Kazakhstan, too often forgotten in world news, has recently been making global headlines. Business success stories such as Kaspi.kz’s debut on the Nasdaq and Air Astana’s remarkable IPO in London have garnered positive attention for this vast, resource-rich, but often overlooked country.
Kazakhstan is gaining further notice for becoming the third largest supplier of oil to Europe. Kazakhstan will likely continue to increase its role on the world stage as it strengthens transportation links with other nations. The country has been chosen as one of the future recipients of a 10 billion euro package that the European and international financial institutions will provide towards improving transportation connectivity between Europe and Central Asia.
Recent changes in the Kazakh government and a new set of economic reforms announced by Kazakh President Kassym-Zhomart Tokayev are also of global interest. They will deeply impact both Kazakhstan’s international profile and its investment climate.
Since the commencement of Tokayev’s presidency in 2019, the Kazakh government has been sending clear signals that it will no longer accept corruption or interference by oligarchs. Tokayev has led the way on bringing in initiatives that are fresh, innovative and transformative.
This change in approach and policy was accelerated in response to a traumatic "wake up call" in January of 2022. In that month, thousands of people raised their voices and many of them took to the streets of Almaty in an attempt to express their frustration with falling standards of living. Although some of the protestors chose to resort to violence, whether out of genuine anger or mere opportunism, their unfortunate actions did not diminish the core reason for the protests. The angry marches of January were driven by a decades-long failure by those in power to address the real needs of the everyday people of Kazakhstan. The government had to admit it was time for substantial and significant change.
This year marks the fifth year of Kazakhstan being under Tokayev's leadership. In accordance with recent legislative changes, he will continue to serve his term as President until 2029. This five-year milestone provides the perfect opportunity to delve into pressing questions about the state of Kazakhstan today and what is to come for a country that holds so much promise. To explore crucial issues about Kazakhstan’s present state and future prospects I posed a series of questions to top foreign experts who shared their insights about current issues and future developments in Kazakhstan. Each article in this series will feature the perspective of a different expert, beginning with Alberto Frigerio, Professor of International Relations at Almaty Management University in Almaty, Kazakhstan.
Q1. What are your views on Kazakhstan’s political reforms and economic progress during the last five years?
A: From an economic perspective, Kazakhstan achieved noteworthy results in the last 5 years: the GDP has been growing since 2020, the digitalization process is spreading in multiple sectors, and the number of countries ready to invest in Kazakhstan is rising. Plus, Astana is becoming the main financial center of the Central Asian region and despite the uncertainties of the international context, the traditional multi-vector policy is producing valuable outcomes (see the 17 agreements signed by Tokayev in the recent trip to Rome).
The green transition process is also moving on with the new Environmental Code and the Doctrine for Achieving Carbon Neutrality until 2060 (both from 2021) representing key benchmarks. Of course, much still needs to be done. However, a path toward sustainable prosperity has been defined and a consistent legal and policy framework has been already established.
Unfortunately, the same cannot be said for the socio-political reforms. The testing of the direct elections of mayors (akimats) in certain towns and the ongoing discussions over the enhanced protection of women and children are positive signs of change and development. However, diverse critical areas require better regulations including, political accountability and transparency, freedom of expression, and engagement of civil society. The traumatic events of January 2022 raised once again the long-standing debate over the trade-off between security and freedom. Nevertheless, both political democratization and economic liberalization seem essential to proceed with the socio-economic development path defined in the “Kazakhstan Strategy 2050”.
Q2. What challenges does Kazakhstan currently face and what do you think can be done by the country to overcome them?
A: Kazakhstan has to face multiple challenges nowadays related to aspects such as public governance, foreign affairs, plans of economic development, narratives of national identity, updating of the normative system, and issues of socio-spatial dialectic. Addressing each of them will require a lot of time. Arguably, the top three priorities right now are:
• Positioning itself in a turbulent geopolitical framework. On this issue Tokayev has been clear: Kazakhstan will keep moving on with its multi-vector policy as the only condition to maintain peace and stability. Up to date, such a policy offered valuable rewards. To what extent it will be possible to preserve it within a more and more polarized international framework is a critical question that cannot be answered (diverse experts might only propose diverse assumptions).
• Proceeding with the diversification of economic activities (detachment from fossil fuels production), while embracing a transition toward a circular economy and maintaining conditions of socioeconomic prosperity. In this regard, digitalization, renewable energy and energy efficiency, and commercialization of local innovation are conditions to achieve such a goal. However, they require, in turn, the embracement of new technologies and innovative approaches, the development of a system able to attract FDI, as well as a reform of the educational sector, to better align the provided knowledge and skills with the needs of the market.
• A necessary upgrading of the “periphery” both from a national and international perspective. From a national perspective the idea of “periphery” is here intended as those areas out of the main “centers” Astana and Almaty. New centers need to be created (to a certain extent Turkistan is moving in this direction) as well as better connectivity within the country must be built. In my view, Kazakhstan could do much better in this regard. From an international perspective, Kazakhstan is still at the margin of both Europe and Asia. But it is important to put Kazakhstan at the center of the map as the bridge between the two regions. This can be done by developing the transportation system (in particular, better railways as well as a large airport acting as a hub for the whole of Central Asia and the Caucasus), favorable visa conditions from and to Kazakhstan, and an extended modernization system. Positively, this is an area in which important results are achieved annually by the Kazakh government. So, it will take time, but the taken direction is correct.
Q3. What areas do you believe are priorities that need to be addressed by the new government (Infrastructure? Diversification of the industrial base? Diversification of the transportation links? Education? Health care?)
A: A widening of the range of industries (economic diversification), coupled with a comprehensive restructuring of the educational system. Kazakhstan has the potential to excel in several sectors, offering numerous chances within the country. However, to achieve desired outcomes, it is imperative to have clear and consistent legislation and regulations, robust security measures, sufficient financial resources and investments, as well as a skilled and knowledgeable working force.
Plus, a remarkable improvement in the healthcare infrastructure is needed as the measles epidemic showed some structural fallacies at the end of last year. Here I mean not only an updating of the medical facilities, but also massive campaigns aimed at educating the population about the importance of vaccinations and improving general conditions (e.g. better education, but also better salary expectations) for those working in the healthcare business.
Q4. What are your views on Kazakhstan’s efforts to diversify its economy?
A: Some progress has been made, but it is still in an early stage. The attention toward renewable energy is growing and, in a few years, they reached 5% of the share of electricity production at the national level. But other areas like agricultural production and manufactured products are below their capacity. Indeed, investments in research and development, adoption of innovative methods and advanced technologies, organization of professional training, and the creation of a comprehensive system of commercialization are fundamental steps that need to be taken.
Q5. What needs to be done at the local level to bring about modernization and social change?
A: It is hard to provide an answer as context matters, so each reality needs to be assessed according to its fundamental features. For example, a successful process of modernization and social change in Semipalatinsk, Taldykurgan, and Aktau will plausibly need diverse types of intervention.
Still, if we would like to have a more generic consideration, bringing modernization and social change at the local level requires a multifaceted approach that addresses various aspects of community life. In this regard, it is important to invest in education initiatives that promote critical thinking, digital literacy, and awareness of social issues. Likewise, upgrading local infrastructure (e.g. transportation, communication networks, healthcare facilities, etc.) is crucial for economic development and improving quality of life. Supporting local entrepreneurship and small businesses through access to funding, training, and resources might revitalize an underdeveloped area while fostering community participation and involvement in decision-making processes could strengthen the sense of community and increase public trust. Plus, there are to consider the two main critical areas of this century: sustainability and technological innovation. Implementing measures to promote environmental sustainability, such as waste management, renewable energy adoption, and conservation efforts and, at the same time, embracing technology and digital innovation to improve efficiency, access to information, and service delivery are actions that could deeply transform a society. But they need resources, partnerships, and education (not only in terms of knowledge but also a deeper transformation of cultural practice and mindset) to be realized and produce long-term benefits.
Q6. The government of Kazakhstan has set the goal of doubling its GDP in the upcoming five years. Kazakhstan is also focusing on encouraging large breakthrough projects. What’s your opinion on this?
A: Kazakhstan is a highly ambitious country and sometimes it sets rather unfeasible goals. Said so, I expect important GDP growth as well as the launch of large breakthrough projects in the country. But I believe the focus should be on something different: GDP growth per capita, quality of education, number of IP licenses, reduction of CO2 emissions, improvements in the healthcare system, monetary stabilization, and decrease of the real inflation rate, are samples of indexes that show better how the “health” of a country is changing.
Q7. Kazakhstan is facing some internal challenges such as low rates of economic diversification, industrial and agricultural modernization, informal employment, social unrest and human rights issues. What is your opinion on this? What role can international community play there to address those issues?
A: Kazakhstan is facing several challenges because it is in a process of development and transformation and we are experiencing an unstable and uncertain international framework. Most of these challenges are not new ones, but legacies of the past that still need to be addressed. Over the past few years, there have been notable advancements in policies, legal, and economic initiatives aimed at fostering a more sustainable approach to development. So, there are obstacles along the way, but we need to have some optimism over the capacity to face them. Can the international community support the mitigation of such challenges? Sure. Kazakhstan is working with UNDP, UNEP, and the World Bank in diverse projects related, for example, to environmental protection, social justice, and green economic transition. Moreover, Kazakhstan has a well-established system of bilateral relations with partners all over the world. Even with the EU the plans of cooperation on hydrogen seem very promising. Likewise, the relations between the five Central Asian states are, apparently, more constructive and dynamic nowadays than ever, as shown for example by their joint meeting with Biden a few months ago. Therefore, a system of cooperation is certainly useful for Kazakhstan to get expertise and funds, as well as for other partners (either states, regional institutions, or international organizations) to explore opportunities in a land that has a lot to offer.
Q8. What’s your vision for the future of Kazakhstan for the next five years?
A: Digitalization, internationalization, and green transition will significantly speed up in the next five years. Other areas might grow as well, like the tourism and creative industry. So, from an economic perspective, Kazakhstan will keep moving on with its process of prosperity, transition, and diversification. From a political perspective, I do not expect incredible turning points. But it would be interesting to see if the direct elections of mayors for the cities of the whole country will ever take place. That would be a further important step in shaping a democratic, transparent, and accountable system. From a social perspective, a few interesting initiatives are coming out, mostly related to civil society engagement, local community development, and extended social responsibility practices. Indeed, we might expect some progress in the areas of social justice, inclusiveness, and participation (but the regulatory system needs to be updated). About Kazakhstan's role in the international arena, to date, Kazakhstan’s multi-vector strategy is working well. But, as mentioned earlier, the current international scenario is so turbulent and uncertain that any sort of expectation (or forecast) would sound silly.
By Assel Nussupova
Assel Nussupova is a highly accomplished analyst with an extensive background in economics and over two decades of dedicated service to the Kazakh government. Holding a prestigious Master's Degree in Economics from Georgetown University in Washington, DC, she has become a recognized authority in the fields of macroeconomics, commodity markets, financial markets, and economic and social policies. With a profound understanding of Kazakhstan's economic landscape and a global perspective, Nussupova is a sought-after expert who continues to contribute valuable insights to the field of economics. Additionally, she is a prominent contributor to the Astana Times, where her articles provide readers with expert analysis and in-depth perspectives on economic matters.
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