No one can doubt that these are uncertain times for Kazakhstan, the region and world economy. The dramatic fall in the global price of oil – with the expected reduction in revenues – is affecting all oil-producing countries. Slowing growth, particularly in China, is having a similar impact on the price of many raw materials. The crisis in Ukraine and the increased tensions between East and West are also undermining global confidence. The Euro-zone which is Kazakhstan’s largest trading partner is still in stormy waters.
Kazakhstan, because of geography, the important role that energy and minerals play in our economy and our trading links, finds itself close to the heart of this economic storm. The forces may be from outside our borders but it has inevitably led to growth forecasts being reduced and credit ratings downgraded.
These problems have also coincided with the launch of the Eurasian Economic Union (EAEU). By removing barriers to trade and creating a free trade zone of 190 million consumers, the EAEU will provide a powerful long-term stimulus to growth and investment and deliver prosperity to our country. But in the short-term, we always knew that opening up our domestic markets would create challenges to our industries. These have been increased by the weakness of the ruble.
It has not been the ideal start to 2015. But nor is it the first time that global economic forces have set challenges for our economy and country. The Asian financial crisis at the end of the last century also hit Kazakhstan hard. But we emerged strongly to record double-digit growth between 2000 and 2007. The National Fund was set up as a long-term home for excess revenues from our extractive industries, measures were put in place to strengthen our financial system and build up our national gold and currency reserves.
As we all know, this was followed by an even more serious crisis which began in the United States and came close over 2008 and 2009 to bringing the entire global economy to its knees. Again, thanks to decisive leadership at home, the steps already put in place to protect against shocks and new measures to strengthen our banks and stimulate jobs and growth, Kazakhstan survived this crisis far better than many other countries. Strong sustained growth returned quickly to our economy.
Such a successful record of anti-crisis management explains why, despite the unfortunate coincidence of economic forces now facing Kazakhstan, there are reasons to look to the future with confidence. Our economic foundations are strong. Our gold and currency reserves have never been higher, and the National Fund provides both resilience and flexibility. As of Jan. 15, the combined gold and currency reserves and those of the National Fund stood at more than $100 billion. Credit-ratings may have been downgraded but they still remain at investment level. Importantly as well, all Kazakhstan’s investment needs could be met domestically from the National Fund and reserves, and from private banks.
This confidence also comes from the way the Government has already put in place pre-emptive measures to protect the economy and citizens. In November 2014, before many realized the full scale of the crisis, President Nazarbayev announced the new economic stimulus programme Nurly Zhol. By accelerating investment in the modernisation of Kazakhstan’s national infrastructure, it will help counter the impact of the external forces on jobs and growth.
As we have seen many times, challenging times require bold decisions. It is likely that more hard choices will have to be made in the coming months both to guide Kazakhstan successfully through these extertnally-induced upheavals and keep the country on course to reach its long-term goal of joining the ranks of the top 30 global economies by 2050. Against this background, it is easy to see why the call to bring forward the presidential election from 2016 to this year has received such widespread support.
The call, originally made by the Assembly of the People of Kazakhstan which represents the country’s ethnic groups, has already received backing from both chambers of Parliament and many other groups. It is now up to the Constitutional Council to decide whether there are any legal reasons an early election cannot take place.
But whatever the legal position, it is clear why an early election would be in the national interest. It would give the President and the Government a fresh and clear mandate as they grapple with the complex challenges the country faces. It will allow the difficulties and the solutions to be shared with the electorate during the campaign. Once the election has taken place, it will allow a complete focus from the Government on guiding the country through these short-term dangers. It would also ensure the right long-term decisions continued to be made for Kazakhstan’s future.
If the election timetable gets the go-ahead, it seems certain, as in the past, to be contested. But President Nazarbayev will be the clear favourite to win another term. His popularity, as demonstrated not just by election results but also surveys conducted by international pollsters, remains very high across the country. Kazakh citizens rightly value his success not only in delivering economic growth and rising living standards but in helping create a stable and successful country where peoples of so many different backgrounds live in an often troubled part of the world.
At a time when the global prospects are so uncertain and Kazakhstan faces many short-term challenges, it may well be that the country decides his experience and leadership remain vital to their future. But it will be the electorate who makes the final decision.