“To depend on Russia is a heavy burden”: Kazakh press digest

Read it in Russian

Last week the Kazakh authorities showed very high international activity. Karavan reports that a big delegation of Kazakh officials visited Baikonur “to find out why human rights are violated there.” “The delegates met with the head of the Baikonur administration Alexander Mezentsev and the heads of the social structures of the Russian administration. The key topics were pensions, social programs to protect the poor, employment, pre-school and secondary education, health care.” “Let’s hope that the visit of such a high-level delegation will help to improve the conditions of Kazakh citizens in Baikonur,” says Karavan.

On May 16-17, a Kazakh governmental delegation led by Economy and Budget Planning Minister Karim Masimov visited the Russian Federation. Kazakhstanskaya Pravda reports that the objective of the visit was to discuss the implementation of the instructions made by the Russian and Kazakh presidents after President Nazarbayev’s April 3-5 visit to Russia, the preparations for the Russian-Kazakh presidential meeting in Sochi and the organization of a forum of the borderline regions of Kazakhstan and Russia with the participation of presidents Nazarbayev and Putin.

Reporting about the last week’s 5^th “Wing of Eurasia” youth information forum in Moscow, Kazakhstanskaya Pravda says: “Over 100 journalists from Kazakhstan, Russia, Kyrgyzstan, Poland, Mongolia and other countries gathered in Moscow to exchange experience, to learn from their older colleagues and just to make new friends,” says the daily. Meanwhile, the Kazakh president spent his one-week holiday in Turkey. In Antalia Nazarbayev met with Turkish Prime Minister Recep Erdogan. Press office of the Kazakh president reports the sides to stress the necessity of increasing cargo turnover and improving the railroads Almaty-Istanbul and Actau-Baku-Tbilisi-Kars-Istanbul. The sides also discussed the possibilities of investments cooperation in the energy sector. Erdogan said he would make necessary instructions on all the initiatives of the Kazakh side. He also invited Nazarbayev to take part in the July 13 official launch of the Ceyhan section of the BTC pipeline.

Meanwhile, Russian media report that, as CIS chairman, Nazarbayev has been invited to the mid-June G8 Summit in St. Petersburg. Komsomolskaya Pravda-Kazakhstan says: “No other CIS leader has been invited to this informal forum.” The daily assumes that it was the initiative of Russia — this year’s chair at G8 — to invite Nazarbayev to the summit. “We think it is not just an invitation. We are sure Russia has a hand in it — never before has President Nazarbayev been invited to G8,” says the daily and notes that Nazarbayev’s press service was quite unaware of his invitation to the summit and could not give any details.

Meanwhile, Kazakhstanskaya Pravda notes that the G8 summit is held at exactly the same time with the jubilee summit of the Shanghai Cooperation Organization. This year is really special for the SCO. “The organization is five years old but the idea of SCO is twice older. In 1996, five countries met in Shanghai to sign a historic agreement on strengthening military-political confidence on border. Initially meant for solving border problems, the ‘Shanghai Five’ – Kazakhstan, Russia, China, Kyrgyzstan and Tajikistan – has grown into a dynamic and influential international organization.” The daily says that “the forthcoming summit may consider full membership applications by some observer-countries.” "However, Kazakhstan has its own position on this issue, clearly expressed by Kasymzhomart Tokayev (Kazakh FM — REGNUM). He says that as an ardent advocate of integration of ideas, Kazakhstan will continue actively supporting the SCO’s initiatives to raise its potential and authority. However, Kazakhstan advises to refrain from enlarging the SCO for the time being as the organization has neither legal basis for admitting new members nor criteria for providing observer status.

The OSCE Permanent Council met in Vienna on May 16, a day before considering Kazakhstan’s candidacy for OSCE chairman in 2009. Karavan says: “First Deputy Foreign Minister, Special Representative for Cooperation with the OSCE Rakhat Aliyev said that Kazakhstan has become the first country in the OSCE Eurasian responsibility area to nominate itself for OSCE chairmanship.” The daily reports Aliyev to tell the council about the key aspects of the internal and foreign political situation in Kazakhstan as well as with President Nazarbayev’s address to his people concerning “Kazakhstan’s Strategy to Become One of the World’s 50 Most Competitive Countries.” A day before the state commissioner for democratic reforms in Kazakhstan, the leader of Ak Zhol party Alihan Baimenov, MP from the Asar party Sergey Kiselyov and the director of the International Freedom Network NGO Rashid Nugmanov held a briefing for all OSCE ambassadors to tell them about political situation, economy development and social programs in Kazakhstan.

Black gold

Over 1,000 dead sturgeons and 95 dead seals were found on the Caspian Sea shore near the Kalamkas oil field in early May. And last week ecologists detected an oil leak in the north-eastern part of the Caspian Sea. The oil spot was found during planned examination of inoperative wells. Express-K reports Atyrau ecologists to have made an unpleasant discovery: they have found a 10 km long and 2 km wide oil spot around inoperative wells at the Pribrezhnoye oil field. Express-K has learned that “this problem dates back from the 60-70s of XX. It was exactly then that almost 1,500 oil wells in the Kazakh section of the Caspian Sea were capped as unpromising. Then the sea was very shallow and nobody imagined that the well might ever go under water, i.e. into something much aggressive than air… Now there are 140-150 wells under water, but if the sea level goes higher, this number may grow to some 1,500. Their ‘caps’ will not be able to stand sea water for long with all ensuing consequences.” Kursiv daily says that “the commission has not found out yet which well caused the leak as there are 167 underwater wells in the area.” The daily reminds that a similar emergency took place at Pribrezhnoye two years ago. The leaking well was stopped in 2005 – stopped but not liquidated as required by the tender of the Kazakh Energy Ministry’s Geology Committee. “If examination shows that the leak is from the recently liquidated well, there will certainly be a scandal,” says Kursiv.

Kazakhstan declares transparency of the use of natural resources. This is one of the ten priorities the Kazakh president mentioned when recently informing his people about his strategy to make Kazakhstan one of the world’s 50 most competitive countries. At the same time, transparency of extraction is one of the country’s key problems today. Business Week reminds that in 2002 during the Johannesburg World Summit on Sustainable Development British Prime Minister Tony Blair came out with the Extractive Industries Transparency Initiative and urged the governments of all extracting countries to join it.

“Speaking at the Asian Community business conference in Almaty on June 14-16 2005, the Kazakh president said that Kazakhstan also supported the British initiative. On October 5, 2005, during the KIOGE-2005 annual oil-gas exhibition, Kazakh MPs, NGO representatives, 24 biggest oil-gas companies and Energy and Mineral Resources Minister signed a mutual understanding memorandum on implementing the Extractive Industries Transparency Initiative,” says the daily. It reminds that as of today 38 companies have joined the initiative in Kazakhstan.

At the same time, some economists say that the Kazakh owners, including the state sector, hold only 8%-10% of the country’s oil-gas companies. “Last year they ensured only 15% of the total oil and gas output in the country. The remaining 85% was produced by foreign owners. Some extraction sectors are fully in the hands of foreigners. The natural question is who do those companies work for? How much do they pay in taxes?” Business Week gives the example of Mittal Steel Temirtau. “In its strategy the company’s owner, Lakshmi Mittal – an entity protected by Kazakh laws and governmental decrees – seems to seek not to develop the company but to use all of its resources in order to get as much profit as possible.” The daily says that in 2003 the tax load factor of Ispat Karmet (Mittal Steel Temirtau) was 1.3% and in 2004 2.3%. In mining and metal articles production this index was 9.4% in 2003 and 10.9% in 2004. In other words, the company’s tax load factor was 5-7 times lower than the average index in the sector. Hence, the refusal of Mittal Steel Temirtau to join the Transparency Initiative was not just regularity but owner dictatorship regularity.

The Kazakh authorities do not want to change their old contracts with foreign investors, says Business Week. That’s exactly why they refuse to allow to force the companies into signing the memorandum. Meanwhile, the oil and energy companies of Kazakhstan are uniting under the aegis of KazEnergy, a non-governmental association set up quite recently by the vice president of the KazMunayGas national oil-gas company Timur Kulibayev, the president’s son-in-law. Komsomolskaya Pravda-Kazakhstan reports that 14 companies have already joined KazEnergy, including big oil companies Chevron, Shell Kazakhstan, ENI Spa, PetroKazakhstan, LUKOIL Overseas and power engineering companies KEGOC, KMG-Energo. “…One of KazEnergy’s key tasks is to protect its own interests in the parliament and the government, to take part in the discussion of new bills, to hold roundtables and seminars about oil, gas and energy,” explains the daily.

In its turn, New Generation daily wonders “what Ilham Aliyev meant by saying that the BTC does not need Kazakh oil.” “While officials of all kinds were trying to convince us that there are no serious problems between Azerbaijan and Kazakhstan, Nursultan Nazarbayev told Georgian President Mikhail Saakashvili where the rub is: Kazakhstan objects to the tariffs. Oil men admit that the BTC is more expensive than the CPC. In general, tariff problems are negotiated by working groups, while here we deal with contradictions on top level: the Kazakh president speaks about tariffs, the Azeri president says he does not need Kazakh oil. This means that the problem is not just money. Quite probably, Aliyev’s attack was a response to Astana’s behavior: today we want to sign, tomorrow – not. This indecision has quite obvious reason: for 1.5 years already they in Moscow have been mulling over the CTC, a project that is really crucial for Kazakhstan’s oil industry. Probably, the Kremlin is pressuring Astana by saying that they will enlarge the system and provide beneficial terms only if we quit our Caucasian projects. Or even simpler: in the CPC too there is variance on tariffs. And in order to get better terms in both projects, Kazakhstan is keeping both sides in tension. This is certainly a big nuisance for Baku as the BTC is vital not only for Azerbaijan — it is, probably, the world’s most important energy project at the moment.” The daily is sure that the sides will agree. “Without the Kashagan oil the BTC will become a useless piece of metal in some 5-7 years, while Kazakhstan strongly needs new routes. To depend on Russia is a heavy burden for it.” “They have much in common – those two young states with big oil reserves and big ambitions. What they want now is to show who is ‘cooler’ and whose name will become a synonym of the ‘Caspian oil’,” concludes the daily.