A post-crisis Kazakhstan: economic and social transformation

Prerequisites for Protests

The widening gap between what can be considered economic successes and the low quality of life that the majority of the population must endure, coupled with a super-concentration of national wealth in the hands of the elite and an economy based on resources that depends on big international companies and the situation on the world market, seem to have become the main social and economic prerequisites for the powerful protests that gripped Kazakhstan in January 2022.

Following a major transformation crisis after the collapse of the Soviet Union, Kazakhstan has been banking on developing the production and export of mineral resources, reviving its economy and achieving impressive successes – a trend supported by a wealth of mineral resources, numerous foreign investments and favorable economic conditions. situation in the world market. Yet average salaries and incomes in Kazakhstan lag significantly behind countries in Eastern Europe or Russia, which follow a similar development trajectory. In addition to low salaries and incomes, high unemployment (around 5%) and self-employment (as of 3rd quarter of 2021, Kazakhstan had 2.13 million self-employed workers) stand in the way of sustainable economic growth. The income of a large part of the population does not last more than from one payday to the next, which forces them to take out loans, thus increasing the debt burden of the population.

Kazakhstan’s uneven socio-economic development is particularly evident when disaggregated by region. Unemployment remains highest in southern Kazakhstan, Almaty and Shymkent, as well as in the Turkestan region. More than half of the self-employed are also concentrated in the south. On the other hand, Kazakhstan is facing a rather urgent housing problem. More than 2.5 million people, or 14% of the total population, need better housing. At the end of 2020, housing per capita was only 22.6 square meters. Again, broken down by region, the situation is the worst in the densely populated south. For example, per capita housing is 17 square meters in Jambyl region, 18.7 square meters in Turkestan region, 20.2 square meters in Amlaty region and 20 square meters in Almaty. Moreover, more than 40% of those who live in the big cities of Kazakhstan are tenants. The COVID-19 pandemic has exacerbated the situation for many Kazakhstanis. Loss of employment, illness and death of loved ones, rising prices of goods and services have only aggravated an already difficult socio-economic situation. For example, rental prices in Almaty increased by 30% in 2020-2021.

The three factors of civil activity: NGOs, blood ties and extremists

The January protests in Kazakhstan manifested a wide geographic reach while growing at a breakneck pace. For a few days, literally, rallies and riots spread across 10 regions, with some regional authorities losing control of the situation. The post-Soviet period in Kazakhstan saw the emergence of a number of network structures, those that served as the basis for the rapid self-organization of the population during the riots, nationwide.

First, there is a network of non-governmental organizations, which have developed in all regions over the past 30 years. Government data suggests that some 22,000 NGOs were registered in Kazakhstan in 2020; among them, 16,000 were very active, involving hundreds of thousands of people in their activities.

Second, blood ties remain really strong in Kazakhstan, especially in the south and west, allowing for quick rallying of friends and all extended family in times of need.

Third, a network of underground Islamist groups has formed in Kazakhstan over the past 10 to 15 years. Some of them have been actively involved in attacks against law enforcement and authorities.

In addition, Kazakhstan has a large network of organized criminal and semi-criminal groups. Almaty and its region are plagued by crime, with one in four crimes in Kazakhstan committed there. In total, southern Kazakhstan, where the most violent riots took place,accounts for some 43% of crimes committed across the country. Almaty and Shymkent, the largest cities in the south, have the highest crime rates per capita.

In addition, southern Kazakhstan is an area of ​​complicated inter-ethnic relations. Over the past ten years, it has experienced dozens of inter-ethnic conflicts, some of which have turned into major clashes and have resulted in casualties. For example, in 2015 the Kazakhs had a conflict with the Tajiks in the Turkistan region; in 2016, a similar situation occurred with the Meskhetian Turks in the Jambyl region, while another clash in the Jambyl region unfolded in 2020, this time with the Dungans.

The agrarian reform rallies from April to May 2016 provided an example of a large national demonstration. Despite a ban by the authorities, around 20,000 people in a dozen Kazakh towns took part in the protests, as most of these towns became the center of anti-government rallies in January 2022. Another example can be provided by the rallies in Nur-Sultan and Almaty after the announcement of the result of the 2019 presidential elections.

In any case, January 2022 witnessed an attempt to ride the wave of spontaneous popular protest and use it to achieve political goals. A whimsical mix of desperate citizens, political activists and radicals, Islamists, criminals and fringe elements of all stripes provided the right mix for the “Molotov cocktail” that blew up Almaty and a number of other regional centers in Kazakhstan.

Consequences of the events of January 2022

For Kazakhstan, a transformation of its economic model should become the crucial consequence of the January riots. Kazakhstan’s post-Soviet economic model was based on several principles. This includes a priority focus on the extractive sector, primarily its oil and gas producing industry, where foreign companies play the main role; a policy aimed at attracting more foreign investment, which was previously truly multi-vector, with the United States, certain European countries, China and Russia investing in Kazakhstan; and a large quasi-governmental sector with the family of Nur-Sultan Nazarbayev controlling the most valuable of assets, directly or indirectly. Despite declared adherence to a neoliberal course throughout the post-Soviet period, the state remained Kazakhstan’s largest employer.

The first signs of failure of this model appeared at the end of the 2000s. In 2015, however, Kazakhstan achieved major successes: it was the second largest economy in the post-Soviet space, overtaking the states of Eastern Europe in its economic development. The World Bank says GDP per PPP in Kazakhstan ($25,877) in 2015 was comparable to figures for Poland ($26,135), higher than in EU states like Latvia ($24,286), Croatia ($21,880), Romania ($21,403) and Bulgaria ($17,512). By the end of the 2010s, the situation had changed and the pace of development in Kazakhstan had slowed down considerably. According to the World Bank, Kazakhstan’s GDP in PPP terms in 2020 was USD 26,729, significantly lower than the figures for Latvia (USD 32,019), Croatia (USD 28,504) and Romania (USD 31,946), and only slightly higher to those of Bulgaria (24,367 USD). Over the past 15 years, Kazakhstan has gone through two economic crises (in 2007-2008 and in 2014-2015), which led to a triple devaluation of the national currency. At the same time, Kazakhstan faces rising prices, reduced construction, industrial manufacturing and foreign trade volumes, and a plethora of social problems. The pandemic has dealt another blow to the economy.

Today, Kazakhstan is going through an acute crisis of its economic model, the foundations of which are still based on the expansion of exports of mineral resources and the development of the consumer sector at the national level. With many post-Soviet states (Russia, Azerbaijan and Turkmenistan) possessing significant mineral deposits, Kazakhstan in the 2000s, amid explosive growth in hydrocarbon prices, built an economic model based on resources that allowed him to achieve impressive success.

However, the conclusion of the resource super cycle in world markets, the economic crisis in Russia and the slowdown in the economies of China and the EU have closed the chapter on the development of this model. The main objective to date is to develop non-resource exports, privatize state and quasi-state economic sectors, increase people’s incomes, create market niches in old markets and exploit new new markets. During the transformation of the economic model, the influence of the family of the first president of Kazakhstan on the economy will gradually decrease, while large foreign (mainly Western) companies will retain their position and Russian companies will increase their influence in Kazakhstan .

From our partner RIAC