The Reforms Kazakhstan Needs
Appeasing Kazakhstan’s people – and thus stabilizing its politics – must take priority over economic reform. That means, first and foremost, credible and concerted action to root out corruption and strengthen the rule of law.
ALMATY – Kazakhstan’s former president, Nursultan Nazarbayev, who resigned in March after nearly 30 years in power, was a great admirer of the Singaporean leader Lee Kuan Yew. For Nazarbayev, Lee’s leadership showed the importance of strengthening the economy before liberalizing politics. But the flaws in this approach are now on stark display.
As Nazarbayev put it, “The middle class will not emerge without a sustainable economy, which cannot exist without a sufficiently strong and wise leadership capable of getting the country out of freefall.” But a sustainable economy is not what his government built. Instead, it relied on oil revenues – which comprised over 27% of the country’s overall budget in 2014 – to keep taxes low, effectively buying citizens’ acquiescence to authoritarianism.
When global oil prices plummeted in 2014, from over $100 per barrel to about $50, Kazakhstan was hit hard. The local currency, the tenge, lost nearly half its value against the US dollar, real incomes dropped to pre-oil boom levels, and unemployment skyrocketed, especially among the young.