KAZAKHSTAN PAYS HIGH PRICE FOR COURTING FOREIGN COMPANIES

During the first days of December, Kazakhstan was hit with several crises that deeply shook the state’s belief in smooth, trouble-free development. Just as the investigations began into the causes of the explosions outside the agricultural library in Almaty (see EDM, November 30), reports emerged of a coal mine disaster in Karaganda region on Sunday, December 5.

As reported by the state Khabar television channel, 87 miners were working the night shift at the Shakhtinsk coal mine when methane gas ignited, killing 23 of them instantly. Three miners were rescued and hospitalized with injuries of varying degrees (Khabar TV, December 6).

But different sources are giving conflicting accounts of the accident. Journalists from KTK television complained that management and trade union officials at the mine where the accident occurred were still refusing to release any information to the media, saying that they would not comment on what had happened before the investigations were finished. KTK reported that 21 miners were killed by the blast, two more with extensive burns died en route to the hospital, and another three miners were being treated in the hospital’s intensive care unit (KTK, December 6).

The Shakhtinsk coal mine, located in the town of Shakhtinsk (Central Kazakhstan), as well as over a dozen other pits in the Karaganda coal basin, is owned by the India-based ISPAT-Karmet company, which also fully owns the largest steel mill in Temirtau, Karaganda region. ISPAT, totally unknown in Kazakhstan before it arrived in Temirtau in 1995, is reputed to be the most profitable enterprise in Kazakhstan’s steel industry. The company employs 16,000 miners in their pits for an average monthly wage of 32,000 tenge ($246), which is, according to financial experts in Kazakhstan, an insignificant sum compared to the wages paid to the company’s miners in Mexico or Canada.

ISPAT’s activities in Kazakhstan have been the source of persistent rumors related to corruption scandals in Kazakhstan. Not long ago, an independent newspaper wrote, referring to a BBC report, that the Indian steel tycoon Lakshmi Mittal had paid $100 million to the influential Shodiev business group in Kazakhstan, which acted as an intermediary in a deal to transfer the Karaganda metallurgical plant to ISPAT (Vremya, September 9). Despite these stories, the government has always positively assessed the ISPAT group’s economic activities. Two months ago a worker was killed at the steel mill, and then in October a fire broke out at the ISPAT-Karmet-owned Kostenko coal mine. But the fire inflicted no casualties, as the miners were quickly evacuated. But the December 5 methane blast is the first serious mine incident involving a great number of human lives, and it is impossible to hush it up.

Immediately after the blast, the government set up an investigation panel, and President Nursultan Nazarbayev sent condolences to the families of the victims. Lakshmi Mittal, president of the Mittal Steel Company, flew in from London to take part in the investigation and announced that the families of the deceased would receive from 5 to 7 million tenge ($38,000-54,000) in compensation and the company would cover burial costs (Khabar, December 6).

But the families who lost their breadwinners may draw very little solace from these promises. It is likely that the incident will fan the flames of the intensifying criticism of how the government has attracted foreign investors. Even the usually docile parliament has become more vocal in recent months, criticizing Prime Minister Danial Akhmetov for the increased number of guest workers, as well as blatant violations of national environmental laws and safety regulations by foreign companies. According to the Environmental Ministry, in the first nine months of 2004, 14 large companies discharged 3.5 million tons of pollutants; 1 million of those tons came from ISPAT-Karmet (Express-K, October 19).

The Shakhtinsk investigation committee, headed by Minister of Energy and Mineral Resources Vladimir Shkolnik, is to complete its investigation in ten days. However, any conclusion put forward by a government-led panel can and will be questioned by the opposition. Perhaps to avoid that embarrassment, Shkolnik announced that the investigating panel would include Russian experts who are to act as independent investigators. The real reason for inviting Russians seems to be the lack of qualified coal-industry experts in Kazakhstan, as many of them migrated to Russia in the last decade.

Conspicuously, ISPAT-Karmet’s trade union has stood largely aloof from the tragedy. The passive attitude of trade unions in labor disputes is almost a rule in Kazakhstan, although formally enterprise and trade union representatives sign a “social-partnership” agreement. Kazakhstan has signed 16 conventions of the International Labor Organization, but in fact it is hard to name a company, privately owned or state-run, that would respect the rights of its employees. Ironically, the blast in the Shakhtinsk mine coincided with a meeting of the Social Partnership Forum. Participants of the Forum honored the victims of the blast with a minute of silence, but genuinely protecting workers’ rights will require much greater efforts.