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Kazakhstan’s Strategy 2050: A Clear Path Forward

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] W [/yt_dropcap]hat the future held the evening of Dec. 26, 1991 was far from certain. At 7:32 pm local time the flag of the Union of the Soviet Socialist Republics was lowered for the last time in front of the Kremlin. And with that, the sprawling empire of the Soviet Union ended and 15 former republics were on their own.

More than 125 million people, thousands of businesses, tens of thousands of workers and countless public services that had counted on the centralised government in Moscow for their very survival, were forced to start again, to build not only governments and economic systems but cultures and national identities. It was a daunting prospect fraught with challenge and uncertainty.

One of those former 15 republics set adrift, however, has met those challenges and exceeded expectations with an economy-first domestic policy that has embraced its historic ethnic and religious diversity to create a stable, growing economy and proud, dynamic citizenry.

Kazakhstan, a country with the land size of Western Europe but only 17 million people, has seized the opportunity to rebuild and, in just a short quarter-century, is on its way to being counted among the world’s most developed nations.

Harnessing its abundant oil and gas resources, the country has attracted more than $226 billion in foreign direct investments over the last decade alone and despite a slowdown during the recent global economic crisis, has enjoyed consistent GDP growth. Despite being home to more than 130 ethnicities and more than a dozen religions, Kazakhstan has enjoyed extraordinary peace and stability among its population.

Kazakhstan has also become a world leader in nuclear non-proliferation, having renounced the world’s fourth largest nuclear arsenal, and worked hard as a positive international force for peace and diplomatic solutions to international conflicts.

Kazakhstan was recently elected to a non-permanent seat on the UN Security Council, the first Central Asian nation to do so, and has hosted the peace talks involving all sides of the conflict in Syria this year. These successes, however, have not come by chance, but have been the results of long-term, strategic planning initiated by Kazakh President Nursultan Nazarbayev.

In 1997, the country adopted its Kazakhstan 2030 development programme, focusing on key sectors of stability and growth. And in 2012, just 20 years after achieving independence, the Kazakh President announced that the goals of the 2030 plan had been achieved 18 years ahead of schedule and that the country was laying out an even a more ambitious plan. The country announced its Kazakhstan 2050 programme designed to place Kazakhstan within the world’s 30 most-developed nations by mid-century.

“We adopted the Kazakhstan Strategy 2050 so that the people of Kazakhstan would firmly hold the helm of the future of the country in their hands,” Nazarbayev said in January 2014.

The strategy hopes to achieve its ambitious goal by focusing on seven priorities: economic pragmatism, comprehensive support for entrepreneurship, an improved social policy, a modern education system to produce a skilled workforce, a consistent foreign policy focus on domestic, regional and international security, a more developed democracy and a promotion of Kazakh patriotism.

While these priorities provide a roadmap, the country and the President realise that policy goals are not enough. Those policy positions must be based on broader, unifying principles.

“Strategic planning is a ‘number one’ rule in the 21st century, because no wind will be favourable unless a country does not know its route and destination harbour. Strategy Kazakhstan 2050, as a guiding beacon, allows us to solve our people’s everyday issues, while also keeping our priority aims in mind. This means that we should improve the life of our nation not in 30 or 50 years’ time, but do so every year,” said Nazarbayev.

Among the principles Nazarbayev has announced are a focus on evolutionary rather than revolutionary change. It is a realisation that change occurs over time and is achieved when all actions steer toward a clear objective.

The country also hopes to more deeply integrate into the regional and global economy, and, most importantly, continually strive to improve the lives of everyday Kazakhs.

The value of the Kazakhstan 2050 plan and its ambitious goal to be among the 30 most developed nations by mid-century is that it gives not only the Kazakh people but all members of the Kazakh government a clear objective. And they have responded.

The government has approved the “Plan of the Nation: 100 Concrete Steps to Implement Five Constitutional Reforms” to achieve specific institutional reforms. Among these are a consistent rule of law and more accountable government.

The country has also unveiled modernisation efforts across industries and sectors, including agriculture, transport, logistics, real estate, education, healthcare and social protection of the population, among others.

And in a significant step in its development as a democracy and as a developed nation, the President and Parliament have this year approved legislation decentralising presidential power and more proportionally distributing authority back to the legislature under a set of constitutional reforms.

“We are witnessing the beginning of a new, largely unclear, historical cycle. And it is impossible to occupy a place in an advanced group, preserving the old model of consciousness and thinking. Therefore, it is important to concentrate, go through changes, adapt to changing conditions and take the best of what the new era offers,” Nazarbayev wrote in a recent address to the nation.

It is that embrace and harnessing of the country’s unique history and population coupled with clear long-term objectives, such as those in Kazakhstan Strategy 2050, that will likely serve Kazakhstan as well over the next quarter-century as they have since the flag was lowered on the Soviet Union and a new nation was born just more than 25 years ago.

Central Asia

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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Central Asia

Supporting Kazakhstan’s Commitment to Fiscal Consolidation and Long-Term Economic Transformation

Ato Brown

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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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Central Asia

Great Central Asia, America’s counter measure to China-Pakistan Economic Corridor

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China’s ambitious global geo-political objective has raised concern among American strategists, which China attempts to Isolate America at the global level. The claim has become more evident during the G20 summit when China curbed president Trump effort to pass a joint declaration in order to condemn North Korea’s recent ICBM test.

(more…)

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