Publication: Monitor Volume: 4 Issue: 128

The relocation of Kazakhstan’s capital from Almaty to Astana has rekindled the issue of the republic’s regional financial autonomy. Specifically, Almaty’s loss of status as capital has encouraged Almaty’s mayor, Viktor Khrapunov, to request special taxation privileges for his region. Khrapunov’s request is typical of a general demand by regional heads for greater financial independence. (Focus Central Asia [Almaty], June 28/29) Kazakhstan’s 1993 and 1995 constitutions both declared the country a unitary state. Financial centralization means that taxes are collected by central authorities and then redistributed to the regions. Since the republic’s independence, regional heads–known today as “akims”–have been appointed and dismissed by the president. Centralization was further tightened last year when the number of regions was reduced from nineteen to fifteen.

This irks rich, extraction-based regions, such as the western oil-producing areas, which are forced to surrender their revenue to poorer agricultural or industrially based regions in the south and center. Ravil Cherdabaev, akim of the Atyrau region in which U.S. Chevron has substantial investments, has reportedly been lobbying since 1996 for tax-raising powers. The regions do not at present have them. Nor are they legally entitled to seek financing through other means, such as bank loans or the issue of Eurobonds.

On June 8, President Nursultan Nazarbaev stated on television that, “so long as nine of the fifteen regions receive subsidies and regional akims remain dependent on the central budget, there will be no regional independence. Let’s first get the economy and regional economies going, then we can start talking about more akim independence.” (Focus Central Asia [Almaty], June 28-29) Some local analysts put the president’s reluctance to decentralize down to politics rather than economics, pointing to the state’s fear that some regions, notably in the north, might possess the financial means to secede. In his new book (see the Monitor, June 22), former Prime Minister Akezhan Kazhegeldin argues that political decentralization and the election of akims are the precondition of economic success.–SC