BASIC FACTS

  1. Kazakhstan is geographically diverse, comprising extensive grassland, semi-desert and mountainous areas. It is the second largest of the former Soviet Republics and the fourth most populous (15.6 million—50 per cent Kazakh, 32 per cent Russian, 4 per cent Ukrainian, 2 per cent German). It borders Russia, China, Kyrgyzstan, Uzbekistan and Turkmenistan.

  2. At the end of 1997 the capital was moved from Almaty to Astana (formerly Akmola), which is located in a more central region of the country and has good rail connections. Despite some reported pressure on companies to relocate to Astana, Almaty is expected to remain the country's commercial capital for the foreseeable future. The British and other Western Embassies are remaining in Almaty.

INTERNAL POLITICAL

  3. President Nazarbaev was elected with 98 per cent of the vote on 1 December 1991. A referendum in April 1995 on the extension of his term of office until the year 2000 produced a 95 per cent vote in favour. In Autumn 1998 he called Presidential elections for January 1999, nearly two years early. The OSCE called for a postponement, arguing that there was no time for the opposition to prepare. The OSCE also complained about the bar on one of the principal contenders, former Prime Minister Akezhan Kazhegeldin, on the grounds he had participated in a meeting of the unregistered "Movement for Honest Elections", and about media restrictions. The elections went ahead, monitored only by an OSCE technical team rather than a full observation mission. The OSCE's report listed numerous flaws in the election, which President Nazarbaev was reported to have won with 78 per cent of the vote.

  4. One of the key domestic political issues is the role of the large Russian minority, who form a majority of the population in the north, near the Russian border. Although predictions of serious conflict have not been fulfilled, there are periodic complaints about discrimination and the introduction of Kazakh as the state language.

ECONOMY

  5. The Kazakh economy was developed essentially as a raw materials appendage of the centralised Soviet economy and produces 95 per cent of the former Soviet Union's phosphorous, 90 per cent of its chrome, 70 per cent of its lead and zinc and 50 per cent of its silver. Kazakhstan accounts for 35 per cent of the former Soviet Union's agriculture. Kazakhstan's oil reserves are second only to Russia in the CIS and it has substantial reserves of gas. Although it currently produces 26 million tonnes of oil (almost three times as much as Azerbaijan) and 6 billion cubic meters of gas, in practice development has proceeded much more slowly than hoped for. This is largely because of failure to make early progress on new export pipelines, although construction of a major export pipeline (CPC) may start in 2000. But the Kazakh Government has pursued a consistent policy of economic reform, including tight budgetary policy. This has included attracting the highest per capita rate of foreign direct investment of any former Soviet republic. Inflation has been brought down from nearly 2,000 per cent in 1994 to 17.4 per cent in 1997.

  6. The second half of 1998 saw a marked slowdown in the Kazakh economy. A number of factors have influenced this including the collapse of the Asian financial markets (e.g., South Korea was a major investor), a global depression in oil prices, economic turmoil in Russia (affecting exports to Russia and remittances from Kazakhs working there), and a poor harvest. GDP growth in 1997 was 2 per cent, but fell by 2.5 per cent in 1998. GDP per capita was US$1390 in 1997.

HUMAN RIGHTS

  7. Although by no means the worst offender in Central Asia, Kazakhstan's performance on human rights since independence has been patchy with a gradual deterioration. Genuine opposition activists are subject to harassment and freedom of the press has been steadily restricted. There are, however, relatively active NGOs and there has been progress in some areas, e.g., on gender issues. As elsewhere in the region, prison conditions are well below acceptable standards.

BILATERAL RELATIONS

  8. The British Embassy in Almaty opened in October 1992. It has four UK-based staff, due to increase to six under the Caspian enhancement programme. President Nazarbaev visited the UK as a Guest of Government in March 1994. He also attended the VE Day commemorations in London the following year. A Kazakh Embassy opened in London in June 1995. There is also a Kazakh Trading House, and an unofficial cultural centre in London. Kazakh Foreign Minister Tokaev visited London in June 1998. HRH The Prince of Wales visited Almaty in November 1996. Ms Quin visited in October 1998.

  9. UK exports in 1998 were £95.8 million, up 78 per cent on 1997, and imports £40.5 million, up 289 per cent. This upward trend is expected to continue as the energy sector develops British companies are heavily involved in Kazakhstan, especially in the oil and gas sector (BP Amoco, British Gas, Shell), but also in construction (Fitzpatrick), security printing (De La Rue), power generation (National Power) and the tobacco industry (Gallagher). Five outward missions supported by the DTI will have visited between Autumn 1997 and Autumn 1999. The annual oil and gas sector mission has been particularly successful in gaining high-level access for exporters. The Kazakh-British Trade and Industry Council promotes trade and investment co-operation. ECGD cover for Kazakhstan is under review in the light of the Russia crisis.

  10. The current Know How Fund allocation is £1.5 million (third largest in Eastern Europe and Central Asia). The programme focuses on environment, health, agriculture and civil society/Democracy.

  11. The British Council has a full directorate in Kazakhstan, which also oversees their office in Bishkek. The MOD maintains a small programme of defence co-operation including English language training.

DRUGS

  12. Kazakhstan will benefit from the Central Asian Drugs Initiative. In addition the UK has funded bilateral law-enforcement training and equipment for Kazakh drugs control agencies worth £49,700 over the last six years.

ENVIRONMENT

  13. DFID are supporting international efforts to assist with Kazakhstan's two major environmental disasters: the shrinkage of the Aral Sea due to environmental mismanagement in the Soviet era and health problems in and around the Semipalatinsk nuclear test range.