Earlier this year, the Central Asian nation of Kazakhstan announced a new campaign called “Invest in Kazakhstan,” which was designed to attract foreign investors. Throughout the campaign it released new commercials that enticed potential investors with exemptions from corporate income tax, land taxes, property taxes, and customs duties for up to ten years.
To lure new stockholders, the commercials promised state-in-kind grants (like goods, services and expertise), stability of investment legislation (drawing on the 2003 Kazakh Law of Investments which virtually guaranteed the stability of assets), strong protection of investors’ rights, no work permits for foreign labor, and visa-free entry for citizens of many countries. As if these benefits weren’t enough, Kazakhstan went even further, offering thirty percent cash back on investments. One would think that with this kind of economic bait – and the fact that Kazakhstan had very low debt – foreign investors would be jumping at the opportunities. So why hasn’t the country been able to draw more foreign investment?
Perhaps, with the exception of multinational oil companies, potential investors are turned off by the many disadvantages there are to investing in Kazakhstan. In addition to being quasi-democratic and geographically landlocked, Kazakhstan’s private sector lacks experience, still has to develop a larger educated workforce, and suffers from global doubt as to its financial ability to follow through on the aforementioned promises. It also doesn’t help that Kazakhstan acts like an autocracy at times in that its government is known for its lack of transparency and has high levels of corruption. It maintains tight controls over the press, lacks diversity, and has an unimpressive civil rights record. Dealing with these political complications would be an inevitable headache for investors.
Perhaps most importantly, Kazakhstan is currently dealing with a currency crisis where capital is hemorrhaging at an alarming rate. The tenge, Kazakhstan’s native currency, was tightly controlled for years until the government decided to switch to a floating exchange rate. This decision, due to falling crude prices around the globe, caused the tenge to lose almost a quarter of its value. However, as the dominoes have fallen in reaction to cheap oil from China to South Africa, Kazakhstan’s government still does not appear too concerned. In fact, while everyone else is calling it a crisis, Kazakh leadership is calling it a normal “transition.”
Even though Kazakhstan has recovered some of its losses (ten percent), there is still a very good possibility it will drop again in the next few weeks. This is because of the tremendous pressure on Kazakhstan by its neighbors. Like other emerging markets in the region, Kazakhstan – a country that is sandwiched between Russia and China – is economically dependent on both regional superpowers. Its economy is linked to Russia’s and has been negatively impacted by the Russian sanctions caused by the crisis in Ukraine. This impacts Kazakhstan on two fronts: the Russian ruble has become so weak that Russians can hardly afford Kazakh goods and, at the same time, Russian imports are threatening to flood Kazakhstan’s market with low-cost imports. To make matters worse, there is a weaker demand for Kazakhstan’s exports by China, the second-largest economy in the world. China’s recent move to devalue its currency – the Yuan – may have been done to boost the country’s exporters in an attempt to make their products cheaper and easier to sell. This could very well spark a currency war in the region and further damage susceptible currencies in emerging markets, including Kazakhstan. In sum, China’s devalued currency, Russia’s plummeting ruble and crushing sanctions, and the likely increased supply of oil from Iran after the new nuclear accord – all exacerbate the problem in Astana and may be putting Kazakhstan’s long-term economic future on shaky ground.
It appears that Kazakhstan, still resolute to integrate into the global market community, has an ambitious plan to use its WTO and EEU memberships to boost its image and attract new investments. Furthermore, the Asian Development Bank (ADB) just announced it will loan Kazakhstan one billion dollars so it can resume governmental programs designed to stimulate the country’s economy. This loan presents Kazakhstan with an opportunity to diversify, create new jobs, provide continued support and services to its disadvantaged citizens, grow its private sector, and build up smaller businesses. Unfortunately, making substantial domestic policy changes pertaining to civil liberties and democratic freedoms do not appear to be a part of the strategy at the moment.
While it is difficult to know exactly how this complex economic strategizing will play out in Kazakhstan, there is one thing we do know. Kazakhstan’s President Nursultan Nazarbayev – the only leader the former Soviet Republic has had since its independence in the early 90s – has great energy and enthusiasm for the future of his country. His grand geopolitical ambitions strive to take the country to new heights of economic, political and industrial growth. While Kazakhstan is considered authoritarian by international standards, by regional standards it is regarded as a much “softer” version than its Asian counterparts. This may give it an important edge as it strives to stay innovative and relevant while expanding its political, military, diplomatic, and economic reach.
Another important demographic factor is just how young the country is, in both population and geopolitical terms. For one, Kazakhstan has managed to utilize its resources and the productive capacity of citizens to not only break away from its domineering progenitor but also set itself up for long-term sustainability. It transformed itself mostly into a market economy that, under the right conditions and strategies, could dramatically transform and deepen from international trade and investment. While it would certainly be a stretch to describe Kazakhstan as a wealthy nation, it most definitely is not a poor one. Post-Soviet Kazakhstan has been remarkably responsible with its fiscal, industrial, trade and macroeconomic policies. Plus, it has worked very hard to carefully cultivate relationships with other countries so that Kazakhstan is largely regarded within the region as a stable and rational geopolitical voice.
While Kazakhstan still needs to diversify its overconcentration on natural resources, the country still has time, opportunities, important economic alliances, and room to grow. Kazakhstan’s economy and political ties do not necessarily have to remain constrained by corruption and political controls either. For the country to overcome the challenges it currently faces and to attract foreign investors, it needs to continue to embrace innovation that can accommodate social unity and a more balanced policy geared towards diversification and development. Perhaps the greatest challenge of all, but also provide definitive proof to the global community (and its foreign investors), is the willingness of the country to venture more boldly with democratic freedoms and civil liberties experiments that will accentuate and reinforce its sound economic strategies. Being able to develop both economically and democratically, to show the world that unlike so many emerging economies Kazakhstan is not afraid to give its people and its system more independence and freedom, might be the one element of harmony that will distinguish the country from all other competitors and, ironically, provide it with the stability to ride out the cyclical nature of economic crisis.
ILO Reports Important Progress on Child Labour and Forced Labour in Uzbek Cotton Fields
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.
Kazakhstan Launches Online Platform for Monitoring and Reporting Greenhouse Gases
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.
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.
Religious buildings in Kazakhstan to be labeled 16+
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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