Kazakhstan's Economy is Finally Rebounding

By Henry Srebrnik, [Charlottetown, PEI] Guardian

At 2.7 million square kilometres in area, Kazakhstan, one of the former central Asian republics of the Soviet Union, is the ninth-largest country in the world. It encompasses an area roughly as big as Germany, Poland, the Czech Republic and Austria combined.

Until two years ago, everyone in Kazakhstan born after 1990 had known only one leader for their entire life -- Nursultan Nazarbayev. He had been largely unchallenged as leader of the nation since 1989, when it was still part of the Soviet Union.

Many regarded him as a president for life, a common practice for authoritarian states in central Asia. After independence, he was returned to office against largely token opponents in 1999, 2005, 2011 and 2015. He enjoyed great popularity, although it was never possible to independently measure it because these were not free and fair elections.

But in a move that caught Kazakhs by surprise, he resigned in March 2019, and Kassym-Jomart Tokayev, regarded as a hand-picked successor, became the new president, after snap elections were announced to complete the process.

In the weeks leading up to the June vote, police raided the homes of opposition figures and courts sentenced anti-government protesters to short prison stays.

Tokayev’s first decision as president was to rename the then capital, Astana, as Nur-Sultan, in honour of the departing Kazakh president.

Because Kazakhstan’s economy was closely linked to Russia’s in the centrally planned system of the Soviet Union, the breakup of the union in 1991 and the removal of Soviet economic infrastructure caused a severe economic downturn in the years that followed.

By 1995, GDP in Kazakhstan had fallen by 36 per cent. Unemployment rose and the proportion of people living below the poverty line grew from 25 per cent in 1992 to 43.4 per cent in 1999.

During the Soviet period, collectivised farms overtook nomadic shepherding in the steppes, though they were not as successful as the Soviets had hoped.

Unprofitable farms relied on money from the Soviet regime to survive. When the funds dried up, many people were forced to look elsewhere for work, and hundreds of thousands of people vacated the grasslands.

Since then, many farms have morphed back into grassy patches, dozens of ruined buildings lie crumbling, and equipment such as water pumps, formerly used by farmers to source water for their livestock, stand unused.

Livestock in the region plummeted. Data from the United Nations’ Food and Agriculture Organization reveals that the number of sheep on the Kazakh steppe fell from 33 million in 1992 to 8.7 million in 1999. Cattle numbers dropped from 9.5 million to 4 million.

The new country engaged in widespread privatization, although many profitable enterprises went to members of the government-connected elite.

But new oil extraction operations after 2002 restored the GDP share of industry to about 30 per cent, and overall economic indicators rose substantially. Development of petroleum, natural gas, and mineral extractions has attracted most of the over $40 billion in foreign investment in Kazakhstan since 1993 and now accounts for some 57 per cent of the nation’s industrial output.

The country’s population, having declined by nearly 1.5 million post-1991, is now growing again, and stands at 18.7 million – of which almost 20 per cent are ethnic Russians. So too has its economic output -- per capita income now stands at $9,686.

Atyrau, the oil capital of Kazakhstan, is situated on the Caspian Sea near the new Tengiz oil field, and already provides nearly a quarter of Kazakhstan’s national revenue.

Until the arrival of the Russians in the eighteenth century, the history of Kazakhstan was determined by the movements, conflicts, and alliances of Turkic and Mongol peoples. The Kazakhs’ nomadic society suffered increasingly frequent incursions by the Russian Empire, ultimately being included in the Soviet Union that followed it.

After the Bolshevik takeover of the tsarist state, at first the Kazakh Autonomous Soviet Socialist Republic was part of the larger Russian Soviet Federative Socialist Republic.

It became the separate Kazakh Soviet Socialist Republic in 1936. The second-largest republic in the USSR, its capital was Alma-Ata, today known as Almaty.

Over time, as in many Soviet entities, dissatisfaction with authorities grew, reaching a peak during the 1980s, with political turmoil and rioting. In the end, Kazakhstan became the last republic to secede from the Soviet Union, on Dec.16, 1991, and was soon recognised as an independent state. Today, it seems to be an economically secure country.