I. Executive Summary
On 10 January 1999, approximately 8.3 million citizens over the age of 18 years were eligible to elect the President of the Republic of Kazakstan. Under the Constitution of Kazakstan, the President enjoys enormous power and the term in office of the President has been changed to last until 3 December 2006. As a result, the election of 10 January 1999 will have crucial influence on Kazakstan�s political future.
On 13 October 1998 the Government of Kazakstan formally invited the Office for Democratic Institutions and Human Rights (ODIHR) of the OSCE to observe the election.
An ODIHR Needs Assessment Mission was in Kazakstan from 16 to 21 November. The Mission concluded that Kazakstan did not meet OSCE election related commitments in the pre-election process and that serious measures needed to be taken for the elections to meet the commitments. The Needs Assessment Mission questioned the possibility of ensuring the integrity of the process without postponing the election. Of particular concern were the refusal of the registration of two candidates because of minor administrative convictions; a media environment inadequate for a free electoral process; and allegations of intimidation of voters in order to secure support to the incumbent President.
Based on these findings, the ODIHR released a press statement on 3 December 1998 in which a postponement of the election was proposed. It was concluded that under the circumstances a full-scale election observation mission would not be launched. Instead, a limited election assessment mission would be sent in order to follow and report on the whole electoral process. No short-term observers would be deployed.
Despite the limited size of the election assessment mission, its activity did not substantially differ from a standard election observation mission during the pre-election period.
The OSCE/ODIHR Election Assessment Mission found that the election process fell far short of the standards to which the Republic of Kazakstan has committed itselfas an OSCE participating State. The areas of concern include the following:
� Duration of the election campaign. The timing of the amendments to the Constitution meant that the election took place earlier than previously scheduled. The period allocated for the election campaign did not allow for sufficient preparation by all prospective candidates given the circumstances that brought about these elections.
� Legislative framework. The election process is governed by the Decree of the President of the Republic of Kazakstan, Having the Force of Constitutional Law, on Elections in the Republic of Kazakstan (hereafter referred to as the Decree on Elections). An election law adopted by the Parliament following a public debate would enhance the credibility of the election process.
� Election commissions. The appointment of election commissions at each level are controlled by the President and appointed local officials. The method of appointment and the makeup of the commissions do not encourage public trust in the electoral process.
� Infringements on rights of citizens to seek public office. Of particular concern are the amendments to the Decree on Elections, disqualifying potential candidates who had received a minor administrative sanction for an �intentional offence� during the year before registration. This new provision was used to prevent the registration of two would-be candidates.
� Obstacles to freedoms of association and of assembly. The rights to association and assembly are unduly restricted through legal and administrative obstacles. Legislation has been used to impede the registration of a number of groups, including political parties, and to harass those involved.
� Campaign atmosphere. State authorities did not behave impartially and provided support for the election campaigns of some candidates, in particular the incumbent. There was no clear dividing line between state affairs and the incumbent�s campaign. Restrictions were placed on the campaign of some of the incumbent�s competitors through administrative measures.
� Access to the media. Both the state-owned and private media gave a disproportionately large share of the coverage to the incumbent. In general, the OSCE/ODIHR Election Assessment Mission is concerned with the media situation in Kazakstan.
� Voting procedures. The voting on election day was carried out in a calm and peaceful manner. However, there were credible reports of irregularities, including proxy voting.
The OSCE/ODIHR Election Assessment Mission found that the Central Election Commission is to be commended for:
� Logistics. The Central Election Commission�s plans and organisation for election day were well drafted and executed.
� Voter education. The Central Election Commission undertook a wide-ranging impartial voter education effort to inform the public about its rights, the biographies of candidates and the procedure to properly complete the ballot. The CEC should continue such efforts in preparation for future elections.
5 February 1999
II. Introduction
A. OSCE/ODIHR Election Assessment Mission
The ODIHR Election Assessment Mission officially started to operate upon the arrival of the Co-ordinator, Ms. Judy Thompson, seconded by Canada, on 14 December 1998. Mr. Vladimir Shkolnikov (ODIHR) was named Deputy Co-ordinator. The team included three logistical and administrative staff as well as ten international election and media experts.
The Election Assessment Mission was established in Almaty. However, another office with two international experts was opened in Astana, where the Government and the Central Election Commission (CEC) offices are located. In addition, long-term election experts were deployed to Shymkent, Pavlodar and Atyrau.
In order to inform the public on the activity of the Mission, a press conference was held in Almaty on 24 December 1998. The press statement explained that the Mission would not focus on election day, but would evaluate the electoral process as a whole.
Thus, the assessment included an analysis of the legal and administrative framework; voter education; the registration of the candidates; the campaign; and the media. There was no special emphasis put on election day; however, polling stations were visited to a limited extent. Details of the areas of the assessment have been compiled in this report. The Mission was in close contact with candidates and their representatives, the Central Election Commission and local commissions, governmental authorities, local NGOs and public associations, the media, international organisations and embassies of the OSCE participating States.
The ODIHR Election Assessment Mission prepared a preliminary statement, which was presented during a press conference on Monday, 11 January 1999. Before the Mission closed on 16 January 1999, the election experts met for a debriefing. The summaries of the experts� findings have also been incorporated into this report.
The new OSCE Centre in Almaty will provide a long-term OSCE presence in Kazakstan. Co-operation in implementing legislative and procedural changes to enhance the democratisation process should be an important part of the future of that centre.
B. Political Background
When the Republic of Kazakstan gained its independence after the collapse of the Soviet Union in 1991, the Supreme Soviet of Kazakstan elected Nursultan Nazarbaev to the post of President. His position as President was confirmed by a non-contested election that year. Previously, since 1989, Mr. Nazarbaev had held the position of First Secretary of the Communist Party in the Kazak SSR.
On 29 April 1995, President Nazarbaev�s term of office was extended to the year 2000 by a national referendum. In addition, his powers were strengthened by changes to the Constitution.
As in all other states of Central Asia, the new Constitution of independent Kazakstan made the President the focus of the political system. The 1995 constitution provided for the replacement of the Constitutional Court by the Constitutional Council, which does not have the mandate to consider cases brought forward by individuals. In addition, a frequency tender process for TV and radio broadcasters initiated by the Government in late 1996 resulted in a number of individual stations closing. These developments had a negative effect on this election campaign.
On 30 September 1998 President Nazarbaev addressed the nation in a speech about economy and democratisation. He stated that Kazakstan must become a supporter and symbol of democracy and human rights. Seven fundamental elements of democracy were outlined:
� The electoral process must be honest, representative and encourage the fullest participation of candidates and voters.
� The role of parties in the political system must be strengthened.
� It is necessary to strengthen and to provide autonomy for the Majilis (Lower House of Parliament) and Senate to have stability and the succession of power.
� The role of non-governmental organizations in building a civil society must be strengthened.
� An independent judiciary is a pillar of a democratic society.
� It is necessary to build on the already established record of a free, uncensored and independent press.
� Changes in attitudes to women must be made by increasing women�s representation in all branches of authority.
The President also stated that authoritarianism of any kind in Kazakstan is the road to nowhere. Only a free democratic society will be a guarantor of a stable and happy life. The contents of the speech encouraged widespread support for further democratisation.
On 7 October 1998, just one week later, the two chambers of Parliament agreed in a joint session on a series of Constitutional amendments. One day later, Parliament called early elections for 10 January 1999. Thus, the presidential election was to be held almost two years earlier than planned.
Since no public discussion had taken place on this issue, the Parliament�s decision caught the opposition parties and possible candidates by surprise. Various groups questioned the legitimacy of the amendments to the Constitution and the election call. The Constitutional Council decided that the Constitutional amendments were legal.
(To be continued)
Bakhytzhamal Bekturganova
President of the APSS
ALMATY, Feb 15
Information for thought
What do we know? Just a few things.
Let us mark the logic of the events:
- a conclusion arises from the Prime Minister�s announcement: the
government is going to cut the budget at the expense of pension payment.
- A conflict between the Parliament and the government is brewing about which both the government and parliament inform us ahead of time.
- - The government displays how ultimatistic is the decision and is planing to go through. The parliament in its turn expressed its indignation and readiness to sacrifice itself as a reckless �kamikaze�.
- Where it will come to? Most likely, the parliament will give a vote of confidence to the government.
- If the parliament approves the budget the incident will be exhausted. If not, a highest policymaker, the President, will join the play. The latter will either resign the government or dissolves the parliament. Now we have got to the main point. What is the President�s next pace?
- What does suggest a common sense?
At his inauguration the President promised: the first � to provide people with food, the second � to protect democracy.
Keeping his promises, the President, according to the common sense, should have stood for pensioners� protection (should be read �of the parliament�) and to punish the government because the latter is freezing all social issues to be solved. The logic of the current events suggests quite the contrary, though. The object of political manoeuvres � pensioners �is well turned. The purpose is a scandal. In the scandal environment all the measures are suitable, even a �tame� parliament might get out of the control and burst out into a crisis with following destabilisation. A crisis in the Parliament is a sound ground for dissolution and pre-scheduled parliamentary elections. The moment is very opportune. Registration of new opposition parties and movement is being slowed down. The opposition is completely demoralised and uncoordinated.
Meanwhile pro-presidential forces pull together in an united block. As soon as it gets legitimate we will learn about the election date. On the election threshold discontented opinions are not taken into account. Our life is just a reaction to situations. Our powers can skilfully treat it so that they are not responsible for consequences. A smart reader will grasp that it is just a remark. The things might happen other way.
Andrey Tsaluk
IRBIS Information Bureau of Financial Markets
Almaty
Specially for The GLOBE
The previous week�s developments in Kazakhstan�s currency market were exceptional in the context of the current year. Though a similarily exceptional week also occured last year at practically the same time. For a while the state of our currency market has been far more influenced by seasonable factors than the influence of political events or economic cataclysms. This is its undoubted advantage. The market has not suffered a �black Thursday� during its five years. But the market has seen both winter and summer. The thing is that it is usually cold at the market in summer and hot in winter. Spring, the period of rest after New Year passions is coming. It is a period of comprehension and the calculation of profits and losses. It is high time to answer the question: What will be in future?
Peculiarities of the present
moment
They are two, one arising from the other.
The first peculiarity may be characterized by a non-professional expression �one is full up�. The matter is about foreign currency � the US dollar. Huge sums of US dollars are being held both in bank accounts and by the population. As to the national currency, there is enough to satisify financial market operators. The question is how to make the tenge bring profits.
The US dollar, as a traditional financial instrument is not as attractive as before. Banks do not want to give the appropriate-for-seller price and may not sell it for the appropriate-for-buyer price. For a certain period of time, the National Bank controls both the so called net currency position and the authorized price for the hard currency of each bank, depending upon the amount of its registered capital. Such positions are �full� at the moment and the only thing for a bank to do is to speculate within certain fixed limits.
As early as January, it was quite easy for the local financial institutions to make a profit by buying and selling non-cash dollars from non-residents, due to the unstable situation of the currency markets. In addition, the population aggressively bought cash dollars to protect its savings from the uncertainty of the future and sold the local currency. In Kazakhstan, contrary to the USA the population must pay for goods and services in the national currency.
However, the relations with neighboring countries became more difficult due to the introduction of export-import limitations and additional duties and tariffs. Meanwhile the populations� fever for dollars slowed down after it saw just another �blunder�. This resulted in the situation in which the banks found themselves limited in their maneuvers. Consequently, the banks� attitude towards stock exchange currency sales also began to cool.
Figures
At the start of January, the per diem net turnover of stock exchange and off-exchange dollar market (the sum of purchase and sale, divided in half) in Kazakhstan made $40-50 million. By early February, this amount had been reduced to 23-26 million. By the end of the week, the figure had fallen to 18-19 million. Over the same period of time, the share of the stock exchange component of the market decreased from 24-27 % to less than one per cent.
In the week of February 08 � 14 of 1999, the AFINEX concluded twenty five transactions of dollars, for the total sum of $ 1, 310 000 and with the average turnover of trading session of $262 000. It was the third time since the tenge was introduced, that the turnover was even less than in the 35th and 36th week of 1995. The 3rd week of 1999 (11-15 January) was the eighth highest weekly stock exchange turnovers ($55.005 million). As a result, one may speak about the peculiarity of the moment in light of market contrasts.
The speed of the tenge�s devaluation against the US dollar, equaled 14.8 % per annum. The week before it totaled 7, 9 % per annum. The same calculation for the period from the beginning of the year to February 14 gave 15,4 % per annum, while the budget stipulated 10 % for the whole year.
This demonstrates the fact that the tenge�s devaluation does not depend upon the market turnover, the objective exchange and off-exchange demand and supply ratio. The market may be governed by this very ratio if it maintains the given devaluation rate without interference from the currency and tenge reserves of the Central bank. Otherwise the National Bank will back the market through dollar or tenge injections. Last week the NB interference appeared unnecessary.
Exchanges and Banks
Banks left the AFINEX for several reasons. �More-than-enough� dollar reserves is the principal one.
In the �election currency rush� period, the demand for the cash dollar on the part of the population was very high. Now it is gradually equilibrated by supplies from the population. In early January it was possible to buy the dollar for T84.0 from non-residents and peripheral banks and to sell it to them for T88.5 based on the prices of real transactions under the conditions of maximum market liquidity.
Now the spread does not exceed T0, 10-25, which means that it has been reduced 20 times. From October 1998 to January 1999, the dollar remained the effective financial instrument and the recommendations of dealing departments were the same � to purchase. However, when everybody buys the National Bank becomes the only seller. On the stock exchange and for a predicted price. Currently some banks sell while others buy currency, depending on the concrete scheme of their work. Next day the disposition may be quite different. This led to a situation in which the dollar supply provided by the second level banks made the currency reserves of the National Bank currency appear unnecessary. To buy or to sell dollars the banks do not need to participate in AFINEX trades, all the more the exchange charges commissions.
The second reason is that foreign banks are not entitled to work on the AFINEX, while de facto peripheral banks find it very difficult to do so - at any rate more difficult than Almaty banks. As is known, the efficiency of speculations in �close circle� reduces practically to zero. It is possible to get maximum from fixed currency positions only on the regional, and to greater extent on the international arbitrage. The share of dollar purchases of non-residents accrued in January increased from 43 % to 60 %, while the share of USD sold increased from 30 to 60 %.
If in the first decade, the banks followed the principle �to buy from the AFINEX and to sell on the off-exchange market for higher price�, the situation on the exchange has changed dramatically. The national Bank, interested in both the economy of currency reserves and in a certain tenge devaluation rate has set a very high price for the dollar. At least it is high from the point of view of local banks, which have more profitable offers from their colleagues here in the republic or abroad. Other potential buyers long for the US dollar exchange on the AFINEX to at least compensate their commissions. As a result, the exchange only fulfills the orders of banks� customers, while the banks get profits on the off-exchange markets.
Despite this situation, a stock exchange market exists. As paradoxical as it might seem, the AFINEX exchange rate is representative. The deflections of the off-exchange market average rates from KZT/USD on the AFINEX are minimal and do not exceed a few tiyns (1 tenge =100 tiyns). The stock exchange rate remains the main indicator and the most important guiding line of the market. Banks work on the floor bidding on both the purchase and sale prices. However the spread is too high to come to a compromise. As a result a trader leaves the market feeling the market potential and knows the price gap to work in during the day.
Banks and the National Bank.
The NBK position on the AFINEX is also quite clear. Being aware of the banks� dollar reserves, it makes attempts to provoke them to start massive sales of the American currency through fixing a high purchase price. If successful the bank will manage to replenish its currency reserves, most needed in the light of future crisis situations.
But the price is not high enough to bring necessary effect. Though the bank is not able to offer more without breaking fixed limits.
Spirits
Beginning in early February the share of currency transactions with non-residents has continued to fall. The author believes that this decline is connected with the introduction of imports from Russia, as well as a range of measures undertaken by the Central Bank of the RF to limit the currency position of Russian financial institutions. The consequences of the �trade war� with Kyrgyzstan and Uzbekistan have not yet been fully experienced. The speculative potential of the currency market continues to narrow. The arbitrage is less and less efficient. As a result, the dollar has become an unattractive financial instrument. In addition the National Bank has made short-term notes more profitable and consequently more attractive for the banks.
Meanwhile rumors abound that the IMF has recommended a more rapid devaluation of Kazakhstan�s currency than is stipulated in the budget.
The Parliament is about to review the budget. What will it be then? Foreign currency reserves sale in exchange of tenge is not the best way in such uncertain situation.
Future
It is obvious that forthcoming weeks will establish the mood of the market for at least the next month and a half. The IMF recommendations (if any) will be considered by the government and result in a number of decisions to be known in 2-3 days. The banks, including the NBK will not take any steps before this time.
According to the author, two scenarios are possible.
i) The government may refuse to speed up the devaluation of the tenge. Such a policy could provoke a massive sale of dollars by banks, allowing the NBK to replenish its currency reserves. In this case the tenge will remain stable till early March. The country will hope for the privatization efficiency and cut of budgetary expenses.
ii) The government could allow the tenge to depreciate by up to 18-22 % per annum. In this case, adequate preventive measures for the population must be taken, as the precedent of an underground currency rush has proved to be real and very dangerous in the past. In this case. the banks will not sell dollars, but will instead try to play on the accrued demand for the dollar on the part of the population. This may result in additional currency expenses for the country. By April the country would be forced to introduce the obligatory sale of the part of enterprises� currency profits on the stock exchange. It is in this period that the volume of the state securities redemption will reach its peak. It will be extremely difficult to neutrals such amount of tenge at such a time.
The author considers that the third variant � a devaluation of the tenge exceeding 22 % per annum is not acceptable for Kazakhstan and the government will not do this.
Translation � INSEL A.B.
Frankly speaking, sometimes I even feel proud to be a soviet man. Why? The answer is quite simple. We managed to overcome the terrible, really terrible 1990�s. We found out so many things, we had never met before. Let�s remember.
Everything was quite different in the soviet times - I often call it �a pre-war period�. The state governed all spheres of our life: pensions (one could solicit for pension raise), free of charge and universal education (there was at least a chance to obtain it) and 100 % employment. One could plan his life for 100 years beforehand: when to buy a dacha, TV set, spend holiday on the Issyk-Kul lake, and to defend a thesis �
Everything that now seems nonsense- party meetings, speeches of Brezhnev, trips to vegetable farms and to kolkhoz�, the iron curtain and one- film-per-week - was a natural and ordinary life.
But the 90�s came and all soviet people fell upon hard times. Self �responsibility appeared to be the most difficult to be reconciled to. I am not sure if all soviet people share my opinion, but I think the pre-war period was like a careless season in a pioneer camp. Certainly, my problems did not seem so easy at those times. But they were easy. Now I know it for sure.
We began to realize self-responsibility at the very start of the transition period. The only thing, which annoyed me in soviet times and annoys me now to an equal degree, is the shortchanging in shops. It was a law in any shop of a pre-war period: first they gave you short weight and then they cheated you in counting. Now they do not shortchange you any longer, but continue to cheat in weight. The Green Market is the sweetest place for this.
But, dear sirs, the traditions are still alive! Do you really know where you risk being cheated? You think in the Yuzhny or the Central department store? Impossible, as they are equipped with digital weights and advanced equipment able to read codes. There is no room for a simple shop assistant as in the soviet times. BUT, look in the magnificent cookery on Shevchenko street. What money are invested in such luxury - marble decors, overseas goods, wines, meat and other cookery masterpieces. But the weights are outdated as in soviet times. Here is the Soviet abundance and feeling of freedom.
The cookery�s owner is Raymbek Batalov, the well-known businessman. His father became one of the initiators in the Mazhilis of the extraordinary presidential elections. Maybe Mr. Batalov will advise his son to introduce electric scales in the cookery ahead of schedule, even though the Soviet scales were not completley outdated, nor had they lost their ability to be useful to people. Perhaps he will tell his son to raise the wages of his assistants simultaneously with introduction of digital scales? The cookery is really magnificent and deserves special care.
When I said to one of the assistants that she had given me incorrect change, her answer was the following: � All of that fuss, for merely three tenge.� Such Soviet inheritance irritates me a lot. What about you?
N. A.
Translation � INSEL A.B.
Naylya Kenzhalina
Almaty, Feb 14 (The GLOBE)
The newly organized Commission for Family and Women Issues under the President of the RK is ready to launch its activities in the near future, confirmed Aytkul Samakova, the Minister of the RK responsible for family and women�s issues on February 12. Ms.Samakova explained that the new commission would replace the existing counsel for the issues of women, children and demography under the president of the republic. In contrast to the counsel ,the commission will unify the representatives of women�s non-governmental organizations aiming at increasing women�s role in the state. The new commission will work in such spheres as women�s healthcare, the appointment of women to high public posts, business support for women, and childhood and motherhood protection.
Gulnur ORAZYMBETOVA,
ALMATY, Feb 12
(The GLOBE)
The World Bank will allocate $100 million to reconstruct the Almaty-Karaganda route, the bank�s representative said on February 12.
The total cost of the project, including contingency reserves totals $135 million. The long-term loan is to be paid in 20 years under a letter of guarantee from the government. When deciding on the loan the bank took into consideration both Kazakstan�s international rating and potential.
The Chairman of the WB�s regular representative office in Kazakhstan said that during the first five years, the country would pay an interest rate of only 3-8 % the rate is based upon the LIBOR system, which takes into consideration the countries� level of economic development.
The Minister of transport and Communications of the RK said that the interest of the bank in Kazakstan�s project contributed to the significance of the route at the international and regional level. According to Serik Burkitvayev, the national economic and social interests in the region were also taken into consideration.
When completed the route will connect China with Russia and Southern and Eastern Asia with Europe. The route is also to connect the north and the south� the two largest industrial centers of the republic. The direction is designed to considerably facilitate communications between the two capitals as an alternative to the railway. The route will contribute to the economic growth of the republic as a whole, enhance domestic and international trade development, and lead to job creation in the region. The government took all these factors into consideration and decided to co-finance the project through an allocation of $35, 7 million.
According to the Minister, in 1999 the project plan stipulates the conclusion of contracts on the tender basis on the supply of materials and equipment. Sums allocated will be assimilated during a 2001-2002 period. The construction will be launched in spring 2000. In winter all works will be suspended. The plan also stipulates that local companies will be granted the right of priority to conclude contracts. The project stipulates licensing for foreign labor force.
The WB representative paid special attention to the fact that the Almaty-Karaganda route restructuring attracted the Asian Bank for Reconstruction and Development and the Islamic Bank as well.
He also pointed out that the since Kazakhstan joined the WB, it received $1.75 billion to finance 17 projects.
Translation �INSEL A.B.