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Kazakhstan: NGO Coalition Wants More Transparency In Oil Sector

Nongovernmental organizations in Kazakhstan have announced their intention to form a group aimed at bringing greater transparency to the country's vital oil sector, which has been plagued by allegations of corruption.

Prague, 16 June 2004 (RFE/RL) -- Several nongovernmental organizations (NGOs) in Kazakhstan announced this week that they intend to establish a coalition aimed at bringing a measure of public scrutiny over the country's oil revenues.

Anton Artyomov, a spokesman for Soros-Kazakhstan, announced the group's purpose: "Our goal is to make it possible for Kazakhstan to join the initiative on transparency in the mineral-resources sector as soon as possible."

British Prime Minister Tony Blair announced the Extractive Industrial Transparency Initiative in September 2002. The initiative aims to disclose information about payments made by extraction companies and also about government revenues from these deals.

The NGO coalition hopes to convince the Kazakh government to sign on to the initiative, which would then allow international organizations to come to the country and carry out field investigations into accountability and corporate transparency in natural-resource management. The Kazakh NGO coalition hopes to sufficiently highlight concerns so that citizens pressure the government into signing up.

But the NGO coalition is likely to face resistance to their efforts, as oil-money scandals are a sensitive issue in Kazakhstan. There have been several scandals surrounding government officials and the huge amounts of money allegedly transferred to foreign bank accounts.

The coalition must also depend to a certain extent on the goodwill of state media to get their message out.

Dos Koshim is the chairman of an NGO called the Kazakh Independent Observers' System. He said a public organization should have been monitoring oil deals and revenues from the early days of the country's independence. "The issue should have been raised in 1991, when international oil companies had just started their operations on Kazakh soil," he said. "That maybe was due to the neglect of NGOs -- our own oversight. We have too many closed sectors. What I think is that we first must change the laws. If the laws are not changed, the government and the oil sector officials will give the simple answer -- we are ready to cooperate and make everything transparent, but there are some issues defined as business secrets."

In the frantic days of Kazakhstan's privatization programs and big oil deals in the mid-1990s, many contracts were signed, with incredible advantages for foreign companies -- extremely low tax rates, tax deferments that lasted years, and seemingly low selling prices that fueled rumors of bribery. A shadow-capital amnesty in June and July 2001 saw some $500 million returned to Kazakhstan.

Kazakh President Nursultan Nazarbaev has himself been accused of making off with some of the country's oil revenue. He denies the charge, saying money that was eventually found in a foreign bank account under his name was intended to help the country in times of crisis.
Pro-government parties are likely to see the creation of this NGO coalition as a political move, rather than as an attempt to rein in oil-industry corruption.

And in a case now unfolding in a U.S. court, an American businessman is accused of paying bribes to Kazakh officials -- including Nazarbaev -- in return for lucrative oil contracts.

These allegations have been fodder for the opposition press and political opposition, both of which still claim they are targeted when they raise the issue publicly.

Independent political observer Bolat Tilepov told RFE/RL's Kazakh Service that he doubts this coalition of NGOs will have any success at the moment in pushing for greater transparency in Kazakhstan's oil sector. "We don't have a stable, civil society yet. It's still developing," he said. "That's why I think it is too early to raise this issue. We have not even established mechanisms to control the sector. I would say that the idea is great, but in Kazakhstan today, there is no possibility to establish such control."

Ualikhan Kaisar is a pro-government deputy in Kazakhstan's Mazhlis, the lower house of parliament, who said he is considering joining the new NGO coalition. "Even though the oil sector doesn't belong to the people, the people should have some right for control over it," he said. "How are foreign investors using our soil? How about the taxes? What are they? Are they paid regularly? Do they use offshore zones to pump out oil revenues from this country? We are witnessing that they do. If that NGO is established, I will join it immediately."

Oil revenues and deals with foreign companies have been a hot issue in Kazakhstan for several years now, but this is a parliamentary election year. Opposition political figures are bound to use these questions to sow doubt in the minds of voters about current government officials and policies.

Pro-government parties are likely to see the creation of this NGO coalition as a political move, rather than as an attempt to rein in oil-industry corruption.

(Merhat Sharipzhan of RFE/RL's Kazakh Service contributed to this report.)

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