COMMENT: Status quo in Kazakh polls but increased populist noise possible

By bne IntelliNews August 17, 2007

Aton Capital in Moscow -

We expect the leading pro-presidential Nur Otan party to easily secure full control of the next parliament with 70-75% of total votes in Kazakhstan's August 18 elections. We also expect two major opposition parties to be able to get representation in the next Majilis (the lower chamber of parliament), which would make the parliament reasonably well balanced with a large centre and two opposition wings, one right-leaning and the other left-leaning. However, the latter, while having little actual legislative bite, may use its parliamentary seats to raise populist rhetoric.

Early parliamentary elections in Kazakhstan, planned for August 18, are to be held according to the recently amended election rules. Thus, 98 out of 107 Members of Parliament (MPs) are to be elected as members of any parties that receive at least 7% of the vote.

Previously, most MPs (67 out of 77) were elected as independents from single-mandate electoral districts. The remaining nine MPs are to be appointed by the National assembly of Kazakhstan on August 20. A total of seven political parties are registered for the elections, but we think that apart from the leading pro-presidential Nur Otan party, only two parties have realistic chances of getting into the next Majilis.

Incumbent camp

The pro-presidential camp is represented by The People's Democratic Party Nur Otan, and three small "satellite" parties: Ayul (Farmers), Patriotic Party and Rukhaniyat. Nur Otan is the official political structure of President Nursultan Nazarbayev's rule, which aims to raise political support for current political and economic policies. The formal party leader is the president, thus, the party's political platform is the political programme of Nazarbaev himself.

Therefore, a victory for Nur Otan would be a personal victory for Nazarbayev and a consequent continuation of existing policies. Not surprisingly, the party election ballot is mostly filled with major government officials and well known public personalities. In the last parliamentary elections the party got over 60% of the general vote and current polls put its current rating at 53-73%. Given the level of popular support behind Nazarbayev, who got over 90% of the vote during the last presidential elections, we think that the party should be able to win votes in the higher range of expectations, getting 70-75% of the vote. This would secure its undisputed control of the Majilis.

Three other pro-presidential parties cumulatively received less than 3% during the last parliamentary elections and historically showed full support of all government initiatives, with minor alterations depending on the party. Thus, Ayul (leader - Gani Kuliev) focuses mostly on the problems of the local agrarian sector, while Rukhaniyat (Altynshash Zhaganova) is more concerned with humanitarian issues of national unity and national ideology etc. The political platform of the Patriotic Party (Gani Kasymov) consists of a page-long list of declarations, which roughly coincide with Nur Otan's slogans.

Presently, the cumulative rating of these three minor parties does not exceed 4-5%, and we doubt any of them can reach the 7% threshold.

Opposition camp

The Kazakh opposition is represented by The Democratic Party of Kazakhstan Ak Zhol, the Nationwide Social-Democratic Party, and the National Communist Party of Kazakhstan.

The Democratic Party of Kazakhstan Ak Zhol received about 12% (second highest) of the general vote during the last elections, but since then the party has gone through a major crisis as some leaders broke away to form Real Ak Zhol, which later merged with another opposition party - the Nationwide Social-Democratic Party. Its current political leader, Alikhan Baimenov, is viewed as one of the most influential politicians in Kazakhstan, mostly due to his position as the only opposition candidate in the last Majilis. He actively participated in the working group that developed recent constitutional amendments, and his party is commonly regarded as a "constructive opposition." Ak Zhol's overall political platform can be regarded as more liberal than that of the other parties, calling for more democratization, reduction of the state's presence in the economy, closer integration with the West, continued tax reforms etc. Present ratings put Ak Zhol in second place, with 6-12% of the general vote. We expect the party to pass the 7% mark necessary to get representation in the next Majilis, but admit that its existing political support does not guarantee success.

The Nationwide Social-Democratic Party (NSDP) in its current form was created just two months ago by merging several major opposition parties. The party has taken a leftist socialist stance, possibly attempting to tap the anti-incumbent and old communist electorate. Thus, the party's political platform actively employs populist slogans of redistribution of oil and gas revenues among the general population, to give Kazakhstan a minimum of 50% representation in all natural resource projects in the country, progressive taxation of luxuries, etc. Its present leaders - Zhamarkhan Tuyakbay (a former presidential candidate who received 6.6% of the vote), Bulat Abilov and Oraz Zhandosov - are generally viewed as genuine opposition to the existing president, but the short history of the party (less than one year) and the low popularity of anti-incumbent sentiments keeps overall opposition ratings low. Existing polls give the party 3-8% of the vote, which puts the success of this party in the high-risk zone. We believe the party can exceed the 7% threshold, but we think this is likely to be achieved by means of unofficially approved vote manipulation to give the party minimal parliamentary representation in order to demonstrate the democratization of the country.

We also think that falling anti-incumbent sentiment could reduce the chances of another parliamentary contender, the National Communist Party of Kazakhstan (NCPK). Despite the long communist legacy of Kazakhstan as an former Soviet state, this party was formed only in 2004 by splitting from the Communist Party of Kazakhstan, which has chosen not participate in the elections. Present ratings give the NCPK about 2-3%, which is much lower than the 7% level necessary.

What to watch for

We expect the main intrigue of the upcoming elections to be whether either of the two main opposition parties, Ak Zhol or the Nationwide Social-Democratic Party, are able to pass the 7% mark.

If both parties fail to reach the 7% mark, we predict there will be a major issue regarding the legitimacy of the election results, as all opposition movements are likely to protest. We also expect international organizations and observers to follow suit. Even though we do not expect any efforts to alter the election outcome to succeed, we think this could potentially lead to increased negative news outflow from the country for the next several months and possibly some deterioration in relations with the West. We think the most positive outcome of the elections would be if Ak Zhol were to win about 7-9% of the votes to give it about 9-11 seats in the parliament, with NSPD failing to reach the 7% mark. Such a composition of the parliament would bring a mainly centrist Majilis leaning towards a relatively more liberal stance, which could help give the economy another reformist boost in the future.

We believe it more likely, however, that both major opposition parties will get minimal representation in parliament. In this case, the Kazakh political scene would appear quasi-balanced with a big centrist party, Nur Otan, and two opposition parties, one on the right and the other on the left. We believe such an outcome could happen as result of some unofficially approved vote manipulation in order to demonstrate increased opposition representation as a sign of Kazakh democratization.

However, we think that in this case, the NSDP's populist platform could eventually affect foreign investors in the country, at least in terms of sentiment, due to a more aggressive parliamentary stance towards international consortia exploring Kazakh oil and gas offshore reserves in the Caspian Sea and on production sharing agreements (PSA). Existing PSAs are popularly viewed as highly disadvantageous for Kazakhstan, and populist opposition could use them as a target for public assaults. While we would not expect this to result in actual legislative reform, it could raise the noise levels of anti-foreign sentiment.

Overall, taking into account the nine MPs appointed by the National Assembly of Kazakhstan, which is generally loyal to the president, we expect the Nur Otan party to control up to 91 seats out of 107, the relatively liberal Ak Zhol to win about 9 seats, and the remaining 7 to be left the NSDP.

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COMMENT: Status quo in Kazakh polls but increased populist noise possible

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