The Divided Elite
“Eurasia IAC received the analytic materials prepared by Institute for Current Political Studies (Moscow, May, 1999). You are offered a part of these materials dealing with the situation in Kazakhstan. The text is given without changes.

Economic and political situation in Kazakhstan has been determined by complex relations between financial and industrial groups with their own media and representatives in the Government and President Administration in Republic of Kazakhstan. The relations are characterized by rigid competition (which is reflected in the media under their control) and by forming alliances, dynamic, however unstable, to secure their interests, in accordance with the principle “common opponent unites”.

Taking into account the flexibility of groups frames in any classification, he would like to define the major financial and industrial groups, their leaders and media, connected with the groups.

“Kazakhoil”, Kaztansoil” companies, “Aktsept” companies group - “Aktsept-Page”, “Aktsept-Terminal”, “Informika”, a number of trade enterprises, spirits and wine manufacturers, People’s Savings Bank of Republic of Kazakhstan. The group leaders are - Timur Kulibaev (“Kazatransoil” Ltd President, President Nazarbaev`s son-in-law), Nurlan Kapparov (President, “Kazakhoil” Ltd.), Karim Masimov (Chair, People’s Savings Bank of Kazakhstan), Ulan Ksenibaev (President, “Aktsept” Company), Nurlan Balgimbaev, RK Prime Minister was close to the group, however taking into account his possible near resignment, the group has become in engaged confrontation with him and organized the campaign to discredit him in Russian and Kazakhstan press. The oil lobby has been unsatisfied with his passivity, maneuvering and his attempt to find a way round, flirting with competitors groups (and R.Aliev`s group, first of all).

“Sakharny Tsentr” (“Sugar Center”) Company, Nurbank, a number of trade enterprises (“Nur”, “RR Kazakhstan Trade and Financing” Joint ventures), several Almaty night clubs and casinos, Republic of Kazakhstan Tax Police, National Security Committee officers. The group leaders are Rakhat Aliev (President Nazarbaev’s son-in-law, “Sugar Center” Company former President, today - vice Minister of State Revenues, head of Republican tax police), Darida Nazarbaeva (R.Aliev’s wife), Alnur Musaev (Deputy Chair of RK National Security Committee). Marat Tazhin, Secretary of National Security Council, G. Zhakiyanov, Pavlodar Region akim, as will as high officials of “Barlau”, RK Foreign Intelligence Service are close to the group. President Nazarbaev offers his patronage to the group. It controls “Novoye Pokoleniye” newspaper, “Khabar” and “NTK” TV channels, “Europa Plus Kazakhstan radiostation.

Kazcommercebank, Global Kazcommercebank, “Kazakhtelecom” joint-stock Company, “Air Kazakstan”, KEGOK” State Company controlling electric power networks, Shymkent oil-refining plant, “Alautransgaz” joint-stock Company, Zhambyl Hydro Electric Power Station, and a number of brokering, auditing and consulting companies. The group leaders are Nurzhan Subkhanberdin (Kazcommercebank Chair), Sauat Mynbaev (Deputy Head of RK President’s Administration), Serik Burkitbaev (Minister of Transport, Communications and Tourism of Republic of Kazakhstan), Evgeny Feld (President “KEGOK” Company), Nurlan Bizakov (Chair of the Board, “SHNOS” joint-stock Company. Yerzhan Utembaev, Chair of Agency for Strategic Development, Zeinulla Kakimzanov, Minister for State Revenues, Kazymzhoknart Tokaev, vice Prime Minister for Foreign Affairs, Zhannat Yertlesova, Vice Minister for Finance, Danijol Akhmetov, akim of North Kazakhstan Region, Daulet Sembaev, former head of National Bank are close to the group. It controls “Vremya” and Panorama” newspapers.

“Astana - holding”, Astana - motors” companies, TuranAlembark, Tsentrcredit bank, and partially KEGOK State Company controlling electric power networks, Gosprodkorporatsiya, a number of consumer goods (matches, pasta, salt) manufacturers. The group leaders are - Mukhtar Ablyazov, Minister for Industry, Power Engineering and Trade, Nurlan Smagulov, President of Gosprodkorporatsiya (State Food Corporation). The group influences the “Vremya PO” newspaper.

Eurasian bank, the group of metallurgy companies “Kazchrome”, Aluminum Kazakhstan”, SSGPO”, Eurasian Power Engineering Company, Civil Party of Kazakhstan. The leader is Alexander Mashkevich (Chairman of Eurasian bank). Leading persons also are - A. Ibragimov, T. Shodiev, D. Duisenov. Up to September, 1997, Cherny brothers and TWG British Company managed the strategy of the group. Today, President Nazarbaev has offered his patronage to the group. It controls “Express K” newspaper.

“CCL-Oil Refinery” Company, Pavlodar Oil-refining Plant, “CCL-Energo” Company, Crystal Lane Ltd, and a number of enterprises (make-up, computers, software). Oleg Lee is the leader of the group. The group has concludes tactical alliance with “Kazcommercebank” high management. Giving to the Bank lobbying the group has been fulfilling a number of orders for National Bank, State Pension Fund, Stock Exchange, State Center for Pension Payment. President Nazarbaev and Nurtai Abykaev, Chair of RK National Security Committee have offered their patronage to the group.

The group funds “Kazakhstan-press” Agency and influences indirectly “Delovaya Nedelya” (Business Week) newspaper.

“Dostyk Interauto” Company (former “Italauto” Joint Venture), a number of construction companies and enterprises for agricultural produce processing. The group leader is Zamanbek Nurkadilov, Almaty Region akim. The group supports financially “Ogni Alatau”, “Vechernaya Alma-Ata”, Kazakhskaya Pravda” newspapers, and “Rakhat” TV channel.

Until 1998 no influential opposition press existed in Kazakhstan, first of all, due to the extreme deficiency of funds opposition suffered from. As soon as Ex-Premier A. Kazhegeldin has entered the field of political struggle (September 1997) the situation has changed. Kazhegeldin and his companions in arms have provided funding for “XXI Vek” and “451 F” newspapers by various means (first of all, with the assistance of Western grants). In present both editions are close to Republican People’s Party of Kazakhstan chaired by A. Kazhegeldin. “Dat” newspaper, which was closed soon after that, published compromising materials on R. Aliev (the 1996 conflict between R. Aliev and former higher officials of RK National Security Committee, which disclosed the facts of criminal activities in a number of enterprises controlled by R. Aliev), belonged to the same group too.

The level of influence (or control) of financial and institutional groups over the above mentioned periodicals is variable. The publications which have stable diversified sources of financing, i.e. “Vremya Po” – grants, “Delovaya Nedelya (Business Week)” – “Rikki Publishing House” Joint Stock Company, depend on the groups to the less extent. These periodicals are very close to independent press Western standards. Profits of advertisement and circulation in most cases do not cover high publication costs (all paper is imported, there are no tax privileges, major advertisers prefer “Khabar” TV channel). “Karavan” was an exception. After its inclusion into the Oil Group its circulation significantly decreased.

Since July 1998 when “Aktsept” has purchased weekly paper “Karavan” and TV channel “KTK” from media magnate Boris Giller (having moved for permanent residency to Russia) the paper started lobbying “Aktsept” and oil complex interests in their competition for the property, extension of markets, effective diversification of business. Before that “Karavan” has had stable image of “peoples” newspaper criticizing authorities and not avoiding scandals. The image was used for corporate interests defense and competitors discreditation. In recent time the paper owners have organized following PR campaigns.

The attempt of RK transport and communications minister Serik Burkitbaev discreditation. The purpose – the resignation of S. Burkitbaev (as the person of “Kazkommertsbank”) and as a result – the weakening of “KKB” group positions at telecommunications market. It should be mentioned that “Aktsept” Company keeps aggressive policy at Kazakhstan telecommunications market since 1997. The campaign was unsuccessful. “KKB” has reserved its rights for “Kazakhtelecom” major share. After the Government partial reshape in January 1999 the position of S. Burkitbaev has not weakened at all, but even enforced; tourism has also been assigned to his ministry. President Nazarbaev has demonstrated by this that he prefers shared responsibilities between relatively balanced groups. At the same time (January 1999) “Karavan” has got an indirect reprimand from N. Balgimbaev which meant changes in relations between Premier (former oil professional) and oil group – the coolness transformed presently into open confrontation.

In October 1998 Gani Kasimov, the former chairman of the Kazakh Customs committee, with the president's consent stood for the president elections to disperse the noes (like in the case of Lebed). His PR-campaign in "Caravan" and on Kazakh Television aimed at reducing of votes for the communist leader S. Abildin as well as at creating an attractive for the lumpen electorate image of a quarrelsome and fearless general (sort of combination of Lebed' and Zhirinovski) whose every political impromptu would have been thoroughly adjusted by the president's teem. Previously some shady cooperation was noticed between "Accept" and the customs committee's leaders. With the help of the committee "Accept" has got exclusive rights for legalization of copies of customs declarations ($56 for a copy; about $3 million profit a year). Some experts say that Kasimov's PR-campaign was a kind of a payment for the lobbying of that contract. But the aim was not achieved: Kasimov could not push Abdildin off to the third position. Now Kasimov is being considered as a possible quasi-opposition leader.

In July 1998 a group of Kazakh businessmen decided to stop Steven Eggers' work at Pavlodar oil refinery. Eggers is the owner of the American company "CCL-Oil" which has won the tender for concession of the POR. It was decided to dismiss Eggers from the management of the plant. It was Timur Kulibaev who became the informal leader of the blocking group. In August 1998 the newspaper "Caravan" published a number of unmasking articles demanding to cancel the contract as illegal and harmful for Kazakhstan economics. The campaign was only partially successful. "Caravan" and T. Kulibaev who backed it could not complete transferring the POR to the possession of "Kazakh-Oil". The main reason was inside group competition between "Kazakh-Oil" representatives, "Kazkommertsbank" and the group of Oleg Lee, the former Eggers' representative in Kazakhstan. As a result the group of Oleg Lee got the administrative power and "KCB" and Kulibaev became shareholders of the POR. The group is unable to stabilize the situation at the plant and so the struggle for the POR continue with new forces involved.

In autumn 1998 Kalik Abdullaev, an akim of the South-Kazakhstan Region, lobbied the KEGOK company's prior participation in providing electric power to Shimkent (the results of the previous tender were cancelled). At that time KEGOK was only supported by M. Ablyasov, the former president of the company. The system of payment for electric power supply in the SKR included barter agreements with some enterprises from M. Ablyasov's (the SKR born) group. This union of an influential akim (the SKR receives the largest subsidies from the republic's budget) and Ablyasov's group caused alarm to rival groups. "Caravan" took an active part in Abdulaev's discredit. As a result Abdullaev reserved his post but the president of KEGOK was removed. E. Feld, the managing director of "Kazkommertsbank", took the place of A. Nauryzbaev, the M. Ablyasov's protege. So electricity transmission almost left Ablyasov's group's sphere of influence and came under Kazkommertsbank's influence instead.

In July 1998 the regional tax inspection (don't confuse with tax police) blocked the Aidabul’s (the North-Kazakhstan Region) distillery's accounts for non-payment of excise and value added tax in total amount of 3 billion tenge ($40 million).In October 1995 the management of the plant was handed over to "Accept" which got the power to sale the production and to receive 7% of a profit. Loyal to "Accept" representatives of the Republican tax service tried to block the actions of the Regional tax committee. However, J. Ertlesova (close to the group of “Kazkommertsbank”), vice-minister for finance, suddenly interfered into the case and achieved arrest of the plant’s accounts. The detailed information of it was published by the newspaper “Panorama”. R.Aliev’s group gave an indirect support to the group of “KCB”: the information of the criminal actions at the enterprise was televised by “Khabar”. Deputy T. Simambaev, the secretary of defense and security committee lobbied actions against “Accept” from the side of the parliament. In the situation the newspaper “Caravan” was actively used by “Accept” to defend its interests and discredit its enemies. Articles of improper Simambaev’s deals and “lobbyists of foreign investments” in Ministry of Finance were published. October 1998 the Supreme court of Kazakhstan delivered a judgement in favor of “Accept”. “Caravan” paid Ertlesova back for her former activity already December 1998. She was called as “macroeconomic lilliputian”, “gray eminence of economics” and accused of all failures of economic policy of government.

In its present-day form the newspaper appeared May 1998. Its publisher is the information company “Kazakhstan Today”. Shuhovs brothers, the heads of the company, are old business partners of Dariga Nazarbaeva. The idea of creation of the information agency “Khabar” with Nazarbaeva as its head, that separated from its channel soon and excelled it a great deal in the volumes of budget financing and technical potentialities belonged exactly to them. A new creative staff was recruited to “Novoye Pokoleniye”, large investments of the enterprises forming Aliev’s group were made. The character of the newspaper was changed. It became more scandalous, aggressive under the patronage of presidential brother-in-law, the representative of power department. Moreover, it got access to operative information from closed sources (first of all, from tax police and KNB) that in combination with professional presenting of material let to increase circulation and get a stable influence on the political elite of Kazakstan. Unlike “Karavan”, “Novoye Pokoleniye” doesn’t have to defend business interests of the “Sugar Center” and other companies of Aliev’s group as nobody has courage to encroach on their interests.

R. Aliev, the founder of the group, demonstrated his influence May 1997 when N.Nazarbaev with the service of his daughter and her husband relieved general Jumanbekov, the chairman of KNB, of his post and appointed colonel Musaev, the deputy chief of security service, to it. Up to the time Jumanbekov has sanctioned an investigation of a number of cases in which the enterprises forming Aliev’s group figured. The new head of KNB was Aliev’s friend and partner in sportive exercises. “Power alliance” Aliev-Musaev formed that tried to widen a sphere of influence on MIA, Prosecutor’s office, Customs. The group sets controlled press the following tasks:

1. Struggle with political enemies of Nazarbaev.
2. Influence on cadre policy of president with the help of compromise materials being put stealthily
3. Formation of a positive image of tax policy and KNB as the two most stainless power organizations battling for exclusively highest state interests in consecutive order.
4. Formation of a positive image of presidential family and defense of its business interests.

It is incredible that the president delivered himself the most powerful blow. Short time before pre-term election (September 1998) he has appointed Nurtai Abikaev to a post of the chairman of KNB (Musaev has been demoted to his deputy). The new head of KNB carefully regarded influence from the side of ambitious presidential brother-in-law. Now R. Aliev actively makes advances to Abikaev (including with the help of the press also) trying to attract him to the lines of his adherents but the latter keeps distance. Since the middle of May rumors have been spread of forthcoming Abikaev’s and Aliev’s appointments as the new prime minister and his first deputy.

Aliev’s group has been organizing the following PR-campaigns in “The New Generation” for the last year.

In the experts’ view, R. Aliev tries to include the general law enforcement and power departments into zone of his informal influence (Ministry of Defense being a department carefully distanced from participation in home policy is an exception). At the most his task is to achieve resignation of persons insufficiently loyal to the group and assign proteges instead of them. The heads of Ministry of Internal Affairs (for example, look through material “Business men in shoulder-straps), General Prosecutor’s office (look through material “Directorate of Public Prosecution is worse than gangster robbery) and Customs committee are the main objects of discredit. The results of campaign are ambiguous. President Nazarbaev in spite of intensified R. Aliev’s lobbying of Sergei Kuzmenko, the chairman of Customs committee, gave preference to candidature of Maratkali Nukenov proposed by N. Abikaev April this year. Minister for Internal Affairs K. Suleimenov being in a state of permanent conflict with the leadership of the KNB and the group of Aliev (taking vengeance, “The New Generation” gave him the following reference: “ordinary middling pupil counting cows”) kept his post. Suleimenov speaks in support of a redistribution of powers in a prevention of economic crime in MIA’s favor. In particular, he attempts the right of tax police to independently institute and investigate criminal cases. Judging from the modest results of campaign against Suleimenov, Nazarbaev fears reinforcement of influence of R. Aliev, his brother-in-law, and encourages inter-group oppositions in power departments. At the same time Aliev’s group managed to achieve significant reinforcement of a loyalty of general public prosecutor Hitrin who has intercepted Musaev’s initiative in campaign of Kazhegeldin’s discreditation April this year.

R. Aliev had old scores with the former premier minister Kazhegeldin. August 1997 Kazhegeldin openly came out against practice of demonstrative arrests of foreign employers who worked in Kazakstan and were suspected in violence of the tax legislation. The day before “Khabar” had showed the arrest of Gevin de Salis, the representative of Swiss firm “Vitol”. “Vitol” together with “Kazkommertsbank” governed Shimkent’s oil refinery. Fatal mistake of “Vitol” and its manager was the attempt to organize sugar production in Kyrghyzstan and import of the cheaper Kyrghyz sugar to Kazakstan. In this manner Salis tried to effectively compete with the “Sugar center”. Action of frightening undertaken in response and transmitted by D. Nazarbaeva, provoked extremely negative reaction of premier minister. Month later Kazahegeldin has been resigned through illness. However, he didn’t cease his political activities. Moreover, he obviously gave to understand he was going to become the following president of Kazakstan.

To neutralize dangerous enemy the traditional PR-technology was used. Musaev as an official representative of the KNB regularly gave “the information leakage” of that Kazhegeldin was being suspected in “washing away of money” and corruption. “The New Generation” used it in its publications as the proved facts. Abikaev, the Musaev’s chief, providently avoided the campaign. As the PR-method “The New Generation” used frank misinformation: October 1998 the newspaper reported that Kazhegeldin gave up the struggle for presidential post. Now the newspaper regularly publishes materials in which it draws a parallel line between Kazhegeldin and the former Ukrainian Premier P. Lazarenko. Readers are offered to believe that Kazegeldin has spoken against Nazarbaev and occupied with active political activity solely with the purpose to draw away public attention from his doubtful financial deals.

The result of the discredit action of Kazhegeldin hasn’t justified initial hopes. Numerous publications with accusations to his address have led to reverse results in many aspects. Social polls show wealth (as though he is a proprietor of some luxurious villas in Belgium) that Kazhegeldin is being accused of doesn’t provoke the planned negative emotions of the most part of voters. The real proprietors of villas proved to be in the center of attention of Belgium powers. Known businessmen, Nazarbaev’s supporters (in particular, Ibragimov, the conspicuous representative of Mashkevich’s group). In the experts’ opinion, urgent attempts of Kazhegeldin’s discredit are negatively reflected on the reputation of edition that is notable for its sufficiently high professionalism on the whole. “The general line” dictated to the newspaper by Aliev’s group, unilateral engagement to the pointed theme is a painful problem for the leaders and collective body of editorship.

“Novoye Pokoleniye” subjects to criticism the representatives of government who are close to the group of “KCB”. It is Kakimzhanov, Minister of the national income (formally he is immediate superior of Aliev), vice-premier Djandosov, previously – Minbaev, Minister for Finance. In particular, the newspaper has come out against the Kakimzhanov’s idea to put a tax monitoring of large-scale investors. Kakimzhanov was accused of aspiration for shifting of responsibility for tax on other departments. The Aliev’s group shows a serious anxiety in connection with the perspective of rapprochement of Kakimzhanov with Suleimenov up to formation of their tactic alliance with the aim to persuade president to restrict powers of tax police. Moreover, “The New Generation” was on the side of “Hurricane” in the conflict between the administration Shimkent’s oil refinery (the “KCB” group) and “Hurricane Kumkol Munai” company October 1998. Summer 1998 a number of materials were published against selling shares of “Kazakhtelecom” to “Kazkommertsbank”. As a whole, Aliev’s group acts jointly with the oil group in a campaign against a common competitor in the person of “KCB”. Accordingly, some traditional themes for critical articles of “Caravan” (“Kazakhtelecom”, “Alteba”, S. Burkitbaev) are supported and developed in “Novoye Pokoleniye”. However, it doesn’t prevent “Novoye Pokoleniye” from saying sarcastically at any chance about the “public” newspaper that loses remainders of the former popularity.

Wide opportunities of access to operative sources of the information and provision with high political patronage give “Novoye Pokoleniye” a chance to form the image of a brave “anti-Mafiosi” edition that is the image the newspaper “Karavan” has lost really up to the present moment. Opposition between “Novoye Pokoleniye” and “Karavan” reflects somewhat hidden opposition of the two so-called “family” groups in which two president’s brothers-in-law are in the lead. The peculiarities of the struggle are stipulated by specificity of Aliev and Kulibaev’s status, differences of their ambitions and temperaments.

T. Kulibaev is a successful businessman, competent specialist, supporter of compromise, concerted decisions. More than once his corroboration with the competitive group “KCB” has been noticed. Kulibaev emphatically demonstrates lack of any political ambitions. He refuses of any interview and contacts with journalists. Unlike him, R. Aliev has realized carefully a large-scale propagandistic project under conventional name “I, fearless and incorruptible, will put native country in order” from the beginning of 1997. Aliev is more aggressive, less educated. His sugar business flourishes mostly due to suppression of competitors. He is poor as economist, jurist, doctor but due to efforts of image makers and Nazarbaev’s support a halo of a gifted administrator, heroic fighter for the “people money” is created.

It is significant that in the situation of growing opposition between ex-premier Kazhegeldin and representatives of Nazarbaev’s family Kulibaev’s oil group outwardly distanced from the conflict and acted by the hidden “market” methods (in particular, it gained “Karavan” depriving Nazarbaev of potential tribune) while R. Aliev gave preference to power variant with arrest of de Salis. In the view of some experts, it is Aliev who stands behind the known action directed to frighten Kazhegeldin during pre-election campaign.

By the same subjective factors in most cases suddenly aggressive character of attacks of “Novoye Pokoleniye” on “Karavan” is explained. For example, in March this year the oil group tried to develop a theme of possible assignment of Aliev as an ambassador of Kazakstan to Switzerland. “Novoye Pokoleniye” gave response on it with a hidden threat to businessman Kulibaev: “Apparently, the active work of the tax police disturbs somebody. We have to pain all those who evades tax payment, plunders and squanders budget resources”.

In the end of March this year the journalists of “Novoye Pokoleniye” called “Karavan” as “once a large-toothed newspaper” and gave “new masters of “Karavan’s” empire” a dressing down for irresponsible spreading of panic rumors of a forthcoming fall of tenge (week later after the reproof tenge had really fallen). It is significant “Karavan” that has never missed an opportunity to enter into polemic with its offenders before endures any mockeries of "Novoye Pokoleniye" with a stoic silence. In the experts’ view, it is evidence of original tactic chosen by Kulibaev and Kapparov in respect of the power group of Aliev. It’s a departure from an open polemic, obvious confrontation and following to the eastern rule: sit still and they carry your enemy’s body by you.