Astana Calling#291

Astana Calling

Issue No 291 FRIDAY, 15 FEBRUARY 2013 www.mfa.kz A weekly online publication of the Ministry of Foreign Affairs of the Republic of Kazakhstan

President Nazarbayev meets President Putin Eurasian Economic Union to be created from 2015

Environment Minister at EU-Central Asia conference in Bishkek Outlines Kazakhstan’s “green” development

Minister of Justice reports on Judicial Reform Priority area for Strategy 2050

New Program for Agribusiness adopted

Kazakhstan’s Economic Strategy

Aims to increase competitiveness

Economics Minister’s Address

Also in the News

Presidents Nazarbayev and Putin in Moscow on February 8

President Nazarbayev meets President Putin President Nazarbayev met with President Putin in Moscow on February 8 and discussed a wide range of bilateral cooperation issues. The two Presidents agreed to strengthen cooperation in all areas and to continue implementing the Joint Action Plan for 2013-2015.

At the start of the meeting, President Nazarbayev recalled that the two Presidents had given an instruction for work to begin on a new Treaty of Good-Neighbourliness and Alliance that he hoped could be ready for signature in the fall. He also referred to issues for discussion related to the Single Economic Space and the Economic Union between Kazakhstan, Russia and Belarus, noting that he expected that an agreement would be finalized in 2014 allowing the creation from 2015 of the Eurasian Economic Union.

“Progress is being made on all issues related to the Single Economic Space and the Eurasian Economic Union. In May 2014 we should have an agreement that will allow us to announce that we are creating a Eurasian Economic Union from 2015.”

President Nazarbayev

The two Presidents agreed on the future use of the Baikonur cosmodrome based on further mutually advantageous and constructive cooperation.

They also announced that they would meet again at the Inter-regional Cooperation Forum in Yekaterinburg later this year to review implementation of their agreements.

The President’s visit to Moscow followed Foreign Minister Idrissov’s meeting in Moscow in late January with his counterpart Sergey Lavrov (see Astana Calling 289).

During his visit to Russia’s capital, the Minister found time to meet with a group of specialists on integration issues. He told them that Russia and Kazakhstan would “come together on new principles – principles of economic practicality and political advantage”.

He described Kazakhstan’s success over 20 years in creating a healthy business climate which was reflected in the conclusions of the international ratings agencies about Kazakhstan’s progress on economic reforms. “Of course, we are not top of the table but for a long time we have also not been at the bottom, we are somewhere in the middle. The main point is that we’re not intending to stop here.” The Minister described how Kazakhstan had tripled its energy production since independence and was now one of the world’s top 15 oil suppliers.

Discussing bilateral cooperation between Russia and Kazakhstan, Minister Idrissov noted that Russia was Kazakhstan’s main partner “not only because we are neighbours with the longest land border in the world - the potential for our cooperation is genuinely huge”.

Kazakhstan’s close relations with Russia are reflected in the frequency of meetings between the governments of both. The Presidents of Kazakhstan and Russia met eight times in 2012 and there were five meetings between the Prime Ministers of the two countries in the same year.

“The scale of our cooperation is very large and I am pleased to note that it is continuously growing. This is without doubt to the benefit of our economies and our people.

We already have very good experience of successfully functioning integration and we are acquiring more along the way. We discussed a set of key issues today.”

President Putin

The Inter-Governmental Commission for Cooperation between Kazakhstan and Russia is an important mechanism for managing bilateral relations. Created in 1999, the Commission is currently chaired by Kazakhstan’s Deputy Prime Minister Kelimbetov and Russia’s First Deputy Prime Minister Shuvalov. At its 15th session held in 2011, the Commission agreed a new program of long-term economic cooperation between Kazakhstan and Russia up to 2020.

At its most recent meeting in December 2012, the Commission discussed 16 issues of bilateral cooperation. Particular attention was paid to future cooperation in the areas of energy, including nuclear, as well as transportation, agriculture, environmental protection and military-technical cooperation. The next meeting of the Commission will take place in Kazakhstan in the second half of this year.

ASTANA CALLING / ISSUE 291 / 2

Back to Contents

The EU-Central Asia Platform for Environment and Water Cooperation meets in Bishkek

Environment Minister at EU-Central Asia conference in Bishkek Minister of Environment Protection Nurlan Kapparov attended this week’s Fourth EU-Central Asia High-Level Conference, known as the Platform for Environment and Water Cooperation.

At the Third High-Level Conference held in Rome in 2009, the EU and its Central Asian partners agreed that the Platform would serve as a vehicle for cooperation in three key areas: environmental governance, climate change, and sustainable water management.

Italy is the coordinator of the initiative and the Secretary of State of the Italian Foreign Ministry, Marta Dassù, opened the conference.

She noted the priority importance of environmental protection and climate change and the EU’s readiness to develop cooperation with Central Asia in these areas. “In the interests of stability in the region, we must secure the maximum from our cooperation, using all available tools. It is also important to continuously monitor the effectiveness of cooperation”, she said.

The conference was attended by representatives from France, Germany, Italy, Romania and the UK on the EU side and from Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan on the Central Asian side.

Addressing the conference, Minister Kapparov referred to Kazakhstan’s contribution to regional and global security as a result of its closure of the Semipalatinsk nuclear test site, its renunciation of nuclear weapons and the restoration of the northern part of the Aral Sea. He explained that Kazakhstan had embarked on an effort to rid itself of “historical pollution” built up over decades and to regenerate contaminated areas and referred to the successful implementation of the program to provide clean drinking water to the population.

He went on to explain President Nazarbayev’s proposal presented to the 66th UN General Assembly in 2011 to review the current basis of economic development. He pointed out that Kazakhstan’s initiatives to develop a global strategy and the “Green Bridge”, an inter-regional environmental program, had received support at the Rio+20 Summit in June last year.

As a priority activity under the “Green Bridge” Program, Kazakhstan is proposing to implement “green” projects in the Aral basin, the Minister said. He noted that a number of these proposals were included in the Program for the Aral Sea Basin recently adopted by the Central Asian countries. He stressed the need to strengthen the investment and technological parts of these proposals, since the growing problems cannot be resolved without attracting “green” investments and new technologies.

In Kazakhstan’s Strategy 2050 presented in December, President Nazarbayev listed water shortage as the fourth out of ten global challenges of the 21st century. He referred to the acute water supply issue facing Kazakhstan and the fact that Kazakhstan is already facing a serious issue of trans-boundary river use. He called for a new policy to incorporate best international practices for water supply and use and for the population to change its thinking about water and prevent waste. He instructed the Government to develop a long term state program on water to resolve the supply of drinking water by 2020, and the supply of irrigation water by 2040.

“For Kazakhstan, “green” development means rational use of natural resources and reducing pollution at the same time as improving the quality of life. To achieve this, the country needs to improve management, introduce stricter ecological standards and stimulate “green” investments and technologies.”

Nurlan Kapparov, Minister of Environment Protection.

ASTANA CALLING / ISSUE 291 / 3

Back to Contents

Minister of Agriculture Asylzhan Mamytbekov

New Program for Agribusiness adopted On February 12, the Government approved a program for agro-industrial development up to 2020 entitled “Agribusiness 2020”. The program was drafted as part of an effort to strengthen competitiveness in light of the Customs Union and Kazakhstan’s accession to the WTO. It focuses on the creation of favourable conditions for agribusiness and the reduction of risks in the sector. The Ministry has turned away from a prescriptive production program to a program intended to create favourable conditions for agribusinesses.

The program envisages various mechanisms of state support for agribusiness to make the sector more competitive and focuses on four areas: First, it envisages financial rehabilitation of the sector through restructuring and refinancing, the provision of loans and project financing, as well as financial support for agribusinesses to extinguish existing debts. This will reduce the credit exposure of agricultural producers and avoid insolvencies.

Second, the program intends to make goods and services for agribusiness more readily available. Existing mechanisms of state support and subsidies are to remain in place. In addition, new subsidies will be available for agribusiness investments in priority areas, for insurance products, guarantees and interest payments on bank loans. In addition, subsidies will be available for the production of items necessary for crop and cattle raising and the processing of agricultural produce.

Third, the program provides for the development of a system for phytosanitary security and veterinary security to ensure a nationwide safety system in the agribusiness sector.

Fourth, the program seeks to improve effectiveness of state regulation in the agribusiness sector. Measures include the establishment of public services for agribusinesses and improvement of government controls and supervision in the agricultural sector.

Implementation of the program will require funds exceeding USD 20.7 million and is expected to have significant macroeconomic and social benefits. For example, agricultural production is expected to increase one and a half times, productivity in the agricultural sector per employed person by three times and profit from export of agricultural produce by 20%. It is also expected to attract private investments of approx. USD 44.5 million.

In his annual state of-the-nation address in December 2012, President Nazarbayev called for the modernization of Kazakhstan’s agricultural sector in view of growing global demand for agricultural products. He ordered an increase in agricultural production and set the priority for Kazakhstan to become a global leader in the agricultural sector.

The President instructed the Government to adopt a new development program for the agricultural sector until 2020 and to increase state support for agriculture by four and a half times by 2020. He gave a further instruction to the Government to create legal and economic incentives for the creation of medium and large agricultural enterprises using new technology and to create tax incentives to develop land. As a result of developing the farming and agricultural sector, the share of agriculture in Kazakhstan’s GDP is projected to increase five-fold by 2050.

ASTANA CALLING / ISSUE 291 / 4

Back to Contents

Minister of Justice Berik Imashev

Minister of Justice Reports on Judicial Reform On February 12 Kazakhstan’s Ministry of Justice reported on the results of the work conducted in 2012. Prime Minister Serik Akhmetov was present at the enlarged session of the Ministry’s Collegium and delivered the closing speech. The session also included representatives of the Presidential administration, the office of the Prime Minister, Members of Parliament and of public bodies, the National Union for Entrepreneurs “Atameken”, as well as executives of regional subdivisions of the Ministry.

The Minister of Justice, Berik Imashev, summarized the results of the work conducted by judicial bodies in 2012 and the priority areas for 2013 in light of the recent presidential address. In his December 2012 address to the nation, President Nazarbayev spoke about the need to simplify the justice system by reducing bureaucracy and establishing mechanisms for settling small disputes outside the courts.

Judicial reform is a priority area as part of the program to implement Strategy 2050 and special responsibility is placed on judicial bodies to achieve its goals.

The Minister noted that in 2012, all judicial bodies had focused on the efficient delivery of decrees by the President and Parliament and on the achievement of targets set in the strategic plan for the Ministry of Justice for 2011-2015. The Ministry had worked together with all state bodies, parliamentary chambers and the “Nur Otan” party and developed a concept for legislative drafting activities in order to implement the social modernization program put forward by the President as part of his plan for the social modernization of Kazakhstan.

The President emphasized that the improvement of public services was key to combat corruption and to raise the public’s trust in state bodies. The Minister said that judicial bodies are aiming to make public services simple and transparent and had, for example, introduced online services for a significant number of civil registration matters.

The procedures for establishing a business in Kazakhstan have been significantly reduced. The Ministry had also focussed on quality control for legal services and on improving access to legal representation, the Minister said. Judicial bodies are engaged in enhancing public legal awareness to foster development of a modern society.

One of the most difficult and dynamic areas of the Ministry’s work is the enforceability of judgments. Although this remains an area of concern, the systematic measures undertaken have created a positive trend.

The Ministry had exceeded its targets for legislative reform in intellectual property matters and legislation had been brought in line with general international standards, the Minister said. Registration of trademarks and licensing procedures have been simplified and the revision of laws concerning authors’ rights and patents is planned to be completed in August of this year.

The Minister concluded his speech by defining the priority areas for this year. These include the development of a conceptual approach for reform of the legal system, the submission to Parliament of draft legislation to strengthen property and intellectual property rights, contractual obligations, and the enforceability of judgments.

ASTANA CALLING / ISSUE 291 / 5

Back to Contents

Kazakhstan’s Economic Strategy

Yerbolat Dossayev, Minister of Economy & Budget Planning

On February 8, Yerbolat Dossayev, Minister of Economy and Budget Planning, addressed a meeting of his Ministry’s Collegium attended by Prime Minister Serik Akhmetov. The first part of his speech analyzed the economic performance of the country over the previous year. The second part summarized the measures undertaken to implement the tasks set out in President Nazarbayev’s National Address of December 2012.

Finally, the Ministry’s priorities were outlined in support of Strategy 2050, which aims to elevate Kazakhstan to the ranks of the top 30 most developed economies.

The economy grew by 5 percent in 2012, a figure somewhat lower than planned, the Minister said. The shortfall is explained by shrinkage in external demand, a dip in agricultural production and a fall in the extraction of oil to 79.2 million tonnes against a planned volume of 81 million tonnes. At the same time, the decline was mitigated by several internal factors: a growth in services, wholesale and retail trade (up 14.6 percent) and internal market investment.

Despite the decline in external demand, foreign trade maintained its positive trajectory. At USD125.2 billion, it was up 10.9 per cent in the first 11 months of the year (exports rose by 6.3 percent and imports by 21.9 per cent), with a positive trade balance of USD44.6 billion. Inflation also declined to 6 percent as compared to 7.4 percent in 2011. Finally, Kazakhstan advanced 21 points in the rating of the World Economic Forum to 51st place out of 144 countries.

In 2012 a raft of measures was undertaken to improve the business environment, cut regulation and licensing requirements and refocus tax and tariff policy in order to stimulate competitiveness, equalize conditions and provide better support for the population. Regional policy has been given added impetus by the development of a number of key urban centers, reform of local government, expansion of public-private partnerships and efforts to diversify one-company towns. The Minister believes that internal trade will be the principal driver of future economic growth.

2012 also saw the start of the People’s IPO Program led by the sale of a stake in KazTransOil. This was also the year in which the Single Economic Space, comprising Belarus, Kazakhstan and Russia, became operational and the rules of the Customs Union came into effect. Enormous work is being undertaken to harmonize legislation across the three economies. Trade in the first 11 months of 2012 totalled USD22.1 billion, up 4.8 percent from 2011.

Future Priorities Minister Dossayev went on to explain that in accordance with the President’s directive and Strategy 2050, the Ministry will focus on the following directions of activity in the coming years: • Modernization, with emphasis on advanced and green technologies; • Stable macroeconomic policy and growth, offsetting weak global markets climate through export diversification and greater emphasis on the internal economy; • Targeted support of investment, privatisation and infrastructure in order to facilitate the long-term diminution of the state’s role in the economy; • Balanced budget policy and increased effectiveness of state expenditure; • Tax incentives for the non-raw materials sector, including agriculture; • Improving state direction and planning; shifting responsibility from the center to the regions; • Better social policy, enhancing human capital and improving migration policy; • Further development of global integration, removal of trade barriers and preparing for WTO membership.

“Weak growth in developed countries makes it necessary to intensify work on diversifying exports and sources of economic growth and reorient demand from the external to the internal market” Yerbolat Dossayev, Minister of Economy and Budget Planning

ASTANA CALLING / ISSUE 291 / 6

Back to Contents

Also in The News…

• In a statement following North Korea’s nuclear test on February 12, Kazakhstan’s Ministry of Foreign Affairs strongly condemned the test saying it was in violation of UN Security Council resolutions 1718 and 1874 and that nuclear tests were a threat to regional and global security. It called for the immediate resumption of talks on the North Korean nuclear issue and urged Pyongyang not to escalate the situation. (mfa.gov.kz) • The Foreign Ministries of Kazakhstan and Romania held a regular meeting on February 11 and signed a Joint Action Plan for 2013-14. On February 13, the Deputy Foreign Ministers of Kazakhstan and Belarus met in Astana and discussed areas of bilateral cooperation. They also signed a plan of cooperation between the two countries for 2013-14. (inform.kz) • On February 12, Foreign Minister, Erlan Idrissov, took part in a meeting with key officials from both chambers of parliament to agree a road map for the development of parliamentary diplomacy over the period 2013-15. They discussed the coordination of work between Parliament and the Ministry of Foreign Affairs and agreed on an approach for developing cooperation with the parliaments of foreign countries. (government.kz) • The Government of Kazakhstan and the car manufacturer Toyota have signed a memorandum on the production of the Toyota Fortuner SUV in Kazakhstan which will be available from 2014. It was signed by Kazakhstan’s Minister of Industry and New Technologies, Asset Issekeshev and the President and CEO of Toyota Europe, Didier Leroy. The project will generate over 200250 jobs in Kazakhstan. (bnews.kz/primeminister.kz) • The Space Agencies of Russia and Kazakhstan will work on developing an agreement for the joint use of the Baikonur cosmodrome in 2013, Deputy Prime Minister, Kairat Kelimbetov said at a meeting of Kazakhstan’s National Space Agency on February 13. The two sides will also seek agreement on developing its scientific-technical capacity, the training of staff and the inclusion of Kazakhstani specialists in its work. (primeminister.kz) • The Deputy Chairman of KazMunaiGas, Magzum Mirzagaliev, has said that foreign companies intend to invest a further USD375 million in the economy of western Kazakhstan. In September last year several foreign companies signed agreements with KazMunaiGas to develop new production in Kazakhstan. 675 new jobs will be created as a result. (inform.kz) • This week saw the opening in Astana of a Kazakh-Czech technological center for the development of machine-building and metal working in Kazakhstan. The center has been equipped with modern machine tools as a result of a memorandum signed with the Czech Association of Machine Tools. The center will reach full capacity in 18 months and process 3,000 tonnes of metal a year. (government.kz) • Louisa Karinbayeva, a Kazakhstani singer known as Luina has applied to represent Russia at “Eurovision 2013” since Kazakhstan does not participate in the competition. Russia’s “First Channel” TV station will make the selection of the singer representing Russia and the song to be performed. (tengrinews.kz) • The Ice Hockey Federation of Kazakhstan has announced that the second annual “Friendship Cup” between Kazakhstan and Canada will take place on February 22. It will coincide with the anniversary of 21 years of diplomatic relations between Kazakhstan and Canada. The Canadian team will be made up of Canadians playing professionally in Kazakhstan, embassy staff and those in the country on business. (bnews.kz)

ASTANA CALLING is a weekly online publication of the Ministry of Foreign Affairs of the Republic of Kazakhstan Please send your requests and questions to pressa@mfa.kz

ASTANA CALLING / ISSUE 291 / 7

Back to Contents