US embassy cable - 05ALMATY3750

UNCLAS  ALMATY 003750 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE FOR EUR (ASTERLING), EUR/CACEN (JMUDGE), EUR/ACE 
(ESMITH), EUR/PPD (CFITZGERALD); DRL/PHD (CKUCHTA-HELBLING) 
STATE PASS TO USAID 
WHITE HOUSE FOR NSC (DMERKLE) 
 
E.O. 12958: N/A 
TAGS: ECON, PGOV, KDEM, EAID, EPET, KZ, 2005 Election, ECONOMIC, POLITICAL 
SUBJECT: A/S FRIED'S MEETING WITH KAZAKHSANI CIVIL SOCIETY 
ACTIVISTS, SEPTEMBER 29, 2005 
 
REF: ALMATY 3453 
 
1. (SBU) Summary:  Participants in a civil society roundtable 
with A/S Fried cited corruption, inadequacies in legislation 
regulating business, an economy over-dependent on oil 
revenues, the weakness of independent media, and the lack of 
political involvement among young people as some of the 
challenges facing Kazakhstan.  All, they said, must be 
addressed in order to ensure Kazakhstan,s continued economic 
and political health.  In the view of several participants, 
the GOK was moving backward rather than forward on many of 
these issues, and thus increasing tensions within society. 
End summary. 
 
2. (SBU) During a September 29 visit to Almaty, EUR A/S 
Daniel Fried met with Kazakhstani civil society activists to 
discuss the political and economic environment in advance of 
December 4 presidential elections.  Kazakhstani participants 
included Yevgeniy Zhovtis, Kazakhstani International Bureau 
of Human Rights; Tamara Kaleyeva, Adil Soz media freedom 
organization; Sergey Zlotnikov, Transparency International; 
Pavel Morozov, Young Professionals, Society; Raimbek 
Batalov, Forum of Entrepreneurs; and Viktor Embayev, Almaty 
Association of Entrepreneurs.  NSC Director David Merkel, 
Ambassador, DCM, POEC chief (notetaker), and DAO FSN 
(interpreter) also participated. 
 
----------------------------------------- 
Business Environment, Corruption 
----------------------------------------- 
 
3. (SBU) Participants described a situation in which the GOK 
was actively trying to support the development of 
small-and-medium-sized enterprises, but seeing few concrete 
results due to the problems posed by corruption, an 
inadequate legal regime, the non-transparency of the 
decision-making process on administrative issues related to 
business, and the lack of awareness among entrepreneurs of 
their rights.  Embayev, explaining that his association had 
been founded by entrepreneurs themselves and did not reflect 
the interests of big business, described joint efforts with 
the USG-funded Center for International Private Enterprise 
(CIPE) to draft amendments to the administrative code to 
limit the use of fines, which can be misused as a mechanism 
of corruption and pressure.  Batalov cited pending 
legislation on entrepreneurship as a key concern for SMEs 
(Note: In general, the draft entrepreneurship legislation is 
positive.   However, among its draft provisions are 
requirements for accreditation and the establishment of a 
GOK-controlled fund for business associations.  SME's are 
concerned these could create obstacles for businesses without 
government connections. End note.) 
 
4. (SBU) Corruption at the top is a key obstacle to political 
change, according to Zlotnikov.  Nazarbayev fears losing his 
substantial property holdings if he loses power.  He added 
that Kazakhstan,s economic success is illusory, based on 
$70/barrel oil prices that cannot last.  Not long ago the 
state budget was $3 bn annually; it is now $15 bn.  There is 
almost no industrial production in Kazakhstan.  The GOK 
estimates the shadow economy at 30% of GDP, but Transparency 
International places the figure closer to 60%.  Of eight 8 
million workers, two million pay no taxes, according to 
Zlotnikov.  He identified political reform, including the 
involvement of representatives of business in government, as 
crucial for the continued economic health of the country. 
Zlotnikov also cited the need for local self-government, an 
effective system of checks and balances, an independent 
judiciary, and reform of the procuracy as crucial needs. 
 
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Media Freedom 
------------- 
 
5. (SBU) Kaleyeva noted several problems related to freedom 
of speech, including the decision the previous day of the 
independent printing house Vremya to cancel its contracts 
with seven opposition newspapers (reftel), and the court 
decision to shut down the independent/opposition newspaper 
Respublika.  She underscored the importance of the continued 
publication of the opposition newspapers, as in her view the 
 
 
rest, regardless of their nominal orientation, were actively 
supporting President Nazarbayev,s electoral campaign.  She 
underscored that while 80% of all TV stations in Kazakhstan 
are private, none is truly independent. 
 
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Young People 
------------ 
 
6. (SBU)  Morozov explained that the majority of young people 
in Kazakhstan are apolitical.  He, together with a group of 
about 30 foreign-educated young professionals, had decided to 
created an organization to promote democratization by getting 
young people involved and interested in politics through 
participation in activities such as election monitoring and 
exit polling.  The GOK finally registered the group in June, 
following several months of delays and scrutiny. 
 
--------------- 
The Big Picture 
--------------- 
 
7. (SBU) Kazakhstan has had great success with ?o8 
political reforms such as the creation of a sovereign state 
and government institutions, and some economic (e.g., 
banking) reforms, Zhovtis said.  The transition to the 
?8 level of reform requires clear rules, effective 
institutions to enforce them, the minimization of government 
intrusion into the economy, and reduced corruption.  For this 
to occur, it is essential to have independent media, strong 
civil society, and political pluralism.  In Zhovtis, 
assessment, the situation in all three spheres is worsening. 
In the early 1990s there were a great number of independent 
media, including broadcast outlets; now there are no 
independent, electronic media.  Civil society is weak and 
divided, with NGOs dealing with social and political problems 
regarded by the government as dangerous.  The small group 
that demands political changes is seen as an annoyance by the 
GOK. 
 
8. (SBU) Zhovtis expressed concern about what he called the 
GOK attempt, the fact that in the run-up to December 
presidential elections, , the GOK is to portray all who do 
not support the status quo as enemies.  This is creating 
growing tension in society by setting groups against each 
other.  The police and the procuracy use Soviet-era tactics 
to suppress the political opposition, independent media, and 
NGOs that demand respect for political rights.  In Zhovtis, 
view, there is no need for this:  the existing political 
structure is stable enough to permit normal political 
dialogue.  Instead, pressure from the government is 
radicalizing some portions of society and creating 
&hysteria.8 
 
ORDWAY 
 
 
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