Kazakhstan: How the hang fire might put the country ablaze

The beginning of the year 2022 was warmly felt by the Kazakh government, after people in the western part of the country came on streets to protest against the government’s decision to cut subsidies on fossil fuels, doubling the price of liquified petroleum gas (LPG).

Protestors protesting against the price hikes and economic difficulties in Kazakhstan.

But it would be too unsophisticated, to state the LPG price hikes to be the sole cause of the alarming developments – absolutely not. The backdrop of the story to what happened from 2nd January onwards goes back to the time when Kazakhstan came into existence itself, after the fall of the Soviet Union in 1991. Kazakhstan came into being on the 16th of December 1991, after the fall of the USSR. In the pre-Soviet era most Kazakhs led a nomadic, semi-nomadic life with their primary occupation being raising animals and the primary economic concern being division of pasture. In the 19th century agriculture grew in the region as the Russian monarchy saw the Kazakh steppe has fruitful for agriculture. Under the Soviet Union, Kazakhstan became the centre for space exploration and the testing of nuclear and biological weapons, the region was industrialised. Post WW2 vast coal reserves were discovered in the region and replaced the depleted fuel reserves of the USSR.

Post independence income inequality was the biggest economic problem faced by Kazakhstan – it still is today. Mikhalev – a survey conducted in 2003, has explicit results, it shows that Kazakhstan transformed from a Soviet-style economic egalitarianism to a society with conspicuous inequality caused due to ‘resource nationalism’. The 90s were turbulent for the Kazakh economy with few individuals or families consolidating the bulk of the economy. 90s were also tough as the share of industry in the GDP fell by 10% – from 31% to 21%. The GDP all together fell by 36% between 1990-95. Industry gained back its share of 30% in the GDP by 2002 due to the oil extraction industry’s development in the country. What deepend the economic inequality was the government’s ‘privatisation’ policy and the favouring of the elite in the country. All the economic progress made thereafter were pocketed by the elite majorly.From 1994 – 2003 Kazakhstan saw several Prime Ministers as the government became unstable, so did the economic policy and the commitments towards economic reforms were ineffectual. The majority of Kazakhs relied on labour intensive agriculture for their daily bread, however the contribution of agriculture in the GDP was shrinking rapidly. By 2006, approximately 30% of Kazakhstan’s economy was termed ‘shadow economy’ especially in the rural regions. This showcases the inefficiency of the financial institutions of the country. Oil continued to spur rapid growth, however the growth was only sensed by the ‘elite’ who are the profit makers from the oil industry.

Kazakhstan is a sparsely populated country with a mere population of 18 million. Another fact is that Kazakhstan is the most resource rich Central Asian country, it is a global top ranker when it comes to reserves of chromite, wolfram, lead, zinc, manganese, sliver and uranium. It also has significant reserves of bauxite, copper, gold, iron ore, coal, natural gas and petroleum. Kazakhstan alone stands for 40% of the global uranium production. Therefore to put it in simple language – Kazakhstan is a resource rich, sparsely populated nation and it might very well appear that the people must be more than satisfied on the economic front. However, that is most certainly not the case, ‘income inequality’ is a long standing major issue in Kazakhstan and over time there has been little progress made to address the concern. Also over time the same has lead to public dissent – 162 individuals corner 50% of the nation’s wealth straight. Apart from income inequality, heavy reliance on oil and non tradable sources are worrying for the national economy. This was clearly witnessed during the 2014 decline in oil prices that lead to severe consequences for the Kazakh economy. Therefore, diversification of revenue generation is another crucial aspect for the Kazakh economy to stand upto.

Now we understand the back story of the events that occurred in early January, it is also important to note that we cannot ignore the fact that all of this has clashed with the Russia – Ukraine crisis. To sum up the severity of the violence – 220 people died and public property worth $3 billion was vandalised. President Kassym-Jomart Tokayev denounced the unrest and called it “an unprecedented act of aggression and assault on our statehood” as he requested help from the Collective Security Treaty Organisation (CSTO), a military alliance of six former Soviet countries. It all began in the western region of the country which is considered to be largely ignored by the Central Government, however the region has a significant contribution towards the economy of the country. Locals in the region suffer from poverty and there are high rates of unemployment, citizens allege to be treated like second class citizens by the government. Therefore, we see that the seeds of violence are sown in the ‘resource nationalism’ in Kazakhstan. As the violence ignited, the President warned the people further infuriating them, leading to widespread protests and violence. The protests further extended to the South till the city of Almaty the former capital of Soviet Republic of Kazakhstan. The situation kept on worsening as the government failed to resolve the matter. On January 5, Tokayev took the reins and fired the government, taking over the powers of the Security Council of the country. The move was also seen as Tokayev consolidating power as he challenged the authority of former President Nazarbayev.

As signs of political mischief came clear along with the ongoing civil unrest – stepped in Russia as President Putin’s Press Secretary Dmitry Peskov made clear the Kremlin’s position on the events in Kazakhstan. He said “We hope that our Kazakhstani friends will be able handle their internal problems on their own.” – this was seen as an inkling that Moscow was interested to interfere in the matter. Just within a couple of hours of this statement, an appeal for help actually came from Kazakhstan. Tokayev stated that the country was attacked by “terrorist gangs trained abroad” as he requested assistance from the CSTO. Overnight, the first military planes flew into Kazakhstan, carrying Russian troops. Later, small contingents arrived from Armenia, Azerbaijan, Belarus, Kyrgyzstan and Tajikistan too. Tokayev was forced to ask for help from the CSTO as Nazarbayev’s clan took control of major government institutions in order to prevent the take over of power by Tokayev, it was pretty much a tug of war going on. The deployment of the CSTO forces then put Nazarbayev’s clan on back foot. Soon, reports came in of a political settlement reached between Nazarbayev and Tokayev – while the first would continue to be the “El Basy” and the mythical figure who played a major role in Kazakhstan’s independence and development, the latter would have his share of power and influence as President without any interruption from Nazarbayev.

On January 11th, President Tokayev asked for the withdrawal of the CSTO forces as he did not want to risk upsetting Kazakhs further by keeping foreign soldiers on Kazakh soil, making them appear as invaders. Therefore, in the first half of January a big upheaval occurred in Kazakhstan, ignited by multiple economic, politic and social matters and only foreign intervention could meltdown the situation. The biggest benefactor from the whole series of events is undoubtedly Putin’s Russia. The Kremlin declared victory in Kazakhstan as Putin was able to showcase that the CSTO was not a mere alliance on paper but an effective military alliance, capable of handling geopolitical and strategical issue in Eastern Europe and Central Asia. This would also empower Moscow in its negotiations on Ukraine with Washington and the NATO. Not to forget, Putin by providing swift assistance to Tokayev has won the loyalty of the Kazakh leadership and strengthen Russia in the post-Soviet space.

It must be very well understood that this time CSTO’s intervention helped the Kazakh leadership, however if major economic changes aren’t introduced then there can be more severe escalation and the CSTO might have to come for a prolonged outing in Kazakhstan. We come to this conclusion that how inimitably, the internal economic issues of Kazakhstan going on for years, sparked civil and political instability in the country which further sprouted to a situation of foreign intervention, delivering victory at Putin’s doorsteps.