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Kazakhstan (12/04)For the most current version of this Note, see Background Notes A-Z.
PROFILE OFFICIAL NAME: Geography People Government Economy PEOPLE AND HISTORY Nomadic tribes have been living in the region that is now Kazakhstan since the first century BC. From the fourth century AD through the beginning of the 13th century, the territory of Kazakhstan was ruled by a series of nomadic nations. Following the Mongolian invasion in the early 13th century, administrative districts were established under the Mongol Empire, which eventually became the territories of the Kazakh Khanate. The major medieval cities of Taraz and Turkestan were founded along the northern route of the Great Silk Road during this period. Traditional nomadic life on the vast steppe and semi-desert lands was characterized by a constant search for new pasture to support the livestock-based economy. The Kazakhs emerged from a mixture of tribes living in the region in about the 15th century and by the middle of the 16th century had developed a common language, culture, and economy. In the early 1600s, the Kazakh Khanate separated into the Great, Middle and Little (or Small) Hordes--confederations based on extended family networks. Political disunion, competition among the hordes, and a lack of an internal market weakened the Kazakh Khanate. The beginning of the 18th century marked the zenith of the Kazakh Khanate. The following 150 years saw the gradual colonization of the Kazakh-controlled territories by tsarist Russia. The process of colonization was a combination of voluntary integration into the Russian Empire and outright seizure. The Little Horde and part of the Middle Horde signed treaties of protection with Russia in the 1730s and 1740s. Major parts of the northeast and central Kazakh territories were incorporated into the Russian Empire by 1840. With the Russian seizure of territories belonging to the Senior Horde in the 1860s, the tsars effectively ruled over most of the territory belonging to what is now the Republic of Kazakhstan. The Russian Empire introduced a system of administration and built military garrisons in its effort to establish a presence in Central Asia in the so-called "Great Game" between it and Great Britain. Russian efforts to impose its system aroused the resentment of the Kazakh people, and by the 1860s, most Kazakhs resisted Russia's annexation largely because of the disruption it wrought upon the traditional nomadic lifestyle and livestock-based economy. The Kazakh national movement, which began in the late 1800s, sought to preserve the Kazakh language and identity. There were uprisings against colonial rule during the final years of tsarist Russia, with the most serious occurring in 1916. Although there was a brief period of autonomy during the tumultuous period following the collapse of the Russian Empire, the Kazakhs eventually succumbed to Soviet rule. In 1920, the area of present-day Kazakhstan became an autonomous republic within Russia and, in 1936, a Soviet republic. Soviet repression of the traditional elites, along with forced collectivization in late 1920s-1930s, brought about mass hunger and led to unrest. Soviet rule, however, took hold, and a communist apparatus steadily worked to fully integrate Kazakhstan into the Soviet system. Kazakhstan experienced population inflows of thousands exiled from other parts of the Soviet Union during the 1930s and later became home for hundreds of thousands evacuated from the Second World War battlefields. The Kazakh Soviet Socialist Republic (SSR) contributed five national divisions to the Soviet Union's World War II effort. The period of the Second World War marked an increase in industrialization and increased mineral extraction in support of the war effort. At the time of Soviet leader Josif Stalin's death, however, Kazakhstan still had an overwhelmingly agricultural-based economy. In 1953, Soviet leader Nikita Khrushchev initiated the ambitious "Virgin Lands" program to turn the traditional pasturelands of Kazakhstan into a major grain-producing region for the Soviet Union. The Virgin Lands policy, along with later modernizations under Soviet leader Leonid Brezhnev, sped up the development of the agricultural sector, which to this day remains the source of livelihood for a large percentage of Kazakhstan's population. Growing tensions within Soviet society led to a demand for political and economic reforms, which came to a head in the 1980s. In December 1986, mass demonstrations by young ethnic Kazakhs took place in Almaty to protest the methods of the communist system. Soviet troops suppressed the unrest, and dozens of demonstrators were jailed. In the waning days of Soviet rule, discontent continued to grow and find expression under Soviet leader Mikhail Gorbachev's policy of glasnost. Caught up in the groundswell of Soviet republics seeking greater autonomy, Kazakhstan declared its sovereignty as a republic within the Union of Soviet Socialist Republics (U.S.S.R.) in October 1990. Following the August 1991 abortive coup attempt in Moscow and the subsequent dissolution of the Soviet Union, Kazakhstan declared independence on December 16, 1991. The years following independence have been marked by significant reforms to the Soviet command-economy and political monopoly on power. Under Nursultan Nazarbayev, who initially came to power in 1989 as the head of the Kazakh Communist Party and was eventually elected President in 1991, Kazakhstan has made significant progress toward developing a market economy, for which it was recognized by the United States in 2002. The country has enjoyed significant economic growth since 2000, partly due to its large oil, gas, and mineral reserves. GOVERNMENT AND POLITICAL CONDITIONS Kazakhstan has a bicameral Parliament, comprised of a lower house (the Mazhilis) and upper house (the Senate). Single mandate districts popularly elect 67 seats in the Mazhilis; there also are 10 members elected by party-list vote rather than by single mandate districts. The Senate has 39 members. Two senators are selected by each of the elected assemblies (Maslikhats) of Kazakhstan's 16 principal administrative divisions (14 regions, or oblasts, plus the cities of Astana and Almaty). The president appoints the remaining seven senators. Mazhilis deputies and the government both have the right of legislative initiative, though the government proposes most legislation considered by the Parliament. Elections to the Mazhilis in September 2004 yielded a lower house dominated by the pro-government Otan party, headed by President Nazarbayev. Two other parties considered sympathetic to the president, including the agrarian-industrial bloc AIST and the Asar party, founded by President Nazarbayev’s daughter, won most of the remaining seats. Opposition parties, which were officially registered and competed in the elections, won a single seat during elections that the Organization for Security and Cooperation in Europe said fell short of international standards. Kazakhstan is divided into 14 oblasts and the two municipal districts of Almaty and Astana. Each is headed by an akim (provincial governor) appointed by the president. Municipal akims are appointed by oblast akims. The Government of Kazakhstan transferred its capital from Almaty to Astana on June 10, 1998. Principal Government Officials Kazakhstan's economy grew by 9.2% in 2003, buoyed by high world oil prices. Gross domestic product (GDP) grew 9.5% in 2002; it grew 13.2% in 2001, up from 9.8% in 2000. Kazakhstan's monetary policy has been well managed. Its principal challenges in 2002 were to manage strong foreign currency inflows without sparking inflation. In 2003 inflation did not remain under control, registering at 6.8% instead of forecast level of 5.3%-6.0%. In 2002 inflation was 6.6%, compared to 6.4% in 2001. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the International Monetary Fund (IMF) in 2000, 7 years ahead of schedule. In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under U.S. trade law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources. In September 2002, Kazakhstan became the first country in the former Soviet Union to receive an investment-grade credit rating from a major international credit rating agency. As of late December 2003, Kazakhstan's gross foreign debt was about $22.9 billion. Total governmental debt was $4.2 billion. This amounts to 14% of GDP. There has been a noticeable reduction in the ratio of debt to GDP observed in past years; the ratio of total governmental debt to GDP in 2000 was 21.7%, in 2001 it was 17.5%, and in 2002 it was 15.4%. The upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1999 budget deficit level of 3.5% of GDP to a deficit of 1.2% of GDP in 2003. Government revenues grew from 19.8% of GDP in 1999 to 22.6% of GDP in 2001, but decreased to 16.2% of GDP in 2003. In 2000, Kazakhstan adopted a new tax code in an effort to consolidate these gains. On November 29, 2003 the Law on Changes to Tax Code was adopted, which reduced tax rates-- value added tax from 16% to 15%, social tax from 21% to 20%, and personal income tax from 30% to 20%. Kazakhstan furthered its reforms by adopting a new land code on June 20, 2003 and a customs code on April 5, 2003. Oil and gas is the leading economic sector. Production of oil and gas condensate in Kazakhstan amounted to 51.2 million tons in 2003, which was 8.6% more than in 2002. Kazakhstan raised oil and gas condensate exports to 44.3 million tons in 2003, 13% higher compared to 2002. Gas production in Kazakhstan in 2003 amounted to 13.9 billion cubic meters, up 22.7% compared to 2002, including natural gas production of 7.3 billion cubic meters, Kazakhstan holds about 4 billion tons of proven recoverable oil reserves and 2 trillion cubic meters of gas. Industry analysts believe that planned expansion of oil production, coupled with the development of new fields, will enable the country to produce as much as 3 million barrels per day by 2015, lifting Kazakhstan into the ranks of the world's top 10 oil-producing nations. Kazakhstan's 2003 oil exports were valued at more than $7 billion, representing 65% of overall exports and 24% of GDP. Major oil and gas fields and their recoverable oil reserves are Tengiz (7 billion barrels); Karachaganak (8 billion barrels and 1,350 billion cubic meters of natural gas); and Kashagan (7-9 billion barrels). Kazakhstan instituted an ambitious pension reform program in 1998. As of January 1, 2003 the pension assets were about $2.6 billion. There are 16 saving pension funds in the republic. State Accumulating Pension Fund is the only state fund, which is planned to be privatized in 2004. The National Bank oversees and regulates the pension funds. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. The banking system's capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN-AMRO, Citibank, and HSBC. Agriculture Natural Resources FOREIGN RELATIONS U.S.-KAZAKHSTAN RELATIONS U.S.-Kazakhstani cooperation in security and non-proliferation has been a cornerstone of the relationship. Kazakhstan showed leadership when it renounced nuclear weapons in 1993. The United States has assisted Kazakhstan in the removal of nuclear warheads, weapons-grade materials, and their supporting infrastructure. In 1994, Kazakhstan transferred more than a half-ton of weapons-grade uranium to the United States. In 1995 Kazakhstan removed its last nuclear warheads and, with U.S. assistance, completed the sealing of 181 nuclear test tunnels in May 2000. Kazakhstan has signed the Conventional Armed Forces in Europe Treaty (1992), the START Treaty (1992), the nuclear Non-Proliferation Treaty (1993), the Chemical Weapons Convention, and the Comprehensive Test Ban Treaty (2001). Under the Cooperative Threat Reduction program, the United States has spent $188 million to assist Kazakhstan in eliminating weapons of mass destruction and weapons of mass destruction-related infrastructure. Economic Relations Sections 402 and 409 of the United States 1974 Trade Act require that the President submit semi-annually a report to the Congress on continued compliance with the Act's freedom of emigration provisions by those countries, including Kazakhstan, that have been determined to satisfy the criteria of the Trade Act's Jackson-Vanik Amendment. Bilateral trade increased by 87% to $939.3 million in 2002, boosted significantly by U.S. exports of civilian aircraft and telecommunications equipment. U.S. Assistance Since 1993, the U.S. Agency for International Development (USAID) has administered technical assistance programs to support Kazakhstan's transition to a market economy, fully integrated into the world trade system. These programs include cooperation in privatization, fiscal, and financial policy; commercial law; energy; health care; and environmental protection. The U.S. Commercial Service provides U.S. business internships for Kazakhstanis, supports Kazakhstani businesses through a matchmaker program, disseminates information on U.S. goods and services, and has recently implemented a good governance program. The Peace Corps has more than 120 volunteers working throughout Kazakhstan in business education, English teaching, and the development of environmental non-governmental organizations. The United States supports increased citizen participation in the public arena through support for non-governmental organizations (NGOs). Dozens of grants have been provided to support NGOs that promote an independent media, legal reform, women's rights, civic education, and legislative oversight. USAID also has provided training courses for leaders and professionals. [Fact sheet on FY 2004 U.S. Assistance to Kazakhstan.] Military Cooperation Environmental Issues To address the water management problem of the Syr Darya River, Kazakhstan and other basin states, with technical assistance from USAID/Central Asia, established the 1998 Framework Agreement on the Use of Water and Energy Resources of the Syr Darya Basin. Kazakhstan became a signatory to the Convention on International Trade in Endangered Species (CITES) in 1999. The United States and the European Union worked together with the Ministry of Environmental Protection to establish an independent, nonprofit, and nonpolitical Regional Environmental Center (REC) in Almaty in 2001. The mission of the REC is to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decisionmaking among the countries of Central Asia. In 2002, the U.S. Environmental Protection Agency, U.S. Embassy, and Ministry of Environmental Protection signed a memorandum of understanding to provide the REC with funding for its grants program. U.S. Embassy Contact Information U.S. Agency for International Development (USAID) Peace Corps Business Customs Kazakhstani business people are generally less direct than American business people, and what can be accomplished in a few meetings in the United States might take more in Kazakhstan, requiring patience and discipline on the part of the U.S. business people. An experienced and competent interpreter can add invaluable context to your business meetings. It is common in Kazakhstan to have dinner with business contacts, but usually only after establishing business contacts in a more formal setting. Business attire is worn. Usually diners share a bottle of vodka or cognac and offer toasts, stating their desire for a fruitful business relationship and warm personal relations between partners. After-hours informal meetings, dinners and toasts, as well as weekend hunting and barbecues can be very important to forge business relations. More Information In an effort to prevent international child abduction, many governments have initiated procedures at entry/exit points. These often include requiring documentary evidence of relationship and permission for the child's travel from the parent(s) or legal guardian not present. Having such documentation on hand, even if not required, may facilitate entry/departure. All children adopted in Kazakhstan after May 2003 must obtain exit stamps from both the Ministry of the Interior and Ministry of Foreign Affairs before departing. OVIR registration. There are local Kazakhstani registration requirements. All travelers staying for more than 5 calendar days must register with the Office of Visas and Registration (OVIR) within that time period. OVIR offices are located in Almaty, Astana, and all other major cities. Visitors who do not register may have to pay fines upon departure and their departure may be delayed. All visitors who plan to stay more than 30 days also must present to the OVIR office within 30 days of arrival a certificate indicating a negative HIV test conducted no more than 1 month before registration. Evidence of an HIV test performed abroad is acceptable. Testing also may be done at the Center for the Prevention and Control of AIDS (7 Talgarskaya Street, Almaty). Registration/embassy location. Americans living in or visiting Kazakhstan are encouraged to register at the U.S. Embassy Consular Section in Almaty and obtain updated information on travel and security within Kazakhstan. Registration with the Embassy is different from Kazakhstani OVIR registration. It can help the U.S. Embassy contact you in case of an emergency, and it can streamline replacement of a lost or stolen passport. The U.S. Embassy in Almaty is 11 hours ahead of U.S. Eastern Standard Time. The Embassy Consular Section is located at 97 Zholdasbekova, Samal-2, Almaty 480099, tel. 7-3272- 50-48-02, fax 7-3272-50 -48-84, e-mail ConsularAlmaty@state.gov or web site http://www.usembassy-kazakhstan.freenet.kz/consular/index.html. For the most current version of this Note, see Background Notes A-Z. |
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