KAZAKHASTAN - The Non-OPEC Countries - Part 8.

President Nursultan Nazarbayev and his family control, directly or indirectly, virtually everything of significance in Kazakhstan. Nazarbayev has concentrated all decision making power on important matters in his hands, and those of a small number of persons around him aided by experts and foreign consultants. With no part of the economy more important than the hydrocarbon sector, Nazarbayev involves himself in all the big E&P deals, pipeline agreements or downstream projects. The process of decision making in the country follows presidential decrees issued in March 1997 re-centralising authority in all the sectors.

The political leadership in Astana, with President Nazarbayev as the source of all authority, retains many characteristics of the Soviet era. Among the ethnic Kazakhs in the leadership most were apparatchiks in the former Communist Party, and many still retain close ties with Moscow. There are also a number of ethnic Russians in top government and military posts.

Indeed, the relationship between Russians and ethnic Kazakhs is a barometer for stability in the country, with Russians forming about 40% of the population. Northern Kazakhstan has a majority Russian/Slavic population, up to 80%, and Russian nationalists still claim the territory. To dilute these claims as well as to soothe Russian fears of Kazakh domination, Nazarbayev has moved the capital from Almaty to Astana (further north and formerly called Akhmola, in the Soviet era known as Tselinograd), which was founded in 1824. Astana has a Russian majority, with just 27% ethnic Kazakhs.

A key characteristic in this country, dating back to the Soviet era, is the presence of a relatively big number of ethnic Kazakh women in high-level positions. This is because Kazakh women took advantage of the Communist system, in which education was compulsory for all, and moved up the career ladder. Moscow encouraged this at the time, as one way of loosening the bonds of Islam. The largest country to emerge from the Soviet Union, after Russia, Kazakhstan became independent in December 1991.

The institutions in the Kazakh oil and gas sector have evolved quite dramatically since then. In the latest transformation, soon after shuffling the cabinet in February 2002, Nazarbayev decreed a merger of KazakhOil and the oil/gas pipeline monopoly TransNefteGaz under KazMunaiGaz. This helped consolidate changes made under the decrees of 1997, which had marked a turning point in the Kazakh economic philosophy as policy lines and measures by presidential commissions reversed reform-related programmes launched by the government of Akezhan Kazhegeldin which lasted from 1994 to 1997, until it was replaced by that of Nurlan Balgimbayev.

Nazarbayev takes a personal interest in promoting Kazakhstan and attracting foreign investors. He has travelled around the world since late 1991 on this mission, and as the country's importance in world energy has become more evident, he has begun to meet with foreign oil executives at the presidential palace in Astana. As in virtually all such highly centralised decision making structures, there is a lot of corruption and nepotism in the country, with Nazarbayev now one of the wealthiest men in the world. He has given his relatives key positions. One of his sons-in-law, Timur Kulibayev, working in the integrated KazMunaiGaz, is said to be the most powerful man in the petroleum sector next to Nazarbayev. Nazarbayev's daughter Dariga is a very wealthy figure and controls the national TV network Khabar. Her husband, Rakhat Aliyev, is the ambassador to Austria. Another daughter is married to the son of Kyrgyzstan's President Akayev.