral commission to participate in the coming vote. There are several new features this time around. To make it easier for new parties to qualify, the membership requirement was reduced from 20,000 to 5,000. Deputies will now be elected not just proportionally from party lists, but also in single-mandate districts where voters will choose from among individual candidates. Out of 98 Majilis deputies, down from 107, 69 will come from party lists and 29 in single-mandate direct ballot elections. In elections to local Maslikhats, also set for March 19, all deputies will be chosen by direct ballot.
In a move aimed at establishing accountability, last year’s referendum approved the principle of recalling or impeaching deputies to the Majilis and Maslikhats in certain circumstances that are now set forth in legislation. In a nod to tradition, ballots will still contain the “against all” option.
Eligibility requirements stipulate that candidates for the Majilis be citizens of Kazakhstan who have reached the age of 25 and resided in-country for the preceding 10 years. The age requirement for Maslikhat candidates is 20. Grounds for disqualification include prior criminal convictions, if not overturned subsequently in a court of law, or any conviction for crimes of corruption.
As is common in a number of other countries, campaigning is not permitted the day before balloting, in this case March 18.
The most significant change in this year’s elections is a reset in the role of the ruling party. In March 2022, in his annual address to the nation, President Tokayev proposed to prohibit Akims and Vice Akims, whether regional or municipal, from holding positions of party leadership, whether in the central apparatus or territorial organizations. In November, the prohibition became law. This new way is in stark contrast to how the ruling party operated under former President Nazarbayev, when Akims, as a matter of course, chaired branches of the ruling Nur Otan (‘Shining Fatherland’) party in the territory they administered, while the President was party leader. Shortly after last year’s bloody January Events, on February 2, the ruling party was renamed Amanat (“Legacy” or “Commitment”), and on April 26 Tokayev resigned from the party.
Among the six parties contesting the March 19 elections, in addition to Amanat, are Ak Zhol (“Bright Path”), created in 2002 and led by Azat Peruashev, a veteran political figure and former chairman of the Kazakhstan Chamber of Entrepreneurs, and Respublica, created in August of 2022 and led by Aidarbek Khodjanazarov. Both are considered pro-business parties. In January of this year, a member of Ak Zhol’s fraction in the Majilis, Azamat Abildayev, voiced support for Russian’s invasion of Ukraine and was promptly expelled from the party and lost his seat in the Majilis.
Kazakhstan’s Green Party, Baitak (“Broad Steppe”), was created in September 2022 and is led by Azamatkhan Amirtai, a board member at state-owned enterprise, KazAgro, from 2020 to 2021 and founder in 2016 of the environmental protection group, Baitak-Bolashak.
The People’s Party of Kazakhstan, founded in 2004 as successor to the Communist Party and led by former Nazarbayev advisor Yermukhamet Yertysbayev, received 9% of the vote in 2021’s Majilis elections but has recently suffered significant defections, causing Yertysbayev to call out “traitors in the ranks of our party.”
The Auyl (“Village”) Party was created in 2002 and is led by Senator Ali Bektayev, committee head for agrarian policy, but has never garnered enough votes to have its delegates seated in the Majilis.
Finally, the Social-Democratic Party of Kazakhstan was created in 2006 and is currently led by Askhat Rakimzhanov. In its time, the SDP was a serious force of opposition, founded by former Prosecutor General Zharmakhan Tyuakbayev and veteran political figure Amirzhan Kosanov – serious enough that it was consistently blocked from registering for elections and eventually chose to boycott the process, never succeeding in seating any of its members in the Majilis. It still has branches in several cities of Kazakhstan, but it not now a serious contender for influence.