Oil is the Wealth of the Nation

Oil - Wealth of the Nation

by Michael Hancock-Parmer on 1/3/2012

The events in Kazakhstan on its Day of Independence have made headlines around the world, but the motivations and consequences of the events continue to evade observers inside and outside the country. Several videos capturing both the violence and the shocked onlookers’ comments have surfaced on Radio Free Europe /Radio Liberty and their affiliate Radio Azattyq. [Kazakh]

I have two short pieces to share in a limited attempt to offer more context. The first is on one possible puppeteer in exile, the second on the news coverage of the events. A third section, on historical comparisons with the Jeltoqsan riots of 1986, is in the works.

Chess Master or Pawn?

The title of this post comes from a video broadcast by K-plus (K-плюс), an opposition news organization owned by Mukhtar Abliazov (Мухтар Aблязов). K-plus covers Kazakhstan and Central Asia and has a fairly active English-translation YouTube channel.

Abliazov is a child of the Soviet 60s and came into his business career in the days of glasnost and perestroika. In the 1990s he amassed the foundation of his current commercial empire and today lives in exile in the United Kingdom. In the early 2000s, Abliazov entered politics as the co-founder of the Democratic Choice of Kazakhstan, was accused of official abuses of government power, sentenced to prison time, allegedly tortured while in custody, and by 2003 was allowed to go into exile in Russia after renouncing political ambitions. From there he become chairman of the board at BTA (Bank TuranAlem), though the how is beyond me (and tangential to this story, probably).

Readers might recognize him from previous stories regarding the banking scandals following the crisis of 2008 involving BTA  and others.

When banks come into the picture, I get nervous. The primary reason is that I don’t know what to think, or even where to begin to learn, about banking in Kazakhstan. I think I understand low-stakes commercial banking in the USA – one procures a loan, maybe a mortgage, and pays back at interest. The rate attached to that loan reflects both the current market and the borrower’s presumed riskiness. Loans in Kazakhstan carry interest rates considerably higher than in the US – and I had some personal experience hearing about local friends and their families who had loans from banks. The borrowing and lending did not seem to follow a model I was familiar with – families were borrowing massive amounts of money at seemingly impossible-to-pay-back interest rates. BTA bank was at the forefront of these practices, though it was hardly alone. In the post-2008 world, however, irresponsible banking practices hardly seem exotic to Americans.

Shortly before the attacks in Janaozen, Abliazov appeared in a UK court in connection with his embezzlement charges (BTA under his leadership allegedly stole $5 billion from its Kazakhstani lenders). From reading some comments on various forum, news, and video internet postings, it would seem some prefer to lay blame on Abliazov’s doorstep in London. There was an interesting exposé in Reporter (Репортер of October, 2011 [Russian]) which referred to Abliazov as a Kazakhstani Zugzwang – a situation when chess players are forced to make a move they don’t want, or are stuck in a corner with every move threatening checkmate. Might this be another maneuver?

 The Events of December 16, 2011

The strike of oil workers appeared to erupt into violence. It’s unclear exactly what relationship lies between the peaceful protesters and the arsonists attacking police forces.

Coverage from RFE/RL and Andrew Kramer of the New York Times offer a glimpse of two Western media outlets at either end of the information continuum. I’m sad to say I didn’t save the original version of the article from the NYT, which has since been corrected. Originally it claimed, among other things, that Almaty was the capital of Kazakhstan and that the New Year’s decorations were for a Christmas party for the city’s children. If this were the Cleveland or Indianapolis city newspaper I would not care. The NYT claims a higher status and should be expected to live up to it. Kramer still stands by his shaky claim that “leaders throughout this region have been unnerved by events in the Middle East” and the patently false statement that “Nazarbayev… took over his country after declaring independence 20 years ago on Dec. 16.”

Speaking of the events of twenty years previous, Kazakhstan’s Prosecutor-General’s Office announced on December 18 that “hooligans” had clashed the previous day with police at the Shetpe railway station. TASS reported twenty years earlier that “hooligans, parasites, and other antisocial persons” had rioted in Alma-Ata (Almaty).

Regional Unrest

In nearby Shetpe, either “hooligans” or “oil workers” destroyed New Year’s and Independence Day decorations and took over the local railway station and stopped some trains. Several passenger and freight trains were halted before police restored order. Other “rioters” allegedly dismantled train tracks in Sai-Utes (Сай-Утес), north up the line from Shetpe and a crossroads for road traffic to Janaozen.

Gazeta.Kz has given a sequence of events at Janaozen, Shetpe, and Sai-Utes. The Prosecutor-General’s Office has promoted a transparent, official version of events [Russian] and is working with international bodies. Opposition groups, however, have been vocal about the repressive response from the government.

Possible Causes

Nazarbaev has publicly stated that he doubts the striking oil workers were behind the attacks. Whether or not they were, this will allow the government to offer amnesty for repentant oil-workers.  “One shouldn’t confuse an oil mens’ working dispute with the criminal acts of bandits who aimed to take advantage of the situation.” RFE-RL alleges that the region including Aqtau, Janaozen, and the Caspian coast holds 70 percent of Kazakhstan’s oil output, itself more than 10 percent of the national gross domestic product.

Some have pointed fingers at the “restive” locals, members of the Adai clan who are famous throughout Kazakhstan for a perceived historical propensity for protest and resistance. Others have resorted to blaming the attacks on the oralman, or “returners.” [Russian]

The leaders of the strikers are oralman. They are a very arrogant caste in Kazakhstan, coming through a government program that repatriates those who had fled from the Reds during the famine in the last century. They come, get a lot of subsidies, incentives, quotas (for higher education, for example), and land… The police recently eliminated a bunch of Wahhabi extremists and their leader was an oralman who came from Mongolia…

Naturally, this does not sit well with everyone. In an interview with K-plus, striking oil worker Orazbai Tursynbai laid out his complaints regarding the local political power’s divisive measures. [YouTube link] My very rough translation from 0:30 to 1:25

And our director Eshmanov is dividing us, saying this is the land of the Adai. He is dividing us by clan [ру] – isn’t that enough? … And what about Temur Kulibayev, head of the National Welfare Fund [Самрук-Казыны]?  The whole economy is in his hands! He’s dividing us up, calling us strikers “returners” [оралман] and charging them with all the horrible sins. We’ve been standing here more than one hundred days and the president and the government pretend that nothing is happening. Where I ask, is our state? Because of their indifference, we must turn to the European Parliaments and send delegates. Shame on them [our government]! We are like orphans with living parents.

Tursynbai seems to appear again after the December events in the aforementioned RFE/RL story as Orazbai Tursynov.
People are fed up with this [negligence]. During the cold winter days, the number of striking oil men on the Central Square [in Janaozen] might seem to be decreasing. But they have a huge number of relatives [supporting them]. All of them are hungry and tired of living with no money. We wanted to make our position clear.
 So, is oil the wealth of the nation? The reality of the oil industry is quite complicated, and it might be worth while to ask why “protests” only seem to hit the national oil companies [KazMunaiGaz and subsidiaries] while leaving Western oil companies alone [TengizShevron, KarachaganakPetroleum]. Far from being the wealth of the nation, might oil really be the root of the nation’s greatest problems?

“Oil is slavery. Here, there is no democracy,” said Baurzhan, another of the sacked strikers from oil firm KBM, which is jointly owned by London-listed KazMunaiGas Exploration Production and CITIC, China’s biggest state investment company.

Another laid-off oil worker, a father of four who declined to give his name, said: “They say hooligans did this, but if you hadn’t been paid for seven months then you would think about raiding an ATM. The oil workers have mouths to feed.”

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This post was written by...

– author of 20 posts on 17_PersonNotFound.

Michael earned an MA in Central Eurasian Studies in 2011 and remains a student at Indiana University pursuing a dual PhD in Russian History and Central Eurasian Studies. He served 6 months in the Peace Corps in Uzbekistan in 2005. After the events in Andijan and the subsequent closure of the program, he served 2 years in southern Kazakhstan, returning to the Midwest in 2007. His general area of interest is on post-Timur Kazakhstan and Uzbekistan, centered on the Syr Darya river valley.

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