During his annual state of the nation address in Astana on December 15, 2012, Kazakh President Nursultan Nazarbayev introduced the new Kazakhstan 2050 Strategy—a comprehensive state plan aimed at bringing Kazakhstan into the ranks of the world’s 30 most developed countries by the middle of the twenty-first century.
Shortly after the address, Nazarbayev began to implement some of the reforms outlined in the strategy. A presidential decree signed on January 16 ordered the restructuring of several government agencies and the creation of a new body devoted to promoting Kazakhstan’s broader social and economic prosperity—the Ministry of Regional Development.
The new ministry will be headed by Bakytzhan Sagintaev, who was also designated first deputy prime minister by the presidential decree. The forty-nine-year-old Sagintaev has served in regional and national government since 1998, when he was appointed deputy governor of the southeastern Zhambyl Oblast. His most recent positions include appointments as Kazakhstan’s minister of economic development and trade in January 2012 and first deputy chairman of Nur Otan, the republic’s ruling party, in September 2012. Some speculate that Sagintaev’s simultaneous appointment to the position of first deputy prime minister was meant to indicate the importance that President Nazarbayev is attaching to the new ministry’s functions.
Many aspects of Sagintaev’s new commission will be drawn from his previous posting as head of the Ministry for Economic Development and Trade, which has now been reformulated as the Ministry of Economy and Budget Planning. He and his staff will be responsible for economic development with specific regard to areas outside of Kazakhstan’s two major cities, Astana and Almaty. The ministry will also focus on encouraging local entrepreneurship. Several internal committees are being created that help outline the new ministry’s aims. These include a committee on construction, housing, and utilities; a committee on entrepreneurial development; and a committee on land resources.
The increased attention to Kazakhstan’s regions is a reflection of commitments made in the Kazakhstan 2050 Strategy. The strategy stresses Kazakhstan’s need to develop “effective mechanisms of leveling . . . social and economic conditions in the regions,” primarily through a focus on creating new industries and infrastructure. Nazarbayev expressed his concerns throughout the development plan that Kazakhstan is not producing goods that are competitive in global markets and that the country is facing the looming threat of “deindustrialization.”
Specific attention has recently been focused on the development of Kazakhstan’s resource-rich west. In September 2012, state gas company KazMunayGas sponsored a large-scale investment forum for western Kazakhstan, citing the need to support local supply-chain growth and strengthen domestic stability by increasing employment opportunities.
The gap between the western oblasts’ high production levels and their lagging development has recently been recognized as a potentially destabilizing factor. This possibility gained mainstream attention in December 2011 after police in the western town of Zhanaozen clashed with striking oil workers who were demanding wage increases and improved working conditions. The violence in the small town in oil-rich Mangystau Oblast left fourteen people dead.
Western Kazakhstan also acutely feels the need to bring economic and social infrastructure up to a level that matches economic production. A report by online news portal Exclusiv.kz found that of the country’s five most revenue-positive regions, measured by comparing per capita tax revenue to per capita state expenditures, four are major oil-producing regions in the west (the fifth is Almaty city). Much of the money from these regions ends up in rapidly developing Astana, which plans to spend over $750 more per resident than it collects in taxes this year.
By contrast, official statistics show that Mangystau Oblast in western Kazakhstan has the highest rate of poverty in the country by some indicators, with over 10 percent of the population earning less than the minimum cost of living. This number had been reported as much higher in previous years. In 2007, for example, 27 percent of Mangystau residents reportedly earned less than a living wage.
Contributing to these high poverty rates is the fact that, according to an International Monetary Fund (IMF) report, “the oil sector is not a main source of employment opportunity in Kazakhstan as it is a more capital than labor intensive industry.” The same report illustrates how central the oil sector is to Kazakhstan, pointing out that this sector accounted for 46.5 percent of the country’s revenues and over 75 percent of total foreign direct investment in 2010. This percentage will likely grow if the Kashaghan oil field meets expectations by producing first oil sometime in 2013. Moreover, 57.6 percent of the country’s 2011 exports, according to official statistics, came from the four oil-producing regions of Atyrau, Aktobe, Mangystau, and Western Kazakhstan, all in the country’s west.
Part of the Ministry of Regional Development’s work will be aimed at developing nonextractive industries, specifically in hydrocarbon-rich regions. At least some of the nonextractive industries Kazakhstan will encourage are likely to be rooted in alternative energy. Reflecting the declaration in the Kazakhstan 2050 Strategy that “the era of hydrocarbon economy is coming to its end,” the government hopes to invest heavily in wind, solar, and hydropower production, adding one gigawatt of renewable energy to the national grid in the next seven years.
In connection with this goal, President Nazarbayev’s decree significantly broadened the authority of the Ministry of Environmental Protection. The ministry will now be responsible for developing Kazakhstan’s renewable energy policy and for overseeing the implementation of the country’s “green economy” policies. In addition, President Nazarbayev announced that the Ministry of Environmental Protection would become one of the central governmental organs involved in coordinating and attracting foreign participants to Expo-2017—the 2017 world’s fair—which will be held in Astana. The Kazakh capital was chosen to host the exposition in late 2012 based on its delegation’s proposal to focus the event on “future energy.” Nazarbayev expressed the importance of green development and Expo-2017 itself, telling his government that the exhibition must become “a catalyst for motion into the third industrial revolution.”