What can we expect from the coming year?

Dosim Satpaev

In his time, Eduard Lorenz, the mathematician contrived so-called “the butterfly effect”, which means that in our chaotic world it is rather difficult to predict what can happen in a given place at a given time. This thesis is directly related to some political systems as well where the engagement in predictions is not beneficial because there is a high probability of spontaneity and subjectivity on the part of political actors. However, in any way let’s try to figure out what expect in 2008 because some of the political and economic events of 2007 without any doubts have already determined the direction of development of the country for several years ahead.
It is enough to bring the amendments made in the constitution, namely the amendment about the constitutional right of the first President to occupy his position for unlimited term of office as an example. With a high probability, it could be supposed that this measure must have calmed the elite, some representatives of which have already begun to worry about their political future after 2012. Most probably, the emergence of this amendment has practically completed the formation of strict presidential vertical in Kazakhstan and has given the Head of State the temporary carte blanche for determining the succession of his course and searching the person who can perform it. If we proceed from this version, then in 2008, there will be no new attempts from the groups of presidential circle to begin their struggle for Royal throne. There is neither political nor economic stimulus for that aim. At the same time, the situation in which our elite resembles the jar that is full of spiders absolutely won’t suffer any changes. Moreover at the level of inter-elite clashes it is possible that the new redistribution of ownership would arise and there would be the distribution of influence in terms of strict correction of economic development of the country, when the winners and losers would be evident. The slowdown of economic growth of the country and some signs of stagnation can weaken some financial groups and strengthen the others, particularly those that are directly or indirectly connected with extractive sector.
As for the perspectives of some participants of sensational political scandals of 2007 which first of all includes the scandal with Rahat Aliev, then in 2008, he promised the publication of his book with spicy details about the inside-elite life of Kazakhstan. If it doesn’t happen then the version about conclusion of the unofficial treaty of peace between the authorities and them would be viable. At the worst the publication of this scandalous work wouldn’t be a good gift for the authorities of Kazakhstan from the point of view of international image, as it can be supposed that this book would contain not only the strange phone negotiations of some representatives of Kazakhstan elite but also the names of other “shady players”.
There would be significant processes in political life of the country in a new year as well because we are preparing to become the chairman of OSCE in 2010. It means that it would be necessary for the authorities of Kazakhstan to demonstrate some initiatives in the sphere of political modernization. Besides some moments have already been made clear, particularly the case in point is a liberalization of law, regulating the activity of mass media, and also some changes in electoral legislation. According to the officials of Kazakhstan all this should happen exactly in 2008.
Here it seems that the officials while passing strict laws regulating the political life of the country from the beginning relied on their partial weakening. It resembles the situation in some shops, where the artful managers announce gigantic discounts on their goods in order to attract the customers. At that the discount is made not from the real price, but from the advanced price. However everybody is glad. The shop receives profit and the buyer feels that he/she could “save” some money. Here we can remember the scene from one of the half-forgotten Soviet films of the reconstruction period where the old party leader teaches the young official what’s right and what’s wrong. He did it quite clearly by taking the neophyte’s hand and pressing it firmly until it hurt. “Now you see that it is hurting”, said “the teacher” — “But soon you will get used to it. And now I will weaken the grasp a little bit and you will feel better. However, nothing has changed, your hand is still in my hand and I am keeping it under my control. It is the same with people. Just weaken the grasp and everybody is glad! As saying is the life became the better – the life became more joyous!” Therefore it would be sad if the whole preparation to our chairmanship in OSCE this year is just limited by the cosmetic repair of the front and building of next skyscraper in Astana for holding the meeting of Council of Ministers for Foreign Affairs of State members of this international organisation.
The foreign policy of Kazakhstan would be more conservative which according to the words of president of Kazakhstan that were made during his last year’s meeting with foreign diplomatic corps would stay permanently multiple vectorial. Here Republic doesn’t change its principle of sitting on different geopolitical chairs. However all this doesn’t exclude the reinforcement of competitive struggle for oil and gas resources of Central Asia in 2008, especially after Kazakhstan, Russia and Turkmenistan have signed the Agreement of building the pre-Caspian gas pipeline. Such decision without any doubts would act as a detonator for new active actions from the direction of EU and USA for extra processing Central Asia with purpose of lobbying their own power interests. Naturally, the positions of another player in the person of China will not weaken which will realize intensively in 2008 the project of building the gas pipeline from Turkmenistan through Uzbekistan and Kazakhstan with a purpose of running it in 2009. It should be noted here that according to some experts the Chinese power policy in the next 2-3 years will effect on the world oil prices which already intimidates the West. Particularly China accumulates the strategic oil reserves, the volume of which according to the plans of Government should reach 12 million tons by 2010 that will be enough only for one month in case of world fuel crisis. All this will contribute to the growth of power role of China in Central Asia at the specified period of time.
The clashes between the Government of Kazakhstan and foreign investors which have already reached its peak in 2007 would be active in a new year as well. If the forecast of Ministry of Finance is true and in 2008 new changes are made in internal revenue code and a new tax on the mining of minerals instead of rental tax is accepted, then it will create basis for the new conflicts. According to Ministry of Finance the changes in internal revenue code will help to provide Republic with stable income coming from the use of raw materials which belongs to State by right. To all appearances Kazakhstan wants to take Russia as a model, where they have a tax on the mining of minerals. This tax and considerable export duties will lead to the fact that the payments to the state budget will increase with the growth of oil prices. In the prime cost structure it makes about 50-60% for the given duties, it means that the net price of oil for the feed companies practically doesn’t increase. The Russian legislation is very strict to subsoil users on this point. It should be noted here that Ministry of Finance will have a quite powerful opponent in the person of “KazMunaiGas” which can fully change the proposed amendments. Particularly, Askar Balzhanov, Chief Executive of JSC “Exploring the extraction KazMunaiGas” has said that he has a negative attitude to the idea of introducing the tax on mining of minerals instead of rental tax. It means that the foreign investors may have a serious ally in the discussions with the Ministry of Finance.
At the same time, next year is less optimistic for the government itself. The financial problems in August of 2007 clearly showed the presence of crisis in the system of State management as a result of its over-centralization. Its feature is concluded in that the government is afraid to take the responsibilities while making the strategic decisions and expects command from above. In addition, it turned out that the most of our Ministers including the Prime are not able to work in conditions of crisis processes. As a result the undue response to arisen problems led to the fall of ratings of our banks on the hand of international rating agencies, which seriously offended the officials, that have already used to economic euphoria and dithyrambs towards financial system. It turns out that in 2008, the government and the financial structures of Kazakhstan will have to do their best to change the “negative” predictions of international rating agencies, which have played a dirty trick on Kazakhstan banks at the end of year of pig.
From the viewpoint of these agencies, the problem is complicated by the needs in refinancing the foreign debt, pressure from the direction of unstable sectors of immovable property and building sector, and also other problematic sectors; moreover, the smaller banks cannot rely on the support from the government. In addition, there is a probability of further devaluation of tenge, which also threatens the ability of debtors to meet their engagements.
Most probably the special group would be established by the government, National bank and AFN in 2008 to hold road-show with the purpose of providing the international business-society with more adequate information about the current financial and economic situation in Kazakhstan. In other words, the New Year would be the year of financial rehabilitation of republic in the opinion of world financial market although from the viewpoint of economic development of Kazakhstan, this slight financial shaking did everyone good — the government and the bank structures and the building sectors. 
At the same time it can be said that the realization of the tasks put by the President would be rather hard trial for the Government of Karim Masimov in a new year as it is supposed that there will be a considerable burden on the budget of the country because the date of keeping social promises would be 2008. At that the problem of effective control of inflation hasn’t still been decided which grows as fast as it can and eats all Kazakhstan “social achievements”. 
All these factors would give a good reason for the President to make next staff castle in the Government that couldn’t justify hopes.
Moreover if to consider the inflation as a “tax for poor” then its non-keeping within the given limits and the further fall of life standard in the country may give the second life for Kazakhstan opposition, which will have opportunity to increase its social base, certainly if it makes some efforts for that. And the political consequences of slowdown of economic growth in Kazakhstan in 2008 could be very serious because those groups of society which is made up of the new average class (the workers of fast-growing spheres of services), small business and the residents of big cities, who were the supporters of existing socio-economic and political systems would strongly suffer from inflation. As it has already been seen in 90s in case of crisis phenomena the political establishment would advise its citizens to “tighten their belts tightly”.
The population would be again the pulling force, which will have to pull the economy from the crisis. It means that even the slight financial scrapes will have serious consequences.
All problems are concluded in the fact that the layer of average class is slight for today (from 15 to 25%); therefore, in case of economic crisis its specific position would be much less. Such position would be the result of the increase of the number of unoccupied people on the labour-market. Especially it is noted that there is a reduction of the unemployed in recent times which can be the result of economic growth. On the other side even the slightest crisis would entail the lowering of financial position of the most people of Kazakhstan. Mainly because of this fact the representatives of average class would lose their social status falling to bottom layer. This process would lead to the growth of marginal layers in society that move in protest mood. As a result, if the crisis situation continues for the long time the socio-political system would lose its firmness and would be in a position of unsteady balance. The danger is in that there are new hidden centers of tensions in society. This is first of all the natural migration of population and the capture of lands which can be observed in the suburbs of large cities. At the same time the failure of State Housing Programme in case of crisis may provoke to the new wave of capturing the lands and properties, which is also able to increase the social tension in society.

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