Global Policy Forum

Politicians Playing the Oil Card as Kazak Elections Loom

Print
Wall Street Journal
September 16, 2004

Under Kazakhstan's renowned inhospitable steppes lies President Nursultan Nazarbayev's crucial economic asset -and also a major political embarrassment. The giant Tengiz oil field is pumping money into the economy, but it's also at the center of a bribery probe in the United States that has kept this ex-Soviet country's longtime leader on edge in a scandal that's been christened "Kazakhgate." As this young Central Asian nation gears up for critical parliamentary elections Sunday, both the government and opposition are trying to play the oil card to their own advantage.


Nazarbayev's Otan party has claimed success for the country's economic boom, reaching nearly 10% annual growth in recent years. The party credits market reforms -although it is mostly the result of large foreign investment in the country's energy sector to exploit an estimated 100 billion barrels of oil. An average Kazakh is also better off than an average citizen of any other ex-Soviet country in Central Asia. But the opposition says more Kazakhs could be benefiting from the country's oil riches. "All goes to a narrow circle of government officials and oligarchs," said Bolat Abilov, co-chairman of the largest opposition Ak Zhol party.

Ak Zhol says if it wins elections and forms a new government, it would start transferring three-quarters of tax revenues from the extraction of mineral resources into the bank accounts of Kazakh citizens. Other opposition parties running in a coalition, Democratic Choice and the Communists, are also campaigning under the slogan of "Let's return the country's wealth to the people!"

A U.N. report released in May said nearly a quarter of the country's 15 million people lived in absolute poverty in 2002 with incomes below the subsistence minimum. The report urged the Kazakh government to use oil export revenues "more prudently. In 2003, the Tengiz field alone brought $1.6 billion (EUR1.3 billion) into the national economy. But besides the issue of wealth distribution, Nazarbayev has been dogged by corruption allegations stemming from a bribery investigation in the United States that involves his former adviser on oil contracts. James H. Giffen, a New York banker, was indicted last year on charges that he made more than $78 million (EUR65 million) in unlawful payments to two senior Kazakh officials in the 1990s on behalf of U.S. oil companies, including mediating Mobil's deal to buy a share in the Tengiz project.

Nazarbayev kept silent on the case until May, when he called the alleged connection between it and top Kazakh officials "insinuations and a provocation" that unnamed forces and international oil companies were using to pressure his government. As Nazarbayev made his first public comment on the "Kazakhgate" case, the country's former Soviet leader announced his intention to seek another term in office.

To have better chances at presidential polls in 2006, Nazarbayev needs a loyal parliament -like the one he has now -and both the opposition and many Kazakhs believe that authorities will try to manipulate Sunday's vote. Facing accusations of authoritarian moves in recent years, Nazarbayev is under pressure to ensure a free and fair election. But allowing more freedom could open discussion of "Kazakhgate" inside the country. Now, the subject is a taboo and raised only by radical opposition voices.

Opposition leader Abilov can't run for parliament because of a July slander conviction. He alleges the charges were politically motivated and aimed to keep him away from parliament "because deputies like me would raise the issue of Kazakhgate." Petr Svoik, a senior Democratic Choice official, said "Kazakhgate" would eventually prove to be "fatal" for Nazarbayev. "It's having a striking effect on his moral state and all his latest actions," he said. "It's like AIDS: it doesn't kill you right away, but you can't live with it."


More Information on Nations & States
More Information on Corruption and Money Laundering
More Information on Oil and Natural Resources

 

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.