Kazakhstan: Country Profile

1

“Kazakhstan aims to strengthen the strategic partnership with the United States and the countries of the

European Union.”

Nursultan Nazarbayev

President of the Republic of Kazakhstan

at the inauguration ceremony

April 8, 2011, Astana

“The United States highly values its bilateral relationship with Kazakhstan. Our countries’ strong

relations demonstrate our shared and enduring commitment to expand and deepen our cooperation across

a wide range of activities from international peace and security to non-proliferation. I look forward to

continued cooperation and friendship between our countries. I wish you and the people of Kazakhstan

success and prosperity as you celebrate this important day.”

Barack Obama

President of the United States of America

on the Independence Day of Kazakhstan

December 13, 2010, Washington, D.C.

“I am grateful to you for your outstanding contribution to the partnership between the U.S. and

Kazakhstan, especially with respect to continued contacts between President Nazarbayev and President

Obama.”

Secretary of State and Foreign Minister Kanat Saudabayev

to Secretary of State Hillary Rodham Clinton

January 25, 2011, Washington D.C.

“Recently, I witnessed the great progress Kazakhstan has made during my visit to Astana for the first

summit of the Organization for Security and Co-Operation in Europe in 11 years. Chairing the OSCE and

hosting this summit are important milestones in Kazakhstan's ongoing development as a regional and

world leader.”

Secretary of State Hillary Rodham Clinton's

on the Independence Day of Kazakhstan

December 14, 2010, Washington, D.C.

“I think Kazakhstan deserves the warmest credit for removing the nuclear material that you inherited on

your territory. And the United States has been your partner in doing this. I think nonproliferation is a

human rights issue. I think the effort to go after the nuclear material that can fall in the wrong hands, that

can be used to terrorize, maim, kill people, contaminate large areas is a fundamental human rights issue.

And in this area, Kazakhstan has been a world leader, and I want to publicly express my appreciation for

that.”

Secretary of State Hillary Rodham Clinton

Town Hall on Empowering Civil Society for Central Asia’s Future

November 30, 2010, Eurasian University, Astana

2

C O N T E N T S

KAZAKHSTAN AT A GLANCE.......................................................................……........…………………………………...4

Country brief overview

Kazakhstan in 10

Economic overview

Political structure

Political Progress

Presidential Elections 2011

Political Parties

Civil society

Middle Class

Court System

Media in Kazakhstan

Ethnic Composition

Religious Composition

Myths in the West about Kazakhstan

KAZAKHSTAN FOCUSES ON ECONOMIC DEVELOMENT AND SOICIAL SECURITY........................................37

President Nazarbayev Outlines Major Development Priorities in His State of the Republic Address

KAZAKHSTAN – ECONOMIC OVERVIEW………………………………………...........…………… … ….……..........43

General background

Key economic indicators

Outcomes of the Government‟s Anti-Crisis Package

Kazakhstan‟s Energy Sector: Global Impact

Mining and smelting industry in Kazakhstan

Transport and Communications

Agriculture

Banking and Financing

National Fund of Kazakhstan

The State Program of Accelerated Industrial-Innovative Development of Kazakhstan for 2010-2014

National Welfare Fund “Samruk-Kazyna”, JSC

People‟s IPO

Development Institutions

Taxation

Trade Regulation

Status Report on Kazakhstan‟s WTO Accession Process

Kazakhstan‟s Position on the WTO after Creation of the Customs Union

Astana Economic Forum

Expectiations about Kazakhstan‟s Economy: Outlook by Independent Experts

KAZAKHSTAN'S FOREIGN POLICY:

MAIN ACHIEVEMENTS AND NEW GOALS………………………………........………………………………….........116

Brief overview

Kazakhstan-US Strategic Partnership

2010 President Nazarbayev‟s Visit to the US

Kazakhstan and Non-Proliferatoin

Kazakhstan‟s OSCE Chairmanship in 2010

Conference on interaction and confidence-building measures in Asia (CICA)

Kazakhstan and the Organization of the Islamic Conference (OIC)

Kazakhstan‟s international interreligious initiatives

Congress of Leaders of World and Traditional Religions

Afghanistan

Iraq

3

KAZAKHSTAN-THE HEART OF EURASIA ……………………………..……………………….……………...............143

Useful Information

Nature and Geography

Environment Protection

Milestones of History

CULTURE AND TRADITIONS...............................................................................................................................................155

Literature

Lifestyle

Traditions

Museums

Sports

Cinema

Architecture

Cuisine

Music

Education

“Bolashak” Scholarships

Nazarbayev University

TOURISM ......................................................................................................... ...........................................................................176

Exciting Outdoor Activities in Kazakhstan

Sample Routes Offered to Tourists in Kazakhstan

Air Astana

MAJOR CITIES ............................................................................................ .............................................................................182

Astana – New Capital for the New Millennium

New Horizons in Kazakhstan

Almaty – Financial and Cultural Hub

RECOMMENDED PUBLICATIONS ON KAZAKHSTAN................................................................................................. 184

DID YOU KNOW THAT ................................................................. .........................………………….…………………....... 193

4

KAZAKHSTAN AT A GLANCE

COUNTRY BRIEF OVERVEW

A huge country covering a territory equivalent to the whole of Western Europe,

Kazakhstan has vast mineral resources, enormous economic potential and rich traditions, culture

and history. The topography varies from the mountainous, heavily populated regions in the east

to the sparsely populated, energy-rich lowlands in the west, and from the industrialised north,

with its Siberian climate and terrain, to the arid, empty steppes of the centre and fertile south.

Descendants of ancient nomadic tribes and Turkic people of

greater Eurasia that later joined the Gengiz Khan Empire, the Kazakhs

created one of the world's last great nomadic empires in the late 15th

and 16th centuries. Russia annexed their lands in the 18th

and 19th

centuries, moving settlers into the area. The Kazakh Republic was

formed as an autonomous Republic within the Russian Federation in

August 1920 and became a full Republic of the Soviet Union in

December 1936. On December 16, 1991, Kazakhstan declared its

independence.

As the result of Soviet Union‘s sudden collapse, Kazakhstan

shared with its fellow former Soviet republics a fiscal chaos that

included hyperinflation (in 1992 about 2,960 percent), plummeting

industrial production and the exodus of many of its most highly trained

ethnic Russians. Between 1992 and 1999, the country lost two million

of its six million Russian Soviet inhabitants. A huge number of

Kazakhs lost their livelihoods in the aftermath of the Soviet economic

implosion.

In order to stop the economic downward spiral Kazakhstan

launched major reforms and subsequently used its rising oil revenues

to remake the economy in accordance with Western standards. It also

restructured its Soviet- educational system. This helped to save

Kazakhstan from the financial shock that inflicted Russia. As a result,

the European Union recognized Kazakhstan as a market-based

economy in October 2000. The U.S. did the same in March 2002.

Kazakhstan also was the first among its CIS neighbours to pay off its

debt to the International Monetary Fund -- in 2000 -- seven years

ahead of schedule. This allowed Kazakhstan to obtain a favourable

credit rating, to implement financial institutions approaching Western

standards of efficiency and reliability and to develop a fully-funded

nationwide pension program.

Foreigners have invested heavily in Kazakhstan since its

independence, particularly in Caspian oil. Such investments are among

of the key elements in Kazakhstan‘s economic success. In 2001-2003,

investment inflow surged to 13 percent of GDP and is currently

running at almost ten times the rate of Kazakhstan‘s neighbours. The

country has enjoyed significant economic growth since 2000,

averaging 10 percent annually until the global crisis of 2008. Although

reduced in 2009, the growth still remains positive and strong.

Independence: December 16,

1991

Population: 16,5 million (as of

February, 2011)

Location: North of Central

Asia, on the Caspian Sea

Capital: Astana (population

684,018 as of April, 2010)

Largest city: Almaty

(population 1,404,329 as of

April, 2010)

Area: 2.7 million sq km

Neighbours: Russia,

Turkmenistan, Uzbekistan,

Kyrgyzstan, China as well as

Azerbaijan and Iran through

Caspian Sea.

Boundaries: Total 7,459 miles

(12,012 km (without Caspian

shoreline). The Republic of

Kazakhstan shares its longest

borders with Russia, 4,251

miles (6,846 km) and China,

951 miles (1,533 km). It also

borders 1,183 miles (1,894 km)

on the Caspian Sea.

Comparative area: ninth

largest in the world, equivalent

to the size of Western Europe;

Four times the size of Texas;

Five times the size France.

Claims: fledgling democracy

Constitution: Secular

democracy. The Constitution

was approved by referendum on

August 30, 1995 and amended

in 2007. It established secular

democracy that values

individual ―life, rights and

freedoms‖, divided the

Government between executive,

legislative and judicial branches

with a system of checks and

balances. The amendments

enlarged the powers of the

Parliament, raised the role of

political parties, thus

transforming Kazakhstan from

presidential into presidential-

5

The country is ethnically diverse, with native Kazakhs making

up more than half of the population. Russians comprise just over a

quarter. The remainder are Ukrainians, Germans, Chechens, Kurds,

Koreans and Central Asian ethnic groups. All in all, more than 100

ethnic groups live in Kazakhstan. They live in harmony. In order to

ensure inter-ethnic peace, the Assembly of the People of Kazakhstan

was established, a unique body in the post-Soviet area representing the

interests of all ethnic groups.

Kazakhstan is pursuing a staged democratization in all fields of

social and political life. Kazakhstan has made notable Constitutional

reforms including bolstering the rule of law, establishing free and fair

elections, empowering parliament and spreading civil liberties. These

were acknowledged when Kazakhstan was unanimously selected by

OSCE member nations to chair the Organization in 2010. Kazakhstan

is also chairing the Organization of Islamic Conference in 2011.

In 2009, Kazakhstan adopted two major roadmaps for

democracy – the ―2009-2012 National Human Rights Action Plan‖

and the ―2010-2020 Legal Concept.‖

Kazakhstan is also a leader in nuclear nonproliferations.

President Nursultan Nazarbayev closed the infamous Semipalatinsk

nuclear testing ground obtained nuclear-free state status for

Kazakhstan.

parliamentary republic.

Head of state:

President Nursultan Nazarbayev

Head of government:

Prime minister Karim Masimov

Chairman of Senate:

Kairat Mami

Chairman of Majilis:

Ural Muhamedzhanov

Secretary of State:

Kanat Saudabayev

Foreign Minister:

Mr. Yerzhan Kazykhanov

Major languages: Kazakh,

Russian; English is promoted as

the language of international

communication

Major religions: Islam,

Christianity

Life expectancy: 62 years

(men), 72 years (women) (UN)

Monetary unit: 1 Kazakh tenge

=100tiyn ($1=147,4 KZT as of

April, 2011)

Main exports: Oil, uranium,

ferrous and nonferrous metals,

machinery, chemicals, grain,

wool, meat, coal

GDP per capita: US $11,500

Internet domain: .kz

KAZAKHSTAN IN 10

Modern Kazakhstan is built on 3000 years of extraordinary history. The country has

experienced epic moments and has been influenced by such legends as Alexander the Great and

Genghis Khan. For centuries, the Silk Road provided a route through Kazakhstan for international

traders and merchants carrying exotic merchandise. All this has contributed to the richness of

Kazakh culture and its capacity to adapt and develop.

Kazakhstan‘s economy is the largest and the fastest evolving of the Central Asian region.

Since 2001, economic growth rate has been among the highest in the world and GDP will grow by

6-7% in 2011, aided by the increasing value of Kazakhstan‘s leading exports (oil, metal and grain).

Since 1993, Kazakhstan has attracted over US $120 billion of foreign direct investment – the highest

foreign direct investment per capita in the CIS.

Kazakhstan holds 30 billion barrels (4 billion tonnes) of proven recoverable oil reserves and

potential reserves of 100-110 billion barrels. Development of new oil fields such as Kashagan

(recoverable reserves: 13 billion barrels, peak projected output: 1.5 million barrels/day in 2019) will

make Kazakhstan one of the world's top ten oil-producing nations.

Kazakhstan ranks first in the world in reserves of barite and tungsten, second in reserves of

chromite, phosphate rock, and uranium, third in reserves of copper, lead, and zinc, fourth in reserves

of molybdenum; sixth in reserves of gold, and eighth in reserves of iron ore. The country contains

almost a quarter of the world‘s uranium – with production reaching 15,000 tons per year in 2010

making it the first in the world.

Kazakhstan has reinforced its global reputation as a democratic country through a series of

major constitutional reforms, including the abolition of the death penalty and increased

parliamentary representation.

6

Kazakhstan is diversifying its economy away from natural resources. Agriculture makes up

10% of GDP; wheat is a leading commodity in export trade – as is metal processing, chemicals,

textiles and food processing. New information technology projects - like the Alatau IT Park – are

growing. Ambitious education initiatives make the latest generation of Kazakhs among the most

highly skilled in the world. Every year, 3000 young Kazakhs are sponsored to study at the world‘s

most prestigious education institutions, before returning home.

Political stability, religious tolerance and a unique location at the crossroads of China, Russia

and Europe gives Kazakhstan a stabilising role for the whole region - as well as making it the

perfect host for the Congress of World Religions (held in Astana every three years).

Kazakhstan is a forward-thinking country. President Nazarbayev is behind many ambitious

projects such as the Aral Sea dam, which will save the disappearance of the world‘s fourth largest

inland sea. The country has launched its own ambitious space programme at Baikonour and plans

for a pan-Asian canal to further open up trade routes between central Asia and Europe.

Astana, Kazakhstan‘s capital (moved from Almaty in 1997), is situated at the very heart of

the country. An incredible US$12 billion has been invested in the city‘s construction and

development. Internationally renowned architechts like Norman Foster and Kisho Kurokawa have

left their mark on a city that is set to outshine many of the world‘s more established capitals.

Eco-tourism is particularly strong in Kazakhstan, a land of vast unspoiled, open spaces,

majestic mountains (with world class ski stations), horseback trails and increasingly vibrant, modern

cities.

7

ECONOMIC OVERVIEW

Prime Minister: Mr. Karim Massimov

First Deputy Prime Minister: Mr. Umirzak Shukeev

(oversees economic, regional, trade and investment policy, sectors of agriculture, construction,

natural resources and infrastructure, cooperation with WTO, Customs Union and Eurasia economic

community)

Deputy Prime Minister: Mr. Erbol Orynbayev

(oversees administrative reforms and macroeconomic policy, sectors of employment, demographics,

education, science, culture, health-care, business environment, Business Road Map-2020, PPP and

SME development, cooperation with World Bank, European Commission, Kazakhstan-United

States initiative on public-private economic partnership)

Deputy Prime Minister - Minister of Industry and New Technologies: Mr. Asset Isekeshev

(oversees the State program of accelerated industrial-innovation development 2010-2014 and local

content development, sectors of industry, innovations, foreign investments, electricity and technical

regulation, cooperation with OECD)

Head of the Prime Minister‟s Office: Mr. Gabidolla Abdrakhimov

(coordination of central and regional state bodies, human resources management, interaction with

the Administration of the President, Parliament, NWF ‗Samruk-Kazyna‘.)

Minister of Economic Development and Trade: Mr. Kairat Kelimbetov

Minister of Economic Integration Affairs: Ms.Zhanar Aitzhanova

Minister of Oil and Gas: Mr. Sauat Mynbayev

Minister of Finance: Mr. Bolat Zhamishev

Minister of Transport and Communications: Mr. Berik Kamaliev

Minister of Environment Protection: Mr. Nurgali Ashimov

Minister of Agriculture: Mr. Assylzhan Mamytbekov

Minister of Tourism and Sports: Mr. Talgat Yermegiyaev

Minister of Education and Science: Mr. Bakytzhan Zhumagulov

Chairman of National Bank: Mr. Grigoriy Marchenko

Chairman of National Welfare Fund „Samruk-Kazyna‟: Mr. Timur Kulibayev

The future of the Kazakhstan economy is closely connected with further integration into

international economic relations, efficient use of reserves of hydrocarbon and mineral resources,

export of industrial and agricultural products and the optimum deployment of country's transit

potential and highly qualified human resources.

Kazakhstan is important to world energy markets

because it has significant oil and natural gas reserves.

Within the next decade, Kazakhstan is expected to

become one of the world's largest oil producers and

exporters.

Kazakhstan’s strategic aspiration is to become a modern,

diversified economy with a high value-added and high-

tech component, well integrated into the global economy.

A strong energy sector is viewed as a good start to

achieve this goal.

Economic development in 2010

Real GDP growth: 7.0%.

Index of consumer prices: 7.8%

Investments in fixed capital stock:

$33 bln. (-0.5%).

Total international reserves (including

reserves of the National Fund): $62,6 bln. or

42.5% of GDP

Government and government guaranteed

debt: 3.1% of GDP

Budget deficit: 2.4% of GDP.

8

During the Soviet period, Kazakhstan was an agrarian country and raw-materials supplier.

The military played a dominant role. During 20 years since independence, Kazakhstan has moved

from a centrally planned economy to a market economy. Kazakhstan has made considerable

progress in implementing complex political, economic and social reforms to establish a politically

stable environment.

The first 10 years of Kazakhstan‘s independence were characterized by numerous economic,

social and environmental challenges. Due to the disintegration of the Soviet Union, real GDP had

dropped to 61.4% of its 1990 level by 1995. This economic deterioration was worse than the Great

Depression of the 1930s.The wide-ranging inflation peaked at annual rate of 3000 percent in mid-

1990s.

Since 1992, Kazakhstan has actively pursued a program of economic reforms designed to

establish a free market economy through privatization of state enterprises and economic

decentralization. Successful implementation of reforms resulted in general recognition of

Kazakhstan in 2001 as the most market-oriented country in the CIS. Western countries have

applauded Kazakhstan‘s reforms in the areas of currency convertibility, inflation targeting, foreign

investment policy, demonopolization and reallocation of resources.

Being the most successful reformer in CIS Central Asia – and based on its strong

macroeconomic performance and financial health -- Kazakhstan became the first former Soviet

republic to repay all of its debt to the International Monetary Fund (IMF) in 2000 (7 years ahead of

schedule). This helped the nation receive an investment-grade credit rating from major international

credit rating agencies. Today, Kazakhstan is rated as follows: BBB/Stable from Standard&Poor's,

Baa2/Stable from Moody's Investors Service and BBB-/Positive from Fitch Ratings. The global

financial crisis which started at the end of 2007 had multiple implications on Kazakhstan‘s economy

and exposed underlying vulnerabilities. With lower oil and commodity prices and adverse

conditions in international capital markets, new challenges for emerging economy surfaced –

declining public revenue, liquidity shortages, dependence of financial institutions on external

funding, negatively affected investors‘ confidence and capital outflows.

In these circumstances the Government quickly stepped in to regulate and stabilize the

situation. A set of policies were introduced under the Anti-Crisis Program to help mitigate economic

vulnerabilities and establish a basis for the resumption of strong growth. As a part of the policy,

Kazakhstan has devalued its currency and vastly expanded its role in the financial sector.

With significant reserves of oil and gas, coal and uranium, Kazakhstan is an important

energy provider to the world. In January 2011, Kazakhstan produced 5.9 mln. metric tons of oil

(+5.5 in comparison with January 2010), 1.2 mln. metric tons of gas-condensates (+15.8%), 11.1

mln. metric tons of coal (+20.9%) and 3.6 bln. cubic meters of natural gas (+11.6%).

However, bearing in mind recent fluctuations in the world commodities market, the

Government‘s energy policy focuses on further diversification of energy resources, efficient

Geologic exploration; 53%

Mining and extraction;

24%

Manufacturing industry; 11% Financial sector;

2%Trade; 7%

Construction; 2%

Transport and communications;

1%Others; 2%

energy use, stimulation of R&D in

renewables and raising a profile of

environment component. Today,

investments in natural resources

constitute 77% of all investments in

the economy. 75% of investments in

natural resources come from

overseas and the rest is generated by

the internal national economy. Figure 1. Foreign Direct Investments (%), January-December 2010 Source: National Bank

9

Key to the energy sector is a system of pipelines and infrastructure. Kazakhstan‘s

counterparts (United States, EU, China and Russia) have identified their strong interest in

cooperating with Kazakhstan in this area, particularly in building trans-continental oil and gas

transportation systems. Kazakhstan has made it clear that this fully meets its own vision for the

development of multiple energy transportation routes from and through Kazakhstan.

As of January 2011, total turnover through pipelines

has increased by 36.7% (in comparison with

January 2010). Volumes of oil and gas transported

through pipelines have increased: in metric tons -

by 14.4% and 7.6% respectively; in tons per

kilometre – by 12.5% and 124.3% respectively (in

comparison with January 2010).

Transportation through pipelines constituted 26.4%

of all cargo turnovers in 2010. Commercial

viability, technical and environmental safety and

financial soundness are the guiding principles for

Kazakhstan‘s strategy in this crucial area.

On November 27, 2009 leaders of Kazakhstan, Russia and Belarus gathered in Minsk to sign

final agreements on the trilateral Customs Union, which launched January 1, 2010. Presidents of the

three countries approved a customs code that went into force July 1, 2010, and a single customs

tariff with a transitional period that will vary between 1.5 and 5 years depending on the type of

goods. The Customs Union sets up a market with a population of 170 mln. people, aggregate trade

of $900 bln., aggregate industrial potential of $600 bln., oil reserves of 90 bln. barrels, and

agricultural production of $112 bln. The three countries' current aggregate GDP exceeds $2 trln. The

establishment of the Customs Union will enable the three countries to have GDP growth over 15%

by 2015.

The establishment of the Customs Union doesn‘t affect

negatively Kazakhstan‘s negotiations to join the World Trade

Organization (WTO). Being a WTO member does not mean

that the country cannot be a member of the Customs Union.

The EU, for instance, is the best example of customs unions

and member states being in the WTO, so is NAFTA. The three

members of the Customs Union announced that they would

seek to pursue their WTO memberships individually and

simultaneously and in a coordinated way

The national economy as well as the market of the Customs Union is considered by the

Government as the basis to build a modern, diversified, highly-technological, flexible and

competitive economy with a high value-added component. This is the central goal of the National

Strategy ‗Kazakhstan-2030‘ and the Strategic Development Plan of Kazakhstan-2020.

These two strategic programs are the framework of the mid-term 2010-2014 State Program

of Accelerated Industrial-Innovation Development, which combines a number of

Figure 2. Pipelines, 2010. Source: Strategic Forecasting Inc.

Figure 3. Members of the Customs Union Source: Strategic Forecasting Inc.

10

regional development and sectoral programs (including the

Strategy to enter the 50 most completive nations, 30

Corporate Leaders etc.).

The Program determines the roles of all development

institutions, national companies, industrial zones,

technological parks and free economic zones.

The objectives of the state industrial-innovation policy is

to increase total GDP of Kazakhstan in 2010 by 50% from

the level of 2008 and to decrease its energy intensity by

10%, to expand non-oil and gas export by 40%, and to

boost labor productivity in

manufacturing industry – by 50%, in other sectors – by 100%.

In 2010, 152 projects worth KZT 800 billion were launched within the program, creating

23.5 thousand jobs. As part of the Program to promote Kazakhstan‘s investment opportunities the

Ministry of Industry and New Technology (operator of the Program) hosted in 2010 more than 28

meetings and presentations resulting in the signing of 150 contracts worth $9.6 billion. It is expected

that in the first half of 2011 approximately 13 innovation-driven industrial projects will be launched

by the Program.

The global financial crisis streamlined the Kazakhstan‘s economy by getting rid of

companies and financial institutions that placed all their bets on high profits and showed no interest

in long-term industrial development. It also correctedthe over-evaluated real estate market and

encouraged investment in more economically stable and productive sectors. The crisis demonstrated

that the Kazakhstan‘s overall financial system is solid enough to deal with a market collapse.

Further diversification of the economy, social and political stability, sizable natural

resources, attraction of foreign capital, implementation of international technical, financial and

business standards, accession to the WTO as a member of the Customs Union, promotion of

corporate governance, greater transparency and accountability, education and administrative reforms

– all are driving Kazakhstan to reach its strategic goals.

Some highlights on Kazakhstan‟s economy:

Kazakhstan in 2010 announced a Business Road Map – 2020, which aims to create

permanent jobs through business development. According to the program, funds are

allocated for further subsidization of interest rates on loans, loan guarantees, development of

industrial infrastructure, internships and social assistance. As of January 2011, over 225

applications worth 101.2 billion tenge were approved for subsidizing within the Road Map.

More than 30 projects of 129 business entities received loan guarantees. Approximately

1,175 enterprises received orders for rendering services in industrial zones. The total number

of employees involved in the program exceeds 20 thousand people.

A state-run scholarship programme ‗Bolashak‘ (―Future‖), since its establishment, in 1994

has increased the number of graduating scholars from 187 in 1994 to 1,259 in 2010. During

1993-2009, Bolashak scholars numbered 6,788. In 2011, approximately 1,058 scholars will

receive their Bachelor, Master and PhD degrees.

Kazakhstan has accommodated 8000 foreign companies (270 of them are companies listed in

the Fortune 500), which invested over $13.1 bln. in Kazakhstan in 2010.

Kazakhstan in 2010 continued implementing of the Extractive Industries Transparency

Initiative with the aim of delivering a clear signal to international investors and financial

Figure 4. State Program of Accelerated Industrial-Innovation Development

11

institutions that Kazakhstan is committed to greater transparency and accountability and

improvement in its investment climate

Following adoption of the Law on Islamic Finance in 2010, Kazakhstan is planning to issue

by the end of 2011 a $500 million debut Islamic bond (sukuk), which could create a

benchmark for corporate lenders aiming to develop an Islamic finance sector in Central Asia.

Kazakhstan plans to attract up to $10 billion in Islamic finance over the next 5 to 7 years.

Islamic finance would play a major role in funding Kazakhstan's drive to develop its

industrial base.

Kazakhstan‘s Government is developing a program for initial public offerings (IPO) of the

national companies owned by the sovereign welfare fund Samruk-Kazyna, which controls around

$70 billion on assets in banks, state energy companies and other major industries. Samruk-Energy,

KEGOC and KazPost will put their shares up for an IPO by the end of the year. National companies

such as KazMunaiGas, Kazakhstantemirzholy railways and Kazatomprom should follow with initial

public offerings in 2012-2013. Later on, the metal producers Eurasian Natural Resources Corp.

(ENRC), Kazakhmys, Kazzinc, and Arcelor Mittal‘s Karmetkombinat will offer some of their

shares.

12

POLITICAL STRUCTURE

Kazakhstan is a presidential-parliamentary republic. The

president is the head of state. The president also is the commander

in chief of the armed forces and may veto legislation that has been

passed by the Parliament. The prime minister chairs the Cabinet of

Ministers and serves as Kazakhstan's head of government. There

are three deputy prime ministers and 16 ministers in the Cabinet.

Karim Massimov has been serving as the Prime Minister since

January 10, 2007.

Kazakhstan has held a number of presidential elections: in

January 1999 – first ever alternative presidential elections with 4

alternative candidates for the Presidency, observed by OSCE; in

December 2005 – presidential elections with 5 alternative

candidates, 2 being major opposition leaders; on April 3, 2011 –

presidential elections with 3 alternative candidates. President

Nazarbayev won the last elections in a landslide. Kazakhstan

invited more than 1,000 international observers to monitor the

elections and demonstrated a high level of openness and

transparency. Many observers assessed the coduct of elections as

―free and fair,‖ although ODIHR/OSCE came up with a number

of criticisms and recommendations for improvement. However,

the vast majority of the observers agreed that the elections

reflected the will of the people and vote for modernization,

stability and economic prosperity.

In May 2007 the Constitution was amended to limit the

presidency to two terms and reduced a presidential term from

seven years to five years, increasing the powers of Parliament so

that the executive branch is more accountable to it. This was

introduced in accordance with the OSCE‘s recommendations.

As in the United States, Kazakhstan‘s President annually

delivers to the people his vision, a so called road map for future

development of the country.

Comprehensive development targets are outlined by

President Nazarbayev in his ―State-of-the-Nation‖ address every

year.

On January 28, 2011, President Nazarbayev delivered his

message to the people of Kazakhstan at a joint session of the

Kazakh Parliament. Here is the summary of his address.

Kazakhstan‘s foreign policy will ―meet hopes and

expectations of all our partners,‖ President Nazarbayev said in his

state-of-the-nation address. ―Kazakhstan will remain committed to

swift and efficient development of the Customs Union between

Russia, Kazakhstan and Belarus.‖ He went on to note that in the

first 10 months of the CU operation last year, the country‘s trade

with the other two partners jumped 38 percent.

―We offer our European partners to jointly develop and

Government

President:

Mr Nursultan Nazarbayev (at the split of

the USSR elected president December 1,

1991; as per new, amended Constitution

elected to the first seven-year term on

January 10, 1999; re-elected to the second

seven-year term on December 4, 2005; re-

elected to the third five-year term on

April 3, 2011)

Prime Minister: Mr Karim Massimov (since January,

2007)

Chairman of the Senate of the

Parliament (upper chamber): Kairat

Mami

Chairman of the Majilis of the

Parliament (lower chamber):

Mr Ural Mukhamedzhanov (elected

October, 2008)

Secretary of State (since August, 2007):

Mr. Kanat Saudabayev

Other members of the Government:

First Deputy Prime Minister:

Mr. Umirzak Shukeev

Deputy Prime Minister:

Mr. Erbol Orynbayev

Deputy Prime Minister – Minister of

Industry and New Technology:

Mr. Aset O. Issekeshev

Minister of Foreign Affairs:

Mr. Yerzhan Kazykhanov

Minister of Defense:

Mr. Adilbek Dzhaksybekov

Minister of Internal Affairs:

Mr. Kalmukhanbet Kassymov

Minister of Justice:

Mr. Rashid Tusupbekov

Minister of Finance:

Mr. Bolat Zhamishev

Minister of Economic Development

and Trade: Mr. Kairat Kelimbetov

Minister of Economic Integration

Affairs: Mrs. Zhanar Aitzhanova

Minister of Labor and Social

Protection: Mrs. Gulshara Abdykalikova

Minister of Oil and Gas: Mr. Sauat

Mynbayev

Minister of Transportation and

Communications: Berik Kamaliyev

Minister of Communications and

Information: Mr. Askar Zhumagaliev

Minister of Agriculture: Assylzhan Mamytbekov

Minister of Environment:

13

accept, in a multilateral format, a Kazakhstan-EU Energy Charter

up to the year 2020,‖ Nazarbayev said. ―This would ensure the

guarantee of stability of energy supplies to the European markets,

and the development of pipeline systems.‖ Turning to other

foreign policy issues, Nazarbayev announced his intention to

convene this year a special donor conference on Afghanistan.

The Kazakh President also reaffirmed his commitment to

pursue a Stability Pact for the Caspian Region, which, in his view,

would be a document leading to better cooperation and mutual

understanding among the five littoral states.

Mr. Nurgali Ashimov

Minister of Healthcare: Mrs. Salidat Kairbekova

Minister of Education and Science: Mr. Bakytzhan Zhumagulov

Minister of Tourism and Sports: Mr. Talgat Yermegiyayev

Minister of Culture: Mr. Mukhtar Kul-Muhammed

Minister of Emergency Situations: Mr. Vladimir Bozhko

Another foreign policy priority for Kazakhstan is the development of an inter-state

programme of assistance to neighbouring Kyrgyzstan, which last year saw major upheavals and

violence. Kazakhstan, as both a close neighbour and the then-chair of the OSCE, helped stabilize the

situation there by sending $11 million worth of assistance and coordinating various efforts including

the dispatch of a group of police advisors. Kazakhstan will also continue promoting a Universal

Declaration of a Nuclear-Weapons Free World, first proposed by President Nazarbayev last year at

the Global Nuclear Security Summit in Washington, DC.

In 2011, Kazakhstan will assume the presidency in the council of foreign ministers of the

Organization of Islamic Conference. Tolerance was one of the major messages of Kazakhstan‘s

OSCE chairmanship last year. Kazakhstan aggressively promoted closer ties between international

organizations it chaired or initiated, such as the OSCE and the Conference on Interaction and

Confidence-building Measures in Asia (CICA) and helped organize the first ever CICA-OSCE

forum in Istanbul in June 2010. Astana also invited OIC Secretary General Ekmeleddin Ikhsanoglu

to participate in and address numerous OSCE events, including its summit in Astana last December.

Kazakhstan is also a leader of the Shanghai Cooperation Organization (SCO), which is

holding its 10th anniversary summit in Astana in June. Kazakhstan was the original co-founder of

the SCO, which includes China, Russia and Central Asian countries. Speaking of Kazakhstan‘s

economic development, the President said Kazakhstan‘s record since independence 20 years ago

offers great promise for the future. ―In December 1991, having chosen the strategic goals of

sustainability and success, we moved forward, creating new programmes of development for each

new stage… We set ourselves ambitious goals, and we achieved them,‖ Nazarbayev said.

In 1994, Kazakhstan‘s gross domestic product per capita was slightly more than $700 Today

it is $9,000, a twelve-fold increase. ―We had planned to reach such a level only by 2015,‖ the

President said. ―The international experience shows that in their first 20 years of independence, no

other country was able to do that.‖ Last year, Kazakhstan‘s economy grew seven percent,

overcoming the global financial crisis. While the GDP grew 8.5 percent in 2007, the growth slowed

to 3.2 percent in 2008, and then slowed even further to 1.1 percent in 2009. The economy never

contracted, thanks to massive state investments to the tune of 14 percent of the GDP and the

recovery of global commodity prices.

Even larger credit for the recovery, according to the President, should go to prudent policies

and the Programme of Accelerated Industrial and Innovative Development (PAIID) for 2010-2014,

which was launched last year. Already, 152 new enterprises were launched, creating 24,000 new

jobs. Kazakhstan‘s gold and foreign currency reserves now stand at $60 billion, more than before

the crisis hit, while Kazakhstan attracted $120 billion in foreign direct investment overall since

1993.

―Before 2014, we plan to see through 294 investment projects worth 8.1 trillion tenge (KZT

147 = US$1),‖ Nazarbayev said, adding that 161,000 new permanent jobs will be created and

14

207,000 new jobs will be available for the period of construction. The GDP should grow 30 percent,

while the growth in processing industries should exceed that in the extractive industries, the

president projected. Investments, both domestic and foreign, should grow by 30 percent. Inflation

will be contained within five to eight percent, he said. The share of small and medium-sized

businesses should reach 40 percent of the GDP. The population should grow from the current 16

million to 18 million, and qualified specialists will constitute 40 percent of the workforce.

Unemployment will stay below five percent. Kazakhstan will seek to become one of the major

exporters of meat in addition to exporting wheat and flour.

―I stand for the principle, ‗strong business means a strong state‘,‖ the President said. Last

year Kazakhstan was recognized by the World Bank as the country that improved conditions for

domestic businesses the most in a single year. The World Bank also ranked Kazakhstan 59th out of

of 183 countries in terms of having the most beneficial business climate. On other fronts,

Kazakhstan adopted 16 laws to reform the system of law enforcement and the protection of human

rights, while state bodies slashed their staffs by 15 percent. ―Kazakhstan will continue fighting

corruption without compromises,‖ Nazarbayev said as he noted that the country jumped 45 places in

Transparency International‘s Corruption Perception Index in three years.

Education, healthcare, language proficiency and tolerance have become Kazakhstan‘s top

social priorities. Lifelong learning is the mantra for all Kazakhs, Nazarbayev said. By 2020, the

country should switch from an 11-year school curriculum to a 12-year curriculum, and, for that, 400

new schools will be built by 2015, the president said. Nazarbayev University and other schools built

around the countrywill also be instrumental in furthering educational reforms. By 2020, at least two

universities in Kazakhstan should be ranked among the best universities in the world, the president

said

What is more, according to Nazarbayev, the people in Kazakhstan should have ―an

opportunity to save for education of their children, with interest bonuses added from the

government.‖ Also, a National Council on Vocational Personnel Training will be set up. Financing

for healthcare now stands at 3.2 percent of the GDP. The population is much healthier and long-

lived as a result.

By 2013, the Unified National Healthcare System will be fully introduced, with the ultimate

goal of extending the average life span to 72 years by 2020. The Government will also promote a

healthy lifestyle.

Another top priority is the development of languages. ―Peace and harmony are our common

achievement,‖ the President said. More than 60 percent of the population speaks Kazakh, the state

language that 20 years ago was almost on the brink of extinction due to suppression from Soviet

authorities. Plans are afoot to have 80 percent of the ethnically diverse population speak Kazakh by

2017 and 95 percent by 2020.

―In ten years, 100 percent of school graduates will speak the state language,‖ the President

said. The government also promotes the study of the Russian and other languages. English is also a

priority and ―by 2020, 20 percent of the population should speak English,‖ the president said. ―By

May 2011, I instruct the Government to develop a new employment programme,‖ Nazarbayev said.

―This year, we are also raising pensions, scholarships and budget wages by 30 percent. For two

years, we have been raising them by 25 percent each. As planned, by 2012, average pensions,

salaries and scholarships will grow twice as fast compared to 2008.‖Kazakhstan has a bicameral

Parliament, made up of lower house (the Majilis) and upper house (the Senate). Since 2007, the

number of MP‘s has been increased:

from 39 to 47 members in Senate. The President appoints 15 of them from the choice of

prominent public figures, academics, intellectuals etc.

15

from 77 to 107 members in Majilis (main legislative body). 98 of the Majilis deputies are

elected in a nationwide constituency on the basis of proportional party lists. Nine of the

Majilis deputies are elected by the Assembly of the People of Kazakhstan (an umbrella

grouping of more than 100 ethnic groups in Kazakhstan).

The Constitution of the Republic of Kazakhstan approved through a national referendum in

August 1995 and ratified the following month replaced an earlier ―soviet-style‖ constitution adopted

in the wake of independence from the Soviet Union. The Constitution provides for a democratic and

secular state. State governance is divided among the executive, legislative and judicial branches. The

President is considered the head of state. The Constitutional Council is charged with the

responsibility of deciding when to hold presidential and parliamentary elections and examining

legislation for compliance with the Constitution.

POLITICAL PROGRESS

Kazakhstan began to reform its political system immediately after becoming independent. At

the time there was economic recession, hyperinflation (up to 3000%) and a drastic decline in living

standards. The groundwork for a market-based economy, political pluralism, amulti-party system, an

independent media, NGOs and a vibrant civil society were non-existent. Kazakhstan chose to build

the country based on democratic values by joining the OSCE and signing the Helsinki Final Act and

Paris Charter. The new political system developed in four stages.

In the first stage (1990–1993), Kazakhstan dismantled the previous soviet style political

structure and established the basis for the parliament-president political system‘s development. In

the second stage (1993–1995), Kazakhstan selected a new model of political development that

reflects political, economic, social, cultural, psychological, geopolitical and ethnic specificities of

the country. The first Constitution was adopted, the first elections to the Parliament and newly

established local government bodies (Maslikhats) were held. For the first time in the history

Kazakhstan, the executive, legislative and judiciary bodies were defined as independent branches of

government.

The third stage (1995–1998) brought Kazakhstan to 1995 Referendum of the new

Constitution and to the election of a professional bicameral Parliament. During this period,

Kazakhstan also shaped its long-term vision of strategic development. -In 1997, President

Nazarbayev adopted the national strategy ―Kazakhstan 2030‖ - a road-map for Kazakhstan‘s future

growth, which identified seven national priorities through the year 2030:

National security. Ensure development of Kazakhstan as an independent sovereign state

preserving its complete territorial integrity;

Safeguard and strengthen domestic political stability and national unity;

Economic growth based on an open market economy with high levels of foreign investments

and internal savings. Achieve realistic and sustainable rates of economic growth;

Health, education and well-being of the citizens of Kazakhstan. Improve living standards,

health, education and opportunities of Kazakhss and improve the natural environment in the

country;

Energy resources. Effectively utilize energy resources of Kazakhstan through rapid increases

in extracting and exploring oil and gas with the aim of gaining revenues to engender stable

and diversified economic growth and improved living standards;

Develop transportation and communications infrastructure to enhance national security,

political stability and economic growth.

16

Establish a professional corps of civil servants capable of acting as representatives of the

people in achieving national priorities.

The fourth stage of political development (1998–2007) helped Kazakhstan to prioritize the

process of democratic development and bring it into compliance with economic development.

Through the Democratization Programme, which was presented in 1998, and efforts to expend

power of the Parliament Kazakhstan came to the understanding of the importance of strong

Parliament, political parties and civil society. Therefore, in 2002, Kazakhstan established the

institution of Ombudsman on human rights, in 2003 - the Human Rights Commission, in 2006 - the

State Commission on Democracy that provides a forum for dialogue on further democratization. It

also adopted the 2003-2005 Program of the state support of non-governmental organizations and the

2006-2011 Concept of civil society development.

These helped Kazakhstan to move to the fifth stage of political development (2007- present).

Its goal is to ensure steady progress on the fundamental principles of establishing a democracy and

civil society that will serve as a model for other countries in Central Asia. Since 2007, Kazakhstan

has made notable advances in Constitutional reforms thatwere designed to establish a genuine

democracy and civil society. The reform included laws that amended the Constitution, improved

elections, provided judicial reform, reduced the presidential term from 7 to 5 years, increased the

powers of Parliament, introduced proportional representation to elect members of the Majilis

(Parliament) and established a party-based parliamentary system.

The Law amending the Constitution was signed by President Nazarbayev on May 21, 2007

as the result of joint work of the State Democracy Commission and Ad Hoc Working Group. This

law enlarged the powers of the Parliament, raised the role of political parties, thus transforming

Kazakhstan from presidential into presidential-parliamentary republic.

The renewed Constitutional Law ―On elections in the Republic of Kazakhstan‖ (signed on

June 21st 2007) introduced proportional representation, political parties-based system for election to

the Majlis. The Assembly of the People of Kazakhstan gained the status of the constitutional body

together with the fixed quota of seats - 9 mandates in the lower chamber of the Parliament. The

transition to the procedure by which the Government is formed by the parliamentary majority party

was completed. Depending on the outcome of the elections, partial state funding of political parties

wasintroduced. The maslikhats became the basis of local self-government. A number of ODIHR

recommendations were implemented. On August 18, 2007, the early elections to the Parliament took

place (as per the amended Constitution). This was the first election to the new, completely party-

based Parliament thus signalling the gradual move of Kazakhstan from a strong Presidential form of

rule toward a parliamentary majority system.

All of the efforts were acknowledged when Kazakhstan was unanimously selected by OSCE

member nations in 2007 to chair the Organization. The OSCE chairmanship, which Kazakhstan took

over in 2010, encouraged Kazakhstan to continue strengthening democracy in the country. President

Nazarbayev had already proposed additional reforms that included requiring the media to provide

equal coverage to all candidates and parties, reducing the requirements for registering as a political

party, prohibiting by law a single-party Parliament, eliminating the requirement to register electronic

media, including internet sites, and granting more authority to local officials over their own affairs.

The rule of law has been affirmed by the Constitutional Council and regional courts that have

recently issued a series of rulings upholding the rights of individuals, often against state and local

authorities, notably in cases involving religious freedom.

In February 2009, Kazakhstan signed into law new legislation regarding the media, elections,

political parties and local government. Through close cooperation and intensive discussions with

NGOs, political parties and OSCE institutions, Kazakhstan incorporated many of their proposals

17

into a final draft of the new legislation. The ODIHR and the Office of the Representative on the

Freedom of the Media were very active and most helpful in bringing Kazakhstan‘s laws in line with

OSCE standards. As Chargй d'Affaires of the U.S. Mission to the OSCE Kyle Scott stated at the

OSCE Permanent Council in Vienna: ―This legislation marks a step forward on Kazakhstan‘s path

to democracy.‖

The law on elections. Twenty-nine amendments have been signed into the law on elections.

Five of them were recommended by the ODIHR/OSCE. Eight of them were recommended by

Kazakhstan‘s human rights community in close cooperation with U.S. human rights NGOs,

including Freedom House. The law now guarantees representation of at least two parties in the

Parliament even if one of them does not win enough votes (i.e., over a 7 percent threshold). The law

excludes the possibility of electing a one-party Parliament, makes it mandatory for the media to

equally cover the candidates and parties, including the period of nomination and registration, cancels

any requirements for thousands of foreign observers, who usually come to Kazakhstan during

elections, to have any relevant experience to monitor electoral process and decentralizes authority of

the Central election commission in favor of local election commissions. Local election commissions

have greater authority in organizing the electoral process, such as determining their schedules to

make them more convenient for the voters, increases salaries for non-public servant members of

election commissions at the election periods and authorizes the Central Election Commission to

strictly regulate the process of issuing absentee ballots.

The law on political parties. Seven amendments signed into the law on political parties partly

reflect recommendations made by the OSCE and Kazakhstan‘s human rights community, in close

cooperation with U.S. human rights NGOs, including Freedom House. The original goal of the

amendments is to further liberalize and expand the space for political debate. The law significantly

reduces the number of requirements for registering a political party (in the new text of the law even

a party that submits erroneous lists of its members cannot be denied registration on these grounds),

decreases required membership size for a party to be registered (now a party needs to have only 600

members in each of the country‘s regions and 40,000 members nationwide to be registered as a

national political party), simplifies the registration process and the funding of political parties to

strengthen their role in public life, regulates the legal and technical process of establishing (merger,

incorporation, split-up or split-off) a political party (the ODIHR recommendation) and provides

public financing of political parties.

The law on mass media addressed the concerns that have been voiced by the media

community. It has been amended to increase the rights of journalists and media to ensure greater

self-regulation. The amendments reflect the recommendations of the ODIHR. The law removes

administrative barriers and re-registration requirements for mass media and extends the rights of

journalists. For example, media representatives are not required to ask for permission to use

recording equipment when conducting interviews, provides the right of a citizen to demand

retraction of the published defamation or slander if a person who published this information cannot

support the allegations with facts and denies this right to citizens, thus upholding the adversarial

principle in the court‘s deliberations.

On January 28 2009, the OSCE Representative on Freedom of the Media, Miklos Haraszti,

welcomed the adoption of a number of amendments to Kazakhstan's media law and underscored the

need for further democratization of media governance. "I welcome the easing of administrative

burdens on the media, as well as the fact that civil society was involved in the discussion about the

changes," Haraszti wrote in a letter to Kazakhstan's Foreign Minister, Marat Tazhin, and Culture and

Information Minister, Mukhtar Kul Mukhammed. "However, the process of liberalization of

Kazakhstan's media law should continue, because the current body of law, notwithstanding these

18

useful amendments, still fails to meet several international standards." He provided the authorities

with a list of the most important reforms that still need to be carried out, including:

The media market should be de-monopolized;

Registration should be managed by an independent body, and should be declarative

and not permissive;

The use of closure or confiscation of circulation as a penalty should be abolished;

Libel and insult should be decriminalized;

Only officials should be in charge of protecting classified information; breach of

secrecy by others, including journalists, should not be criminalized.

Haraszti offered his office's assistance to help the Kazakh government carry out

further reforms in the field of media legislation.

The law on local self-government codifies local self-governance in the regions (oblast),

districts, cities, districts within the cities, towns and villages, significantly increases the political role

of Maslikhates (local elected legislatures) and improves the effectiveness of a ―checks and balances

system‖ between maslikhates and akimates (local executives). The law reflects the experience of

both France and Britain in providing local self-governance. It includes attributes of the European

Charter on local self-government, is generally in line with the final document of the 1990

Copenhagen Meeting and reflects the vision of the United States on independence of local

governance.

Members of Maslikhates are elected by people of a region. They approve regional

development programs, claim the regional budget, and are accountable to voters. Voters have the

right to request a report on the work of members of Maslikhates, as well as to recall them in case of

a duties‘ breach. Heads of Akimats (akims) appointed by the President of Kazakhstan take office

only after approval by Maslikhate. They are accountable to Maslikhates on budget issues. The law

also lowers the needed majority (to 51 percent) for Maslikhates to vote Akims out of office.

Kazakhstan has also signed and ratified 35 major international instruments aimed at

upholding human rights and civil liberties. These include international treaties on civil, political,

economic, social and cultural rights, as well as conventions of the International Labor Organization,

the optional protocol to the International Treaty on Civil and Political Rights and the protocol to the

Convention Against Torture.

REFERENDUM-2020 and Kazakhstan‟s commitments to democracy. 2011 began with a

jumpstart for political life in Kazakhstan with the initiative of a group of Kazakh citizens to hold a

national referendum to extend the incumbent President‘s term of office until 2020. The logic behind

their proposal was that Kazakhstan has prospered under President Nazarbayev. The country has

established good governance, dynamic economic growth and basic rights and freedoms for its

citizens. As a young nation, Kazakhstan still faces tough challenges in an unstable environment.

Those in favor of referendum argued that in order to ensure the continuity of economic reforms and

political modernization, Kazakhstan needed long-term stability, which President Nazarbayev best

ensured.

This initiative generated a great deal of support. More than 5 million people, or 55 percent of

registered voters, signed a petition in favor of holding the referendum. The Parliament also approved

the initiative and adopted constitutional changes to pave the way for the referendum.

But President Nazarbayev chose to adhere to democratic principles by vetoing the initiative.

The matter was also sent to the Constitutional Council of Kazakhstan to check its compliance with

the country‘s Constitution. The Council ruled that it contradicts the provisions of the Constitution.

The President announced his full agreement with the conclusion of the Constitutional Council. Not

to disappoint the supporters of the initiative, he offered a compromise solution by calling early

19

presidential elections, thus agreeing to cut his term of office by two years. Later, April 3rd was set

as the date for presidential elections.

The President‘s decision not to create a precedent that could have been interpreted as a

setback for the fledgling democracy was overwhelmingly appreciated on the international scene. In a

letter to the President, U.S. legislators said they ―commended the decision of the President‖ and

stated that ―the West was right to pin its hope on Kazakhstan as a stabilizing partner committed to

democracy and the rule of law in one of the world‘s tougher neighborhoods.‖

20

PRESIDENTIAL ELECTIONS 2011

Kazakhstan as an emerging democracy spared no effort to ensure that its presidential elections were

free and fairand upheld high international standards and remain fully open for international and

domestic observers.

Kazakhstan‘s Central Electoral Commission confirmed

applications from eleven presidential candidates. .

Nominees of three political parties continued the

presidential campaign: acting President Nursultan

Nazarbayev from the Nur Otan Party, Secretary of the

Communist Party‘s Central Committee Zhambyl

Akhmetbekov and Senator Gani Kasymov from the Party of Patriots. Another candidate for the

presidency, the leader of the Zheltoksan /December/ patriotic movement, filed an application on the

last day of the nominations period.

On April 3, 2011 the presidential elections were held. The result: a landslide victory for the

incumbent President. According to the Central Election Commission of Kazakhstan, the following

was the distribution of votes among the candidates:

Communist Zhambyl Ahmetbekov has won 1.36% of all the votes.

Mels Eleusizov, leader of the Environmental Union ―Tabigat‖ (―Nature‖) - 1.15%.

Gani Kasimov, the leader of the Patriots Party – 1.94%.

Incumbent President Nursultan Nazarbayev – 95.55 %.

For western onlookers, the figure might

seem too high to be true. However,

observers who visited Kazakhstan during

the elections confirmed the genuine

popularity of the leader among the

citizens.

The result was foreshadowed by a

survey conducted by IRI (International

Republican Institute)/NED (National

Endowment for Democracy). The

survey, which took place February,

2011, indicated a 90% approval rate for Mr. Nazarbayev.

To ensure open and transparent elections, Kazakhstan welcomed 1,059 observers, including 357

from the ODIHR/OSCE, 426 from CIS observer mission, 13 from SCO observer mission, 7 from

Turkic Speaking Countries Parliamentary Assembly, 5 from the Organization of the Islamic

Conference, 8 from the Council of Europe Parliamentary Assembly (PACE), 80 from OSCE

Parliamentary Assembly, 163 from 25 different countries, 90 foreign media representatives.

21

A majority of the observers, including from CIS, SCO, CSTO and OIC, confirmed that the elections

were ―free and fair.‖ The head of the CIS observation mission, Sergey Lebedev, said, ―The

necessary conditions had been created in the Republic for international observation of the elections,

attesting to the openness of the electoral process. Furthermore, the mission concluded that the

legislation of the Republic of Kazakhstan makes it possible to hold free and democratic elections on

the basis of universal, equal and direct suffrage.‖

The head of the SCO observation mission, Muratbek Imanaliyev, also declared that the elections had

been free and transparent. The head of the observation mission sent by the Parliamentary Assembly

of the Turkic-Speaking Countries, Aidyn Mirzazade, considered the presidential elections in

Kazakhstan to be legitimate and in compliance with all international democratic standards.

The elections were also monitored by a group from the U.S. comprised political and economic

analysts from the Center for Strategic and International Studies, Institute for New Democracies,

Hudson Institute, Georgetown University and The Jamestown Foundation. On April 4, 2011 the

group issued the ―Independent Observer Mission for the Presidential Election in Kazakhstan: Post-

Election Assessment.‖ It found:

- The electoral process was generally well-administered and transparent at almost all the 65

polling stations that were visited;

- Organizational errors or significant lapses seemed rare and could not detract from the overall

impression of a decently run electoral process;

- Electoral commission members were invariably open and forthcoming with information

about technical aspects of the process;

- The turnout rate for these elections was extraordinarily high at 89.9 percent. Such a turnout

bespeaks a yearning to maintain stability and political continuity in Kazakhstan. Voters often

said that they valued Kazakhstan‘s stability, security, and steadily increasing living standards

in their country. They contrasted this with the chaos engulfing many Muslim countries, from

North Africa and the Middle East to Afghanistan and Kyrgyzstan next door;

- In most places election commissions members had undergone training ahead of the

presidential election;

Improvements in electoral process were found by the delegation of the Parliamentary Assembly of

the Council of Europe. The head of the delegation said, ―PACE has observed elections in

Kazakhstan in the past and is pleased to state progress from one election to another in this country.

The delegation is united in its view that despite certain imperfections that invariably mark all

elections in any country, the outcome of this vote truly reflects the will of Kazakhstan‘s electorate.‖

The ODIHR/OSCE observer mission, which usually gives a cautious assessment of the elections in

Kazakhstan, in its statement acknowledged improvements compared to previous elections. It stated

that ―compared to the last presidential elections, the media provided more equality in covering

candidates in the news programmes.‖ At the same time, it came up with a number of criticisms and

recommendations for further improvements needed in the electoral process. Kazakh authorities have

committed to continue working with ODIHR/OSCE on its recommendations in a cooperative

manner.

22

Against the backdrop of the positive assessment of all the international observers, ODIHR‘s focus

on irregularities caught everyone‘s attention. It is widely held view in Kazakhstan that ODIHR

mission of observers did not grasp the free and transparent atmosphere, in which elections were

held, as well as a significant progress in Kazakhstan in this direction. The ODIHR estimations did

not reflect the fact that the authorities and society exercised political will and aspiration to facilitate

that the elections match the international standards.

The international community also recognized the legitimacy of the elections. Among the world

leaders who congratulated Kazakhstan were French President Nicolas Sarkozy, Indian Prime

Minister Manmohan Singh, Russian President Dmitry Medvedev, Chinese President Hu Jintao and

Turkish Prime Minister Recep Tayyip Erdogan.

U.S. congressmen, including Gregory Meeks, Michael Honda, Eni Faleomavaega, John Conyers,

Laura Richardson, Madeleine Bordallo, in their congratulatory message to the President said,

―Although we are fully aware that the election is not without criticism, we commend you for

inviting more than 1059 international observers to monitor the conduct of the electoral process.‖

During the meeting of the House of Representatives on April 7, 2011, Rep. Faleomavaega stated,

―Since its independence, Kazakhstan has fully supported US-led efforts against nuclear proliferation

and, under the leadership of President Nazarbayev, Kazakhstan continues to provide indispensable

aid to US troops in Afghanistan. I am proud of Kazakhstan‘s accomplishments and, once more, I

congratulate President Nazarbayev on his re-election as President of Kazakhstan. I have every

confidence that he will spare no effort in delivering stability, security and prosperity for and on

behalf of the people of the Republic of Kazakhstan.‖

The U.S. Government was among the first to offer its opinion on the election results. The U.S.

Embassy in Astana issued a statement on April 4, 2011, which reads:

―We congratulate President Nursultan Nazarbayev on his re-election as President of the Republic of

Kazakhstan. We look forward to continuing to work with him and the people of Kazakhstan to

implement our broad-ranging strategic partnership.

―We endorse the preliminary conclusions of the Organization for Security and Cooperation in

Europe (OSCE). We appreciate the improvements it noted. We urge the government of Kazakhstan

to rapidly address the shortcomings the report highlighted. We welcome Kazakhstan‘s

commitments to further liberalize the political environment and believe that continued

improvements in the electoral process are critical components.‖

In his inaugural speech on April 8, President Nazarbayev

outlined major priorities of his new term. The democratic

reforms featured highly in his speech.

The president said that he always envisioned Kazakhstan ―as a

modern and strong nation, an equal partner of advanced

powers,‖ That is why he and his team are building Kazakhstan

―as an open economy and full-fledged democracy,‖ he said. The

23

pace of Kazakh reforms, he said, was ―higher than in any other developed countries, where it took

them centuries to develop their democracies.‖ He reaffirmed his commitment and determination to

further ―democratization of the society.‖

He vowed to seek the best way of ensuring checks and balances in the government system through

―expanding powers of the Parliament and responsibilities of the Government.‖ He also spoke in

favor of decentralizing power and delegating more authority to the local regions.

The Kazakh leader also promised to ―further improve the electoral process.‖ He underscored the

need for ―developing a political culture.‖ He noted the absence of ―black pr‖ during the elections.

The elections were held in ―a stable atmosphere, without extreme confrontation,‖ he said, which

should be the direction for future election campaigns. ―Only this way will it be possible to develop a

real democracy and an efficient multiparty system,‖ he said.

The President also vowed to promote a ―responsible and free media.‖ He also underlined the

importance of making sure that ―every citizen is equal before the law.‖ For that to happen, he

expressed his willingness to ―take new steps to further improve the judicial system.‖

―An uncompromising fight against corruption‖ is another priority for the re-elected President. There

will be more ―rigid actions in place against corruption through criminal prosecution and eliminating

loopholes in the laws,‖ he said. He also assured citizens that there would be ―adequate protection of

rights and properties of individuals and legal entities.‖

POLITICAL PARTIES Kazakhstan‘s law on political parties prohibits parties based on ethnic origin, religion, or gender.

There are 10 political parties in Kazakhstan as compared to 13 in 2006. Four parties representing

supporters of the current Government merged by the end of 2006, and as a result ―Nur-Otan‖ - a

new pro-presidential pro-reform party able to effectively represent interests of its numerous

supporters - emerged on the political stage of Kazakhstan. Also in 2006 a leftist Nationwide Social

Democratic Party was registered joining the ranks of several other opposition parties. The beginning

of 2007 has seen a robust process of mergers and consolidation of political parties, including

opposition ones, particularly, in the run-up to 18 August, 2007 parliamentary elections.

CIVIL SOCIETY

Since its independence, Kazakhstan has been fully engaged in the transition from a Soviet political

system to democracy. It charts its own destiny under a banner of increasing freedom and decided to

follow a formula that has worked for other democracies and requires the involvement of all

stakeholders in the society. In the mid-1990s, Kazakhstan decided to establish and maintain a strong

and independent civil society.

In close cooperation with European and American partners, Kazakhstan has been creating a

legal environment for NGO development and growth. Kazakhstan‘s non-for-profit legislation has

been internationally recognized as one of the best among the Commonwealth of Independent States.

The first measure was adopted in the early 1990s and gave a powerful boost to the development of

civic organizations in Kazakhstan. In the middle of the 1990s, the government separated NGOs from

commercial entities, significantly simplified the process of state registration, separated their activity

from government and granted them special benefit status. In its ―1998 NGO Sustainability Index in

Kazakhstan‖ report, USAID said, ―…NGOs exercised tax benefits without undue difficulty.‖

24

Kazakhstan also has been providing opportunities for foreign and international donors to

provide financial support to the national non-for-profit sector through grants and other means. The

peak period of foreign support for the Kazakh NGO sector was from 1996 to 1998. Today, 162

international organizations are giving grants to Kazakhstan‘s NGOs and implementing various

programs in the country. Funds received by Kazakh NGOs under state contracts are exempt from

corporate income and value-added taxes.

Since Kazakhstan‘s independence, thousands of Kazakh NGOs have been trained by the

UNDP, the USAID, the OSCE and other foreign and international organizations to increase their

role in society and participate in nearly all spheres of public life. Recently, NGOs have become

increasingly active in advocacy efforts.

The United States Agency for International Development‟s (USAID‟s) 2010 NGO

Sustainability Index for Central and Eastern Europe and Eurasia scored Kazakhstan better than

many Eastern European and Eurasian countries and identified Kazakhstan as having achieved one of

the highest levels of NGO sector development among Central Asian countries. The report also

projected that the number of NGOs in Kazakhstan is expected to rise because of the ―stable domestic

policy climate laws that are favorable to NGOs.‖

The dynamic of NGO growth in numbers. In the early 1990s, about 400 NGOs were

established as Kazakhstan experienced a rapid rate of reform. These NGOs were mainly involved in

human rights issues and furthering democracy in the country. From 1994 to 1997, more than 1,600

NGOs were registered. That growth continues today. Last year, the number of NGOs rose by 10

percent. Today, more than 25,000 nonprofit organizations are active in Kazakhstan, including

13,000 NGOs. More than 550,000 people are involved in the ―third sector.‖

Cooperation between government and NGOs. At the beginning of 2002, the government

decided to expand its effort to develop the third sector. It approved the Concept of State Support for

Non-Commercial Organizations, including support for socially significant projects of NGOs through

the signing of social contracts with them. In 2006, Kazakhstan adopted the Concept of Civil Society

Development for 2006-2011, a ―road map‖ for improving relations between the government and the

not-for-profit sector. During the first and second phases of implementing the Concept, Kazakhstan

reduced the registration fee for NGOs, signed and ratified the Optional Protocol to the 1966

International Covenant on Civil and Political Rights, simplified long-criticized reporting

requirements for NGOs receiving foreign aid and lifted the ban on state financing of NGOs. A

number of laws have encouraged active cooperation with civil society institutions.

Kazakhstan will continue drafting an effective legal framework for NGOs. The original goal

was to promote and secure stable development of civil institutions and improve the quality of

dialogue between the government and NGO community. One of the most prominent platforms for

this dialogue was established in 2003 with the creation of the so-called biannual ―Civic Forum.‖

Civic Forum. Years ago, President Nazarbayev called for the government to cooperate with

the NGO sector, recognizing the power that partnerships with these organizations can play in

developing and improving a civil society. As a result, Kazakhstan initiated the Civil Forum to

facilitate greater involvement of the NGO community in the government‘s efforts for political

reform nationwide. Civil Forum is a mechanism for engaging in meaningful dialogue, positive

interaction and results-driven collaboration with NGOs, giving these organizations direct access to

decision-makers within government. This process promotes the kind of participation, synergy and

exchange that result in the formulation of beneficial policies and laws. The Civic Forum provides

the opportunity for Kazakh NGOs to participate in government policy discussions and formulation.

At the time of the Civil Forum I, the nongovernmental sector of Kazakhstan was recognized as an

important power within the democratic process. A new partnership among the government, business,

25

and NGOs was announced during this initial forum. The Civil Alliance of Kazakhstan was created

during Civil Forum II. The Concept of Civil Sector Development was adopted and approved by the

President. The action plan for the concept implementation was developed and approved by the

Prime Minister during this forum as well. Civil Forum III was devoted to further developing

partnerships within the framework of the civil society democratization and realization of the Civil

Sector Development Concept.

The 2009 Civic Forum IV held in Astana on November 23-24 hosted more than 700

participants from an array of countries, including the United States, Russia, Germany, France,

Ukraine and Azerbaijan. Representatives from trade unions, media, international and foreign NGOs,

central and local executive bodies, and regionally elected representatives from various political

parties attended. ―The Civic Forum, which this year is the largest ever, proves that the partnership

between Kazakh society and the Government is deepening,‖ said Program Director for Central Asia

at the International Center for Not-for-Profit Law (American based NGO) Elizabeth Warner.

The forum was opened by 2010 OSCE Chairman-in-Office H.E. Kanat Saudabayev. He

stressed that cooperation between NGOs and the government will only increase as Kazakhstan

begins its chairmanship of the Organization for Security and Co-operation in Europe (OSCE). He

called on NGOs to contribute to Kazakhstan‘s success as chair of the OSCE, which he said is a

―great honor and huge responsibility not only for state organs but for all the institutions of civil

society, including NGOs.‖

At the 2009 forum, the government reported to assembled NGOs that it had implemented

226 socially significant projects during the previous year—all in partnership with various NGOs. As

a result, Kazakhstan was able to avoid social instability and, through this partnership, minimized the

after-effects of the world economic recession. This partnership has had a defining effect as observed

by Ms.Warner: ―Since the first Civic Forum in 2003, we have seen many important developments in

the partnership between the Government and civil society—simplified registration laws, the

participation of NGOs in policymaking at the national and regional levels, and the beginning of

more favorable tax laws that will promote private philanthropy.‖

One of the main outcomes of Civil Forum IV is the agreement reached between the

government and NGOs to continue working together on improving the quality of their cooperation,

the role of NGOs in the social and political life of the country, social monitoring, social orders,

among other important areas.

Setting the Course Together. One of the more telling signs of the ―deepening‖ partnership

on issues of political development has been the government‘s involvement in the drafting two

significant documents—the National Human Rights Action Plan of the Republic of Kazakhstan,

2009-2012, outlining steps to strengthen the national system of human rights protection, and the

Concept of Legal Policy for 2010-2020, which sets a plan for improving state governance based on

the principles of effectiveness and accountability, ensuring protection of human rights and freedoms,

and protecting the interests of the state and society.

Eighty percent of the Action Plan was developed by Kazakhstan‘s non-governmental

organizations. It was preceded by a baseline study and report on human rights in Kazakhstan that

analyzed national legislation, law enforcement practices and compliance with international law

provisions in human rights protection. The Human Rights Commission and the group working on

the plan closely studied the breath of international experiences. The Legal Concept was also

prepared in close cooperation with Kazakhstan‘s NGO community. It defines the main directions of

legal policy and is intended as a foundation for the development of programs in the sphere of legal

policy and is projected to bring Kazakhstan‘s legal system closer to international standards in such

26

areas as the constitution, administration, taxation, customs, as well as civil, financial, and criminal

law. It envisages reforms in law enforcement, the judiciary and the protection of human rights.

MIDDLE CLASS

Unlike many nations that have recently developed their energy reserves, the rise in revenues from

foreign energy sales has had a trickle-down effect in Kazakhstan, producing the embryo of a new

middle class. Kazakhstan has made a cornerstone of its social policy fostering the development of an

indigenous middle class, seeing it as a social and political guarantor of stability. Privatisation,

housing, banking, education reforms and numerous initiatives on supporting small and medium

businesses have helped Kazakhstan‘s emerging middle class. Kazakhstan‘s middle class has begun

to use its disposable income to travel abroad and to acquire items essential for a Western lifestyle

such as computers and cell-phones. According to Kazakhstan‘s Statistics Agency, in mid-2008 there

were more than 8 mln. cell phone users in Kazakhstan, representing more than half of the

population. As the Kazakh middle class became increasingly visible, new political parties and the

government itself began to vie for its support.

While estimates vary, some analysts put its numbers at 25 percent of the total population,

representing people who consume 50-80 percent of the financial value of all goods sold in

Kazakhstan. Analysts further divide this group into two sections, a lower middle class, with

individual annual incomes of $6,000-9,000, (an estimated 70 percent of the stratum,) and the

―upper‖ middle class, with annual individual incomes of $9,000-15,000, (30 percent of the total

group). According to official Kazakh statistics, salaries increased by 21 percent in 2001 and by 12

percent in 2002 and have consistently risen each year since.

COURT SYSTEM

The legal system of Kazakhstan owes its origin to the Continental (Roman-German) legal family.

Since independence, Kazakhstan has successfully reformed its legal and judicial sectors and

constantly continues the modernization process by introducing the best world practices. Such

reforms as the move of penitentiary system from the Ministry of Interior to the Ministry of Justice,

introduction of a moratorium on the death penalty with a view of future total abolition and the

introduction of jury trials for the most serious crimes have all won international acclaim.

There are local and oblast (regional) level courts and a national-level Supreme Court and

Constitutional Council. A special arbitration court hears disputes between state enterprises. There is

also a military court system. Local level courts serve as courts of first instance for less serious

crimes such as theft and vandalism. Oblast level courts hear more serious criminal cases and also

hear cases in rural areas where no local courts have been established. A judgment by a local court

may be appealed to the oblast level. The Supreme Court hears appeals from the oblast courts. The

constitution establishes a seven member Constitutional Council to determine the constitutionality of

laws adopted by the legislature. It also rules on challenges to elections and referendums and

interprets the constitution. The president appoints three of its members, including the chair.

Under constitutional amendments of 1998, the president appoints a chairperson of a Supreme

Judicial Council, which nominates judges for the Supreme Court. The Council consists of the

chairperson of the Constitutional Council, the chairperson of the Supreme Court, the Prosecutor

General, the Minister of Justice, senators, judges, and other persons appointed by the president. The

president recommends and the senate (upper legislative chamber) approves these nominees for the

Supreme Court. Oblast judges (nominated by the Supreme Judicial Council) are appointed by the

president. Lower level judges are appointed by the President from a list presented by the Ministry of

Justice. The Ministry receives the list from a Qualification Collegiums of Justice, composed of

27

deputies from the Majlis (lower legislative chamber), judges, prosecutors, and others appointed by

the president). Under legislation approved in 1996, judges serve for life.

In accordance with 2008 Constitutional reform, the judicial-legal system was improved with

the aim of strengthening the independence of courts in pronouncing judgments. The reform

facilitated a near total abolishment of capital punishment in Kazakhstan, limiting its application

exclusively to terrorist crimes involving the loss of human life, or wartime crimes. A system of

judicial custody has been introduced and the Constitution prohibits investigation by the Office of

Public Prosecutor. These reforms are directed at further democratization of the institutions of the

Government and society. In order to make the legislation activity more effective, the Kazakh

Government is in the process of creating a system that would be modern in content and have

regulations that vividly reflect all stages of legislation and law-enforcement activity.

Each Legal Act is being evaluated as per international standards to ensure that the interests of

Kazakh citizens, society and the State are comprehensively and rationally taken into consideration.

JUVENILE JUSTICE REFORM IN KAZAKHSTAN. Kazakhstan, like other countries

that were part of the Union of Soviet Socialist Republics (USSR), did not have a juvenile justice

system at independence. Some institutions specifically for children did exist, notably juvenile

correctional facilities and juvenile police. But there was no law on juvenile justice, nor specialized

courts or judges. Juveniles accused of an offence were tried by ordinary criminal courts, under the

Criminal Code and the Code of Criminal Procedure.

While offenses by juveniles increased in the years following independence, they have been

decreasing since 1994. In recent years, the number of offences has fallen from 8,237 in 2002 to

5,383 in 2007. The decline has been dramatic for administrative offenses, such as drunkenness, drug

use and disorderly conduct, and less pronounced for criminal offenses. The number of offenders has

remained relatively stable during these years, however, apparently due to the growing number of

crimes committed by juveniles acting as a group. Nevertheless, the number of convicted juvenile

offenders has diminished by more than half since 2000, and the number of juveniles given custodial

sentences annually has fallen from 1,668 in 2000 to 751 in 2006. The total population of the four

juvenile correctional facilities was 473 persons in 2007, and the number in ‗pretrial‘ detention

facilities was 459.

UNICEF supported a situation analysis on juvenile justice in 2000. The lead role then passed

to the Open Society Institute, which undertook a major project from 2001 to 2006 (the ‗Juvenile

Justice Project‘). The project led to a comprehensive set of recommendations, many of which have

been incorporated into a ‗Juvenile Justice System Development Concept‘ approved by the President

in 2008. Adoption of this ‗Concept‘ marks the beginning of a key stage in the development of

juvenile justice in Kazakhstan.

In 2010, a UN assessment team found much that is positive: a commitment to the creation of

a juvenile justice system that complies with international standards and best practices, strong

cooperation with the international community, pilot specialized juvenile courts and juvenile police

units, a specialized defense team in Almaty, the improvement of conditions in colonies and the

policy of early release of juvenile prisoners who show evidence of rehabilitation.

The ‗Juvenile Justice System Development Concept‘ establishes the basic framework for the

future juvenile justice system. The time frame for the creation of this system is 2009–2011. The

Open Society Institute is no longer involved in juvenile justice. The Organization for Security and

Co-operation in Europe (OSCE) supports the development of probation and mediation, but does not

play a direct role in juvenile justice. The government has asked UNICEF to help develop the

juvenile justice system, which builds on UNICEF‘s previous work on de-institutionalization.

28

MEDIA IN KAZAKHSTAN

When it emerged on the world stage from the shackles of

the Soviet Union in 1991, Kazakhstan began to develop its media

market. It started with only few media outlets, purely official, and

now has more than 2,000 local media resources, about 85 percent

of which are non-governmental.

There are major newspapers as well as TV and radio

channels providing news and entertainment in 11 languages,

including German, Ukrainian, Turkish and Ukrainian. Media

outlets broadcasting in ethnic languages receive grants and other

types of financial support from the national budget. In 2002, the

first Kazakh satellite channel – Caspionet – was launched and

broadcasts both in the country and abroad.

International media corporations such as CNN, BBC,

Radio Free Europe, Deutsche Welle, Polonia and others broadcast

their programs in Kazakhstan through local cable television

companies. More than 80 foreign media outlets from more than 20

countries, including the largest news agencies such as the

Associated Press, Interfax, France Press,Xinhua, Reuters, ITAR-

TASS and Bridge news are accredited in Kazakhstan.

Benefits to the media include:

legal guarantees of the principles of freedom of speech;

continuing improvement of the legal framework for mass

media activity;

a transparent process of receiving frequencies for TV and

radio broadcasting. The Commission on providing rights

for radio frequency use comprises representatives of the

Parliament, international and Kazakhstan public

associations. Activity of the Commission is widely

covered by the mass media;

creation of economic conditions for mass media growth.

All the publications and TV stations are exempted from

VAT. Charges for use of radio frequency decrease almost

every year;

continuing and constructive cooperation with public

associations, international organizations, media research

institutes in the area of mass media development.

Major Kazakh media outlets

Newspapers

Kazakhstanskaya Pravda

www.kazpravda.kz

Ekspress-K

www.express-k.kz

Zhas Alash

www.zhasalash.kz

Liter

www.liter.kz

Vremya (opposition) –

www.time.kz

Karavan – www.caravan.kz

Zonakz (opposition web source)

www.zonakz.net

Geo (opposition web source)

www.geokz.tv

Television Khabar TV – www.khabar.kz

Kazakh Commercial TV (KTK)

www.ktk.kz

Caspionet – www.caspionet.kz

El Arna http://www.elarna.kz/

Hit TV www.hittv.kz

Channel 31

http://www.31.kz/

Radio Radio NS – www.ns.kz

Europa Plus –

www.europaplus.kz

Auto Radio – www.avtoradio.kz

News Agencies Kazinform – www.inform.kz

Interfax Kazakhstan –

www.interfax.kz

Kazakhstan Today –

www.gazeta.kz

Journalists‘ rights associations such as the Journalists Congress of Kazakhstan, Journalists

Union of Kazakhstan, Teleradiobroadcasters Association of Kazakhstan and offices of

international organizations (the OSCE, Human Rights Watch, Internews network and Adil

Soz) are all established in Kazakhstan;

close attention to journalists‘ development. The government provides grants and loans for

education in this field; a TV Journalism School was established.

29

ETHNIC COMPOSITION. Kazakhstan has 130 nationalities within its borders.

Kazakhstan‘s ethnic composition is the driving force behind much of the country‘s political

and cultural life. The country‘s principal ethnic groups include Kazakh (63.1%), Russian (23.7%),

Uzbek (2.9%), Ukrainian (2.1%), Uighur (1.4%), Tatar (1.3%) and German (1.1%), and other

groups (4.4%).

Many nationalities were driven to Kazakhstan by political

repression and persecution. In Stalin‘s time, Kazakhstan

hosted 1.5 million political prisoners from Russia and other

regions of the USSR. More than 1.3 million people were

deported by Stalin during World War II ―as representatives of

unreliable nations,‖ All these people found understanding and

support among the Kazakh people.

The principle of equality of all ethnic groups is strictly

adhered to. About 40% of secondary schools use Russian in

teaching. In higher education, 70% is in Russian.. In areas of residence of compact ethnic groups

schools function with Uyghur, Tajik, Ukrainian, German, Polish and other languages of teaching.

The Sunday schools of national and cultural unions also receive support in the teaching of

native languages. Today 30 languages of ethnic groups are taught in about 200 Sunday schools and

3 schools of national revival. Magazines and newspapers are published and TV and radio programs

are broadcast in 11 national languages. Books in the languages of ethnic minorities of Kazakhstan

are published annually, with a total number exceeding 80,000. Besides Kazakh and Russian theatres,

there are also Uyghur, German and Korean ones.

Ethnic cultural centres have been established in all areas of Kazakhstan to support ethnic

identity of different nationalities. Their highest forum is the Assembly of peoples of Kazakhstan.

Today this powerful social force has become an organic part of the civil society and expresses its

views in the chambers of the Parliament, political parties, mass-media, state and non-government

organizations. The Assembly of peoples of Kazakhstan has become an important element of the

political system of Kazakhstan. It has forged the interests of all the ethnos and ensures the rights and

freedoms of all citizens regardless of their ethnic origin and religion. 27 republican and regional,

more than 300 district ethnic cultural unions enter the Assembly of people of Kazakhstan. Three

centres have an international status. The Assembly deals with 16 Small Regional Assemblies of

peoples of Kazakhstan which act as consultative bodies by the regional administrations and

comprise representatives of local ethnic-cultural and social unions.

Kazakhstan‘s efforts to ensure inter-ethnic peace and accord are essential for internal

stability and are widely recognized in the world. The Pope as well as UN General Secretary Koffi

Annan who paid visits to our country over the last five years cited Kazakhstan as the example of

inter-ethnic consent and sustainable development of a multi-ethnic society. The interethnic policy is

based on the principle of unity in variety. The civil peace and consent in Kazakhstan are the result of

a persistent policy of the Government which enjoys the support of the whole society.

Languages: Kazakh, which belongs to a Turkic group, spoken by over 70.1% of the

population, is the state language. Russian, spoken by 94.3%, enjoys an equal status under the

Constitution and is a means of interethnic communication in Kazakhstan. English is spoken by

15.4%. There is the National Trinity of Languages Program which aims to ensure that all

Kazakh citizens have full command of Kazakh, Russian and English to have an international

competitive edge in the 21st century. Newspapers, TV/Radio programs, school instruction are done

in 11 languages (Kazakh, Russian, Uzbek, German, Korean, English, etc.)

30

RELIGIOUS COMPOSITION

Two major religions in Kazakhstan are Islam and Christianity (70.1% and 26.1% of all believers,

respectively). Most Muslims in Kazakhstan belong to the Sunni denomination of Islam, while most

of Christians belong to the Russian Orthodox Church. Kazakhstan is home to more than 40

religions. in Kazakhstan which are organised in more than 3000 religious organisations. It is worth

mentioning that although most people in Kazakhstan associate themselves with a certain religion,

most of the population is not deeply religious.

In accordance with 2009 US Department of State ―Human Rights Report: Kazakhstan,‖ the

constitution and law provide for freedom of religion and religious groups worship largely without

government interference. The government continues to express publicly its support for religious

tolerance and diversity. The country is multiethnic, with a long tradition of tolerance and secularism.

In particular, Muslim, Russian Orthodox, Roman Catholic, and Jewish leaders reported high levels

of acceptance in society. The number of registered religious groups and places of worship increased

during the year.

The State doesn‘t interfere with the activities of religious organizations (unless laws are

violated). The State provides no material or any other support, including financial aid, to religious

organizations. Religious organizations don‘t exercise any state functions. Religious organizations

don‘t interfere with the matters of the State. NATIONAL UNITY DOCTRINE. On the eve of the Day of Unity of Kazakhstan People on

May 1, 2010, the authorities and civil society groups achieved consensus on the final version of the

National Unity Doctrine, a project initiated by President Nazarbayev in October 2008 at the 14th Session

of the Assembly of People of Kazakhstan and designed to reflect the common ideals consolidating all

citizens of Kazakhstan into a single nation, regardless of one‘s ethnic heritage, religion, or social class.

The first draft, designed by the Assembly of People of Kazakhstan and published in news media in

November 2009, created much public interest and encouraged a wide debate on the ways to enhance

social cohesion in the country of 130 ethnicities and 40 religious denominations.

The Doctrine of National Unity, a blueprint for strengthening

the inter-ethnic harmony of Kazakhstan for years to come in a

country destined to maintain its multicultural character and

consolidation around common values, has caused a significant

debate, which ultimately made for stimulating dialog between

the government and civil society.

―The doctrine‘s final version proved that we can reach

agreements and understand each other. This wasn‘t forced upon

us, people discussed it and felt it through their hearts,‖ said

Murat Auezov, a prominent intellectual and philosopher.

31

MYTHS IN THE WEST ABOUT KAZAKHSTAN

Common misconceptions. Kazakhstan is frequently described in Western media articles as a

―dictatorship‖ led by a ―corrupt‖ and ―autocratic ruler‖ who has been in power for ―too long.‖ In

fact, Kazakhstan is a country that is only 20 years old and that, in that short time, has achieved

remarkable progress in transforming itself from a former Soviet republic into a new and increasingly

successful Western-style democracy.

Kazakhstan has a record to be proud of. It has settled its borders with its vast neighbors. It has

strengthened its external security by a shrewd foreign policy that has achieved close ties with

Russia, China, the United States and Europe simultaneously. It has achieved an unprecedented

degree of interethnic harmony, thereby laying the foundation for internal stability. The economy has

been privatized and has been growing at about 10% per annum for the last several years. Oil exports

will continue to grow and steps have been taken to diversify the economy. Kazakhstan‘s citizens

have strong property rights. They are able to borrow money from banks to buy homes, land and

other property knowing that they have a real chance to develop a personal stake in the economy.

When they get old or ill, they know that they will receive adequate support and medical care.

The result is that today Kazakhstan is probably the most stable and developed country in the

former Soviet Union. How was this achieved? Many Westerners think the story is only about oil.

The truth is different. Since the beginning, President Nazarbayev and the Government have placed

emphasis on achieving political stability and economic growth, without which there can be no long-

term future for the country. The economy was privatized in the 1990s and today, thanks to this

policy and the rapid development of the energy sector, the nation is reaping the benefits. By staying

faithful to the strategy of putting the economy and stability first, the Government has been able to

unveil a series of important democratic reforms that will in time lead to a full-fledged democratic

state.

Despite the obvious signs of progress, Kazakhstan has been frequently criticized in the West

for being ―slow‖ to implement democratic reforms. This is unfair. In England, for example,

democracy developed over more than 700 years, with often violent interludes. In Kazakhstan, we

have achieved an extraordinary degree of political freedom in just twenty years without any

violence. Democracy is not only about laws and institutions. It is fundamentally about custom, habit

and culture - supported by property rights backed by the rule of law. In practice this means that it is

impossible to create a parliament one day and expect democratic debate to occur the next. One

cannot create a responsible opposition or media at the stroke of a pen. Establishing and nurturing an

independent judiciary is an even greater challenge, as is tackling corruption.

A common misconception in the West is that Kazakhstan is ―forcefully‖ being dragged down

the path to democracy against its will. This is not true. Kazakhstan has chosen to become a

democracy because it is the best way to run our society, ensure the prosperity of the people and

guarantee the long-term security of the state. A large and stable democracy in the heart of Central

Asia is surely a positive thing for Kazakhs and for their Western allies.

Over the last years, Kazakhstan‘s Government has set out and started to implement detailed

plans for further democratization and economic development. These reforms are an integral part of

the Government‘s domestic agenda and they will be persistently implemented.

Kazakhstan‘s impressive record in reforming its economic and political system, its global

promotion of inter-ethnic and inter-religious tolerance, its leadership in non-proliferation activities

and its overall responsible and constructive foreign and domestic policies were recognized in

December, 2007 when fifty-six nations of the Organization on Security and Cooperation in Europe

unanimously elected Kazakhstan as their Chair in 2010. Kazakhstan was the first former republic of

32

the Soviet Union, the first nation ―to the East of Vienna,‖ and the first country with a Turkic-

speaking Muslim majority to lead the OSCE.

“The President for life” myth. In May 2007, President Nazarbayev announced a series of

important political reforms designed to take to the next stage Kazakhstan‘s unique experiment to

establish a genuine democracy and civil society. Among his proposals was judicial reform, the

reduction of the presidential term from seven to five years, increasing the powers of Parliament so

that the Government would be accountable to it, introducing proportional representation to elect

members of the Majilis (Lower House) and establishing a party-based parliamentary system.

Although the President‘s announcement was greeted positively in the United States and

Europe, the coverage in the Western media has been almost wholly negative, focusing on the

decision by the Majilis to grant President Nazarbayev the right to stand as a candidate for the

presidency for a third time when his term of office expired in 2012. The gist of the media comment

is that this is yet another example of the ―authoritarian‖ Nazarbayev centralizing power around

himself and his family. It was widely reported, quite incorrectly, that he has arranged for the Majilis

to vote him ―President for life.‖

Under the Constitution of the Republic of Kazakhstan, the maximum number of presidential

terms to which an individual may be elected is two. This rule is the same in the United States.

President Nazarbayev is currently serving his second term. The Majilis‘ decision to grant Mr.

Nazarbayev the right to run for a third term of office did not grant him the presidency ―for life.‖ It

permitted him by law to stand for election a third time, and only if he so chose to.

Second, this vote was a unanimous decision by the elected Members of Parliament. It was not

an executive order from the President. Under the Constitution, President Nazarbayev – indeed, any

president – cannot refuse Parliament‘s unanimous decision under any circumstances, whether he

supports the proposal or not.

Third, the Majilis made their decision in the light of the unique set of circumstances facing the

country, granting a privilege -- certainly – but also imposing an onerous duty upon a single

individual whose role in the founding of the State of Kazakhstan has been pivotal. This is not an

example of an autocratic leader propping up his power. It is the behavior of an increasingly stable

and prosperous society seeking to bolster one of the main anchors upon which the security and

welfare of millions depend.

The key to understanding what the Majilis voted for lies in understanding Kazakhstan's quest

for stability. As any informed observer of events in the former Soviet Union will acknowledge, ill-

considered or overhasty experiments with democracy have unleashed forces that have been deeply

harmful. The result has been economic failure, inter-ethnic discord and, in some cases, a reversal of

the very freedoms that democratic reform was supposed to bring about.

Kazakhstan, with its vast territory and small but diverse population, has a once-in-a-lifetime

opportunity to build a viable and prosperous state. It cannot afford to play with experiments that will

not succeed.

For this reason, the Majilis' decision to grant President Nazarbayev the unique status of being

able to stand for election to a third term of office was sensible and pragmatic. In the short- to

medium- term, it is the best guarantee for the stability. The law does not mean that Mr. Nazarbayev

will be President for life, or that he may stand for an indeterminate number of times, or even that he

might stand unopposed.

Religious Freedom: Myth or Reality? In Kazakhstan, religious freedom is guaranteed by the

Constitution, promoted by President Nazarbayev, praised by the country‘s Chief Rabbi and recently

affirmed by the Constitutional Council‘s landmark decision that further safeguards this fundamental

right. Yet the Western media and human rights organizations occasionally report on small incidents

33

involving non-traditional religious groups in the country that have portrayed religious freedom as

controversial rather than a fundamental right. There is undeniable evidence that religious freedom is

a way of life in Kazakhstan. Kazakhstan‘s culture is multiethnic and tolerant; the state is secular and

neutral, converging in a way to insure that Kazakhstan, more than any country in Central Asia, is

respectful to any and all faiths. The Department of State‘s Human Rights report points to

Kazakhstan‘s Constitution and laws that ―provide for freedom of religion,‖ which guarantee this

right in Article 39. It states: ―Human rights and freedoms shall not be restricted in any way.‖ Article

14 prohibits ―discrimination on religious basis‖ and Article 19 insures that everyone has the ―right to

determine and indicate or not to indicate his/her ethnic, party and religious affiliation.‖

The Constitutional Council recently affirmed these rights by ruling that a proposed law that

would have limited the rights of certain individuals to practice their religion was declared to be

inconsistent with the country‘s Constitution that guarantees freedom of religion.

Although Kazakhstan is sixty percent Muslim, the Jewish community is exceptionally well

regarded, according to Chief Rabbi Yeshaya E. Cohen. In a statement before the Conference on

Human Rights and Religious Freedom, Rabbi Cohen reported, ―In Kazakhstan, every religion and

faith enjoys complete freedom of expression and government support and can well serve as an

authentic model to all countries with regard to preventing and eliminating anti-Semitism and

terrorism.‖

President Nazarbayev‘s personal commitment to respecting all faiths and insuring that

religious harmony is a way of life in Kazakhstan is evidenced by his hosting of the third triennial

Congress on World and Traditional Religions in July, 2009. It brought together hundreds of

religious leaders from around the world to promote religious tolerance, common ideals, and

interfaith dialogue.

During a visit to Kazakhstan in September 2001, Pope John Paul II stated: ―It is with great

affection that I kiss this land, which has given rise to a multi-ethnic state. Each guaranteed the same

rights and freedoms, the spirit of openness and cooperation is part of your tradition.‖

ANSWERING CRITICS. Despite Kazakhstan‘s impressive strides in transitioning to a

democratic society, criticisms by some non-government organizations unfairly portray Kazakhstan in

negative terms. While some of the criticism may be warranted, it should be viewed in the larger context

of Kazakhstan‘s commitment to and progress towards achieving a true democracy.

CRITICISM #1: Kazakhstan‘s 2011 election was not fairly conducted, nor was it transparent and

fully open to international observers.

RESPONSE: The improvements in electoral process were attested to by the majority of the 1,059

internatational observers. The head of the delegation of the Parliamentary Assembly of the Council of

Europe said, ―PACE has observed elections in Kazakhstan in the past and is pleased to state progress

from one election to another in this country. The delegation is united in its view that despite certain

imperfections that invariably mark all elections in any country, the outcome of this vote truly reflects the

will of Kazakhstan‘s electorate.‖

The ODIHR/OSCE observer mission, which usually gives a cautious assessment of the elections in

Kazakhstan, in its statement acknowledged the improvements as compared to previous elections. It

stated that ―compared to the last presidential elections, the media provided more equality in covering

candidates in the news programmes.‖ At the same time, it came up with a number of criticisms and

recommendations on further improvements needed in the electoral process. Kazakh authorities have

committed to continue working with ODIHR/OSCE on its recommendations in a cooperative manner.

ODIHR‘s focus on irregularities caught the attention of the many. It is the Kazakh view that

ODIHR mission of observers did not grasp the free and transparent atmosphere in which elections were

held, as well as the significant progress in Kazakhstan in this direction. The ODIHR estimations did not

34

reflect the fact that the authorities and society exercised political will and aspire to attain international

standards.

CRTICISM #2: The media in Kazakhstan, with a few exceptions, is owned or controlled by the

state and those close to the President. The few independent news publications and broadcast outlets that

do exist are often subject to intimidation by state authorities.

RESPONSE: While press freedoms are limited in comparison to Western standards, Kazakhstan

has proven to be far more progressive than other countries in Central Asia. Unlike some neighboring

countries, where government control has tightened over the media, Kazakhstan is steadily embracing

reforms to bring media more into conformity with OSCE and international standards. This is a

remarkable achievement for a country that once had only a few media outlets, purely government

controlled. It now gives access to more than 2,000 local media resources, about 90 percent of which are

non-governmental.

In January, 2009, the Kazakh Parliament adopted a reform package that places limits on the

prosecution in libel cases, curtails the ability of arbitrary arrest and detention and extends the right of

media to appeal to the courts. The new media law was drafted by Kazakh NGOs, the Congress of

Journalists and the OSCE Representative for Media Freedom.

CRITICISM #3: Kazakhstan is essentially a one party state, under authoritarian rule with no viable

opposition party and little opportunity for citizens to challenge the incumbent party and vote out of

office the current leadership.

RESPONSE: It is undeniable that President Nazarbayev received over 90 percent of the vote and

his Nur Otan Party captured 88 percent without a single parliamentary seat going to the opposition in an

election generally considered to be fair and open. It is difficult for the critics to accept that such

staggering percentages are due to President Nazarbayev‘s personal popularity and the fact that opposing

parties do not have effective campaigns. Yet it is not unusual for a U.S. Congressman to receive ninety

percent of the vote in their contested races.

The Western media has coined the phrase ―President for life‖ to describe a constitutional

amendment allowing a third term for Nursultan Nazarbayev, yet the U. S. Constitution allowed four

terms for President Roosevelt. Recently, New York Mayor Michael Bloomberg pushed through a change

in the city‘s charter to allow him to run for a third term.

There is little question that President Nazarbayev is portrayed as an authoritative figure, but in

Kazakhstan he is viewed as a father-like leader who is moving the country out of its Soviet past toward

independence and prosperity. He exemplifies the qualities of Singapore‘s Lee Kuan Yew, whose 30 year

reign as Prime Minister transformed a backward Third World Country into a modern, prosperous

and stable Asian giant and who remains one of the most influential figures in the world.

CRITICISM #4: Reports in news publications have raised questions about Kazakhstan‘s

treatment of certain ―nontraditional‖ religious groups, notably the Jehovah‘s Witnesses, Hare-

Krishna‘s and the Unification Church. In most cases, the reported incidents have involved regional

or local authorities and often the issues concerned state laws that require registration of such groups

or legal proceedings over property rights.

RESPONSE:Jehovah‘s Witnesses. Kazakhstan enjoys friendly relations with Jehovah‘s

Witnesses (JW). Kazakhstan‘s Ambassador to the U.S. has met with the leaders of JW: Mr. Philip

Brumley, General Counsel to the Governing Body of Jehovah‘s Witnesses, and Mr. Gregory Olds,

Associate General Counsel, and had an extensive and friendly exchange. JW have been freely and

happily operating in our country for more than a century and have been successfully resolving any

difficulties they may have had through dialogue. Recently, some of the 16,000 JW followers in

Kazakhstan had legal difficulties over registration matters that are now resolved. JW‘s leaders are

publicly recognizing that Kazakhstan‘s Government ―stands up for religious freedom.‖

35

Hare Krishna. The situation around Hare Krishna Community in the Karasay District is a

property dispute. Legal actions against some members of the local Hare Krishna Community were

initiated to stop their violations of Kazakhstan legislation regarding improper use of property,

falsification of property titles, violation of building, design and sanitary norms, as well as fire safety.

Despite the obvious violations and the fact that the local HK Community has no legal basis for

claiming the property, Kazakhstan‘s authorities are doing their best to help the HK Community and

have offered local HK Community members the choice of five free of charge land plots to move

their houses. These were rejected as inadequate. The essence of the dispute is what constitutes

proper compensation and/or an alternative site to be provided to that HK community. Local

authorities remain open to negotiation. There are about 10 other Krishna Consciousness community

groups legally active in Astana and six other regions of Kazakhstan. These law-abiding communities

are actively participating in strengthening inter-religious dialogue and have never had any problems

with Kazakh authorities.

Evangelical Christian-Baptists. Leaders of 300 Evangelical Christian-Baptists Churches have

registered their communities and freely operate in Kazakhstan. There are normal relations between

them and Kazakhstan‘s Government. However, some Evangelical Christian-Baptists leaders are

persistently evading any form of legally prescribed registration at all levels citing religious creed. It

is a shame as the law requires a very simple form of notification (name, address, contact details

etc.), which is not burdensome. Having faced administrative fines imposed by local courts for

violating Kazakhstan‘s legislation, they twisted the situation by presenting law enforcement actions

as ―vivid examples of religious persecution‖ in Kazakhstan.

CRITICISM #5: The imprisonment of Mr. Yevgeni Zhovtis, a prominent Kazakh human rights

activist, inspired all sorts of allegations among international human rights activists.

RESPONSE: On September 3, 2009, Mr. Yevgeni Zhovtis (Director of the Kazakhstan

International Bureau for Human Rights and Rule of Law) was found guilty of the car incident that

resulted in the death of Mr. Kanat Moldybayev. The Balkhash District Court (Almaty Region)

sentenced Mr. Zhovtis to four years of imprisonment in a special minimum security settlement.

The tragic accident happened the night of July 30, 2009, when Mr. Zhovtis was returning from

fishing. While driving an SUV towards Almaty, Mr. Zhovtis was blinded by the high beam

headlamps of the cars coming in the opposite direction, which led him to temporarily lose full visual

control of the road ahead of him. The Court ruled that Mr. Zhovtis did not take the necessary

precautions by stopping or slowing down his vehicle, as the traffic rules mandate in these types of

situations. Mr. Zhovtis continued to drive at the speed of 80-90 km/h. The failure to take this

precaution resulted in the death of a 35-year-old pedestrian, Mr. Kanat Moldybayev, who died

immediately at the scene of the accident due to multiple injuries.

The Kazakh legal system is based on the continental legal tradition, which puts absolute

liability on the person that causes the death or severe injury of a human being. In this particular case,

the person who caused the death of Mr. Moldybayev was Mr. Zhovtis. In addition, the Court found

Mr. Zhovtis guilty of not taking necessary precautions that would have made it possible to avoid the

accident. Mr. Zhovtis‘s efforts to reconcile with the relatives of the victim did not qualify as a

circumstance mitigating his guilt since he had pleaded innocent. Besides, only some of the late Mr.

Moldybayev‘s relatives agreed to reconcile; others strongly insisted on pursuing the criminal case

against Mr. Zhovtis. Still, the Court took into account Mr. Zhovtis‘s good character, both

professional and personal, provided by his friends and colleagues, and assigned him to a minimum

security facility instead of regular detention facilities. It was also fully recognized that Mr. Zhovtis

was not drunk, did not violate the speed limit, did not attempt to leave the scene of accident and

tried to help the victim by calling the ambulance and police.

36

The Statistics: From January-July 2009, there were 179 similar cases throughout Kazakhstan.

Among them, 136 cases, or 76 percent, resulted in prison sentences (the rest of the cases did not

involve loss of life or severe injuries): 4 persons got 1 year, 50 persons got 1-3 years, 50 persons got

3-5 years, 32 persons got 5-10 years.

The Controversy: Unfortunately, this tragedy has become a subject of controversy and gross

misrepresentation of facts. Given the nature of Mr. Zhovtis‘s activities and his high international

status, immediately after the accident, various speculations circulated that the verdict was politically

motivated. There were attempts to incriminate the Government by focusing on a few procedural

irregularities. Behind this rhetoric and the efforts to politicize the case, the fact is that a person died

as a result of Mr. Zhovtis‘s actions.

Director of the Kazakhstan International Bureau for Human Rights and Rule of Law Mr.

Yevgeni Zhovtis is a prominent human rights activist who worked closely with the Government of

Kazakhstan to improve national legislation. His expertise, proactive involvement and constructive

criticism were valuable to the efforts of reforming Kazakhstan‘s legislation and legal system. Mr.

Zhovtis is widely respected both by his colleagues in the NGO community and his partners in the

Government of Kazakhstan.

The Court found Mr. Zhovtis guilty in the death of Mr. Kanat Moldybayev. The Court

proceedings were as transparent, open and unbiased as it was possible. Many supporters of Mr.

Zhovtis, including the Embassies of the United States and some other countries, received unimpeded

access to the Court hearings. There was no government interference in the Court‘s deliberations.

Any allegations to the contrary are baseless and false. The fact that Kazakhstan‘s judicial system is

still maturing does not present any grounds for questioning its credibility.

37

KAZAKHSTAN FOCUSES ON

ECONOMIC DEVELOMENT AND SOICIAL SECURITY

PRESIDENT NAZARBAYEV OUTLINES MAJOR DEVELOPMENT PRIORITIES IN HIS

STATE OF THE REPUBLIC ADDRESS

On 28 January 2011, President Nazarbayev delivered his message to the people of Kazakhstan at a

joint session of the Kazakh Parliament.

Here is the summary of his address:

The decision on the referendum in Kazakhstan will be made after the Constitutional Court

takes brings out its conclusion;

The President is willing to work as long as his health and strength permit and the nation

desires his leadership;

About 2 thousand inmates will be freed in 2011 as part of humanization of the criminal legal

framework;

GDP per capita exceeded USD 9 thousand by 2011;

The Kazakh leader asked the Government to draft a Energy Efficiency and Regional

Development Plan;

Kazakhstan should have strong businesses;

By 2020, GDP growth will be 30% or more, the population will increase up to 18 million;

By 2014, Kazakhstan plans to materialize 294 investment projects;

By 2020, Kazakhstan will shift to 12-year school education model;

From 2011, Kazakhstan abandon its current scientists training model;

Customs union is a very pragmatic project aimed at ensuring regional economic prosperity

By 2020, 95% of all Kazakh citizens will be able speak Kazakh;

38

From July 2011, scholarships and salaries of public service officers will grow up by

30%;

The President asked the Government to prepare coherent measure to enhance agribusiness;

By 2020, all Kazakhstan children will be covered by pre-school training;

Kazakhstan will adopt a national children’s and women’s medical programs;

By 2015, the percentage of real estate requiring major overhaul should decrease by 22%;

The Head of State takes note of the presence of “strong corruption lobby” among

government officials

President Nazarbayev delivers 2011 State-of-the Nation Address Kazakhstan‘s foreign policy will ―meet hopes and expectations of all our partners,‖ President

Nursultan Nazarbayev said in his state-of-the-nation address on January 28 as he outlined major

priorities for the country‘s development for both 2011 and the next decade.

―Kazakhstan will remain committed to swift and efficient development of the Customs Union

between Russia, Kazakhstan and Belarus,‖ the President told the members of Parliament, the

government and the people of the country during his one-hour address televised nationally. He went

on to note that in the first 10 months of the CU operation last year the country‘s trade with the other

two partners jumped 38 percent.

―We offer our European partners to jointly develop and accept, in a multilateral format, a

Kazakhstan-EU Energy Charter up to the year 2020,‖ Nazarbayev said. ―This would ensure the

guarantee of stability of energy supplies to the European markets, and the development of pipeline

systems.‖

Turning to other foreign policy issues, Nazarbayev announced his intention to convene this

year a special donor conference on Afghanistan. Last year, Kazakhstan launched a special 50-

million-dollar educational programme to train 1,000 Afghans in Kazakhstan and signed an

agreement, as yet to be ratified by the Parliament, to send officers to ISAF headquarters in Kabul.

The Kazakh President also reaffirmed his commitment to pursue a Stability Pact for the

Caspian Region, which, in his view, would be a document leading to better cooperation and mutual

understanding among the five littoral states.

Taking up the subject of the Organization for Security and Cooperation in Europe (OSCE) and

Kazakhstan‘s chairmanship in it last year, the President said the country would continue to stay

involved, especially in efforts to resolve conflicts.

Another foreign policy priority for Kazakhstan would be the development of an inter-state

programme of assistance to neighbouring Kyrgyzstan which last year saw major upheavals and

violence. Kazakhstan, as both a close neighbour and a chair of the OSCE, helped stabilize the

situation there by sending 11 million dollars worth of assistance and coordinating various efforts

within the organization, including the dispatch of a group of police advisors.

Kazakhstan will also continue promoting its idea of reaching a Universal Declaration of a

Nuclear-Weapons Free World, first proposed by President Nazarbayev last year at the Global

Nuclear Security Summit in Washington, DC.

Later in 2011, Kazakhstan will assume the presidency in the council of foreign ministers of the

Organization of Islamic Conference. As part of its mission, Kazakhstan will continue to promote the

East-West dialogue and better understanding, President Nazarbayev said. Internationally there are

expectations Astana can indeed contribute to these efforts.

Tolerance was one of the major messages of Kazakhstan‘s OSCE chairmanship last year,

resulting in a stronger focus within the organization on problems related to intolerance based on

39

ethnic, religious, sexual or other grounds. Also last year, Kazakhstan aggressively promoted closer

ties between international organizations it chaired or initiated, such as the OSCE and the Conference

on Interaction and Confidence-building Measures in Asia (CICA), helping organize the first ever

CICA-OSCE forum in Istanbul in June 2010. Astana also invited OIC Secretary General

Ekmeleddin Ikhsanoglu to participate in and address numerous OSCE events, including its summit

in Astana last December.

One more important foreign policy priority for Kazakhstan is its current leadership in the

Shanghai Cooperation Organization (SCO) and the holding of the group‘s 10th

anniversary summit

in Astana in June. Kazakhstan was the original co-founder of the SCO and this organization, which

also groups China, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, will continue to be of great

importance for the country, President Nazarbayev said.

Referendum decision to be based on people‟s best interests Turning to the much discussed issue of a referendum to extend the President‘s term of office

up to 2020, Nursultan Nazarbayev said the people‘s initiative, now supported by more than five

million signatures or almost two thirds of the typically voting electorate, created a complicated

―political collision‖.

―I am sincerely grateful to all the people of Kazakhstan, as well as the initiators of this idea,‖

the President said.

―As you know, by my decree I declined the proposal of the Parliament to have a referendum,

as I was planning to stand for re-election in 2012,‖ he noted. ―The Parliament overruled my

objections and passed a law. I sent it to the Constitutional Council for review. Only after they make

a conclusion, the final decision [on whether or not have the referendum] will be made.‖

―In any case, I am very touched by such attitude from the people… I take it as a signal to

continue in my job, to continue doing my work,‖ Nazarbayev said.

―Whatever decision we will make… If my health and strengths allow me, if there is such

support from the people, I will continue doing my job,‖ the President said to a rousing applause

from the audience.

―For we have created this country almost from scratch, and I, your obedient servant, has led

this process. I can‘t say I am the founder, but I did lead this process, and this country is my creation,

our creation, which is precious for me and whose independence is precious for me and for us,‖ he

stressed.

―The decision will take into account the position of the Constitutional Council and the interests

of the people. We need to look not in front of our feet, but farther ahead. In any case, the will of the

people will be above all for me,‖ President Nazarbayev noted.

Economic growth top priority Speaking of Kazakhstan‘s economic development, the President said its record since

independence 19 years ago offers a great promise for the future.

―In December 1991, having chosen the strategic goals of sustainability and success, we moved

forward, creating new programmes of development for each new stage… We set ourselves

ambitious goals, and we achieved them,‖ Nazarbayev underscored.

In 1994, Kazakhstan‘s gross domestic product per capita was slightly above 700 dollars, while

today it reaches 9,000 dollars, an increase of 12 times.

―We had planned to reach such a level only by 2015,‖ the President proudly said. ―The

international experience shows that in their first 20 years of independence, no other country was able

to do that.‖

40

Last year, Kazakhstan‘s economy grew seven percent, overcoming the influence of the global

financial crisis which affected the country over the past couple of years. While the GDP grew 8.5

percent in 2007, the growth slowed to 3.2 percent in 2008, and then slowed even further to 1.1

percent in 2009. The economy never contracted, though, thanks to both massive state investments to

the tune of 14 percent of the GDP, and the recovery in the global commodity prices.

An even larger credit for that recovery, according to the President, should go to both prudent

policies and the Programme of Accelerated Industrial and Innovative Development (PAIID) for

2010-2014, launched last year.

Already, 152 new enterprises were launched, creating 24,000 new jobs. Kazakhstan‘s gold and

foreign currency reserves now stand at 60 billion dollars, more than before the crisis hit, while

Kazakhstan attracted 120 billion dollars in foreign direct investment overall since 1993.

―Before 2014, we plan to see through 294 investment projects worth 8.1 trillion tenge (KZT

147 = US$ 1),‖ Nazarbayev said adding that 161,000 new permanent jobs will be created and

207,000 new jobs will be available for the period of construction.

The PAIID‘s main result is the ―beginning of the structural changes in the economic

development thanks to the expansion in the real sector of the economy,‖ the President said as he

went on to outline the expectations for economic development up to 2020 according to a strategic

development plan offered last year.

The GDP should grow 30 percent, while the growth in processing industries should exceed

that in the extractive industries. The assets of the National Fund, set up in 2000, would reach 30

percent of the GDP. Investments, both domestic and foreign, should grow by 30 percent. Inflation

will be contained within five to eight percent. The share of small and medium-sized businesses in

the GDP should reach 40 percent of the GDP. The population should grow from the current 16

million to 18 million, and qualified specialists will constitute 40 percent of the workforce.

Unemployment will stay below five percent [Last year it fell to 5.6 percent]. The productivity in

agriculture will grow twice by 2014, and four times by 2020, as Kazakhstan will seek to become one

of the major exporters of meat, in addition to exporting wheat and flour. Along all of that

development, energy consumption of the economy should be reduced.

―I stand for the principle, ‗strong business means strong state‘,‖ the President noted as he

reaffirmed his commitment to further creating beneficial conditions for businesses. Already, last

year Kazakhstan was recognized by the World Bank as the country which improved conditions for

domestic businesses the most in one year. The World Bank also ranked Kazakhstan 59th

in the rating

of 183 countries in terms of the most beneficial business climate.

Elsewhere, 16 laws were adopted to reform the system of law enforcement and the protection

of human rights, while state bodies slashed their staff by 15 percent.

―Kazakhstan will continue fighting corruption without compromises,‖ Nazarbayev

underscored as he noted that the country jumped 45 points in Transparency International‘s

Corruption Perception Index in three years.

Education, healthcare, languages and tolerance top social priorities Lifelong learning should be the motto for all Kazakhs, Nazarbayev said, adding that

Kazakhstan will continue to create conditions for the people to pursue this goal.

By 2020, the country should switch from an 11-year school curriculum to a 12-year one, and,

for that, 400 new schools will be built by 2015.

The Nazarbayev University, as well as the intellectual schools built around the country now,

will also be instrumental in further educational reforms. By 2020, at least two universities in

Kazakhstan should join the rating of the best universities in the world.

41

What is more, according to Nazarbayev, the people in Kazakhstan should have ―an opportunity

to save for education of their children, with interest bonuses added from the government.‖

Additionally, a National Council on Vocational Personnel Training will be set up, while free

vocational training is to be ensured.

Budget financing for healthcare now stands at 3.2 percent of the GDP. The continued attention

to this sphere had led to a 25 percent growth in birth rate, an 11 percent decrease in death rate, and

the speeding of the population growth by 1.7 times.

By 2013, the Unified National Healthcare System will be fully introduced, with the ultimate

goal of extending the average longevity to 72 years by 2020.

The Government will also heavily promote a healthy lifestyle, and the new facilities,

specifically built for the Asian Winter Games from January 30

through February 6, 2010, will have to be fully used afterwards,

the President underscored.

Another top priority is the development of languages.

―Peace and harmony are our common achievement,‖ the

President underscored, as he outlined plans to promote the study

of the Kazakh, the Russian and the English languages.

Already, more than 60 percent of the population speaks

Kazakh, the state language which 20 years ago was almost on

the brink of extinction due to suppression from the Soviet

authorities. Plans are afoot to have 80 percent of the ethnically

diverse population speak Kazakh by 2017, and 95 percent by

2020.

―In ten years, 100 percent of school graduates will speak

the state language,‖ the President said.

The government would also promote the study of the Russian and other languages of more

than 130 ethnic groups in the nation. English, though, will be a continued priority, and ―by 2020 20

percent of the population should speak English freely‖, the head of state said.

Among other priorities listed by the President were housing, water supplies and providing

employment. ―By May 2011, I instruct the Government to develop a new employment programme,‖

Nazarbayev said, adding that free vocational training and microcredits to support small

entrepreneurs, especially, in the rural communities, should be a top goal.

―This year, we are also raising pensions, scholarships and budget wages by 30 percent. For two

years, we have been raising them by 25 percent each. As planned, by 2012, average pensions,

salaries and scholarships will grow twice compared to 2008. We had promised that, and we are

delivering on that promise,‖ Nazarbayev said.

20th

anniversary to be a major celebration The year of 2011 will be a major opportunity to celebrate the 20

th anniversary of Kazakhstan‘s

independence, achieved on December 16, 1991.

―Throughout the years of independence fundamental values of the Kazakhstan Way have been

crystallized: Freedom, Unity, Stability and Prosperity,‖ the President stressed.

To arrange proper commemoration, a state commission has now been set up and a nationwide

plan approved.

42

Celebrating the 20th

anniversary is a ―common affair‖ for the whole nation, Nazarbayev said as

he asked the Government to bring together the efforts of investors, business community and all the

people.

―The motto of our jubilee will be ‗20 Years of Peace and Creation‘,‖ the President said.

Full text of the address is accessible at http://www.kazakhembus.com/uploads/Nation2011.pdf .

43

KAZAKHSTAN – ECONOMIC OVERVIEW

GENERAL BACKGROUND

After ten years of remarkable economic growth, Kazakhstan was able to withstand the shock

of the 2007-2009 global liquidity crisis. Appropriate measures by the Government helped

Kazakhstan overcome the deepest financial crisis in its history. The economy did not suffer from

rapid deposit outflows, national currency fluctuations, economic recession or depletion of

international reserves.

9.3 9.6 9.7 10.7

8.9

3.3

1.2

7

4

2,0682,870

3,771

5,290

6,772

8,514

6780

8326.4

7852

2003 2004 2005 2006 2007 2008 2009 2010 2011П

GDP, % GDP per capita, USD

The main priorities of the Government‘s

strategic economic policy in the

upcoming two years are: financial

sector stabilization, support for small

and medium enterprises, development

of agribusiness and real estate, further

diversification of the economy and

support for socially vulnerable layers of

society.

In the meantime, Kazakhstan's fiscal position is strengthening due to restoration of budget

discipline. During the crisis an increased budgetary deficit was financed mostly by exceptional uses

of the National (Oil) Fund resources, both on and off-budget. Starting in the beginning of 2010, the

Government took actions aimed at increasing efficiency in public spending and better budgetary

management at both national and local levels. According to the new Fiscal Code that was adopted in

2008, the three-year budget has been introduced for better harmonization of economic and budget

planning.

-215.3

-333.2

-492.7 -527

-696

-582

-382

-1.8-2.1

-3.1-3.1

-2.9

-2.5

-1.5

-4

-3

-2

-1

0

(750)

(650)

(550)

(450)

(350)

(250)

(150)

(50)2007 2008 2009 2010 2011 2012 2013

Budget deficit, bln. tenge % of GDP

As per the new state budget for 2011-2013

that has been approved by the Parliament,

the budget of Kazakhstan in 2011 is

projected to have a moderate deficit, (-)696

bln. tenge or (-)2.9% of GDP. In 2012 and

2013, the budget deficit is forecaste to be (-

)582 bln. tenge or (-)2.5 of GDP and (-)382

bln. tenge or (-)1.5 of GDP respectively.

Revenues in the state budget are projected at the level of 4.9 trln. tenge in 2011, 5.2 trln.

tenge in 2012 and 5.6 trln. tenge in 2013. Expenditures are expected at the level of 5.7 trln. tenge in

2011, 5.7 trln. tenge in 2012 and 6.0 tlrn. tenge in 2013 accordingly. Exchange rate: 150 tenge = $1.

Kazakhstan has been successful in reducing the ratio of government debt to GDP in recent

years. In 2001, total governmental debt was $3.8 bln, which amounted to 19.7% of GDP and in 2010

total government and government guaranteed debt equalled $4.5 bln, which amounted to 3.1% of

GDP.

Table 1. GDP growth, %, and GDP per capita Sources: Ministry of Economic Development and Trade

Table 2. Budget deficit in tenge and in % of GDP (2007-2012) Sources: Ministry of Finance

44

Starting in 2009, government debt

increased 21% since after several years of

active external borrowing by private

banks and their aggressive lending

practices, which contributed to an overall

liquidity and credit crunch. The

government stepped in to bail-out the

financial system. Total external debt

(public and private) increased

dramatically from $15.2 bln (2001) to

$112.8 bln (2010), which is equivalent to

87% of GDP.

The official inflation rate based on the consumer price index (CPI) in 2009-2010 increased

slightly. As of February 2011, the year-to-date inflation rate rose by 1.7% up from 1.4% in February

2009. The year-on-year inflation rate rose by 8.1% up from 7.3% in February 2010. Food prices and

non-food items in the CPI were up by 2.0% yoy and 0.2% yoy respectively, whereas prices of

services rose by 2.2% yoy.

The consolidated balance of payments in 2010 was positive due to overall improvement of

trade and financial accounts. According to the preliminary estimate of balance of payments by

National Bank of Kazakhstan, the current account surplus in 2010 was $4.9 bln. (in comparison with

deficit (-)$4.2 bln. in 2009). Trade balance was positive, $29.0 bln. up from $15.2 bln. in 2009, with

exports on a secular rising trend, $59.7 bln. up from $43.9 bln., and slightly increased imports, (-

)$30.7 bln. up from (-)$28.8 bln. The capital and financial account (including errors and omissions)

was negative, (-)$0.2 bln. down from $6.7 bln. in 2009, with substantially decreased net direct

investments, $1.2 bln. down from $10.5 bln., and increased net portfolio investments, $8.3 bln. up

from $2.9 bln.

As a result, the external liquidity position of Kazakhstan has strengthened. Total

international reserves (including assets of the National Fund) as of January 1, 2011, amounted to

$62.6 bln., which is 23% more than $50.9 bln. as of January 1, 2010. Total foreign-currency and

gold reserves made up to $31.2 bln., which is 18.6% more than $26.3 bln as of January 1, 2010.

3.5 4.98.1

14.7

22.3

27.5

23.4

31.4

11.5 11.414.2

18.121.3 20.6

22.324.2

0

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008 2009 2010

bln. $ % of GDP

Assets of the National Fund made

up to $31.4 bln., which is 27.6%

more than $24.6 bln. as of January

1, 2010.

Thus, despite the fact that the

Government spent about $20 bln

(14% GDP) for anti-crisis measures,

the foreign-currency and gold

reserves of the country as well as

the funds of the National Fund were

restored and increased by several

billion dollars.

Table 4. Assets of the National Fund, in $ and % of GDP Sources: Ministry of Finance

Table 3. Government and private debt in bln $ (2001-2009) Sources: National Bank

45

KEY ECONOMIC INDICATORS

Table 1. Macroeconomic indicators

Sources: National Bank, Ministry of Economic Development and Trade

2003 2004 2005 2006 2007 2008 2009 2010

GDP growth (%) 9,3 9,6 9,7 10,7 8,9 3,3 1,2 7,0

GDP per capita ($) 2068,0 2874,0 3771,0 5292,0 6772,0 8514,0 6732,1 8326,2

Current account (% GDP) (0,9) (0,8) (1,8) (2,5) (7,9) (4,7) (3,2) 3.8

Trade balance (% GDP) 11,9 15,7 18,1 18,1 14,4 25,1 14,1 22,3

Exports (%) 32,0 55,7 37,4 37,0 24,7 48,8 (39) 45,9

Gold and foreign-currency

reserves ($ bln.)

5,0 9,3 7,1 19,1 17,6 19,9 23,2 31.2

Foreign direct investments

(% GDP)

7,2 12,6 3,7 8,2 7,6 11,1 8,9 7.5

Sovereign debt (% GDP) 15,0 11,4 8,1 6,7 5,9 6,4 13,0 2.8

National Fund, including

assets in national currency

(% GDP)

11,5 11,4 14,2 18,1 20,0 20,5 27,9 24,2

Table 2. Economic Structure (2010)

Source: Agency of Statistics of Kazakhstan

Origins of gross

domestic product

% of

GDP

Components of gross

domestic product

% of

GDP

Agriculture 4.4 Private consumption 47.5

Industry 32.3 Government consumption 12.9

Services 63.3 Gross fixed investment 29.6

Exports of goods & services 43.6

Total exports $ 59.2 bln.

Exports growth 37.1%

Imports of goods & services

Total imports

Imports growth

37.3

$29.8 bln.

4.8%

Structure of exports % Structure of imports %

Mineral products

including oil and gas

74.9 Machinery, equipment,

transport vehicles

43.2

46

Metals and metal

products

13.3 Mineral products

including oil and gas

10.9

Animal and plant products 3.4 Metals and metal products 11.3

Chemicals and chemical

products

5.1 Chemicals and chemical

products

14.3

Machinery, equipment, transport

vehicles

0.8 Animal and plant products 9.7

Main destinations

of exports

% of

total

Main origins

of imports

% of

total

China 17.1 Russia 37.0

Italy 16.2 China 13.3

Russia 8.1 Germany 6.1

France 7.5 Italy 5.3

Netherlands 7.0 Ukraine 4.6

***

OUTCOMES OF THE GOVERNMENT‟S ANTI-CRISIS PACKAGE

In his Address to the Nation on March 6, 2009, "Through Crisis to Renovation and

Development," President Nazarbayev pledged to the Kazakhstan people that the state had the

resources it needed to overcome the world financial crisis. "You have to be confident we are not

simply ready to face these challenges. We will overcome tough calls and avoid recession as a strong

and prosperous state," the President said.

The anti-crisis efforts cost the country more than KZT 3 trillion (USD 20 bln). The

Government of Kazakhstan, the National Bank and Agency for Regulation and Supervision of

Financial Market and Financial Institutions concentrated their activities on stabilization of financial

sector, settlement of real estate market problems, support of small and medium businesses,

development of agriculture, encouragement of innovation and the maintenance of industrial and

infrastructure projects.

The Government managed to prevent an economic recession in 2009 and provided stable

growth in 2010.

The GDP growth in 2009 was 1.2%, while in 2010 it was 7%. Industrial production

increased by 10% in 2010.

Food market stability was maintained and inflation was kept in the planned corridor of 6-8%.

The unemployment rate fell to 5.5% in 2010 compared to 6.3% in 2009.

In 2010, the measures stabilized the financial sector. The banks' foreign debt totaling USD

46 bln as of mid 2007 decreased by USD 29 bln. in 2010. The total gold and foreign exchange

reserves of the National bank and National Fund rose by USD 17 bln to USD 60 bln. (early in 2009

it made USD 43 bln)

The situation in the banking sector improved due to an inflow of public funds and

government actions. Fulfillment of this part rescue plan ensured further growth of finance industry

stability.

47

Anti-crisis efforts to support small and medium business were especially effective. More

than 10,000 small and medium enterprises got financial support from the state. The number of the

ongoing small and medium enterprises increased by 5,3% and 1.3% percent in 2009 and 2010

respectively.

About 60 investment projects worth KZT 56.3 bln were approved for further financing. 27

investment projects worth KZT 30.1 bln were implemented.

KZT 342.7 bln were allocated for repair works and modernization of transport infrastructure

facilities. 392 000 new jobs were created.

48

KAZAKHSTAN‟S ENERGY SECTOR: GLOBAL IMPACT

Energy Overview

Minister of Industry and New Technologies (for nuclear energy, alternatives and

renewable, energy efficiency and electric power): Deputy Prime-Minister – Minister;

Minister of Oil and Gas: Mr. Sayat Mynbayev

President, KazMunayGas (National Oil & Gas Company): Mr. Kairgeldy Kabyldin

Other organisations: KAZENERGY Association; Kazakhstan Electricity Grid Operating

Company (KEGOC); Kazatomprom (National Atomic Company)

Major Oil and Gas Fields: Tengiz (oil), Karachaganak (natural gas and condensate),

Kashagan (off-shore, oil), Uzen, Kumkol, Korolev, Tenge, Uritau (oil, natural gas),

Zhanazhol

Major Oil Ports: Atyrau, Aqtau, Bautino and Kuryk on the Caspian Sea

Oil Export Pipelines: Caspian Pipeline Consortium (CPC) – Tengiz-Novorossiisk (Russia);

Uzen-Atyrau-Samara (Russia); Kenkyak-Orsk (Russia), Kenkyak-Atyrau (Kazakhstan),

Atasu-Alashankou (China)

Major Oil Refineries (crude oil refining capacity): Pavlodar (162,666 bbl/d); Atyrau

(104,427 bbl/d); Shymkent (160,000 bbl/d)

Major Power Plants (capacity): Ekibastuz no. 1 (4000 megawatts, MW), Yermak (2400

MW), Zhambyl (1230 MW)

Current Oil Reserves: 32.5 billion barrels (twice as much as the North Sea)

Projected Oil Reserves: 100-110 billion barrels by 2015 (would be in top 5 of the world)

Oil Production (2010): 79.5 million tonnes

Oil Consumption (2010): 13.7 million tonnes

Net Oil Exports (2010): 71.2 million tonnes

Crude Oil Refining Capacity: 14.5 million tonnes (17.5 million tones by 2015)

Current Gas Reserves: 3 trillion cubic metres

Projected Gas Reserves: 5 trillion cubic metres by 2015

Natural and Crude Gas Production (2010): 37.4 billion cubic metres

Natural Gas Consumption (2010): 9.0 billion cubic metres

Natural Gas Export (2010): 9.1 billion cubic metres

International Transit of Gas (2010): 82.1 billion cubic metres

Coal Reserves 35.8 billion tons (or 3.6% of the world reserves)

Coal Production (2010): 110.8 million tons

Coal Consumption (2010): 61.2 million tons

Coal Export (2010): 27.8 million tons

Electric Generation Capacity: about 19.5 gig watts (GW)

Electricity Generation (2010): 82.3 billion kilowatt-hours (kWh)

Electricity Consumption (2010): 83.8 billion kilowatt-hours (kWh)

Uranium Reserves: 1.5 million tonnes (or 20% of the world reserves)

Uranium Production (2010): 17,803 tonnes

Kazakhstan is rich in oil and minerals. Industry analysts believe that a planned increase in oil

production and the development of new oil fields will enable Kazakhstan to produce as much as 3

million barrels (477,000 tons) per day by 2015, lifting the country into the ranks of the world's top 5

oil-producing nations. Major oil and gas fields and their recoverable oil reserves are Tengiz with 7

49

billion barrels (1.1 bln. tons); Karachaganak with 8 billion barrels and 1.35 trillion mі of natural gas;

and Kashagan with 7 to 9 billion barrels (936 mln. to 1.2 bln. tons).

One of the country‘s top priorities in the extractive sector is the efficient development of its

Caspian off-shore energy resources. Recent developments in this area give hope that further

development of North Caspian oil and gas fields will start in the not-to-distant future.

Originally, the status of the Caspian Sea was regulated by the bilateral treaties of 1921 and

1940, made between the former Soviet Union and Iran. With the break-up of the Soviet Union,

offshore territorial rights have generally become more complex. In 2002, Kazakhstan signed bilateral

agreements with Russia and Azerbaijan on delimitation of the Northern Caspian seabed and the joint

development of the Khvalynskoe, Tsentralnoe and Kurmangazy off-shore oilfields with Russia.

In 2003, Kazakhstan adopted a State Programme of development of the Kazakhstan sector of

the Caspian Sea, the main target of which is to boost environmentally safe oil and gas production to

generate revenues to help diversification and modernization of the economy. In 2006, Phase II of the

Strategy was commenced.

With the launch of the State Program of Accelerated Industrial-Innovative Development for

2010-2014, Kazakhstan‘s O&G sector is entering a more advanced value-added phase. The

following multimillion pioneer projects have laid the foundation for overall diversification of the

country‘s O&G sector and development of relevant infrastructure:

$6.3 bln. Construction of Integrated Gas Chemical Complex in Atyrau Region (Western

Kazakhstan) - 2015

$1130 mln. Construction of Aromatic Hydrocarbons Production Complex – 2013

$290 mln. Construction of Road Bitumen Plant based on existing Aktay Plastic Plant - 2012

Modernization and Technological Upgrade of Existing Refineries (Atyrau, Pavlodar and

Shymkent)

Kazakhstan has an abundant supply of accessible mineral and fossil fuel resources. The

country has some 3% of the world‘s raw materials and natural resource base of over $300,000 per

capita (among the highest in the world, twice the level of Russia, higher than Australia), 4% of the

global iron reserves, 8% of the world‘s total zinc reserves and 4% of the world‘s total chrome

reserves accounting 15% of global production. According to estimates, Kazakhstan has the second

largest lead reserves, the third largest manganese reserves, the fifth largest copper reserves, and

ranks in the top ten for coal and gold.

The demand in the world for quality uranium fuels increases year by year. Forty new power

generating units are being constructed in fifteen countries of the world. Kazakhstan has been an

important source of uranium for more than fifty years. In 2009, it became the world's leading

uranium producer, with almost 28% of world production.

Kazakhstan has the second largest uranium reserves. Total resources and reserves of uranium

are over 1.5 million tonnes, over 1.1 million tonnes of which can be mined by the in-site leaching

method. Some 50 uranium deposits are known, in six uranium provinces. Between 2001 – 2010,

uranium production in Kazakhstan rose from 2000 to over 17,800 tonnes per year, and further mine

development is underway with a view to reaching a production rate of 30,000 tonnes/year by 2018.

State owned National Atomic Company Kazatomprom is the sole organization for uranium mining,

reprocessing, export & import operations in Kazakhstan (President – Mr. Vladimir Shkolnik).

Having abundant natural energy resources, the Government and the country‘s energy sector

keep an attentive eye on global energy trends. In 2006, Kazakhstan produced its first wheat-based

bioethanol and this private sector programme is expanding further. There are also plans to set up

wind farms in the mountainous region of Almaty. The law on using renewable energy has already

50

come into force. Kazakhstan has numerous opportunities for cooperation with the U.S. in this area

and welcomes participation of the most advanced companies in alternative energy projects. At the

7th

Annual Kazakhstan-US Energy Partnership Meetings in Washington, D.C., in November, 2010,

Minister of Oil and Gas Sauat Mynbayev and U.S. Deputy Secretary of Energy Daniel Poneman

agreed to work together to address environmental concerns. Energy transportation and infrastructure

are key elements of a varied energy policy. The EU wants to cooperate with Kazakhstan in this area,

particularly on trans-continental gas and oil transportation issues. The country's oil and gas reserves

and its pivotal location make it of strategic importance to the U.S. and its western allies in terms of

providing global energy security.

***

Hydrocarbons

The proven, large reserves of oil and gas (about 3% and 1% respectively of the world‘s total)

and significant forecast reserves (13-18 billion tonnes of standard fuel) in Kazakhstan, make

investing in the fuel and energy sector a priority. Oil reserves per capita in Kazakhstan are 5 times as

high as in Russia and higher than in Iran

Hydrocarbons are being developed at 241 fields. As of December 31, 2010, the number of

hydrocarbon subsoil use contracts is 206. A total of 142 companies are operating in the sector: 20

joint ventures, 48 foreign companies and 74 local companies. As of December 31, 2010, total

number of hydrocarbon subsoil use contracts amounts to 206.

The limit of O&G production has not yet been reached. With the current production of 79.7

mln tons, the country will extract up to 85.0 million tonnes of oil by 2014 and about 120-130 million

tonnes of oil by 2015.

Kazakhstan occupies the eighth place in terms of proven oil reserves in the world and second

place in the CIS. The proven reserves will ensure extraction for 50 years for oil and 75 years for gas,

which is in line with the world average figure for oil-extracting countries. The future development

of the domestic oil sector mainly depends on developing the Kazakh sector of the Caspian Sea,

where the forecast reserves are quite promising.

The Northern Caspian Project alone is expected to attract more than USD 136 bln.

Oil and Caspian off-shore development strategy and pipelines policy

Some estimates say that the offshore Kashagan field alone may contain up to 50 billion

barrels of oil. Kazakhstan‘s vast natural resources are projected to provide 2-3% of the world‘s

expected oil demand within the next decade.

By 2002, most O&G fields under development had reached peak levels of production.

Further growth of ashore production was linked to intensified development of such oilfields

as Tengiz and Karachaganak. At the same time, research has shown that major gains in

explored reserves and in hydrocarbons production are

expected to take place in the Caspian aquatic area. It

normally takes 8-10 years to get to the commercial

production stage. The main targets of the State-run

Program of Development of the Kazakhstan‘s Sector of the

Caspian Sea include: gains in explored hydrocarbons

resources and bringing of production to a stable high level;

development of multimodal system of hydrocarbons

transportation;

“Being a dynamically

developing exporter of energy

resources, whose role will

continue to grow, Kazakhstan

is fully aware of its

responsibility for

hydrocarbon deliveries to the

world market”

Marat Tazhin

Former Minister of Foreign

Affairs of Kazakhstan

51

reprofiling and modernization of domestic machine-building enterprises;

development of the maritime fleet and sea ports;

build-up of the local engineering capabilities; training of domestic specialists;

enforcement of health protection and environment protection measures;

development of petrochemistry enterprises.

The Government will be in charge of defining blocks to be offered for tenders and of

defining the order and conditions of setting them forth for tenders.

At the present time, there are about 23 undistributed blocks, exploration of some of them is

planned to be financed out of the state budget. To define the most suitable subsoil users for both

exploration and development, the plan is to offer for tenders at least 3 blocks per annum. At the

same time, there will be blocks offered for additional exploration.

The Kazakh Government‘s commitment in cooperation with partners from abroad is to

respect contracts signed with foreign companies but the contracts must be honoured by both sides.

According to preliminary estimates, the Program implementation will allow bringing

production at maritime oilfields to 100 million tons per annum by 2015 and maintaining this level

for 25-30 years.

Kashagan

Kashagan is a momentous project not only for Kazakhstan‘s energy sector, but for the entire

world. In 2008, Kazakhstan‘s Ministry of Energy and Mineral Resources and KMG signed the final

agreement with all co-venturers in the international Consortium (Eni, ExxonMobil, Shell, Total,

ConocoPhilips and INPEX).

Under this agreement, KMG acquires a major participation level in the project going from

8.33% to 16.81%. Given the size and complexity of the Kashagan project and other NCSPSA

developments, the Kazakh government the Kazakh government and Agip KCO have

agreed to consolidate their efforts and resources and

implement the project with the following division of

responsibilities: Exxon Mobil - offshore drilling; Shell -

offshore development (except drilling); Eni and Agip

KCO – onshore development; ConocoPhilips – audit.

KMG will take on an increasing role in the project and

will be involved in each phase of its development.

According to the agreement, a new joint operating

company for Kashagan project has been established

52

which includes all the co-venturers in the NCSPSA

Consortium. This joint operating company is named

North Caspian Operating Company (NCOC) BV.,

Commercial oil production at Kashagan should be started no later than December 31, 2013.

But the target date for non-commercial oil production is December 1, 2012.

75,000 barrels a day are expected to be extracted at the beginning of oil production with following

increases up to 370,000 barrels a day. 2-3 years later the 3rd tranche of oil production increase is

expected – up to 450,000 barrels a day. By the end of the next decade, Kashagan oil production is

expected to reach 1.5 million barrels a day.

Block “N”

The agreement on ―N‖ Block, reached

in 2008, is another important step forward in

the development of mutually beneficial

cooperation between Kazakhstan and foreign

energy corporations. On October 6, 2008,

KMG, ConocoPhillips and Mubadala

Development Company, PJSC (Mubadala)

announced the signing of a Memorandum of

Understanding (MOU) to negotiate terms for

the exploration and development of the ―N‖

Block.

The MOU was signed by Mr.

Kabyldin, the KMG President, Mr. Mulva, the

ConocoPhilips CEO and Mr. Al Mubarak,

Mubadala‘s CEO, and was witnessed by Mr.

Sayat Mynbayev, the Minister of Energy and

Mineral Resources of Kazakhstan.

The agreement on the principles of

cooperation on the Block N shelf project was

signed by KMG, ConocoPhilips and

Energy & Industry Holding Co., a wholly owned subsidiary of UAE-based Mubadala

Development Company, in Almaty on December 5, 2008. The parties agreed that the project would

be managed by a joint operating company, in which KMG will own 51% and the other two

companies will own the remaining 49%. During the production period, KMG will be the sole owner

of the operating company.

―In accordance with this agreement, KazMunayGas will transfer 24.5% stakes in the contract

for the subsurface use to each ConocoPhillips and Mubadala," Mr. Kabyldin said.

On June 11, 2009, ConocoPhillips, KMG and Mubadala Development Company PJSC

(Mubadala) signed project agreements allowing the joint exploration and development of the N

Block. ―The rise of our cooperation with ConocoPhillips and Mubadala to a new level indicates

foreign investors‘ great interest in developing Kazakhstan‘s offshore fields in the Caspian and re-

affirms the potential of our country‘s oil and gas sector. This project will enable us to use new

53

technology and international expertise in developing offshore oil and gas resources of Kazakhstan,‖

said Kairgeldy Kabyldin, president, KazMunayGas.

The parties are planning to launch commercial production around the start of 2016 if all the

forecasts for raw hydrocarbons there are confirmed.

The ―N‖ Block is located 30 kilometers southwest offshore of Aktau, Kazakhstan‘s port in

the Caspian Sea. The Block covers approximately 8,100 square kilometers and is considered highly

prospective for both oil and gas. This field has some 630 million tons of geological resources with

recoverable resources estimated at about 270 million tons. Under the agreement, the KMG‘s foreign

partners will pay a signing bonus of $100 million.

Global energy security is being significantly contributed by Kazakhstan’s multi-vector pipeline

policy

As KSCS oilfields get developed, the need for diversification of export routes keeps

growing. Proximity to such dynamically developing nations as Russia and China opens wide

opportunities for Kazakhstan‘s hydrocarbons exports. To ensure entering into the markets of the two

countries, it is vital to develop and enhance trunk pipelines system.1 Enhancement of export routes

implies multimode transportation of hydrocarbons, with efficient combination of capabilities of

pipe, railway and sea transport.

The Caspian Pipeline Consortium (CPC) and

Atyrau - Samara pipeline system are currently

traditional routes for Kazakhstan‘s oil exports.

Significant volumes of Kazakh oil (about 50 million

tons a year) are exported through the Russian territory.

Under the pipeline diversification policy

Kazakhstan is actively developing the following

projects:

“Attention should be focused on

diversification and securing stable

routes for future energy supplies.

We will stick to the principle of

pursuing a multi-vector policy in

this regard.”

Nursultan Nazarbayev

President of Kazakhstan

Kazakhstan‘s Caspian Transportation System is being developed to meet increasing oil

production at Tengiz and Kashagan oil fields through the Caspian Sea to global markets via

Baku-Tbilisi-Ceyhan system (BTC). Transcaspian oil exports through the Baku-Тbilisi-Djeihan

system. Kazakhstan‘s approach to this project has been confirmed by the KCTS. Kazakhstan –

China oil pipeline. Phase I of the project which includes Atasu-Alashankou pipeline and

Kenkiyak-Kumkol pipeline (to connect western and eastern parts of Kazakhstan) were put into

operation in 2006 and 2010 respectively.

Expansion of Caspian Pipeline Consortium from its current 32.9 mln. tonnes to 67 mln.

tonnes. Of this amount 52.5 mln tonnes will be Kazakhstan‘s oil. Memorandum of

Understanding on CPC Expansion Principles was signed by the project‘s shareholders on

December 17, 2008. The entire project will be finalized by 2015.

1 www.government.kz

54

KCTS

CPC

Kazakhstan-China

BTC

Atyrau-Samara

Тенгиз

Kazakhstan-China

Caspian Pipeline Consortium, CPC

Kazakhstan Caspian

Transportation System,

KCTS

Atyrau-Samara BTC

Атырау

Кенкияк

Кумколь

Атасу

Alashankou

Новороссийск

Баку

Kuryk

Omsk-Pavlodar

Omsk-Pavlodar

Eskene

Uzen-Atyrau

Актау

Kazakhstan’s Long-distance Oil Pipelines

2nd Phase

Kazakhstan-China

55

Gas pipelines of Kazakhstan

Узбекистан

СХЕМА ГАЗОПРОВОДОВ РК

Аральскоеморе

Казахстан

Туркменистан

АСТАНА

Петропавловск

КокшетауКустанай

Рудный

МГ Карталы-Рудный

Челябинск

КС Карталы

КС Домбаровское

Оренбург

КС Кр. Октябрь

АктобеМГ Бухара-

Урал

МГ Жанажол-Актобе

Жанажол-КС13КС Талдык

КС Шалкар

КС Сев. Устюрт

АксайСаратов КС Чижа

КС Макат

КС Кульсары

КС Опорная

ПХГ Бозой

КС Бозой

КС-7КС Бейнеу

КС Каракалпатское

КС Жана-Узень Тулей КС Кунград

КС Ташауз

Дарьялык

КС Хива

КС Ургенч

КС Сазакино

КС Газли

КС КаганКС Ильялы

КС Каракумское

Стихийное

Хазарли

Беурдешик

АшхабадКС Шатлык

Туркменбаши

Эрдекли

Окарем

КС Бегдаш

Кели

Уграпли

Ку мколь

Акшабул ак

Амангельды

МГ БГР-ТБА

Кызылорда

Кыргызстан

КС Уральск

ПХГ Акыр-Тобе

Алматы

Достык

МГ САЦ

МГ Окар

ем-

Бейнеу

Атырау

ХоргосКАШАГАН

КС Джангала

КС Индер

МГ Макат-Северный Кавказ КС Редут

КС Тайман

Актау

КС Акколь

ДКС Бозой

Жетыбай

ЛупингМГ Союз

МГ Оренбург-

Новопсков

Новопсков

КС Ал. Гай

Таджикистан

КС Сокулук

МубарекДушанбе

КС Зирабулак

КС Чиназ

КС Галля-Арал

Ташкент Ферганс

ПХГ Полторацкое

КС Полторацкое

МГ Газли-Шымкент

КС-5 Тараз

Каспийское море

Китай

Россия

Иран

Азербайджан

КС Самсоновка

(Акбулак)

К ашаган

Тенгиз

Толкын

Ш огырл ы-Шомышты

Planning gas pipeline:

1 – Caspian gas pipeline GP

2 – Beineu - Shymkent GP

Active gas pipeline:

(Gas main pipeline – GP)

Middle Asia -Centre GP

Оkаrеm-Beineu GP

Макат-North Caucasus GP

Orenburg - Novopskov GP

Bukhara -Ural GP

Zhanazhol - Oktyabrsk GP

BGR-TBA GP

Gazli-Shymkent GP

Аmangeldy - КС-5 GP

Аkshabulak-Kyzylorda GP

Zhanazhol-КС-13 GP

Аksai-Krasny Oktyabr-Astana GP

Turkmenistan-Kazakhstan-China GP Legend

Прикаспийский

газопровод

Туркменистан-Казахстан

-Китай

Бейнеу-Бозой

-Самсоновка

Существующие газопроводы

Компрессорные станции

Подземные хранилища газа

ГПЗ

Маршрут Прикаспийского газопровода

Существующие газопроводы

Условные обозначения:

Иолотань

3

2

1

Middle Asia -

Centre GP

Orenburg -

Novopskov GP

BGR-TBA

GP

Bukhara -Ural

GP

Месторождения газа

Compressing station

Underground storage facility

Gas field

Gas-transfering factory

Caspian gas pipeline

Turkmenistan –Kazakhstan –

China GP

Beineu-Shymkent

Active gas pipeline

Kazakhstan

Russia

China

Uzbekistan

Turkmenistan

Tajikistan

ASTANA

Slide 2

56

The Burgas-Alexandroupolis pipeline is a trans-Balkan project conceived to reduce the cost

of hydrocarbon deliveries to European and possibly U.S. and Asian markets. The project is the

logical continuation of the CPC expansion and an economical way to bypass the risky Bosporus

strait and the Dardanelles. The viability of the pipeline depends on Kazakh oil production, which

is expected to reach 120-130 million tons by 2015. As Russian oil alone is not sufficient for the

trans-Balkan pipeline, contribution of Kazakh oil is vital to ensure economic efficiency. For

Kazakhstan, the trans-Balkan pipeline is an alternative route to transport its crude oil to global

markets. The CPC expansion and the Burgas-Alexandroupolis pipeline are important to the fast

growing Kazakh oil industry. Kazakhstan is among the world‘s top 20 net exporters of crude oil.

For the European Union, the Burgas-Alexandroupolis pipeline is an important step to decrease

dependence on OPEC countries.

Construction of Pre-Caspian Gas Pipeline, according to the agreement signed by Kazakhstan,

Russia and Turkmenistan. The Mazhilis (Lower House of the Kazakhstan‘s parliament)

approved a draft Law ―On ratification of the agreement between the government of Kazakhstan,

Russia and Turkmenistan on cooperation in construction of Pre-Caspian Gas Pipeline‖ on April

22, 2009.

Construction of Kazakhstan – China gas pipeline was finalized in October 2010. On

December 2010, construction of the Beineu-Shymkent gas pipeline was started. It is considered

Phase II of the Kazakhstan-China gas pipeline.

Kazakhstan‟s Oil Export (major routes)

2010

2015

likely

CPC (Kazakh share) 28.6 52.5

Atyrau-Samara

15.3 30

Atasu-Alashankou

10.1 20

KPO-Orenburg

2.0 -

Aktau Port (via Caspian Sea) 9.2 -

Rail 6.0 (15)

Totals: 71.2 201-228 (241)

Source: Kazakhstan’s Ministry of Oil and

Gas

Europe is an important partner of Kazakhstan in implementation of its energy policy. This

interaction includes expansion and increase of transit opportunities for hydrocarbon supplies from

Kazakhstan to European markets, including cooperation under TRACECA international project,

ТАCIS INOGATE Program «International transportation of oil and gas in Europe» and The Energy

Charter Treaty (ECT).

57

The main criterion for decision by the Kazakh Government on projects aimed at

diversification of exporting routes is their economic effectiveness.

Kazakhstan welcomes the active U.S. involvement into activity for development of

alternative export routes in Eurasia, particularly, from the Caspian basin to Europe. This approach

fully corresponds to Kazakhstan‘s national security priorities.

The Kazakhstan International Oil & Gas Exhibition (KIOGE)

KIOGE 2011, the 19th International Oil & Gas Exhibition and Conference will be held on 5th

- 8th October 2011 at the Atakent Exhibition Centre and Intercontinental Hotel in Almaty,

Kazakhstan.

KIOGE is Central Asia‘s largest and most influential trade event for the oil and gas industry. It is the

focal point for the sector in Kazakhstan and the highest profile event in the calendar for the region.

KIOGE comprises an exhibition and conference and has helped to introduce more than 5,000

companies into the market, a great many of which now have well-established businesses in

Kazakhstan.

The KIOGE Conference is Kazakhstan‘s leading forum for debating the key issues affecting the oil

and gas industry in the country. The conference will gather together in excess of 1,000 oil and

gas professionals and provide a high-level forum for open, balanced and independent discussions

and an in-depth analysis of the current oil and gas market trends in the Kazakh and Caspian region.

The KIOGE Exhibition is the premier showcase of products and services for the oil and gas industry

in Kazakhstan and the wider Central Asian region. The exhibition covers a total area of almost

10,000mІ with over 500 companies from 30 countries promoting their goods to over 8,000

professionals from Kazakhstan‘s energy sector. The KIOGE exhibition covers all areas of upstream

and midstream oil and gas technologies and services. It is a place where people meet face-to-face,

where companies demonstrate their products and debate the practical applications of their

technologies and service solutions. It is also a place to discuss contracts, take orders, boost sales,

learn about new projects, cement existing relationships and build new ones. For the oil and gas

industry, KIOGE is Kazakhstan‘s key marketplace for business.

KIOGE benefits from the official support of the Ministry of Oil and Gas of Kazakhstan and the

national oil company, KazMunayGas. Official event support is also provided by the Almaty City

Akimat, the Chamber of Commerce and Industry of Kazakhstan and a number of diplomatic

missions from participating countries. The event is ‗Approved‘ by the Global Association of the

Exhibition Industry (UFI) and is organised by one of Kazakhstan's leading trade event organisers,

Iteca (part of ITE Group plc) together with partners from the UK, Russia, Germany, Turkey and

China.

Coal

Coal is one of the largest industries in Kazakhstan. According to the 2010 BP Statistical

Energy Survey, as of beginning of 2010 Kazakhstan‘s coal reserves were 31300 million tons, 3.78%

of the world total.

Kazakhstan ranks eighth in the world in coal production after the U.S., Russia, China,

Australia, India, South Africa and Ukraine. Kazakhstan‘s 2009 coal production was 101.52 million

58

tons, 1.51% of the world total. Kazakhstan‘s 2009 coal consumption was of 33.04 million tons oil

equivalent, 1% of the world total.

The coal sector is also a priority investment area. Kazakhstan has Central Asia‘s largest

recoverable coal reserves. The state register includes 142 closed mines and 55 open-pit mines. Most

mines are located in the central part of Kazakhstan (the Karaganda and Ekibastuz coal basins and the

Shubarkol mine) and north Kazakhstan (the Torgay coal basin). Recoverable reserves account for

45% and unrecoverable 55%.

Approximately 30% of Kazakhstan‘s coal production is exported, mainly to Russia and

Ukraine. The remainder is used in the domestic power generation industry (80% of Kazakhstan‘s

power requirements are coal based) as well as the iron and steel industries. Kazakhstan is the former

Soviet Union‘s 2nd largest producer, after Russia. According to the Kazakh Ministry of Industry and

New Technologies, the country aims to be producing 134 million tons annually by 2015 and

increasing this number by 150 million tons annually by 2020.

The country has more than 400 coal deposits of which a third is classified as brown coal or

lignite deposits. Most coal production is sourced from two main basins, the Karaganda Basin, which

supplies coking coal from underground mining operations, and the Ekibastuz Basin (the third largest

coal basin in the FSU), which supplies coal to the power generation sector.

The Karazhir deposit is one of Kazakhstan‘s higher grade coal deposits containing more than

1 billion tons of reserves, with a large proportion being open pittable.

Mining is happening at 53 mines, including 15 in the Karaganda coal basin, by 34 companies

(one joint venture, five foreign and 28 local companies). The major companies are: Bogatyr Access

Komir, Shubarkol Komir, Mittal Steel Temirtau, the Eurasian Energy Corporation, Maykuben West,

Karazhira Ltd, the Kazakhmys Corporation and Gamma.

Bogatyr Access Komir, LLP or BAK, the largest open cast mining company in Kazakhstan,

which is wholly owned by the US' Access Industries Inc., owns the Bogatyr mine. The mine has a

projected capacity of 50 Mt/y.

MMRC owns 32.8 % of the Eurasian Energy Corporation, with the remaining 24.3% by the

government and the balance as public and corporate shares.

Ispat-Karmet, Kazakhstan's biggest steel producer, operates several coal mines to feed its

steelworks, producing just over 7 Mt from the Karaganda region.

Summary of Coal Industry

Kazakhstan has registered 49 coal deposits in its state reserve balance (USGS, 2010). Table

below summarizes Kazakhstan‘s historical annual coal production by regions.

Kazakhstan‘s coal production

2006 2007 2008 2009 2010

Coal, thousands tons

Republic of Kazakhstan 96230.5 98383.9 111072.3 100 854.3 110805,

9

Akmola region 41.1 41.1 30.9 245.4 1478,6

Aktobe region 3.2 6.2 4.7 4,9 2,5

Almaty region 8.1 10 15.0 15.1 16,7

Eastern Kazakhstan region 4469.4 4433.3 5431.5 5353.3 5808,3

Zhambyl region 20 66 324.0 355.0 263,6

59

Karaganda region 26797.9 31715.4 32461.8 30722.2 32560,4

Kostanay region 52.7 7.7 51.0 8,2 50,0

Pavlodar region 64838.1 62104.2 72753.4 64150.2 70625,8

The coal sector is said to have enough reserves to last over 100 years. In the future, the

development of the raw materials base will be achieved through enriching and improving the quality

of the coal and the deep processing of coal to obtain fluid fuel and synthetic substances. Developing

shale is also timely. As an alternative source of energy, methane from coal mines in the Karaganda

basin can also be used. The high concentration of methane in coal layers and the existence of a well-

developed infrastructure and major gas consumers make it possible to extract it and utilize it on a

large scale. This will also increase central Kazakhstan‘s energy potential and provide gas not only to

enterprises in Karaganda, Ekibastuz and Pavlodar regions but also to the country‘s capital, Astana.

***

Kazakhstan’s Uranium and Nuclear Industries

(based on World Nuclear Association’s reports)

Kazakhstan has 15% of the world's uranium resources and an expanding mining sector,

aiming for 30,000 tU annual production by 2018.

In 2009, it became the world's leading uranium producer, with almost 28% of world

production.

A single nuclear power reactor operated from 1972 to 1999, generating electricity and for

desalination.

Kazakhstan has a major plant making nuclear fuel pellets and aims eventually to sell

value-added fuel rather than just uranium. It aims to supply 30% of the world fuel fabrication

market by 2015.

The government is committed to increased uranium exports, and is considering future

options for nuclear power.

Kazakhstan has been an important source of uranium for more than fifty years. From 2001-

2010, production rose from 2000 to 18,000 tonnes. The uranium production output for 2010 totalled

17,803 tons and exceeded the targeted volume by almost 30%. For the period 2009-2010, the

volume of uranium production in Kazakhstan increased two fold.

Kazakhstan has no national electricity grid, but a northern grid links to Russia and a southern

grid links to Kyrgystan and Uzbekistan. Electricity consumption is 48 TWh/yr, from 17 GWe of

plant, mostly fossil fuel fired and now privatised.

Kazatomprom is the national atomic company set up in 1997 and owned by the government.

It controls all uranium exploration and mining as well as other nuclear-related activities, including

imports and exports of nuclear materials. It announced in 2008 that it aims to supply 30% of the

world uranium by 2015, and through joint ventures: 12% of uranium conversion market, 6% of

enrichment, and 30% of the fuel fabrication market by then.

The uranium sales volume of JSC NAC Kazatomprom, excluding subsidiaries and joint

ventures, amounted to 9,000 t U in 2010 The revenue of uranium in 2010 increased by 30%

compared to 2009.

60

By the end of 2010, the portfolio of orders of JSC NAC Kazatomprom was about $17

billion.

Recent international collaboration. Kazatomprom has forged major strategic links with

Russia, Japan, China and the U.S. It also has taken a significant share in the international nuclear

company Westinghouse. Canadian and French companies are involved with uranium mining and

other aspects of the fuel cycle.

In July 2006, Russia and Kazakhstan (Kazatomprom) signed three 50:50 nuclear joint

venture agreements totalling US$10 billion for new nuclear reactors, uranium production and

enrichment. The first JV with Atomstroyexport is JV Atomniye Stantsii for development and

marketing of innovative small and medium-sized reactors, starting with OKBM's VBER-300 as

baseline for Kazakh units. Russia's Atomstroyexport is expected to build the initial one.

The second JV with Tenex, confirmed in 2008, is for extending a small uranium enrichment

plant at Angarsk in southern Siberia. (This will also be the site of the first international enrichment

centre, in which Kazatomprom has a 10% interest.) It will eventually be capable of enriching the

whole 6,000 tonnes of uranium production from Russian mining JVs in Kazakhstan. The uranium

exploration and mining JV Akbastau with Tenex started with Budenovskoye in the Stepnoye area of

south Kazakhstan, which commenced production in 2008. This will complement the Zarechnoye JV

250 km to the south, which was set up in June 2006.

In April 2007, a number of high-level agreements on energy cooperation were signed with

Japan. These included some relating to uranium supply to Japan, and technical assistance to

Kazakhstan in relation to fuel cycle developments and nuclear reactor construction. A further

agreement on uranium supply and Japanese help in upgrading the Ulba fuel fabrication plant was

signed in may 2008. Kazatomprom is keen to move from being a supplier of raw materials to selling

its uranium as fabricated fuel assemblies. It said that it aimed to supply 40% of the Japanese market

for both natural uranium and fabricated fuel starting in 2010 - about 4000 tU per year. Negotiations

have commenced for a bilateral nuclear cooperation agreement between Kazakhstan and Japan.

In August 2006, the Japan Bank for International Cooperation signed an agreement with

Kazatomprom to support and finance Japanese firms in developing Kazakh uranium resources to

supply Japan's power generation. In March 2009, three Japanese companies - Kansai, Sumitomo

and Nuclear Fuel Industries - signed an agreement with Kazatomprom on uranium processing for

Kansai plants.

In December 2006, China Guangdong Nuclear Power Group Holdings (CGNPC) signed a

strategic cooperation agreement with Kazatomprom, in May 2007 an agreement on uranium supply

and fuel fabrication, and in September 2007 agreements on Chinese participation in Kazakh uranium

mining joint ventures and on Kazatomprom investment in China's nuclear power industry. This is a

major strategic arrangement for both companies, with Kazatomprom to become the main uranium

and nuclear fuel supplier to CGNPC (accounting for a large share of the new reactors being built in

China). In October 2008, a further agreement was signed covering cooperation in uranium mining,

fabrication of nuclear fuel for power reactors, long-term trade of natural uranium, generation of

nuclear electricity and construction of nuclear power facilities. A CGNPC subsidiary, Sino-

Kazakhstan Uranium Resources Investment Co, is to invest in two Kazakh uranium mines, Irkol and

Semizbai, through the Semizbai-U LLP joint venture.

A framework strategic cooperation agreement was signed with China National Nuclear

Corporation (CNNC) in September 2007 and this was followed in October 2008 with another on

"long-term nuclear cooperation projects" under which CNNC is to invest in a uranium mine. Late in

2007, Kazatomprom signed an agreement with both GCNPC and CNNC for them to take a 49%

stake in two uranium mine joint ventures and supply 2000 tU per year from them.

61

Early in 2009, Kazatomprom signed an agreement with CGNPC for the establishment of a

specialized company for the construction of nuclear power plants in China, since Kazakh plans to

work with Russia's Atomstroyexport developing and marketing innovative small- and medium-sized

reactors had to be put on hold. As of mid 2009, a feasibility study on this joint CGNPC project was

underway.

In January 2009, Kazatomprom signed an agreement with India's Nuclear Power Corporation

(NPCIL) to supply 2100 tonnes of uranium to India and undertake a feasibility study on building

Indian PHWR reactors in Kazakhstan. NPCIL said that the deal represented "a mutual commitment

to begin thorough discussions on long-term strategic relationship." Under this agreement, 300 tonnes

of natural uranium will be supplied by Kazatomprom in 2010-11.

In April 2010, Kazakhstan signed a nuclear cooperation agreement with South Korea, paving

the way for export of Korean SMART 100 MWe nuclear reactors and for joint projects to mine and

export Kazakh uranium.

In addition, Kazakhstan signed intergovernmental agreements on nuclear energy cooperation

with the U.S. and Euratom.

In 2007, Kazatomprom purchased a 10% share in Westinghouse. Toshiba had bought the

company from BNFL for $5.4 billion early in 2006, and the Shaw Group then took 20% and IHI

Corp. 3%. The Kazatomprom link strengthened the company's upstream links for fuel supplies and

should enhance its marketing of nuclear reactors. It also brought Kazatomprom more fully into the

industry mainstream, with fuel fabrication in particular.

This led to a decision to set up with Toshiba a nuclear energy institute in the northeastern

town of Kurchatov, near Semipalatinsk, which is already a centre of R&D activity. This was

announced by Kazatomprom and the Kazakh prime minister in September 2008 and will focus on

skills development in all aspects of the nuclear fuel cycle as well as reactor technology. Other

Japanese companies such as Toyota and Marubeni are expected to support the institute, especially in

its rare earth metals department, which aims to utilize present waste materials as the basis of a

billion-dollar, high-tech export industry. Three research reactors are operated by the Institute of

Atomic Energy at Kurchatov.

In May 2007 Canada's Cameco Corporation signed an agreement with Kazatomprom to

investigate setting up a uranium conversion plant, using its technology, and also increasing uranium

production at its 60% owned Inkai mine. In June 200,8 Cameco and Kazatomprom announced the

formation of a new company - Ulba Conversion LLP - to build a 12,000 t/yr uranium hexafluoride

conversion plant at the Ulba Metallurgical Plant in Ust-Kamenogorsk. Cameco will provide the

technology and hold 49% of the project. A feasibility study is due to be completed mid 2009.

In June 2008, Areva signed a strategic agreement (MOU) with Kazatomprom to expand the

existing Katco joint venture from mining 1500 tU/yr to 4000 tU/yr (with Areva handling all sales.In

October 2009, the two parties signed another agreement to establish the IFASTAR joint venture to

fabricate nuclear fuel at the Ulba plant and market it as an integrated fuel supply for Asian

customers. IFASTAR would first undertake a feasibility study on building a 400 t/yr fuel fabrication

line at Ulba. IFASTAR is to be based in Paris, with 51% Areva equity (though any resulting plant

will be 51% owned by Kazatomprom).

In 2010 Kazatomprom implemented a number of large-scale industrial projects:

- Inkai JV LLP: The facilities of industrial complex of geo-technological field were put into

operation in Suzak District of South Kazakhstan Oblast. The Satellite 1 Plant at Site 2 of

Inkai Deposit was put into operation.

- Karatau JV LLP: Expansion of Pilot Commercial Uranium ISL Mining Project at Budenovskoye

Deposit, Site 2

62

- Katco JV LLP: Increase in production capacity at Moyinkum Deposit, Tortkudik Site 2.

- Baiken-U JV LLP: Housing estate of field camp designed for 245 people located in Baikenzhe

Rural District, Zhanakorgan Region of Kyzylorda Oblast was commissioned.

In the area of uranium conversion, Kazatomprom and Cameco are working together on

implementing the joint project for conversion facilities construction. In 2010, Rosatom State

Company and Kazatomprom reached agreement in the area of uranium enrichment on further

development of the project CJSC Center for Uranium Enrichment according to the alternative

option.

On October 27, 2010, during the official visit of President Nazarbayev to France, the

Agreement was signed between Kazatomprom and AREVA for nuclear fuel production. The

company, which is 51% owned by Kazatomprom and 49 % by AREVA, will construct a new line

for fuel assemblies production. The new plant with capacity of 400 tons per year is supposed to be

put into operation in 2014.

In 2010, JSC UMP completed the certification process of fuel pellets made of uranium

dioxide as per AREVA‘s specifications. Kazatomprom was awarded the right to produce fuel for

reactors of AREVA design, used in many countries around the world.

In 2010, JSC UMP and Nuclear Fuel Industries Ltd. (NFI), Japan, implemented a

certification of uranium dioxide powder, produced by JSC UMP for Japanese nuclear power plants,

which allowed JSC UMP to supply the nuclear fuel components to Japanese market.

In addition in 2010 JSC UMP completed the certification of production for uranium fuel

pellets at China Jianzhong Nuclear Fuel (CJNF), an entity of China National Nuclear Company

(CNNC). Thus, a large scale project was launched for supply of uranium fuel pellets to China, which

will be used in fuel production for largest nuclear power plant owner in China - China Guangdong

Nuclear Power Corporation (CGNPC).

Kazatomprom continues active development of new directions in its activities:

- SARECO JV LLP was established by Kazatomprom and Sumitomo Corporation, Japan

- The establishment of the Joint Venture by Kazatomprom and Toshiba Corporation, Japan.

63

map of KazAtomProm. Scale: Kyzlorda to Shieli/ Kokzhoky is about 100km.

64

National Atomic Company «Kazatomprom»

The Atomic Company KAZATOMPROM is the national operator of the

Republic of Kazakhstan, for import and export of uranium, rare metals,

nuclear fuel for power plants, special

equipment and dual-purpose materials.

100% of the Company‘s stock is held by the Government under the National Welfare Fund

SAMRUK-KAZYNA. At present, over 25,000 workers are employed by the Company.

KAZATOMPROM is a holding - managing six following core activities:

uranium prospecting/exploration and production;

output of nuclear fuel cycle products;

construction of reactors and nuclear power plants;

non-ferrous metallurgy and production of construction materials;

power industry;

science;

social welfare and personnel training.

MISSION:

Pursuance of the industry-oriented policy of the Republic of Kazakhstan aimed at

establishment of a national industrial complex, competitive in both the domestic and

overseas market;

Development of a transnational vertically integrated Company holding key positions in the

world nuclear power market;

Participation in designing nuclear power plants;

Development of science-intensive technologies.

Strategy

To offer the customer a wide range of outputs and services and, to this purpose, to seek to achieve

dynamic development of high production standards through the use of the latest advances in science,

know-how and management.

Nuclear fuel cycle development strategy

To support the nuclear renaissance worldwide and, whilst also pursuing a concept of large-scale

international cooperation, KAZATOMPROM also aims to achieve the goal of becoming a top

vertically integrated transnational company, with a complete service package – from uranium

production to nuclear fuel manufacturing and construction of power generation units.

Contacts:

168, Bogenbai batyr St, Almaty city,

050012, Republic of Kazakhstan

Tel.: +7 /727/ 261 54 25, 258 50 75, 258 50 95, 258 50 96 (reception)

Fax: +7 /727/ 250 35 41

e-mail: [email protected]

http://www.kazatomprom.kz/

65

Renewable Energy

Biofuels. Kazakhstan has the necessary economic potential for the production and

development of bio fuels. According to the Ministry of Agriculture of Kazakhstan, using common

wheat for the production of bioethanol is most appropriate in Kazakhstan‘s climatic conditions.

Many experts are convinced that by using low-quality wheat (1 million tons) and unused grain

leftovers (about 1.9 million tons) Kazakhstan can produce 1 billion litres (812,000 tons) of

bioethanol by 2010.

Since 2009, the Law on Support of Using Renewables has provided a legal framework for

commercial activities in this area.

In 2010, the Ministry of Industry and New Technologies signed a Memorandum of

Understanding with the Samsung C&T. According to the Ministry of Industry and New

Technologies, the Memorandum includes planning the construction of wind and solar power

stations.

66

MINING AND SMELTING INDUSTRY IN KAZAKHSTAN

As the planet‘s ninth largest country, covering 2,717,300 km2, Kazakhstan dominates its

Southern Central Asian neighbors both in terms of land mass and mineral wealth. Proven resource

figures are truly staggering. Its mineral wealth has colossal potential for development.

Kazakhstan‘s mining industry accounts for approximately 27% of the Kazakhstan‘s GDP.

About 90% of all MSS products are exported to more than 30 countries, making 35% of the total

exports of the country. Mineral resources produced in Kazakhstan contain 76 elements of

Mendeleev‘s table. The reserves of the country are rated 1st in uranium, zinc and lead in the world,

3rd

in manganese, 4th

in copper, 7th

in cobalt and cadmium, 8th

in gold.

After oil and gas, the mining industry in Kazakhstan is the second largest economic sector

when evaluated in terms of revenues. In 2009, mining represented 19.6% of Kazakhstan‘s national

GDP and US$21.3 billion worth of economic output. In 2009, investments in minerals amounted to

US$21 billion (12 times higher than in 1996). Of that, $4.6 billion was invested into mining and

conversion of solid minerals. The greatest volume of investments, next to hydrocarbons, goes to the

polymetallic and ferrous metals industries. The investments were put into the technical

modernization of mining companies and construction of new high added-value enterprises.

The government will approve the Mining-Smelting Industry Development Program in 2014.

The goal of the program is to provide raw materials for the production of high technology and

science-intensive finished products (mechanical engineering, construction, aircraft, space and

defense industry). Upon The government expects 107% growth of gross value added for metallurgy

products.

Kazakhstan is one of the world's best-endowed states, possessing world-class deposits of

minerals and raw materials. Vast quantities of base and precious metals have been discovered, with

countless others waiting for discovery and development. Kazakhstan is the ultimate mining and

metallurgical country producing 25 different kinds of ferrous, non-ferrous and precious metals.

Some 233 mining enterprises produce a wide variety of commodities: coal, iron ore, chromites ores

and ferroalloys, alumina, copper, lead, zinc, steel, titanium sponge, uranium, barites and others.

Mining activities are currently being carried out at 2,000 mines in Kazakhstan, which consists

of prospecting at 132 mines (7%), extraction at 1,213 (61%) and both activities at 641 (32%).

Kazakhstan has an abundant supply of accessible mineral and fossil fuel resources. According

to some estimates, Kazakhstan has the first largest uranium, chromium, lead, and zinc reserves, the

third largest manganese reserves, the fifth largest copper reserves, and ranks in the top ten for coal,

iron, and gold. It is also an exporter of diamonds.

Precious Metals

Gold. Kazakhstan has 4% of world deposits of gold. The country occupies eighth place after

South Africa, the US, Australia, China, Russia, Canada and Indonesia.

Kazakhstan‘s two major gold deposits are in Vasilkovskoye (Kazzinc) with

approximately360 mt and in Bakyrchik (Ivanhoe Mines Altynalmas) with approximately 277 mt.

Kazakhstan‘s gold deposits are complex poly-metallic ores often presenting significant challenges

during processing stages of production. Much of Kazakhstan‘s gold is produced by copper and zinc

producers such as Kazzinc and Kazakhmys as a byproduct of refining processes.

The Vasilkovskoye Zoloto joint venture, the Bakyrchik mining enterprise, the Kazakhmys

Corporation, Kazzinc and the Kazakhaltyn mining company have large gold reserves (together

accounting for 52% of the country's total reserves). Gold is being mined at 199 deposits.

67

Most extraction (about a half) comes from composite sulphide deposits developed by Kazzinc

and the Kazakhmys Corporation. A further 40% is extracted by Vasilkovskoye Zoloto, Altynalmas,

Kazakhaltyn, Yubileynoye, Andas-Altyn, Altyn-Tobe and Dank companies, which are developing

their own gold deposits.

These companies have gold reserves that will last between 10 and 80 years. Developing hard

and complex ore will increase the ore base. As a result, according to forecasts, Kazakhstan will

become a leading gold producer by 2015.

In 2009 Kazakhstan produced 10.3 thousand ton of refined gold, which is 26% up from 2008.

Silver. Silver reserves were discovered in 100 deposits of which 60% are cooper-lead-zinc

deposits. Silver production is concentrated on affiliated companies of Kazakhmys i.e.

Zhezkazganzvetmet and Balkhashzvetmet. In 2009, Kazakhstan produced 673,3 thousand tons of

silver, up 7.1% from the year 2008.

Nonferrous Metals

Copper. Kazakhstan occupies fourth place in the world‘s copper reserves (5.5% of world

deposits), behind Chile, Indonesia and the U.S. The state register records 93 copper deposits, half of

which are being developed. The major enterprises operating in the sector are the Kazakhmys

Corporation, Kazzinc, Aktubinsk Cooper Company, Maikainzoloto (in total, there are nine

companies, including two foreign).

Copper production is estimated to be around 400,000 mt in 2010, which places Kazakhstan at

No. 10 globally for copper output. The sector has reserves that will last from 20 to 30 years.

Kazakhstan‘s export of cooper concentrate varies between 100-200 thousand tons per year.

Main export markets are China, Russia and Uzbekistan. In 2009, Kazakhstan produced 400 tons of

refined copper.

Lead, zinc. In terms of proven zinc (9,5% of world deposits) and lead (10% of world deposits)

reserves Kazakhstan occupies the leading position in the world. The state register records 85 lead

deposits and 79 zinc deposits. The mining of polymetals is being carried out at 32 deposits,

consisting of extraction at twenty (63%), prospecting and extraction at nine (28%) and prospecting

at three (9%).

Reserves are concentrated in Eastern Kazakhstan around Ust-Kamenogorsk as well as in

Southern Kazakhstan in close proximity to Shymkent. Both zinc and lead production in Kazakhstan

are dominated by major domestic firms Kazzinc and Uzhpolimetal. Kazzinc production for 2009

was 300,000 mt of zinc and 80,000 mt of lead. Kazzinc is driven by a strategy of advanced

industrialization, employing some of the world‘s leading technologies to increasingly improve the

efficiency and productivity with which Kazakhstan‘s complex poly-metallic ores can be processed.

The main raw material base is composite sulphide and polymetal deposits in Rudnyy Altay,

which produces over two-thirds of the country‘s total lead and zinc outputs. Deposits are developed

using underground methods. The main enterprise in the sector is Kazzinc. Kazakhmys is involved in

collateral production and accounts for a third of the total lead and zinc ore outputs. In total, there are

14 enterprises operating in this sector (11 local, 2 foreign and 1 joint venture) and they enable

Kazakhstan to occupy sixth place in the world in terms of lead and zinc production. A new zinc

production plant with capacity of 30 thousand tons per year has been built by Uzhpolimetal. Another

plant with production capacity of 100 thousand tons is under construction by metallurgical company

Shalkiya.

The sector has reserves that will last about 25 years. Replenishing reserves is a timely issue at

the moment. The prospects for developing the raw material base in this sector depend on

68

discovering new high-quality deposits, developing major deposits with complex and poor ores and

reprocessing scrap metal.

85-88% of zinc production is exported with main destinations as Netherlands, Turkey, Italy,

Ukraine and China.

Aluminium (bauxite). In terms of proven bauxite reserves, Kazakhstan occupies tenth place

behind Guinea, Australia, Jamaica, Brazil, India, China, Guyana, Suriname and Venezuela. The state

register lists 20 bauxite mines. Aluminium of Kazakhstan, which includes the Pavlodar Aluminium

Plant and the Krasnooktyabrski and Torgay bauxite mining departments, accounts for the entire

bauxite and marketable aluminium outputs.

Aluminum production in Kazakhstan was left relatively unaffected by the global financial

crisis. Current bauxite output for 2010 stands at around 5 million mt from a relatively small total

known reserve of 360 million mt.

The sector has sufficient reserves to last about 50 years. Adopting a new technological line at

the Pavlodar Aluminium Plant has created conditions to produce alumina from low-quality bauxite,

which makes it possible to increase the raw material base of the sector from the existing deposits.

Technology to extract gallium, aluminium sulphate and sodium-sulphate mixture has been improved

to boost the deposits‘ productivity.

Kazakhstan does not yet produce metallic aluminium because the main consumers of our raw

material are Russian enterprises. However, in December 2007, Eurasian Natural Resources

Corporation announced the inauguration of the Kazakhstan Aluminum Smelter (KAS), the first

state-of-the-art aluminium smelter in the Republic of Kazakhstan and CIS. KAS has achieved its

initial production capacity of 62.5 thousand tons of primary aluminium a year.

KAS is a key element of a significant future aluminium cluster being developed by ENRC

within the Republic of Kazakhstan. The $900 mln. investment project represents the largest private

capital investment in the metals and mining industry in the Kazakhstan.

KAS‘s initial production capacity was 62,500 tons in 2007, 125,000 tons in 2008 and will

rise to 250,000 tons by 2011. The smelter, which will work in close partnership with ENRC‘s

Aluminium of Kazakhstan (AoK), is poised to service the growing demand for aluminium both in

Kazakhstan and worldwide.

Nickel, cobalt. In terms of nickel and cobalt reserves, Kazakhstan occupies twelfth and

seventh places in the world, respectively. The state register records 39 nickel deposits and 55 cobalt

deposits. Kazakhstanskiy Nikel, Kyzyl Kain Mamyt and the Sokolov-Sarbay Ore-enrichment

Production Association own major deposits. Five companies, two foreign and three local, are

operating in the sector.

Almost the entire Kazakh nickel output is exported.

Ferrous Metals

Iron, manganese. In Kazakhstan occupies sixth place in the world in iron reserves (behind

Russia, Australia, Ukraine, China and Brazil) and third place (behind South Africa and Ukraine) in

manganese reserves. The iron and manganese sector is a major sector in the country‘s raw materials

industry. The state register records 47 iron deposits and 31 manganese deposits. Orken, the Sokolov-

Sarbay Ore-enrichment Production Association, the Zhayrem Ore-enrichment Combine and the

Kazkhrom transnational company have largest raw material bases (accounting for 98% of the entire

industrial reserves). Mining iron and manganese is being carried out at 32 deposits, with prospecting

at seven (22%), extraction at 10 (31%) and both activities at 15 (47%). There are 23 companies

operating in the sector, of which 3 are foreign and 20 are local.

69

Kazakhstan is expected to produce 55-60 million tons of iron ore and 4-5 million tn of

manganese ore in 2010 and 80 million tn and 7 million tn, respectively, in 2015. The current output

levels will provide the enterprises with reserves for over 80 years in terms of iron ore and over 100

years in terms of manganese ore. This is enough not only to satisfy the demands of domestic ferrous

metallurgy, but also to allow for efficient export activities.

Chromium. At 300 million mt, Kazakhstan‘s chromium reserves are the second largest in the world

behind South Africa‘s. Chromium extraction increased by 25% from 2009, reflecting sustained

increases in global demand. The state register lists 23 deposits with almost all industrial reserves

owned by the transnational company, Kazkhrom. Mining is being carried out at nine deposits owned

by Kazkhrom and one by Voskhod-Oriel. Kazakhstan is currently producing about 7 million tn of

chromium ore and this figure is expected to grow to 9 million tn by 2015.

The chromium reserves are enough to last for over 90 years.

70

TRANSPORT AND COMMUNICATIONS

Kazakhstan‘s Government is pushing forward with its Strategy of Transport Sector

Development of up to 2015, which calls for the investment of up to USD26 billion on infrastructure

projects over 10 years.

The Strategy covers 2006-2015 and is supposed to be implemented in two stages: 1st stage –

2006-2011, 2nd stage – 2011-2015.

The Strategy is designed to bring the national transport system to a higher level. Transport

infrastructure is supposed to be brought in compliance with the worldwide standards.

The core of the effort involves container traffic. Improvements will ensure substantial

revenue for the central budget and transport companies.

The Strategy covers railways, automobile, in-city passenger, air and water carriage.

The Strategy is intended to facilitate growth of trade ties between the West and the East by means of

reliable and accessible transit routes.

The Strategy provides for modernization of already operating infrastructure and construction

of new routes, with all transport fleets being renewed.

Economic and geographic features of Kazakhstan (its vast territory, land-locked position,

uneven distribution of population clusters and natural resources) make the transportation component

of the economy challenging.

But being sandwiched between Europe and Asia, Kazakhstan boasts great transit potential,

as there are no alternatives for Asian states to link to Russia and Europe.

Automobile and railways routes account for a major share of the total above-ground

transport routes (about 88.4 и 14 thousand km, respectively). Total length of navigable waterways

is 3.9 thousand km, and the total air routes makes up 61 thousand km. Density per every 1000 km 2

stands at 5,1 km for railways, at 32,4 km for automobile routes with hard surface, and at 1,5 km for

in-land navigable waterways.

The share of transportation costs compared to the cost of goods is 8% and 11% for in-land

railways and automobile traffic respectively, while in industrialized countries these are normally in

the range of 4-4,5%. Four international transport corridors cross Kazakhstan:

• Northern Corridor of Trans-Asian Railway Main (TARM): Western Europe – China,

Korean Peninsula and Japan via Russian and Kazakhstan (section Dostyk – Aktogai - Sayak –

Mointy – Astana – Petropavlovsk (Presnogorkovskaya)).

• Southern Corridor of TARM: South-Eastern Europe – China and South-Eastern Asia via

Turkey, Iran, Central Asian states and Kazakhstan (section Dostyk – Aktogai – Almaty – Shu –

Arys – Saryagash).

• TRACECA: Eastern Europe – Central Asia via the Black Sea, Caucasus and the Caspian

Sea (section Dostyk – Almaty – Aktau).

• North-South: Northern Europe – Gulf States via Russia and Iran, with Kazakhstan‘s

participation in the following sections: sea port Aktau – Ural regions of Russia and Aktau – Atyrau.

Kazakhstan, Russia and other CIS countries believe that cargo transit between the EU and

Asia is worth more than $ 600 bln. a year, according to the IMF.

Infrastructural investment requirements through 2030 are expected to total more than $25

billion - and of this, 40% will be needed for railway transportation, 23% for highways and motor

transport, 25% for telecommunications, and 12% for the air and water transport systems.

Railway services play a significant role in the transport-communications network. They

carry up to 70% of cargo and 50% of passengers in the overall transport operations in Kazakhstan.

Total mileage of the railways in Kazakhstan exceeds 14 thousands km .

71

A transit route with great potential is the Trans Kazakhstan Route project from China to Europe

through Kazakhstan, Turkmenistan, Iran and Turkey. One of the advantages of this route is that the

width of railroad track will be in line with the international standards so it will be unnecessary to

change railroad wheels on borders. The length of the Kazakh part of the Route is 3070 km. When

completed, the $4 bln. project will allow cargo to move from the ports of China to the port of

Rotterdam within 18 days resulting in significant cost savings for cargo transportation from Asia

Pacific Region to the Western Europe. The two stage project with 15 years of implementation period

is set to convey up to 110 mln tons of cargo a year through Kazakhstan.

New and existing railway lines will strengthen the transit potential of the country. For

example, a new route from Chromtau to Altynsarino, 402 km, which was finished in 2004 will

shorten the existing route through the Russian territory for cargo shipments from the West and East

Siberia, the Ural region of Russia to the Aktau Seaport and further to Iran and through the North-

South transport corridor to the ports of the Indian Ocean. This route will cut the length of the freight

transportation route by 2000 km, saving 48 hours of shipment time and up to US$18 per per ton ton

of cargo. Since the opening of Chromtau-Altynsarino route almost 15 mln tons of cargo were

transferred with the possibility to increase the volume of transit by 25 mln. tons a year after

realisation of the second stage of the project.

Motor transport. Kazakhstan possesses a motor roads network with total length of more

than 88,9 thousand km. What‘s more, 13 thousand km of the network have international significance

linking the Asian and European motorways. For the last years great attention has been paid to major

repair and reconstruction of existing roads. At least 14,4 thousand km of roads were repaired.

The total amount of financial resources for the implementation of the Program is US$ 8.5

billion.

International transit corridors received their further development as 579 km of highways of

national importance have been launched.

Construction of a new transport corridor between West Europe and West China will increase

deliveries by trucks almost four fold, from the current 900 thousand tons to 3.5 million tons.

72

AGRICULTURE

Agriculture is considered to be one of the key sectors of the Kazakhstan economy.

Kazakhstan is rich in land resources: more than 74% of the country's territory is suitable for

agricultural production, representing 5.5% of GDP and employing over 20% of the labour force with

43% of population living rural areas.

Kazakhstan is one of the world‘s major wheat and flour exporters. It is among the 10 largest

wheat producers. It also exports large amounts of cotton, leather and wool. In seven years,

agricultural exports may reach the level of Eastern European countries.

The total area of agricultural land resources in Kazakhstan is 222.6 mln. hectares (ha), 24

mln. ha of them are covered by tilled fields (10.8%), 5 mln. ha (2.2%) by hay-fields and 189 mln. ha

(85%) by pastures. The rural population is 7.3 mln people, which represents 47.2% of the

population. Meanwhile, according to the World Bank, Kazakhstan‘s labour efficiency in agriculture

is 5 times lower than in the Eastern Europe, even lower than Russia and Ukraine. The main grain

crop is milling wheat, which is typically high in quality and protein. There is a growing trend for

Kazakhstan to export its grain internationally. In 2010, Kazakhstan produced 12.2 million metric

tons and exported 5 million metric tons of grain (net weight).

Other food crops include barley, maize, rice, potatoes, soybeans, sugar beets, cotton,

tobacco, sunflower, flax, soybean and mustard. Cotton is the most important industrial crop grown

on the irrigated land of southern Kazakhstan. Orchards and vineyards are widespread. The rich soil

and climate provide ideal conditions for growing wheat, barley, rice, corn, millet and buckwheat.

In 2011, the total crop area is planned to reach 21,3 million ha. Corn and beans will be sown

on 16,5 million hectares while oilseeds will occupy 1,7 million ha. To satisfy the demands of the

livestock industry, forage cultures are to be expanded by 95 thousand ha; areas for fruit and

vegetables will grow by 2,5 thousand and by 1,7 thousand ha for sugar beets.

Effective methods of cultivation will be employed more actively in 2011. Crop areas with

application of moisture -and resource-saving technologies will reach 11,2 million hectares, which

amount to 68% of the total sown area. That is more than the previous level by 650,000 ha, or 6%. In

addition, 8,1 million ha of grain, or nearly half of the cultivated area, will be planted with modern

crops.

For a country with a long nomadic history, it is not surprising that stockbreeding is the

traditional and dominant agricultural sector. No less than three quarters of all agricultural land is

used for grazing. Sheep breeding is predominant, while cattle breeding and the raising of pigs,

horses and camels are also well developed. Animal husbandry typically accounts for about 45%-

50% of the production value in agriculture in Kazakhstan. Primary meat products include beef, veal,

chicken, horse, lamb, pork and rabbit.

The livestock sector is gradually growing. During 2010, the output of meat rose by 3.0%, egg

production went up by 12.6% and milk output rose by 1.4%. Similarly, herd sizes are recovering

after a period in the 1990s in which livestock were being slaughtered for meat but not replaced. As

of January 1, 2011, in comparison with the previous year the number of head of cattle increased by

1,1 %, sheep by on 3,5 %, horses by 3,1 %, hogs by 2,3 %, birds by 1,1 %.

In 2010, National Holding ―KazAgro‖ allocated 94.3 billion tenge (640 million USD) for 86

projects including construction of greenhouses and poultry farms, feedlots, meat-packing factories,

milk farms, infrastructure for grain exports and development of processing industry. As of January

1, 2011, 32 projects worth 29 billion tenge (200 million USD) were completed, which created 2,000

jobs.

73

One such project is a joint venture established between by Global Beef Consultants LLC

(Bismarck, North Dakota) and the Kazakh government. In 2010, the joint-venture imported 2,040

Angus and Hereford cattle from North Dakota. Ultimately the number of cattle is planned to reach

40,000. The $50 million project also includes construction of two 2,500-animal breeding facilities

and a feedlot. Kazakhstan is already the fourth-largest importer of North Dakota products, mostly

farm machinery. The state exported $40.3 million in goods last year, up from $25 million in 2005.

The government of North Dakota opened a trade office in Kazakhstan.

The Kazakhstan Government is looking for agricultural investors from the United States. The

Government has allocated land to be rented by foreign investors for as long as10 years. Also,

modern technologies are being brought to Kazakhstan from the United States.

In order to support this industry, the Government is implementing several programs to

improve the investment climate for farming in Kazakhstan. In 2011, in government subsidies for

agriculture will amount to 58 billion tenge (400 million USD), which is greater than 13.6 billion

tenge (95 million USD) allocated in 2010. To support seed production, the Government will allocate

2.2 billion tenge (15 million USD), which is higher than 108 million tenge in 2010. More than 4,2

billion tenge (30 million USD) will be budgeted for livestock breeding programs,which is higher

than 740.4 million tenge in 2010. Almost 13.1 billion tenge (90 million USD) will be spent

on improving productivity and quality of livestock production, which considerably exceeds the level

of subsidies in 2010 - 76 million tenge.

NATIONAL HOLDING «KAZAGRO»

Purpose Stimulation of agro industry development by effective management of agrarian

joint-stock companies.

Basis principles of activity -compliance with priorities of agricultural policy;

- concentration and directing investments to solving priority tasks of the agro industrial complex;

- improving economic effectiveness of the companies' activity;

- application of innovative international experience in the sphere of corporate management.

Functions - elaborate strategic plans for development, mid-term plans for the Companies' financial activity,

investment programs and the budget of the year;

- ensuring achievement of purposes, including maximization of the Companies' financial results;

- participation in realization of financial and administrative management of the companies'

projects;

- assistance in attraction of external and internal investments;

- development and monitoring indicators of the companies' activity efficiency;

- taking correcting measures in case of the companies' failure in achieving their purposes and

efficiency parameters;

- introduction of international principles of corporate management;

- selection and motivation of the Companies' top managers;

Companies of “KazAgro” National Holding

JSC ―Food Contract Corporation‖

74

JSC ―KazAgroFinance‖

JSC ―Agrarian Credit Corporation‖

JSC «Mal Onimderi Corporation»

JSC ―Foundation for financial support of agriculture‖

JSC ―Kazagromarketing‖

JSC ―KazAgroGarant‖

Contacts:

Chairman of the Board Mr. Berik Beissengaliev

Astana, 36 Kenesary Str., office № 605 PO 010000

Tel./Fax: (7 7172) 555 973, 391 696 email: [email protected]; http://www.nhkazagro.kz

75

BANKING AND FINANCING

On the left is a symbol for national currency, Tenge

Banking sector

After the financial crisis of two years ago, three banks (BTA Bank, JSC; Alliance Bank,

JSC; and Temirbank, JSC) were successfully restructured. As a result, the total foreign indebtedness

of those banks has decreased by more than USD11.0 billion. The banking sector is sounder as a

result. In particular, the share of banks‘ foreign liabilities in as compared to their total liabilities has

been reduced to 23.9% as of January 1, 2011, versus 33.6% as of January 1, 2010.

In 2010, deposits from individuals and legal entities grew by 13.7% to KZT 6825.3 billion

compared to 2010.

However, the lending activities of banks remain low. The reasons: the high credit risk of the

economy and the lack of high quality borrowers. The banks‘ loan portfolio decreased by KZT 572.8

billion, or by 5.9% over the year 2010 to make up KZT 9066.0 billion as at January 1, 2011. As at

January 1, 2011, loans that banks had made in foreign currency were 50.2% of the aggregate loan

portfolio, or KZT 4553.2 billion (57.2% as at Jan 1, 2010).

One of the major problems in the banking sector remains the quality of the loan portfolio.

Non-performing loans remain at a high level -- 32.5%, though this is a decrease of 4 percentage

points compared to the beginning of the past year (36.5%).

2010 saw a reduction in provisions (reserves) in Kazakhstan‘s banking sector. The aggregate

amount of provisions (reserves) in banks decreased to KZT 2802.2 billion, which is 30.9% of the

loan portfolio, and is enough to cover loans more than 90 days in arrears 1.3 times. However, the

proportion of loans more than 90 days in arrears keeps is still high at 23.8% as of January 1, 2011.

Stock exchange

On January 1, 2011, total capitalization of KASE was KZT 13967.2 billion or 56.8% of the

GNP. The number of issuers that had defaulted in the organized securities market was 29. Of them,

the number of issuers whose outstanding debt has been repaid in part is 9. The number of issuers

whose outstanding debt has been repaid through debt restructuring is 2. The number of issuers

whose securities have been delisted from KASE is 19.

76

Kazakhstan‟s Sovereign Ratings

Ratings Outlook

Standard & Poor‘s

Foreign currency: BBB

National currency:

BBB+

Stable

Moody‘s Investors

Service

Foreign currency: Baa2

National currency:

Baa2

Stable

Fitch Ratings

Foreign currency:

BBB-

National currency:

BBB

Positive

77

NATIONAL FUND OF KAZAKHSTAN

National Fund of Kazakhstan (the Fund) was established according to the Decree of the

President of the Republic of Kazakhstan dated August 23, 2000. The Fund is managed by the

National Bank of the Republic of Kazakhstan.

The Fund has 2 basic functions:

saving: guaranteeing sustainable socio-economic development of the country and savings

for future generations; and

stabilizing: reduction of economy dependence on unfavorable external factors.

The Fund‘s assets are being invested into fixed income securities, money market instruments

and equities issued by top-rated foreign and national companies. Stabilizing portfolio includes

investments in highly liquid instruments of money markets and reliable Eurobonds with high

credibility rating. Saving portfolio, aside from debt and money market instruments, is comprised of

equities. This approach favors safe diversification and stable long-term revenues.

The Fund has been very sizeable financial cushion making the country‘s budget much less

dependent on price fluctuations for energy and commodity exports during the recent global financial

turmoil. Apart from reducing the country‘s exposure to external shocks, the Fund‘s assets have been

used to overcome consequences of the global financial crisis. Kazakhstan has allocated $19 bln

(14% of GDP) for the local anti-crisis measures from the Fund, which helped to create 400 thousand

new workplaces, put into operation 170 new industrial objects, render support to small and medium

business, financial institutions and real estate market.

As of March 1, 2011, the Fund‘s assets rose 26% to 6.11 trillion tenge ($41.9 billion) from

4.5 trillion tenge ($31 billion) in 2009 on higher revenue from oil-industry taxes. Previously, the

Fund had been kept in dollars, but now its currency structure is diversified. The Fund‘s benchmark

portfolio for bonds comprises 40% U.S. Treasuries with maturities of 1 to 5 years, 35% euro-area

debt rated AA or AAA with maturities of 1 to 10 years, 10% each of 1- to 10-year U.K. gilts and

Japanese bonds, and 5% 1- to 10-year Australian bonds. Stabilizing portfolio constitutes about 25%

of the Fund‘s assets in foreign currency, whereas the saving portfolio – 75%.

Notwithstanding the negative impact of the global financial crisis on the market conditions

and especially on the Euro-zone debt capital market, due to diversified investment policy as well as

a timely response to changes in the situation on world financial market the Fund has significantly

improved its investment performance in both stabilizing and saving portfolios well above their

benchmark portfolios. For instance, sales of Greek, Spanish and Portuguese sovereign bonds helped

the Fund to earn about $900 million on its investments in 2010. As a result, after losing money on

investments in the 1st half of 2010, the Fund turned a profit through three quarters as the value of its

securities and assets increased.

Advanced world experience as ground for the National Fund of Kazakhstan. Taking into

consideration many features Kazakhstan and Norway have in common as oil exporting nations

Kazakhstan has based its National Fund establishing experience on the example of the Norway Oil

Fund.

KAZAKHSTAN The National Fund

NORWAY

The Norway Pension Fund

Goals:

1. Ensure stable social and economic

development of the country

2. Accumulate financial resources for

future generations

Goals:

1. Smooth short-term variations in oil

revenues

2. Cope with long-term challenge of funding

pensions in the face of declining oil revenues

78

3. Reduce the economy‘s susceptibility to

unfavourable external factors

Income sources:

taxes and non-tax revenues from oil

companies, return on invested capital

Income sources:

cash flow from petroleum activities and return

on invested capital

Management:

Operations require annual approval by

the Parliament;

Assets are managed by the National

Bank of Kazakhstan and/or appointed asset

management companies according to the

Ministry of Finance guidelines;

Oversight by the Management Council

formed by the President and members of

the Parliament and Government.

Management:

Transfers to a government

fiscal budget require approval of the

Norwegian Parliament

Assets are managed by the

Norwegian Central Bank according to the

Ministry of Finance guidelines;

Oversight by the Norwegian Government

and Advisory Council on Ethics.

79

THE STATE PROGRAM OF ACCELERATED INDUSTRIAL-INNOVATIVE

DEVELOPMENT OF KAZAKHSTAN FOR 2010-2014

Important Milestone in “Avoiding the Oil Course”

Kazakhstan had to rely on rich energy resources and spared no effort to ensure speedy

development of this sector of the economy. But there was an early understanding that the oil could

become a curse unless proper policies are developed -- that oil is an opportunity, not a guarantee of

economic success. The goal is to build a modern, diversified, highly-technological, service-based and

value-added economy.

The State Program of Accelerated Industrial-Innovative Development of Kazakhstan for

2010-2014 (SPAIIDK) reflects Kazakhstan‘s new economic philosophy, which initially was

introduced by the Innovative Industrial Development Strategy for the years 2003-2015 (New

Industrial Development Strategy).

The SPAIIDK is aimed at maintaining a steady and balanced economic growth through

diversification.

SPAIIDK indentifies seven areas to serve as a basis for overall economic diversification:

agriculture;

construction;

refining and O&G infrastructure development;

metallurgy;

chemical and pharmaceutical industry;

news sources of energy (including nuclear and renewables);

transportation and telecommunications.

Implementation of this program will lead to a $47.6 bln increase of the economy‘s total value

added.

SPAIIDK opens wide opportunities for foreign investors. For example, in 2010 Kazakhstan

launched 152 projects worth KZT 800 billion ($ 5.5 bln) that created 23,500 jobs. By 2014, Kazakh

officials plan to implement 294 investment projects worth KZT 8.1 trillion ($ 55.1 bln). In total,

161,000 new permanent jobs will be created for the period of the program.

In March 2010, the Ministry of Industry and New Technologies was established to

coordinate diversification development. It has a Deputy Prime-Minister-ranked Minister – a sign of

its importance.

80

логотип

Program of Accelerated Industrial-

Innovative Development for 2010-2014

Agriculture

2015 – 8% export share of agricultural products

Gross Value Added+16%

10000 new jobs

Construction and Construction Materials

2015 – 80% of demand by domestic production

Gross Value Added+76%

Refining and O&G Infrastructure Development

2014 – 100% of demand by domestic oil products

Gross Value Added+30% Metallurgy

2015 – twofold production and export

Gross Value Added+107%

Chemical and pharmaceutical Industry

2014 – 50% of demand by domestic production

Energy including renewables

2015 – 10% decrease of economy’s energy intensity

Transport and Telecommunications

boost for new production across all sectors

Gross Value Added+63%

Total Gross Value Added+over KZT 7 trn. ($47.6 bln.)

134 projects are scheduled for 2010 and alreadydistributed but…

2011-2014 are still ahead

81

логотип

SME Development Fund „DAMU‟

www.damu.kz

Development Bank of Kazakhstanwww.kdb.kz

Investment Fundof Kazakhstan

www.ifk.kz

National Innovation Fund

www.nif.kz

Export credit Insurance Corporation

„KazExportGarant‟ www.kecic.kz

National Export and Investment Agency „KAZNEX INVEST‟

www.kaznex.kz

Official Points of Contactto explore investment opportunities

Ministry of Industry and New Technologies(www.mit.kz)

„Samruk-Kazyna‟ National Welfare Fund

(www.samruk-kazyna.kz)

„KazAgro‟ National Holding

(www. nhkazagro.kz)

Investment Portal

„Kazinvest‟

www.kazinvest.kz

82

“NATIONAL WELFARE FUND

“SAMRUK-KAZYNA”, JSC

Contacts:

Address: Kazakhstan,

010000, Astana,

Kabanbay Batyr av.,

building 23

Blocks А, С, Е.

Tel.: (+7 7172) 79-04-

86, 79-04-87, 79-04-

88 and 97-94-42

Fax.: (+7 7172) 79-04-

00 and 97-94-45

Mr. Timur Kulibayev

CEO

Sir Richard Evans,

Independent Director,

Member of the Board of Directors

The ―Samruk-Kazyna‖ was established to increase competitiveness and sustainability of

the national economy and to prevent a potential negative impact of world market changes to the

country‘s economic growth.

The core aim of the Fund activities is to manage share holdings of national development

institutions, national companies and other legal entities for maximization of their long-range

value and enhance of competitiveness on international markets.

Fundamentals of the Fund Activity:

1. Observance of state interests as the sole shareholder of the Fund;

2. Transparency, efficiency and flexibility of activity of the Fund and companies;

3. Consistency and operational efficiency in decision making and realization;

4. Responsibility and accountability.

Main Directions of the Fund Activity:

5. Assistance in modernization and diversification of national economy;

6. Assistance in stabilization of national economy;

7. Increase of activity efficiency of companies.

8. The key direction of activity of the Fund and companies is modernization and

diversification of national economy

9. The Fund is designated to extend maximum assistance to the Government of the Republic

of Kazakhstan taking prompt and operative decisions on attraction of investments to real

sector of the economy, stirring up the activities in the regions, strengthening of inter-

sectoral and interregional ties utilizing to maximum extent the existing advantages and

potential.

83

Efficient diversification and modernization of national economy are implemented through

realization of intensive investment activity, especially in priority sectors of the economy such as

oil and gas, electric energy, metallurgy, chemistry, petrochemistry and infrastructure.

Main Objectives of the Fund:

- To elaborate and provide the realization of investment projects of regional, national and

international scale;

- To support and modernize existing assets of Fund group companies;

- To assist the development of regions and realize social projects;

- To support national commodity producers, domestic goods and services.

Functions of the Fund within aforementioned objectives:

- To elaborate and (or) realization, and (or) financing of investment projects of regional,

national and international scale, including the real sector of the economy, using its own

resources and (or) with participation of the companies, as well as jointly with strategic

foreign and (or) domestic investors, through equity financing and loan extension;

- To act as an operator for realization of the Programme ―30 Kazakhstan corporate

leaders‖ and other programs and plans based on the decisions of the Government of the

Republic of Kazakhstan;

- To develop new sectors of economy and to purchase economically attractive assets both

in the country and abroad;

- To ensure cooperative and active investment policy;

- To attract domestic and foreign, state and private investments; to introduce innovations

in different spheres of economy;

- To raise balanced debt capital on foreign and domestic markets;

- To finance SME projects;

- To establish efficient complex system of financial and investment instruments group

companies;

- To develop interregional economic ties through the realization of projects on the

territory of the Republic of Kazakhstan;

- To ensure break-through development of regions through the actions of social and

entrepreneurial corporations.

Functions of the Fund:

- To participate in stabilization programs of the Government of the Republic of

Kazakhstan;

- To purchase of authorized voting shares of second-tier banks;

- To allocate tied funds in second-tier banks in order to promote social and economic

development, including completion of construction sites, financing of SME and agro-

industrial complex;

- To assist in development of mortgage loan market and housing construction holdings

system;

- To define, approve and carry out monitoring of procurements order of the Fund and

companies, that set the mechanisms for increase of domestic component in procurements of

the Fund and companies got from Kazakhstan producers of goods and services, for provision

of localization of production, assembly, repair and service of imported equipment in

Kazakhstan only when the equipment is purchased in large volume by the companies;

84

- Asset management of JSC ―Stress Assets Fund‖.

Activity of Samruk-Kazyna Fund for stabilization of the economy of the Republic of

Kazakhstan:

1. Stabilization of financial sector

2. Problem solving on real estate market

3. Support of SME

4. Development of agro-industrial complex

5. Realization of innovation, industrial and infrastructure projects

“NATIONAL WEALTH FUND “SAMRUK-KAZYNA”, JSC,

SUBSIDIARIES AND DEPENDENT ORGANIZATIONS

About 40% of the national GDP is within the realm

of the Fund

Total amount of the Holding Company employees is

more than 260 thousand, including 205 employees of

the Management Company

1. JSC “Kazmunaigas” – 100% subsidiary

2. JSC “Kazakhstan Temir Zholy” – 100%

subsidiary

3. JSC “KEGOC” – 100% subsidiary

4. JSC “Kazakhtelecom” – 45.9%

ownership

5. JSC “Kazmail” – 100% subsidiary

6. JSC “Air Astana” – 51% ownership

7. JSC “Samruk-Energo” – 94.01%

ownership

8. JSC “Kazakh Research and

Development Institute of Energy” – 50+1%

ownership

9. JSC “Kazakh Operator of the Electrical

Energy and Power Market” – 100% subsidiary

10. JSC “Pavlodar Airport” – 100%

subsidiary

11. JSC “Aktobe International Airport” –

21. JSC “Kazakhstan Export Credit Insurance

Corporation” – 100% subsidiary

JSC “Investment Fund of Kazakhstan” – 100%

subsidiary

22. «KazExportGarant» Export credit insurance

corporation» JSC – 100% subsidiary

23. JSC “Engineering and Technology Transfer

Center” – Trust management

24. JSC “Astana – Finance” – 26% ownership

25. JSC “Kazakhstan Mortgage Company” –

100% subsidiary

26. JSC “Kazakhstan Mortgage Guarantee

Fund” – 100% subsidiary

27. JSC “Zhylstroisberbank” – 100% subsidiary

28. JSC, “Real Estate Fund Samruk-Kazyna” –

100% subsidiary

29. National Mining Company “Tau-Ken

Samruk” – 100% subsidiary

85

100% subsidiary

12. JSC “Atyrau International Airport” –

100% subsidiary

13. LLP “Repairs Corporation “Kamkor” –

100% subsidiary

14. LLP “Samruk-Kazyna Invest” – 100%

subsidiary

15. LLP “Samruk-Kazyna Contract” – 100%

subsidiary

16. JSC “Development Bank of Kazakhstan”

– 100% subsidiary

17. JSC “Kazyna Capital Management” –

100% subsidiary

18. JSC “Entrepreneurship Development

Fund “Damu” – 100% subsidiary

19. LLP “SK-Pharmacy” – 100% ownership

20. JSC “Distressed Assets Fund” – 100%

beneficial ownership

30. JSC “Halyk Bank” – 20.91% ownership

31. JSC “BTA Bank” – 75.1% ownership

32. JSC “Kazkommertsbank” – 21.26%

ownership

33. JSC “Alliance Bank” – 67.07% ownership

34. JSC “TemirBank” – 79.9% ownership

35. LLP “United Chemical Company” – 100%

subsidiary

36. Kazakhstan Growth Fund Management –

100% subsidiary

37. KGF SLP – 100% subsidiary

38. KGF IM – 100% subsidiary

39. JSC “Maikainzoloto” – 25% ownership

40. JSC “Kazatomprom” – 100% subsidiary

41. JSC “Pavlodar Oil Chemistry Refinery” –

42% ownership

42. JSC “Kazakh British Technical University” –

1.67% ownership

86

PEOPLE‟S IPO

In a speech at Nur Otan Party Congress on February 11, 2011, President Nazarbayev

asked the Government to develop a program for initial public offerings of the national

companies owned by the sovereign welfare fund Samruk-Kazyna, which controls around $70

billion of assets in banks, state energy companies and other major industries.

Samruk-Energy, KEGOC and KazPost will put their shares up for an initial public

offering (IPO) by the end of the year. National companies such as KazMunaiGas,

Kazakhstantemirzholy railways and Kazatomprom will follow up with initial public offerings in

2012-2013. Later on, the metal producers Eurasian Natural Resources Corp. (ENRC),

Kazakhmys, Kazzinc, and Arcelor Mittal‘s Karmetkombinat will also offer some of their shares.

―People‘s IPO‖ shares will be sold directly to the public. Shares that remain unsold to

individuals will then become available for purchase in Kazakhstan‘s pension and investment

funds. ―We are now in the tight process of engaging consultants, and I think that in the 2nd half

of this year people‘s IPO will enter into full force,‖ said Prime-Minister of Kazakhstan Mr.

Karim Massimov.

"In the sale of shares we do not aim at maximizing profits for the Government. We think

more about the investors – citizens and the pension funds… Revenue sharing and the

establishment of average investors in the country is very important not only in economic terms,

but also from political and social point of view. Not everyone can become an entrepreneur. But

having small savings to the tune of USD 100, 200, 500 you can take part in the equity. I think

that this is a reduction of social tension. This first stage we must pass and later we can talk about

the full-scale IPO for a wide range of investors," the Prime Minister said.

The Ministry of Finance has proposed to limit the equity offering up to 10% of each

company‘s shares. Finance Minister Bolat Zhamishev said that "it would be correct if the

market proposed only minority stakes up to 10% of all the national companies, except for JSC

Exploration and Production KazMunaiGas." Some companies are planning to place their shares

ahead of schedule. Thus, JSC "Exploration and Production KazMunaiGas" is going to sell 5%

of its shares this year at an estimated value of $500 million. Kazakh Citizens willing to become

shareholders of the national companies can acquire no more than 50 shares each. Public

offerings will be sold through the offices of KazPost, the national postal service.

87

DEVELOPMENT INSTITUIONS

With a view to implement innovation policy in the Republic of Kazakhstan, the system

of state development institutions has been established. Such institutions are recognized by the

native and foreign partners as a reliable tool for the establishment of new high-tech industries.

Mission of the institutions is in implementing and enhancing capacities for domestic

business to accomplish important national tasks with regard to modernizing and diversifying

economy as well as bringing the country to a new level of socio-economic development.

Through the development institutions, the state participates in the projects focused on

creation of entire industries system, producing competitive products, developing technological

and economical value chain step by step. It will enable to create multi-activity enterprises,

working for final product meeting all competitive product requirements.

To further increase efficience of implementation of diversification programs since April

2011 control over development institutions has been transferred from the National Welfare Fund

―Samruk-Kazyna‖ to Ministry of Industry and New Technologies and Ministry of Economic

Development and Trade.

Investment Fund of Kazakhstan

Investment fund of Kazakhstan was formed in May

2003. It has an authorised capital of 37,9 billion KZT

(Approx. 296 million USD).

Chairman Mr. Timur Zhaksylykov

Tel.: (+7 727) 258 83 33, 259 81 31

Fax: (+7 727) 258 37 99

e-mail: [email protected]

Web-site: www.ifk.kz

Postal address: Kazkhstan, 050010 Almaty, Zenkov St. 80.

―Investment Fund of Kazakhstan‖ JSC was founded on May, 30th, 2003 by Government

Resolution of the Republic of Kazakhstan № 501 within realization of the Strategy of Industrial

and Innovative Development of the Republic of Kazakhstan 2003-2015. 100 percent of shares

of "IFK" JSC belong to Sovereign Welfare Fund "Samruk-Kazyna", JSC.

Goal of the Fund. The goal of the Fund is assistance in realization of industrial and

innovative policy of the Republic of Kazakhstan through realization and attraction of

investments into attractive projects and financial support to initiatives of a private sector in non-

primary sectors of the economy.

Objectives of the Fund:

equity investments into newly organized and operating organizations dealing with

profound processing of raw materials, producing competitive production using new

technologies, and also rendering industrial services to the perspective organizations in the

industry field;

promotion of private investments into non-primary sector of the economy through co-

financing by the Fund of investment projects (equity financing) and participation in

management of these projects.

88

A decision on providing financial support is made after a comprehensive analysis on the

value added concept (VAC), and finding more significant elements of the chain. If the results of

VAC analyses show the necessity and viability of the project then it is given encouragement.

One of the main criteria for projects‘ evaluation is their commercial viability.

While considering a project the experts take into account whether the project leads to

creation of an enterprise which produces products competitive in the external markets and

capable of replacing imported goods. The analyses mainly focus on the initiatives of the private

sector with respect to the economy‘s non-mineral sector.

In order to make the projects‘ financing easier in case of finance shortage in the private

sector IFK makes co-financing by taking part in the authorised capital (purchase of shares), but

without acquiring a control package. Moreover, it should be stipulated that the state package

will be sold once the project has been realised.

It gives IFK opportunity to facilitate not only to the creation of new industries, including

high tech enterprises, but also development of the securities market.

The Fund is currently searching opportunities for establishing relations and developing

ways for enhancing partnerships with highly reputable strategic investors and private equity

funds interested in emerging markets.

National Innovation Fund

The Innovation Fund of Kazakhstan was formed in May 2003. It has an

authorised capital of KZT (tenge) 9.5 bln. (approx. US $ 68 mln.).

Chairman Mr. Aidyn Kulseitov

Tel.: (+7 727) 259 98 16, 259 98 17, 259 98 19

Fax: (+7 727) 259 98 39

e-mail: [email protected]

Web-site: www.nif.kz

Postal address: Kazakhstan, 050013 Almaty, Nauryzbay Batyr str., building # 154-A, floor 5

The Innovation Fund is to stimulate the venturing function of the market economy which

does not exist even in all of the developed countries. This function is important for the creation

and development of high tech fields of economy such as IT, electronics, biotechnology and

others. Thus the main aim of the Fund‘s activity has to be facilitation of the growth of

innovative activities, development of high tech industries in the Republic of Kazakhstan. The

efforts of IF are aimed at encouraging and development of infrastructure for innovations.

The main tasks of the Fund are:

- participation in creating the elements of infrastructure for innovations (technical

policies and science parks, informational and analytical centres, etc.);

- creation of venture funds together with domestic and large international venture

investors;

- participation in the authorised capital of new or existing enterprises with the aim to

manufacture high tech products and develop new technologies;

- financing of certain types of Research and Development aimed at creating new

technologies, products, services which are commercially viable and may have a

positive impact on the technological advancement of the country.

A decision on issuing grants by IF is taken after holding an independent scientific and

89

technical expertise with involvement of foreign experts. Scientific researches, which have been

selected for financing, have to be up to the projects within the framework of financing via the

Investment Fund of Kazakhstan and Development Bank of Kazakhstan.

The innovation infrastructure development is operated by a branch enterprise of the

NIF — «Center of engineering and transfer of technologies«JSC . Since 2005 NIF is a member

of European Venture Capital Association (EVCA) and Singapurian Venture Capital Association

(SVCA).

Creation of venture funds facilitates involvement of private capital in innovation

activity, reduces risks, and forms a mechanism of effective co-operation between government

and private sector in the sphere of commercialization of innovative ideas. In present, National

Innovation Fund has initiated foundation of six venture funds together with Kazakhstani private

partners. Investment policy of these funds is addressed to search and attract projects in the areas

of ICT-technologies, new construction materials, pharmaceutics, and other prospective export-

oriented areas.

Today, the authorized capital of the six venture funds created in Kazakhstan is equal

to 130 million US dollars. Venture Capital is investors‘ capital created to finance new,

developing, or competing for a market share enterprises and firms, and therefore, it is associated

to a high or relatively high level of risk; long-term investments into venture securities

or enterprises with an expectation of high profits. Venture investments are usually risky

investments with profitability higher than average level.

Export Credit Insurance Corporation KazExportGarant (State Insurance Corporation for the Insurance of Export Credit and

Investment)

«KazExportGarant» Export credit insurance corporation» JSC was formed on

August 8, 2003. It has an authorised capital of KZT (tenge) 7.7 bln. (approx.

US $ 63 mln.).

Chairman Mr. Galym Amerkhodzhaev

Tel.: (+7 727) 250 00 21

Fax: (+7 727) 293 88 37

e-mail: [email protected]

Web-site: www.kecic.kz

Postal address: Kazakhstan, 050010 Almaty, Zenkov str., building # 80

The main task of the Export Credit Corporation is facilitation of export of goods and

services produced by Kazakh companies and insuring from political and regulatory risks. The

Corporation holds marketing researches for the development of Kazakh goods export, analyzes

and distributes information on potential export markets. Such an export promoting tool is widely

recognised in the world to facilitate export transactions. Within domestic insurance market

growth it is ready to cover risks related with export and import operations, the Export Credit

Corporation is focusing its activity on insuring from political risks and providing commercial

information on the international markets.

In August 11, 2007 credit agency «Moody‘s Investors Service» upgraded financial

reliability rating of the Corporation up to the sovereign one «Ваа1», with stable rating outlook.

The rating was upgraded due to the financial performance, well-implemented investment policy

in the area of asset management as well as the full compliance of the Corporation‘s activity in

90

the area of commercial and political risks insurance to the international standards used by the

world export credit agencies.

Chairman Mr. Nurlan Kussainov

T. (+771712) 792606

E-mail: [email protected] , [email protected]

Web-site: www.kdb.kz

Postal address: Kazakhstan, Astana, Esil district, Orynbor Street, building 10 (Kazyna Tower)

Established in 2001 the Development Bank of Kazakhstan is currently one of the main

providers of the state investment policy in Kazakhstan.

Through financing estabkishment of competitive productions in non-primary sectors of

the economy and developing the country‘s infrastructure, the Bank directly contributes to the

sustainable development of the national economy.

Investment activity of the Bank is represented in all the regions of Kazakhstan and in all

key sectors of the processing industry. The new and modernized enterprises commissioned with

the help of the Bank‘s financing make a solid contribution to strengthening Kazakhstan‘s

industrial and export potential.

Being one of the main participants of the economy diversification, the Development

Bank of Kazakhstan will further establish itself as the leader in implementing breakthrough and

cluster projects. The main principles on its way are Professionalism, Credibility, and

Transparency.

All these processes are united in the ENGINEERING OF THE NEW ECONOMY, the

economy which is being built today.

National Agency for Development and Promotion of

Export and Investments “KAZNEX INVEST”

In early 2008 Corporation for export development and

promotion was formed. After announcement of State

program for accelerated industrial-innovative development

in 2010 it was reorganized into the National Agency for

Development and Promotion of Export and Investments

―KAZNEX INVEST‖. It is now in charge of organizing

road shows and business forums that are aimed at

attraction of foreign direct investments. The Agency is

working now on creation of web portal that will match

local and foreign investors. The Agency is also partnering

with large foreign investors to attract new technologies

within the realization of investment projects that are aimed

to produce high value added goods in Kazakhstan.

Chairman Mr. Yerlan Arinov

Tel.: (+7 7172) 79 17 18

Fax: (+7 7172) 79 17 19

91

e-mail: [email protected]

Web-site: www.kaznex.kz

Postal address: Kazakhstan, 010000 Astana, Sygynak str., building # 10/2, block Б,

Business Center ―Nomad‖, floors 6-7

The key objective of the Agency is to be a driving force to build the institutional

network, stimulate and maintain export growth, develop trade competence through improvement

of national competitiveness. The Agency is working closely with both private and public sectors

to develop export promotion.

Activities of the Agency will be aimed at:

Promotion of an enterprise export capacity development (training, technical assistance,

data bases, trade financing information , logistics, custom clearance, packing, etc.);

Organizing business forums and trade shows to increase awareness of business

opportunities in Kazakhstan;

Promotion of the Kazakhstan‘ goods export(establishment and maintenance of business

relations with other countries; exhibitions; missions of exporters and importers,

assistance in assessing external markets);

Development of the institutional capacity (recommendations on trading improvement,

interaction between participants of trade support network, development of trade

competence, publications to support exporters, etc.);

Consulting (study of sectors and potential markets, analysis of current legislation, etc.);

Kazyna Capital Management

―Kazyna Capital Management‖ was formed on March 2007

Chairman

Mr. Abay Alpamysov

Tel.: (+7 727) 334 14 17

Fax: (+7 727) 334 14 18

e-mail: [email protected]

Web-site: www.kcm-kazyna.kz

Postal address: Kazakhstan, Almaty, Dostyk avenue, building # 291/3a, floor 2

The mission is to provide an additional incentive to private businesses of the country

through a direct participation in the authorized capital; grant loans, warranties and other

investment instruments. The main objective is making a significant contribution in the structural

and sustainable economic development of the country and gaining, jointly with the private

sector, income compatible by a degree of risk. One of the main goals of KCM JSC in the market

is providing investments in the priority sectors of the economy.

The key objective of ―Kazyna Capital Investment‖ is foundation of Private Equity Funds

(PEF) jointly with overseas funds to finance different projects especially in Kazakhstan and

Central Asia region.

92

Entrepreneurship Development Fund “Damu”

EDF ―Damu‖ started operating on August 18, 1997

Chairman Ms. Lyazzat Ibragimova

Tel.: (+7 727) 244 55 56, 244 55 77

Fax: (+7 727) 244 83 41, 278 07 76

e-mail: [email protected]

Web-site: www.fund-damu.kz

Postal address: Kazakhstan, 050004 Almaty, Gogol str., building # 111

The major goal of the Fund is to encourage the establishment and economic growth of

the Kazakh small businesses and distribute government funding to support small and medium

enterprises.

Until November 2007 the Small Entrepreneurship Development Fund accomplished its

major goal by undertaking the following actions:

Developing project financing: Direct loans to small businesses operating in priority

sectors to diversify small businesses taking into account social and economic situation in

certain areas;

Developing financial leasing;

Establishing a network of microfinancing institutions;

Developing a system to guarantee liabilities of small businesses to commercial banks;

Consulting to small and medium enterprises within the program implemented by the

Fund.

The Fund is currently part of the Sustainable Development Fund Kazyna. New principles

and priorities of management and communications include transparency and partnership.

Since late 2007 conceptual changes have been occurred in the Fund: The Fund has

changed from the Small Entrepreneurship Development Fund into Entrepreneurship

Development Fund Damu. Now it has greater authority to support small and medium-sized

businesses; the Fund is turning from a financial institution into operator to manage funds

allocated by the government; new approaches are being taken to provide financial support to

small and medium-sized businesses, assisting in collecting and analyzing data and providing

consulting services to small and medium-sized businesses.

93

TAXATION2

Due to political and economic stability in Kazakhstan, abundant natural resources and

high annual economic growth over the past decade, foreign investors continue to view

Kazakhstan as a favourable place to do business. One of the most important issues to foreign

investors is taxation.

The existing Tax Code was adopted on December 10, 2008, with the latest amendments

made on January 1, 2011 and is aimed at fostering the process of further diversification of the

economy of Kazakhstan and stimulation of its development. All previous amendments and

interpretations as well as International Financial Reporting Standards (IFRS) have been taken

into account and incorporated in the Tax Code. The new Tax Code aims to achieve a reduction

of tax burden on sectors not related to natural resources extraction and improve tax

administration.

What is taxation for companies that operate in Kazakhstan through permanent

establishment?

Foreign investors can operate in Kazakhstan through either a local branch of a foreign

company or a local subsidiary established as an independent legal entity. Income of foreign

companies represented in Kazakhstan is subject to corporate income tax (CIT) at a rate of 20%.

CIT was lowered in 2009 from 30% to 20%. While plans to further reduce the rate to 15.0% in

2011 have been postponed, the government remains committed to easing the overall tax burden

in order to stimulate new business ventures.

The Tax Code also introduced a number of changes to the regulation of CIT. For

example, an advance payment of CIT was cancelled for small-sized business entities and the

period of net operating loss carry-forwards was extended from 3 to 10 years.

What is taxation for companies that earn income in Kazakhstan without permanent

establishment?

Foreign companies which earn income from sources in Kazakhstan without a permanent

establishment or branches are subject to various income taxes. The following income tax rates

apply to income paid by non-resident companies with no taxable permanent establishment in

Kazakhstan:

Income (except income as per clauses 2)-6) of article 192) 15%

Income of an entity registered in tax-havens 20%

Premiums paid for insurance coverage 15%

Premiums paid for reinsurance 5%

Income from international transportation services 5%

Other income (royalty, fees for other types of services) 15%

What is the taxation regime for oil companies?

Energy companies pay the Mineral Extraction Tax (MET), the Excess Profit Tax (EPT),

the signature bonus, the commercial discovery bonus and historic costs. The MET is a volume-

2 The information contained in this article is of a general nature and is not intended to address the circumstances of any particular

individual or entity. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

94

based royalty type tax applicable to crude oil, gas condensate and natural gas. Rates escalate

depending on volume. Different tables of rates apply depending on what is produced and

whether it is exported or sold domestically. The rates are applied to production valued at world

prices. MET rates vary from 0.25% to 20%. EPT is assessed using a sliding scale at the specific

rate stipulated in the Tax Code and based on the ratio of the aggregate annual income to the

income deductions. The size of the non-taxable net profit has been increased from 20% to 25%.

Are there any tax treaty benefits?

Yes, there is a procedure for claiming treaty relief in Kazakhstan that depends on the

type of income for which treaty benefits are claimed. For passive income and income from

services provided entirely outside of Kazakhstan, a non-resident of Kazakhstan who is a resident

of a country that has a tax treaty with Kazakhstan can claim treaty benefits simply by providing

to the payer a copy of a certificate from the non-resident‘s home-country tax authorities

confirming that the non-resident is a tax resident of that treaty-partner country. Likewise, a non-

resident with a branch office in Kazakhstan can claim a treaty-reduced branch profit tax rate by

obtaining from its home-country tax authorities a certificate confirming that the non-resident is

a tax resident of that treaty-partner country.

Can I use investment preferences?

Acting enterprises are granted the right to deduct the cost of fixed assets entered to

exploitation for a period not less than 3 tax periods (years). Newly commissioned enterprises are

given exemption from CIT on revenues of investment activity for a period from 3 to 10 years.

There is an exemption from property tax on fixed assets purchased within the framework

of the investment project for the period not less than 3 tax periods (years). Exemption from land

tax for plots is used for implementing investment project for the period not less than 3 tax

periods (years). There is flexibility in terms of custom duty payment when investor imports

equipment or parts to implement the investment project. State grants in kind can be granted as a

plot of land, building, construction, machines and equipment.

What are the social tax and value-added tax (VAT) rates?

The Social tax changed from 13% to 5% to a fixed rate of 11%. The VAT rate was

lowered from 13% to 12% and it has to be paid through refunding of debit balance. Tax benefits

are available to enterprises that are making investments. The flat rate of the individual income

tax is kept at 10%.

What changes have been introduced in relation to value added tax (VAT) in 2011?

According to new amendments into taxation legislation the list of zero rated turnover

and turnover which is exempt from VAT has been extended starting from January 1st 2011.

Zero-rated turnover

Sales turnover of petroleum-oil lubricants (POL) carried out by airports fuelling aircraft

of foreign air companies conducting international transportation is taxed at the zero rate.

Exemption does not apply if the shipment point and destination point are located in the

territory of the Republic of Kazakhstan.

95

The list of documents confirming zero rated turnover from sales of POL to the aircraft of

foreign air companies conducting international air transportation is determined.

Turnover and import which are exempt from VAT

Sales of investment gold are considered to be turnover which is exempt from VAT under

the conditions established by the Tax Code.

Investment gold is added to the list of imported goods which are exempt from VAT.

The conditions under which import of investment gold shall be exempt from VAT are

determined.

Has the Customs Union made any impact on the taxation regime in Kazakhstan?

Kazakhstan, starting January 1, 2010, became a member of the Customs Union with

Russia and Belarus. The Customs Union is a market of more than 170 million people and has

combined GDP that exceeds 2 trillion US dollars. Being a member of the union hasn‘t affected

the tax regime of Kazakhstan, which is considered one of the most liberal tax regimes among

the countries of the CIS. For example, the CIT in Russia and Belarus are 20% and 24%

respectively, whereas in Kazakhstan CIT is 20%. VAT in Russia and Belarus are 18% and 20%

respecitvely, whereas in Kazakhstan VAT is 12%.

96

TRADE REGULATION

Trade growth is a primary component of Kazakhstan‘s successful development. There

are new players in the market, and the extension of trade with Kazakhstan is becoming a priority

for an increasing number of foreign companies. What follows is an overview of the main

regulatory mechanisms for trade in imported goods into Kazakhstan. The main requirements of

customs control, licensing and certification are described.

Organizational and Legal Form of the Trade Enterprise

Kazakh law does not distinguish between resident and nonresident legal entities.

Therefore, a foreign company may carry out activity in Kazakhstan as a Kazakhstan legal entity,

with charter capital fully established by a foreign company, in the form of a joint venture or

through the establishment of a branch.

Tariff Regulatory Measures of the Foreign Economic Activity

From the moment that goods are conveyed across the customs border of Kazakhstan,

they fall within the scope of the legally established rules on conveyance and customs clearance,

i.e. tariff regulatory measures. These rules are established by the Customs Code of the Customs

union and the Customs Code of the Republic of Kazakhstan. The customs payments depend on

customs procedure chosen and include customs duties, customs fees and payment for a

preliminary decision.

In order to pass customs clearance, the customs value of the goods must be determined.

There are several methods that have been established to determine the customs value:

transaction value of imported goods; transaction value of identical goods; transaction value of

similar goods; deduction of costs; computed value and the reserve method.

The customs valuation of imported goods is often based on the price of the transaction with

these goods. The declaring person independently determines the customs value of the goods and

the customs authority controls the correctness of such determination.

A person importing goods has to pay customs duties and taxes, comply with non-tariff

regulatory measures and conduct a customs clearance. Under the procedure of processing goods

for internal consumption, foreign goods undergo processing under customs controls without

payment of customs duties or taxes and without application of non-tariff regulatory measures.

The free customs zone procedure envisages that goods placed and used within the relevant

territorial special economic zones are exempt from customs duties and taxes, except for excise

tax on imported goods, and from non-tariff regulatory measures being applied to them, except

for safety requirements. This category of goods consists of the articles included in a list

composed specifically for the purpose of the creation of special economic zones. For example,

the Decree of the President ―On the creation of the ‗Ontustik‘ special economic zone‖ contains

the list of goods including vehicles, equipment and goods necessary to conduct construction

work on the territory of the economic zone, as well as goods and materials necessary to conduct

scientific and development work.

Kazakhstan grants tariff preferences to certain countries either in the form of release

from or reduction of the rates of customs duties, or in the form of allocation of quotas for the

preferential import of goods. Customs duties are not collected when goods are imported from

countries that are members of the Customs union or have free trade agreements with

Kazakhstan. The Commission of the Customs Union approves the list of developing countries

97

that are subject to the common system of tariff preferences of the Customs union. The listed

goods imported from developing countries to the common customs territory of the Customs

union are granted tariff preferences.

The law envisages that the customs value is declared by a declarant when submitting a

customs declaration of goods. However, the final decision concerning accuracy of methodology

application on customs value determination is made by the customs authorities.

In order to avoid delays in customs clearance, declarants should carefully review all

requirements with regard to the list and contents of the documents to be submitted. It is possible

to request a preliminary decision from customs authorities on classification of goods and to

undergo a periodic declaration of goods.

Non-Tariff Regulatory Measures

Apart from the customs payments, the import of goods is also subject to the non-tariff

regulatory measures, including licensing, quotas, certification and other protective measures

established by law.

Licensing

The purpose of import licensing of certain goods is to monitor and control imports of

goods that are classified as sensitive for national security reasons, protection of life or health of

citizens and the environment. Licensing of imports and exports is regulated by the Agreements

of the Customs union. Not all goods must be licensed, only those that are included in the special

list approved by the Commission of the Customs union. The list includes such goods as ozone-

depleting substances and products containing ozone-depleting substances, medicine and

pharmaceutical substances, medicine applied in veterinary, radio-electronic devices and (or)

high-frequency devices, ethyl spirits and alcohol products, cryptographic devices.

Obtaining a license is a mandatory for every imported category of goods, whether such

goods are imported by a legal entity registered in Kazakhstan or a foreign legal entity (or its

structural subdivision). In order to obtain a license, an applicant needs to submit the documents

regulated by the legislative acts to the authorized body.

One-time licenses are issued on the basis of a foreign trade contract related to goods

subject to import licensing. The license grants the right to import certain types of goods subject

to licensing in the quantity determined by the license and is valid up to 1 year from the date of

issuance of the license. At the request of an applicant, the duration of a one-time license can be

extended by making additional entries into the license by the authorized body. An import

license is issued within 15 business days from the date of submission of all necessary

documents. The authorized body of Kazakhstan has the right to terminate or suspend the license

in the case of a change in the constituent documents of the licensee registered as a legal entity (a

change of the organizational-legal form, name, or its location) or a change in the passport

information of the licensee being a physical person. In such circumstances, the licensee can ask

the authorized body to terminate the existing license and register a new license.

Certification of Compliance with Technical regulations and Standards

Within the framework of formation of the Customs Union that started its operation

January 1, 2010, the basic legal framework for technical regulations of Kazakhstan could be

found in the EurAzEC Agreement on Implementation of Coordinated Policy in the Field of

Technical Regulation, Sanitary and Phytosanitary Measures of January 25, 2008, signed by the

Republic of Belarus, the Republic of Kazakhstan, Russian Federation, Republic of Tajikistan

98

and Kyrgyz Republic.

Technical regulations are mandatory for application by all EurAzEC member-states and

are enforced in the manner provided by member-states‘ national legislation. Products covered

by EurAzEC technical regulations are allowed on the common market only if they pass the

appropriate conformity assessment procedures within the territory of any member-state in

compliance with EurAzEC technical regulations. Conformity assessment is a process that

determines whether products and processes conform to technical regulations or standards.

Conformity recognitions can be (i) mandatory – by a certification of an accredited certification

body or a producer's declaration of conformity (for products subject to technical regulation

requirements); and (ii) voluntary – by a certification or a conformity declaration of the

producer/seller indicating that the requirements of standards, other documents or special

requirements were met (for products not subject to mandatory conformity recognition).

For assessment of products‘ conformity to technical regulations, EurAzEC member-

states upon mutual agreement and on a voluntary basis apply international and regional

standards and in the absence of thereof, national ones. Conformity assessment documents issued

by a certification body of one member-state are equally valid within the territory of any other

member-state without carrying out of additional procedures.

Guided by EurAzEC Agreement, the CU member-states established a legal framework

for technical regulations within the CU in the Agreement on the Common Principles and Rules

of Technical Regulating of November 18, 2010, (hereinafter – the CU Agreement on Technical

Regulating). The CU technical regulations have the status of direct application. Products could

be released for circulation within the CU territory only upon results of a conformity assessment.

In accordance with CU Agreement on Technical Regulating the CU member-states

formed a Common List of Products Subject to Mandatory Requirements within the Customs

Union (hereinafter – Common List), products included on the Common List, for which no

technical regulations of the CU or EurAzEC came into force, should be governed by the

relevant national legislation of CU member-states. Currently, mandatory requirements are

applied to 35 product groups. The product has to be excluded from the Common List once the

CU technical regulation for this product comes into force. The effect of CU technical

regulations for certain products is terminated once the EurAzEC technical regulations for these

products come into force.

Pursuant to the CU Agreement on Technical Regulating, activity related to conformity

assessment should be carried out by the accredited certification bodies and testing laboratories

included into the Common Register of Certification Bodies and Testing Laboratories.

Recognition of results issued by accredited certification bodies and testing laboratories should

be carried out in accordance with the CU Agreement on Mutual Recognition of Accreditation of

Certification Bodies and Testing Laboratories Performing Conformity Assessment of December

11, 2009. Results of products conformity assessment for which no technical regulations of the

CU came into force have to be recognized in accordance with the CU Agreement on Circulation

of Products Subject to Mandatory Assessment of Conformity on the Customs Territory of the

Customs Union.

The legislative framework on technical regulation, standardization, certification and

accreditation in Kazakhstan is based on Law No. 603-II "On Technical Regulation of 9

November 2004. The two main objectives of the Law is (i) to ensure the safety of products

through the application of mandatory technical regulations; and (ii) to enhance product

competitiveness through the application of voluntary standards.

99

A conformity declaration can be prepared on the basis of evidence collected by the

applicant alone or on the basis of evidence obtained with the participation of a conformity

assessment organization. The declaration of conformity is to be registered with the relevant

accredited conformity recognition organization and is valid – similar to a conformity certificate

– in the entire territory of Kazakhstan. Any domestic or foreign organization can act as a

conformity assessment organization or a test laboratory as long as it has received accreditation

in accordance with established rules.

Foreign conformity certificates, test protocols, accreditation certificates and other

documents issued by foreign accreditation bodies are recognized in accordance with mutual

recognition agreements. In the absence of international mutual recognition agreements, test

results issued by foreign authorized bodies will only be recognized through the accreditation of

these foreign bodies in Kazakhstan's national accreditation system.

Kazakhstan has concluded a number of international agreements under which the

conformity certificates of some foreign states are recognized in the territory of Kazakhstan.

Recognition of the foreign states‘ certificates is carried out by means of their re-issuance in the

form established in Kazakhstan. In case there is no international agreement with an exporting

country, the certification of imported products is conducted according to the rules established

for Kazakhstani producers.

100

STATUS REPORT ON KAZAKHSTAN‟S

WTO ACCESSION PROCESS

Status of multilateral and bilateral negotiations

Kazakhstan submitted its official application for WTO membership in 1996. Negotiations are

taking place around four key issues:

- Multilateral negotiations on systemic issues, in which Working Party members review the

existing regulatory framework for Kazakhstan‘s economic and trade policies and make

recommendations on how to bring them into conformity with WTO agreements.

- Multilateral negotiations on agriculture, in which Working Party members review the types

and volumes of state support to the agricultural sector, and negotiate on the specific amount of

the so-called ―amber box‖ measures, which are considered as ―trade distorting‖ and impacting

on the price of agricultural products.

- Bilateral negotiations on market access for goods, as a result of which Kazakhstan will bind its

import duty rates for both agricultural and non-agricultural goods imported from WTO member-

states.

- Bilateral negotiations on market access for services, as a result of which Kazakhstan will

undertake specific commitments in terms of market access for foreign suppliers of services,

such as financial, construction, telecommunication, legal and other types of services.

Kazakhstan has signed protocols concluding bilateral negotiations with 24 WTO member-states

including Oman, Pakistan, Turkey, China, Georgia, Kyrgyzstan, South Korea, Cuba, Mexico,

Japan, Norway, Honduras, India, the Dominican Republic, Bulgaria, Switzerland, Egypt, Israel,

Brazil, Malaysia, Canada, Australia, Mongolia and Ecuador.

Bilateral negotiations with the United States are at their final stage. Kazakhstan‘s Delegation

headed by the First Deputy Prime Minister of Kazakhstan Mr. Umirzak Shukeyev visited

Washington D.C. in September 2010 to meet with the United States Trade Representative Ron

Kirk and high-level officials from the White House. As a result of the meetings, Kazakhstan and

the United States finalized negotiations on Kazakhstan's goods market access. The bilateral

negotiations were officially concluded after Minister of Economic Development and Trade of

Kazakhstan Zhanar Aitzhanova signed a document with the United States Representative to the

World Trade Organization Michael Punke in Geneva in November 2010. There are a few issues

remaining in services market access and Kazakhstan plans to finalize bilateral negotiations.

Kazakhstan‘s team reassured its American counterparts that the accession to the WTO has

always been and stays a top priority for Kazakhstan.

The United States welcomes progress achieved by Kazakhstan in bringing its legislation in

compliance with the WTO rules and supports its continuous trade liberalization process. In

particular, such issues as sanitary and phytosanitary measures and intellectual property rights

are in the final stages of negotiations.

101

The United States is one of Kazakhstan's main trading partners and completion of the bilateral

negotiations on goods market access is an important step in the process of Kazakhstan's

accession to the World Trade Organization.

Progress made in addressing systemic issues

Within the framework of multilateral negotiations on systemic issues, the following steps were

undertaken.

a. In accordance with the new Law of the Republic of Kazakhstan ―On Currency Regulation and

Currency Control‖ of 13 June 2005, the currency regime has been significantly liberalized. Most

notably, as of 1 January 2007, the licensing requirement for capital account transactions has

been removed. It should be noted, however, that Kazakhstan has never applied any limitations

with regard to capital inflow to the national economy.

As an alternative mechanism replacing the licensing requirement, as of 1 January 2007,

Kazakhstan is applying registration and notification requirements for currency transactions with

the sole purpose of maintaining accurate balance of payment, foreign investment, and foreign

debt statistics. Hence, the registration and notification requirements will not be of a ―permission

requirement‖ nature.

As for further liberalization of currency market Kazakhstan removed licensing requirement for

licensing requirements on currency operations related to capital transfer as of 1 January 2007.

b. In accordance with the WTO Agreement on Technical Barriers to Trade (TBT), the Technical

Regulations Law of November 2005 introduced the mandatory nature of technical regulations

and voluntary nature of standards, providing the legislative basis for developing an international

system of technical regulations and standards. According to the Law, both technical regulations

and standards are applied equally, regardless of the origin of a product or service. In December

2006 the Law adding amendments to the existing 33 laws on technical regulations in various

sectors (fire safety, construction safety, and others) was signed by President Nazarbayev.

In 2007, within the framework of further implementation of laws on technical regulations, laws

on Food Safety, on the Safety of Machinery and Other Equipment, On the Safety of Chemical

Products, and On Toy Safety were passed. The main purpose of implementing the laws is to

provide production safety, people‘s health and environmental protection safety as well as the

establishment of technical requirements of safety.

c. In accordance with the WTO Agreement on Sanitary and Phytosanitary Measures (SPS),

amendments were made to national legislation on veterinary, plant quarantine and sanitary-

epidemiological measures. For example, Kazakhstan ensured that its veterinary measures were

based on an assessment of risks to human and animal life or health, taking into account

available scientific evidence. Where relevant scientific evidence was insufficient, Kazakhstan

could provisionally adopt sanitary or phytosanitary measures on the basis of the available

information, including from relevant international organizations.

102

d. In 2010 in order to bring national legislation into compliance with the WTO Agreement on

Trade Related Aspects of Intellectual Property Rights (TRIPS) amendments were made to the

Customs Code of the Republic of Kazakhstan.

According to the new amendments customs authorities were entitled to act upon their own

initiative and to suspend the release of goods in respect of which they have acquired prima facie

evidence that an intellectual property right is being infringed (ex officio action).

In 2005 amendments were made to 11 laws regulating intellectual property rights protection.

Amendments to the Criminal and Administrative Codes of the Republic of Kazakhstan

introduced the new concepts of ―selection achievements‖ and ―integrated circuits‖ and provided

criminal and administrative responsibility for illegal acquisition, storage or transportation of

counterfeit copies of works and phonograms. The minimum threshold for bringing criminal

cases involving unlawful use of copyright and related rights was decreased to 100 MCI while

the term for imprisonment was increased for up to 5 years. Administrative responsibility for

infringement of copyright and related rights was strengthened with the provision of higher

penalty sanctions and introduction of such measure as confiscation of equipment used in

production of counterfeit goods.

In 2004 Kazakhstan acceded to the World Intellectual Property Organization‘s (WIPO)

Copyright Treaty and the Performances and Phonograms Treaty (so-called ―internet treaties‖).

Besides, amendments were made to the Law on Copyright and Related Rights to ensure

retroactive protection of intellectual property rights in accordance with the Berne Convention

for the Protection of Literary and Artistic Works.

e. In accordance with the General Agreement on Tariffs and Trade (GATT) provision of the

WTO to gradually eliminate quantitative restrictions and other measures:

-A quota on imported ethyl spirit and alcoholic beverages products was eliminated in June 2004;

-Export bans on aluminum and nickel waste and scrap was abolished in December 2004;

-and as of March 2006, export prohibitions on mazut and diesel during the agriculture season in

support of local farmers was discontinued.

As of 1 July 2010 the following groups of goods were no longer subject to import licensing:

armament and defense technology, special complementary parts for their production, works and

services in the sphere of military-technical cooperation, nuclear materials, technology,

equipment and settlements, special non nuclear materials, sources of active radiation, based on

application of X-ray, alpha-, beta- or gamma- radiation, X-ray equipment, medical equipment

with use of radio-active substances and isotopes, Gunpowder, explosives, means of exploding

and pyrotechnics, rare metals, rare ground raw materials, alloy, combinations and articles,

sources of ionizing radiation and isotopes, equipment based on the use of X-ray, alpha-, beta-,

gamma- or neutron radiations.

f. As of 1 July 2010, Kazakhstan applies rules of origin to imports in accordance with the

Customs Code of the Customs Union. Non-preferential rules of origin and their application are

governed by the Agreement on Common Rules for Determining the Country of Origin of Goods

of 25 January 2008. These instruments closely follow the work of the World Customs

Organization (WCO) and the WTO regarding the application and harmonization of non

103

preferential rules of origin. The principles for determination of the country of origin of goods

are based on international practices and implemented the recommendations of the revised Kyoto

Convention. The determination of the origin of goods originating from developing countries

and eligible for the system of preferences maintained by Kazakhstan is governed by the

Agreement ―On Rules of Origin of Goods, Originating from Developing and Least Developed

Countries of 12 December 2008 concluded by Kazakhstan within the framework of the customs

union being formed with Russian Federation and Belarus.

As of 1 July 2010, customs valuation in Kazakhstan is carried out in accordance with the

Agreement of the customs union ―On Customs Valuation of Goods Transferred through the

Customs Border of the Customs Union‖ of 25 January 2008, the Customs Code of the Customs

union and the Customs Code of RK. The relevant provisions of the Agreement of the Customs

union and the national legislation are based on the provisions of the WTO Agreement on the

Implementation of Article VII of the GATT 1994 and are drafted to fully implement the WTO

Agreement on Customs Valuation.

g. In order to bring into compliance with WTO Agreements on safeguards, anti-dumping,

subsidies, and countervailing measures, the necessary amendments to national legislation on

trade remedy measures have been introduced. In particular, the definitions of ―subsidy‖ and

―domestic industry‖ have been modified, and the meaning of normal value in conducting anti-

dumping investigations has been introduced. Investigation procedures have been brought into

conformity with WTO norms to ensure transparency and mechanisms for consultations with the

concerned parties.

It should be mentioned that at the moment the provisions of the ―Agreement on Application of

Safeguard, Anti-dumping and Countervailing Measures to the Third Countries‖ of 25 January

2008 between the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation

concluded within the framework of the customs union, that entered into force on 1 July 2010

provide the principles for application of trade remedies by the Customs Union Members with

regard to third countries. The provisions of the Agreement comply with the principles of the

WTO Agreements. The provisions of the national laws and regulations apply to the extent they

do not contradict the CU Agreement on Trade Remedies.

h. The new Tax Code was adopted as of December 2008 (entered into force 1 January 2009) to

align government policy to develop priority sectors of the economy with WTO norms. In

addition, current excise tax regime for alcoholic beverages and tobacco products will be unified

to conform to WTO non-discrimination and national regime principles.

i. Lastly, in accordance with a key WTO principle - transparency in developing and

implementing economic and trade policies, Kazakhstan has adopted a new methodology for

calculating fees for services applied to customs escort, import licensing and registration of legal

entities. The new methodology will ensure that these fees reflect the real cost of services

rendered.

104

Liberalization of key service sectors

The gradual liberalization of key sectors of the economy is proceeding together with

Kazakhstan‘s bilateral negotiations on access to the services market. For example: Amendments

made to Kazakhstan‘s legislation on licensing and consolidated supervision of financial services

envisage eliminating existing requirements that:

-the total paid-up capital of banks with foreign participation not exceed 50 percent of the

aggregate paid-up capital of all banks in Kazakhstan;

-the total paid-up capital of insurance companies with foreign participation, providing general

and life insurance services shall not exceed 25 and 50 percent of the aggregate paid-up capital of

general and life insurance companies respectively;

-at least seventy percent of employees of a bank shall be residents of Kazakhstan; and at least

one member of the Board of Directors of a bank with foreign participation shall be a resident of

Kazakhstan.

The Program to develop the telecommunications sector provides for creation of a competitive

framework for the telecommunications market. The exclusive license for a national operator

was eliminated on January 1, 2006. The 49% foreign-capital restriction for joint ventures

supplying architectural, urban-planning, construction and engineering services has been

eliminated. Legal entities of Kazakhstan with 100% foreign ownership will be allowed to

provide those services.

Steps taken by the Government to liberalize the energy and transport sectors have also

contributed to Kazakhstan‘s negotiations on access to the services market.

Conclusion

The process of Kazakhstan‘s accession to the WTO represents a set of comprehensive reforms

aimed at building sustainable market economy policies and institutions in the country. One of

the major challenges still being addressed by the Government within the framework of the

multilateral negotiations with WTO member-states is how to balance effective implementation

of Kazakhstan‘s key economic priorities, economic diversification and development of

processing industries with the country‘s commitments arising from WTO accession. We are

carefully reviewing the policies and mechanisms applied by WTO member-states to facilitate

development of ―infant‖ industries, which supply new types of services and produce high value-

added goods, in a WTO-consistent way.

Enhancement of customs administration and support to agricultural development are also among

our key priorities. We fully recognize that we need to pursue further liberalization reforms in a

systematic stage-by-stage manner in order to promote national economic interests. However, we

also need to ensure that Kazakhstan‘s economic and trade policy and regulatory changes are

backed by strong institutional and human capacity.

Working Party deliberations are focused on a draft Working Party report, and Kazakhstan

submitted draft legislation to implement WTO agreements in many key areas, including

customs practices, sanitary and phytosanitary (SPS) regulation, technical barriers to trade

(TBT), and licensing.

105

Kazakhstan has completed accession negotiations with 24 WTO members and is close to

completion with 4 more, the United States, European Union, Saudi Arabia and Taiwan.

After careful consideration of pros and cons, Kazakhstan has made an economically prudent

decision to pursue WTO accession through the framework of the Customs Union, together with

Russia and Belarus – neighboring economies which fully comply with Kazakhstan‘s economic

and trade interests. Since WTO accession as a united three-nation-strong market is an

unprecedented case, the members of the Customs Union have agreed to continue its individual

track and coordinate among each other the issues related to the Customs Union.

106

n Center for Trade Policy Development under the Ministry of Economic

Development and Trade of the Republic of Kazakhstan

―Center for Trade Policy Development‖, JSC was established in June 30,

2006 to strengthen the negotiations process of Kazakhstan‘s accession to the

WTO

Director General: Mr. Ruslan Sultanov

Tel.: (+7 7172) 74-38-94

Fax: (+7 7272) 74-38-94

e-mail: [email protected]

Web-site: www.ctpd.kz

www.wto.kz

Postal address: 35th Street, 7th

Entrance, The House of Ministries

010000 Astana, Kazakhstan

―Center for Trade Policy Development‖ (100% shares owned by the Government) is affiliated with

the Ministry of Economic Development and Trade.

The main tasks of the Center are:

Conducting analysis of economic implications of Kazakhstan‘s WTO accession;

Providing consulting support in determination of Kazakhstan's position in international trade

negotiations;

Developing recommendations to private and public sectors on improvement of Kazakhstan

legislation in the sphere of international trade taking into account WTO standards;

Providing informational support to the Ministry of Industry and Trade of the Republic of

Kazakhstan on current system of international trade and regulation;

Developing recommendations to the Ministry of Industry and Trade of the Republic of Kazakhstan

on general trade regime taking into account WTO standards;

Developing suggestions and recommendations on creation of general trade regime and free trade

areas with neighboring countries, in particular, within the framework of Eurasian Economic

Community, WTO and other regional associations;

Disseminating information and knowledge concerning current system of international trade,

commercial policy measures and its regulatory principles, as well as improvement of professional

standards for key personnel in private organizations and government bodies.

Employees of the Center have studied at well-known universities, such as Oxford, Cambridge,

Colombia, the London School of Economy and Political Sciences, the World Trade Institute, the

Moscow State University and others.

High proficiency of the team allows the Center qualitatively perform the work connected with

analytical support for negotiations of Kazakhstan‘s accession to the WTO and with consultations of

private companies.

107

KAZAKHSTAN‟S POSITION ON THE WTO

AFTER CREATION OF THE CUSTOMS UNION

The Customs Union was formed on January 1, 2010. Its goal was to

strengthen integration among three countries and to facilitate trade and

investment.

Elimination of internal customs borders and harmonization of legislation of the Customs Union

members is already creating additional benefits for the trading partners by insuring free circulation

of goods between the Customs Union countries. Traders and investors get a bigger economic space

and a more attractive market for potential investors.

1. Accession to the WTO Remains a Priority

Accession to the WTO has always been and remains a foreign policy priority for Kazakhstan.

Negotiations on the country‘s WTO accession have been on-going for more than 14 years.

Kazakhstan has also worked to create the Customs Union, which is viewed as a practical realization

of the Kazakh President‘s idea.

It is well known that a unified customs territory is an integral step towards that high level of

economic integration. Neither in negotiations on the WTO, nor in negotiations on the Customs

Union did Kazakhstan ever renounce its interests. The country considers both processes to be

mutually complementary rather than mutually exclusive. Therefore, the processes of Eurasian

integration and WTO accession have always been in parallel.

2. Creating Customs Union Protects Kazakhstan‟s Economic Interests

Kazakhstan‘s decision to create the Customs Union together with Russia and Belarus was based

solely on the country‘s economic interests including the following factors:

Mineral Reserves. Kazakhstan has the sixth largest mineral reserves in the world and is a major

player in the energy markets. A major portion of mineral and energy resources produced in

Kazakhstan is exported to external markets. One of the main tasks of the Government of Kazakhstan

is development of nonextractive sectors and diversification of the economy and export promotion of

highly marketable products. A unified customs tariff within the Customs Union would expand the

regional market and promote Kazakhstan‘s exports. Future customs tariff policy within the Customs

Union will allow the import of raw materials and equipment under low custom duties within the

development of investment projects. Establishment of the Customs Union would entail creation of a

unified commodity market with a total GDP of about $2 trillion (2008) and a population of 170

million people, as well as create preferential conditions within the Customs Union. Such a large

market within a unified customs territory would make Kazakhstan even more attractive for foreign

investors who have considered Kazakhstan as one of the most attractive markets in our part of the

world.

Geopolitical Realities. Kazakhstan is the largest land-locked country in the world and much of its

foreign trade depends on the routes that go through the territories of neighboring states. Membership

in the Customs Union will provide Kazakhstan‘s businesses with domestic (non-discriminatory)

transit tariffs, taking into consideration that almost all the trading relations, particularly with the

European Union, are implemented through the transit of the territory of Russia.

108

Global Financial Crisis. The crisis has thinned down the flow of FDIs, decreased trade turnover,

led to the introduction of protectionist mechanisms by some trade partners, and seriously damaged

the economies of neighboring states. This harsh reality, therefore, demanded a more active and joint

approach to further integrate and modernize the regional economy. Creation of the Customs Union

will allow for more efficient use of the limited financial resources due to the global economic crisis.

It will also provide a rationale for companies to use available resources to increase their production

capacity.

Accession to the Customs Union. This will provide sizable benefits for Kazakhstan and serves its

long-term economic priorities. The decision was based on the need to meet Kazakhstan‘s national

economic interests including:

Unimpeded access to global markets

Expanding trade with large neighboring economies, such as Russia and China

Accelerated economic diversification by moving towards service and technology

based economy.

Therefore, any speculations suggesting political motivation behind the decision are baseless.

3. WTO and Customs Union Negotiations Moved in Parallel

Negotiations on Kazakhstan‘s accession to the WTO and efforts to join the Customs Union were

moving in parallel. The idea of establishing a single customs territory was initiated earlier and had

been moving at a much better pace, which was in full compliance with Kazakhstan‘s economic

interests. The process of harmonizing tariffs within the creation of the Customs Union demanded

flexibility from every member and a transition period was introduced for some major commodities

sensitive for Kazakhstan. It is also important to understand that the pace for creating the Customs

Union has been, to a large extent, dependent on the political will from the Governments of the three

states. Therefore, promotion of trade and economic cooperation with the neighboring countries has

become the most important priority.

4. Kazakhstan‟s Decision to Join Customs Union Was Not Sudden

Speculations about Kazakhstan‘s ―unexpected‖ and ―sudden‖ decision to join the Customs Union

with Russia and Belarus are groundless. Kazakhstan‘s Special Representative for WTO accession

negotiations, Ms. Zhanar Aitzhanova, regularly briefed American counterparts on this issue, as she

was also directly involved in negotiations on the Customs Union. Moreover, in February 2009,

Kazakhstan at a very senior level informed U.S. Ambassador to Kazakhstan Richard E. Hoagland

that the country, together with Russia and Belarus, would soon announce its decision to create the

Customs Union. Astana noticed certain constructive reaction on behalf of Washington, however, our

American partners seemingly failed to conceive, in all its depth, our signal toward a significant

growth of dynamism in the process of creating the Customs Union.

5. Expansion of Global and Regional Trade

The Central Asian Trade and Investment Framework Agreement (TIFA) provides a useful

background for a regular dialogue between U.S. and Kazakhstan trade authorities on the issues of

mutual interest. We share the U.S. vision that the expansion of global trade should proceed through

109

creating opportunities for regional trade, and Kazakhstan stands ready to work with the United

States on the implementation of this vision.

110

ASTANA ECONOMIC FORUM

The Astana Economic Forum has emerged as a platform for

prominent scholars, economists, senior government officials,

corporate chieftains and civil society leaders to discuss global

challenges and prospects for development in the run up to the G-

20 summit.

On May 3-4, 2011, the 4th Astana Economic Forum was attended by more than 3,500

participants from 75 countries, including Nobel laureates James Mirrlees, Robert

Mundell, John Nash, Yisrael Aumann, Finn Kydland and Roger Kornberg. Also

attending were leaders of the UN World Tourism Organization, the UN Economic and

Social Commission for Asia and the Pacific (UNESCAP), the Madrid Club and the

UN Food and Agriculture Organization (UNFAO).

Other co-organizers: the World Islamic Economic Forum, United Nations Economic

Commission for Europe, Islamic Development Bank and the Reinventing Bretton

Woods Committee. Media partners were International Herald Tribune, Euronews and

Economist. The Forum received wide coverage by 100 foreign and 350 local

journalists.

They discussed reforming the international monetary system, food security and

renewable energy, better communication between the government and private sectors

and regional economic integration, green growth, tourism, small and medium sized

entrepreneurship, multinational corporations.

In his welcoming remarks, Kazakh President Nursultan Nazarbayev talked about the

lessons learned from the global financial crisis, the current imbalance in world trade

and the state of the international monetary system.

―The existing monetary system does not adhere to the principles of legality and

democracy. It mitigates the growth, distorts macroeconomic principles and prevents

us from resolving global issues. To correct that, one needs to take fundamental

actions, which have never been taken before,‖ he said.

He highlighted the need for a new reserve currency: ―The defects of the international

monetary system are now making some countries take practical steps to use

alternative currencies. For instance, the Bolivarian Alliance member states are

considering transactions using a notional unit called Sucre. The BRICS nations signed

a memorandum to use reserve currencies for mutual financing.‖

111

Nobel Laureate Robert Mundell indicated that the IMF needs to determine two

currency zones and make an ―anchor‖ for a stable currency. The professor advised the

group to pay special attention to the Yuan and generally to the Chinese economy,

because today‘s global currency-related issues depend on financial stability of the

most populous nation.

Participants attended many side events organized by local business alliances and the

government authorities. These included the Innovative Congress and Eurasian

Business Congress organized by the National Innovation Fund and Atameken Union

National Economic Chamber hosted by the mayor‘s office.

By tradition, the Forum was concluded with the issuance of an open letter to the

leaders of the G-20 member states called ―The Astana Consensus.‖ It will be released

shortly. Its key messages are based on recommendations about how to reform the

world economy, develop the global currency, enhance the monetary system, reform

international financial institutions, support international investments and trade,

improve food security and develop the ―green economy.‖

It was also decided to set up Astana club of the Nobel Prize laureates. Its goal would

be to encourage their meeting in Astana. Currently the Club includes seven Nobel

laureates and its membership is set to expand.

The 5th Astana Economic Forum will be held in Astana on May 23, 2012.

Kazakhstan is turning into a popular venue for international discourse on world

economic matters, as its economy was among the first to recover from the world

financial crisis and is predicted to grow by 6-7% this year.

112

EXPECTATIONS ABOUT KAZAKHSTAN‟S ECONOMY:

OUTLOOK BY INDEPENDENT EXPERTS

The following is based on Q1 and Q2, 2001 “Kazakhstan and Central Asia Business Forecast” by Business Monitor International, Ltd (BMI)

Business Environment

Kazakhstan was the world‘s top business reformer over the course of the last year according

to the World Bank‘s 2011 Doing Business Report, an accolade which is expected to help facilitate

higher domestic and foreign investment. Kazakhstan rose 15 places up the world rankings in 2011,

coming in at 59th out of 183 countries up from 74th in 2010. As such, Kazakh President Nursultan

Nazarbayev‘s pledge last year to develop Kazakhstan‘s business environment to become one of the

50 best in the world by 2020 now seems easily achievable.

Kazakhstan already enjoyed a relatively robust and transparent business environment,

particularly compared with other CIS countries. The World Bank‘s recent recognition of the

country‘s ongoing efforts to liberalize and reform the economy will help cement the country‘s

position at the forefront of frontier markets.

Kazakhstan made specific strides toward making it easier to start a business, with the country

rising 38 places in the world rankings. The cost (as % of per capita income) and minimum capital

required to start a new business are now significantly lower than the OECD and emerging European

regional averages. Furthermore, the government helped realize improvements in the levels of

protection awarded to investors, with Kazakhstan scoring particularly strongly on the rights of

shareholders to sue.

Tax Burden Easing

The government has acted to considerably reduce the tax burden on corporations operating in

Kazakhstan over the past few years. The corporate income tax rate was cut to 20.0% in 2009 from

30.0%. Plans to further reduce the rate to 17.5% in 2010 and 15.0% in 2011 have been postponed

for now, tbut he government remains committed to easing the overall tax burden in order to

stimulate new business ventures. This pledge was exemplified by the government‘s decision not to

raise mineral resource rents this year. The only business reform category in which Kazakhstan

performed worse in this year relative to 2009 was access to credit. However, BMI believes this is the

temporary result of the pressures facing the country‘s banking sector. With asset quality improving

in recent months and government restructuring of troubled banks nearing completion, firms will

begin to find access to credit more readily going forward.

Development Of Non-Hydrocarbon

Sectors

BMI View

The Kazakh government‘s drive to diversify the non-oil sector and invest in developing strategic

industries, as well as the national infrastructure, helps the long-term outlook for the economy. The

growing integration of Kazakhstan into global markets will help to reduce the impact of external

shocks and put the economy on a more sustainable growth path.

According to BMI, reforms being implemented by the government in Kazakhstan will not

only serve to improve the competitiveness of domestic and foreign firms already operating in the

113

country, but will also act to draw in higher levels of foreign direct investment over the coming years.

Kazakhstan has already enjoyed large inflows of foreign capital and expertise into its oil and gas

sectors. BMI‘s Oil & Gas team calculates that exports of oil and gas products alone accounted for

almost 40% of GDP in 2008 and this industry is expected to remain the main economic sector in

Kazakhstan for some time to come.

However, as a result of the volatility in global oil prices, the Kazakh government has been

stressing the importance of developing other sectors of the economy, namely mining, metallurgy,

retail and infrastructure, in order to reduce the economy‘s dependence on energy exports. Reports

suggest that some funding for investments into these sectors will come from the country‘s Sovereign

Wealth Fund.Foreign direct investment will likely make up the lion‘s share. In particular, BMI

believes the mining and infrastructure sectors have huge potential going forward. Indeed, while total

productive activities from mining and quarrying accounted for just under 20% of total GDP in

H110, according to the Kazakh Statistics Agency, reports suggest Kazakhstan is home to huge

deposits of gold, uranium and copper that have yet to be developed and foreign mining giants such

as Rio Tinto are eager to develop this industry further.

Despite notching a stellar 9.3% average annual rate of economic growth over the course of

2000-2008, the severity of 2009‘s recession, combined with a protracted period of deleveraging,

BMI forecasts annual growth to average 7.5% through to 2020. Coming from a higher base, and

investing heavily in developing the national infrastructure and non-oil sectors, Kazakhstan will

further consolidate its position as the regional powerhouse in Central Asia over the long term.

Moreover, for the less-developed economies in Central Asia, this will mean more employment

opportunities, cross-border investments and demand for primary and processed exports for Kazakh

industries.

Since the government is likely to continue working towards reducing the economy‘s

dependence on oil over the long term BMI expects to see further diversification away from the oil

sector. Key industries are likely to include retail, manufacturing, construction and finance. As a

result of this diversification drive, investment in fixed capital will continue to buoy economic

growth over the long term. Moreover, in much the same way that increased credit availability will

spur consumer spending, a broader and more sophisticated array of financial products are expected

to come to the market. It will facilitate investment (particularly with regard to hedging risks,

leveraging and gaining exposure to new markets) and business transactions.

Kazakhstan‘s ever-growing prominence in Central Asia will also facilitate investment into

the wider region. Indeed, the ongoing development of the country‘s physical and financial

infrastructure will attract more foreign investors wanting to increase their exposure to frontier

markets such as Tajikistan and Kyrgyzstan without having to base operations in these countries.

Similarly, the economic development of these countries (as well as Turkmenistan and Uzbekistan)

will see demand for imported capital grow, allowing Kazakhstan to become an export platform to

these countries.

Driving Forces of Growth

The major drivers of growth this year are set to be industrial production (IP) and export

volumes, which will be well supported by a sustained pick-up in global trade conditions and

elevated commodity prices. Indeed, global oil prices, in particular, have picked up strongly on

account of ongoing political ructions in the Middle East and North Africa region and, while

commodity prices are expected to come off the boil slightly in the second half of the year, they are

likely to remain well supported by high levels of global liquidity and improving demand conditions.

114

Similarly, BMI expects IP volumes to post stronger growth this year. Owing to improving domestic

demand conditions and efforts by the government to speed up the development of non-hydrocarbon

sectors, production levels are expected to enjoy a more robust pick-up in 2011 and 2012.

While 2010 growth exceeded BMI‘s original forecast of 6.0%, its hold to their view that

growth in 2011 will come in at 6.3%. We see Kazakhstan‘s economic upturn continuing over the

medium term, with growth reaching 7.5% by 2013. This dynamic will be well supported by higher

oil prices, increased export volumes, a rapidly improving business environment and the

government‘s economic diversification programme.

In the longer term with population forecast to reach around 17.5mn by 2020 and GDP per

capita reaching US$28,367, the consumer will become instrumental in driving growth dynamics

over the long term. The opportunities available for retailers to exploit are likely to see foreign retail

operators from Russia, and potentially China, starting to build up a market presence in Kazakhstan.

Moreover, with the government keen to develop its banking and financial sectors, BMI‘s experts

expect to see an increase in credit availability for the consumer, particularly credit cards and

overdraft facilities, which will extend to the poorer sectors of the retail market and thus allow for an

expansion in consumption possibilities for Kazakh households.

As a result of these dynamics, consumer spending is expected to contribute around one-third

of economic growth.

Although domestic demand will increasingly become the driving force of growth, oil and gas

will nonetheless remain an important export earner, helping to bolster domestic demand. Indeed, it

will be the recycling of energy export revenues to the non-oil sectors that will be key to broadening

the economy. Moreover, although BMI believes that Astana will remain reliant on Moscow to

purchase its energy output over the medium term, Kazakhstan‘s growing economic and political

clout may allow it to expand export routes away from Russia

further down the line. In this respect, we believe Kazakhstan is the most likely of the Central Asian

states to supply energy to European markets over the long term. While BMI does not believe this

will mean a shift in Kazakhstan‘s foreign policy agenda towards euro-Atlantic institutions, new

trade relations are expected to emerge, with the EU likely to take a greater share of Kazakh exports.

FDI will support strong growth trajectory. The government‘s economic diversification

strategy, and ongoing improvements to the country‘s business environment are likely to attract

further foreign direct investment flows into the country over the coming years. These two factors are

expected to help support increased foreign direct investment flows into the economy over the long

run, as Kazakhstan‘s position at the forefront of frontier markets is cemented further. As such, BMI

sees economic growth continuing to pick up over the coming years rising to 7.8% by 2015 and 8.6%

by 2020.

Following the successful restructuring of Kazakhstan‘s most troubled banks Kazakh banking

sector is now on the slow road to recovery, with overall confidence and stability set to continue

improving over the coming quarters. Data released by the National Bank of Kazakhstan confirm this

view that conditions in the banking sector are tentatively improving, with loan growth picking up to

4.9% y-o-y in October from a trough of - 1.7% back in February.

In Search Of International Finance

Kazakhstan is seeking greater access to international capital markets this year on both the

sovereign and corporate levels – a process which will be well supported by ongoing development of

the country‘s Islamic financial industry. Given the country‘s long-term economic potential and

rapidly improving business environment credentials, BMI believes financing will come relatively

115

easily for Kazakhstan, and will ultimately help bolster the country‘s long-term economic

diversification and investment strategy.

Kazakhstan is on course to boost its utilisation of international capital markets this year at

both the sovereign and the corporate level. This process will be well supported by ongoing

development and growth of the country‘s Islamic banking sector, which will help to boost the

potential for greater sukuk issuance. Ultimately, we believe that these dynamics should aid the

government in its long-term strategy of boosting foreign investment and diversifying the non-

hydrocarbon sector of the economy. BMI noticed that Kazakhstan‘s sovereign wealth fund, Samruk-

Kazyna, (which currently holds in the region of US$70bn worth of assets) is looking to tap both

local and international markets for a combined US$1bn in funds this year, which will be used to

finance a raft of industrial and financial investment projects. Making a reference to the Samruk-

Kazyna‘s top-management BMI expects that the national welfare fund will also draw on a further

US$2bn worth of funds from a bilateral loan package agreed with China back in 2009.

At the same time, according to government officials, in line with the ongoing development

and expansion of the Islamic finance industry in Kazakhstan, some corporates are expected to begin

issuing Islamic sukuk bonds by the middle of this year. Under current legislation, only Samruk-

Kazyna and Islamic banks in Kazakhstan can issue sukuk bonds. However, a new law that would

allow resident companies with a firm credit rating to engage in sukuk financing is currently being

discussed in parliament. If passed, this new legislation will give corporations (and the government

albeit further down the line) increased scope for attracting foreign financing, in our view, in

particular, from regions such as the Gulf Cooperation Council. To be sure, owing to the country‘s

long-term growth potential and the country‘s rapidly improving business environment, external

financing should come relatively easily, as evidenced by the country‘s already massive foreign

direct investment inflows of recent years.

If you are interested to learn more about “Kazakhstan and Central Asia Business Forecast Report” or any Country/Industry reports by BMI please contact Matthew Thompson, Business Development Manager, “Business Monitor International” T:+44 (0)20 7246 1433 M:+44 (0)7983 473 767

Email: [email protected])

Business Monitor International - DISCLAIMER

All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of

publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the

publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to

the accuracy or completeness of any information hereto contained.

116

KAZAKHSTAN'S FOREIGN POLICY:

MAIN ACHIEVEMENTS AND NEW GOALS

BRIEF OVERVIEW

Many American and European experts believe that Kazakhstan has done a remarkable job

establishing an independent foreign policy in the 20 years since it gained independence from the

Soviet Union.

Kazakhstan's foreign policy is based on the understanding that it is a large country with roots

in both Europe and Asia; its interests are many. . Kazakhstan‘s location has helped define its foreign

policy priorities and diplomatic activity. Kazakh President Nursultan Nazarbayev believes that by

enacting strong political and economic reforms, Kazakhstan will be in a better position to build its

relationships with other nations.Kazakhstan is an impartial nation – one that has worked hard to

reform its military, political and economic policies as it advances toward a full

democracyinternational and regional events. Its foreign policy underscores the nation‘s commitment

to create strong long-lasting alliances and partnerships. One of Kazakhstan most important decisions

since gaining independence was to gain the status of a non-nuclear state and to pursue the policy of

non-proliferation. Kazakhstan set an example - demonstrating its desire for peace, internal stability

and sustainable economic and political development.

Kazakhstan has good relationships with the United States, Russia, and China as well as

inCentral Asia and in many other European and Asian countries. With Russia, Kazakhstan has

longstanding historical ties and a vast shared border.. Kazakhstan also shares a border with China.

China's pursuit of energy security and new markets has strengthened its ties to Kazakhstan and its

economy. That will only continue.

Kazakhstan also has strong alliances with its Central Asian neighbors. Globalization is

gaining momentum and creating new regional alliances in every corner of the world. Many countries

have realized, that their national goals can be realized through regional cooperation. Since its

independence, Kazakhstan has worked to create regional economical alliances including with the

Commonweath of Independent States, Eurasian Economic Association, Central Asian Economic

Association and the newly founded Shanghai Cooperation Organization.

By strengthening its relationships with its neighbours, Kazakhstan has built a ―security belt‖

around its borders. And it continues to build alliances with other states such as India, Iran, Japan,

South Korea, Turkey= and numerous European states.

Extending its influence beyond Central Asia, Kazakhstan has worked to develop confidence

building measures throughout the region –in 2000 the idea was adopted by the Conference on

Interaction and Confidence-Building Measures in Asia (CICA). CICA demonstrated that

Kazakhstan is part of a larger Asian universe; its presidency of the OSCE in 2010 underscores its

ties to the European world. In addition, Kazakhstan has relationships with several global and

regional organizations that promote peace and economic prosperity including the Collective

Security Treaty Organization (CSTO), NATO's "Partnership for Peace" program (PFP), the

European Union (EU), the Shanghai Cooperation Organization (SCO), the Organization for Security

and Cooperation in Europe (OSCE), the Economic Cooperation Organization (ECO), the United

Nations, and the Organization on Islamic Conference (OIC).

117

KAZAKHSTAN-U.S. STRATEGIC PARTNERSHIP

Kazakhstan is one of the most

progressive nations in the region and since its

independence has proven to be the most

reliable U.S. partner in Central Asia. The two

countries established their ―strategic

partnership‖ in 2006. Astana and

Washington are time-tested partners who

have worked together on issues such as non-

proliferation of nuclear weapons, the fight

against terrorism, energy reform and

democracy.

Kazakhstan and the United States

have entered a new stage in their relationship

. President Barack Obama‘s phone

conversation with President Nursultan

Nazarbayev soon after the 2008 U.S.

elections instilled confidence that, under the

new Administration, relations between the countries would continue to grow. The two leaders

discussed further cooperation on important international issues such as non-proliferation, the fight

against terrorism and stabilization of Afghanistan.

Later, in April, 2009, U.S. Vice President Joseph Biden called President Nazarbayev to

express his gratitude for Kazakhstan's efforts to promote regional cooperation. He assured

Nazarbayev that the U.S. would support Kazakhstan‘s OSCE Chairmanship in 2010. He

alsocommended Kazakhstan‗s contribution to nuclear non-proliferation and affirmed President

Obama‘s commitment to nuclear non-proliferation throughout the world. President Nazarbayev and

Vice President Biden also discussed prospects for the development of Kazakhstan-US relations.

They agreed to look for new ways to expand bilateral cooperation with a focus on the economy.

After President Obama‘s historic address in Cairo on June 4, 2009, President Nazarbayev

commended Obama‘s vision for the Islamic world. President Nazarbayev stressed that Obama's

remarks demonstrated his commitment to a new beginning with Muslim world. "In his speech in

Cairo, President Obama demonstrated his willingness to build understanding and rapport with

Muslim nations. I am encouraged by this constructive engagement and Kazakhstan looks to

continue its efforts on strengthening political, economic, and cultural cooperation with the United

States of America‖, - President Nazarbayev said then.

In 2010, Kazakhstan and the United States launched the ―Annual Bilateral Consultations‖.

The first round of talks was held in Washington, D.C., on March 8-10. The two working groups

chaired by Kazakhstan‘s Deputy Foreign Minister Kairat Umarov and U.S. Assistant Secretary of

State for South and Central Asian Affairs Robert Blake reviewed the state of bilateral cooperation.

They covered a full range of issues: political cooperation, security, including counter-narcotics and

counter-terrorism, Afghanistan, non-proliferation, OSCE, human dimension, including democratic

reform, rule of law, human rights, and NGOs. They also discussed economic development issues,

including energy cooperation, trade and investment, health, and education. The working groups

agreed to continue their work in accordance with the Action Plan adopted at the first round of the

Kazakhstan – U.S. Annual Bilateral Consultations.

118

On March 24-25, 2011, Asistant Secretary Blake led an interagency delegation of

representatives from the departments of State, Energy and Defense as well as the National Security

Council to Astana to hold the second round of the Kazakhstan-US Annual Bilateral Consultations

(ABC). The discussions covered a range of bilateral initiatives including cooperation in

Afghanistan, nuclear non-proliferation, energy, trade and investment, science and technology, and

the advancement of democratic and human rights reforms. Speaking afterward, Blake said: ―These

discussions showed that the United States relationship with Kazakhstan is perhaps the deepest and

broadest in Central Asia, and it shows the progress that we‘ve made in our relations over the last 20

years.‖

119

2010 PRESIDENT NAZARBAYEV‟S VISIT TO THE U.S.

On April 10-13, 2010 President

Nazarbayev visited the U.S.to participate in the

Nuclear Security Summit and to meet with

President Obama and representatives of his

administration. The visit opened a new stage in

the relationship between Kazakhstan and the U.S..

Leaders of both countries had a

comprehensive exchange on global security,

including non-proliferation, the unstable situation

in Kyrgyzstan, stabilization in Afghanistan,

democratic development, economic ties and

investment opportunities, energy partnership and

Kazakhstan‘s chairmanship of the OSCE.

The leaders also reiterated their commitment to strengthening bilateral cooperation.

According to the Special Assistant to the President/National Security Council Senior

Director for Russian and Eurasian Affairs Michael McFaul, President Obama praised President

Nazarbayev as ―one of the model leaders in the world. We could not have this summit without his

presence.‖ President Nazarbayev also met with U.S. Secretary of Energy Steven Chu, heads of

several American companies, leaders of Amercan Jewish organizations. In addition, hereceived the

EastWest Institute Peace and Preventive Diplomacy Award for championing diplomacy and

promoting interfaith dialogueacross the globe. .

Beyond the agreement struck between Kazakhstan and the U.S. on Cooperation in Science

and Technology, agreements were met between Kazakhstan‘s National Railway Company and

General Electric on Transportation for the Commonwealth of Independent States Shunter

Locomotive Program and between Air Astana company and the Pilot Training College in Florida to

train an additional 24 pilots by the end of 2010.

After their meeting the two Presidents issued the Joint Statement on some of the most

important topics they discussed. Among them are the following major pririties.

Nuclear Security and Non-Proliferation: The Presidents underlined the 15-year track

record of close cooperation between Kazakhstan and the United States and success in reducing

nuclear threats in Kazakhstan and around the world. They share the vision of a world without

nuclear weapons. The U.S. appreciates the leadership of President Nazarbayev and the contribution

of Kazakhstan to nuclear disarmament and non-proliferation. The leaders hailed the successful

implementation of the Cooperative Threat Reduction program and other efforts such as the

decommissioning of the BN-350 nuclear reactor at Aktau and the construction of a central reference

laboratory in AlmatyProgress is also being made atthe research reactor in Alatau to eliminate the

highly enriched uranium stored there, as called for in the Nuclear Security Summit Communiquй.

President Obama thanked President Nazarbayev for offering to host an International Nuclear

Fuel Bank and said he supports Kazakhstan's e‘forts to become member of the IAEA Board of

Governors.

Kazakhstan is eager to speed up the mutually agreed work at the former nuclear test site in

support of President Obama‘s speech in Prague, which called for accelerated action to secure

vulnerable nuclear materials.

Afghanistan: The Presidents highlighted their shared understanding of the threats and

challenges in Afghanistan.

120

President Obama expressed appreciation for Kazakhstan‘s humanitarian, economic and

educational support of the Afghan people, including the decision Kazakhstan‘s decision to

contribute $50 million dollars to a new program to educate Afghans at Kazakh universities. The

Presidents discussed ways to enhance Kazakhstan‘s critical role in the Northern Distribution

Network and welcomed a new bilateral agreement enabling U.S. cargo flights across Kazakhstan.

Investment and Trade: Recognizing Kazakhstan‘s achievements in social and economic

development the United States will continue to support the development of a diversified economy in

Kazakhstan through the Program for Economic Development and the Kazakhstan-U.S. Public

Private Economic Partnership Initiative.

The Presidents positively assessed the current state of bilateral economic relations. They

agreed to redouble efforts to complete Kazakhstan‘s WTO accession and support the work of the

Central Asia Trade and Investment Framework Agreement.

The Presidents reconfirmed the importance of the long-term energy partnership between the

two countries. The United States welcomed Kazakhstan‘s emergence as the top global uranium

producer as an important development for diversification of global energy supply.

The United States and Kazakhstan expressed their intention to enhance cooperation on

nuclear energy and development of alternative energy resources. The leaders hailed the signing of

the bilateral Science and Technology Agreement, which will increase scientific cooperation and

exchanges.

The parties will encourage large-scale bilateral commercial cooperation in agriculture that

can make a significant contribution to the U.S. and UN initiatives on global food security.

U.S.-Kazakhstan Bilateral Consultation: The Presidents welcomed the first session of

annual bilateral consultations on March 8-9, 2010, in Washington D.C. The purpose of the new

forum is to advance all the dimensions of the bilateral relationship, including security and

nonproliferation cooperation, universal values and our economic and energy partnership.

Democracy: The United States encouraged Kazakhstan to implement its forward looking

2009-2012 National Human Rights Action Plan and 2010-2020 Legal Concept. The United States

will continue to support the Kazakhstan‘sefforts to liberalize its media and democratize its political

system, including through legal reform.

Enhancing Contacts between Our Societies: President Obama and President Nazarbayev

underscored the importance of strengthening relationships between American and Kazakh civil

societies, including NGOs, religious groups and educational institutions. Nazarbayev welcomed

President Obama‘s Cairo Speech and outreach to the Muslim world. The Presidents emphasized the

important role of religious freedom and tolerance in developing stable societies and declared their

support of Kazakhstan‘s relevant efforts as 2010 OSCE Chairman and 2011 Chairman of the

Council of Foreign Ministers of the Organization of the Islamic Conference.

Organization for Security and Cooperation in Europe (OSCE): President Obama

highlighted the historic significance of Kazakhstan‘s OSCE Chairmanship _ the first time a former

republic of the Soviet Union has chaired the OSCE. The Presidents discussed Kazakhstan‘s OSCE

Chairmanship and its proposal to host an OSCE Summit. They noted positively Kazakhstan‘s

initiative to promote greater OSCE engagement in Afghanistan, to hold a Review Conference in

Kazakhstan on Implementation of Commitments in the Human Dimension, and to advance the

Corfu process. The United States and Kazakhstan agreed to work on developing a substantive

agenda for an OSCE Summit.

President Nursultan Nazarbayev invited President Barack Obama to visit Kazakhstan at his

convenience. The invitation was received with appreciation.

121

In November 2010, President Nazarbayev met with President Obama during the NATO

Summit in Lisbon to discuss a number of international security issues.

KAZAKHSTAN AND NONPROLIFERATION

Nonproliferation has been the cornerstone of relations between two countries that traveled a

long way from newly born cooperation to mature strategic partnership between Kazakhstan and the

United States.

Kazakhstan‘s adherence to building peaceful world resulted in open and constructive

Kazakh-US cooperation in nuclear nonproliferation based on the Nunn-Lugar Initiative

―Cooperative Threat Reduction Program‖.

2011 is the year of celebrating the 20th anniversary of the closure of Semipalatinsk nuclear

testing ground; In August 1991, President Nazarbayev signed a historic decree to close the

Semipalatinsk nuclear test site. Kazakhstan dismantled its infrastructure, and signed agreements

concerning nuclear armaments. Now Kazakhstan is implementing the proposals made by the

President Nazarbayev during the Disarmament Conference to include Kazakhstan‘s seismic stations

in the International Monitoring System.

On Dec. 29 1991, the leaders of Belarus, Kazakhstan, Russia and Ukraine signed the Almaty

Declaration in which they agreed on nuclear control mechanisms for the former Soviet Union; they

affirmed their international obligations to strategic arms reduction.

On May 23 1992 in Lisbon, the representatives of Kazakhstan, Belarus, Ukraine, Russia and

the U.S. signed a five-party Protocol to the Strategic Arms Reduction Treaty. At the same time

Belarus, Ukraine and Kazakhstan - as the states possessing nuclear weapons - committed to the

Non-Proliferation Treaty.

In accordance with the Lisbon Protocol, Kazakhstan, Belarus and Ukraine, as successor

states to the USSR in terms of the Strategic Arms Reduction Treaty, have agreed to participate,

along with Russia and the U.S., in the joint Commission on observance and inspection. The nations

also agreed to the limits and restrictions specified by the Treaty. Kazakhstan ratified the Treaty and

the Lisbon Protocol on July 2, 1992. In 1994,Strategic Arms Reduction Treaty paved the way to

disarmament and the elimination of more than 9,000 nuclear warheads.

Kazakhstan was the first among the participants of the Lisbon Protocol to implement

provisions related to the removal of nuclear warheads. On April 21, 1996, Kazakhstan completed the

removal of 1416 nuclear warheads . On May 30, 1995, the last nuclear test warhead- located in a

gallery on the Semipalatinsk test site - was destroyed. Kazakhstan had gotten rid of its nuclear

inheritance.

During the Soviet era, Kazakhstan was the site of the world‘s fourth largest nuclear arsenal

with more than 1000 deadlyweapons. . Fortunately, President Nazarbayev ordered the dismantling

and removal of Kazakhstan‘s entire nuclear weapons system. In 1994, Kazakhstan transferred more

than a half-ton of weapons-grade uranium to the U.S. In 1995, Kazakhstan removed its last nuclear

warhead and, with U.S. assistance, completed the sealing of 181 nuclear test tunnels in May 2000.

Kazakhstan signed the START Treaty (1992), the Nuclear Non-Proliferation Treaty (1993), the

Chemical Weapons Convention, and the Comprehensive Test Ban Treaty (2001).

On March, 21, 2009, the Treaty on Nuclear Weapon Free Zone in Central Asia (signed on

September, 8, 2006 in Semei, Kazakhstan) took effect. . Kazakhstan believes the Treaty will

contribute to global non-proliferation and promote regional and international security. The new de-

nuclearized zone in Central Asia has a number of unique features. First, it includes Kazakhstan,

which in the past possessed the forth largest nuclear arsenal. Second, for the first time, the

denuclearized zone is in Northern hemisphere. Third, the Treaty brings together all five Central

122

Asian countries. And finally, the zone was created in a region that borders on two nuclear states.

The Protocol on negative security assurances is an integral part of the Treaty. Under the Protocol,

the nuclear weapon states pledge not to use or threaten to use nuclear weapons against any other

member states.

On June 18, 2009, more than 25,000 Kazakhs, local dignitaries and world media gathered in

Semey city to celebrate the 20th anniversary of Kazakhstan's decision to end nuclear tests at the

Semipalatinsk Test Site. The meeting was held in Semey, where President Nazarbayev appealed to

the international community to support the nation‘s efforts to promote peace.. In his speech,

President Nazarbayev credited the Kazakh people for helping the ending nuclear testing.He said

then: ‖Starting from the first days of the country‘s independence, Kazakhstan did not leave its

citizens alone with their problems. The work on social rehabilitation of the population and the

territories suffered the harm of the nuclear tests is being constantly carried out. For these purposes

the state utilized nearly KZT 34 billion (approximately $215 million)‖.

In December 2009, the UN General Assembly unanimously accepted a resolution by

Kazakhstan proclaiming Aug. 29 - the day when in 1991 President Nazarbayev signed a decree on

the closure of Semipalatinsk Test Site - as the ‗International Day against Nuclear Tests‘.

Recognizing the negative impact of nuclear testing on human life and the environment, as well as

the importance of of achieving a nuclear-weapon-free world, the Resolution was designed to

commemorate an importantdate in Kazakhstan‘s history.

The international community has fully appreciated Kazakhstan‘s contribution to this nuclear

disarmament programm.

Paying a visit to Kazakhstan in April 2010, U.N. Secretary General Ban Kim-moon said, ―I

highly commend the extraordinary leadership of president Nazarbayev of Kazakhstan, who

courageously closed this nuclear test site and initiated the nuclear weapon-free zone in Central Asia.

That‘s a big milestone‖.

During the Nuclear Security Summit in Washington, D.C., in April, 2010, Obama praised

President Nazarbayev "as really one of the model leaders in the world on nonproliferation and

nuclear-safety issues". President Obama and other leaders also heralded President Nazarbayev's

proposal to establish an International Nuclear Fuel Bank in Kazakhstan. President Nazarbayev

credited President Obama‘s anti-nuclear initiatives and achievements including the Global Nuclear

Security Summit, signing the New START Treaty with Russia andadoption of the new U.S. nuclear

posture review,.

In November 2010, Kazakhstan joined with the U.S. and other nations to provide secure

long-term storage for more than 10 metric tons of highly enriched uranium and three metric tons of

weapons-grade plutonium in Kazakhstan – enough material to make 775 nuclear weapons. Under

the operation, 12 spent fuel shipments were safely and successfully secured, the largest and most

complex nuclear transport campaign ever. The operation is an example of the international

cooperation envisioned by Presidents Nazarbayev and Obama at the April 2010 Nuclear Security

Summit in Washington, D.C.

123

KAZAKHSTAN‟S OSCE CHAIRMANSHIP IN 2010

Kazakhstan began its chairmanship of the Organization for

Security and Cooperation in Europe (OSCE) on Jan. 1, 2010. It

was a historic achievement given that Kazakhstan was the first

former Soviet Union Republic to lead the OSCE. The primary

focus of the OSCE, with its 56 member states, is to promote

economic and security cooperation. Kazakhstan took its

responsibility very seriously; itworked with its fellow member states to build on the progress

achieved by former chairs and to develop viable solutions to pressing challenges.

Kazakhstan set out on a challenging and exciting journey as Chairman of the OSCE. . Kazakhstan

was committed to enhancing the Organization‘s credibility and efficiency. The first POLITICAL

VISION AND PRINCIPLES were formulated by President Nazarbayev in his video address to the

OSCE Permanent Council on the occasion of Kazakhstan‘s assumption of its Chairmanship in the

OSCE on January 14, 2010.

―Kazakhstan is assuming the extremely important mission of the Chairmanship of the Organization

for Security and Co-operation in Europe (OSCE) with a sense o great responsibility. Our country

will embark on its Chairmanship during one of the most complicated periods in modern history.

Because of the global financial and economic crisis, tectonic shifts are taking place in the global

order, and this process is still far from completion,‖ Nazarbayev said. ―The erosion of the regime of

non-proliferation of weapons of mass destruction, terrorism, humanitarian and ecological disasters,

famine, poverty, epidemics, depletion of energy resources, conflicts based on interethnic and

interreligious differences—such is a far from complete list of the challenges faced by modern

civilization that call for maximum efforts by multilateral institutions of high standing like the

OSCE.‖

The motto of Kazakhstan‘s Chairmanship was four Ts, namely, "trust", ―tradition‖, ―transparency‖

and ―tolerance‖. The first T refers to the trust. The second one refers to Kazakhstan‘s commitment to

the fundamental principles and values of the OSCE. The third one conveys maximum openness and

transparency in international relations, free from ―double standards‖ and ―dividing lines‖, as well as

a focus on constructive co-operation in order to address challenges and threats to security. Finally,

the fourth T reflects global trends towards a strengthening of intercultural and intercivilizational

dialogue, which is gaining major importance in today‘s world. Kazakhstan considered expanding

and strengthening the consensus base on fundamental issues of development to be one of the key

tasks for the OSCE.

Later in January 28, President Nazarbayev articulated the philosophy of Kazakhstan‘s chairmanship.

In the article ―OSCE AND GLOBAL POLITICS,‖ published in Izvestia on Jan. 28, 2010, he

outlined Kazakhstan‘s vision and explained how Kazakhstan planned lead the Organization through

its challenges.

―We, as the chair of the OSCE, recognize the unrelenting challenges facing the world and are

keenly aware that one year limits our ability to address every aspect of OSCE activities. While we

are not in favor of fostering any kind of revolutions in the institution, we are not going to be deterred

from pursuing our aggressive agenda either. As the head of a sovereign state, I view our

chairmanship not only as a national project of strategic value but as evidence of the country‘s

124

increased international prestige. And I relish the opportunity to inject renewed inspiration into the

OSCE and give it a new impetus,‖ he wrote.

The U.S. was supportive of Kazakhstan‟s role in the OSCE. On Jan. 20, 2010, in his remarks on

―The Occasion of the Commencement of Kazakhstan's OSCE Chairmanship,‖ Assistant Secretary of

State on South and Central Asian Affairs Robert Blake said:

―As Kazakhstan begins to serve as the Chairman-in-Office of the Organization for Security and

Cooperation in Europe this year, it is charting a course for a bright and promising future. It is a

future in which the United States and Kazakhstan together seek peace, security, economic

development and prosperity. We seek democratic values and human rights that unite free nations in

trust and in respect. We seek a region in which relations are good between neighbors, between

Russia and China and Afghanistan and all others in the region and of course with the United States.

Kazakhstan has been a leader in international security since its earliest days of independence. After

the end of the Cold War, the world applauded as Kazakhstan renounced its nuclear weapons, closed

the nuclear test site at Semipalatinsk, and freely transferred over half a ton of weapons-grade

uranium to secure sites outside the country under Project Sapphire. This past December, we marked

the sixteenth anniversary of the landmark Cooperative Threat Reduction Program in Kazakhstan and

we continue to work in partnership with Kazakhstan to advance our common non-proliferation

goals. In April President Obama will welcome President Nazarbayev and other world leaders to the

Global Nuclear Security Summit he will host.

Since its independence, Kazakhstan has also set an example in the region with economic reforms

that have attracted investment and created jobs. The Government of Kazakhstan is also making wise

choices to develop multiple energy export routes and to diversify its economy to ensure that its vast

oil wealth can become a source for social mobility, not social stagnation.

As Kazakhstan‘s economy continues to recover from the global economic downturn, it should again

be an engine for growth within Central Asia. Afghanistan, Kyrgyzstan and Tajikistan would benefit

immensely from Kazakhstani investment and energy supplies to stimulate growth and create jobs.

And Afghanistan needs the full partnership of Kazakhstan to overcome the destitution that

extremists, warlords, and civil war have compounded over several decades. Kazakhstan is providing

vital logistical support to the International Security Assistance Force through the Northern

Distribution Network. We welcome Astana‘s decision to invest in Afghanistan‘s next generation of

leaders by generously allocating $50 million to fund scholarships for a thousand Afghan students to

study in Kazakhstan.

Kazakhstan‘s OSCE Chairmanship is highly symbolic. The OSCE had long prided itself for

stretching from Vancouver to Vladisvostok. Now, for the very first time, a major international

organization is headed by a new country east of Vienna. It is a recognition that the OSCE draws its

strength not only from Europe and the United States, but also from Central Asia, the Caucasus, and

the Balkans. The challenges facing the OSCE and the international community are real but our

strength comes from facing those challenges collectively and with a common purpose. The United

States looks forward to working with Kazakhstan this year to meet these challenges and achieve the

goal of modernizing and strengthening the OSCE, for the benefit of all participating States.

125

Kazakhstan has successfully navigated the early stages of statehood. It has achieved a position of

leadership on international security and economic development. And now, Kazakhstan, as the OSCE

Chairman-in-Office has an unprecedented opportunity to lead Central Asia towards a future of

democracy and to advance its own reform agenda to unleash the creative energy of its people. With

continued reform, Kazakhstan can become the nexus of Eurasia in the 21st century, the point where

all roads cross. For thousands of years, along the ancient Silk Road, the communities of Central Asia

facilitated the global exchange of ideas, and trade, and culture. In the process, they made historic

contributions to our collective human heritage.

Today, as Kazakhstan assumes the OSCE mantle, it is poised and ready to break a fresh path for a

new Silk Road, a great crossroads of reform linking the provinces of northern Russia to the ports of

South Asia, the republics of Western Europe to the democracies of East Asia.

A strong and prosperous and democratic Kazakhstan can energize the global transmission of

learning, trade and freedom across the steppes of Central Asia. Kazakhstan has a glorious past and

can seize a hopeful future. The United States will continue to be Kazakhstan‘s steadfast partner.‖

Since then, the brainstorming over how to reenergize the OSCE had begun. U.S. VicePresident

Joseph Biden in his op-ed ―ADVANCING EUROPE‟S SECURITY‖ published in The New York

Times on May 6, 2010 defined the OSCE as global security player along the lines of NATO.

Biden wrote: ―The Russia-Georgia crisis in August 2008 reminded all of us that we cannot take

security in Europe for granted or become complacent. To prevent such events from recurring, we

support the creation of an O.S.C.E. Crisis Prevention Mechanism that, in situations of tensions

between O.S.C.E. states, would seek to prevent crises before they start. And in the case that they do,

it would empower the organization to offer rapid humanitarian relief, help negotiate a cease-fire, and

provide impartial monitoring. We also believe that the O.S.C.E. should facilitate consultations in the

case of serious energy or environmental disruption and dispatch special representatives to

investigate reports of egregious human rights violations.‖

The OSCE Chairperson-in-Office, Kazakhstan's State Secretary and Foreign Minister Kanat

Saudabayev said that based on the results of preliminary consultations, Astana could be the location

of the next OSCE summit. OSCE participating States are expected to discuss this proposal in the

near future. ―Today's meeting is a possibility to enter a new level of our dialogue and to raise

ourselves to a higher stage in ensuring united and indivisible security.‖ Saudabayev told meeting

participants.

President Nazarbayev also announced that Kazakhstan would give $10 million dollars in emergency

aid to Kyrgyzstan, including fuel and house-building materials.. The President of the OSCE

Parliamentary Assembly, Petros Efthymiou, stressed the important role that OSCE Parliamentarians

can play in crisis situations such as that in Kyrgyzstan. ―The Corfu Process was an excellent start to

bringing relevance back to the OSCE through dialogue. It is very important that focus has rightly

moved toward strengthening the Organization's capacity for early reaction to evolving crisis

situations,‖ he said.

126

The Corfu Process is an OSCE-anchored dialogue on the future of European security. It was

launched at the OSCE's first informal ministerial meeting, which was held last June on the Greek

island of Corfu. OSCE Secretary General Marc Perrin de Brichambaut said the Almaty meeting and

the proposed summit were opportunities to renew the participating states' commitment to the OSCE,

to address problems dividing them, including protracted conflicts and arms control, and to act on

common challenges such as transnational threats, the situation in Afghanistan and Kyrgyzstan. ―The

participating States, under the guidance of Kazakhstan, have worked hard to identify problems and

gaps of understanding. Steps have been taken to restore a sense of trust. The time has come to move

to concrete action and step up the pace,‖ Nazarbayev said.

Some 50 ministers and deputy ministers participated in the meeting. After almost a yearlong debate,

they reached a consensus andagreed to hold an OSCE summit in Astana by the end of 2010. . ―This

is the success of our Organization, this is the success of our chairmanship‖, K. Saudabayev said,.

President Nazarbayev welcomed the decision:

―The decision adopted is a sign of the high level of respect on the part of the international

community for the successes achieved by the people of Kazakhstan during the years of

independence,‖ he said on Aug. 5.

Prior to the OSCE Summit, meetings were held in Warsaw, Vienna and Astana to prepare the

agenda.. The most important element of the process was THE PARALLEL OSCE CIVIL

SOCIETY CONFERENCE that brought together hundreds of the OSCE representatives to come

up with ways to promote good governance, human rights and democracy. The Forum was held

Nov.28-29, 2010.

The goal was to re-affirm respect for human rights and fundamental freedoms, democracy and the

rule of law,. The final Outcome Document contained more than 100 recommendations. Despite

noting several important achievements, such as the work done by the OSCE Representative on

Freedom of the Media, NGO delegates pointed to the ―shrinking space wherein civil society can

operate, an obvious erosion of human rights, and the inability of participating states to effectively

resolve protracted conflicts‖ as proof that the OSCE needs to re-affirm its fundamental values and

principles. Representatives saw the Astana Summit as a unique opportunity to reinvigorate the

Organization, with civil society playing an important role in shaping the outcome. They provided

the following recommendations as part of their resolve to protect and promote human rights and

fundamental freedoms:

Strengthening implementation of the human dimension as a core principle of comprehensive

security;

Strengthening the OSCE‘s operational functions, including its relations with civil society;

Strengthening the OSCE‘s effectiveness in responding to political and humanitarian crises;

Addressing human rights violations in the post-Soviet era, including in Central Asia.

More specifically, they recommended creating a mechanism for NGOs to participate in sessions of

the OSCE Permanent Council and the Human Dimension Committee. They urged the creation of an

official review process to evaluate candidates for OSCE Chair based on their record implementing

127

human dimension commitments. Along similar lines, representatives promised to work toward

strengthening engagement and oversight of OSCE field operations and institutions. Delegates also

called on the OSCE to endorse the Extractive Industries Transparency Initiative (EITI) - a revenue

transparency standard in the oil, gas and mining sectors that provides for regular public disclosure of

payments by extractive industries to governments.

Furthermore, civil society representatives highlighted their concern for the ―growing tendency of

using the legitimate goal of fighting terrorism as a pretext for laws that seek to curb legitimate

speech.‖ They strongly advocated that such practices be brought to an immediate end. They called

upon participating states to do more to protect journalists and civic and political activists from

physical attacks, harassment and intimidation. With regard to intolerance, the representatives urged

that OSCE commitments to end discrimination be upheld by all member states. Civil society

representatives noted their disappointment in Kyrgyzstan for failing to accept the OSCE Police

Advisory Group in a timely manner, though they did welcome the launching of the Community

Security Initiative. Additional recommendations focused on the need for the OSCE to strengthen

cooperation with other international institutions, most notably the Council of Europe and the Venice

Commission. Representatives also called on OCSE members to maintain, if not increase, their

financial contributions to the OSCE.

ASTANA SUMMIT The first OSCE Summit in 11 years concluded today with

Kazakhstan's President Nazarbayev welcoming the work of

Heads of State from the 56 OSCE participating States, saying

their adoption of the Astana Commemorative Declaration

affirmed the Organization's comprehensive approach to

security based on trust and transparency. The United States

was represented Secretary of State Hillary Rodham Clinton.

"We have reconfirmed our support to the comprehensive approach to security based on trust and

transparency in the politico-military field, on rational economic and environmental policy and on the

full-fledged observation of human rights, basic freedoms and the rule of law," Nazarbayev said. "We

intend to raise the level and quality of security and understanding between our states and peoples."

Nazarbayevdescribed the two-day Summit as "an historic event for the entire OSCE community"

that had been characterized by "the spirit of Astana".

While in Astana, Clinton set up a Town Hall Meeting at the Eurasian University in Astana to meet

Kazakhstan‘s human rights advocates and female NGOs and discuss issues of democracy building,

freedom of speech, women‘s rights and other human rights issues. On Dec. 1, she met President

Nazarbayev and Foreign Minister Saudabayev. After the meetings, she said:

―The United States is committed to the OSCE, and we and our partners are working to empower it to

take an even more effective role, including the encouragement of more transparency and cooperation

between and among militaries, helping resolve long-standing conflicts, and standing up against

128

attacks on civil society and journalists. Our discussions here in Astana have been constructive and

substantive,‖ Clinton stated.

She also said that ―Last night, I met with many of the participants who took part in the independent

conference of non-governmental organizations that ran parallel with the summit. I was impressed by

their effort and energy on crucial challenges, including protecting fundamental freedoms. They

know what we all know, that a thriving civil society is a vital building block of democracy, and that

disparate, diverse voices must be heard and supported. In the discussion that I had with both the

president and the foreign minister, I thanked Kazakhstan for your support of the international

mission in Afghanistan, and for all you are doing to help the Afghan people, particularly the very

kind invitation for 1,000 students to continue their education here, in Kazakhstan. This will enable

these young people to contribute to Afghanistan's development. I also thanked Kazakhstan for the

recently concluded air transit agreement that will help ensure the delivery of critical resources to

Afghanistan, and I welcomed Kazakhstan as the newest member of the International Security

Assistance Force, which now includes 49 countries.

We discussed our shared interest in curbing nuclear proliferation, and safeguarding vulnerable

nuclear material. Kazakhstan has long been a leader on this issue, and the United States deeply

values our partnership. Along with the United Kingdom, our nations recently secured more than 10

metric tons of highly-enriched uranium, and 3 metric tons of weapons-grade plutonium here in

Kazakhstan. That is enough material to have made 775 nuclear weapons. And now we are confident

it will never fall into the wrong hands. This is a milestone of our cooperation, and a major step

forward in meeting the goals set at this year's Nuclear Security Summit of securing all nuclear

material within four years.

I also shared with the minister and the president the discussions that I have had with civil society

leaders. I expressed our continued interest in Kazakhstan's national human rights action plan, and

reforms to electoral, political, and libel laws. I assured him that America's commitment to working

with Kazakhstan and the other nations of Central Asia to advance democracy and human rights will

not end when the summit is over. On all of these and other fronts, Kazakhstan and the United States

are making progress together. The bonds we are forging between our governments and our peoples

are making both of our countries -- and, indeed, the region and the world -- more secure and

prosperous. And surrounded by the energy and optimism that one feels in this new dynamic city, I

look forward with confidence to a positive future for Kazakhstan and its people‖.

The OSCE Summit was a historic event for the organization, its membership and Kazakhstan. Amid

all the assessments of Kazakhstan‘s chairmanship, the best was presented by the Center for Strategic

and International Studies in its report ―Kazakhstan‘s OSCE Chairmanship 2010.‖. The report

provided an end-of-year assessment of the 2010 Kazakh chairmanship of the OSCE and focused on

the events of the last few months of 2010, especially the Summit in Astana and the preceding review

conferences.

The report concluded that Kazakhstan provided capable and energetic leadership for the

organization at a difficult time. A major achievement of the Kazakh chair was to showcase the

OSCE to Central Asia and emphasize its Eurasian dimension—highlighting security problems

related to Afghanistan, potential failed states, economic and environmental problemsand human

rights violations. The crisis in Kyrgyzstan helped focus OSCE member states on the region. In

addition, Kazakhstan provided bilateral assistance to Kyrgyzstan during and after the crisis; other

129

states also helped. The report says that the Astana summit was the major achievement of

Kazakhstan‘s OSCE chairmanship. The summit concluded with a commemorative declaration

outlining the road ahead for the organization (for more detailed info on the report visit

http://csis.org/publication/kazakhstans-osce-chairmanship-2010-0).

130

ASTANA COMMEMORATIVE DECLARATION

TOWARDS A SECURITY COMMUNITY

1. We, the Heads of State or Government of the 56 participating States of the OSCE, have assembled in Astana, eleven

years after the last OSCE Summit in Istanbul, to recommit ourselves to the vision of a free, democratic, common and

indivisible Euro-Atlantic and Eurasian security community stretching from Vancouver to Vladivostok, rooted in agreed

principles, shared commitments and common goals. As we mark the 35th anniversary of the Helsinki Final Act and the

20th anniversary of the Charter of Paris for a New Europe, we reaffirm the relevance of, and our commitment to, the

principles on which this Organization is based. While we have made much progress, we also acknowledge that more

must be done to ensure full respect for, and implementation of, these core principles and commitments that we have

undertaken in the politico-military dimension, the economic and environmental dimension, and the human dimension,

notably in the areas of human rights and fundamental freedoms.

2. We reaffirm our full adherence to the Charter of the United Nations and to all OSCE norms, principles and

commitments, starting from the Helsinki Final Act, the Charter of Paris, the Charter for European Security and all other

OSCE documents to which we have agreed, and our responsibility to implement them fully and in good faith. We

reiterate our commitment to the concept, initiated in the Final Act, of comprehensive, co-operative, equal and indivisible

security, which relates the maintenance of peace to the respect for human rights and fundamental freedoms, and links

economic and environmental co-operation with peaceful inter-State relations.

3. The security of each participating State is inseparably linked to that of all others. Each participating State has an equal

right to security. We reaffirm the inherent right of each and every participating State to be free to choose or change its

security arrangements, including treaties of alliance, as they evolve. Each State also has the right to neutrality. Each

participating State will respect the rights of all others in these regards. They will not strengthen their security at the

expense of the security of other States. Within the OSCE no State, group of States or organization can have any pre-

eminent responsibility for maintaining peace and stability in the OSCE area or can consider any part of the OSCE area

as its sphere of influence. We will maintain only those military capabilities that are commensurate with our legitimate

individual or collective security needs, taking into account obligations under international law, as well as the legitimate

security concerns of other States. We further reaffirm that all OSCE principles and commitments, without exception,

apply equally to each participating State, and we emphasize that we are accountable to our citizens Astana

commemorative declaration towards a security community and responsible to each other for their full implementation.

We regard these commitments as our common achievement, and therefore consider them to be matters of immediate and

legitimate concern to all participating States.

4. These norms, principles and commitments have enabled us to make progress in putting old confrontations behind us

and in moving us closer to democracy, peace and unity throughout the OSCE area. They must continue to guide us in the

21st century as we work together to make the ambitious vision of Helsinki and Paris a reality for all our peoples. These

and all other OSCE documents establish clear standards for the participating States in their treatment of each other and

of all individuals within their territories. Resolved to build further upon this strong foundation, we reaffirm our

commitment to strengthen security, trust and goodneighbourly relations among our States and peoples. In this respect we

are convinced that the role of the OSCE remains crucial, and should be further enhanced. We will further work towards

strengthening the OSCE‘s effectiveness and efficiency.

5. We recognize that the OSCE, as the most inclusive and comprehensive regional security organization in the Euro-

Atlantic and Eurasian area, continues to provide a unique forum, operating on the basis of consensus and the sovereign

equality of States, for promoting open dialogue, preventing and settling conflicts, building mutual understanding and

fostering cooperation.

We stress the importance of the work carried out by the OSCE Secretariat, High Commissioner on National Minorities,

Office for Democratic Institutions and Human Rights and Representative on Freedom of the Media, as well as the OSCE

field operations, in accordance with their respective mandates, in assisting participating States with implementing their

OSCE commitments. We are determined to intensify co-operation with the OSCE Parliamentary Assembly, and

encourage its efforts to promote security, democracy, and prosperity throughout the OSCE area and within participating

States and to increase confidence among participating States. We also acknowledge the Organization‘s significant role in

establishing effective confidence- and security-building measures. We reaffirm our commitment to their full

131

implementation and our determination to ensure that they continue to make a substantial contribution to our common

and indivisible security.

6. The OSCE‘s comprehensive and co-operative approach to security, which addresses the human, economic and

environmental, political and military dimensions of security as an integral whole, remains indispensable. Convinced that

the inherent dignity of the individual is at the core of comprehensive security, we reiterate that human rights and

fundamental freedoms are inalienable, and that their protection and promotion is our first responsibility.

We reaffirm categorically and irrevocably that the commitments undertaken in the field of the human dimension are

matters of direct and legitimate concern to all participating States and do not belong exclusively to the internal affairs of

the State concerned. We value the important role played by civil society and free media in helping us to ensure full

respect for human rights, fundamental freedoms, democracy, including free and fair elections, and the rule of law.

7. Serious threats and challenges remain. Mistrust and divergent security perceptions must be overcome. Our

commitments in the politico-military, economic and environmental, and human dimensions need to be fully

implemented. Respect for human rights, fundamental freedoms, democracy and the rule of law must be safeguarded and

strengthened. Greater efforts must be made to promote freedom of religion or belief and to combat intolerance and

discrimination. Mutually beneficial co-operation aimed at addressing the impact on our region‘s security of economic

and environmental challenges must be further developed. Our energy security dialogue, including on agreed principles

of our co-operation, must be enhanced. Increased efforts should be made to resolve existing conflicts in the OSCE area

in a peaceful and negotiated manner, within agreed formats, fully respecting the norms and principles of international

law enshrined in the United Nations Charter, as well as the Helsinki Final Act. New crises must be prevented. We

pledge to refrain from the threat or use of force in any manner inconsistent with the purposes and principles of the

Charter of the United Nations or with the ten Principles of the Helsinki Final Act.

8. Conventional arms control and confidence- and security-building regimes remain major instruments for ensuring

military stability, predictability and transparency, and should be revitalized, updated and modernized. We value the

work of the Forum for Security Cooperation, and look forward to the updating of the Vienna Document 1999. We value

the CFE Treaty‘s contribution to the creation of a stable and predictable environment for all OSCE participating States.

We note that the CFE Treaty is not being implemented to its full capacity and the Agreement on Adaptation of the CFE

Treaty (ACFE) has not entered into force. Recognizing intensified efforts to overcome the current impasse, we express

our support for the ongoing consultations aiming at opening the way for negotiations in 2011.

9. At the same time, in today‘s complex and inter-connected world, we must achieve greater unity of purpose and action

in facing emerging transnational threats, such as terrorism, organized crime, illegal migration, proliferation of weapons

of mass destruction, cyber threats and the illicit trafficking in small arms and light weapons, drugs and human beings.

Such threats can originate within or outside our region.

10. We recognize that the security of the OSCE area is inextricably linked to that of adjacent areas, notably in the

Mediterranean and in Asia. We must therefore enhance the level of our interaction with our Partners for Co-operation. In

particular, we underscore the need to contribute effectively, based on the capacity and national interest of each

participating State, to collective international efforts to promote a stable, independent, prosperous and democratic

Afghanistan.

11. We welcome initiatives aimed at strengthening European security. Our security dialogue, enhanced by the Corfu

Process, has helped to sharpen our focus on these and other challenges we face in all three dimensions. The time has

now come to act, and we must define concrete and tangible goals in addressing these challenges. We are determined to

work together to fully realize the vision of a comprehensive, co-operative and indivisible security community throughout

our shared OSCE area. This security community should be aimed at meeting the challenges of the 21st century and

based on our full adherence to common OSCE norms, principles and commitments across all three dimensions. It should

unite all OSCE participating States across the Euro-Atlantic and Eurasian region, free of dividing lines, conflicts,

spheres of influence and zones with different levels of security. We will work to ensure that co-operation among our

States, and among the relevant organizations and institutions of which they are members, will be guided by the

principles of equality, partnership co-operation, inclusiveness and transparency. Drawing strength from our diversity, we

resolve to achieve this overarching goal through sustained determination and common effort, acting within the OSCE

and in other formats.

132

12. To this end, we task the incoming Chairmanship-in-Office with organizing a follow- up process within existing

formats, taking into consideration ideas and proposals put forward by the participating States, including in the

framework of the Corfu Process and in the preparation of the Astana Summit, and pledge to do all we can to assist the

incoming Chairmanships- in-Office in developing a concrete action plan based on the work done by the Kazakhstan

Chairmanship. Progress achieved will be reviewed at the next OSCE Ministerial Council meeting in Vilnius on 6 to 7

December 2011.

13. We express our deep gratitude to Kazakhstan for hosting our meeting, and for the energy and vitality the country has

brought to the challenging task of chairing the OSCE in 2010. We welcome Lithuania‘s Chairmanship of the

Organization in 2011, Ireland‘s in 2012 and

Ukraine‘s in 2013.

133

CONFERENCE ON INTERACTION AND CONFIDENCE–BUILDING MEASURES

IN ASIA (CICA)

The idea of convening a Conference on Interaction and Confidence-Building Measures in Asia

(the CICA) was first proposed by President Nazarbayev on Oct. 5, 1992, at the 47th Session of the

United Nations General Assembly.

Today, in the age of globalization, CICA activity has become particularly significant. In 2006,

CICA member-states established the International Secretariat on the CICA with offices in Almaty.

Regular meetings among the Senior Officials Committee and Special Working Groups improved the

organization‘s effectiveness. Organizing the CICA III Summit for June 2010 in Istanbul (Turkey)

was a top priority on the group‘s agenda. During the Summit, Turkey assumed the chairmanship of

the CICA from Kazakhstan for a two-year period (2010 to 2012). This represented the first-ever

chairmanship succession in the history of the Conference (Kazakhstan has chaired the Conference

since 2002).

Before the CICA III Summit, all member states began work on implementing Catalogue of

Confidence Building Measures (CBMs) (human, economic, environmental, military-political,

fighting against new challenges and threats), as well as on the legal framework of the Forum. In

accordance with the ―Cooperative Approach for the Implementation of the CICA CBMs‖ (the

document was adopted in March 2007 at the meeting in Bangkok), CICA arranged workshops and

field meetings dealing with four aspects of the CBMs—fighting against new challenges and threats,

economic, environmental, and the human dimensions.

All member states worked on strengthening and broadening cooperation in the politico-

military area to make it the central element in CICA efforts to implement provisions of the CBMs

Catalog. During the meeting of Senior Officials Committee in Beijing on Oct. 29, 2009, member

states approved Kazakhstan‘s vision on strengthening the military-political dimension. This vision

was the starting point for the Concept and Action plan for the CICA military-political dimension.

Furthermore, on Jan. 18, 2010, at the tripartite consultations in Bangkok, the then CICA chair

(Kazakhstan), new CICA chair, (Turkey), and current ASEAN and RFA chairman (Thailand)

discussed opportunities for future development of the CICA‘s military-political dimension with the

possible addition of the RFA experience.

CICA is expanding its influence in the region. It brings together 18 states occupying 90

percent of Asia 's territory with half the world's population and growing interest in the increasing

dynamics of CICA processes. It has extended its geographic reach and representation—in 2009,

Vietnam requested full CICA membership (this request was preliminarily considered by all member

states at the Senior Officials Committee‘s meeting in Beijing on October 29, 2009). Moreover, the

CICA was conferred observer status by the U.N.General Assembly during in 2007. All these

achievements indicate that the Forum is in relevant and useful and responds to the needs of CICA

member states and the broader region.

In preparation for the CICA III Summit in June 2010, member states workedhard to implement

thecommitments and decisions made during the 2006 Summit and at the 2008 CICA Ministerial

Meeting. The preliminary vision for the next Summit‘s agenda included:

- adoption of the Summit political declaration

- completion of the process of institutionalization of the Forum through the adoption of the

Convention on the Privileges and Immunities of the CICA Secretariat

- giving impetus to the implementation of the Catalog of Confidence Building Measures to

initiate the first steps in the politico-military dimension

- Elevating some Asian countries as full members and observers of the CICA

134

Moreover, Kazakhstan, as the then OSCE Chairman-in-Office proposed having a separate

meeting during the CICA Summit with participation of OSCE Asian partners to promote

cooperation between the OSCE and the CICA. It has also proposed issuing the final statement or

communiquй of all participants in the event.

Kazakhstan was the founding Chairman of CICA. It successfully held the Chairmanship since

the first summit in 2002. Turkey, which has been one of the most active members of CICA,

assumed the Chairmanship in June 2010 at the third Summit meeting in Ankara. It is expected

that there will be regular rotation of the chairmanship every two years.

The original goal of Turkey‘s chairmanship was to enhance political and security dialogue in

Asia. In the beginning of 2010, Turkey declared the following priorities for its work as chair:

conduct a dialogue on cooperation for security; provide basis for mutual search toward common

understanding; establish a bridge between security and dialogue; enhance dialogue for cooperative

security in accordance with the principle of non-zero-sum game; establish more effective

mechanisms of cooperative security; understand challenges to cooperative security; identify the road

map for the future development.

135

ORGANIZATION OF THE ISLAMIC CONFERENCE

Kazakhstan became a member of the Organization of Islamic Conference in 1995. Cooperation

with the Islamic world is one of the priorities of Kazakhstan‘s foreign policy. Our country is

considered by the Islamic World as the integral part of the Muslim community. Since entering the

OIC, Kazakhstan has gradually developed its interaction with the General Secretariat, subsidiary

bodies and institutes of the Organization. Kazakh delegations have participated in the biggest OIC

events such as Summits (Eighth OIC Summit in December 1997 in Tehran, Ninth OIC Summit in

November 2000 in Doha, 10th OIC Summit in October 2003 in Putradjaya), Islamic Conferences of

Foreign Ministers (since 24th ICFM in December 1996 in Jakarta, until 33rd ICFM in June 2006 in

Baku) as well as Annual Coordination Meetings of Foreign Ministers within frameworks of the UN

General Assembly.

Further intensification of Kazakhstan‘s relations with the Muslim countries meets long-term

interests of our country mentioned in the Address of PresidentNazarbayev on March 1, 2006.

Nazarbayev described Kazakhstan as a multiethnic and multiconfessional state thatfully supports

developing a dialogue among civilizations and religions. He said it was becoming increasingly

important that Kazakhstan participate in the OIC as well as with other large regional and global

organizations.

Participants at the 32nd Islamic Conference of Foreign Ministers in Sanaa, Yemen in June

2005,supported Kazakhstan‘s initiative on promoting inter-faith dialogue by convening the Congress

of Leaders of World and Traditional Religions.

Special importance was given to cooperation with the Islamic Development Bank and other

financial and consulting institutions and companies. Implementing earlier agreements were under

development. The IDB Program, which includes several economic and infrastructure projects in

Kazakhstan, was developed for the period, 2003-2006:

- Syzganov Institute– $10 million

- Highway Gulshat – Karaganda – $10 million

- Segment of the Osakarovka – Vishnevka Highway– $20 million

- Assistance to Small and Medium Enterprises Development– $15 million

Development of cooperation with the OIC in educational, cultural-humanitarian, science and

technology fields as also important. Close interaction with the Islamic Education, Science and

Culture Organization (ISESCO) gave Kazakhstan an opportunity to implement national projects

including preservation of cultural heritage monuments, language training and study of history,

culture of Islamic Countries.

On Sept. 9-11, 2005, in Mekkah (Saudi Arabia), the Conference of Muslim Scholars and

Thinkers was held with the participation of the Chairman of the Committee for Foreign Affairs,

Defense and Security of the Senate of the Parliament of the Republic of Kazakhstan Zhabaikhan

Abdildin. This activity was aimed at elaboration of recommendations and preparation of documents

to be submitted to the Third Extraordinary Conference held in Mekkah, Dec. 7-8, 2005.

Representatives from the 57 Member States came together to consider the initiative of the King of

Saudi Arabia Abdullah bin Abdulaziz Al Saud.

A 10-year OIC Action Plan was adopted during the Extraordinary Summit. Based on the

proposals of the Kazakh delegation, provisions were included on political, economic and financial

assistance to countries affected by environmental disasters as well as on religious dialogue. At its

33rd meeting in June 2006, the Islamic Conference of Foreign Ministers reiterated support for the

Resolution initiated by Kazakhstan ―On the situation in the Regions of the Islamic world Affected

by Environmental Disasters, in particularly in the basin of the Aral Sea and the Region of

136

Semipalatinsk Region.‖ Kazakhstan has worked within the OIC framework to participate in the

activities of the OIC Parliamentary Union. With the aim of enhancing and intensifying its

cooperation with the OIC, Kazakhstan has become more integrated in OIC inter-parliamentary

relations. This demonstrates our goal of developing positive and mutually beneficial relationships

with the Islamic countries. Kazakh parliamentarians took part in the sixth Conference of the

Parliamentary Union of the OIC,April 12-13, 2006, in Turkey.

KAZAKHSTAN‟S OIC CHAIRMANSHIP

In 2009, member states of the OIC decided that Kazakhstan would chair the Organization in

2011.. It is important to highlight that the decision was largely the result of the high trust and authority

that President Nazarbayevcommands in the region and his active international stand on security and

constructive East-West relations. . The focus of Kazakhstan‘s Chairmanship is to establish the effective

and constructive ―dialogue of civilizations‖ between the East and West, one of the goals of the CICA,

OSCE and OIC.

As the 2010 OSCE Chairman-in-Office and 2011 OIC Chairman, Kazakhstan has focused

strengthening the two organizations' cooperation. The goals and objectives of the OIC are not much

different from those of the OSCE, as both organizations are devoted to international peace and

security.

137

KAZAKHSTAN‟S INTERNATIONAL INTERRELIGIOUS INITIATIVES

Since achieving independence, Kazakhstanhas served as an international platform for the

dialogue of cultures and religions. The initiative of the Alliance of Civilizations is accelerating its

pace and the dialogue between individuals, governments, religious and public. Kazakhstan

contributes to its interreligious, international efforts. At the 62nd session of the UN General

Assembly, Kazakhstan initiated the resolution that has been adopted proclaiming 2010 as the

―International Year of Rapprochement of Cultures.‖ Kazakhstan also held the 3rd Congress of

Leaders of World and Traditional Religions on July 1-2, 2009. The idea of promoting interreligious

and interethnic tolerance was also included on Kazakhstan‘s OSCE agenda in 2010.

CONGRESS OF LEADERS OF WORLD AND TRADITIONAL RELIGIONS.Leaders

of world and traditional religions met for the first time in Astana on Sept. 24, 2003, to condemn

terrorism . They pledged to continue to work toward peace, harmony and prosperity. The Congress,

held at the initiative of President Nazarbayev in Kazakhstan's capital, drew widespread support from

leaders of both Western and Asian nations. Kazakhstan is a Muslim-majority country and is

considered an example of interethnic and interfaith harmony. The Congress was a bold reminder to

the world that people of different faiths and ethnic backgrounds can and should live together in

peace.

At the end of the Congress, senior clerics from Islam, Christianity, Buddhism, Judaism,

Hinduism, Taoism and other faiths adopted a Declaration stating that "extremism, terrorism and

other forms of violence in the name of religion have nothing to do with genuine understanding of

religion, but are threat to human life and hence should be rejected. The inter-religious dialogue is

one of the key means for social development and the promotion of the well-being of all peoples,

fostering tolerance, mutual understanding and harmony among different cultures and religions," the

religious leaders said after the closing joint prayer.

President Nazarbayev, who chaired the conference, said, "It is unacceptable to attach

ideological or political dimensions to existing cultural and religious differences." He countered the

notion of the "clash of civilizations," saying it would be more appropriate to talk about "a meeting of

civilizations." U.S. President George W. Bush said then in his message to President Nazarbayev,

"The United States strongly supports the Congress' objectives of deepening inter-faith understanding

to advance the cause of religious liberty, expand freedom, and eliminate the root causes of

terrorism."

"For the United States, itself a multi-ethnic and religiously diverse nation, these meetings

underscore the importance of working with our friends in Central Asia to advance the values of

tolerance and respect that form the foundation of democracy," the President added. Leaders of the

United Kingdom, France, Italy, Russia, China, Egypt and other nations, as well as then UN

Secretary General Kofi Annan, also sent letters of support and commendation to the participants.

A bipartisan group of senior senators and congressmen from the United States, including

Sens. Sam Brownback (R-Kansas), Conrad Burns (R-Mont.); Reps.George Radanovich (R-Calif.),

Joe Pitts (R-Pa.), Robert Wexler (D-Fla.), Eni Faleomavaega (D-American Samoa), Edolphus

Towns (D-N.Y.) and others sent a letter to President Nazarbayev saying the Congress was "timely."

At the religious level, the U.S. was represented by the President of the National Council of Churches

Michael E. Livingston and Cardinal Theodore Edgar McCarrick (Archbishop of Washington). They

thanked Kazakhstan "for taking consistent and concrete steps to bridge the growing divide between

Muslims and Jews at a time when tension in the Middle East is at a fulcrum, and intolerance and

anti-Semitism are rising worldwide."

138

A total of 18 different religious delegations participated in the meeting from Belgium, the

United Kingdom, China, France, India, Iran, Israel, Japan, Pakistan, Russia, Saudi Arabia,

Switzerland.. Islam was represented by General Secretary of the Saudi Arabia-based World Muslim

League Abdalla ben Abdel Muhsin At-Turki, President of the Islamic Knowledge University

Ayatollah Sayed Mohammad Khamenei of Iran and others from Pakistan and India. Papal Envoy

Cardinal Joseph Tomko led a delegation from the Vatican. The head of the Anglican Community,

the Archbishop of Canterbury was represented by the Bishop of Croydon, the Rt. Revd. Nicholas

Baines and Archbishop‘s Secretary for Ecumenism, Revd. Canon Jonathan Gough. Metropolitan

Mefodiy represented the Russian Orthodox Church. Metropolitan Emmanuel of France led the

delegation of the Constantinople Orthodox Church. Rev. Dr. Ishmael Noko, General Secretary of the

Lutheran World Federation, represented the LWF. Losantsyumay Tudanzyuezinima, Living Buddha

and deputy chairman of the All China Buddhist Association, Jian Ziyui, first deputy chairman of the

All China Taoist Association, Dr. Shantilal Somaya, Director of Shinto Temples Directorate from

Japan, represented their faiths. Jonah Metsger, the Chief Rabbi of Israel, and the chief rabbis of

Belgium, Switzerland, and Russia led the delegation representing Judaism.

In the final declaration, the leaders said they would not "allow the use of religious

differences as an instrument of hatred and discord." "We shall strengthen cooperation by promoting

spiritual values and a culture of dialogue to ensure peace in the new millennium," the participants

declared. The Resolution of the Congress requested Kazakhstan to make arrangements for the

Secretariat to handle all inter-sessional activities before the next meeting of the Congress in 2006.

The UN General Assembly acknowledged the Congress of World and Traditional Religions

held in September 2003 in Astana. The UN General Assembly adopted the Resolution on Promotion

of Interreligious Dialogue on Nov. 12, 2004. The document stressed the commitment of all religions

to peace and stability all over the world and appealed to the international community to promote the

development of the interreligious dialogue. By adopting the Resolution, the community of nations

supported Kazakhstan‘s initiative to promote a culture of peace and dialogue among civilisations.

Following the adoption of the Resolution, the Kazakhstan delegation to the UN informed the

international community about its work leading up tothe Second Congress of World and Traditional

Religions, held in Astana in 2006.

The Resolution invited UN Secretary-General Kofi Annan ―to bring the promotion of

interreligious dialogue to the attention of all Governments and relevant international organizations

and to submit a report thereon, including all views received, to the General Assembly at its sixtieth

session.‖ The Secretary General‘s report also included information on the First Congress of World

and Traditional Religions and further efforts of Kazakhstan to develop the interreligious dialogue.

On Oct. 13, 2004, Kazakhstan hosted the First Meeting of the Secretariat of the Congress of

Leaders of World and Traditional Religions in the southern city of Turkestan, a city on the ancient

Silk Road with 1,500 years of history and a spiritual center for Turkic people.

On April 25-26 2006, Kazakhstan hosted the Fourth Meeting of the Secretariat of the

Congress in Astana. Participants approved the draft declaration, themes and agenda of the Second

Congress. The main themes were: the freedom of conscience and recognition of leaders of other

religions and the role of religious leaders in international security. Special envoy of the U.S.

National Council of Churches Rev. Dr.Shanta Premawaradhana participated in the Secretariat‘s

meetings.

On Sept. 12-13, 2006, Kazakhstan‘s capital Astana hosted the Second Congress of Leaders

of World and Traditional Religions, gatheringmore than 40 religious leaders. At the Second

Congress, the leaders of major world and traditional religions decided to take a more active role in

denouncing intolerance, terrorism and the misuse of religion for political ends.

139

Islam was represented by Dr. Abdullah bin Abdulmohsin Al-Turki, Secretary General of the

Muslim World League (Saudi Arabia), Sheikh Muhammad Sayyid Tantawi, Grand Imam of Al-

Azhar, Dr. Mahmoud Hamdi Zaqzouq, Dr. Mahmood Ahmad Ghazi, President of International

Islamic University (Pakistan) and other distinguished Islamic leaders. The heads of Christian

delegations included Rt. Rev Nicholas Baines, Bishop of Croydon (United Kingdom), Cardinal

Roger Etchegaray, Emeritus President of the Pontifical Council for Justice and Peace (Vatican), His

All Holiness, Bartholomew, Archbishop of Constantinople, New Rome and Ecumenical Patriarch

(Turkey), Cardinal Theodore Edgar McCarrick, Archbishop of Washington (USA), Reverend Dr.

Ishmael Noko, Secretary General of the Lutheran World Federation (Switzerland/USA) and others.

Yona Metzger, Chief Ashkenazi Rabbi of Israel and Shlomo Amar, Sephardic Chief Rabbi of Israel

have represented Judaism at the Second Congress. The representatives of Buddhism, Shinto, Taoism

and Hinduism have also participated in the Second Congress. Among the invited guests of honor

were UNESCO Director-General Koichiro Matsuura, the former Prime Minister of Malaysia

Mahathir Mohammad, UN Under-Secretary-General (Geneva) Sergey Ordzhonikidze, Renй van der

Linden, President of the Council of Europe Parliamentary Assembly, Alejo Vidal-Quadras, Vice-

President of the European Parliament, Staf Nimmegeers, Vice Chairman of the Senate of Belgium

and other distinguished political figures.

President Nazarbayev welcomed participants‘ agreement on a set of Principles of Inter-

religious Dialogue that he hoped would pave the way for a Declaration on the role of religion in

promoting international security. "After the great loss of life in the first six years of the new century,

the world is gradually beginning to understand one simple fact," he said. "The world‘s cultural and

religious diversity is a reality that one needs to understand and accept as a given. Any other

approach by politicians and the world may simply explode."

Representatives of each of the world‘s major religions spoke about the role of education in

promoting tolerance as a long-term contribution to global security. Koichiro Matsuura, UNESCO

Director-General, lauded Kazakhstan‘s "model for peaceful coexistence" among the country‘s 40-

some religious groups. French President Jacques Chirac, in a letter to President Nazarbayev,

expressed hope that the gathering would improve global dialogue between cultures and civilisations.

"To counteract against the clash of cultures, to combat calls to violence, to achieve the victory of our

vision of a unified world, these are the goals which people of all kind intentions, of all religions and

views, must reach together," he wrote. At conclusion of the Congress, the religious leaders signed a

solemn Declaration ―together to tackle and ultimately eliminate prejudice, ignorance and

misrepresentation of other religions‖ to aid in the global fight against terrorism. The Declaration

calls for ―placing a particular focus on what religions hold in common rather than what divides

them.‖ It alsocondemned terrorism on the basis ―that justice can never be established through fear

and bloodshed and that the use of such means is a violation and betrayal of any faith that appeals to

human goodness and dialogue.‖ President Nazarbayev stated that the Declaration capped five years

of work following the terrorist attacks on New York and Washington on Sept. 11, 2001.

―In the face of global threats the whole world has united in this goal: eradicate terrorism and

confirm the values of humanism. An ideology of tolerance and dialogue must confront the ideology

of terrorism,‖ President told to the delegates.

The Congress‘ participants agreed to meet again in Astana in three years. The Congress took

place in a newly built Palace of Peace and Accord. Inaugurated in early September, the pyramid-

style building was designed by British architect Sir Norman Foster as a permanent seat of the

interreligious dialogue forum. The place serves a museum of Kazakhstan‘s national culture, opera-

house, civilizations‘ university, exhibition and concert hall, library, research center for major faiths

140

and office for different religions. The hallwas designed after the Sitting Hall of the UN Security

Council in New York. The building is 77 meters high and 25,500 square meters wide.

The Third Congress was held on July 1-2, 2009, in Astana under the title of ―The role of

religious leaders in building a world of tolerance, mutual respect and cooperation,‖ with the

following sessions: ―Moral and spiritual values‖; ―Justice, peace and security,‖ ―Environment and

harmony,‖ ―Dialog and cooperation,‖ ―Solidarity and cooperation in the period of crisis.‖

In the first session, religious leaders discussed moral and spiritual values as a part of human

culture and tried to find the unified approach to understanding and defining spirituality. Some

people believe spirituality is a cultural heritage like language, art, music, literature, etc.; others

believe that spirituality is closely linked to religion and religious values. They refer to secular and

religious perceptions of the concept of "spirituality."

In the second session, participants discussed developments of the modern world. One group

of religious leaders spoke about a lack of of understanding and tolerance. At the same time, the

leaders said the interaction of religions, culture, and social development continues to affect interstate

relations and international stability. At the third session, leaders discussed the global goal of

solidarity. Differences provide opportunities to explore others values and their merits. Today the

global community needs to be united and make active steps to develop new forms of international

cooperation that will make it possible to ensure stable economic growth and overcome global

imbalances.

At the Third Congress, the United States was represented by three different delegations:

religious diversity included the Rev. Dr. Bernice Powell Jackson, the North American President of

the World Council of Churches, Ms. Debbie Almontaser, Member of board of Brooklyn Borough

President's New Diversity Task Force, Muslim Consultative Network, Women In Islam Inc., and

others). The delegation was led by the President of the US Christian Churches Together, the Very

Reverend Leonid Kishkovsky. The second group represented the level of American involvement in

the global interreligious dialogue; itwas represented by Dr. William Vendley, Secretary General of

the World Conference of Religions for Peace International and Mr. Stein Villumstad, Deputy

Secretary General of the World Conference of Religions for Peace International. The third

delegation represented the voice of Mormon community was led by Paul Bowen Pieper of The

Church of Jesus Christ of Latter-day Saints (LDS Church) and was the first leader of the LDS

Church in Kazakhstan.

141

AFGHANISTAN

Kazakhstan views the situation in Afghanistan as a priority of its foreign policy agenda.

Kazakhstan strongly supports a comprehensive and continued international effort to bring lasting

peace and economic development in Afghanistan.

In 2001, Kazakhstan provided no-cost over-flight rights for the ―Enduring Freedom‖

operation. Similar arrangements were developed and adopted between Kazakhstan and Germany at

the end of 2007. In 2002, Kazakhstan offered its emergency landing air fields for U.S. military and

cargo planes. As one of the key parts of so-called Northern Distribution Network through which

about 35% of all US cargo arrives to Afghanistan since 2009, Kazakhstan made its rail and motor

roads available for transit of non-lethal shipments needed for NATO and U.S. forces in Afghanistan.

In accordance with Bonn Process, 2006 London Conference, 2008 Paris Donor Conference

on Afghanistan,Kazakhstan has undertaken a number of steps to aid Afghanistan: $1 million in

humanitarian assistance, scholarships for 1000 Afghan students and training programs for Afghan

police and internal security service. It also paired with Government of Afghanistan the Protocol of

Intentions to build railway road Termez (Uzbekistan) to Kabul (Afghanistan) with further access to

the transport infrastructure of India and createdthe Kazakh-Afghan Intergovernmental Commission

on Trade and Economic Cooperation.

Kazakhstan is the only Central Asian country that has the Assistance Program on

Reconstruction of Afghanistan. Between 2007-2008, $3 million was provided to restore agricultural

seed supply in Afghanistan, to build a school in Samangan province, a hospital in Bamiyan province

and a road.

Under the next Governmental Action Plan on Assistance, Kazakhstan is allocating $5 million

for projects related to water supply, infrastructure development and delivery of grains and other

commodities. The Action Plan calls forthe delivery of commodities and materials as well as

construction of four bridges crossing the river running through the town of Aibak and strengthening

the river banks. According to the Action Plan, the Afghan government will receive two aircrafts

from their Kazakh counterparts: a MI-171 (to use for humanitarian cargo and rescue operations) and

an IL-76 (for transporting humanitarian aid cargo from the United Arab Emirates to Afghanistan as

part of the UN World Food Program).

Another important step was the decision by the Government of Kazakhstan to allocate $50

million to implement the Agreement on Cooperation in Education with Afghan Government. Under

the agreement, Kazakhstan will educate 1,000 Afghan people from 2010 to 2014. Education of

Afghan people will be carried out in the universities of Kazakhstan in such specialties as healthcare,

agriculture, police, border control, engineering, teachers and educators.

Kazakhstan fully supports the U.S. strategy on Afghanistan. Stabilization of Afghanistan was

and continues to be one of the most important issues to discuss during high-level exchanges between

Kazakhstan and the U.S.

142

IRAQ

Kazakhstan believes that UN should play an active and effective role in further political and

economic rehabilitation in Iraq in close cooperation with the Iraqi Authorities and international

community. Joint efforts should ensure full respect for the independence and territorial integrity of

Iraq, as well as the sovereignty of the Iraqi people and their right to determine their own political

future.

The Kazakh military engineers unit has been stationed in Iraq under U.S. command since

2003. It consisted of 25 people in the Engineer Battalion, four officers in the Multi-National Force

in Baghdad and the Multi-National Division – Centre South.

During its mission in Iraq, the squad destroyed four million units of ammunition. Kazakh

doctors, together with their foreign colleagues, rescued more than 500 Iraqi citizens, one third of

whom were children.

In October 2008, Kazakhstan withdrew its peacekeepers from Iraq at the request of the Iraqi

government. The security situation had improved and Iraqi security forces were now capable of

taking over.

143

KAZAKHSTAN – THE HEART OF EURASIA

USEFUL INFORMATION

National holiday

Dec. 16 – Independence Day

State holidays

Jan. 1-2 – New Year

March 8 – International Womens‘ Day

March 22 – Nauriz (traditional holiday of Spring - ancient Turkic (Kazakh) New Year),

May 1 – Unity Day of Kazakhstan people

May 9 – Victory Day

July 6 – Astana Day

Aug. 30 – Constitution Day

144

Local time

Kazakhstan is divided into two time zones

Eastern zone, Western zone

Eastern Standard Time + 11 hours (time in the capital of Kazakhstan – Astana) and + 10 hours when

the United States switches to Daylight Savings Time

Languages

Kazakh, which belongs to a Turkic group, spoken by over 70.1% of the population, is the state

language. Russian, spoken by 94.3%, enjoys an equal status under the Constitution and is a means of

interethnic communication in Kazakhstan. English is spoken by 15.4%. There is the National

Trinity of Languages Program which aims to ensure that all Kazakh citizens have full command

of Kazakh, Russian and English to have an international competitive edge in the 21st

century.

Newspapers, TV/Radio programs, school instruction are done in 11 languages (Kazakh, Russian,

Uzbek, German, Korean, English, etc.)

Currency

The national currency of Kazakhstan is Tenge (100 tiyn). There are banknotes of T 10 000, 5 000, 2

000, 1 000, 500, 200. The coins of T 1, 3, 5, 10, 20, 50,100.

Currency exchange

Official exchange rate (June, 2010): US$ 1 = 146,4 KZT. The exchange of foreign currency to

Tenge and back is carried out in any bank or official exchange offices. It is advisable to keep

documents of exchange of large amounts before departure from the country.

Bank hours

09.00 a.m. to 06.00 p.m., Monday-Friday

Lunch break 01.00 p.m. – 02.00 p.m.

Credit cards

Almost all American and international credit cards, including Visa and Diners Club, are accepted in

most large hotels in Almaty and Astana and in most shops and restaurants.

National dishes

In general, Kazakhs prefer meat dishes. The favorite national dish of Kazakhstan is beshbarmak.

Beshbarmak is made with lamb, horse meat, beef and dough. Other favorites include kazy, karta,

zhal, zhaya and, of course, kumys (mare‘s milk).. Kumys has healing qualities and is used to treat

lung and intestinal-gastric illnesses. Taking into account that more than 130 different nationalities

are represented in Kazakhstan, the country‘s cuisine is diverse. Kazakhs enjoy Russian, Uighur,

Ukrainian, Uzbek, Korean and European cuisine. Throughout the country, restaurants and cafes are

diverse.

145

Other useful information

Electricity: 220 volts AC, 50

Communications:

Telephone: country code – 7, code of Astana city – 7172, code of Almaty – 727 / International calls

can be made easily. Telegram facilities available from any post office. Full postal facilities are

available at main post offices in the cities andare open 24 hours a day, seven days a week.

Useful links

Travel and Visa information: www.kazakhembus.com

Information on Kazakhstan: www.kazakhstanlive.com

Tourism: www.kazakhstan-tourist.com; www.ecotourism.kz; www.kantengri.kz;

www.kazakhstanbirdtours.com

Most popular ski resort in Kazakhstan: www.chimbulak.kz

146

NATURE & GEOGRAPHY

The Republic of Kazakhstan is located in the central part of Eurasia, almost equidistant from the

Atlantic Ocean and the Pacific Ocean.

Kazakhstan is located at the junction of two continents, Europe and Asia, between 45 and 87

degrees of the eastern longitude, 40 and 55 degrees of the northern latitude in Central Asia. It

occupies a territory equal to 2724.9 thousand km2 and spreads to the east from the Caspian Sea and

Volga valleys to mountainous Altai, from the foothills of the Tien Shan in the south and southeast to

the Western Siberian lowland in the north. The length of its territory from the west to the east

exceeds 3,000 km, and from the south to the north it exceeds 1,700 km. Kazakhstan borders Russia

to the north, 6,467 km, China to the east, 1,460 km, andKyrgyzstan, 980 kmUzbekistan, 2,300 km,

and Turkmenistan, 380 km, to the south. Kazakhstan is bordered by the Caspian Sea in the west.

Total length of the borders is 12,187 km including 600 km of borders along the Caspian Sea. By the

territory, Kazakhstan is the ninth largest in the world and in the 4th on the continent.

Throughout history, Kazakhstan was ann arena for brisk commercial and political relations; itnow it

serves an important role as a link between Europe, Central Asia and the rapidly developing Asian-

Pacific region.

The largest part of the territory is occupied by the valley framed with mountains in the east and

south-east. Mountains along the border with Kyrgyzstan rise almost up to 5,000 meters above sea

level, and Karagiye (Batyr) depression in Mangyshlak is located at 132 meters below sea level. The

Mangyshlak peninsula is in the southwest; Kazakh Low Hill Land is in the central part of the

country, the southern part of Western Siberian lowland sits in the north, and the mountains of Altai,

Tarbagatai, Zhungar Alatau and Tien Shan sit in the east and southeast.

Kazakhstan is home to 8,500 rivers. The length of seven rivers exceeds 1,000 km. The Ural and

Emba, which flow into the Caspian Sea, and the largest; Syrdariya flows into the Aral Sea; Ili that

flows into the lake of Balkhash; Irtysh, Ishim and Tobol cross the country and flow into the Arctic

Ocean. Kazakhstan is also home to 48,000 lakes. The largest are the Aral Sea, Balkhash, Zaisan,

Alakol, Tengiz and Seletengiz. The largest part of the northern shore and half of the eastern shore of

the Caspian Sea (the largest lake in the world) belong to Kazakhstan. The length of the shore is

2,340 km. Twenty-six percent of Kazakhstan is occupied by steppes; 44 percent or 167 million is

desert and 14 percent issemi-deserts. Forests occupy 21 million ha. There are several large

mountain ranges on the territory. The highest peak is Khan-Tengri peak (Saryzhaz ridge) – 6,995

meters above sea level.

Kazakhstan has a unique and rich landscape.

Kazakhstan‘s fauna is also diverse. On its territory there are 853 species of vertebrate animals (178

species of mammals, 512 species of birds, 49 species of crawlers, 12 species of amphibious animals,

102 species of fish and cyclostomes). Fauna of invertebrate animals is also diverse: there are at least

50,000 species including 30,000insects. In the steppes, there are flocks of koulans and goitered

gazelles (Atlantic antelope). Deserts are inhabited by gigantic lizards, snakes and spiders. Tops of

the mountains are inhabited by snow leopards. In the precipices of mountains, one can hear the

147

voice of whistling thrush – Indian thrush. There are birds, marmots, Ustyurt wild sheep, Turkestan

lynx, Tien Shan brown bear, flamingo and swans in Kazakhstan. All of them are unique animals.

Flora is rich: . 5,754 species of higher plants grow on the territory of the Kazakhstan. High-level of

endemism (up to 14%) is specific for Kazakh flora. The most peculiar is the flora in the Western

Tien Shan and in the mountains of Karatau.

The Red Book of the Republic includes 125 species and subspecies of vertebrate animals, 96 species

of invertebrate animals and 303 species of plants.

Protection of the biological and landscape diversity is carried out by 115 specially protected natural

territories of national significance and 60 local natural territories.

Currently there are 10 reserves, eight national parks, two natural reservations and three natural parks

operating in Kazakhstan.

Typical plants of Kazakhstan

Blue Spruce: blue royal Tien Shan spruces are natural artistic

decoration of mountain ridges of Ile Alatau. Like candles they

can reach heights of 40-50 meters. Covered with fog, these

giants rise above the deep precipices of the mountains. Their

tolerant needles can survive cold alpine winters and can exist in

bare rocks.

Saxaul (Latin: Passer ammondendri): You can meet a unique

plant in the steppes of Kazakhstan - saxaul, a bush with soft

leaves. During unusually dry periods, saxaul loses all its leaves

and look like long curls. But as long as rain comes, the plant

starts growing again. If there are several rainy periods in

summer, it can form a small forest. The bush mainly grows in

the desert and semi-desert areas.

148

Typical animals of Kazakhstan

Snow leopard (Pantera unique): In Kazakhstan people view the

eopard as their strongest and proudest animal. A wild cat, its

preferred habitat ison the mountain tops where glaciers are

contiguous with the alpine belt. Although rare, it can

sometimes be found in of the Tien Shan. Without natural

enemies, snow leopards have a long life expectancy .

Saker falcon: In ancient times, Kazakhs used saker falcons for

to hunt fowl. Kazakhs took baby falcons from their nests to

train them to hunt. This tradition still exists. Falcons can be

found in the wilderness in Altai, in north-eastern Kazakhstan, in

Ile Alatau.

Koulan (Latin: Eglius hemionus): Strong, with a light gait, these

Asian animals are elegant and beautiful. Scores of koulans used

to roam in the steppes of Kazakhstan but overhunting rendered

them extinct. Koulan were reintroduced to the at the right

riverbank of Ili River from the Aral Sea.

ENVIRONMENT PROTECTION

Kazakhstan was hit by two major disasters in the 20th century, 500 nuclear weapon tests at the

Semipalatinsk test site and the drying up of the Aral Sea due to diversion of water from Amu Dariya

and Syr Dariya rivers for irrigation.

The country has also been heavily industrialized in the second part of the last century, resulting in

high levels of industrial pollution.

Against this background, the people in Kazakhstan have been particularly conscious of the need of

greater efforts to protect and restore the environment. The Semipalatinsk nuclear test site was shut

down in 1991, while joint projects with the World Bank helped restore water to the northern part of

the Aral Sea.

Other steps are being taken toward cleaner air and environmental protection at the national level.

149

In March 2009, Kazakhstan ratified the Kyoto Protocol to the UN Framework Convention on

Climate Change.

According to the document, the country must reduce carbon dioxide emissions in the atmosphere.

Since ratification, all major facilities are being monitored for environmental compliance with the

protocol. Kazakhstan aims to reduce its greenhouse gas emissions by 15 percent by 2020, and by 25

percent by 2050, in full accordance with the Kyoto Protocol.

Since July 2009, the government restricted the import of automobiles not meeting the Euro-2

standard. From Jan. 1, 2011, Euro-3 standard was implemented, and the Euro-4 standard will be

introduced in 2014.

Almaty, a city with one of the highest levels of pollution in Kazakhstan, introduced a program to

reduce air pollution through 2018. Trucks are now restricted from entering the center of the city,

many trees are being planted, transport interchanges are being built to reduce congestion. The city‘s

department of natural resources noted an improvementin the pollution index from August 2008 to

August 2009, with a drop of almost three percentage points.

Since 2009, Kazakhstan has participated in ―Earth Hour‖ meant to draw public attention to climate

change. On this day, lights are switched off for one hour at Baiterek Tower (the symbol of Astana),

the Ak Orda presidential palace and another 100 buildings in Astana. Initially the action was

planned only in Astana and Almaty, but 88 other cities across Kazakhstan chose to participate.

All future efforts in environmental protection will be carried out in accordance with a new 10-year

program, ―Ecology of Kazakhstan.‖. One of the program‘s objectives is to create a Zhasyl damu

(green development) national center of environmental development for integrated management of

waste production and consumption. Its main purpose is to construct factories to produce recycling

equipment. Today, the country exports its persistent organic pollutants for recycling to Germany.

The program also incorporates a number of investment projects, which will be designed in

accordance with today‘s requirements. The program‘s top prioritywaste production and

consumption.

In June 2010 in Bonn (Germany), Kazakhstan recommended to the COP-16 to accept Republic of

Kazakhstan in Annex B of the Kyoto Protocol.

The conference adopted a policy document that laid the groundwork for a future comprehensive,

legally binding climate agreement to replace the Kyoto Protocol after 2012. A Kazakh delegation

led by Minister of Environmental Protection Nurgali Ashimov participated in the debates.

To implement the Joint Implementation (Article 6) and emissions trade (Article 17), it is necessary

to meet the requirements of articles of the Kyoto Protocol stated in the Marrakesh Agreement. t the

international level, negotiations are held on the integration of Kazakhstan in Appendix B of the

Kyoto Protocol with a commitment to voluntarily limit their anthropogenic emissions of greenhouse

gases (GHGs) for the period from 2008 to 2012. Kazakhstan is commited to achieving 1992

emissions levels.

150

In September 2009, Kazakhstan submitted a report to the UNFCCC Secretariat on inventory of

GHG emissions.

After receiving a positive report on the audit led by international experts, Kazakhstan presented a

national report on Assigned Amount Units (AAU / AAU) and registered with the Secretariat of the

UNFCCC. All these activities contributed to positive solutions at the 32nd session of the Subsidiary

Body for Implementation (May 31 - June 11, 2010, Bonn, Germany) and further at the KS/SS-6 in

Mexico in December of 2010.

In November 2009 in Barcelona at a meeting of the AWG-LCA, Kazakhstan made a commitment to

quantitative reductions in greenhouse gases after 2012.

Within the framework of the State program "Zhasyl Damu" for 2010-2014, there will be a general

decrease in carbon intensity and increase of the share of renewable energy. Work is underway to

develop strategies for low-carbon economy. These parameters helped Kazakhstan develop a legally

binding agreement at COP-16 and KS/SS-6 in Mexico in December 2010.

In June 2009, in Bonn, the Kazakhstan submitted the Second National Communication at the

Conference of Parties of the UN Framework Convention on Climate Change. Since the beginning of

last year, negotiations on the development of the Third National Communication have been held to

meet the requirements of Annex I.

On Aug. 6, 2009, a Ministry of Environmental Protection was appointed to coordinate

implementation of the Kyoto Protocol of the UN Framework Convention on Climate Change (DNA

/ DFP).

The Head of State gave an assignment to the Government to introduce national carbon trading

platform in Kazakhstan. Work has begun to develop regulatory and legislative documents,

amendments and changes to the Environmental Code.

The Ministry of Environment is considering the acquisition and establishment of a national register

of units to reduce greenhouse gas emissions. It should result in the formation of a national system

for estimating emissions of greenhouse gases, the rules on the approval, registration and monitoring

of projects to reduce greenhouse gas emissions.

On Jan. 29, 2010, Kazakhstan sent a letter to the UNFCCC Secretariat expressing its intention to be

associated with the Copenhagen Accord and requested to include the name "Republic of

Kazakhstan" in the title of the Agreement.

Aral Sea in Kazakhstan - a rebirth of local environment?

Kazakhstan has refused to accept the so-called irreversible fate of the Aral Sea.

The country‘s decision to reconquer the northern part of the sea nearly five years ago has released its

first tangible results: rising water levels and the return of fish.

151

Forty years of heavy irrigation by rice and cotton farmers took their toll on the Aral Sea, shrinking

its surface by two thirds and its depth from 53m above sea level to a mere 30m.

Fish disappeared, salinity increased and large quantities of pesticides were released into the

environment. Labelled an ―ecological disaster‖ by the international community, the results have had

a profoundly damaging effect on local fishing communities.

But Kazakh President Nazarbayev has defied fate, launching a vast rescue programm for the Kazakh

side of the Aral Sea in 2001. The two main goals were: the construction of the 13km Kok-Aral dam,

dividing the sea into two halves, north (Kazakh) and south (Uzbek), and the development of the Syr

Darya river banks to increase the volume of water being discharged into the northern part of the sea.

These two measures have been successful:

● Soon after the program was completed in August 2005, tests revealed that the surface of the

northern half of the lake had risen 13% from 2850 square km in 2003 to 3250 square km in 2006.

● Over the same period, salinity dropped from 34 grammes/litre to 15 grammes/litre, encouraging

the gradual return of marine life and several varieties of freshwater fish. The volume of fish catches,

less than 1500 tonnes/year two years ago, is now 15000 tonnes/year – a ten-fold increase.

A significant climatic evolution has taken place. The inhabitants of the region, who are finally able

to resume their livelihoods, have noted a considerable improvement in environmental conditions of

the region in recent years. Above all, the increase of the sea‘s surface has encouraged evaporation,

and thus the progressive return of rainfall, indispensable for agriculture and human and animal life.

152

MILESTONES OF HISTORY

Kazakhstan is located in the heart of Eurasia and on the intersection of ancient social, economic and

cultural routes between many nations, ethnic groups and civilisations. During different periods in

history many states with their unique cultures were established and developed on the present-day

territory of Kazakhstan.

The Scythian nomad civilisation existed in the steppe regions of Central Asia during the first

centuries of the first millennium B.C. Some artifacts of this civilization can still be found. The most

impressive artifacts from this era are household goods and personal items made from bronze and

gold in so called "animal style."The "Golden warrior-prince" tomb is well-known for its beauty and

elegance. It was found near a settlement called Issyk, which is located very close to Almaty city.

Centuries ago, a powerful tribe called the Huns established themselves in the steppe region of

present-day Kazakhstan. They had a great influence on the political development of this area at the

time. An army of Huns led by their great warlord Attila the Hun brought down the Roman Empire.

Later on Turkic tribes became the Huns‘ successors. They created some vast states named

"kaganats" which means empire. These empires covered the territory from the Yellow Sea in the

east to the Black Sea in the west. These nomad states had well-developed cultures for that era: there

were several cities with advanced levels of commerce and trade. Step-by-step, the cities and

caravan-sarais were established at Central Asian oases. It was a part of the historical route known as

"The Great Silk Road,‖ which connected Byzantium with China. Other caravan routes were

important as well. Among them were the roads leading along the Syr-Dariya River to the Aral Sea

and the Urals and the so-called ―sable road‖ from Central Kazakhstan and Altai to southwest

Siberia. Europe and the Middle East were supplied with very valuable furs by this route. Big cities

and commercial centers were built along these trade routes, the most famous among them being

Farab, Taraz, Kulan, Yassy (Turkestan), Sauran and Balasagun.

The Great Silk Road trade route played a major role in the development of commercial relationships

and in the exchange of progressive scientific and cultural ideas. The great eastern philosopher

AI-Farabi lived on the territory of the present-day Kazakhstan from 870 to 959 and was known as

the Second Teacher after Aristotle for his research into philosophy, astronomy, mathematics and the

theory of music. Hodja Ahmed Yassawi was a well-known Moslem bard who lived in the 12th

century; he wrote a famous poem called the book of wisdom. A new form of city architecture

developed at that time and became a major historical achievement. This new style was famous for its

elegant proportions. At the same time a unique type of portable dwelling called "yurta‖ (nomad's

tent) was invented. Yurta was a perfectly designed structure for the the nomads.

In 1221, nomadic tribes led by Genghis-khan occupied Central Asia. This invasion had a great

influence on the development of the Kazakh nation.

Kazakhs had emerged as a distinct ethnic group about that time, forming a tribal confederation

known as the Kazakh Khanate (or Orda) which comprised three tribal unions – Elder, Middle and

Lesser Zhuzes each of which were led by Khans.

153

The merger of different nomadic tribes began in the second

half of the 15th century. These tribes had different cultures

and traditions but had a similar lifestyle. The word ―Kazakh‖

is translated from the Turkic language as "free, independent."

The Kazakh khanate appeared at the time when there was a

political crisis caused by the downfall and collapse of the huge

nomadic empire. This caused a lot of small states to emerge

and fight for control of the territory and parts of the Great Silk

Road trade route. Subsequent dynasties of Genghis-Khan and their rivals also contributed to the

political instability of the region.

Mausoleum of Alasha-Khan (XVI century)

Since the end of the 16th century the main goal of Kazakh khanate has been to promote the integrity

and inviolability of its territory.

Certain events that took place at the beginning of the 18th century show that there was a lack of

resources for the defense and development of Kazakh independence. A very powerful and

aggressive neighbor called Dzhungar Khanate was on the border of the Kazakh khanate. This fact

made Kazakh Khans reconsider their diplomatic relations with Russia and to change them not only

for good trade relations but also for the military defense of the Kazakh khanate and Russia against

Dzhungar aggression.

At the beginning of the 18th century, the political situation along Kazakhstan‘s borders and in the

Kazakh khanate itself was incredibly unstable. The Khanate was under threat. That is why khans of

the Lesser and the Medium zhuz Abulkhair and Sameke decided to accept Russia‘s protection as it

was the only condition under which Russia would agree to defend it militarily.

This protectoin very shortly turned into the colonization of Kazakhstan by Russian military forces.

Abylai Khan made a successful attempt to resist this process of colonisation. He managed to do the

impossible by gaining the independence of the Kazakh khanate under very unfavorable internal and

154

external circumstances. He used the fact that China and Russia had a lot of disagreements at the time

(the 18th century). Unfortunately, the independence of the Kazakh khanate did not continue after his

death.

Some Kazakh intellectuals founded the national liberation movement in 1917-1918. The "Alash"

party and the "Alash-Orda" government were established to defend Kazakhstan‘s independence.

They wanted to liberate the Kazakh people from colonization and to provide them real

independence. The movement ended tragically.

Despite many uprisings, Tsarist Russia retained control over the Kazakh tribes until the Bolshevik

Revolution. Incorporated into the emerging Soviet state, Kazakhstan was made an autonomous

republic, and in 1936 attainedthe status of a full Soviet republic. With the collapse of the Soviet

Union on Dec. 16, 1991,, Kazakhstan declared its independence .

155

CULTURE & TRADITIONS

Kazakhstan has been ―terra incognita‖ for the rest of the world for a long time. Kazakhstan is a huge

country located at the heart of the largest steppe on Earth. For centuries, riders have strolled along

this steppe linking Europe and Asia and mentioned a country where ―rage, attractiveness and charm

are mixed up.‖

LITERATURE

Before the 19th century, Kazakhstan had no written language of its own. Literature

took the form of long oral poems, recited by bards (aquins) in a song-like chant

and accompanied by traditional instruments like drums and a dombra, which is a

mandolin-like string instrument. Recitals and poetry contests (aitys) are still very

popular. The founder of modern Kazakh literature is said to be Abay Kunanbaev

(1845-1904 - see illustration left), a 19th century poet and writer who translated

Russian works into the Kazakh language. His main contribution to Kazakh culture

and folklore is his poetry, which expresses strong nationalism and grew out of

Kazakh folk culture. His most famous philosophic work, "Words of edification" is

said to be a spiritual commandment to the Kazakh nation. Other notable writers and poets include

Akhmet Baitursynov, Mirjaqip Dulatuli, Bukhar-zhirau Kalmakanov, Makhambet Utemisov and

many others.

Chokan Valikhanov (1835-1865), from which Kazakhstan‘s Academy of Sciences takes its name,

was the first Kazakh scholar, ethnographer and historian. A descendant of Ghenghis Khan,

Valikhanov was one of the first Kazakhs to be educated in Russian and published books and articles

devoted to the history and culture of Central Asia. Notable works include "Kirghiz (Kazakhs),"

"Traces of shamanism in Kirghiz," "About Kirghiz nomads' camp" and others containing

ethnographic data that have been used to date. He also wrote the Kazakh epic poems "Kozy-Korpesh

and "Bayan-Sulu" and the Kyrgyz epic "Manas.‖

LIFESTYLE

Astana, the Kazakh capital, and Almaty, the former capital, are modern

cosmopolitan cities . Most Kazakhs live in urban apartment blocks, houses

finished to international standards. The wealthy denizens of Astana have

often occupy penthouse flats overlooking the city and the ever-receeding

steppes. The latest important residential complex under construction - the

Abu Dhabi Plaza - is designed by Norman Foster.

TRADITIONS

The traditional dwelling of the Kazakh nomad is the yurt, a tent made from a framework of willow

wood and covered in felt, with a hole in the top to allow smoke to escape. When correctly

constructed, a yurt enables its inhabitants to stay cool in summer and warm in winter. Very few

Kazakhs still maintain a semi-nomadic existence, moving their herds and flocks to summer pastures

each year.

156

MUSEUMS

Most of Kazakhstan‘s museums are found in Almaty. The Central State

Museum of the Republic of Kazakhstan was established in the 1930s and today

hosts four large exhibition halls covering hundreds of unique Kazakh exhibits

including spiritual and cultural material describing the history of the country.

The A. Kasteyev State Museum of Arts boasts over 20 thousand exhibits in its

collection (painting, sculpture, decorative art). The Museum's acquisitions program began when the

Russian Museum and the A.S. Pushkin Museum of the Fine Arts delivered 200 works by Russian

and Western masters in the 1930s. The collection traces art history from ancient to present times.

The Archaeological Museum of the Kazakhstan National Academy of Sciences and The State Book

Museum is also located in Almaty

SPORTS

As in other aspects of Kazakhstan‘s traditional culture, the

horse plays a dominant role in athletics – kokpar is a wilder

version of polo using a goat‘s carcass instead of a ball; and qyz

quu, is a chase between girl and boy on horseback.

In contemporary terms, Kazakhstan is obsessed with football.

The Kazakhstan First Division is controlled by the Football

Union and feeds into the Kazakhstan Super League, founded in

1994. Cyclist Alexander Vinokourov is perhaps the best-known

Kazakh athlete. Tennis, boxing, gymnastics, swimming and

golf are also popular.

At the 29th

Olympic Games in Beijing, Kazakhstan‘s athletes won a total of 13 medals – two gold,

four silver and seven bronze. Kazakhstan has consequently been ranked 29th among the 205

competing countries. Since its independence, the country has won an incredible 43 medals -

including 11 gold. Weight lifter Ilya Ilyin and welterweight boxer Bakhyt Sarsekbayev won gold

medals. Judoist Askhat Jitkeev, female weightlifters Irina Nekrasova and Alla Vazhenina, and free-

style wrestler Taimuraz Tigiyev won silver medals. Bronze medals were won by N. Tenizbayev and

A. Mambetov (Greek-Roman wrestling), M. Grabovetskaya (weightlifting), E. Shalygina and M.

Mutalimov (free-style wrestling), E. Shynaliev (boxing), A. Chilmanov (taekwondo).

The Kazakh delegation for the Olympics in Beijing consisted of 70 female and 62 male athletes

winning 132 qualifying licenses in 22 (out of 41) sports. The delegation included athletes from all

16 administrative territories of the Republic - and from 11 separate ethnic groups. Kazakhstan

including President Nazarbayev led a delegation of 200 officials to Beijing.

157

CINEMA

Kazakhstan has a strong cinematic tradition: the first Kazakh films date back to the beginning of the

20th century and the first filming took place in 1928. These were mainly short propaganda films,

created by Russian directors and known as ―agitfilms.‖ The first Kazakh full-length feature,

―Amangeldy‖ by Moisey Levin, was made in 1938 and was also the first film with sound. It has a

narrative pattern typical of central Asian cinema, which focuses on strong and heroic characters.

Other notable early films include ―The Land of the Fathers‖ by Zemlya Ostov, ―The Balcony' by

Kalykbek Salykov,‖ ―Gift to Stalin‖ and 'The Island of Rebirth‖ by Rustem Abdrashev.

In recent years, fast-growing Kazakh cinema is

positively affected by economic growth. Kazakhstan

has submitted six films to be considered for the

Academy Awards. Since 2006, Kazakhstan has been

submitting a film every year (Fall of Otrar in 1992,

Nomad in 2006, Mongol 2007, Tulpan 2008 and Kelin

2009 and Strayed 2010). Mongol was an Oscar nominee

and Kelin made a shortlist.

From June 27 through July 1, 2010 Astana hosted the

1st Astana International Action Film Festival, which was attended by many international stars and

producers, including Dolph Lundgren, Hilary Swank, Harvey Weinstein and Mike Tyson. The event

was organized by Timur Bekmambetov, a Kazakh Hollywood producer of internationally famous

movies such as ―Night Watch‖ and ―Wanted,‖ which starred Angelina Jolie. Timur Bekmambetov is

working on many noteworthy projects in the U.S.

It is no coincidence that internationally famous producer, Mr. Steven Jaffe, was appointed as the

Honorary Consul of Kazakhstan in Los Angeles – he is already making contributions to

development of Kazakh cinema as a Hollywood director. His multifaceted career in film has

included being producer, executive producer, writer, and/or second unit director on such films as

―Ghost,‖ ―Star Trek VI,‖ ―The Widowmaker,‖ ―Strange Days,‖ ―Time After Time,‖ ―Near Dark,‖

―The Day After‖ and ―K19: The Widowmaker.‖

The Land of the Fathers (1966). A year after the end of the war, an old Kazakh man and his

grandson go through all the country to retrieve the body of a soldier who was old man‘s son from a

rural cemetery near Leningrad and to bury him in native Kazakh steppe. However as they reach a

tomb, they learn that old man‘s son lies here with his friends‘ bodies. So, the old man and his

grandson decide not to disturb him, understanding that the national grief and the national feat

brought all the people closer together.

Revenge (Mest, 1989). In the beginning of the 1940s, hundreds of thousands of Koreans that had

lived in the Russian Far East since the XIX century were forcibly displaced overnight by Stalin‘s

orders. Women, children, the elderly, were sent away with no explanation. The Korean diaspora in

Kazakhstan, with a population of more than 1 million, has been a forbidden topic for many

years. Revenge is the first film telling the story of their tragedy.

The Road (1992) by Omirbaev Darejan. A film director takes a trip to visit his sick mother, leaving

his wife and son in Almaty. The audience is exposed to his thoughts and encounters along the way.

158

Highway (2001) by Sergei Dvortsevoy. Kazakhstan is seen through the eyes of a small traveling

circus.

My Brother Silk Road (2001) by Marut Sarulu. Filmed in Kazakhstan/Kyrgyzstan, four village

children embark on a difficult journey through the steppes to the railroad, which lies on the path of

the ancient Silk Route. A train meanders down the mountain and, following an argument, an artist is

unceremoniously thrown off a carriage and meets the children...

Leila's Prayer (2002) by Satybaldy Narymbetov. A powerful drama portraying a young girl living

in the Semey region in the north of Kazakhstan, where the Soviet regime carried

out 467 nuclear tests at a devastating cost to the local environment.

Little Men (2003) by Nariman Turebayev. Subtle comedy on the post-Soviet

generation in Kazakhstan, full of up-tempo music and slapstick humor. Bek and

Max, two slackers, share an apartment and the same bleak economic prospects.

When one of the two, the naive Bek, falls hopelessly in love, the incurable

philanderer Max decides to teach him about women.

The Hunter (2004) by Serik Aprimov. An allegory about the tensions between the traditional and

the new in Kazakh society. It featuresa young boy who is brought up by his stepmother and a

nomadic hunter.

Schizo (2004),Writer/director Guka Omarova's debut. Acoming-of-age film about a 15-year-old boy

(played by Oldzhas Nusupbayev) growing up in Kazakhstan in the early 1990s (see poster above).

Nomad (2006), which symbolizes Kazakh-US friendship, is a product of international cooperation

of the Kazakh movie industry and Hollywood, among others. The epic film is about

Kazakhstan‘s18th

century fight for survival against jungar invaders.

Ulzhan (2007) by Volker Schloendorff. Driven by an inexplicable force, Frenchman Charles

decides to leave his homeland and head east. When his car breaks down in Kazakhstan, he decides

to travel on foot. Destitute but happy, he wanders the steppes of Central Asia.

Racketeer (2007). An action blockbuster set in the post Soviet 1990s, it is a story of a young boxer

who decides to carve a new path for himself by diving straight into the underbelly of Almaty‘s

mafia. The film follows him as he moves up the ladder until he realizes there‘s no going back and

theres a price to pay for success.

Mongol (2008) is about the incredible destiny of Gengis Khan, or to give him his true name,

Temudgin. This legendary chief of the Mongolian armed forces was one of the greatest conquerors

in history.

Tulpan (2008) by Sergei Dvortsevoy. After having made its service in the marines, Asa returns in

the steppes to live with her sister and brother-in-law, a stockbreeder of sheep. Asa dreams of a

simple life. He sets his eyes on on a wife,Marie Tulpan. But she does not want him.

159

The Gift to Stalin (2008) tells the story of a Jewish boy who in the late 1940s was saved from the

horrors of Stalin‘s GULAG human grinder by a humble Kazakh war veteran. The story takes place

in Central Kazakhstan, where the Stalin regime was preparing to test of the first Soviet nuclear

bomb. The movie is about love, human courage and tolerance.

Native Dancer (Baksi, 2008) by Gulshat Omarova. Aidai the baksy, or folk healer, uses mysterious

actions to cure the sick and to give infertile couples children. As capitalist forces begin to encroach

on tradition, the first casualty is any culture's most

fundamental inheritance - land. The healer has to leave

her land because the mob thinks the location is suitable

for a filling station. A harsh battle between supernatural

good and earthly evil ensues. Native Dancer evokes the

mysticism of fantasy and the thrills of a gangster film.

It features Neisipkul Omarbekova, a real-life Kazakh

witch doctor, in the title role.

The Strayed (2009), a psychological thriller, is about a man who goes astray on the vast steppe of

Kazakhstan. Through discussions with devil, he realizes that he went astray not only physically on

the road, but also in his life, as he slowly got involved with drug trafficking. The movie sends a

powerful message and could be seen as educational for youth about the consequences of crossing the

red lines.

Kelin (2009). Told in beautiful and poetic images without a word of dialogue, a young love

struggles to survive in the face of uncontrollable external factors. Short-listed for 2009 Academy

Awards Best Foreign Language Film.

Liquidator (2011) tells the story of a bodyguard who uncovers foul play in his brother‘s untimely

death. Actor Vinnie Jones plays a mute assassin on assignment in Kazakhstan. Jones brings solid

credentials as an on-screen thug with appearances in Guy Ritchie‘s ―Lock, Stock and Two Smoking

Barrels.‖

160

ARCHITECTURE

Kazakhstan is full of architectural masterpieces reflecting its varied

history. Southern Kazakhstan is home to a number of important

Islamic buildings, including the Arystanbab Mosque (built in the

12th century) located near the ancient city of Otrar and the villages

of Talapty and Kogam, the Khoja Akhmed Yasavi Mausoleum

(14th century) in the city of Tuumlrkistan and the Aisha-Bibi

Mausoleum (10th century) in the city of Taraz.

Many new mosques have been built since independence. In the new capital, Astana, buildings were

constructed or renovated specifically for the government‘s move there in 1997. They include a

modern complex in the city‘s main square that serves as the government headquarters. The cities of

Kazakhstan also contain examples of Russian architecture such as the Zenkov Cathedral (built in

1904) in Almaty. The architecture of the Soviet period mostly took the form of drab, functional

buildings.

Khan Shatyr ("Royal Marquee") is a giant transparent tent in

Astana, the capital city of Kazakhstan. The architectural project

was unveiled by the President of Kazakhstan Nursultan

Nazarbayev on 9 December 2006.

The 150m-high (500 ft) tent has a 200m elliptical base covering

140,000 square meters. Underneath the tent, an area larger than 10

football stadiums, is an urban-scale internal park, shopping and

entertainment venue with squares and cobbled streets, a boating river, shopping centre, minigolf and

indoor beach resort. The roof is constructed from ETFE-cushions provided by Vector Foiltec

suspended on a network of cables strung from a central spire. The transparent material allows

sunlight through which, in conjunction with air heating and cooling systems, is designed to maintain

an internal temperature between 15-30°C in the main space and 19-24°C in the retail units, while

outside the temperature varies between -35 to +35°C across the year.

After the Palace of Peace and Reconciliation (2006), a giant glass pyramid in Astana, this is the

second national project designed by UK architect Norman Foster (of Foster and Partners), (Partners

in Charge Filo Russo and Peter Ridley), and UK engineers Buro Happold led by Mike Cook

Construction documentation architects are Linea and Gultekin. The construction of the tent-city is

the responsibility of the Turkish company Sembol (source: Wikipedia).

The Palace of Peace and Reconciliation (also translated as the

Pyramid of Peace and Accord) is a 77 m high building in Astana,

the capital of Kazakhstan. The structure was built by Sembol

Construction at a cost of 8.74 billion Kazakh tenge (about $58

million) and opened in late 2006.

It was designed by the British architects Foster and Partners (lead

161

design). The Pyramid was specially constructed to host the Congress of Leaders of World and

Traditional Religions. A 1,500-seat opera house is built into the lower levels, with auditorium and

performance equipment design by Anne Minors Performance Consultants and acoustics by Sound

Space Design (source: Wikipedia).

Bayterek (tall poplar [tree), is a monument and observation tower

in Astana, the capital of Kazakhstan. A tourist attraction popular

with foreign visitors and native Kazakhs alike, it is a common

symbol of the city and itself in turn symbolizes Astana's new status

as the capital of Kazakhstan.

The monument is meant to embody a folktale about a mythical tree

of life and a magic bird of happiness: the bird, named Samruk, had

laid its egg in the crevice between two branches of a poplar tree.

The 105m structure consists of a narrow cylindrical shaft emeshed

in flaring white branch-like girders, widening toward the top (the

"tree"), where a gold-mirrored 22m-diameter sphere (the "egg")

containing the observation deck is supported.

The altitude of the deck is 97m, symbolizing the year of the

capital-transfer to Astana (1997). From its height it is possible to see much of the newly built city. In

addition to the observation platform, the tower contains a large aquarium and an art gallery. Astana

citizens jokingly refer to Bayterek as "Chupa Chups" because of its similarity to the popular lollipop

(source: Wikipedia).

The Ascension Cathedral, also known as Zenkov Cathedral，is a

Russian Orthodox cathedral located in Panfilov Park in Almaty.

Completed in 1907, it is the second tallest wooden building in the

world. It survived the 1911 earthquake with minimal damage.

After the Russian Revolution the cathedral was used to house the

Central State Museum of the Kazakh Soviet Socialist Republic.

From 1930 to 1940 it was used by important public organizations.

The first radio transmitters in Almaty were situated in the

cathedral's belfry.

In May 1995 control of the cathedral was returned to the Russian

Orthodox Church and it was reopened for religious services in

1997. (source: Wikipedia)

162

The 28 Panfilov Heroes Memorial Park. Honours the men from

Kazakhstan who died on the battlefields of the 2nd

World War

against Nazi fascism. The monument depicts 28 soldiers of an

Almaty infantry unit who died fighting off Nazi tanks in a village

outside Moscow in 1941. The unit was commanded by Gen.

Panfilov. There is an 'eternal flame' by the war memorial where

schoolchildren put flowers on the last day of school, and

newlyweds also come to have their photos taken there.

(sources: Wikitravel and www.almaty-hotels.net ).

Abai Kazakh State Academic opera and ballet theatre by musical

performance "Aiman-Sholpan" on libretto of Muhtar Auezov. Its

success left a longlasting impact on the cultural development and

soon the entire country learned of a bright a new theatre. Presently,

it is the largest theatre in Eurasia. Its artistic team includes glorified

stage masters and young talents, winners of the various prestigious

international competitions. It world recognition and guests from all

overt the world, including the US, France, Germany, Italy, Japan and

China frequent the theater. It also hosts an annual international festival of opera and ballet.

Hotel Kazakhstan is a famous landmark building in Almaty and

serves as a symbol of the city. It is 129.8 meters tall. The building

was erected in 1970. Located in downtown, in the heart of the

cultural and business center of the city, it is ideally situated for

sightseeing, nightlife, banking and the city administration. It is a 20-

minute drive from the airport. The 26-storey quake safe construction

was recently granted listed status by the National Heritage Fund.

The hotel offers excellent view of picturesque Alatau mountain.

163

CUISINE

Traditional Kazakh food is similar to that of the Mediterranean in its use of

rice, savory seasonings, vegetables, yogurt and grilled meats. The Nomadic

diet is heavy in lamb, dairy products and bread, while in the northern cities

cuisine is heavily influenced by Russia. A popular dish is qazy, a horsemeat

sausage served up with cold noodles, or the sweet plov, made with dried

apricots, raisins and prunes. Food in large towns and cities is similar to that

of any Western urban area.

SOME OF THE MOST POPULAR TRADITIONAL DISHES

IN KAZAKHSTAN INCLUDE:

KUYRDAK

(Kazakh equivalent of haggis)

Kuyrdak is served in soup-plates and covered

with greens. Usually kuyrdak is served with

taba-nan or fresh bread.

MANTY WITH MEAT

(Turkic dumplings with organic meat)

The manty are served on a plate, covered with

black pepper and served. Sometimes they are put

in deep bowls. Portions are typically 3-4

piecesand covered with broth.

164

DOMALAK BAURSAK

(delicious Kazakh-style donuts)

Before serving, baursaks are laid out on a plate,

covered sour cream and castor sugar.

SAMSA

(traditional Kazakh pasty)

Samsa is usually laid out on hot forms and

sprinkled with water and then baked in an oven

at 300°C for seven minutes.

165

MUSIC

CLASSICAL

Kazakhstan is home to the Kazakh State Kurmangazy Orchestra of

Folk Instruments, the Kazakh State Philharmonic Orchestra, the

Kazakh National Opera and the Kazakh State Chamber Orchestra.

The folk instrument orchestra was named after Kurmangazy, a famous

composer and dombra player from the 19th century. Other Kazakh

composers include Tattimbet, Sougur, Almaz Serkebayev, Tles

Kazhgaliev, Makhambet and Bayserke.

Marat Bissengaliev, Janiya Aubakirova and Aiman Mussakhajaeva

are famous musicians who put Kazakhstan on the musical map.

TRADITIONAL

Kazakh music is nomadic and rural, and is closely related to Uzbek

and Kyrgyz folk forms. Traveling bards, healers and mystics called

akyn are popular, and usually sing either unaccompanied or with a

string instrument, especially a dombra or kobyz. Akyn performance

contests are called aitys; their lyrics are often social or political, and

are generally improvised, witty remarks.

Traditional Kazakh music includes ensembles using instruments like

the kobyz (qobuz) or dombra, as well as kyl-kobyz, sherter, sybyzgy, saszyrnay and shankobyz; the

most common instrumental traditions are called kobizovaia, sibiz-govaia, and dombrovaia. Many

songs are connected to ancient mythology and folk religious beliefs (kui), while others were

composed after the rise of authored works (kuishi) by early songwriters (jirau) like Mahmud

Kashgari, Kaztugan, Dospanbet, Shalkiiz and Aktamberdi. The kuishi tradition is said to have

peaked in the 19th century when composers like Kurmangazy and Birjan and singers like Ahan were

active. In the 20th century, the first major star was the singer Mayra Shamsutdinova.

MODERN

Pop music in Kazakhstan has evolved since 2000. Local record

labels are signing more young musicians than ever. Talent

searches such as the project Anshi Balapan and Pop Idol spinoff

SuperStar KZ broadcast weekly on Kazakh TV have always been

an integral part of the Kazakh pop music industry.. Popular artists

include Madina Sadvaqasova, Almas Kishkenbayev, Roman

Kim, Makpal Isabekova, Kayrat Tuntekov, Rakhat Turlykhanov,

NN Bek, Nurlan & Murat, A-Studio, Musicola, Rin'Go, Pеrsy,

Chine Town, Billy Sexcrime, SuperStar, and Urker.

166

WASHINGTON KAZAKHSTAN FESTIVAL 2010

EXPOSING KAZAKH CULTURE TO AMERICAN FRIENDS

The Smithsonian Institution, with the Embassy of the Republic of Kazakhstan, has organized the

Washington Kazakhstan Festival 2010 to celebrate Kazakhstan‘s rich cultural heritage through a

series of events held in locations throughout Washington, D.C, April 14 through Dec. 31. The

Festival, structured around the Chokan Valikhanov online exhibition, was generously sponsored by

the Chevron Corporation.

ABOUT THE VALIKHANOV ONLINE EXHIBITION

Kazakhstan Explored: The Expeditions of Chokan Valikhanov

www.valikhanov.si.edu

Chokan Valikhanov (1835-1865) is often considered the ―father of

Kazakh historiography and ethnography.‖ This new Smithsonian

online exhibition begins a multi-year project to present the scientific

accomplishments, along with translations of expedition records, of

this great 19th-century Kazakh geographer and ethnographer.

FESTIVAL OPENING EVENT

PERFORMANCES AND EXHIBITIONS

The Washington Kazakhstan Festival 2010

launch event on April 14, 2010, at the

Smithsonian American Art Museum‘s Robert

and Arlene Kogod Courtyard, featured a range of

traditional and modern performances and events,

including music performances by the Kazakhstan

Presidential Orchestra, the Youth Jazz Ensemble

from the Kazakh National Academy of Music

and Ulytau folk-rock band, exhibitions of gold

and traditional crafts of Kazakhstan, and

contemporary art by Kazakh-born artist Marina

Sharipova (MAKE).

Throughout 2010, the Festival featured exhibitions, musical performances, a week of Kazakh

cinema, lectures on Kazakhstan and much more. Please follow the Embassy of Kazakhstan website

(www.kazakhembus.com) and the Smithsonian newsletters for more information.

167

EDUCATION

After its independence from the Soviet Union, Kazakhstan was hit

by a major economic depression that cut "public financing" for

education in the country. It dropped from 6% of GDP in 1991 to

about 3% in 1994, before rising to 4% in 1999. Elementary- and

secondary-school teachers were severly underpaid; in 1993 more

than 30,000 teachers (or about 1/7 of the 1990 teaching staff) left

education, many of them to seek more lucrative employment.

In 1994, Kazakhstan had 8,575 elementary and secondary schools

(grades one through twelve) attended by approximately 3.2 million

students, and 244 specialized secondary schools with about

222,000 students. In 1992, about 51 percent of eligible children

were attending some 8,500 preschools in Kazakhstan. In 1994, some 272,100 students were enrolled

in the republic's 61 institutes of higher learning. Fifty-four percent of the students were Kazakh, and

31 percent were Russian.

Kazakhstan's 1995 Constitution provides mandatory, public secondary school education. Citizens

compete for institutions of higher learning. Private education is increasing in the country, with about

5% of students enrolled in the private schools, which arelargely under arbitrary state control.

Primary school

Primary school in Kazakhstan starts at age 6 and runs from one to five years. Classes typically run in

two sessions, from 8 a.m. until 1 p.m. and from 1 p.m. until 5 p.m., with students either going to

class in the morning or in the afternoon. All primary schools are state-owned; access to primary and

secondary education is a constitutionally protected right.

Primary school is provided free to all citizens and residents of Kazakhstan and parents typically only

pay for extra-curricular activities such as sports or music programs. Parentssometimes pay for lab

equipment or other special equipment.

Lower secondary school

Students continue in lower secondary school from grade five through nine. This roughly

corresponds to junior high school, or middle school, in the U.S. Typically a student in year eight is

14-15 years old. The curriculum is a general education curriculum covering subjects like literature,

students‘ first language, Russian or Kazakh language (depending on the language of the school in

general), history, physics, mathematics, biology, chemistry, foreign language, and so on.

Higher secondary school

Once leaving lower secondary school, there are three tracks available. Students are free to choose

any track of higher secondary education but are required to pursue one track. Graduates of all three

tracks are eligible to enter university.

The first track is a general secondary school which covers grades 10 -11 and provides general

education on a variety of subjects.

168

In addition, there are two curriculum tracks for vocational education: Initial vocational education,

which is provided by training schools and lycees, and secondary vocational education provided by

colleges and trade schools.

Initial training schools are designed to train students in a skilled profession. The program is usually

two or three years in length, (typically ages 16 – 18), but for some professional training requires a

four year program. Students who graduate can go on to college for advanced vocational training or

attend university. The state provides costs of education from the budget.

Colleges provide both academic general education and advanced vocational education. Colleges, if

licensed, can also provide initial vocational education. Programs last for three or four years (grades

10, 12, 13). Accelerated programs exist for students who have already completed both general

secondary education and initial vocational training in the same field. Graduates may go on to

university or may begin working. As of the 1999 Budget Law, colleges are state-owned and self-

financed. In principle, however, all compulsory education (primary and secondary) is provided free

of charge.

The curriculum for both primary and secondary school is established by the Ministry of Education,

with little choice left up to the individual schools. Textbooks are sold in bookstores throughout the

country and are purchased by the students themselves.

Like primary school, secondary school is subsidized by the government and parents only pay for

extra-curricular activities and sometimes lab equipment or other special equipment.

Tertiary Institutions The universities, following the Russian system, focus entirely on teaching and do not engage in

research. Students who are accepted to university at any level apply under a specific major, and the

curriculum is set by the university (according to State legislation) for each major. For example,

economics majors will all study in the same courses in the same order, separate from English majors

who have a different curriculum. Some courses are required. Students may switch majors but

typically classes do not transfer so students are expected to reenter in the new major as a new first

year enrolee. .

The government is currently pursuing a program to adopt a credit system that would allow students

to studyabroad more easily. It is also consideringexpanding the curriculum to include electives and

student-chosen courses.

There are four levels of tertiary education in Kazakhstan:

- Bachelors degree, which is typically a four-year degree

- Specialist degree , which istypically a five-year degree and more intensive than the bachelors

- Masters degree,a two-year degree, roughly corresponding to the Western masters;

- Doctoral degree, which istypically a five-year program.

Universities are usually headed by a rector, appointed by the President of Kazakhstan, who wields

considerable authority over the institution, approving all decisions including curriculum, personnel

and admission. Kazakhstan universities are more centralized than their Western counterparts.

The top two universities in Kazakhstan are al-Farabi Kazakh National University in Almaty and

Eurasian National University located in Astana. Karaganda State University is also well-regarded.

In addition, there are a few international universities such as KIMEP, which is a joint program, 40%

owned by the government of Kazakhstan, but education is based on the Western system. The

169

Kazakh-British Technical University and the Kazakh-American University represent joint projects

between Kazakhstan and the UK and the U.S., respectively. In all three institutions, the language of

instruction is English. The University of Central Asia, founded jointly by the Governments of

Kazakhstan, Kyrgyzstan and Tajikistan and by the Aga Khan, is affiliated with the Aga Khan

Development Network. Private universities, typically for-profit institutions, are subject to the same

regulations related to curriculum but are free to set tuition and salaries as they see fit. Public

universities are subject to the same regulations as other government-owned institutionsrelated to

fees and salaries, administrative structure, contracting and subcontracting, and ownership of

property.

State-owned universities receive funding if their enrollment reaches 86,000 students or 34%. A

small number of universities are financed through a budget line in the Republic budget, such as art

academies or international universities.

KAZAKHSTAN‟S EDUCATION AND TALENT ON GLOBAL MAP

85% of the population ages 5-24 years are enrolled in education

30% of citizens are involved in the system of education and science, which includes:

• 4.4 million students

• 405,000 employed teachers and scientists

4,568 preschools and 7,576 secondary schools as of Nov. 1, 2009

From 2001 to 2008, 1,776 preschool education facilities were in operation

From 2004 to 2008, 263 new schools were built, including 170 in rural areas;

(Source: Ministry of Education of the Republic of Kazakhstan)

At the beginning of 2009, 143 higher educational establishments were in operation in the

country, including 51 state and 92 private educational facilities. The total number of students in

2008 was 768,000, 25.2% of whom received higher professional education, 73.8% received

bachelor‘s degrees, and 1.0% received higher scientific and pedagogical education;

Kazakhstan was ranked 1st in Asia by the Education for All Development Index, 2008;

(Source: Asian Development Bank)

Kazakhstan ranked 1st in the world out of 129 countries, followed by Japan, Germany, UK,

according to the Norway by the Education for All Development Index (EDI); (Source:

Education for All Global Monitoring, Report 2009, UNESCO)

Kazakhstan ranked 10th

in the world in adult literacy (ages 15 and above) with 99.6%;

(Source: Human Development Report 2009, UNDP)

The Trends in International Mathematics and Science Study, TIMSS 2007:

(Project by International Association for the Evaluation of Educational Achievement, directed

by the TIMSS & PIRLS International Study Center at Boston College, conducted every four

years among 4th

and 8th

grade students)

• In Mathematics (4th

grade) – Kazakhstan students ranked 5th

in the world;

170

• In Science achievement (4th

grade) – Kazakhstan students ranked11th

in the world;

The International Mathematical Olympiad (World Championship Mathematics Olympiad for

High School students held annually):

• Kazakh students team ranked 27th

out of 104 teams at the 2009 Olympiad held in

Germany;

• The International Mathematical Olympiad of 2010 will be held in Astana,

Kazakhstan.

171

BOLASHAK (FUTURE) SCHOLARSHIP

Reformation of the educational system by opening it up to the world

knowledge and experience, scientific and technological

achievements by training highly qualified professionals with the

best managerial skills always helps to transform the society into a

progressive and democratic one. Post World War II Japan, Turkey,

Hong Kong are just some of the convincing historical examples of

economically and politically viable states that have benefited from

having advanced educational systems .

The leadership of the newly formed Republic of Kazakhstan

recognized that in 1991 when it was faced with economic turmoil,

social inefficiency and a legacy of environmental disasters left by

the Soviet Union. With a huge stockpile of nuclear weapons, the

leadership of Kazakhstan had a choice: empowerment through force

and dictatorship, or prosperity through disarmament and democracy.

Kazakhstan President Nursultan Nazarbayev chose the latter, and today Kazakhstan is emerging as a

player in the global economy, and an advocate of regional and world stability.

In 1993, Kazakhstan was the first Central Asian country to launch a presidential scholarship

program "Bolashak" for international study. "Bolashak," which means "The Future" in Kazakh,

peaks to the importance Kazakhstan puts on educating itsyouth at the best universities of the world.

The Decree of President of Nazarbayev on Nov. 9, 1993, says:"In Kazakhstan's transition toward a

market economy and the expansion of international contacts, there is an acute need for cadres with

advanced western education, and so, it is now necessary to send the most qualified youth to study in

leading educational institutions in foreign countries."

The program is designed to train future leaders in business, international relations, law, science,

engineering and other key fields. Upon completion of their programs, scholarship recipients return

to Kazakhstan to perform government service for a period of five years.

The rigorous criteria for Bolashak scholars and the highly competitive nature of the selection

process assure that only the best students, who represent Kazakhstan's most promising young

leaders, are selected. The Bolashak program is fully funded by the Government of Kazakhstan and

overseen by the Ministry of Education and Science.

This program is a top priority of President Nazarbayev' s as he looks to develop and modernize the

country and move toward a full democracy . That is why it is not an accident that most Kazakhstan

students are sent to be trained in the United States. "We are learning from the positive example of

American democracy", President Nazarbayev says.. There was a clear understanding that the

Kazakhstan nascent democracy would not be sustained without a strong educaton system. Currently,

50 "Bolashak" Scholars are successfully studying at leading U.S. universities and have proven to be

excellent students and representatives of Kazakhstan.

Since 1994, hundreds of Kazakhstan students have successfully completed their Bachelor's and

Master's degrees under the Bolashak Scholarship program at the best Western universities; more

than 400 students are graduates of the leading U.S. universities includingas Harvard, Massachusetts

Institute of Technology, Columbia, Duke, Georgetown, Emory, Carnegie Mellon, Indiana

University, Vanderbilt and many others.

172

NAZARBAYEV UNIVERSITY

VISION

To create a prestigious, highly regarded international

university in the capital city of Kazakhstan employing

the best local and foreign professors to develop the

intellectual scientific, technical and engineering elite

of the country

MISSION

Contributing to Astana goal of becoming the center of

science, education and culture in Eurasia.

Advancing the science and educational system of Kazakhstan to international standards.

By the decision of the President of the Republic of Kazakhstan the New University of Astana will

carry the name "Nazarbayev University."

History of the University

―The New University is a very important national project that will have global systematic effect on

development of our country and will benefit all the citizens of our country.

The New University will be positioned to become the national brand by harmoniously combining

national identity, best international model of education, science and research practice.

The international partners will assist the New University in developing degree programs and

developing a quality assessment system of teaching.

Specialties taught at New University are determined by the priorities of the Kazakh economy. The

University will prepare the best technical and engineering specialists for the industries already

developed in Kazakhstan. A range of programs will prepare research specialists in new fields such

as genetics, biochemistry and biophysics. We should have clear understanding of career

development of each student for that.‖

From the speech of President Nazarbayev at the session of the Committee on Science and Research

Politics in Kazakhstan. Sept. 4.

The strategy for the University development 2010-2012 was approved on October 17, 2009 at the

first meeting of Board of Directors of JCS ―New University of Astana‖ chaired by Prime Minister of

Republic of Kazakhstan K. Masimov

The academic and research policy of the University presumes that each school within the University

will have an international academic partner among the leading universities in the world with

strong research, clinical and industrial base. This will allow Kazakhstan to integrate education,

research, and industries and help to achieve the objectives for the development of the country.

173

Realization of the ―New University of Astana‖ project will give young Kazakhs the opportunity to

receive a superior education.. The highest standards apply to programs, academic staff, facilities and

equipment, methods of teaching and level of research activities.

―Three research centers will be created within the ―New University of Astana‖ project.

Center of Life Sciences will undertake joint research projects with leading world research centers in

the transplantation of organs, artificial heart and lungs, stem cells and age prevention medicine.

Center for Alternative Energy will focus on issues of renewable energy, physics and techniques of

high energies.

International Instrumentation Center will be an engineering center, laboratory base and

constructor bureau.‖

From the Address of President Nazarbayev to the nation. ―New decade –new economic growth –

new opportunities of Kazakhstan‖ Jan. 29, 2010.

Strategic goals

The goals for the University are:

Formation of a new generation of professionals capable of creating and developing new

trends in science and technology

Create a model of integration of education, research and industry promote sustainable

development of national economy and support knowledge-based economic diversification

Build a culture of global awareness through an international curriculum and cooperative

relationships with world institutions of higher education

Create modern technological infrastructure to provide collaborative learning environment

Deliver joint research projects with world-class universities scientific research centers

Develop and maintain a strong professional community among faculty and enhance local

capacity of teaching professionals

Enhance the national and global prestige of the University

Management

Board of Directors is presided over by the Prime Minister whose members are national government

and business leaders. It is responsible for long-term and strategic planning and overall development

of the project. It supports and reviews the performance of the Executive Body and approves annual

budgets. Members of the Board of Directors are appointed by the Government Decree.

International Advisory Council

The International Advisory Council (IAC) provides advisory support work. The IAC is composed of

widely-respected scholars, researchers and academic leaders in addition to leaders from the public

and private sector. Members of the Council will be selected on the basis of their leadership skills,

expertise and experience in scientific, technical, business and academic domains. The Council will

work on issues related to educational and research services provided at the initial stage, as well as

other issues concerning the activities of the university.

174

Faculty members

Employment of faculty members will be determined by a joint hiring process with our partner

university and the New University of Astana. The best national and international researchers will be

invited to work at the university, where they will be provided with all necessary conditions for their

creative activity.

There was a signing of cooperation agreement of the New University of Astana and University

College London (UCL). The Foundation program is scheduled to begin in September 2010. More

than 50 teachers of University College London will be delivering classes for our Foundation

program at the university.

Finance

Effective financial policies will provide stability for the university and will help the New University

meet its future objectives. In the long-term, the financing of the university will be provided from the

following sources:

Financing the research and development by the state and industrial customer (specialized

ministries and national companies)

Investment income from the endowment fund

Tuition payment

Non-governmental and international organizations‘ scholarships for fundamental research

Donor assistance from the private sector, including the university alumni

Additional services payment, which is provided for other organizations

Partners

The New University of Astana cooperates with several leading universities globally ranked in the

top 30 universities of the world.

Students will have the opportunity to study abroad at the university of our academic partner for one

semester and up to 2 years in some of our programs.

The agreements on the development strategy of the New University of Astana were signed with the

following partners:

UCL (University College London) to set up the Foundation Program – first year of the

undergraduate programs (basic education)

PHMI (Partners Harvard Medical International Inc.) to set up the Medical School

Duke University to set up the Graduate School of Business

iCarnegie to set up the School of Natural Sciences

University of Wisconsin-Madison to set up the School of Social Sciences and Humanities

UPMC (University of Pittsburgh Medical Сenter) to set up the Center of Life Sciences

UPenn (University of Pennsylvania) to set up the Center for Education Policy

Infrastructure

The architectural design of the New University is very modern and uses the latest in Information

Techonologies (IT). A significant feature is that all educational buildings are connected by common

axial atrium with internal passages, which creates the architectural unity of the complex. The service

of the laboratories and other buildings will be done through a round road surrounding the entire

building.

The New University building will come into operation in several stages.

175

University Campus

Nine buildings are connected by a single atrium

176

TOURISM

The Republic of Kazakhstan pays special attention to the

development its of tourism.

Kazakhstan has signed tourism agreements with Turkey, Iran,

Xinjang Uigur Autonomous Area of China, Moldova,

Hungary, the State of Israel, Kyrghyzstan and Egypt. In 1993,

the Republic of Kazakhstan became a full member of the

World Tourism Organization.

The agency that is in charge of state management of the tourism industry is the Ministry of Sports

and Tourism. There is a Law ―On Tourism‖ enacted in 1992.

It embraces virtually all types of tourism and specifies legal,

economic, social and organizational fundamentals of tourism

activities. As a matter of fact, Kazakhstan provides for all

varieties of tourism - cognitive, , ethnic, ecological,

rehabilitative, youth-oriented; they also include entertainment

and athletics such as hunting, equestrian activities.

There are more than 700 travel routes around the territory of

Kazakhstan.

The Republic of Kazakhstan is well-known for its unique

natural and geographic diversity.

South-Kazakhstan (Almaty, Jambyl, South-Kazakhstan and Kyzylorda regions) is an area rich with

history and culture, featurefamous medieval monuments and mausoleums such as Aisha-Bibi,

Karakhan, Babadzha-Khatun in Taraz and an architectural ensemble of Khodja Akhmet Yasavi in

Turkestan. Other unique sights includeScythian burial mounds in Semirechje (Almaty region). It is

also home to the world-famous space-vehicle launching site Baikonyr. The region also offers

opportunities for recreation, rehabilitation, hunting, skiing and skating.

West Kazakhstan (Aktobe, Atyrau, Mangystau regions) sits at the crossroads of the European and

Asian continents in the basin of the Caspian Sea, the Volga and the Ural. It is the location of the

world‘s second deepest depression - Kargije lies 132 m below

sea level. The area is rich good for hunting, angling andwater

sports. It is also home to the monuments of ancient Mangyshlak

and Ustyurt.

North Kazakhstan (Kostanay, North-Kazakhstan and Pavlodar

regions). Everything here - landscape, climatic conditions -

favors recreation.

It features the health resorts of Kokshetau, Bayan-aul, Muyaldy

and natural preserves of Kurgaldzhino and Naurzum

177

Central Kazakhstan (Karagandy region) is home to one of the largest lakes of the world - the lake

of Balkhash. The area features various archaeological and ethnographic relics.

East Kazakhstan is represented by the Altai and its wooded foothills, the river of Irtysh and such

lakes as Zaisan, Markakol, Alakol, Sauskan. Its Semipalatinsk region is the birthplace of the great

Kazakh poet Abay Kunanbaev and writer Mukhtar Auezov.

EXCITING OUTDOOR ACTIVITIES IN KAZAKHSTAN

Spas: Kazakhstan has a wide range of spas offering various treatments. There are 98 sanatoria

holiday hotels and 115 preventative medicine sanatoria. Many are also located in areas that feature

sports, cultural events and historical and archaeological sites.. The most internationally renowned

resorts include Sari Agach (in the south), Mujaldi (in the Pavlodar region), Arasan-Kapal (in the

Taldikorgan region), Jani-Kurgan (in the Kzil-Orda region), Kokshetau and Zerenda (in the

Kokshetau region) and those located in Zaili Alatau.

Zaili Alatau Moutains: The 4000m-high (1310ft) Zaili Alatau Mountains near Almaty offer

numerous opportunities for sports and recreation. The Medeo ice rink is situated 15km outside the

city in a stunning gorge. It attracts walkers and climbers in summer and skiiers in the winter.

The Tian Shan Mountains: Tian Shan, or "Heavenly Mountains," in the southeast of Kazakhstan,

stretch for more than 1500km (932 miles). The highest peaks are Pobeda Peak (7439m/24,406ft) and

Khan-Tengri Peak (7010m/23,000ft), a snow-white, marble-like pyramid. The huge Inylchek

Glacier, spanning almost 60km (37 miles) in length, splits the summits and at its center lies the

beautiful Mertzbakher Lake. The Kolsai Lakes are three blue mountain lakes, known as the ―pearls

of the northern Tien-Shan,‖ that lie within the ridges of the Kungei Alatau range at heights of up to

2700m above sea level. The Khan-Tengri International Mountaineering Camp offers experienced

mountain guides to take visitors on organized climbing and trekking programs. Horseback riding is

also available.

178

SAMPLE ROUTES OFFERED TO TOURISTS IN KAZAKHSTAN

Explore the nature of South Kazakhstan

Mangystau Safari

This area is home to the

Talass Alatau, southern

steppes and lakes and

sandy and clay deserts.

Visitors can enjoy 1 to 16-

day programs including an

intensive program that

features Aksu Canyon and

Kishi Kaiyndy, the western

Tien Shan and Karatau

Mountains, Mashat, Sairamsu, steppe lakes and

deserts. .

Aksu-Zhabagly National Park:

Aksu River Canyon:a 500m deep

tectonic fault that spans 700-800m

across.

Kishi Kaiyndy Tract: an area featuring a

largeforest, flowers and beautiful

landscapes.

Steppe Lakes

Bilikol Lake: a lake home to herons,

bitterns, black and white storks,

sandpipers, terns, gulls and many near-

water sparrow birds (rush bird, penduline

tits, pipits and wagtails)

Taskol and Darbaza Lakes: typical

Central Asian lakes.

Mashat Gorge