Wednesday, 29 June 2005

WILL KAZAKHSTAN’S GOVERNMENT RESIGN?

Published in Field Reports

By Marat Yermukanov (6/29/2005 issue of the CACI Analyst)

In his recent interview to the Liter newspaper, presidential aide Yermukhambet Yertysbayev, known for his proclivity to make unusual political forecasts, predicted that president would dismiss the government in late August, if it fails to curb inflation and effectively manage the economy to ensure the implementation the program of social development outlined in this year’s presidential address to the nation.

The cabinet of ministers has become the target of criticism on many occasions before. In September last year, President Nursultan Nazarbayev rapped the government for the slow pace of administrative reforms and inflating the clumsy administrative machine up to 16 ministries and a dozen of independent and irresponsible governing bodies unaccountable to any of ministries.

In his recent interview to the Liter newspaper, presidential aide Yermukhambet Yertysbayev, known for his proclivity to make unusual political forecasts, predicted that president would dismiss the government in late August, if it fails to curb inflation and effectively manage the economy to ensure the implementation the program of social development outlined in this year’s presidential address to the nation.

The cabinet of ministers has become the target of criticism on many occasions before. In September last year, President Nursultan Nazarbayev rapped the government for the slow pace of administrative reforms and inflating the clumsy administrative machine up to 16 ministries and a dozen of independent and irresponsible governing bodies unaccountable to any of ministries.

On June 13, after hearing the report of the Ministry of Finance, some deputies demanded the immediate resignation of the government. The popularity of the government plummeted after the auditing committee of parliament reported serious financial irregularities involving 31.3 billion tenge diverted from social infrastructure programs last year. Further investigations carried out by the Prosecutor General’s Office and the Agency for fighting economic crimes revealed the mismanagement of funds channeled to housing and road construction. In 2004, twelve government officials were sacked for financial improprieties. This year deputy ministers from the Transport and Communications Ministry as well as Ministry of Finance stepped down amid a surge of similar scandals.

All these accusations and sackings may create an impression that the state is bent on rooting out big-scale corruption in top-placed echelons of power and pave the way for a transparent economy. But a more plausible explanation for the sudden eruption of a new anti-corruption crusade seems to be the upcoming presidential elections. Affordable housing, salary and pension raises starting from July1, the development of a wide network of social infrastructure were all promised by President Nazarbayev in his address to the nation in February. But the government’s inability to cope with the task before the elections is becoming evident. Prime Minister Danial Akhmetov took desperate efforts to keep down soaring prices for agricultural produce, but so far to no avail. In three months, vegetable prices hiked by 5.2% and meat prices rose by 0.2%.

On June 22, Prime Minister Akhmetov convened cabinet members for an urgent sitting to discuss the implementation of housing program, one of the most important items on on President Nazarbayev’s election campaign agenda. The state program envisages the construction of relatively affordable housing for population at the reduced price of $350 per square meter. Although 42 billion tenge were allocated from the state budget for this purpose, as of June 1, only 14.3 billion tenge had actually been used. Danial Akhmetov, using very harsh language, publicly shifted the blame for the failure of housing program on the Ministry of Industry and Trade, and added that regional governors (akims) were “extremely ineffective” in their efforts to reach the set target.

Mr. Akhmetov is in an unenviable position. An ardent advocate of integration within the Single Economic Space and an influential figure in Russian business circles in the energy sector, he took the post of prime minister at the height of intensifying Russian-Kazakh economic ties. Over the last few years, his name was frequently mentioned in the press in connection with shady businesses with Russian electricity and coal companies. Although none of these insinuations led to proper investigations, the prime minister’s legitimacy in the public eye took a beating.

It is only logical for the president to get rid of everything that may in any way be damaging for his pre-election policy. He clearly needs someone with stronger political charisma to replace the weary Akhmetov. The avalanche of criticism heaped on the prime minister for his unsuccessful attempt to create state holdings to exert control over national companies, endangered social benefits for pensioners and lack of adequate housing for teachers and medical workers indicate that the days of the current government are numbered. Akhmetov, moreover, has many opponents in presidential entourage. Some political observers name the co-chairman of the presidential Otan party Aleksandr Pavlov, the advisor to the president Grigoriy Marchenko and minister of agriculture Akhmetzhan Yesimov as candidates for the post of prime minister. Whoever comes to head the government will assume a burdensome legacy.

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