INTERVIEW: Kazakhstan struggles with social policy

By bne IntelliNews November 20, 2012

Clare Nuttall in Astana -

Social policy has become the "Achilles' heel" of the Kazakh government as it tries to spread the benefits of the country's oil wealth to encourage social stability. Yet Astana's record so far has been mixed, raising questions about the government's ability to stave off unrest in future, according to Martha Brill Olcott, senior associate with the Russia and Eurasia Program at the Carnegie Endowment.

The 2011 Zhanaozen tragedy, in which a seven-month strike by oil workers erupted into clashes with police that resulted in at least 14 rioters being shot dead, highlighted the dangers of allowing discontent to ferment in the country's industrial towns. Following the incident, the Kazakh government stepped up its efforts to ensure the country's oil revenues trickled down to the population. However, according to Olcott, while the government has already launched a series of regional investment and diversification programmes, Astana's ability to maintain stability will depend on how successful these initiatives are on the ground. "The Kazakhstani government has always had a tension between legislating projects and actually implementing them in a way that produces the desired effect fast enough," Olcott tells bne in an interview. "Introducing diversified economies in the old one-industry towns would contribute to social stability, but economic diversification policies so far in Kazakhstan have been only partially successful."

There is a danger, she points out, that with patchy success across different parts of the country, communities that do not become quickly diversified may become even angrier if they see that the policies have succeeded elsewhere. The current priorities in Astana are also likely to require local government reforms, since most of the responsibility for carrying out the various programmes will rest on local governments. "The question is whether - with the best will in the world to carry out their tasks - [local government] will have the capacity to succeed," Olcott says. "It seems that social policy is going to continue to be the Achilles' heel in Kazakhstan, given the need to create more opportunities for people who feel either economically disenfranchised or that they are not being treated in an equitable fashion."


While Kazakhstan's economy has continued to grow, the country is already seeing a gradual slowdown, with the Ministry of Economic Development and Trade cutting its 2012 growth forecast to 5.4% on October 23 - down from an earlier government forecast of 5.8%. "Because it is so much better integrated into the global economy than any of the other Central Asian states, Kazakhstan feels that its recovery would be threatened in the event of another crisis, although this seems to have been averted, at least for now," Olcott says.

She says the two biggest global risks for Kazakhstan are a severe slowdown in China and a precipitous drop in the price of oil. Not only would these affect Kazakhstan directly, but because its economy is so closely tied to Russia economically, the impact on the Russian economy would ripple out to Kazakhstan and all the countries in the Central Asian region. "Kazakhstan's budget is, however, pegged on a lower oil price to break even than the Russian budget," she notes, adding that there is a danger that a worsening of economic conditions could cause the social situation to deteriorate.

However, government officials say they have contingency plans in place should the economic situation worsen considerably. Furthermore, in only one of the five Central Asian republics have social tensions led to the toppling of a government, with Kyrgyzstan's two revolutions in 2005 and 2010, meaning the chances of Kazakhstan following a similar path are not very high given the two countries' divergent paths over the last two decades. "Kyrgyzstan has a very different political development trajectory from the other Central Asian states, because they not only have this cycle of revolution, but they also have a cycle of political protests going back to the Aksy revolt in 2002. Nobody else in the region has the same dynamic of political protest and unrest that goes back for over 10 years," Olcott points out.

Kyrgyzstan also continues to see political and economic turmoil, making this a cautionary tale rather than a model to follow for the Kazakhstanis, she adds.

There are, however, various risks to political stability in all of the five Central Asian countries, and the region as a whole faces new threats when the Nato withdrawal from Afghanistan is completed in 2014, creating a potential security vacuum. "I think that we are going to find each of the countries in Central Asia finding their own patterns for blowing off steam," Olcott says. "I can't see the Kyrgyzstani pattern repeating itself across the region, but there are risks to political stability in each country, and they are likely to play out in different ways."

INTERVIEW: Kazakhstan struggles with social policy

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