KZBlog

The Spectator has an article from last week provocatively titled Why Come to Kazakhstan?

According to the article, government controls are getting too tight for many foreign businesses and creating a disincentive to invest there. Most interestingly, the article claims that in terms of energy and mineral resource rights, things are about to get a lot more difficult:

Meanwhile, the straitjacket into which Astana is trying to squeeze foreign corporations is about to be tightened. The country’s subsoil laws, which have been successively reinforced over the years, now grant the state first rights over any energy or mineral wealth. Not content with that, this February the country’s new premier, Karim Masimov, said the government was prepared to alter, and even cancel, existing operating licences (sic) held by foreign energy and mining firms.

This is a controversial issue and there’s certainly reason to believe that foreign companies took advantage of Kazakhstan in its formative years and that many oil companies in particular pushed for some seriously beneficial deals basically saying, “without us, you won’t see a penny of profit on your oil or resources.” However, the fact that everything in Kazakhstan changes all the time, without warning, is likely one of the biggest blocks to cooperation. Projects that have been agreed to by government officials suddenly have to be renegotiated as officials can change several times a year–and apparently new officials are not always debriefed by the previous officeholder. Rules and regulations change, even locations of key offices. Along with the bureaucracy, corruption and strict government control–all cited in the Spectator article and elsewhere ad nauseum*, this love of change (or perhaps lack of appreciation of stability) make Kazakhstan a hard country to work with.

* Perhaps the most notable case of late of problems working in Kazakhstan is that of Mark Seidenfeld, imprisoned for stealing funds from his own company, Golden Telecom. Evidence seems to indicate that he did not steal the funds and his arrest is simply a punishment for not selling his company directly to a Kazakh company but instead offering an open tender. The accusers alleged close relations to powerful government and business people indicate that the trial will not be fair, creating a serious barrier to foreign desire to work in Kazakhstan.