Lessons of Kazakhstan – has the “point of no return” been passed?

MOSCOW, 13 Jan 2022, RUSSTRAT Institute.

In his speech to the parliament, President Kassym-Jomart Tokayev introduced the new head of government and announced a program of large-scale reforms. Elena Panina, Director of the RUSSTRAT Institute, believes that urgent socio-economic transformations aimed at a more equitable redistribution of national wealth were the main outcome of the January crisis in Kazakhstan. What is to be rebuilt?

In his speech, President Tokayev announced that the constitutional order in the country has been restored, and the CSTO forces will leave the country within 10 days. At the same time, he listed the key problems that Kazakhstan will have to solve in the near future. The program is large-scale.

From the point of view of the head of state, the central problem is that financial and oligarchic groups have become the key beneficiaries of economic growth in the country. These oligopolies seriously limited the development of the free market and reduced the competitiveness of the country.

“The government will have to determine the range of companies and coordinate with them the amount of annual contributions to the people’s fund (we are talking about a specially created social public fund – E.P.). In addition, I expect active participation from those persons who actually have huge funds, remain in the shadows,” Tokayev said.

This is a serious statement and a serious warning: in fact, the owners of super incomes in a country where social inequality brings people to the streets are invited to “share”.

The day before, it is worth recalling that the main aspects of the crisis, qualified as an attempted coup, were also analysed at the extraordinary summit of the Collective Security Treaty Organisation (CSTO). The conversation was about how it came to this and how to exclude the repetition of such scenarios in the future. 

The Presidents of the CSTO countries drew attention to the “hybrid nature” of the threat. Thus, Vladimir Putin agreed that “well-organised and well-controlled militant groups” participated in the events, and “their attack on Kazakhstan was essentially an act of aggression”.

At the same time, he drew attention to the use of “Maidan technologies”, as well as to the threat posed by social networks, where terrorists are being recruited into “sleeper cells” and “attempts are being made to involve our citizens in protest actions, which are the forerunner of terrorist attacks”. It is necessary to make sure that such events do not catch us by surprise in the future, the President of Russia noted.  

The President of Belarus also stressed the need for “proactive actions”. “Based on what happened in Belarus,” Aleksandr Lukashenko said, “we assume that there were internal reasons. If we don’t understand this and blame only the external factor, we can get a repeat.”

“Sleeper” cells of terrorists and extremists can manifest themselves and take advantage of the situation, he believes. And not only in Kazakhstan, but also in other post-Soviet republics – Kyrgyzstan, Uzbekistan, Tajikistan. “We need to improve both the manageability of the CSTO and the forces that we are ready to use. We are facing serious challenges in the future.”

These assessments, in my opinion, reveal a deep layer of the Kazakhstan crisis. The country, as I have already written before, does not need a redistribution of property, but urgent socio-economic transformations that demonstrate that the authorities are ready to take real steps towards a more equitable distribution of national wealth, improving the socio-economic situation. It is clear that this cannot be solved by one forceful operation.

The coup attempt in the republic cannot be explained by just one factor, as they tried to do at the beginning. For example, by the intensification of inter-clan competition. Or unsolved economic problems that brought people out into the street. This does not give a complete picture, but it created an explosive background, which was used by external forces – judging by what the presidents say, the forces of international terrorism.

In fact, Kazakhstan has faced a whole “bouquet of coups” initiated by a variety of forces, from external to internal. The cohesion of society was methodically shaken, and the National Security Committee, according to Tokayev, did not see this threat. Having such a precedent in the immediate vicinity of Russia, it is important to identify and isolate these forces.

And it’s worth starting with the fact that strategically Kazakhstan is a buffer between Russia and Afghanistan, which over decades of civil war has become a springboard of militant Islamic fundamentalism, and of different shades, sometimes hostile and competing with each other for influence in the region.

At the same time, it was believed that the most reliable shield covering Kazakhstan from the threats of the Taliban and ISIS is that this republic had one of the most developed economies in the post–Soviet space. Indeed, a country rich in minerals attracts the labor resources of the entire region. Without a doubt, it is part of China’s zone of interests.

Turkey is also very interested in Kazakhstan: in Ankara’s plans to promote pan-Turkism and create a Turkic-speaking “Great Turan” as a centre of influence on all Islamic states of the post-Soviet space, this country played an important role. It is no secret that he was also interested in the resources of Kazakhstan (and used them with might and main) West.

So how did the very “internal reasons” that created the conditions for the coup attempt develop in this oasis of well-being? And who opened the doors to international terrorism?

What are the ratings silent about?

Indeed, until recently, Kazakhstan’s economic model was considered one of the most effective among the Central Asian republics. Just before the protests, Deputy Prime Minister Eraly Togjanov said that “Kazakhstan is leading among the CIS countries in terms of the accumulated volume of attracted foreign investments per capita.” The sums are impressive: in the period from 1993 to 2021, they amounted to at least $365 billion.

In addition, revenues from the export of hydrocarbons allowed Kazakhstan to accumulate significant financial reserves: up to $94 billion by the end of 2020, including funds from the National Fund (analogous to the Russian NWF) – $59 billion.

In 2021, Kazakhstan took the 35th place in the Global Competitiveness Ranking calculated by the World Economic Forum, ahead of, for example, Portugal. In general, over 30 years, the country’s GDP has grown 190-fold – from $11.4 billion in 1993 to $190 billion in 2021.

Hence the logical question: if the economy is on the rise, what pushed the population towards an open conflict with the authorities?

Alas, in fact, the economic situation is not as rosy as it was presented by the country’s leadership and international rating agencies. More than 70% of Kazakhstan’s oil business is controlled by foreign companies: the USA – 29.5% of all oil production, China – 17.7%, European companies – 17.4%. The largest oil producing company in Kazakhstan – JV Tengizchevroil – is 50% owned by Chevron, 25% by ExxonMobil, 5% by LukArko (Lukoil’s daughter) and only 20% by Kazakhstan’s KazMunayGas.

At the same time, it is important to note: by allowing American campaigns to develop this giant oil field, the first authorities of independent Kazakhstan managed to agree on de facto tax-free exploitation. The logic was as follows: the government guarantees business savings on costs with taxes, and business – the fulfilment of all the wishes of the authorities. In January 2022, the country, in fact, reaped the benefits of this scheme: people who produce hydrocarbons did not have enough money for fuel and refuelling.

In his speech to the parliament, President Tokayev called a spade a spade for the first time: “Thanks to the First President, Elbasy, a group of very profitable companies and a layer of rich people appeared in the country, even by international standards… Incomes of all population groups should grow as the economy grows. This is an immutable axiom, which does not work in our case.”

It should also be added that Kazakhstan accounts for 40% of the uranium mined in the world. But even here the share of national profit is small. 11 uranium mines and factories out of 13 belong to foreign companies. They also control metallurgy and gold mining. This economic model did not give way to national business: Kazakhstan’s political and financial elites ensured a comfortable existence at the expense of profits from the sale of natural resources abroad. The population got crumbs.

More than that. Recently, there has been widespread discussion among the political establishment about the possibility of redevelopment of a number of industries in favour of private individuals – in fact, the privatisation of economic sectors. Among the initiators of this, if I may say so, “economic innovation” is the nephew of the first president Nursultan Nazarbayev, Kairat Satybaldy. And also one of the most influential and richest people in the south of the country, Bolat Nazarbayev, the younger brother.

“Jamaat” or a takeover group?

It’s not just about controlling the economy, though. After all bazaars and markets were surprisingly monopolised in Alma-Ata and Almaty region ten years ago, the “southern jamaat” (jamaat is a religious Muslim community) under the leadership of Bolat Nazarbayev and his nephew started talking on the Kazakh Internet.

The structure turned out to be a surprisingly effective business community: yesterday’s competitors, once inside it, suddenly began to unanimously make decisions on price regulation, smuggling and other key issues.

The leaders of the largest logistics hub based on the Altan-Orda market (on the border with China), which belongs personally to Bolat Nazarbayev, were also in the same community. Gradually, the influence of the “southern jamaat” spread to the commercial facilities of cities and regions from Shymkent to Nur-Sultan, as well as the Jambyl, Turkestan, Kyzylorda regions in the south of the country.

In fact, the entire sphere of trade in food and essential goods turned out to be monopolised by one group. In fact, there was a latent seizure of power in the country through the monopolisation of the maximum number of spheres of economic activity.

The Jamaat has achieved full control over the sphere of trade, from customs to the final points of sale. It is symptomatic that the leadership of the Kazakhtelecom national company, which absorbed the Tele-2 mobile network not so long ago, also belongs to the Jamaat. Kairat Satybaldy and Bolat Nazarbayev sought not only monopoly control over the financial sphere, but also over all personal data of Kazakhstanis, their negotiations, correspondence.

Apparently, the leadership of the community did not rule out a forceful scenario. In any case, private security companies were formed in the south of Kazakhstan, they recruited criminals, guards of numerous bazaars and markets, rural residents.

It was no secret to the Kazakh intelligence agencies that those who fought in the “hot spots” in the Middle East and returned from there as a conductor of Islamism were taken to these private security companies – with the permeability of the borders of the republic, it was not difficult. Let’s hope that the investigation announced by President Tokayev will reveal the number and origin of these militants, who formed the core of the conspiracy.

Who benefits from the confrontation?

But their plans were not allowed to come true. The President of Kazakhstan Kassym-Jomart Tokayev had his own view on the development of the country, and the intra-governmental conflict turned into an open confrontation. On charges of treason, the head of the National Security Committee Karim Masimov, who “did not notice” the training of militants, was detained. A number of high-ranking law enforcement officials have been arrested. More than 8000 people who took part in mass riots were detained.

Various foreign intelligence agencies that have been “working” with regional oligarchic groups for a long time (information about the cooperation of Kairat Satybaldy with the Turkish intelligence agencies has been on the Internet for a long time) used public protest for their own purposes. It was not difficult to raise a part of the credited population, which was hurt by the rise in gas prices, on it. The country was on the verge of civil war. The President was forced to appeal to the CSTO.

It should be taken into account that the strategic security of Kazakhstan is also the strategic security of Russia, as well as of all CSTO member states, a factor of their integrity and internal stability. Therefore, the prompt decision to send a peacekeeping contingent to help a neighbour is quite understandable, and given the fact of aggression, it is legitimate.

However, for some reason, such a development of events does not suit the “guardians of democracy” both in Kazakhstan and abroad. In this context, it is interesting to note that the National Endowment for Democracy NED (funded mainly by the US Congress and suspected of collaborating with the CIA) in 2020 alone spent more than $1 million in Kazakhstan on projects related to “democracy, human rights, the rule of law.” How effective these investments turned out to be could be seen this January on the streets of Alma-Ata.

A number of Russian NGOs, as well as the head of the Kazakh diaspora in Moscow, take an equally active part in the process of supporting “Kazakh democracy”. In their opinion, the introduction of the CSTO peacekeeping forces is an occupation. Financing from various Western Funds needs to be worked out…

Forecast and stakes

Judging by how the mortality rate among high-ranking security officials has sharply increased after the announcement of a reshuffle in the government, the masterminds of the riots are openly covering their tracks so that the investigation does not lead to too large figures. The big question is how possible this is at all. However, it is the task of the Kazakh society to deal with this political and criminal business legacy. Although it cannot be ruled out that the problem may also affect neighbouring republics.

Nevertheless, it is clear to any sane person, in my opinion, that it is possible to start solving these problems only by stopping the bloody civil massacre unleashed to promote their interests in the worst medieval traditions. At this stage, it is impossible to put an end to this turmoil and prevent it from spilling out into the region without the CSTO peacekeeping contingent.

It is no coincidence that the presidents at the CSTO summit talked about threats to Kyrgyzstan, Tajikistan, and Uzbekistan. It is worth adding – but we are talking about Russia too, where there is also an increase in terrorist attacks planned under the ISIS brand by immigrants from Central Asia. Whoever and whatever interests, from commercial and religious to human rights and geopolitical, justify an alliance with terrorists, even in one particular bazaar, he must remember: once this demon is released into the operational space, there is no stopping it.

In whose interests is the development of the situation in the region adjacent to Afghanistan, according to an explosive scenario, I think there is no need to explain. To discredit Russia’s traditionally strong positions in Central Asia, and at the same time to clash the interests of Moscow and Beijing is a long-standing dream of many Western, as well as Turkish intelligence agencies, with their ideology of the “Great Turan”.

It is no secret that Washington and London, which has been playing a “Big Game” against Russia for centuries in these parts, are most afraid of a strong alliance between China and the Russian Federation. And here is such an opportunity to drive a wedge between the two powers… Not to mention that the events in Kazakhstan, in the pragmatic interpretation of the United States and its allies, are an excellent trump card in the negotiations between Russia and NATO.

Problems along the entire perimeter of the Russian borders are generally a way of pressure. In this sense, it should not be ruled out that the next step may be an attempt to provoke a new round of tension in Ukraine.

What are the prospects for constructive? They should start with a basic statement. It is clear that the CSTO peacekeeping contingent must solve tasks that will stop the spread of the crisis before withdrawal. Namely: to guarantee the protection of strategic facilities, to prevent interethnic clashes, to ensure the protection of the Russian-speaking population. In short, to give a chance to a different, non-confrontational model before transferring control over the situation to the Kazakh law enforcement forces.

At the same time, the lessons of Kazakhstan should be learned by other CSTO member countries. In the current “Big Game” it is difficult to guess who will be next. Therefore, it is necessary to establish closer cooperation of intelligence agencies within the framework of the CSTO. This will prevent such a development of events. And not only to eliminate the consequences of the actions of armed extremists.

As for Kazakhstan itself, the cardinal reforms that President Tokayev intends to implement in the near future, in my opinion, can only be implemented in close cooperation within the framework of the EAEU. Moreover, I think we are talking not only about the economic union, but also about deeper integration.

Institute for International Political and Economic Strategies – RUSSTRAT

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