Highlights
– Power struggle in ruling elite
– Evidence of corruption in the energy sector
– Foreign engagement of Kazakhstan Continues in spite of difficulties
The Rise and Fall of Rakhat Aliev
Rakhat Aliev, the former son-in-law of the President of Kazakhstan, Nursultan Nazarbaev is a constant thorn in the side of the current regime. Recently, Aliev announced from the safety of exile in Austria that he is willing to give evidence against top-level government officials including Nazarbaev in a United States (US) investigation examining bribes by US companies to Kazak officials. Previously, Aliev released recordings to the opposition of phone calls allegedly made by top officials including Nazarbaev detailing bribes and physical retaliation. Currently he is a wanted man in Kazakhstan, tried in absentia and sentenced to 40 years in prison for a variety of crimes to include: illegal business activities, kidnapping bank officials, plotting a coup and treason. Until a year ago when he fell into disfavor, Aliev was flying high as part of the political and economic elite in Kazakhstan. He was serving as the Ambassador to Austria, a coveted diplomatic position, until abruptly fired, and was involved in various business interests. Aliev was married to President Nazarbaev’s daughter, Darigha Nazarbaeva who also promptly divorced him when charges were filed against him. Until recently, Aliev was considered a powerful man in Kazakhstan and served as a plausible and credible challenge to President Nazarbaev’s power. Both the Nazarbaev government and Aliev have made accusations of wrongdoing against the other.
The Nazarbaev Regime, Resources and Power
President Nursultan Nazarbaev largely considered an autocrat by both friends and foes has remained in power almost 17 years. Nazarbaev is a holdover politician from the old Soviet days and recently enacted legislation permitting him to run for the Presidency as many times as he desires, effectively a legal means to become President for life.
The political opposition is considered weak and ineffective and the media is tightly controlled by the state. A series of suspicious deaths of opposition members has occurred in recent years. In spite of its less than stellar democratic record however, Kazakhstan will hold the chairmanship of the Organization for Security and Co-operation in Europe (OSCE) in 2010.
Kazakhstan is becoming a large-scale energy exporter at a time when the international community needs new suppliers to meet growing energy demands. The Kashagan oilfield is considered one of the biggest discoveries in almost three decades. Bountiful energy resources and a strategic location in Central Asia have resulted in Western European, US, Russian and Chinese courtship of the Nazarabaev regime. The regime in turn has exploited these strengths as a bargaining chip with these different countries. However, foreign companies are purportedly finding it challenging to deal with the Kazakh government, which notoriously changes contract terms at will. Currently a dispute between a Western oil consortium and the Kazakh government over the Kashagan oilfield is ongoing. Adding to the difficult business environment, in 2007, Parliament passed a new law allowing the government to legally break contracts with foreign companies.
Repercussions of “Kazakhgate”
Taking place almost a decade ago, the events of “Kazakhgate,” the oil bribery scandal, is currently under investigation. The US has been conducting a very slow moving investigation. In Kazakhstan, it is a very sensitive subject and those media outlets that have reported the story have been subjected to vandalism or intensive financial investigations. If any of Aliev’s allegations are proven to be true, it will shine a very negative spotlight on the Kazakh government at a time when most countries are trying to engage the government.
One of Aliev’s alleged accomplices is a former security chief in Kazakhstan leading some to speculate that is how Aliev was able to procure damaging information against government officials. Adding a further level of intrigue to Kazakhgate is the revelation that the daughter of President Nazarbaev and ex-wife of Rakhat Aliev, Darigha Nazarbaeva hired US security consultants to monitor the US government’s investigation of Kazakhgate. Her motivations are unclear regarding this action. She may be genuinely trying to help her father, or trying to gain information to hurt her father, which would be further evidence of a power struggle within the ruling family.
Outlook
It is likely we will continue to see foreign economic and political courtship of Kazakhstan despite undemocratic government practices, scandals and corruption as well as difficult business practices. Kazakstan’s growing importance as an energy provider is likely to trump these other concerns. However, should any future power struggle envelop the country, it is likely we will see a period of instability in Kazakhstan which could affect access to this lucrative energy market.
