Kazakstan - Ten years and counting
Nursultan Nazarbaev's trip to the US was ego-boosting

By Paul Sampson, Dubai

An ego-boosting trip to the US in the second half of December may have allowed Kazak President Nursultan Nazarbaev to forget, temporarily, the political intrigues swirling back home.

The official visit focused primarily on the need to boost security in Central Asia and to counter the global threat posed by terrorism (EC Dec.21,p6). But talks also touched on oil, and the two countries signed a largely symbolic "joint energy partnership" reaffirming their commitment to multiple pipelines out of the Caspian. The Bush administration tried to drum up Kazak support for an oil pipeline planned to run to the Turkish port of Ceyhan, and to dissuade the Kazaks from pursuing the cheaper but politically sensitive option of building a line south to Iran. Nazarbaev made no public response.

Nazarbaev, now president for life, has ruled Kazakstan with an iron hand for more than 10 years. As if in answer to US calls for greater democracy, a new "opposition" grouping, the Democratic Choice of Kazakstan (DCK), emerged late last year. DCK's members, young reformers and industrialists eager for political change, feature several former members of the Komsomol students' movement. They include the chairman of the Kazkommertsbank (KKB) conglomerate, Nurzhan Subkhanberdin, and another top banker, Mukhtar Ablyazov. Perhaps the key figure is Oraz Jandosov, the former deputy prime minister who has been at the forefront of Kazakstan's economic program.

Most of DCK's members owe their past success to the president's backing, while Jandosov is related to Nazarbaev, Kazak sources say. So although Jandosov and others were removed from office after DCK's creation, the new movement is unlikely to cause Nazarbaev too many problems. His main political threat remains ex-prime minister Akezhan Kazhegeldin, a wealthy former KGB officer. Although Kazhegeldin lives in exile in Europe, he continues to undermine the Kazak regime through a combination of mud-slinging over the internet and slick public relations.

The Kazak government has made several secret attempts to mediate with Kazhegeldin, so far unsuccessfully. One of the emissaries has been Rakhat Aliev, Nazarbaev's eldest son-in-law, who was until recently considered one of the country's key political players. But in a series of bizarre developments in November, Aliev was forced to resign as deputy head of Kazak National Security (KNB) before reportedly being put under house arrest. A few days later, he was named deputy head of the president's security apparatus. Quite what Aliev did to irk his father-in-law is a mystery, although a subsequent purge of the security and defense ministries hints at an internal power struggle.

Aliev, also a leading player in the local sugar industry, is believed to be a key backer of Mangistaumunaigas (MMG), the 90,000 barrel per day oil producer that is becoming an economic force to be reckoned with. In late 2001, MMG won a tender to buy the government's remaining 33% stake in Halyk, the former state savings bank, submitting a last-minute bid that was some $4 million above the asking price. The result was a surprise, since the clear favorite had been KKB, which was planning to merge with Halyk through a series of cross-shareholdings. KKB's bid was backed by another Nazarbaev son-in-law, Timur Kulibaev, who already controls some of Halyk's shares and is eager to expand his oil-driven business empire.

Less than a month later, the Kazak stock exchange announced that three little-known Kazak companies - Dakot, 24 Karat, and Argys - had snapped up a combined 23.3% of Halyk's equity, but would not name the ultimate beneficiaries. All three companies are registered in Kazakstan and one, Argys, is involved in oil trading.

MMG is currently involved in a three-way battle for control of the oil sector with oil and gas pipeline operator Transneftegas (TNG) and other companies controlled by Kulibaev, and state-owned Kazakoil. All are lobbying for favors. Kazakoil boss Nurlan Balgimbaev recently asked Nazarbaev to help his company expand at home and overseas, perhaps mindful of the fact that Kazakoil's vice president, Kairat Satybaldy, is the president's nephew. MMG is meanwhile reported to have written to Prime Minister Kosymzhomart Tokaev complaining that TNG subsidiary Kaztransoil is obstructing its crude shipments from the Caspian port of Aktau.

Besides these three heavyweights, other influential players include the Eurasia Group, a private metals conglomerate owned by two Belgian citizens, Alexander Mashkevich and Fatokh Shodiev, and a Kazak, Alidjan Ibragimov. Eurasia used to partner Belgium's Tractebel in its now-defunct concession to manage Kazakstan's gas pipeline network. The group is also a shareholder in Ukraine's Black Sea Kherson refinery, which is now controlled by Kazakoil.