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Kazakhstan: People Get Poorer Amid Economy Boom and Corruption

As the Kazakhstani economy continues to grow – although much slower now – thanks to petrodollars inflow, the resource nationalism and state expansion tendencies get stronger. Private business has to fight against the credit crunch consequences themselves, but both sectors suffer from flagrant and endemic corruption.

Kazakhstan continues expanding its control in the extractive industries, especially oil. Some observers believe the government's stance exemplifies “resource nationalism”, others argue that highly disadvantageous contracts that had been done in early years of independence worth revision because the nation can't get a fair portion of benefit from its own wealth. In either way, Kazakhstan introduced an oil export tax — it will apply to export of crude oil and add up $1 billion to the budget until the end of this year, reports utkir-aka [ru].

Meanwhile, megakhuimyak takes a look at the banking sector. Kazakhstani banks are believed to be among most stable and wealthy in the CIS, they often win Euromoney awards in management and aggressively penetrate neighboring markets. Although the last year's global credit crunch affected them too, and many were forced to search for internal sources of liquidity instead of dried up flow of external borrowings and toughen credit conditions:

As far as I remember, the Balzac's Gobseck was called inhumane because he took 13 per cent for long-term credits. How shall we call our kind bankers, who have average rates between 15 and 19 per cent? We can only dream about Gobseck's rates!, he writes [ru].

Meanwhile, azoo marks that amidst negative expectations about the bank sector's ability to survive the credit crunch, the country's major private bank shows +108% net income for the fourth quarter of 2007 [ru]. Nemtschin tried to check the widespread allegation that the national currency rate is overregulated with the dollar rate overestimated by the central bank. After several calculations he found out that, indeed, dollar in EU costs 114 tenge — i.e. 5 per cent cheaper than in Kazakhstan [ru].

At the same time, the vast majority of the country's population don't bother themselves with monitoring the trends or researching the monetary policies. But they did feel the last year's food and finance crisis personally. Beskunak writes in this regard:

“It's just my personal IMHO — my real income has shrinked 4 times for the past three months. I spoke to a newspaper's advertisement manager, she said the bulk of ads has fallen two times. The feeling of fear and expectation of disaster pierce the country after the Aliyev affair with all its kompromats [discrediting materials], which exposed the top officials’ filth” [ru].

But above all of the economic and political problems of Kazakhstan stands corruption, especially flagrant here as in every petro-state. The nation stands on 155 place among 180 in the Transparency International's corruption perceptions index. Sarimov's post gives a good snapshot of how it's done in Kazakhstan:

More than 600 million tenge — it's 5 million dollar is the cost of design estimate of the market for farm products in Astana, the capital of Kazakhstan. Not of the construction even… The state-owned company announced a tender for development of a design estimate and will pay 5 million dollars to some private firm. Just to compare, here is what I found about 5 million dollars in the search engine:

- 5 million dollars are required to create a center for transplantation of bone marrow in Kazakhstan.
– Kazakhtelecom offered 5 million dollars for 51 per cent in the Kyrgyz telecom monololy.
– The Zaman Company invested 4,5 million dollars in a unique plant for production of ferroalloys out of coal wastes.
– The Central Asia's only factory on glass production works in Astana. Its total value is 5 million dollars.

Can you feel the difference?

2 comments

  • […] People get poorer amid economy boom and corruption […]

  • Paul Elliott

    Having worked in Kazakhstan for two years (and being married to a Kazakh woman), I have found corruption in EVERY possible place but was amazed recently when the English President of a local airline was found colluding with a local woman to punish her expat husband. Apparently the airline was threatened with bad media publicity if he did not help and as the airline is in a serious financial situation he agreed to help! It just goes to show how even foreigners cannot avoid this process.

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