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Kazakhstan & WTO: End of an Odyssey or New Leap Forward?

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Kazakhstan applied to join the World Trade Organization (WTO) in January of 1996. Twenty long years later (July 27, 2015), President Nazarbayev signed the official ascension documents in Geneva, making it the 162nd WTO member state.

While assessing the impact of Kazakhstan’s entrance into the WTO is difficult at this early stage, speculation is rampant given current geopolitical tension in Central Asia and the global price of oil. This article will attempt to contextualize this decision by adding insight to three questions – why, why now, and what’s next?

Why?

The WTO is an important stepping stone for legitimacy and integration on the world stage. To some, most notably Kazakh economist Aidarkhan Khusainov, WTO membership is more comparable to United Nations membership, simply providing an image boost, rather than a substantive change in Kazakh political economy. This diminished outlook is not the only position in Kazakhstan and around the world, however, as many believe that this move will open up Kazakh markets, allow for increased foreign investment, and diversify the largely energy-dependent and landlocked nation.

Regardless of economic prognostications, Nazarbayev’s signature ultimately formalized an already informal economic reality. As Nazarbayev himself said, “In the mid-1990s, Kazakhstan had ties only with post-Soviet states, while now we are trading with 185 countries of the world.” Kazakhstan’s elevated status into the WTO, therefore, is a bit more pomp and circumstance, and less substantive change, as much of the Kazakh economy has already been developed in the global arena for some time. Thus, WTO membership is more about affirmation of deeds already accomplished, than hope for potential development somewhere far off in the future.

Why Now?

Kazakhstan’s membership status in some ways could always be seen as a foregone conclusion. For example, more than 50% of the nation’s trade is with the European Union. WTO membership, therefore, is a continuation of a two-decade long process of real economic integration and reform, rather than a radical departure from it. The significance of ‘now’ is less about Kazakhstan’s economic reality and more about the potential geopolitical and economic challenges in the region.

First, the global drop in the price of oil has had a significant impact on the Kazakh economy. WTO membership will not only provide new opportunities for investment and economic diversification, but greater flexibility in global markets.

Second, U.S.-led sanctions on Russia have indirectly constrained Kazakhstan’s economy. Russia and Kazakhstan are more than trade partners, but members of the Eurasian Economic Union (EEU), which features Kazakhstan, Russia, and Belarus. Russia’s economic woes have negatively affected the strength of this union. Evidence of this from a political perspective is the renewed stress on WTO negotiations from both Kazakhstan and Belarus starting in 2013. Moreover, Russia has gradually shown a willingness to support these negotiations (Russia joined the WTO in 2012) rather than oppose them.

Third, the why now of this moment is representative of a broader desire for engagement in Central Asia, particularly between those global players with higher stakes in the region. We are far from a proliferation of cooperation, but recent events have shown an environment in cautious conversation and optimistic consideration. WTO membership does not magically transform enemies into friends, but it does pave the way for a more solid process of enhanced cooperation between Kazakhstan and many other nations.

What remains to be seen is whether this shift is more representative of the dynamism of the landscape or the individual states? In this case, will we see motivated regional cooperation or cooperation in lieu of state capacity for direct or unilateral action?

What’s Next?

Economic projections range from the optimistic (new investment and development) to the pessimistic (job loss, wage decrease, and simply being out competed) to the apathetic (WTO is more about banal prestige and less about workable policy). Any basic economic theory will show that increased free trade comes with benefits and drawbacks, where the effect on the state is ultimately determined by good governance. What is most clearly next is Kazakhstan’s opportunity to diversify economically and have that diversification feed into a new positive political evolution. If the country is able to broaden its economic capacity, then its membership in the WTO, at least in the short term, is a win, offering Kazakhstan an outlet from energy export dependence. If it is able to broaden that into real political (read: democratic) consolidation, then membership in the WTO will have proven far more invaluable than anyone could have surmised. These potential geopolitical ramifications and speculative regional suggestions are what should be seen as the truly fascinating, and still unknown mystery, of pending WTO ascension.

What Kazakhstan’s WTO entrance hopefully suggests is less contestation and more cooperation across Central Asian economies. The EEU can be seen as strong evidence of this. Until very recently, the EEU was a barrier for Kazakhstan’s entrance in the WTO. With Russia and Kazakhstan now WTO members, and Belarus poised to follow, the EEU (which is Russian-led), has shown a clear willingness to conform to global economic standards. The EEU is thus now operating within the parameters of the WTO. What remains to be seen is if there is a bigger or more politically-motivated strategy behind Russia’s cooperation. Put another way – how does this affect the regional economic strategy of Russia’s so-called privileged area of influence? Is Kazakhstan moving away from the regional fold and into independence (or interdependence) in the global market? I find it difficult to believe that Russia would passively allow the countries of what it considers to be its personal sphere of influence to integrate one by one into the global economy (a US and EU-led order) without also trying to achieve serious advantages or privileges for itself. This is not necessarily a bad thing. Indeed, it is quite a normal thing when considering international political economy. But there are both acceptable ways of achieving those advantages or privileges and non-constructive ways. In this case, a win for WTO liberal institutionalism is a sign that both sanctions and the regional economic landscape have limited Russia’s influence and ability to project power arbitrarily. Russia can either adapt to that reality and incorporate itself better into that changing landscape or problematically try to fight such change. Time will tell exactly how that plays out.

To turn to Kazakhstan’s strategic outlook, however, WTO membership represents not only a win for Nazarbayev’s ambitions, but for Kazakhstan’s potential as a serious player on the international stage. Being the strongest economy of the former Soviet states but also quite literally surrounded by great and regional powers, Kazakhstan has been unable so far to cast a long geopolitical shadow in any direction. I expect Kazakhstan to gradually fill this opportunity of potential by trying to expand its own capacity and in so doing drafting more of an independent, rather than subservient, strategy to its large imposing neighbor to the North. Hopefully, Kazakhstan will carve out that new role without incurring a heavy price militarily or in terms of new economic regional conflict. So congratulations, Kazakhstan, on the end of your 20-year odyssey. Here is to hoping a WTO with Kazakhstan turns into a win-win-win for all sides: Kazakhstan, Central Asia, and the global community.

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Central Asia

ILO Reports Important Progress on Child Labour and Forced Labour in Uzbek Cotton Fields

MD Staff

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A new International Labour Organization report to the World Bank finds that the systematic use of child labour in Uzbekistan’s cotton harvest has come to an end, and that concrete measures to stop the use of forced labour have been taken.

The report Third-party monitoring of measures against child labour and forced labour during the 2017 cotton harvest in Uzbekistan is based on more than 3,000 unaccompanied and unannounced interviews with a representative sample of the country’s 2.6 million cotton pickers. It shows that the country is making significant reforms on fundamental labour rights in the cotton fields.

“The 2017 cotton harvest took place in the context of increased transparency and dialogue. This has encompassed all groups of civil society, including critical voices of individual activists. This is an encouraging sign for the future. However, there is still a lag between the sheer amount of new decrees and reforms being issued by the central government and the capacity to absorb and implement these changes at provincial and district levels,” says Beate Andrees, Chief of the ILO’s Fundamental Principles and Rights at Work Branch.

The ILO has been monitoring the cotton harvest for child labour since 2013. In 2015, it began monitoring the harvest for forced labour and child labour as part of an agreement with the World Bank.

Interviews carried out by the monitors took place in all provinces of the country and included cotton pickers and other groups which are directly or indirectly involved in the harvest such as local authorities, education and medical personnel. In addition, a telephone poll of 1,000 randomly selected persons was conducted. Before the harvest, the ILO experts organized training for some 6,300 people directly involved with the recruitment of cotton pickers.

The results confirm that the large majority of the 2.6 million cotton pickers engaged voluntarily in the annual harvest in 2017 and that there is a high level of awareness in the country about the unacceptability of both child and forced labour. The report confirms earlier findings that the systematic use of child labour in the cotton harvest has ended though continued vigilance is required to ensure that children are in school.

Instructions have been given by the Uzbek national authorities to local administrations to ensure that all recruitment of cotton pickers is on a voluntary basis. In September 2017, an order was given withdrawing certain risk groups (students, education and medical personnel) from the harvest at its early stage.

Moreover, cotton pickers’ wages have been increased in line with recommendations by the ILO and the World Bank. The ILO recommends that the government continues to increase wages and also addresses working conditions more broadly to further attract voluntary pickers.

Last September, Uzbekistan President Shavkat Mirziyoyev spoke before the United Nations General Assembly in New York where he pledged to end forced labour in his country and underscored his government’s engagement with the ILO. In November 2017, at the Global Conference on the Sustained Eradication of Child Labour in Argentina, Uzbekistan also pledged to engage with independent civil society groups on the issue.

The ILO Third-Party Monitoring (TPM) project in Uzbekistan will now focus on the remaining challenges, particularly the need for further awareness raising and capacity building, which varies between provinces and districts. It will ensure that all those involved in recruitment will have the information and tools needed to ensure that cotton pickers are engaged in conformity with international labour standards.

The monitoring and results from a pilot project in the area of South Karkalpakstan also show that cotton picking economically empowers women in rural areas. The cotton harvest provides many women with a unique opportunity to earn an extra cash income which they control and can use to improve the situation of their families.

The ILO TPM Project is funded by a multi-donor trust fund with major contributions by the European Union, United States and Switzerland.

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Kazakhstan Launches Online Platform for Monitoring and Reporting Greenhouse Gases

MD Staff

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An online platform for monitoring, reporting and verifying emission sources and greenhouse gases (GHG) was officially launched today by the Ministry of Energy of the Republic of Kazakhstan and the World Bank.

The platform is an essential element of the National Emissions Trading System of Kazakhstan, which was launched in 2013 as the country’s main instrument to regulate domestic CO2 emissions and to drive the development of low-carbon technologies. Today, the National Emissions Trading System of Kazakhstan covers all major companies in the energy, oil and gas sectors, mining, metallurgical, chemical and processing industries.

Since 2014, the World Bank Trust Fund Partnership for Market Readiness has provided technical assistance to Kazakhstan in supporting the implementation of the National Emissions Trading System of Kazakhstan and related climate change mitigation policies.

“Kazakhstan’s emissions trading system is the first of its kind in the Central Asia region,” said Ato Brown, World Bank Country Manager for Kazakhstan. “With support from the Partnership for Market Readiness, the country has made a great effort to develop policy options for mid- and long-term emissions pathways and to develop an action plan on GHG emissions reductions by 2030. The World Bank will continue to support the Government during the crucial stages of policy implementation.”

The platform enables Kazakhstan’s major emitters to transmit and record data on GHGs emissions, as well as trade online. The National Allocation Plan, adopted in January 2018, sets an emission cap for 129 companies for the period 2018-2020. Per the national allocation plan, quotas have been allocated until 2020.

“The electronic platform undoubtedly proves the evolution of the Kazakhstan emission control system, which will allow the monitoring, reporting and verification system to be upgraded to a much higher level,” said Sergei Tsoy, Deputy General Director of JSC Zhasyl Damu.

GHG data is confirmed by accredited bodies for verification and validation and transferred to the Cadastre using an electronic digital signature. To date, there are seven verification companies accredited in Kazakhstan, with five more in the process of accreditation.

The platform was developed by JSC Zhasyl Damu with the support of France’s Technical Center on Air Pollution and Greenhouse Gases. The system is administered by JSC Zhasyl-Damu, while the beneficiaries are the Climate Change Department and the Committee for Environmental Regulation and Control of the Ministry of Energy of the Republic of Kazakhstan.

Background

Kazakhstan is one of the largest emitters of GHG in Europe and Central Asia with total annual national emissions of 300.9 MtCO2e in 2015. The energy sector accounts for 82% of total GHG emissions, followed by agriculture (9.6%) and industrial processes (6.4%). More than 80% of produced electricity in Kazakhstan is coal-fired, followed by natural gas (7%) and hydro power (8%).

Kazakhstan proposed as its Nationally Determined Contribution (NDC) an economy-wide reduction of GHG emissions of 15% from 1990 emissions levels by 2030. Kazakhstan ratified the Paris Agreement in November 2016 and committed itself to the fulfilment of the proposed target as its first INDC. The objective will contribute to sustainable economic development as well as to the achievement of the long-term global goal of keeping global temperatures below 2 degrees Celsius. 

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Religious buildings in Kazakhstan to be labeled 16+

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New restrictions on religious activities are emerging in Kazakhstan. Will they help to fight extremism?

According to the Government bill introducing amendments to the laws on religious activities and associations, adolescents should be forbidden from attending mosques, churches and synagogues if they are not accompanied by one of the parents and don’t have written consent of another parent.

Schools and the media are going to be forbidden from talking about the belief systems of various religions as well.

By implementing these and other measures, Astana intends to combat religious extremism. However, the crackdown on religion has already set the country four years back: in 2017 the Republic of Kazakhstan returned on the list of countries where the religious situation arouses concern of the US State Department Commission on International Religious Freedom. Kazakhstan last appeared on the list along with Afghanistan, India, Indonesia and Laos in 2013.

Is the proposed bill really going to help to contain the spread of radical Islam, and to what extent does it conform with international human rights standards?

The Concept of State Policy towards Religion, adopted in 2017, shows that the authorities strive to expel religion from public space altogether and promote an ideology of “secularism”. Their thinking is understandable: with no contact between members of differentreligions, there will be no inter-religious conflicts.

However, according to the European experience, prohibitive policy does not bring the expected results. In a multicultural society, the lack of information about the beliefs of other religions only increases tensions. Silencing the matter of religion and obstructing religious education reduces the ability to critically evaluate the extremist ideologies,while increasing the opportunityto spread false information aimed to promote inter-religious discord.

In addition, various summer camps, excursion and pilgrimage activities organized by religious communities are going to be banned if the bill is adopted. It includes those traditional religious confessions that the Government routinely thanks for promoting the inter-civilizational dialogue, youth development and the maintenance of stability, peace and prosperity in the society. A large number of children and teenagers will be deprived of their usual social circles and leisure activities.

As a result of such unconstitutional state interference and bureaucratic obstacles, children and teenagers will be denied the right to practice the religion of their family even when outside educational, medical and other state institutions. Not to mention that parents will be entitledby law to restrict the right of their children under the age of 16 to choose their faith.

Moreover, according to the proposed legislation, if a minor is found in a prayer room“illegally”, the responsibility will fall on the religious organization in question. Consequently, the clergy will need to alienate and discourage the younger generations from attending their own churches, so as not to get fined and fall within the scope of the restrictions on the religious activities!

At the same time, actual extremist organizations will go underground and get more freedom than their peaceful competitors. Obviously, the unruly youth will turn not to those imams, priests or rabbis unable to go beyond the restrictive framework of formal prohibitions. They will go to the “real” preachers who offer communion, new religious experience, something to devote yourself to, a sense of self-worth (even if as suicide bombers).

It is in the interests of all religious leaders, and indeed the whole world, to prevent such a terrible scenario from happening and to return Kazakhstan on the path of civilizational dialogue and inter-confessional cooperation. Otherwise, any participation in the VI Congress of Leaders of World and Traditional Religions in the Astana Palace of Peace and Reconciliation can be seen as not only dishonorable and hypocritical, but also unsafe.

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