[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] K [/yt_dropcap]azakhstan, a country with immense oil wealth but relatively little global influence, has recently been trying to convert its wealth into influence. The successful bid to hold an exposition in Astana this summer is so far the crowning achievement of this international push to engage with countries directly outside of the post-Soviet space. The preparation for Astana 2017 is decades in the making and has literally been built from the ground up.
Twenty years ago Astana, Kazakhstan’s capital and second largest city, was a nondescript village in the country’s northern steppes. Fast forward to present day and the gleaming metropolis is adorned with skyscrapers and unique structures designed by the world’s best architects. The city was willed into reality as a representation of Kazakhstan’s new wealth and outlook for the twenty-first century. Astana was designed to grab the world’s attention and to be used as a spectacle for events like this year’s world expo. Having failed to secure the 2022 Winter Olympics, Kazakh authorities have pulled out all the stops to promote the expo. A massive futuristic pavilion will house the expo and even world famous boxer Gennady Golovkin has been recruited to promote the event.
The wealth needed to allow for such projects only emerged following the tumultuous 90s. Under the leadership of Soviet era strongman Nursultan Nazarbayev, Kazakhstan has risen from planned economy stagnation to double digit GDP growth. Granted, this was not achieved through transparent economic practice and the rule of law, but through the development of its petrochemical industry. Hydrocarbons accounted for 60% of exports in 2015. However, due to the collapse of crude prices in late 2014, Kazakhstan has had to adapt to an alternate reality where sustainable development and outside investment needs to matter for the continued upward movement of the Kazakh state.
Astana 2017’s theme of “Future Energy” is an important continuation of the general worldwide consensus following the 2015 UN Climate Change Conference. As of September of last year, 101 countries have confirmed their participation at the expo with more than two million individual visitors planned for the three-month long event. Astana will take center stage for Kazakhstan’s future ambitions. Mr. Nazarbayev’s real vision of Kazakhstan’s role in the world is known only to him and a select few individuals in his inner circle. It is difficult to imagine him wanting Kazakhstan to take a leading role in the fight against climate change or energy equity.
Kazakhstan has outlined a plan to obtain 50% of its energy needs from renewable sources by 2050. This target is not binding to any supranational organizations of which Kazakhstan is a part (ex. Eurasian Economic Union [EEU] and Commonwealth of Independent States [CIS]). Additionally, with the country so heavily invested in hydrocarbons all the while lacking almost any renewable energy infrastructure, it is unlikely that Kazakhstan will be able to meet it, despite an enormous renewable energy potential. These speculative inferences point to a likely scenario where Mr. Nazarbayev does not foresee his country using soft power to influence its neighbors with energy policy.
Instead of traditional established partnerships with its CIS and EEU partners, Kazakhstan may be looking for outside investment. With its conventional economy tied to the EEU trading block, which is also hurting due to the low price of oil, Astana 2017 could prove to be particularly useful to attract investment and diversify its economy. In addition to international representatives, the world’s largest energy and tech companies will be making an appearance. It is through partnerships with these giants that Kazakhstan can create its own homegrown industries which may be competitive in the EEU and abroad. Rapil Zhoshybayev, a Kazakh commissioner for Expo 2017 and a former deputy foreign minister described the expo’s mission in an article for The Diplomat:
“Our aim is to use EXPO to drive the next stage of our industrial development and diversification with a new emphasis on sustainability, high-tech and skills. The exhibition site and its buildings will, wherever possible, use the latest renewable power sources, smart energy networks and sustainable construction techniques. Their use will embed these skills and knowledge throughout our wider industry”.
It is extremely unlikely that Kazakhstan would hope to become a global leader in renewable energy. However, it can hope to be a player in an underdeveloped regional market and expand its influence that way.
Astana 2017 can lead to a more diversified and successful future for Kazakhstan. Unfortunately, its typical post-Soviet government may derail any plans even before they are formed. Mr. Nazarbayev is currently 76 years old and has been in power for more than 26 years. His recently more liberal attitude towards finance, development, and succession could all be rolled back should he be unable to fulfill his duties as president. There is no guarantee that his successor will be as open minded. Corruption, the traditional enemy of free enterprise in this part of the world, will also almost certainly have an impact. It is just a question of how much of an impact.
Kazakhstan has had an impressive start to the 21st century and its economy looks set to continue to grow. Astana 2017 presents a bridge to the outside world which Kazakhstan would likely be best served to explore.
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.
Supporting Kazakhstan’s Commitment to Fiscal Consolidation and Long-Term Economic Transformation
Kazakhstan’s 2050 Strategy envisages a radical restructuring of the government and the economy by 2050 and recognizes that “the era of the hydrocarbon economy is coming to its end.” The world’s current oversupply of oil adds urgency to the need to accelerate broader reforms of economic structure and fiscal policy.
The World Bank Group’s recent Public Finance Review, Kazakhstan: Enhancing the Fiscal Framework to Support Economic Transformation, provides a set of recommendations to support the government’s move in this direction.
Kazakhstan benefited greatly from the oil boom of 2000–14, which led to income growth and poverty reduction, and helped build a fiscal cushion to stabilize the economy during downturns. As oil output more than doubled during the oil price super-cycle, the Government of Kazakhstan accumulated substantial fiscal savings in its National Oil Fund (NFRK). These funds were used for anti-crisis programs in 2007–10, during which time the fiscal stimulus program totalled US$18 billion (about 15 percent of GDP).
The Government injected more than US$30 billion in foreign-currency interventions in 2014–15, while the current fiscal stimulus package already exceeded US$20 billion (12 percent of GDP) in 2014–17.
As a result, the NFRK balance has fallen from US$73 billion in 2014 to a projected US$57 billion by the end of 2017. The Kazakh authorities moved to a floating exchange rate regime in the second half of 2015 to stop the leakage of foreign exchange reserves. However, an accompanying fiscal adjustment has not materialized. Some policy makers may still believe that the shock is cyclical and maintain hope that oil prices will recover.
Yet that might not be the case.
The low-oil prices environment is not a temporary crisis, but is rather a structural shift to a “new normal”. In this case, Kazakhstan needs to urgently adopt a fiscal consolidation strategy to promote diversified growth and high-quality job creation.
The NFRK’s new management rules, with advice from the World Bank Group and IMF, include:
- The nonoil deficit, the main anchor of fiscal policy, is to be progressively decreased to 7 percent of GDP by 2020 and 6 percent by 2025;
- Guaranteed transfers from the NFRK are to be reduced from the present US$8 billion to the equivalent of US$6 billion by 2020;
- The NFRK is to be maintained at least at 30 percent of GDP;
- Privatization revenues are to flow to the NFRK; and
- General government debt and external debt of state-owned enterprises are not to exceed the size of NFRK assets.
Government projections have been made under these assumptions, but it is critical that oversight and reporting of the NFRK rules are applied rigorously.
Failure to consolidate as projected could result in a full depletion of net fiscal savings in around 5-10 years!
At the heart of successful fiscal consolidation should be two things: reducing inefficient expenditure that distorts private incentives while redirecting savings toward productivity-enhancing spending; and eliminating inefficient tax benefits that result in an uneven playing field for investment.
While pursuing a fiscal consolidation effort over the medium-term, there are potential benefits to reviewing Kazakhstan’s fiscal policy framework and institutions with the goal of strengthening their coherence, credibility, and flexibility.
All these major institutional developments will require considerable time, as well as extensive technical support. The World Bank Group suggests to develop a three-phase, time-bound Action Plan consistent with an immediate focus on fiscal consolidation as well as continuing the support programs that are already underway, notably by the World Bank Group, the IMF, and the OECD. Longer-term issues could be discussed at a high level with the authorities in 2018, with inputs from all the involved international bodies.
First published in World Bank
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