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Investment in Kazakhstan: Everything beckons, from oil to rare earths

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It is hard to travel in Kazakhstan without thinking of Singapore. So different in every way, but both the successful creations of post-colonial leaders; singular men with singular vision. Also, it is hard if you are an investor not to want a part of the alluring future that is emerging in Central Asia, writes Llewellyn King.

Lee Kaun Yew, the late prime minister of Singapore, wrested a poor city from the British after World War II and turned it into a city-state economic powerhouse. Former Kazakh President Nursultan Nazarbayev took a landlocked country that had been hard used and abused by Soviet Russia and turned it into the most successful of the former Central Asian republics. Something of gem, a tiger economy.

Nazarbayev came to power as one of the communist rulers of the country which sprawls across the Great Steppe. Today’s Kazakhstan is this man’s creation, as though he had sat before a big, empty canvas and painted his vision of what his country could be.

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When the Soviet Union collapsed in 1991, Nazarbayev moved from Soviet first secretary to being the first president of the Republic of Kazakhstan. The country was in horrible shape. Soviet Russia had used it as a place to do that which was unspeakable: throw people into Gulag prisons, conduct nuclear tests, and dump nuclear waste; and to launch space probes.

The Soviet view was if it is dirty, dangerous or inhuman, do it in Kazakhstan. One third of the Kazakhs were starved to death in the 1930s by Soviet communists in a heavy-handed agricultural collectivization, as the nomads were forced to give up their herds and settle. The Kazakh culture and language were suppressed, and the ethnic Russian population was beginning to approach 50 percent of the population as a whole.

Now the ethnically Turkic Kazakhs are 70% of the population, and their culture and language are dominant. Some Russians, Ukrainians and Germans have left but, more important, Kazakhs have come home from China, Russia, and neighboring countries. The Kazakh diaspora was reversed.

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Since gaining independence in 1991, Kazakhstan has made considerable strides. But the modern gloss of its capital, Nur-Sultan (f0rmerly Astana), conceals the need the country has for growth, inward investment, and expertise.

Western companies flood in

Western companies, led by big US names, started investing initially in the oil and gas sector and eventually across the board in many industries. They range from GE, which has interests in the railroads and alternative energy, to the engineering giant Fluor, to consumer goods companies such as PepsiCo and Procter & Gamble. The total foreign direct investment stood at $161 billion in 2020, with $30bn coming from the United States.

Nazarbayev’s transformation of his continental country — it is the largest landlocked nation and the ninth-largest country in the world, which spans three time zones, but its population is only 19 million — was made possible by oil and gas, and these have continued to set the pace of economic activity.

There have been years of growth, at over 10 percent, and years of stagnation; mostly, growth has been around 4.5 percent. The Kazakh government is determined to get off oil dependency and favors a diversified future, beyond raw materials export, with more manufacture in Kazakhstan; greater value added. 

The World Bank ranks Kazakhstan as the 25th easiest place to do business out of 150 indexed countries. There is every evidence that the country is out to make itself more business-friendly and to ease the weaknesses of central planning which have lingered.

In March 2019, Nazarbayev retired and Kassym-Jomart Tokayev, a diplomat with experience in Singapore and China, became acting president, according to the country’s constitution. He was confirmed by a June 2019 election with 71% of the vote.

The transformation from a land of nomads to an exploited and abused Soviet satellite state to a modern, forward-leaning country has been boosted by waves of returning students from the United States and Europe.

They are graduates of the Bolashak programme, initiated to educate the new managerial elite of post-communist Kazakhstan. They make up what amounts to a new class of Kazakhs. They have brought with them a sense of comfort with the West and western business practices; and they speak English.

Kazakhstan watchers expect these young managers to further pry open the investment door. Behind it are treasures in many sectors.

Plethora of Resources

After oil and gas resources (Kazakhstan produces 1.5 million barrels of oil per day and an increasing amount of gas) comes uranium. Kazakhstan is the largest uranium producer in the world and holds the second-largest proven reserves after Australia. It also has huge coal reserves, which it uses to fuel its electricity sector. Other resources include bauxite, chrome, copper, iron, tungsten, lead, zinc.

There is a major wind resource on the flat Kazakh Steppe, maybe the world’s largest. With a gas infrastructure in place, couldn’t a hydrogen industry based on the wind follow? There, too, are rare earths, so necessary in wind turbines and modern electronics.

The Kazakhs are working to improve transportation. To move goods out of a landlocked country and maintain price competition, excellent roads, railroads, airports, and pipelines are needed. The original Silk Road ran through Kazakhstan, and it seeks to be a great Central Asian transportation hub again. And its vast lands can supply large amounts of organic and clean-grown foods for Chinese and Eurasian markets. Tyson Foods is investing in chicken and beef production.

For Kazakhstan to prosper, it requires skilled diplomacy, and the Kazakhs are proud of their diplomatic ability. It has some tetchy neighbors. Kazakhstan is bounded on the north and northwest by Russia, on the east by China, and on the south by Kyrgyzstan, Uzbekistan, and Turkmenistan.

Building on their neighborly skills, the Kazakhs are hoping to join that small group of nations which offer their good offices in dispute resolution, such as Ireland, Switzerland and Finland, a source at the university told me.

A word on the social stability: At times, there has been labor unrest in the oil fields and there have been election protests. The country is predominantly Muslim — with a light touch. Religious diversity is allowed and even encouraged. I have interviewed the Roman Catholic bishop, the chief rabbi, and a Protestant pastor, all at their places of worship in Nur-Sultan.

The Astana International Financial Center (AIFC), the booming financial services hub, is following the Dubai model and boasts a fintech incubator, a green finance center, and an Islamic finance centre. In tandem with London, it participates in IPOs of fintech and uranium companies.

However, in what seems like an admission that the country’s legal system isn’t yet in conformity with global standards, AIFC uses English common law and has a retired chief justice of England and Wales and a bench of English judges doing their business – setting disputes, hearing civil cases, and presiding over arbitrations — in English.

Apparently, where there is a will, there is a workaround.

Kazakhstan

Commentary from Benedikt Sobotka, Honorary Consul of Kazakhstan in Luxembourg, on President Tokayev's State of the Nation Address

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“We are encouraged to see a wide range of policies that will set the tone for Kazakhstan’s transformation in the years ahead, and by the country’s clear ambition to reach carbon neutrality by 2060. Progress in developing the country’s net zero goals has been impressive – Kazakhstan was the first country in Central Asia to establish a national Emissions Trading Scheme to put a price on carbon. Earlier this year, the country also adopted a new Environmental Code to accelerate the shift to sustainable practices.  

"A key enabler of Kazakhstan’s transition to net zero over the next decades will be digitalization. We welcome Kazakhstan’s efforts to place digital growth at the heart of the country’s vision for the future. Over the years, Kazakhstan has taken digital transformation to a new level, investing heavily in new ‘smart city’ technologies to improve and automate city services and urban life. The country has succeeded in establishing an innovative digital ecosystem in Central Asia that has been reinforced by the creation of the Astana International Financial Centre and the Astana Hub, home to several hundreds of tech companies that enjoy preferential tax status. 

"Underlying this technological transformation has been Kazakhstan’s commitment to digital learning solutions, designed to catalyse over 100,000 IT specialists to develop technical skills that are integral to the Fourth Industrial Revolution. The shift to digital learning opportunities has also been reflected in Kazakhstan’s approach to education – with plans to create 1000 new schools, the country’s commitment to upskilling youth will be key to creating an inclusive and sustainable economy of the future.”

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Kazakhstan collects 5 medals at 2020 Tokyo Paralympics

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Kazakhstan collected five medals - one gold, three silver and one bronze - at the Tokyo 2020 Summer Paralympic Games in Japan, Kazinform has learnt from the official website of the event. Kazakhstan para-powerlifter David Degtyarev lifted Kazakhstan to its only gold medal at the 2020 Tokyo Paralympics.

Kazakhstan hauled all three silver medals in judo as Anuar Sariyev, Temirzhan Daulet and Zarina Baibatina all clinched silver in Men’s -60kg, Men’s -73kg and Women’s +70kg weight categories, respectively. Kazakhstani para-swimmer Nurdaulet Zhumagali settled for bronze in Men’s 100m Breaststroke event. Team Kazakhstan is ranked 52nd in the overall medal tally of the 2020 Tokyo Paralympics together with Finland. China tops the medal standing with 207 medals, including 96 gold, 60 silver and 51 bronze. Ranked second is Great Britain with 124 medals. The US is third with 104 medals.

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Zhambyl Zhabayev’s 175th anniversary: A poet who outlived his (almost) 100 years of physical life

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Zhambyl Zhabayev. Photo credit: Bilimdinews.kz.
Zhambyl Zhabayev (pictured) is not just a great Kazakh poet, he became almost a mythical figure, uniting very different epochs. Even his life span is unique: born in 1846  he died on June 22, 1945 – weeks after the defeat of Nazism in Germany. He had only eight months more to live to celebrate his 100th birthday, his centenary, writes Dmitry Babich in Kazakhstan’s Independence: 30 Years, Op-Ed.  

Now we are celebrating his 175th birthday.

Zhambyl, who was born just four years after the death of Mikhail Lermontov and nine years after the death of Alexander Pushkin – the two great Russian poets. To feel the distance, it is enough to say that their images were brought to us only by painters – photography did not exist at the time of their early deaths in bloody duels. Zhambyl breathed the same air with them…

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But Zhambyl  is also the indispensable memory of our fathers’ childhood, the evergreen “grandfatherly figure”, who seemed so close, so “one of us” not only thanks to numerous photos in newspapers. But most of all – thanks to his  beautiful, but also easily understandable verses about Kazakhstan, its nature, its people. But not only about the motherland – singing from Kazakhstan’s heartland, Zhambyl found a way to respond to the tragedy of World War II, Leningrad’s blockade, and many, many other tectonic “shifts of history” that took place in his lifetime.

The living room of the Zhambyl Zhabayev’s museum, which is located 70 km from Almaty where the poet lived in 1938-1945. Photo credit: Yvision.kz.

Could someone link these two worlds – Kazakhstan before its “Tsarist period”, the times of Pushkin and Lermontov, – and our generation, which saw the end of the Soviet Union and the success of independent Kazakhstan?

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There is only one such figure – Zhambyl.

It is amazing that his world fame came to him around 1936, at the moment when he was 90. “You are never too old to learn” – this is a reassuring statement. But “you are never too old for fame” is an even more reassuring one. Zhambyl got famous in 1936, when a Kazakh poet Abdilda Tazhibayev proposed Zhambyl for the position of the “wise old man“ of the Soviet Union (aksakal), a niche traditionally filled by the ageing poets from the Caucasus lands. Zhambyl immediately won the contest: he was not only older (his competitor from Dagestan, Suleiman Stalski, was 23 years younger), Zhambyl was certainly more colorful.  Raised near the old town of Taraz (later renamed after Zhambyl), Zhambyl had been playing dombura since the age of 14 and winning local poetic contests (aitys) since 1881. Zhambyl wore traditional Kazakh clothes and preferred to stick to the traditional protein-rich diet of the steppes, which allowed him live so long. But there was certainly something more to him – Zhambyl indeed was a poet.

A monument to Zhambyl Zhabayev in Almaty.

Critics (and some detractors) accuse Zhambyl of writing “political poetry,” of being blinded by the might (which was not always right) of the Soviet Union. There is some factual truth to that statement, but there is no aesthetic truth to it. Leopold Senghor, the legendary first president of independent Senegal, also wrote political verses, some of them about the “strength” and “might” of political “strongmen” of the 20th century. But Senghor wrote these verses sincerely – and he stayed in the history of literature. And Senghor stayed in history in a much more honorary position than the political strongmen, whom he admired.

For Zhambyl, the people of Leningrad, (now St.Petersburg) who sustained awful famine during the siege of their city by the Nazis in 1941-1944, – they were INDEED his children. In his verses, Zhambyl felt pain for every one of more than 1 million people starved to death in that majestic imperial city on the shores of the Baltic sea, whose palaces and bridges were so far away from him. For poetry, distances do not matter. It is the emotion that counts. And Zhambyl had a strong emotion. You can feel it reading his verses of a 95 years old man:

Leningraders, children of mine!

For you – apples, sweet as best wine,

For you – horses of the best breeds,

For your, fighters, most dire needs…

(Kazakhstan was famous for its apples and horse-breeding traditions.)

Leningraders, my love and pride!

Let my glance through mountains glide,

In the snow of rocky ridges

I can see your columns and bridges,

In the sound of spring torrent,

I can feel your pain, your torment…

(Verses translated by Dmitry Babich)

The famous Russian poet Boris Pasternak (1891-1960), whom Zhambyl could call a younger colleague, had huge respect for the kind of folk poetry that Zhambyl represented, wrote about this verses that “a poet can see events before they happen” and poetry reflects a “human condition” at its symbolic core.

This is certainly true of Zhambyl. His long life and work are a tale of human condition.  

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