Publication: Eurasia Daily Monitor Volume: 2 Issue: 133

Rumors of the impending dismissal of Kazakhstan’s current government, headed by Prime Minister Daniyal Akhmetov, have circulated since September 2004, when President Nursultan Nazarbayev criticized the government for distorting administrative reform efforts and inflating the ungainly administrative machine up to 16 ministries and a dozen independent governing bodies unaccountable to any of ministries.

Since those comments were made, criticism of the cabinet of ministers has noticeably increased. On June 13, Minister of Finance Arman Dunayev’s report to parliament, which revealed poor budget performances in 2004, prompted some deputies to demand the immediate resignation of the government.

Adding fuel to the already heated emotions in parliament, the auditing committee reported that 31.3 billion tenge ($231.5 million) had been diverted from social infrastructure programs last year. Further investigations carried out by the Prosecutor-General’s Office and the Agency for Fighting Economic Crimes pointed to the mismanagement of funds earmarked for housing and road construction. In 2004 12 government officials were sacked for financial crimes and abuse of authority. This year the deputy minister of transport and communications and the deputy minister of finance stepped down amid a surge of similar scandals. During a session of the Security Council, President Nazarbayev warned that any government official suspected of financial irregularities should be sacked (Kursiv, May 26).

The new wave of accusations and firings may create the impression that the state is bent on rooting out rampant corruption in the highest levels of power and pave the way for a transparent economy. But the more plausible explanation for the sudden emergence of a new anti-corruption crusade lies in the upcoming presidential elections.

In his address to the nation in February, President Nazarbayev promised affordable housing, salary and pension increases (starting July 1), and the development of a wide network of social infrastructure. But the government’s inability to cope with these tasks before the elections is becoming evident. Prime Minister Akhmetov took desperate efforts to minimize the soaring prices for agricultural produce, but to no avail. In three months vegetable prices rose by 5.2% and meat prices rose by 0.2%. In a bid to cushion the effects of galloping prices for staple foodstuffs, the government opened its borders to convoys with agricultural produce from Kyrgyzstan (Kazakhstan TV, June 27).

On June 22 Prime Minister Akhmetov convened an emergency cabinet meeting to discuss the implementation of a new housing program, one of the most important items on President Nazarbayev’s pre-election agenda. The state program envisages the construction of relatively affordable housing for the population at the reduced price of $350 per square meter. Although 42 billion tenge ($310.5 million) was allocated from the state budget for this purpose, as of June 1 only 14.3 billion tenge ($105.7 million) had actually been used. Akhmetov, using very harsh language, publicly shifted the blame for the failed housing program to the Ministry of Industry and Trade, and added that regional governors (akims) were “extremely ineffective” in their efforts to reach the set target (Khabar TV, June 22).

Prime Minister Akhmetov is in an unenviable position. An ardent advocate of integration within the CIS Single Economic Space, and an influential figure in the energy sector with solid Russia contacts, he took the post of prime minister at the height of intensified Russian-Kazakh economic ties. Over the last few years the press has frequently suggested that he was lobbying on behalf of several Russian electricity and coal companies. The recent bankruptcy of the Almaty Power Consolidated (APC) electricity company, which ran up a debt of 19 billion tenge ($140.5 million), has whipped up these feelings. The fact that Akhmetov managed to buy back APC’s assets after a series of painful negotiations with the Halyk Savings Bank at a cost to the state budget of billions of tenge is regarded as a dubious face-saving effort. Efforts to modernize APC, when 80% of its equipment is obsolete, will place a heavy burden on the state budget (Kazakhstanskaya pravda, June 28).

It is only logical for Nazarbayev to eliminate anything that may in any way damage his pre-election image. He clearly needs someone with considerable political charisma to replace the weary Akhmetov. Presidential aide Yermukhambet Yertysbayev, in a newspaper interview, repeated that the current government might resign, presumably in late August, if it fails to curb inflation, which he claimed is more of a political issue than economic one (Liter, June 15). The avalanche of criticism heaped on the prime minister for his unsuccessful attempt to create state holdings to exert control over national companies, endangered social benefits for pensioners, and the lack of adequate housing for teachers and medical workers are likely to precipitate the end of Akhmetov era.

There are several potential prime minister candidates from within the presidential entourage. Some political observers name Alexander Pavlov, co-chairman of the presidential Otan party, presidential advisor Grigory Marchenko, and Minister of Agriculture Akhmetzhan Yesimov as candidates for the post of prime minister. Whoever steps in as a new prime minister, he will inherit a burdensome legacy of unsolved problems.