Wealth Gap Widening in Kazakhstan

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"The city with capital status was always a source of funding from the state budget during Soviet times," said Tulegen Askarov, a leading Kazakh business columnist. "However, at this point Astana is only absorbing financial transfers from the national budget, and that seems abnormal." According to the Ministry of Finance, in 2008 Astana received about $1.6 billion in transfers from the national budget, but contributed back only about $80 million. In contrast, Almaty, with around twice as many residents and a much more extensive infrastructure, received only $750 million last year. The former capital remains an island of prosperity and growth thanks to its status as the financial, cultural, and intellectual center of the country.

The dichotomy between the cities and regions is likely to increase, as migrants within the country surge to Almaty and Astana to reap the benefits of the mineral-driven economy, which was officially growing at an almost double-digit pace before the global downturn. Many top professionals from the regions – doctors, teachers, engineers, and managers – have already made the move, helping lift Almaty's population to almost two million. According to forecasts by the National Statistics Agency, Astana could have one million residents by 2010, about twice the size of five years ago. That only further worsens the prospects of the regions in terms of investment, economy of scale, and infrastructure development.

The country's political system itself undermines the prospects for more effective regional development. Local governments, all appointed by the authorities in Astana, rarely have real incentives to promote the interests of the regions they run, as they are accountable to the political center and not elected by local citizens. Some officials usually hail from the loyal clans and networks of the ruling political class and often do not have enough managerial skills, since their performance is mainly assessed according to their loyalty instead of their merit. Critics of this system say that appointed officials then bring along their own cronies, whose intentions are even more short-term, predatory, and marginal to the interests of the locality.

As a result, many local and foreign experts blame mainly the regions themselves for the underdevelopment of their communities. For example, Togzhan Kizatova, a civic activist from Demos, a non-governmental organization in the Atyrau region, said that "if the local governments could effectively use the local budgets with no corruption, we could easily manage without any alternative budget redistribution system on a nationwide scale." That opinion is echoed by Olzhas Khudaibergenov, a well-known Kazakh economist. "The main problem of regional development is that a lot of nationwide developmental programs are implemented ineffectively on the local level," Khudaibergenov said.

A LACK OF PEOPLE POWER

Not everyone agrees. "On the regional level, the use of budgetary resources is much more effective," said Evgeniy Aman, a ruling party member of the Mazhilis, the lower chamber of parliament. "The projects implemented there are more tangible and concrete because they are tied to specific utility, infrastructure, and healthcare improvement programs. On the local level they are under tighter control because they are implemented and monitored very closely and the punishment for [poor management] is much more severe."

Until now, however, local citizens have rarely emerged from the general apathy and inertia to force local officials to improve governance. "The challenge is how the local population and their representatives in the local elected bodies can ensure the effectiveness of their local governments," said Haoliang Xu, the UNDP permanent representative in Kazakhstan. "In this regard, wider public participation in decision-making and in monitoring of government activities will be helpful."

"Kazakhstani society still does not have a developed public discourse and political language on the territorial development of the country," said Eset Esengarayev, a sociology professor from the state university in Karaganda. But, observers say, the time to initiate such a discussion is now as the global economic slump forces tremendous cuts in the national budget and has already led to growing disputes over resource distribution to the regions, Astana, and Almaty.

This year, the two big cities again received good portions of the shrinking public finance cake, leaving the other regions with fewer resources to meet basic social needs and to deal with the likelihood that incidents such as the water stoppage in Stepnogorsk will repeat, with ever-increasing frequency.

Provided by Transitions Online—Intelligent Eastern Europe

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