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Qishloq Ovozi

Kazakh President Nursultan Nazarbaev kicks off the "great distraction."

This year is bound to be a difficult one for Central Asia. The big question is: How bad can it get? I decided to follow events, as 2016 started, as closely as possible to see not only what was happening but also to pay special attention to how the individual publics responded and what measures each government would take. I chose to look at the first 40 days of the year, hoping to get a glimpse of where the five countries are heading.

Emerging from 2015, Kazakhstan's economic situation was gloomy, at best. Its economy is heavily tied to oil exports. The falling price of oil forced the government to revise the state budget three times during the year. Its major trading partners, Russia and China, were experiencing their own economic downturns. The national currency, the tenge, had dropped in value more than any other Central Asian currency over the course of the year.

A small number of Kazakh citizens continued to make their way to Syria to join militant groups, but this was not the principle security concern for Kazakhstan's authorities. The Kazakh government, very conscious of the situation in eastern Ukraine where Russia illegally annexed the Crimean Peninsula and pro-Russian separatists with Moscow's backing had seceded from Ukraine, paid more attention to Kazakhstan's sizable Russian population, most of whom live in areas near the border with Russia.

The first day of the new year in Kazakhstan was filled with state media images of President Nursultan Nazarbaev dancing with Miss Kazakhstan at a ball on New Year's Eve. Heavy snows were paralyzing traffic across northern Kazakhstan; emergency crews were working around the clock to rescue stranded travelers along the roads.

On the first day of the new year, the exchange rate was about 340 tenges to the U.S. dollar. At the start of July, the rate had been about 182 tenges to the dollar.

Bad economic news kept coming in January. On January 5, the Economy Ministry announced inflation during 2015 had reached 13.6 percent, double what it had been in previous years. Just after that the government presented a list of some 780 state companies that would be available for privatization. These included the state oil and gas company KazMunaiGaz, the nuclear company Kazatomprom, the national railway company, Kazatelecom, the state airline, and on and on.

By January 13, the tenge had dropped to 364 to the dollar, half its value of six months earlier.

On January 15, First Deputy Minister Bakytzhan Sagintaev said GDP growth for 2015 totaled 1.2 percent.** He presented figures that showed industrial production dropped by 1.6 percent, the mining and extraction industry dropped by 2.5 percent, alongside declines in oil production, coal production, and iron ore production -- mainly, Sagintaev said, due to decreased orders from China.

During January the Economist Intelligence Unit forecast that Kazakhstan would fall into recession in 2016 for the first time since 1998.

Austerity Bites

There have already been signs of the effects of the economic downturn on the population. Parents complained about increased in the cost of preschools. Almaty Mayor Baurzhan Baybek promised to allocate money to lower the cost of preschool tuition for lower-income families.

Near Shymkent, the cuts in the public-transportation budget left some children walking to and from school after the number of buses servicing routes was pared back or routes were cut entirely. Parents expressed concerns especially about the morning walk, which in January is shrouded in darkness.

Those who in better days had taken out home loans based on dollar rates made the most commotion. They suddenly owed twice as many tenges. Some of the mortgage-holders in Almaty staged a "gray mass" protest outside banks on January 20, seeking to have their debts recalculated at the tenge rate prior to July 2015. On February 2, dozens of mortgage-holders demonstrated outside several banks in Almaty demanding the same.

On January 12, Kazakhstan's government announced Kayrat Kozhamzharov had been named chairman of the newly created National Bureau for Countering Corruption. While it might sound impressive to some, President Nazarbaev and other officials have been bringing up the fight against corruption practically since the first days of independence. What this bureau can do that the many previous anticorruption campaigns could not is unclear.

That would be part of the "great distraction." But Kazakh authorities did much better than that.

When the Mazhilis, the lower house of parliament, met on January 13, the first order of business was to approve a measure to hold early parliamentary elections and send a request to President Nazarbaev to formally disband the legislature.

The theater was about to begin.

Election Theater

Pro-government media leapt into action. On January 14, reported that the Scientific Research Association of the Institute of Democracy had conducted a poll of 97 "experts" and that 95.6 percent supported early parliamentary elections. None of the experts was named.

Kazinform interviewed Botagoz Turekhanova, the chairwoman of the sociological research department of the institute of Eurasian integration. Her organization had time to poll 615 people, "82.5 percent of them have already heard about...holding early elections, and 93.6 percent believe that holding such elections is the right thing to do."

And the Astana Times, also on January 14, was able to report that early elections were supported by the "National Consumers League, the Assembly of People of Kazakhstan, the Youth Congress, Association of the Deputies of Maslikhats, representatives of the national movement Kazakhstan 2050, and the Civil Alliance of Kazakhstan."

The most common reason officials gave for early parliamentary elections was the need for a parliament with a fresh mandate to confront the economic problems coming Kazakhstan's way. No one bothered to explain what new deputies could do that the outgoing parliament was unable to do.

For days Nazarbaev conducted well-publicized meetings with high-ranking officials to discuss the merits of early legislative elections before officially dissolving parliament on January 20 and setting March 20 as the election date.

The ruling Nur-Otan party held its congress to approve nominations on January 29. As party chairman, Nazarbaev attended. The event featured maudlin praise for Nazarbaev, completely overlooking any blame that might lie with the head of state for the bad situation the country found itself in.

The list of candidates approved at the congress includes Nazarbaev's eldest daughter, Darigha; World Middleweight boxing champion Gennady Golovkin; actor Nurlan Alimzhanov (who played Nazarbaev in a film about the president's youth); singer Kayrat Nurtas; and other celebrities.

Their qualifications to deal with the economic crisis better than the outgoing parliament were unclear.

Little-noticed was the fact that Nur-Otan was able to register 127 candidates to run for the 98 seats available in the Mazhilis (nine more are filled from the People's Assembly and are named by Nazarbaev), while the other five parties participating in the early parliamentary elections registered a combined 107 candidates.

On February 1, the exchange rate was 354.79 tenges to the U.S. dollar. On February 9, the rate was 359.89 tenges to the dollar.

* The rotating chairmanship of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia) passed to Kazakhstan at the start of 2016. The statistics department of Kazakhstan's Economic Ministry reported in mid-January that Kazakhstan's trade with EEU countries during January-November 2015 fell by some 27.7 percent.

** According to The World Bank, Kazakhstan's GDP growth figures from 2001-14 were as follows: 2001 -- 13.5 percent; 2002 -- 9.8 percent, 2003 -- 9.3 percent; 2004 -- 9.6 percent; 2005 -- 9.7 percent; 2006 -- 10.7 percent; 2007 -- 8.9 percent; 2008 -- 3.3 percent; 2009 -- 1.2 percent; 2010 -- 7.3 percent; 2011 -- 7.5 percent; 2012 -- 5.0 percent; 2013 -- 6.0 percent; 2014 -- 4.4 percent.

Kyrgyz Prime Minister Temir Sariev ordered a draft bill that would have cut a special subsidy for people living in Kyrgyzstan’s mountains withdrawn for revision.

This year is bound to be a difficult one for Central Asia. The big question is: How bad can it get? I decided to follow events, as 2016 started, as closely as possible to see not only what was happening but also to pay special attention to how the individual publics responded and what measures each government would take. I chose to look at the first 40 days of the year, hoping to get a glimpse of where the five countries are heading.

Coming out of 2015, although Kyrgyzstan, like the other Central Asian countries, was facing economic problems, the country could look back on two potentially beneficial events. Kyrgyzstan had officially joined the Eurasian Economic Union (EEU) in August and then conducted an amazingly clean campaign for parliamentary elections, followed by the actual poll on October 4, which did not come off quite as clean but was still far better than elections in any of the other Central Asian states.

Forty days into 2016, neither of those things had helped Kyrgyzstan much. But it’s only been a few months, so maybe there is still a chance.

Kyrgyzstan certainly had security concerns entering 2016. There were two security operations conducted in the capital, Bishkek, in 2015, both involving escaped prisoners vaguely identified as militants. There were reports about citizens of Kyrgyzstan making their way to Syria to join Islamic State (IS) or other extremist groups.

As Kyrgyzstan started the new year, the country’s main source of power -- the Toktogul Reservoir and hydropower plant (HPP) -- had just shut down three of its four turbines for several days. An inspection determined the HPP was simply old and needed repair and upgrades. At the same time, the Kyrgyz government was preparing to scrap an agreement with Russia to construct the giant Kambar-Ata-1 HPP, a project that was supposed to push Kyrgyzstan closer to the long-anticipated goal of energy independence.

In the meantime, the sale of the state gas company to Russia’s Gazprom in 2014 for a symbolic $1 was paying dividends to Kyrgyzstan’s people, who did not have to endure another winter of severe power rationing this winter. Admittedly, the company said rate hikes would be coming, incrementally, over the coming years.

On the first day of the new year, the exchange rate was 75.89 soms to one U.S. dollar. One year earlier, on January 1, 2015, the rate was 58.89 soms to the dollar.

There was an abundance of bad economic news. On January 6, the Kyrgyz National Bank said it staged 16 interventions, spending some $37 million to prop up the som during 2015. When Kyrgyzstan’s National Bank carried out a currency intervention on January 21, Russia’s TASS news agency reported, “This is the 12th currency intervention conducted by the National Bank in January this year.” The Kyrgyz news agency later reported the bank sold some $3.75 million on January 21 and then sold some $5.4 million the next day and during January had spent nearly $54 million.

Authorities initiated inspections of exchange bureaus to stamp out currency speculation. At least four exchange bureaus had their licenses pulled by January 18. The country’s Agency for Antimonopoly Regulations reminded on January 16 that all financial transactions in the country must be conducted in the national currency.

Kyrgyzstan is the second-most remittance-dependent country in the world. Some 700,000 Kyrgyz citizens are migrant laborers. For several years, money, sent mainly from Russia, has been equivalent to 30 to 40 percent of Kyrgyzstan’s GDP. Owing to the economic crises in Russia and Kazakhstan, with some 520,000 and 113,000 migrant laborers, respectively, from Kyrgyzstan, work remittances for 2015 dropped some 27 percent compared to 2014.

However, Kyrgyzstan seemingly will not face the dilemma of returning migrant laborers that Tajikistan and Uzbekistan seem bound to experience. Russia's Federal Migration Service reported on January 12 that while the number of Tajik and Uzbek citizens living in Russia decreased during 2015, the number of citizens of Kyrgyzstan coming to Russia increased by 2 percent.

Kyrgyzstan’s unemployment figure is unclear. During January, the Labor Ministry told Azattyk there were some 200,000 unemployed people in the country, but other government agencies put it as low as 56,000.

There were signs of social discontent. Those who took out loans based in dollars suddenly found themselves unable to repay the loans. There were protests over this, but the Kyrgyz government appeared to have headed it off, at least temporarily, by offering to calculate repayment of loans under $40,000 at the som rate of a year ago for state employees (who include teachers and medical workers). It is not clear how authorities will manage that financially.

There were also the residents of “high mountain regions.” For years, people living in Kyrgyzstan’s mountains have been given a special subsidy by the state, but in January parliament discussed cutting that benefit. Kyrgyzstan is some 90 percent covered by mountains, so a significant number of people would be affected by such a decision. Some of these people, particularly in the northeast city of Naryn, protested the plan. Prime Minister Temir Sariev ordered the draft bill withdrawn for revision on January 25, easing passions, at least temporarily.

Security remains a concern. On January 21, State Committee for National Security Deputy Director Taalaybek Japarov said there were some 500 citizens of Kyrgyzstan who were members of militant groups in Syria.

One of these, at least, returned to Kyrgyzstan and spotlighted a significant gap in domestic security. On January 18, authorities in the southern city of Jalal-Abat detained a Kyrgyz citizen recently returned from Syria and reportedly discovered that individual had a grenade launcher. Authorities quickly learned the detained person had obtained the grenade launcher from the head of the police arms depot in Jalal-Abat. Prime Minister Sariev called it an “outrageous case.”

There really was not any “great distraction” in Kyrgyzstan during the first 40 days of 2016. The country is marking the 100th anniversary of the Urkun, the flight of the Kyrgyz people into the Tien-Shan Mountains after widespread violence erupted when Central Asians resisted Russian attempts to conscript them for duty in World War I.

There is also next year's presidential election. President Almazbek Atambaev will step down, and the political jockeying is already under way and will likely only become more intense during the course of 2016.

The exchange rate on February 1 was 75.88 soms to the U.S. dollar. On February 9, it was 74.31 soms. The World Bank forecast at the start of January that Kyrgyzstan’s GDP would grow by 1 percent in 2016 and 3.4 percent in 2017, the year the country holds its next presidential election.

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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.

Bruce Pannier
Bruce Pannier

Content draws 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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