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COUNTRY BRIEFS


GENERAL

Kazakhstan is the largest of the Central Asian republics, covering some 2.7 million square kilometres. It is bordered by Russia to the north, the Caspian Sea to the south-west, Turkmenistan, Uzbekistan and Kyrgyzstan to the south, and China to the east.

In 1998, the capital was moved from the south eastern city of Almaty to the northern city of Astana (known at the time as Akmola).

More than half the 15.6 million people in Kazakhstan are ethnic Kazakhs. There is also a sizeable Russian community (23 per cent of the population) and smaller communities of Uzbeks, Ukrainians, Uighurs, Tartars and Germans. Kazakhstan's population is dropping; in 1998 it was about 18 million. Religious affiliation is more or less equally split between Islam and Russian Orthodox.

The national language, Kazakh, is a Turkic language and is thus akin to the Kyrgyz, Uzbek, Tatar, Turkmen and Uighur languages spoken in Central Asia. Kazakh has well-established communities of speakers in Kyrgyzstan and Tajikistan as well as in Mongolia, China and Iran. It can be written in the Cyrillic, Latin or Arabic script. Russian is extensively used for administrative and technical purposes, as well as still being a first language for a significant proportion of the population.

Kazakhstan gained its independence from the former Soviet Union on 16 December 1991. The national day, called "Day of the Republic", is celebrated on 25 October. The President of Kazakhstan, Nursultan Nazarbayev, has ruled the country continuously since its independence in 1991.

Kazakhstan is a member of the United Nations, Shanghai Cooperation Organization (SCO), North Atlantic Cooperation Council (NACC), Commonwealth of Independent States (CIS) and the Organization for Security and Cooperation and Europe (OSCE). It is the OSCE Chair in 2010, and plans to hold an OSCE Summit in Astana in late 2010.

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POLITICAL OVERVIEW

Kazakhstan is a presidential republic where power rests almost entirely with the President.

Kazakhstan has had two constitutions since independence. The first gave the President wide-ranging powers. The second, approved by referendum in 1995, further strengthened the President's hand by abolishing the position of Vice-President. In 1998, Parliament gave the President even greater powers by extending Presidential terms from five to seven years and by abolishing a number of restrictions such as the two term limit, the maximum age limit, and the requirement for at least 50 per cent voter turnout.

The President is elected by direct vote. He appoints the Prime Minister and the First Deputy Prime Minister. The Parliament consists of a Senate (upper house) and the Majlis (lower house). There are 39 members of the Senate, seven of whom are appointed by the President. The other members are popularly elected by proportional representation. The Majlis, or lower house, comprises 77 seats. Members are popularly elected to serve four-year terms.

President Nursultan Nazarbayev was first elected in December 1991 and has been Kazakhstan's only President since independence. Prior to his election in 1991, he was Chairman of the Supreme Soviet of the Kazakh republic within the Soviet Union.

The current Prime Minister is, Karim Masimov who took office on 8 January 2007.

In the Presidential election held on 4 December 2005, Nazarbayev gained over 91 per cent of the vote, an increase over the 80 per cent he gained in the last Presidential election in 1999. The OSCE said the December 2005 election showed some improvement on past polls but still failed to meet international standards. In 2006 Nazarabayev merged his Otan party with three other parties, creating a coalition that was subsequently named Nur-Otan. Nur-Otan won every seat in the August 2007 Majlis elections with 88% of the popular vote.

President Nursultan Nazarbayev has called a general election for 3 April 2011.

Nuclear Disarmament and Energy

Kazakhstan allowed the destruction of the 1,300 nuclear warheads it inherited following the collapse of the USSR. All Kazakhstan's nuclear facilities are now under International Atomic Energy Agency (IAEA) safeguards. Kazakhstan signed the Additional Protocol to its Safeguards Agreement with the IAEA in 2004, and this entered into force in 2007.

Kazakhstan is currently the world's biggest uranium producer. Kazakhstan has about 15 per cent of the world's uranium reserves. In 2009 Kazakhstan produced 13,800 tonnes of uranium and is expected to produce 15,000 tonnes in 2010 (around 250 per cent the amount produced in 2007).

Like Australia, Kazakhstan had nuclear weapons tested in its territory, and takes an active approach to nuclear disarmament and non-proliferation. Kazakhstan is a party to the Nuclear Non-Proliferation Treaty (NPT), the Comprehensive Test Ban Treaty (CTBT) and the Central Asian Nuclear Weapon Free Zone (CANWFZ). Kazakhstan ratified the International Convention on the Suppression of Acts of Nuclear Terrorism on 14 May 2008 and is an active partner nation in the Global Initiative to Combat Nuclear Terrorism.

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ECONOMIC OVERVIEW

Kazakhstan's economy has performed strongly over the last decade, powered by booming energy and minerals exports, and facilitated by some economic reform, foreign investment and (mostly) good harvests. According to the World Bank, Kazakhstan sustained an average annual GDP growth of 10 per cent from 2001 to 2007, which slowed during the Global Financial Crisis to 3.2 per cent in 2008 and 1.2 per cent in 2009. In 2010, there were signs of recovery with International Monetary Fund forecast GDP growth of 4 per cent and some private forecasts even higher. Kazakhstan's estimated nominal GDP per capita of US$8,108 for 2010 far exceeds those of its Central Asian neighbours.

For historical and geographic reasons, including its rich natural resources, Kazakhstan's economy is more closely tied to that of Russia than those of any other Central Asian economy. Russia continues to lease some 6,000 sq km of Kazakhstan's territory around the Baikonur Cosmodrome space facility, from where Sputnik 1 was launched in 1957. The Cosmodrome is in active use and its lease has been extended to 2050.

Kazakhstan has observer status in the World Trade Organization (WTO), having applied to join in 1996. WTO accession negotiations are continuing. On 1 January 2010 Kazakhstan established a customs union with Belarus and the Russian Federation, which envisages adoption of common tariffs and eventual removal of internal border controls. As part of Kazakhstan's WTO accession process, Australia concluded a bilateral market access agreement on goods and services with Kazakhstan in 2008.

Energy and Minerals

Kazakhstan possesses vast reserves of natural resources and fossil fuels, many of which are untapped. Globally, Kazakhstan ranks in the top ten countries for coal, oil and gas, chrome, zinc and bauxite reserves. Kazakhstan possesses 15 per cent of world uranium reserves, 8 per cent of zinc, 7 per cent of manganese and 4 per cent of iron ore. In production terms, however, the Kazakhstan mining industry is far from realising its full potential.

According to the US Department of Energy, Kazakhstan's oil production in 2008 was 1.43 million barrels per day. Full development of its major oilfields could make Kazakhstan one of the world's top five oil producers in the next decade; for example, the planned further development of its giant Tengiz and Karachaganak fields is expected to add 1.5 million barrels per day by 2014. Kazakhstan's sector of the Caspian Sea is believed to hold several other major oil and natural gas deposits as yet unexploited, including the giant Kashagan oil field, currently under development. Kazakhstan plans significantly to increase its oil production.

Steadily rising natural gas production is turning Kazakhstan from a net importer to a net exporter in the near term. Natural gas development has lagged behind oil due to the lack of domestic pipeline infrastructure linking the western producing region with the eastern industrial region.

Oil exporting capacity was substantially enhanced in 2001 with the opening of a pipeline from Kazakhstan to Novorossiysk, a Russian port city on the Black Sea. Kazakhstan oil is also exported across the Caspian Sea to join the Baku-Tbilisi-Ceyhan pipeline, and piped to the Turkish Mediterranean port of Ceyhan. In late 2005 a pipeline to China was opened.

The industrial sector is heavily reliant upon mining and mineral processing and on related activities such as the production of basic mining and engineering equipment.

Agriculture

Given its vast steppe lands able to accommodate both livestock and grain production, Kazakhstan has considerable potential for agricultural production. Kazakhstan among the world's leading wheat producers. Its main export markets are its central Asian neighbours, Iran and Turkey, although in recent years it has begun exporting to China, South Korea and Japan. The United States Department of Agriculture estimated that Kazakhstan's 2010 wheat production total will be 10.5 million tonnes, around 2.6 million tonnes less than the five-year average. Drought has been blamed for the reduced production levels.

Investment

Foreign direct investment in Kazakhstan exceeds US$100 billion.

While revenue from oil, metals and other resources will continue to be the mainstay of the economy over the medium term, economic stability in the longer term will depend on progress with structural reform, diversification of the economic base and higher levels of foreign investment in other sectors of the economy. In recognition of this, the Kazakhstan Government is looking to diversify the economy - especially in areas like non-ferrous metals production which complement its energy endowment - and to develop industrial clusters to promote synergies in sectors of comparative advantage.

As the Kazakhstan Government implements its transport development strategy, opportunities may emerge for Australian businesses in infrastructure development and financing. Valued at over US$30 billion, the strategy involves redevelopment of highways, railroads, airports and port facilities.

Kazakhstan's investment promotion agency is Kaznex Invest (http://www.kaznex.kz).

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AUSTRALIA'S RELATIONS WITH KAZAKHSTAN

Australia established diplomatic relations with Kazakhstan in 1992. Australia opened an embassy in Almaty in 1995, but closed it in 1999 due to resource constraints. Kazakhstan opened a Consulate in Sydney in January 1996, but closed it in March 2003 for similar reasons.

Australia's current Ambassador is Margaret Twomey, who is resident in Moscow, and makes regular visits to Kazakhstan. In January 2005, Australia established an Honorary Consul in Almaty. Kazakhstan's Ambassador to Australia, Yerlan Baudarbek-Kozhatayev, is resident in Singapore. Kazakhstan has an Honorary Consul in Perth.

Australia's Ambassador to Germany, Peter Tesch, is Australia's Special Envoy to Central Asia. Mr Tesch, a fluent Russian speaker, was Australia's Ambassador to Kazakhstan from 1996 to 1999.

At the 2006 Census, 649 Australian residents declared they were born in Kazakhstan.

A number of high-level visits have taken place between Australia and Kazakhstan. Kazakhstan's then Prime Minister, Sergey Tereshchenko, visited Australia in 1993; then Governor-General of Australia, Bill Hayden, visited Kazakhstan in 1994; President Nazarbayev visited Australia in 1996. Zhanar Aitzhanova, then Vice-Minister of Industry and Trade, led a trade and agriculture delegation to Australia in 2008. Aitzhanova is now Minister for Trade and Economic Development.

The two Governments signed an Agreement on Economic and Commercial Cooperation which came into force on 2 June 2004. The agreement aims to facilitate trade, investment and economic cooperation between the two countries. As part of Kazakhstan's WTO accession process Australia concluded a bilateral market access agreement on goods and services with Kazakhstan in 2008. Mr Rudd visited Astana, Kazakhstan on 1-2 December 2010 to attend the Organisation for Security and Cooperation in Europe (OSCE) Summit. Kazakhstan is the current OSCE Chair. The visit provided a valuable opportunity to develop bilateral relations with Kazakhstan and other Central Asian countries and to identify synergies between the OSCE and Australia's security interests in the region. Australia became an Asian Partner for Cooperation in the OSCE in 2009.

Commercial Relationship

Kazakhstan is Australia's leading trading partner in Central Asia, however, the level of trade between Australia and Kazakhstan remains modest. Direct two-way trade in 2009-10 was worth $23.7 million. Australia's exports to Kazakhstan, worth $12.8 million, consisted principally of vehicles. Imports from Kazakhstan, worth $10.9 million, consisted mostly of pig iron. Some trade is handled through intermediate markets such as Russia, China and the Netherlands.

Australian investment in Kazakhstan totalled $57 million in 2009. Several Australian companies are active in Kazakhstan, including WorleyParsons, Orica, Kentor Gold, Aker Solutions, Leighton Holdings, Jupiter Energy, Gloria Jean's Coffees, Rio Tinto and Snowy Mountains Engineering Corporation (SMEC). In addition Macquarie Group has an interest in Kazakhstan through its $530 million Macquarie Renaissance Infrastructure Fund (MRIF).

Agriculture is an area of considerable potential. The Australian Centre for Plant Functional Genomics in Adelaide is linking with the Kazakhstan Government on wheat and barley genetics. The two parties have signed a memorandum of understanding, which will see greater collaboration between Australian and Kazakh scientists working on drought, salinity and nutrient deficiencies and toxicity affecting cereal crops in both countries.

Opportunities exist for Australia to increase its share of the education market in Kazakhstan. There was a successful Australian education roadshow in Kazakhstan in 2008. Since 1994 some 7,000 Kazakhstan students have studied abroad supported by the Kazakhstan Government's "Bolashak" International Scholarship program, of which 74 scholarship recipients have studied in Australia. In May 2010 there were 112 Kazakhstan nationals studying in Australia. Kazakhstan's educational priorities include public administration, medical studies, agriculture and information technology.

Austrade Moscow and Vladivostok offices provide support for trade and two-way investment with Kazakhstan.

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Last Updated: February 2011

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