Seeing Red In A Golden Land

Business Week

June 26, 1994

International Spotlight On Kazakhstan


Kabil Alimbayev sits cross-legged on the floor of a yurt, the round felt tent used for centuries by the nomads of Central Asia. He passes a plate of Kazakh manti–meat dumplings to a guest while cooks prepare beshparmak, a national dish made of lamb, home-made noodles, and potatoes. “Most Kazakhs have never set foot in a yurt,” Alimbayev says. “They don’t even know their national dishes.” He hopes to remedy that by selling Kazakhs cultural items such as special foods and yurts for summer use.

But Kazakhstan‘s regenerated nationalists are demanding much more than a tent and a meal like granny used to make. After almost two centuries under the heel of imperial Moscow, many Kazakhs are demanding a wholesale redistribution of wealth and power from the Russians to them. They want their language, culture, and traditions restored. In such areas as business and university admissions, they are pushing for preference over ethnic Russians.

Across Kazakhstan’s arid landscape, ethnic tensions are brewing. If they build, and if economic woes continue, the hopes of a country that not long ago was hailed for its oil riches as the next Kuwait could be snuffed out.

Until recently, Kazakhstan enjoyed the best business climate in the former Soviet Union. That climate is the handiwork of Nursultan Nazarbayev, a former Communist Party boss who took over as President when the Soviet empire fell apart in 1991 and the nation became independent.

Under Nazarbayev’s leadership, Kazakhstan has lured major Western corporations, such as Chevron, Elf Aquitaine, Philip Morris, and such major Western banks as Citibank and Chase Manhattan. The country is rich in oil, gas, gold, and copper and has a relatively well-developed manufacturing base. Possible Western investment could reach $30 billion.

Today, Kazakhs are a minority in their own country. They make up only 6.5 million of the total population of 17 million. Besides a smattering of Ukrainians, Koreans, Germans, and Uzbeks, some 6.2 million are Russians.

To beef up population figures while making it difficult for non-Kazakhs to move to Kazakhstan, the government is trying to lure back Kazakhs who fled to China during Stalin’s forced-collectivization program in the 1930s. The 1993 freshman class at the University of Kazakhstan in Almaty was 95% Kazakh, and non-Kazakhs have been kept out of study-abroad programs.

Should nationalists move too aggressively against ethnic Russians, Moscow is sure to retaliate by switching off pipelines and souring billions of dollars in Western investment.

To further complicate matters, growing nationalism also is sparking animosity among the country’s three major Kazakh tribes–the Small, Middle, and Senior hordes, which roughly correspond to the west, north, and southeast sections of the country. The Senior tribe, from which President Nazarbayev hails, has clearly profited the most since independence, sparking resentment among members of the other clans, who expected to reap the benefits equally. “It is not in the press or in speeches–no one talks about it–nevertheless, there are bubbling frustrations about predominance of the Senior horde,” says a foreign banker.

The Senior clan, for example, has all but taken over the country’s vaunted privatization program, which started when Philip Morris Cos. bought Almaty Tobacco Co. last year. The foreign business community now derides some of the sell-offs as “nephew privatization.” Many of the holding companies set up as intermediaries in the program are headed by young Kazakh relatives of Nazarbayev and his circle of advisers and friends.

Nor does the ballot box seem a viable solution. Western observers scorned the country’s first-ever multiparty parliamentary elections on Mar. 7 as fraudulent. One complaint: Nazarbayev was allowed to appoint 24% of parliament. Most appointees were from Nazarbayev’s clan. Although Nazarbayev’s lock on power is secure, a small, vocal Kazakh opposition group challenges Nazarbayev’s authority. Says opposition leader Gaziz Aldamzharol: “Of course, it will do harm to the economy.” Adds Eric Rudenschiold, the local director of the International Republican Institute, a U.S. group promoting democracy: “As infighting among Kazakhs starts to grow, it could become a real problem.”

Edited by John E. Pluenneke, by Juliette Rossant in Almaty

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