Thursday, July 28, 2016


Qishloq Ovozi

Calls For Strict Oversight During Kazakhstan's Privatization Drive

Given the assurances given about the currency last summer, it's no surprise that many Kazakhs are apprehensive about the coming privatization of the country's most valuable industries and businesses.
Given the assurances given about the currency last summer, it's no surprise that many Kazakhs are apprehensive about the coming privatization of the country's most valuable industries and businesses.
By Bruce Pannier

On July 15, 2015, Kazakhstan's national currency, the tenge, was valued at around 187 tenges to the U.S. dollar. That was the day that the chairman of Kazakhstan's central bank, Kairat Kelimbetov, announced that bank authorities were widening the currency's trading band so the tenge would float between 170 and 198 to the U.S. dollar.

Kelimbetov said the exchange corridor would allow the tenge to "fluctuate independently" and therefore "answer the challenges in the coming six to 12 months." He said it was a "happy medium" for Kazakhstan's economy. In August, the bank announced a devaluation of the tenge and the rate fell precipitously.

On January 12, 2016, less than six months after Kelimbetov announced the widening of the currency band, the tenge's exchange rate was around 370 to the U.S. dollar.

Faced with economic hardships not seen since the 1990s, Kazakhstan is now moving to privatize its biggest enterprises, including the state oil and gas company, the state nuclear company, the railroad company, the national postal service, and many more of the prize pieces that for more than a decade represented Kazakhstan's economic success. Privatization could potentially bring tens of billions of dollars into Kazakhstan's economy, which is exactly what Kazakh officials are hoping.

Given the assurances the National Bank chairman gave a half-year earlier, it is no surprise that many people in Kazakhstan are apprehensive about the coming privatization of the country's most valuable industries and businesses. Many also remember the results of privatizations in Kazakhstan 20 years ago that made a select few people very wealthy.

RFE/RL's Kazakh Service, known locally as Azattyq, interviewed some knowledgeable people in Kazakhstan to get their reaction to the impending privatization.

The president of the Union of Academics, Orazaly Sabden, told Azattyq, "Under the guise of privatization, it is possible that not the people but those people who already have billions will be further enriched." Sabden added that the privatization process "must be fair...[and] it should be transparent -- on television, in the press, everything so the people see they are getting something."

"We've seen other privatizations [and] who gained from them," Sabden recalled, without naming anyone in particular.

The director of the Astana branch of the Institute of Economic Sciences, Zhangeldy Shymshykov, said another problem was that "within the government structures, quasi-state enterprises have appeared recently, and they interfere with the formation of entrepreneurial and competitive conditions."

Shymshykov said state management had been neither motivated nor interested in effective results.

Ordinary citizens shared with Azattyq some of their concerns since the government late last year announced plans for the massive privatization campaign. As Kazakh citizens helplessly watch their purchasing power plunge and some face bankruptcy after they took out loans based on dollar rates during better economic times, many people in the country are afraid this wave of privatization will only benefit those who already have large amounts of money.

Some critics suggest the privatization targets mostly the infrastructure of big state companies and is an attempt by the government to jettison ballast by forcing these companies and enterprises to function as independent businesses.

The fears surrounding privatization are not wholly unfounded. Kazakhstan's large privatization process in the mid-1990s produced many of the richest people in the country today, and some former officials from that time have since fled the country and live comfortably abroad in self-imposed exile.

Azattyq's Svetlana Glushkova and Yerzhan Karabek contributed to this report
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About This Blog

Qishloq Ovozi is a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the events that are shaping Central Asia and its respective countries, connect some of the dots to shed light on why those processes are occurring, and identify the agents of change. Content will draw on the extensive knowledge and contacts of RFE/RL's Central Asian services but also allow scholars in the West, particularly younger scholars who will be tomorrow’s experts on the region, opportunities to share their views on the evolving situation at this Eurasian crossroad. The name means "Village Voice" in Uzbek. But don't be fooled, Qishloq Ovozi is about all of Central Asia.

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