While many in Kazakhstan and abroad are wondering whether a large financial crisis is in store for this oil-rich giant, others are hoping that this could be a window of opportunity to bring about reform that embodies transparency, inclusiveness, rule of law and accountability, all key elements in ensuring long-term stability and prosperity. Some have praised Kazakhstan as a rock of stability and a regional leader in economic growth, however its current troubling developments point to the danger of the contrary.
Recent political and economic trends in Kazakhstan have disappointed many well-wishing international observers, who view the country as having significantly drifted away from openness and transparency and embraced strong-armed tactics in the political arena as well as the economy. These trends are disturbing not only because they stifle channels of civic participation in the policymaking process, essential for democratic progress, but also because they discourage investment and undermine the sustainability of Kazakhstan’s hailed economic boom. If a crisis can lead to reform, then one can hope that this situation presents such an opportunity.
Today, business laws in Kazakhstan typically favor the top-heavy Government and its loyal financial groups, which emerged as a result of the opaque privatization of the 1990s. State interests, including state-owned businesses, have a high stake in ensuring that the ruling party stays as strong as possible: August 2007 Parliamentary elections, which by most accounts were flawed, cemented the ruling party’s hold on the nation. In the last six months, Kazakhstan’s policy has shifted harshly toward increasing government intrusion into business activity in the energy sector, enacting laws that substantially boost the position of domestic government-loyal business groups’ stake in the energy sector and granting the government power to unilaterally cancel any contract with a foreign company that it deems to endanger the nation’s interest.
