Tag Archives: Kazakhstan

Kazakh court sentences former head of EXPO-2017

JUNE 8/9 2016 (The Conway Bulletin) — A court in Kazakhstan sentenced Talgat Yermegiyayev, the former head of the Astana EXPO-2017, and Kazhymurat Usenov, one of its former directors, to 14 and 2 years in jail for corruption. They are the two most prominent figures in a trial of 23 officials accused of stealing from the state budget. Yermegiyayev was found guilty of having embezzled 10.2b tenge ($31m).

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(News report from Issue No. 284, published on June 10 2016)

Kazakh Minister says Karachaganak talks are friendly

ALMATY, JUNE 6 2016 (The Conway Bulletin) — Kazakhstan’s energy minister Kanat Bozumbayev denied that the government was using multi-billion dollar fines against the consortium operating the Karachaganak gas and condensate field to negotiate more favourable terms to a Production Sharing Agreement (PSA) drawn up in 1997.

Mr Bozumbayev’s comment contradicts statements by shareholders in Karachaganak. Russian oil company Lukoil said in its Q1 report that Kazakhstan’s total claims for the renegotiation of the Karachaganak contract have grown to $1.8b, up from $1.6b it had highlighted in April.

At a press conference in Astana, Mr Bozumbayev tried to shrug off the allegations.

“The reason I do not comment on these issues is that my words are then taken out of context and I read that Kazakhstan wants to sue,” media quoted him as saying. “Kazakhstan is holding friendly negotiations with the shareholders of the Karachaganak project.”

Mr Bozumbayev’s comments are the most clear to date that the Kazakh government is holding direct talks with the Karachaganak partners on a new PSA deal.

Essentially, the Kazakh government wants a greater share of the profits from Karachaganak. Last week, the FT reported that the Kazakh government had rejected a $300m deal to settle the dispute.

The consortium is Eni (29.25%), BG (29.25%), Chevron (18%), Lukoil (13.5%) and Kazmunaigas (10%).

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(News report from Issue No. 284, published on June 10 2016)

Technopark costs in Kazakhstan rise

JUNE 8 2016 (The Conway Bulletin) — The Kazakh government said it will have to recalculate costs for the construction of a petrochemical technopark in a Special Economic Zone near Atyrau, due to the depreciation of the local currency. Nurlan Rakhmetov, managing director at Samruk-Kazyna, the country’s sovereign wealth fund, said costs will rise. As of June 1, the local consortium building the technopark has received 40.7b tenge ($120m) from the state budget.

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(News report from Issue No. 284, published on June 10 2016)

Central Banks in Kazakhstan and Georgia fight deflationary pressures

ALMATY, JUNE 10 2016 (The Conway Bulletin) — Currencies across the Central Asia and South Caucasus region have stabilised this year after losing 30% to 50% of their value in 2015 thanks, in part, to record high interest rates but governments are now having to deal with deflation.

As well as raising interest rates to their highest level since the Global Economic Crisis of 2008/9, Central Banks bought heavily to defend their currencies. The Kazakh Central Bank said it bought $3.7b in Jan.-May 2016 and in Georgia, the Central Bank intervened twelve times in just two months, although on a smaller scale.

And both Central Banks have now started unwinding high interest rates, hoping to spark economic activity.

Earlier this year the Kazakh Central Bank cut its key interest rate to 15% from 17%. Georgia’s Central Bank cut its interest rate to 7.5% from 8% and promised further cuts. New data from Georgia’s statistics agency highlighted the challenge. It said that prices in May dropped by 0.4%, the third consecutive month of falling prices. Year-on-year inflation in May measured 2.1%, down from a high of 6.3% in November.

And this scenario is playing out across the region.

Last month Armenia’s Central Bank said that year-on-year inflation measured minus 1.9% and immediately cut interest rates by 0.5% to 7.75%.

But Alex Nice, an analyst at the Economist Intelligence Unit, said that the region’s weak banking systems and high levels of dollarisation means that there is little Central Banks can do to impact economic activity.

“The exchange rate is a more powerful lever for managing prices in the economy [than the official interest rate],” he said.

ENDS

(News report from Issue No. 284, published on June 10 2016)

Kazakh sportsmen fail in drug test

JUNE 6 2016 (The Conway Bulletin) — Five Kazakh weightlifters have tested positive for taking banned drugs, Kazakhstan’s weightlifting association said. The names of the athletes who failed the tests have not been released although weightlifting websites speculated it could be Olympic champions Ilya Ilyin and Zulfiya Chinshanlo. The drug test failures and any subsequent bans would be a major blow to Kazakhstan’s hopes of winning medals at the Olympics in Brazil.

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(News report from Issue No. 284, published on June 10 2016)

Person in the news: The Kazakh beer king

JUNE 10 2016 (The Conway Bulletin) — Tokhtar Tuleshov, a man known as the Kazakh Beer King who has a penchant for luxury watches and racehorses, has been accused of masterminding protests that spread across Kazakhstan in April and May. According to the authorities Mr Tuleshov was trying to stoke a coup d’etat.

The well-groomed, Mr Tuleshov, is a kingpin in Shymkent, a sprawling city on Kazakhstan’s south on the border with Uzbekistan. The city has something of a reputation of an ethnic melting pot and is home to a million or so Kazakhs and Uzbeks. It also has a reputation for cross border trade and smuggling and for having an air of the so-called ‘wild south’.

Mr Tuleshov revelled in this environment, building up a power base that may have threatened more established politicians in Astana. In a dramatic raid captured on mobile phone footage on Jan. 30 this year, armed police swooped on a hotel where Mr Tuleshov was hosting a meeting. They arrested him and four of his colleagues for alleged drug smuggling and gun running.

His Shymkentpivo brewery is one of the biggest in Kazakhstan, producing around 200m litres of beer every year, including the Shymentskoe brand, one of the most popular. He also has close links with the Russian parliament and was the official representative in Kazakhstan of the Centre for the Analysis of Terrorist Threats, a Moscow-based group. Kazakh news websites have also reported that Mr Tuleshov has bought a majority stake in Uzbekistan’s biggest juice producer.

Like other wealthy businessmen in Kazakhstan, Mr Tuleshov was careful to support causes favoured by the ruling elite. This involved being a fully paid-up member of President Nursultan Nazarbayev’s Nur Otan party and a benefactor of various boxing associations.

Mr Tuleshov was not afraid of showing off his wealth, often driving around Shymkent in a black Rolls Royce, inevitably followed by a convoy of bodyguards, and making pop videos released on YouTube of his wife and daughter’s extravagant birthdays.

All this is a world away from his prison cell where Mr Tuleshov has been languishing for nearly six months. By being accused of trying to organise a coup d’etat, Mr Tuleshov is effectively being cast as an enemy of the state, making his situation precarious – to say the least.

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(News report from Issue No. 284, published on June 10 2016)

Editorial: Kazakh coup charge

JUNE 10 2016 (The Conway Bulletin) — If the Kazakh authorities are to be believed Tokhtar Tuleshov, a millionaire Kazakh who owns a major brewery in Shymkent, organised a series of protests across the country in April and May to try to incite a revolution.

He did this, apparently, while in jail. Mr Tuleshov has been in pre-trial detention since the end of January when he was arrested for alleged drug and gun running offences.

And he apparently picked Atyrau, a town hundreds of kilometres away near the Caspian Sea, to kick-start his coup attempt before organising protests in other cities.

These charges lack credibility. How could Mr Tuleshov have organised these demonstrations from his prison cell? Would Mr Tuleshov even have had the influence to organise a rally in Atyrau in mid-April? He has strong local support in Shymkent but this support is unlikely to spread to Atyrau.

It’s plausible that disgruntled members of the Kazakh elite may have organised the initial protests in Atyrau against land reforms that spread but the government needs to present more evidence to back this up.

ENDS

(Editorial from Issue No. 284, published on June 10 2016)

Expobank buys Kazakh RBS

JUNE 8 2016 (The Conway Bulletin) — Russian lender Expobank, owned by Igor Kim, agreed to buy the Kazakhstan-based subsidiary of Britain’s Royal Bank of Scotland. Earlier this year, Mr Kim bought RBS’s Russian subsidiary. Orifzhan Shadiyev, owner of Capital Bank Kazakhstan, had, in March 2015, expressed an interest in buying RBS Kazakhstan although the deal later fell through.

ENDS

(News report from Issue No. 284, published on June 10 2016)

UN criticises Kazakh labour law

JUNE 8 2016 (The Conway Bulletin) — The UN’s International Labour Organisation said that Kazakhstan has made little progress in implementing international standards in its labour legislation. In particular, the committee urged the government to amend the 2014 law on trade unions and the 2015 law on the chamber of entrepreneurs, which restrict workers’ freedom and independence.

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(News report from Issue No. 284, published on June 10 2016)

Editorial: Attacks in Aktobe

JUNE 10 2016 (The Conway Bulletin) – Kazakh officials have been quick to blame Islamic militants for a series of attacks in Aktobe, northwest Kazakhstan, that killed at least 25 people.

This, if proved, would be alarming as it would confirm links in west Kazakhstan with Islamic militants in both the North Caucasus and Syria/Iraq. The Islamic militant explanation, though, would also help President Nursultan Nazarbayev’s narrative. He made it clear that if the Kazakh population didn’t support him they would be faced with a dystopian future.

And this version of events, of course, could be accurate, time will tell. But no group has taken responsibility and there is an alternative explanation.

Some analysts have said that the attacks were organised by disgruntled members of the Kazakh elite. Mr Nazarbayev, 75, is looking weak. He hasn’t organised a clear succession and is presiding over a worsening economy. By destabilising the country, a rival would be piling on the pressure.

This is the alternative explanation for the Aktobe attacks that the gov- ernment doesn’t want discussed.

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(Editorial from Issue No. 284, published on June 10 2016)