BTC opens up new opportunities for friendship with the US: Kazakh press digest

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Foreign policy

The past week was quite eventful. During the visit of South Korean Prime Minister Han Myung-Sook to Kazakhstan Kazakh President Nursultan Nazarbayev accepted the invitation to visit South Korea next year. An ICT business-forum took place in Almaty in the framework of Myung-Sook’s visit. The key objective of the forum was to present South Korea’s ICT policy and to inform about IT development in that country. The forum was also an opportunity for Kazakh and Korean businessmen to further strengthen their ties and carry out joint investment projects. Nazarbayev also received Russian First Vice Premier Dmitry Medvedev. The sides discussed urgent problems and the prospects of Kazakh-Russian cooperation in various directions. This week Nazarbayev is to pay an official visit to the US, where he is to meet with US President George Bush. Meanwhile, Kazakh Foreign Minister Kasymzhomart Tokayev is attending the 61st session of the UN General Assembly.

“Han Myung-Sook is the first woman-politician in the history of the Country of Morning Freshness. She was appointed Prime Minister in Apr 2006,” reports Liter daily. “This is her first visit to Kazakhstan. Myung-Sook said that she was satisfied with the results of the talks. She said that her visit was fruitful. The sides have agreed on enlarging their economic cooperation. If formerly they were focused on energy and housing construction, now, they will raise their relations to a new level.” Liter also reports about Nazarbayev’s meeting with Medvedev. “After a ‘tete-a-tete’ meeting Medvedev told journalists: ‘We have discussed various questions of Russian-Kazakh cooperation in all key directions of common interest: economy, trade and transport. We have talked about Kazakhstan’s experience in implementing big projects, particularly, the ones we are implementing in Russia,’ Medvedev said. He noted that the bilateral talks will be continued on a prime ministerial level during the borderline cooperation forum, to be held in Uralsk in early October.”

Liter also reports Kazakh FM Kasymzhomart Tokayev to have had a number of bilateral meetings in the framework of the 61st session of the UN General Assembly in New York: “The key topic of Tokayev’s meeting with UN Vice Secretary General — Executive Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP) Kim Hak-Su was the conduct of the ESCAP 63^rd session in Kazakhstan in 2007. Hak-Su pointed out that the choice of Kazakhstan as the venue of such a big international forum is not a coincidence but acknowledgement of its impressive achievements in social-economic and political reforms and of the fact that Kazakhstan has one of the most dynamically developing economies in the world.” With Executive Director of the UN Office on Drugs and Crime (UN ODC) Antonio Maria Costa “Tokayev discussed the practical cooperation between the Kazakh Government and the UN ODC against drugs trafficking in Central Asia, particularly, in Kazakshtan. Costa highly appreciated Kazakstan’s contribution to the fight against drugs-trafficking, particularly, the country’s efforts to set up Astana-based Central Asian Regional Information-Coordination Center for the Fight against Drugs-Trafficking.” With Argentinean FM Jorge Inrique Taiana Tokayev discussed “developing the promising directions of bilateral cooperation, interacting in the framework of the UN and its structures as well as organizing top-level contacts. Taiana said that they in Latin America know Kazakhstan as a successful state with dynamically developing economy and rational foreign policy.” The daily says that the agenda of Tokayev’s visit is quite eventful. “The Kazakh delegates will speak during the general debates of the 61st UN GA session and other top-level events. Tokayev will have almost 30 bilateral meetings with the foreign ministers of UN member states and heads of various international organizations.”

The 8th meeting of the CIS Coordinating Council of the Heads of the Tax (Financial) Investigation Services has taken place in Astana, reports Panorama. "Nursultan Nazarbayev met with the participants before the meeting and pointed out that Kazakhstan was one of the first in the CIS to adopt a law “On Fight against Corruption.” This summer alone 69 government officials have been dismissed because of bribery. The Coordinating Council was formed in the late 90s. At that time, the efficiency of interaction among CIS financial policemen was no more than 40%, today, it has almost redoubled. The Kazakh financial policemen have concluded agreements with their colleagues from Russia, Ukraine, Lithuania, Azerbaijan, Kyrgyzstan, Moldova, Turkmenistan and Tajikistan. The sides also discussed ensuring quick and effective cooperation on the border, jointly training and raising the qualification of personnel, holding joint decriminalization and anti-corruption measures.

“The chairman of the Coordinating Council, the head of the Economic Security Department of the Russian Interior Ministry Sergey Mescheryakov said that during the 8th meeting they will discuss opposing the legalization of illegal incomes and the sale of counterfeited products, detecting financers of terrorism, fighting financial-credit and tax violations,” reports Kazakhstanskaya Pravda. "Being this year’s chairman of the CIS, Nazarbayev is going to intensify the efforts to raise its efficiency. He urged “the sides not to rush to solve all problems at once but to focus on the biggest ones,” reports Panorama. "He is going to include migration, transport and communications problems in the agenda of the October CIS summit: “There is legal and illegal migration in the CIS and, like all civilized countries, we must put this problem on a legal basis, we must define the rights and duties of migrants. The second issue is transport and communications… I would like to include these two issues in the agenda of the summit so we can solve them and move forward with specific decisions influencing our relations, our economy.”

Panorama also tells its readers about the last 5th meeting of the prime ministers of the Shanghai Cooperation Organization (SCO) member-states in Dushanbe. Today, the SCO is focused on energy and business cooperation. During the meeting the PMs clearly specified the interests of their countries in multi-lateral cooperation. “Russia and Kazakhstan insist on cooperation in energy, transport, on enlarging the involvement of businessmen and banks. Russia’s priority is energy as in Tajikistan it is building Rogun and Sangtudin water power plants. During the meeting Kazakhstan also pushed forward the problems of energy security. There is ‘a documentary ground’for the Kazakh PM’s confidence — joint communique singed by all SCO PMs during the meeting. In the communique the signatories emphasize the importance of ‘special working groups on energy and ICT problems’ and ‘urge the competent authorities of the SCO member-states to consider the possibility of a joint conference of SCO energy ministers.’The communique expresses support for the idea of establishing an SCO Energy Club. A special working group on energy problems has been instructed to consider this idea and to make specific proposals to this end. The proposals will be discussed by the energy ministers during a special meeting in early 2007.”

On September 28 during his official visit to the US Kazakh President Nursultan Nazarbayev will meet with US President George Bush. During a briefing in the Ak Orda presidential residence, deputy head of the presidential administration-spokesman Mukhtar Kul-Mukhammed told journalists about the forthcoming visit. “Kul-Mukhammed said that the White House has released a special statement that the visit of Nursultan Nazarbayev is of special importance for Washington,” reports Liter daily. “The Huston initiative advanced by Nazarbayev during his visit to the US in 2001 and aimed at promoting small and medium-sized business, developing and diversifying our economy and making it competitive in the world has been a big impulse for Kazakh-US economic cooperation. Kazakh-US cooperation is consistently developing in other spheres. In 2000 the US and the EU helped to open regional ecological center and inter-department climatic changes center in Kazakhstan.”

Head of the Foreign Policy Department of the Kazakh Institute of Strategic Studies Askar Nursha told Central Asia Monitor about the preparations for Nazarbayev’s visit to the US: “The US Secretary of State, Vice President, a number of state and defense departments high-ranking executives for Central Asia have visited Kazakhstan since Oct 2005.”Nursha says that the growing activity of the US diplomacy in Kazakhstan reflects the changes it has made in its regional strategy in Central Asia in the last years. At the end of XX-beginning of XXI, most experts believed that in Central Asia the US preferred Uzbekistan. For example, in his Grand Chessboard Zbigniew Brzezinski proposed staking on Uzbekistan as Kazakhstan and Russia enjoy special relations. However, after the Andijan events of May 2005, the US grew cold towards Uzbekistan, closed its airbase in Karshi-Khanabad and lost the key military-political positions it got in that country as a result of the campaign in Afghanistan. As a result, Kazakhstan role has grown.

The daily gives the key indices of Kazakh-US economic cooperation: "As of today, the US is the leading investor of the Kazakh economy — a total of $12bln invested so far. It is the biggest index in Central Asia. In 2005 the US invested $759.5mln. In January-March aloneit was $607.5mln. Over 90 US companies have offices and 374 ones are officially registered in Kazakhstan. The Kazakh-US commodity turnover is steadily growing. In 2005 it was $1.870bln, of which Kazakh export was $666.02mln and US import $1.204bln. In Jan-June 2006 the index totaled $844.7mln: Kazakh export $260.55mln, US import $584.15mln. Energy is the key and traditional sphere of cooperation. Now that Kazakhstan has opened the Kashagan field, it will be much more active on the international energy market. The priorities, long-term goals and practical measures of the US-Kazakh energy cooperation are specified in the Declaration on Energy Partnership, signed during Nazarbayev’s Dec 2001 visit to the US. Kazakhstan’s joining the Baku-Tbilisi-Ceyhan (BTC) project has opened up new opportunities and prospects. At the same time, they in Kazakhstan would like the US to actively invest not only in mining but also in processing. The sides are presently negotiating for involving US capital in the development of Kazakhstan’s oil-chemical industry.

Before the Kazakh President’s visit to the US, Business Week daily reminds its readers about the fate of the family of Kazakh resident Asel Abdygapparova, who have sent an open letter to Nazarbayev. Former professor of San Antonio University, Abdygapparova was sentenced to life in prison in the US. Her family says that Asel is innocent. They ask the President to solicit her return home. The daily says that Nazarbayev could do it.

Economy

Not only tariffs are growing in Kazakhstan — despite world forecasts, USD is getting stronger in the country. Izvestia-Kazakhstan daily analyzes this phenomenon. The head of the conversion operations department of ATF-Bank Nurteli Nayteliyev says that this is due to a change in the National Bank’s tactics on the currency market: “I think the rise is also due to exporters. They lobbied the rise as it was no longer profitable for them to export goods to Kazakhstan, i.e. there was a threat that the key exporters, particularly, Russian companies, could leave our market because of losing big money because of strengthening tenge. As you know, Russia is our key exporter.” “Bayteliyev says that the USD exchange rate will most probably continue to grow due, particularly, to seasonal circumstances: harvest and export of agricultural goods, for example, wheat.

”One more topic is the Kazakh President’s business offer to the Ex President of the World Bank. Business Week daily reports Kazakh President Nursultan Nazarbayev to offer Ex President of the World Bank James Wolfensohn the post of development advisor at the Central Asian Financial Center, to be opened in Almaty. The daily says: “… Wolfensohn may like the Kazakh President’s offer to start actively working for the financial welfare of Asia (with the center in Almaty). As to the salary, as WB President, Wolfensohn got $220,000 a year, with no taxes. In the White House he got $160,000-170,000, but there he had to pay taxes. The Kazakh Government can easily pay ‘the Australian Swede’as much, especially as Wolfensohn may attract to Almaty big financial companies from America, Western Europe and Asia. Besides, Wolfensohn has personally said that, at the present stage, Asia has the best potential for economic and financial development. So, should Wolfensohn happen to agree to come to Almaty to work for Kazakh tenge, this will be good not only for him but also for those who have planned this center especially for him. Will Wolfensohn agree to it? We will know it only after Nazarbayev’s visit to Washington. There the two presidents — present and former — will dot all i’s.”

Prospecting Extraction KazMunayGaz, daughter company of the KazMunayGaz (KMG) national oil-gas holding, has made public the price range and the estimated results of its IPO. In its release, PE KMG announces an indicative price range for ordinary share and offers for sale recently bought (placed) ordinary shares in accordance with the global supply price range. The company is doing this for redistributing and stabilizing its shares, reports Panorama. “During a press-conference in Almaty Director General of PE KMG Askar Baljanov said that the global supply prices will range from $12.75 to $14.75 for GDR and from 9,649 tenge 71 tiyin to 11,163 tenge 39 tiyin for ordinary share.”

One GDR is 1/6 of an ordinary share, which means that the global supply will total $1.9bln (240bln tenge), with redistribution shares exclusive, and the company’s market capitalization — $6.1bln (774bln tenge) if all shares are distributed at the average price of the global supply price range. The global supply of ordinary shares and GDR will consist of 23,086,791 to-be-placed and 3,463,019 already-placed shares, sold by KMG as redistribution shares. KMG is supposed to sell this quantity of PE KMG placed shares (15% of the global supply) to underwriters with a view to redistribute and stabilize both ordinary shares and GDR. Under this redistribution scheme, KMG will provide underwriters with the following option: within 30 days they will be able to sell back to KMG the ordinary shares or GDR bought on the market as a result of stabilization activities. The press-release says that “the ratio of placed ordinary shares and GDR offered for redistribution and stabilization may not coincide with the ratio of ordinary shares and GDR offered for placement or sold during global supply.”

Meanwhile, one more “daughter”of KMG — KazTransGaz (KTG) — says that it is ready to invest 2bln EUR in the reconstruction of 2 and the construction of 8 power plants in Bosnia and Herzegovina. Panorama reports that KTG has been invited by the Energy, Industry and Mining Ministry of Bosnia and Herzegovina to take part in new investments projects in the energy sector of that country. “If KTG gets energy business in Bosnia and Herzegovina, it will be its third project abroad. To remind, over a year ago KyrKazGaz — joint venture of KTG and KyrgyzGas (50%/50%) — undertook trust over the assets of the Kyrgyz section of Bukhoro gas-bearing region-Tashkent-Bishkek-Almaty and in the spring 2006 KTG bought a gas distribution company in Georgia for $12.5mln. Earlier KTG announced plans to take part in energy projects in Ukraine.”