Source - Economist, July 1, 2017: "Steppe change"
Kazakhstan and its capital, Astana are at the crossroads of both geography and history. Geographically, it is sandwiched between Russia, China and the Middle East, astride once and future trade routes. The president, Nursultan Nazarbayev, is eager to turn this location to Kazakhstan’s advantage, by joining China’s “Belt and Road” program of new transport links between Asia, Europe and Africa. Over the past two years Chinese cash has created a massive freight-rail hub at Khorgos, spanning the border between the two countries. The other crossroads is historical. Kazakhstan has a choice: open up or stagnate. This is not easy, given how much the country has suffered from foreign domination in the past. The Soviets forced nomadic Kazakhs into collective farms at gunpoint, wiping out a quarter of the population. They used Kazakh territory both as a gulag and a nuclear testing ground, deliberately exposing children to radiation to measure its effects. Kazakhstan is relatively wealthy thanks to oil, which accounted for 58% of exports last year.
Kazakhstan’s government is authoritarian. Dissident media are crushed, criticism of the president is taboo and President Nazarbayev was re-elected with 98% of the vote in 2015. He has no clear successor. Last year he appointed his daughter to the Senate, prompting speculation that he is grooming her for the top job. The rule of law is also much in doubt. Bribery has been endemic. Kazakhstan scores as badly as Russia on Transparency International’s corruption league table. Oligarchs will labour mightily to block reforms that harm their interests. Foreign investors may not believe assurances about the rule of law, since this “depends on the word of one man”, as a local analyst puts it. Another problem is that, for most Kazakhs, free enterprise is a novel concept. No one can remember a time when the state did not dominate the economy.
Reforms are in the making. Some have already occurred - between 2016 and 2017 Kazakhstan jumped from 51st to 35th place on the World Bank’s ease of doing business rankings, with big improvements in how straightforward it is to get construction permits or electricity. A digital portal for basic interactions with the state has curbed low-level corruption. The government says it will switch from Cyrillic to the pro-business English alphabet by 2025. In the capital, they are now building the Astana International Financial Centre, a regional stockmarket and financial hub. Firms operating there will be subject to rules based on English common law, enforced by independent courts.