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A WEEKLY ONLINE PUBLICATION / WWW.MFA.GOV.KZ ISSUE NO. 380 / FRIDAY, NOVEMBER 14, 2014

President Unveils Nat’l Infrastructure Plan in Early Address

Kazakh, German FMs Discuss Economic Relations in Astana

Also In The News

Think Tank Launches to Focus on EU-Central Asian Relationship

President Unveils Nat’l Infrastructure Plan in Early Address

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President Nursultan Nazarbayev delivered his latest state-of-the-nation address at an extended session of the Political Council of the Nur Otan party in Astana on Nov.11, introducing a new economic policy that will see massive state investment in infrastructure over the next few years.

The address is usually delivered in December, January or February, but this year’s address was moved forward in order to get proposed anti-crisis steps into the budget plans for the upcoming year and begin work quickly.

Kazakhstan’s economy has grown 4 percent in the first nine months of 2014, slower than expected, and is suffering from a 25 percent reduction in oil prices over the past two months and the reciprocal sanctions between the West and Russia over Ukraine.

The next few years will be a time of global challenges, the President said. “Kazakhstan, as a part of the global economy and a country situated close to the epicentre of geopolitical tensions, is affected by these [economic changes]. We see decreases in prices on international markets and a general slowdown of the economy. … The World Bank and IMF [International Monetary Fund] had re-evaluated their global growth forecast for 2014. That is why we need to quickly examine our positions and adjust plans for the coming years,” Nazarbayev said.

The new “Nurly Zhol” (Bright Path) policy resembles Kazakhstan’s previous relatively successful efforts to battle the 2007-2009 global economic slowdown and is evocative of U.S. President Franklin Delano Roosevelt’s New Deal of the 1930s.

Uncorking the National FundThe policy addresses finance, industry and social welfare issues, but focuses on developing infrastructure. Given falling revenues from raw materials exports, the money will come from Kazakhstan’s National Fund, created in 2000. The fund has accumulated $76 billion from Kazakhstan’s oil and other raw material exports revenues.

In 2007-2009, the government used $10 billion from the National Fund to balance the effects of the global financial crisis. Now is the time to use more of the reserve’s funds, the President said. An additional $3 billion per year will be allocated for the next three years to support the economy, he announced. The government is preparing the decree and including the money in the 2015 budget.

President Nursultan Nazarbayev (centre) during his recent state-of-the-nation address to the Nur Otan Political Council

The new allocation should be used to build transport, energy, industrial and social infrastructure, as well as support small and medium enterprises (SMEs), he said, and a special commission will strictly observe the use of all funds and report to him personally.

The second tranche of 500 billion tenge (US$2.8 billion) from the 1 trillion tenge (US$5.6 billion) allocated by the National Fund in February to boost economic growth and employment in 2014-2015 should be used to implement five key goals, he said.

First, 100 billion tenge (US$560 million) will be set aside for lending to SMEs and supporting important projects in the food and chemical industries, mechanical engineering and the service sector. Second, 250 billion tenge (US$1.4 billion) will go to provide additional capitalisation for the government’s nonperforming loans fund. Third, 81 billion (US$447.7 million) will be channelled into infrastructure in the Khorgos special economic zone and the national industrial petrochemical technology parks in Atyrau and Taraz. Fourth, an additional 40 billion tenge (US$220 million) will be poured into the construction of the EXPO 2017 complex in Astana. Fifth, 29 billion tenge (US $160.2 million) will go toward expanding Astana’s airport, including building a new terminal and rebuilding its air strip. The existing facility is at maximum capacity, but the number of visitors to Astana is expected to increase dramatically in the near future, particularly with EXPO 2017 coming up.

Massive infrastructure investment to help boost economic growthThe Nurly Zhol policy itself will be centred around a five-year infrastructure development plan that coincides with the second five-year section of the Programme of Accelerated Industrial and Innovative Development (PAIID). The plan’s overall investment portfolio is estimated at 6 trillion tenge (US$33.1 billion), 85 percent of which is to come from private investors, including foreign investors.

The development of transport networks and logistics infrastructure is a key part of the plan and intended to shape macro-regions within the country around hub cities. Roads, railways and airlines are to connect the regions to the capital and to each other. Major road projects will get the most attention: the Western Europe – Western China highway; Astana – Almaty; Astana – Ust-Kamenogorsk; Astana – Aktobe – Atyrau; Almaty – Ust-Kamenogorsk; Karaganda – Zhezkazgan – Kyzylorda and Atyrau – Astrakhan. A ferry service from the Kuryk port on the Borzhakty – Ersai railroad is to boost export potential on the

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President Nursultan Nazarbayev during his most recent state-of-the-nation address

Caspian Sea. The government will also explore opportunities to build or lease terminal facilities, dry ports and sea ports.

Regarding energy infrastructure, the government will focus on developing two high-voltage lines, from Ekibastuz – Semey – Ust-Kamenogorsk and Semey – Aktogai – Almaty – Shymkent.

Other significant goals include upgrading public utilities infrastructure and water supply systems, which will need 200 billion tenge (US$1.1 billion) per year until 2020, Nazarbayev said. Attracting investment from the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), and the Islamic Development Bank (IDB), as well as private investors, is another goal.

Increasing urbanisation is stressing the housing market, Nazarbayev said, announcing changes to state programmes on the construction of rental houses that would exempt less-affluent candidates from needing to make an initial deposit and help get lower interest rates from banks. One-hundred-eighty billion tenge (US$995 million) is to be allocated in 2015-2016, and the programme seems set to make rent and housing more affordable.

Seventy billion tenge (US$387 million) will go toward repairing schools and eliminating three-shift education by 2017. Regional authorities will receive an additional 20 billion (US$111 million) to reduce overcrowding in preschools. Universities that have been designated as hubs for training specialised personnel and linking science and the real economy will receive 10 billion tenge (US$55.5 million) by 2017 to upgrade their equipment and other relevant infrastructure.

Work on increasing SMEs’ share in the nation’s gross domestic product to 50 percent, ongoing under the Kazakhstan 2050 Strategy, is to be continued, Nazarbayev said. Loans totalling 155 billion tenge (US$857 million) from the Asian Development Bank (ADB), EBRD and World Bank are to be used over the next three years, he said.

Structural reforms in the economy should accompany the National Fund investments, the President said, and this requires support from international financial organisations to implement joint projects. The World Bank, ADB, EBRD and IDB are ready to provide about $9 billion to 90 priority projects to support investment activity, maintain income levels and stimulate job creation. This will ensure sustainable growth in the short and medium term, the President said.

Overall, Nazarbayev said, the Nurly Zhol economic policy will help create up to 200,000 new jobs through road construction projects alone. This will also stimulate related sectors of the economy.

Concluding his address, Nazarbayev stressed that economic growth depends on domestic peace and ethnic harmony. The country’s young people have never seen ethnic conflict, nor the depression and strife of the 1990s, Nazarbayev said.

“Many treat stability and a comfortable life in Kazakhstan as something omnipotent. But what is stability? It is the well-being of our families, security and a roof over our heads. Peace is the joy of parenthood, the health of our own parents and the happiness of our kids. Peace is a steady job, salaries paid and confidence in the future. Peace is stability, a public heritage that should be protected, preserved and enhanced day by day,” he said.

“Kazakhstan, as a part of the global economy and a country

situated close to the epicentre of geopolitical tensions, is affected by these [economic changes]. We see decreases in prices on international markets and a general slowdown of

the economy. … The World Bank and IMF [International Monetary

Fund] had re-evaluated their global growth forecast for 2014. That is

why we need to quickly examine our positions and adjust plans for the

coming years.”- President Nursultan Nazarbayev

Kazakh, German FMs Discuss Economic Relations in Astana

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Foreign Minister of Kazakhstan Erlan Idrissov met visiting German Foreign Minister Frank-Walter Steinmeier in Astana on Nov. 10 to discuss economic cooperation. Steinmeier was accompanied by a delegation of German businessmen on his visit, which focused on business and political connections.

At the meeting at Kazakhstan’s Ministry of Foreign Affairs, Steinmeier called Kazakhstan an “anchor of stability” in Central Asia and expressed Germany’s desire to strengthen ties. The foreign ministers discussed bilateral trade, which in 2013 reached a total of $3.2 billion and from January – September of this year was $1.95 billion. Seventy-two trade and investment agreements, totalling $3.2 billion, have also been signed between the countries over the last three years.

“Kazakhstan is the leading trade partner of Germany in Central Asia. Today, I am accompanied by a big delegation from the German business community. Our country is interested in investing in Kazakhstan,” Steinmeier said at a joint press briefing after the meeting. His country sees highway, railroad and other infrastructure projects in Kazakhstan as great opportunities, he said.

Idrissov began by recalling the importance of two political documents signed between Kazakhstan and the EU in October: a document on the completion of negotiations on the draft of the Enhanced Partnership and Cooperation Agreement (PCA) between the countries and a document completing bilateral negotiations between Kazakhstan and the EU regarding Kazakhstan’s accession to the World Trade Organisation (WTO).

“We consider the PCA an opportunity to bring our cooperation to a new level in all areas. The document provides a framework for the strategic partnership and significant growth in trade and investment,” Idrissov said.

The ministers also commented on international issues. Steinmeier noted that conflict de-escalation was a topic during his conversations with President Nazarbayev and Idrissov earlier in the day. “We reviewed proposals that our countries, jointly as neighbours, can take towards the de-escalation of pressing issues in the Middle East, Iran, Iraq and Ukraine. Kazakhstan and Germany will continue to make efforts to ensure that the intensity of these conflicts are decreasing,” he said.

German Foreign Minister Frank-Walter Steinmeier (second from left) during a recent meeting in Astana with Foreign Minister of Kazakhstan Erlan Idrissov (directly across from Steinmeier)

Interparliamentary and interparty relations between Kazakhstan and Germany were also reviewed, as well as the work of the Kazakh-German Intergovernmental Working Group on Trade and Economic Cooperation and the Kazakh-German Business Council for Strategic Cooperation. Kazakhstan’s legislators meet regularly with members of the Germany-Central Asia parliamentary group in Germany, Idrissov said. “The dialogue between the Nur Otan and Christian Democratic Union parties is also developing,” he noted.

Issues concerning ethnic Germans living in Kazakhstan are of great political and practical importance, Kazakhstan’s foreign minister said, adding that ethnic Germans in Kazakhstan and Kazakhstan’s immigrants to Germany serve as a bridge between the two countries.

EXPO 2017 was also on the agenda. Idrissov briefed Steinmeier about preparations for the event and gave him an official invitation letter from President Nazarbayev to Federal Chancellor Angela Merkel to participate in the exhibition.

“The theme of EXPO 2017, future energy, is focused on transitioning to a green economy. Our country is ready to share its experience in this field with our Kazakhstan partners,” the German foreign minister said.

Visa facilitation, a priority for Kazakhstan’s Foreign Ministry, was touched on at the press conference. The issue will be reviewed by the German government, Steinmeier said, though he cautioned that making changes will be a long process, as Germany follows EU rules. This summer, Kazakhstan introduced unilateral visa-free regimes for citizens of its top 10 investor nations, which include Germany.

Asked about the EU Strategy for Central Asia, which Steinmeier took a leading role in crafting in 2007 during his first stint as foreign minister, Steinmeier said the strategy has had some success and that updating it will be a matter of further discussion with the countries of the region.

Think Tank Launches to Focus on EU-Central Asian Relationship

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Minister of Foreign Affairs of Kazakhstan Erlan Idrissov visited Brussels on Nov.12 for the launch of a new Central Asian think tank dedicated to the discussion of the region’s relationship with the EU. The new dialogue platform, the Eurasian Council on Foreign Affairs (ECFA), was founded to foster the exchange of knowledge and best practices between Central Asia and Europe. It will be headquartered in Brussels.

European statesmen, academics, EU, NATO and Organisation for Security and Cooperation in Europe (OSCE) officials and other opinion-makers form the ECFA’s Advisory Council. Former EU Commissioner for External Affairs and Foreign Minister of Austria Benita Ferrero-Waldner was named chairman of the ECFA Advisory Council, while Idrissov is to be became the first honourary president of the organisation. Rauan Kenzhekhanuly, head of Kazakhstan’s Wiki Bilim public foundation, is the ECFA’s first founding director.

Other notable guests at the ECFA launch ceremony included Secretary-General of the OSCE Lamberto Zannier and the ambassadors of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan to Belgium.

In his opening remarks, Idrissov called the ECFA an innovation both historic and timely, as it is not always easy to bridge the cultural and psychological gulf between Europe and Asia.

“I believe the geographic, cultural and psychological gap between Europe and Asia will be increasingly bridged and blurred, and the twain shall meet here, in Brussels, in Europe and in the Eurasian Council on Foreign Affairs,” he said.

Idrissov also referred to the new economic strategy, Nurly Zhol (Bright Road), announced by President of Kazakhstan Nursultan Nazarbayev in a surprise state-of-the-nation address on Nov. 11 in Astana, calling it a clear vision for the efficient and sustainable development of Kazakhstan.

Former Italian Foreign Minister Franco Frattini said Kazakhstan plays a very important role in promoting dialogue on nuclear nonproliferation, and it is essential that the EU cooperate effectively with the country. “President Nursultan Nazarbayev makes a vital contribution to ensuring stability and sustainable development not

Members of the Eurasian Council met recently in Brussels

only in Kazakhstan itself, but also in the entire region. Therefore, the development of the transit potential of Kazakhstan is and will be important not only from an economic perspective, but also from the point of view of the development of human contacts.”

Ferrero-Waldner called the conclusion of negotiations between Kazakhstan and the EU on a new enhanced partnership and cooperation agreement “very important for moving relations to a qualitatively new level. Kazakhstan has made impressive progress over the years of its independence, and is now moving to a new trajectory of growth.”

The ECFA’s launch coincided with the publication of its first detailed opinion research from within Kazakhstan. The research, commissioned from UK-based polling agency Ipsos MORI, highlights the attitudes of the country’s citizens toward their government and its key policies.

The results show that 90 percent of respondents feel “fairly positive” or “very positive” about their country, 4 percent more than in a similar survey from late 2013. Kazakhstan has become a better place to live over the past 10 years, most said, with 83 percent saying it has gotten “a lot better” or “a little better.” The top five descriptive words most associated with Kazakhstan were “hospitable,” “stable,” “peaceful,” “improving,” and “successful.”

According to an ECFA press release, the organisation has been modelled on the Council on Foreign Relations in the U.S., the Royal Institute of International Affairs at Chatham House of the U.K. and the EU’s own European Council on Foreign Relations. Over time, it is hoped that the new think tank will become a valuable and independent source of high-quality research, publications and information that will keep Europe abreast of development in Central Asia.

While in Brussels, Idrissov also took part in the opening of the international conference “Toward Eurasian Security: Europe and Central Asia’s Post-Afghanistan Strategy,” organised in cooperation with the Deutsche Gesellschaft für Auswärtige Politik, Germany’s national foreign policy network.

Also In The News... • PresidentsofKazakhstan,KyrgyzstanReaffirmHistoricRoots,

GrowingEconomicRelationshipPresident of Kazakhstan Nursultan Nazarbayev and President of Kyrgyzstan Almazbek Atambayev reaffirmed their countries’ growing economic relationship during the Nov. 7 Supreme Interstate Council meeting in Astana. Nazarbayev noted that since 2012, bilateral trade relations have grown, with trade turnover exceeding $1 billion in the period. In the first eight months of this year, it rose 5.2 percent. The vast majority of Kyrgyzstan’s electricity and dairy exports come to Kazakhstan, which also receives about half of its fruit and vegetable exports, Nazarbayev said, while Kazakhstan provides most of Kyrgyzstan’s wheat, flour and minerals needs, as well as 53 percent of its nonorganic chemical imports. Since independence, Kazakhstan’s businesses have invested $1 billion into Kyrgyzstan’s economy. The President also reiterated Kazakhstan’s readiness to support Kyrgyzstan’s effort to join the Customs Union of Belarus, Kazakhstan and Russia and the Common Economic Space of the same three countries. Both unification initiatives are precursors to the Eurasian Economic Union set to enter into force on Jan. 1, 2015. (www.astanatimes.com)

• KazakhstanparticipatesinCISDefenceMinistersCouncilKazakhstan’s Minister of Defence Imangali Tasmagambetov participated in the meeting of the Commonwealth of Independent States Defence Ministers Council in Moscow on Nov. 11 and held talks with his counterparts from Azerbaijan and Kyrgyzstan on the development of military and military-technical cooperation. At a round-table discussion with Azerbaijani Minister of Defence Zakir Hasanov, Tasmagambetov discussed cooperation between the Defence Ministries of the two countries and approved the bilateral cooperation plan for 2015. Tasmagambetov and Minister of Defence of Kyrgyzstan Abibullah Kudaiberdiyev called for stronger bilateral ties and cooperation within the CIS, Collective Security Treaty Organisation (CSTO) and Shanghai Cooperation Organisation (SCO). The CIS defence ministers signed documents on the control of radiation, chemical and biological conditions and the rapid exchange of geospatial information in the interests of the armed forces of CIS countries and discussed the draft concept of military cooperation between the countries of the CIS to 2020. They also discussed plans for joint preparations for the celebration of the 70th anniversary of victory in the Great Patriotic War. (inform.kz)

• KazakhstantoopendiplomaticmissioninEthiopiaKazakhstan plans to open a diplomatic mission in Ethiopia by the end of 2014, part of the country’s ongoing expansion into the African continent. Kazakhstan regards cooperation with African nations as a promising foreign policy direction. Establishing an embassy in Ethiopia would improve cooperation between the two countries, and Kazakhstan also plans to reach out to the rest of Africa through Ethiopia. The first Embassy of Kazakhstan in Africa was opened in Egypt in 1993. Last year, the country opened an embassy in South Africa. (inform.kz)

• DeputyForeignMinisterattendsBakuconferenceonCouncilofEuropetowardneighbouringregionsOn Nov. 7-8, Baku, Azerbaijan, hosted a high-level conference to review the progress made within framework of the Council of Europe policy toward its immediate neighbouring regions and exchange views on development of this policy. Deputy Foreign Minister Alexei Volkov, head of Kazakhstan’s delegation, stressed the significant potential of dialogue between Kazakhstan and Europe in his address, noting the rapidly developing cooperation between Kazakhstan and the Council of Europe. Kazakhstan considers the mutual desire to cooperate with the Council of Europe an opportunity to exchange experiences and knowledge to ensure stability, security, economic development and prosperity in the region, he said. He also highlighted the importance of the Action Plan for cooperation on criminal matters adopted in December 2013. Volkov also discussed the Joint Programme of the European Union and the Council of Europe supporting the government in improving its justice system, which aims to harmonise Europe and Kazakhstan’s systems of justice. (mfa.gov.kz)

• AstanahostsKazakhstan-ItalybusinessforumA Kazakhstan-Italy business forum focusing on trade, economic, infrastructure and agro-industrial cooperation was held in Astana from Nov. 10-12 with the participation of representatives from 80 Italian companies and more than 200 representatives of Kazakhstan’s national companies and sectoral associations. At the forum, Italian Deputy Minister for Economic Development Carlo Candela said Italy was keen to advance trade cooperation and promote its products across Kazakhstan. Currently, 70-80 percent of Italian products are concentrated in Almaty. dPresident of the Italian Trade Agency Riccardo Monti announced at the forum that direct flights between Italy and Kazakhstan will be launched soon.Italy provides 16 percent of Kazakhstan’s trade turnover, coming after only Russia and China. There are now 178 joint Kazakh-Italian companies in Kazakhstan. (inform.kz)

• Kazakhstan’s symphony orchestra performs in Brazil andArgentinaRio de Janeiro hosted the State Academic Symphony Orchestra of Kazakhstan on Nov. 6, with the assistance of Kazakhstan’s Embassy in Brazil and Ministry of Culture and Brazilian production company Dell’Arte. The orchestra is on a tour that includes concerts in Brazil and Argentina and is intended to expand and strengthen cultural ties with these countries as well as to introduce Kazakhstan’s culture and art to Brazilian and Argentinian audiences. The orchestra included violinist Galiya Bisengaliyeva, graduate of the London Royal Music Academy, and French conductor Nicole Krauss. Concerts will also be held in Vitoria, Brazil, and Buenos Aires, Rosario and Córdoba, Argentina. In Buenos Aires the concert will be held at the world-famous Colon Theatre. (mfa.gov.kz)

• DaysofKazakhCultureinFrancecometoanendParis’s Théâtre de la Ville hosted the final event of the Days of Kazakh Culture in France on Nov. 9. A yurt richly decorated with traditional Kazakh ornaments welcomed guests there. From Oct. 31 – Nov. 2, an ethnic village, “Kazakh auly,” welcomed Parisians in the middle of the Palais Royal square between the Louvre and the State Council. Cartoons from Kazakhstan were screened for children and a concert featuring traditional Kazakh music was held. The events were intended to enrich cultural exchange and ties between the two nations and provide insight into Kazakhstan, its people, development and traditions. (inform.kz)

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