Andrew Tsaluk
Information agency on financial markets (�IRBIS)
ALMATY (Specially for THE GLOBE)
Questions
Almost all of my meetings with the acquaintances and close friends, provided that we haven�t seen each other for a long time, now begin something like this:
-Hi! As an expert of all things, in your opinion will the crisis crack or not?
- Which crisis?
- You astonish me. Everybody knows that�
- The fall of tenge? Something wrong with the securities or prices? Or maybe people have started shooting at each other in the streets?
- I don�t know, you are more knowledgeable than I. When will the situation worsen?
- Do you think that everything is all right now?
- Well, they say the worst times are coming soon.
Difficult questions and difficult answers. With August of 1998 came the unprecedented strife, which however does not signify an approaching cataclysm.
The business media, as if urging the authorities to concrete answers and prognoses, holds wide discussions on the new ill-based budget, the merits of the devaluation of tenge, and the dubious opportunities to monetarize the economy though the emission of money. The professional participants of the securities market are anxious about the fate of the �blue chips�, which they are so eager to buy. As a result, the officials� statements on the subject are of paramount importance to them. Pension Funds and companies in charge of pension securities hestitate to �get off � the euro-notes, even though they have proven less profitable in comparison with MEKKAM and especially with the notes of the National Bank. Banks are also unable to decide what to do with dollar, as the dollar�s speculative potential becomes less impressive. The population cannot but worry in the same way. And there emerged a new strange word - �euro�.
The trade unions say the new budget shall be unpopular with the people. The authorities, cannot help anything. At the press-conference on February 17, the finance minister did not offer an overt explanation concerning the rate of devaluation and possible emission of tenge. Rather, he preferred to analyze the opponents� views.
Facts and tendencies
During the eighth week, 26 deals on USD were concluded in the AFINEX. A total of $1,585,000 changed hands, with the average volume of the trade session of $317,000. In the previous week, 25 trade operations brought $1,310,000 and $262,000 respectively. So the banks� activity at the stock exchange somehow increased, though not reaching the levels of the beginning of the year. The turnover of the currency market lowered by 200%. Now the turnover of the outside inter-banks sector equals approximately $15 million per day.
The interrelation of dollar turnovers of both stock exchange and outside sectors makes it possible to conclude that the banks are not radically changing their strategy. Rather, the banks prefer to retain their available currency positions to take advantage of the fluctuations of dollar prices.
It is interesting to note that banks continue to �narrow� their currency positions, i.e. they convert part of their securities into tenge. The currency market has become less liquid.
In other words, as the banks await the outcome of the current indefinite situation; they are carefully converting tenge into short-term notes of the National Bank.
Answers
No answers at the moment. The current situation is most favorable for the devaluation rate of 10.2% per year with minimal usage of the currency reserve. It is necessary to peg the tenge to the dollar at the early March level. But the National Bank, satisfied with the trend of an annual 12-15% does not want to do it. The authorities do not seem to have arrived at any decision.
Rumours abound of an early parliamentary election. It is high time to reflect upon those persons who might take an active part in a campaign. Potential candidates include not only leaders of different political parties and movements, but also those who oddly emerged and failed in the past presidential election, such as senator Engels Gabbasov, Communist Serikbolsyn Abdildin.
As for Gani Kasimov, he deserves special attention. Mr. Kasimov had left the political scene, and it is unclear whether he can retain his position as the Chairman of the Customs Committee. This most exotic candidate explains his absence by a disease. This correspondent interviewed him at one of the Almaty sanatoriums where he is recovering after a serious surgery.
Gani Kasimov shared his opinion on the following issues:
1. About coming parliamentary election.
�I was strongly effected by the operation�I must have some time to recover. When I�ll be well again it will be possible to attempt something. Will it be with a party or a movement, I don�t know. But I can only participate if the parliamentary election campaign begins at the appointed time and is not premature. Such a development would be a repeat of what we had already seen: forgery of ballots and so on�.
2. About the political situation after the presidential election.
�The situation worsened. The government infringed upon the legal social rights of the population. Pensioners are driven to despair, and our president is strangely silent about it�.
3. About our �new� government.
�This is a team of petty merchants and incompetent bankers. They don�t want to pay attention to the people�s needs. They just share money among themselves through their commercial structures; it�s the only thing they are interested in. Agriculture has become really abject�
4.About the way out.
�We must get rid of such government and attract great intellectuals to lead the country. I also mean such oppositionists as Petr Svoik, leader of the �Azamat� movement and Seidakhmet Kuttykadam, journalist. Irina Savostina, leader of the �Pokolenie� movement, would be useful in the sphere of Social Care. And how could we not count on the great potential of Serikbolsyn Abdildin!�
5.About myself.
�I have no illusions about myself. They will never offer me a high government post. But I won�t work abroad. I want to change everything here in my country�.
6. About the Customs Committee.
�The Customs Committee is crushed. The ignorants have been appointed. That was the initiative of the Ministry for the State Revenues, of course�.
7.About banning Russian imports and 200% duties for Kyrgyz and Uzbek ones.
�That was a wrong step. Why didn�t the Foreign Ministry try to interfere?..�
8. About Oljas Suleimenov.
�I especially esteem him. He is Kazakhstan�s glory. He made the Kazakh famous. I am glad that he is once again based in Kazakhstan. It�s the right time for him.
9. About the people.
�Ordinary people are dear to me. I would like to make things better for them.�
Kulimkhan Khasenova, the correspondent
(Continued from # 13(331), 14(332))
IV. Pre-Election Activities
B. Freedom of Association
The Constitution of Kazakstan guarantees freedom of association. However, during the election period, the authorities restricted this freedom in some cases. The Law on Public Associations allows for only one founding meeting of a public association before the association is registered with the Ministry of Justice [Art. 10]. Other meetings are not allowed and carry an administrative sanction.
Some human rights and other NGOs in Kazakstan have faced problems with registration in the past and the authorities appear to have the ability to delay registration. No explanation is required if the registration is denied. Some members of these groups have reported harassment by the police for their involvement. These measures tend to discourage the right of individuals and groups to establish political parties and organisations.
On 5 October 1998 the NGO For Honest Elections, which had been unable to register for technical reasons, held a meeting attended by Mr. Kazhegeldin. Consequently, Mr. Kazhegeldin received an administrative sanction, lost an appeal in the Supreme Court, and was barred from entering the Presidential race. The zeal with which this case was prosecuted leaves the appearance of being politically motivated since only a selected number of those who attended the meeting were charged. The Kazhegeldin case also points to the lack of an upper court (such as a Constitutional Court) able to consider complaints from individual citizens. The existence of such a court would enable an inquiry into whether relevant provisions of the Law on Public Associations and the 8 May 1998 amendments to the Decree on Elections contravened constitutional guarantees of freedom of association and the right to seek public office contained in the Constitution, OSCE commitments and other international human rights instruments.
C. Campaign Environment
The unexpected timing of the elections coupled with the onerous requirements to register meant that the period left for campaigning was short. The campaign lacked political discussion and debate. The political party system in Kazakstan is weak and there was a noticeable disinterest by the public. Trade union leaders cited concerns for jobs if they attended political meetings and students expressed the fear of losing scholarships if they became active in politics.
One candidate, Senator Gabbasov, had a low-key campaign with no rallies and a limited number of press interviews. Mr. Kasymov�s campaign featured personal appearances at public places and impromptu speeches before selected social groups (e.g. street traders). Mr. Kasymov used a public building, facilities of the State Customs Committee, for his campaign headquarters. It does not appear that any rental fee for the building was paid.
Mr. Abdildin, the head of the Communist Party, had a number of meetings around the country. On more than one occasion, Mr. Abdildin was denied access by local authorities to public buildings, which his campaign staff had reserved. While the Central Election Commission assisted the Abdildin campaign in securing the return of the deposit for one building, an opportunity for a speaking engagement at this location was lost. The persons responsible for this infraction were not punished. The candidates, other than the incumbent, also had difficulties getting access to universities and work places for meetings.
After having been banned from running for the Presidency, Mr. Akezhan Kazhegeldin embarked on organising a political party, the Republican People�s Party, with the aim to participate in the Parliamentary Elections of 1999. The Republican People�s Party also called on its supporters to vote for none of the candidates appearing on the ballot in the Presidential elections. The founding congress of this party took place in Almaty in mid-December 1998. There was very little coverage of it in the media. Some organisers of the congress were harassed at its conclusion by individuals claiming to be plain-clothes police and were later called to court. The Republican People�s Party was not granted registration prior to election day and thus could not assemble again due to the restrictions posed by the Law on Public Associations.
The incumbent, Mr. Nazarbaev, who was campaigning under a slogan of continued stability, appeared to have no problems in conducting his campaign. Large billboards featuring the incumbent were ubiquitous around the country. Kazakstani and Russian rock stars toured the country with concerts at which the artists encouraged the audience to vote for the incumbent. The incumbent embarked on a vigorous campaign schedule and his appearances were widely covered by the media.
There appeared to be no clear dividing line between state affairs and the campaign of the incumbent. Many state bodies announced and publicised, by displaying large banners on their buildings, their support for the incumbent. Individual heads of state institutions, such as departments of state universities or military units, wrote letters to newspapers pledging their institutions� support for the incumbent. Printed messages urging passengers to vote for the incumbent were distributed on some local flights of the state airline. Finally, the incumbent made a number of campaign-related remarks in his Presidential New Year�s address. The incumbent asked for support for his platform and thanked some groups, such as war veterans, for supporting his candidacy. These cases are clear and direct violations of Article 27 (3) of the Decree on Elections.
The OSCE/ODIHR Election Assessment Mission received credible complaints from individuals who felt they were being pressured to vote for the incumbent. This appeared consistent with a campaign atmosphere heavily favouring one candidate.
D. Election Finances
A state fund, administered by the CEC, was available to each candidate for President [Art. 33]. The fund was set at 2.44 million Tenge per candidate (approximately the same amount as the fee to register as a candidate, US$ 30,000). The fund was used to pay for the media time allotted for each candidate under the Decree, for printing campaign materials and for transportation expenses.
Each candidate could also establish an election fund financed from non-state resources [Art. 34]. Funds are made up from three sources, each with a limit on the amount: from the candidate�s own resources (with a limit of approx. US$ 90,000), from the public association that nominated the candidate (approx. US$ 150,000) and voluntary donations of citizens and organisations (approx. US$ 300,000). The total limit is 43 million Tenge (approximately US$ 540,000). An independent candidate is not entitled to the second of these sources. The fund is registered with the Ministry of Justice and it is controlled through the banks.
The Decree on Elections does not deal with contributions in kind, which may need some attention. For example, the campaign team for the incumbent reported that supporters donated the sites for the billboards, so this would not be an expenditure against his election fund. Donations of this kind circumvent the purpose of the election fund.
Bank statements showed that the election funds varied dramatically amongst the candidates. In late December, Mr. Nazarbaev�s fund totaled 40.5 million Tenge (approx. US$ 506,000), made up of 7.1 million in personal funds, 9 million in nominating association funds and 24.4 million in voluntary funds. Mr. Gabbasov�s fund had 1.4 million Tenge (approx. US$ 17,500), all in voluntary funds. Mr. Kasymov�s funds totaled 4.1 million Tenge (approx. 51,000), all in voluntary funds. Mr. Abdildin�s balance was zero.
Each candidate must submit a report on the expenditures from the election fund to the CEC within five days after the determination of the results of the election. The CEC has the right to annul the recognition of the election result if a candidate violates the rules on the election fund [Art. 34 (10)]. In some cases, campaign headquarters consulted informally with the CEC before spending funds to ensure that it was an acceptable expenditure.
E. Media Issues
The ODIHR Needs Assessment Mission expressed concern about the increased concentration of the media in the hands of a few persons close to the incumbent. It was reported that harassment and legal means were used to silence any opposition media or independent media. The Election Assessment Mission was able to follow up and confirm these concerns.
Mission members in five regions interviewed local media owners and journalists. There was evidence of closure of newspapers, both permanent and temporary, based on accusations of breaking tax laws, publishing �false information� or minor infringements of the law. Broadcast licenses, tenders for frequencies and tax laws are used to control the media. As a result, the independent media have experienced financial problems, which often leads to closure.
There is no direct censorship but it was reported that suggestions are made to owners that nothing critical of the government is to be printed and, in some cases, the printing house removes articles. These types of intimidation lead to self-censorship by journalists. Media employees have no protection from reprisals and intimidation.
The media in Kazakstan does not cover the entire spectrum of opinion. Several examples occurred during the mission. For example, the Congress of Democratic Forces held a press conference to announce the creation of the Republican People�s Party (17 December 1998). There was minimal coverage of this event by the media. The OSCE mission had its activities covered quite widely by the media until its final press conference (11 January 1999). The final statement of the mission also had minimal coverage and a certain amount of misinformation was reported.
The legal requirements concerning candidate messages are quite narrow. The state media must give each candidate fifteen minutes on state television, ten minutes on state radio and an opportunity to publish two articles in the state press [Art. 28 (3)]. The CEC further stated that one of the articles must be in the Kazak language and the other in the Russian language. The candidate must cover the costs for these items prior to the delivery and then they are reimbursed from the state election fund on submission of a receipt to the CEC.
Candidates can purchase additional media time using their non-state election funds. These advertisements do not need to be identified as paid political announcements so it was difficult to determine whether information was sponsored. For example, it was unclear if the documentaries on the incumbent, which were shown during the week before the election, were paid for by his campaign or were provided by the state media as a part of regular programming.
(To be continued)
by Heather Clark, ALMATY, Feb 22 (AFP)
With aftershocks from the global economic crisis still jolting its economy, Kazakhstan is resorting to protectionism as a last line of defence, but analysts warn that the tactic could backfire.
Stuck on an economic faultline running from southeast Asia up to northern neighbour Russia, Kazakhstan has dug in to withstand the tremors of last year�s economic crisis, desperate to buck the trend of toppled emerging economies and devalued currencies.
But its latest tactic of slapping protectionist tariffs on a wide range of imports from regional partners could seriously harm trade in Central Asia and hinder Kazakhstan�s bid to join the World Trade Organisation (WTO), analysts said.
Earlier this month, this vast former Soviet republic imposed temporary customs duties of 200 percent on certain foodstuffs, alcohol and tobacco products imported from Kyrgyzstan and Uzbekistan.
The measures followed a ban on imports of certain Russian foodstuffs that went into effect on January 11.
The measures were aimed at protecting Kazakh manufacturers from foreign counterparts who have become increasingly competitive as a result of currency devaluations, Yerzhan Utembayev, chairman of the Agency of Strategic Planning and Reform, told AFP.
�These measures are literally of a temporary character and will be in effect for only three to four months,� Utembayev said.
While some analysts and local businessmen welcomed the new trade policies, other observers bemoaned the long-term effects of such protectionism, especially when it comes to Kazakhstan�s hoped-for membership in the WTO.
Utembayev said Kazakhstan hopes to join this year, but wants a grace period of five to seven years during its transition to protect its economy with high tariffs, something that has been granted to other countries.
But Kazakhstan�s new trade policies will mean the country will have some explaining to do when it next sits down at the WTO bargaining table, observers said.
�It�s going to be an impediment in discussions with the WTO,� said a western economic analyst, who spoke on condition of anonymity.
While the WTO may not take too kindly to Kazakhstan�s new trade policies, its Central Asian neighbors are even less impressed.
Russia has so far been relatively understanding of Kazakhstan�s ban on its imports, but Kyrgyzstan has not taken the announcement of the 200 percent customs duty, which will go into effect next month, with grace.
Kyrgyz President Askar Akayev said last week that Kazakhstan was trying to punish Kyrgyzstan for being the first Central Asian republic to enter the WTO.
�It will especially be difficult for (Kazakh President Nursultan Nazarbayev) since he has a personal relationship with Kyrgyzstan,� said Oleg Tsurkan, treasurer of ABN AMRO Bank of Kazakhstan, referring to the marriage between Nazarbayev�s daughter and Akayev�s son. �Tension will definitely be there.�
At home, the trade barriers will remove what little incentive local producers have to improve their products and turn out world quality merchandise, Tsurkan said.
The western analyst agreed, saying the measures �are just going to quietly grind down various parts of the economy. �A few people who are protected are going to make some money and the rest of the economy will continue to suffer.�
All Over the Globe is published by IPA House.
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