Tag Archives: Kazakhstan

Kazakh car manufacturing slides

ALMATY, JAN. 18 2017 (The Conway Bulletin) — Car manufacturing in Kazakhstan fell by around a third in 2016 to 8,397, dragged down by a stagnant economy.

The disappointing data, released by the Kazakh state statistics committee, is even more stark when laid alongside earlier, pre-economic downturn aspirations. In 2013, with oil prices hovering above $100/barrel, double today’s prices, and with domestic consumer demand buoyant, foreign carmakers were lining up to cut deals with local producers to get their models into the market.

Back then, industry officials were predicting that Kazakhstan would produce over 50,000 cars in 2014.

The economic downturn been so devastating on Kazakhstan’s industrial base, that the government has said that it will step in and subsidise the car industry.

Kazakhstan’s Auto Business Association said that official car dealers’ sales sharply dropped in 2016 to 46,712 cars from 97,469 in 2015.

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(News report from Issue No. 313, published on Jan. 20 2017)

Agriculture investment rises in Kazakhstan

JAN. 18 2017 (The Conway Bulletin) — Kazakhstan increased investment in its agriculture sector by 50%, in US dollar terms, in 2016, media reported quoting a senior official at KazAgroFinance. Tuleugazy Seisenovm described as general manager of Assets of the Inspection Department at the state-owned KazAgroFinance, said that the government had spent $686m on investments in agriculture this year compared to $446m in 2015. Kazakh president Nursultan Nazarbayev has ordered his officials to diversify investment away from the dominating oil and gas sector.

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(News report from Issue No. 313, published on Jan. 20 2017)

Kazakh cement maker reports soft market

JAN. 13 2017 (The Conway Bulletin) — Steppe Cement, the London-listed Kazakhstan-based cement producer, posted full year results which showed a 4% drop in production and a 4% fall in prices because of a fall in demand. Steppe Cement’s main market is Kazakhstan which has been struggling to maintain economic output because of a drop in oil and gas prices, a recession in Russia and fall in the value of the tenge. Steppe Cement said it was going to focus on maintaining prices over market share in 2017.

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(News report from Issue No. 313, published on Jan. 20 2017)

Comment: Nazarbayev tightens the screws in Kazakhstan, writes Kilner

JAN. 20 2017 (The Conway Bulletin) — There is a sense of deja vu hanging over Kazakhstan.

In the west of the country, hundreds of oil workers are on a hunger strike over the closure of the country’s trade union umbrella body. In Astana the hollowing out of the media continues with the trial of Bigeldy Gabdullin, editor of the Central Asia Monitor newspaper, while police arrest government officials for corruption and for leaking state secrets.

All these events are the result of deliberate government policies.

Let’s take the oil workers’ strike first. Reports from Zhanaozen say that an estimated 400 workers are now on hunger strike. They worry that while the government says that it wants to improve their rights and working conditions, they are actually being undermined. The government is determined to exact revenge on the Confederation of Independent Trade Unions of Kazakhstan for what it sees as its role in organising and politicising oil workers in 2011. Strikes, then, ended with a riot in Zhanaozen and the shooting dead of at least 16 oil workers by police.

The Kazakh authorities see the unions as a threat to central government and a court in Shymkent earlier this year ordered the closure of the Confederation

for allegedly not being registered properly several years ago. Suspecting a government stitch up, the workers have chosen to strike.

As for Gabdullin, he has apparently already admitted extortion of government officials. The charges may be true or they may be fabricated, it’s difficult to say in Kazakhstan where fact and fiction melt into one. Either way, the 61- year-old Gabdullin appears to have decided that it would be best to admit wrong doing and hope for clemency rather than try to defend himself against the state.

The Kazakh government has worked tirelessly to undermine journalists over the past few years, locking up high profile free-thinkers or forcing them into exile. The case against Gabdullin is a continuation of this policy.

And finally, the rounding up of various government officials for corruption.

This may be, as presented, a case of clearing out corrupt officials but it may also be the case, as some analysts are saying, that Nazarbayev is using the cover of an anti-government purge to wipe away potential troublemakers before he reveals his succession plan.

In all three arenas — workers’ rights, the media, central government — the Kazakh government is extending and deepening its authority.

By James Kilner, Editor, The Conway Bulletin

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(News report from Issue No. 313, published on Jan. 20 2017)

Kazakh-Chinese dating agency receives threats

ALMATY, JAN. 17 2017 (The Conway Bulletin) — A Kazakh dating agency which finds Kazakh wives for wealthy Chinese men said that it had received threats after a series of protests against it.

The row highlights growing nationalism in Kazakhstan as well as concerns over land rights and the rising influence of China. In 2016, protests over land rights spread across the country, worrying president Nazarbayev. Anti-Chinese sentiment has generally increased over the past few years as the politics of national identity have been played with increasing vigour.

And earlier in January it emerged that protesters have targeted the Gimeney marriage agency.

Carrying banners, protesters gathered outside the agency’s office in Astana and called on women who married foreigners to be stripped of their Kazakh citizenship and for the government to protect land from being stolen by Chinese.

Aidyn Egeubayev, one of the protest leaders, said that Chinese men only wanted to marry Kazakh women so that they could later claim land through their children.

“The law says that if a child has at least one parent who is a Kazakh, then they automatically become a citizen,” she said in media interviews.

“We believe that this provision should be removed because Chinese only want our land.”

Now, the Gimeney agency has said that they have received direct threats against it.

A representative of the business, though, defended its business model. “I hope you understand that this is all absurd, we live in 21st century. It is a real problem that there are eight women for one men, it is no joke,” she said, preferring to remain anonymous.

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(News report from Issue No. 313, published on Jan. 20 2017)

Kazakh capital hosts Syrian talks

JAN. 16 2017 (The Conway Bulletin) — Some Syrian rebel groups have agreed to attend so-called peace talks backed by Russia and Turkey set for Astana on Jan. 23, giving the them a vital boost. It’s considered vital for rebel groups to attend the talks if issues of any great matter can be decided. Syrian peace talks were also held in Kazakhstan in 2015 but without any government representatives.

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(News report from Issue No. 313, published on Jan. 20 2017)

Rolls-Royce admits bribing Azeri and Kazakh officials

ALMATY, JAN. 17 2017 (The Conway Bulletin) — British engineering company Rolls-Royce, famed for its powerful industrial engines, admitted to prosecutors in the US, Britain and Brazil that it had bribed officials for years to win contracts, including in Kazakhstan and Azerbaijan.

The revelations that one of Britain’s most famous companies bribed their way into contracts will not only damage British industry’s reputation but will also reinforce the reputations of both Kazakhstan and Azerbaijan as countries where corruption is rife.

The focus of the corrupt payments was a firm called Unaoil which acted as an intermediary for Rolls-Royce, and other companies, for winning contracts. The prosecution said Rolls-Royce knew that some of the fees they paid to Unaoil and other advisers would be used to bribe officials.

Last year, as reported by The Conway Bulletin, the Monaco-based Unaoil was exposed as acting as an intermediary for a number of Western companies.

In a video statement, Rolls-Royce CEO Warren East said corruption at the company was linked to a handful of rogue employees.

“It is apparent that the standards of our business conduct have not lived up to the high standards of our engineering,” he said.

Rolls-Royce has agreed to pay an $800m fine for a so-called Deferred Prosecution Agreement which means that, in return for paying the fine and admitting guilt, criminal proceedings are dropped.

In Kazakhstan the prosecution said Roll-Royce paid out $5.4m to advisers between 2009-12, knowing that some of these fees would be converted into bribes for officials handing out contracts for elements of a gas pipeline between Kazakhstan and China. Rolls-Royce also hired a local distributor in 2012 who they knew was linked to a government official able to influence tenders.

In Azerbaijan Rolls-Royce paid intermediaries who bribed officials on their behalf between 2000-9.

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(News report from Issue No. 313, published on Jan. 20 2017)

Kazakh police arrest pension fund chiefs on corruption allegations

ALMATY, JAN. 6 2017 (The Conway Bulletin) — A Kazakh court ordered the arrest of the state pension fund’s top managers on corruption allegations, severely denting the public’s trust in one of the state’s flagship financial organisations.

The arrest of the pension fund’s chairman, Ruslan Erdenaev, the director of financial risk management, Musa Bakhtov, as well as two directors from two different mining companies, is just the latest in a series of high profile corruption cases in Kazakhstan which have even included a former economy minister.

And ordinary Kazakhs, who are already struggling to deal with the impact of a sharp economic downturn that has wiped 50% off the value of the tenge, destroyed jobs and savings, are voicing their frustrations increasingly vocally.

In Almaty, Inna Kisilenko, a mother of a six-year-old boy, shrugged her shoulders.

“Time will tell,” she said. “But honestly I feel doubtful. They [the government] increases the pension age and makes up other things.”

The pension fund arrests were ordered after the Central Bank asked the security services to investigate a deal between the fund and two mining companies worth 5b tenge ($15m) in November.

And the $20b pension fund is a particularly sensitive issue in Kazakhstan. It was created in 2014, when the government forced banks to merge their pension funds into one single state-controlled unit. Kazakhs questioned the motive of such a move. This grumbling turned to outrage when news emerged in the summer that the fund had lent members of the elite cash to finance construction of a shopping centre.

Natalya, 50, summed up people’s feelings.

“I just don’t trust it [pension fund],” she said. “I think it is not right because times are hard. I think about how elderly people survive with their pension money. Everything is getting more expensive, rent, groceries.”

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(News report from Issue No. 312, published on Jan. 13 2017)

Estonian builder says Kazakhstan hasn’t paid fine

JAN. 12 2017 (The Conway Bulletin) — Estonian construction company Windoor said that Kazakhstan had refused to pay a 23m euro settlement imposed by Stockholm’s arbitration court last year for reneging on a 2012 deal to build a conference centre in Astana for the Kazakh foreign ministry. Windoor said that it would now take the judgement to an international tribunal in Washington.

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(News report from Issue No. 312, published on Jan. 13 2017)

Kazakhstan cuts uranium production, forcing prices to rise

ALMATY, JAN. 10 2017 (The Conway Bulletin) — Kazakhstan, the world’s top uranium producer, pledged to cut uranium output, immediately pushing up the price of the metal by 10%.

The production cut promise, and subsequent price rise, demonstrated just how much influence Kazakhstan has over the global uranium market. It currently produces around 40% of the world’s uranium.

Announcing the 10% cut in production, Kazatomprom chairman Askar Zhumagaliyev, said that 2016 had been scarred by a global oversupply of uranium.

“It will be better for our shareholders and stakeholders to leave these strategic uranium resources in soil, rather than use them in the current situation of oversupply,” media quoted him as saying. “The uranium will be produced when the situation improves in the markets in the coming years.”

Uranium prices collapsed in 2016, hitting a 12-year low of $18/pound in mid-December. This represented a drop of 25% since September.

Analysts blamed a number of factors.

A tsunami in 2011 knocked out the Fukushima nuclear power plant in Japan. Fukushima had been a major buyer of uranium before the accident and knocking it out of the market had triggered an immediate oversupply.

The accident at Fukushima also dented the reputation of nuclear power as a safe and reliable energy source and a drop in global oil prices also switched attention away from nuclear power and back to hydrocarbon-fired power which has dropped in price.

Kazakhstan has also contributed to the glut of uranium as it moved to become the world’s biggest supplier. Kazakh uranium production shifted from 18,000 tonnes in 2010 to 24,000 tonnes in 2016. In 2007, Kazatomprom mined 5,000 tonnes.

After the Kazakh cut announcement, which represents around 3% of global supply, Uranium’s spot price rose to $24.25/pound, its highest since September.

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(News report from Issue No. 312, published on Jan. 13 2017)