VZCZCXRO2572
PP RUEHAST RUEHBI RUEHCI RUEHLH RUEHLN RUEHPW RUEHVK RUEHYG
DE RUEHTA #0280/01 0390228
ZNR UUUUU ZZH
P 080228Z FEB 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 1733
INFO RUCNCIS/CIS COLLECTIVE 0387
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE

UNCLAS SECTION 01 OF 02 ASTANA 000280 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN - MARTY O'MARA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EPET KZ
SUBJECT:  NAZARBAYEV'S STATE OF THE NATION SPEECH FOCUSES ON 
ECONOMICS, SOCIAL PROGRAMS 
 
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SUMMARY 
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¶1. (U) President Nazarbayev's 2009 state of the nation address 
focused largely on the economy, as well as on government social 
programs.  He only touched briefly on foreign policy, highlighting 
Kazakhstan's selection as OSCE chairman for 2010.  He said little 
about democratic reforms.  End Summary. 
 
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FOCUS ON ECONOMY 
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¶2. (U) President Nazarbayev delivered his annual state of the nation 
address to parliament and other assembled guests, including foreign 
ambassadors, on February 6.   His remarks focused largely on 
economic matters, as well as on government social programs.  He 
showed great enthusiasm in discussing the economy, deviating several 
times from his prepared text.  Nazarbayev noted that the state is 
strengthening its position in strategically important parts of the 
extractive sector, and pointed out that Kazakhstan had increased its 
share in Kashagan and several other projects.  He said the 
government had to undertake measures to better develop the country's 
infrastructure, especially transport links and electricity. 
 
¶3. (U) Discussing the banking sector and the domestic impact of the 
global financial crisis, Nazarbayev called for strengthening the 
Financial Supervision Agency (FSA), and said the government, FSA, 
and National Bank have to create a strong system of risk management. 
 He said that the government needs to develop a new tax code that 
would faciliate economic modernization and diversification, and 
reduce the shadow economy.  He argued that taxes should be lowered 
on the non-extractive sectors of the economy, especially on small 
and medium-sized enterprises, with increased output in the 
extractive sector compensating for the lost government revenues. 
 
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COOPERATION IN CENTRAL ASIA 
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¶4. (U) Nazarbayev touched on foreign affairs only briefly, but made 
one comment of note.  He first explained that Kazakhstan has to 
strengthen its economic and political cooperation with Russia, 
China, and the Central Asian states.  He added, however, that with 
the "aim of strengthening security in the Central Asian region," 
Kazakhstan is also "widening constructive cooperation with the U.S., 
EU, and NATO." 
 
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OSCE 
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¶5. (U) Nazarbayev contended that Kazakhstan had achieved a 
"qualitatively new level of international recognition," of which the 
most persuasive testament was Kazakhstan's selection as 2010 OSCE 
chairman.  He said Kazakhstan has to develop a special program in 
connection with the chairmanship, which he named the "Road to 
Europe."  Nazarbayev said that this program must "facilitate the 
development of economic cooperation, the attraction of technology 
and managerial experience, the perfection of our laws, and the 
development of our agenda, the strategic vision of our chairmanship 
of the OSCE."  (Note:  While Nazarbayev did not elsewhere directly 
touch on Kazakhstan's Madrid commitments on democractic reform, his 
mention of "perfection of our laws" may have been an oblique 
reference to the issue.  End Note.) 
 
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DEMOCRATIC DEVELOPMENT AND DOMESTIC PRIORITIES 
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¶6. (U) Nazarbayev contended that in the 16 years of the country's 
independence, Kazakhstan had realized its own model of "guaranteeing 
social stability, inter-ethic accord, and the formation of a 
Kazakhstani identity and common Kazakhstani patriotism. "  He 
stressed that "long-term stability, peace, and accord" were critical 
to the further strengthening of the country and its economic 
prosperity. 
 
¶7. (U) Nazarbayev said that political parties, as well as NGO's and 
other public organizations, would play the main role in the further 
development of Kazakhstan's political system.  He said that "the 
model with Nur Otan as dominant party could be considered the 
optimal form of Kazakhstan's political system," claiming that this 
model would open a path for all other parties to participate in 
elections, to enter parliament, and to participate in all political 
processes.  He argued that there are no obstacles to the emergence 
of new parties and the expression of their own points of view. 
 
ASTANA 00000280  002 OF 002 
 
 
 
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COMMENT 
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¶8. (SBU) While Nazarbayev did not clearly address the Madrid 
commitments, it is important to note that the government has in any 
event begun taking at least some steps toward implementing them.  In 
January, the Central Election Committee (CEC) requested that 
political parties, including opposition parties, provide 
recommendations for election law amendments.  The main opposition 
parties recently responded to the CEC with their own proposals.  The 
CEC is currently inaugurating a series of working group meetings to 
discuss the issue further, and has invited political parties to 
participate in them.  End Comment.