Kazakhstan faces a prolonged economic crisis

Kazakhstani President Nursultan Nazarbayev stated that the country is facing a crisis worse than that of 2007-2008, as he charged the government with drawing up an anti-crisis plan on October 19. Nazarbayev forecast that the country’s economic situation would not face an upturn soon, citing decreasing prices for natural gas and other resources exported from Kazakhstan as well as the current state of the global economy. Analysts claimed the president’s words signaled the government’s recognition of the long-term nature of the crisis, and predicted that the national budgetary expenditures would not decrease in the face of reduced income from sales of natural resources. Nazarbayev stated that recently begun social programs under the Nurly Zhol framework would assist poorer citizens in weathering the crisis, yet barred the government from using the National Oil Fund to prop up failing industries.

Nazarbayev’s statement came shortly before credit rating agency Standard and Poor announced that it would no longer take the Kashagan oil field into account for ratings due to its delayed development. S&P predicted the oilfield would resume normal operations no sooner than 2018, contrary to Prime Minister Kassimov’s June prognosis of a restart date sometime in 2017. Kassimov stated in July 2015 that the government would not compensate an international coalition of business interests for replacing faulty pipes in the oilfield. Kazakhstan continues to experience a destabilized economic situation amid effects from its August currency devaluation and a drop in natural gas and oil prices worldwide.

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News Briefs:

  • Former Ukrainian President Viktor Yanukovych filed a lawsuit against Ukraine with the European Court of Human Rights. A document published by his UK lawyer alleges that his human rights under the European Convention of Human Rights were violated during and after he fled the country in February 2014. These include the right to a fair trial, to investigation of attempts made on his life, and to not be discriminated against on the basis of his political status. Yanukovych’s lawyer published a notice in July stating that Interpol removed the former leader from its “most-wanted” list after it determined more in-depth study of his case was necessary before further action.
  • NATO began its largest exercises in a decade in Trapani, Italy. Its top commander stated it sends a “very clear message” to potential aggressors against NATO member states, as other officials cited concerns over the recent buildup of Russian military forces in the Mediterranean. Russia has positioned anti-aircraft and anti-ship missiles from Kaliningrad in the Baltic Sea to Syria, raising alarm among Western officials who have so far taken a cautious response to the buildup. Prime Minister Ahmet Davlatoglu stated that a drone shot down by Turkish forces inside the country on October 16 was Russian-made but did not belong to Russia, citing the recent supply of Russian weaponry to elements in Syria. NATO officials also announced the organization would follow the US in keeping a military presence in Afghanistan.
  • The President of breakaway South Ossetia has proposed a referendum on joining Russia. Leonid Tibilov’s office released a statement that he had planned the accession in a meeting with Russian Presidential Advisor Vladislav Surkov on October 19. He said the date for the referendum would be agreed upon once it had received the Kremlin’s approval, yet the Kremlin for now has refrained from comment. Georgian officials expressed outrage over Russian troops’ extension of border signs deeper into Georgian territory in July, allegedly seizing a section of a BP-operated pipeline. The current border South Ossetia is approximately 50 miles from the Baku-Tbilisi-Ceyhan oil pipeline, a major alternative supply route around Russia for Europe and the US.
  • Rating company Standard & Poor’s has upgraded Ukraine’s credit rating after the country concluded a debt relief agreement last week with most of its major creditors. The rating was upgraded from “selective default” (“junk”) to “B-/B”, which broadens potential for future investment in the country. The upgrade came as Russia’s Ministry of Economic Development predicted a record decrease in trade with Ukraine. Russia remains Ukraine’s only creditor not party to the recent debt deal, insisting that Ukraine take on a $3 billion loan from the IMF to pay the owed bond back in full by the original December deadline, raising questions about the rationale of the upgrade.
  • Kazakhstan’s proposed NGO law has attracted outcry from international organizations. The law, which passed the Kazakhstani congress’ lower chamber and its first reading in the Senate, would establish a single state agency to manage funding for all NGO activity. The new legislation has prompted concern from human rights watchdog groups that it could be used to shutter NGOs that are not specifically pro-government. The OSCE representative on freedom of the media stated that the law “could pose a clear threat to the free media in the country.” Kazakhstan introduced changes to its criminal code in July 2014 that expanded the offenses that can be applied to NGOs in criminal court.
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