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O 120106Z FEB 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4582
INFO RUCNCIS/CIS COLLECTIVE 1162
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
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UNCLAS SECTION 01 OF 03 ASTANA 000250 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB, DRL 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM ECON EFIN SOCI KDEM KZ
SUBJECT:  KAZAKHSTAN:  POLITICAL ANALYST SEES INTRA-ELITE WARFARE 
BEHIND BTA TAKE-OVER 
 
REF: (A) ASTANA 0204 
 (B) ASTANA 0068 
 (C) 08 ASTANA 2398 
 (D) 08 ASTANA 2471 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY: In a February 5 meeting with the Ambassador in 
Almaty, Kazakhstani political analyst Dosym Satpayev said that the 
recent state take-over of two leading banks is part of a larger 
trend of increased government control over strategic sectors of the 
economy.  The financial industry, the mass media sector, and the 
hydrocarbon and mining industries, are increasingly under the direct 
control of the state-owned Samruk-Kazyna National Welfare Fund, what 
he termed a "controlling structure."  Satpayev sees similar 
"controlling structures" in the political and social spheres.  The 
ousting of BTA bank Chairman Mukhtar Ablyazov was "inevitable," due 
in part to the bank's vulnerability, but also because of an 
intra-elite struggle over property and resources within President 
Nazarbayev's inner circle.  Satpayev sees Kazakhstan's political 
opposition as "weak," although he believes the grass-roots social 
movements emerging in the fall-out of the economic crisis have 
potential as an opposition force.  However, the real political 
counterweight to the government, according to Satpayev, lies within 
the "shadow opposition":  political and business interests that are 
vocally loyal to the government, but are "getting ready for the 
post-Nazarbayev world."  To assure a smooth transition, Nazarbayev 
must clearly identify a successor; the alternative would bring on 
vicious fighting within his inner circle, Satpayev believes.  In his 
view, the system of inter-dependence and interest politics around 
the President has evolved to be quite complex, and at times 
Nazarbayev has lost control over his system.  Structures like 
Samruk-Kazyna, in Satpayev's view, are the President's way of making 
sure the system does not crack.  END SUMMARY. 
 
GOVERNMENT TIGHTENS CONTROL OF ECONOMY 
 
¶3.  (SBU) On February 5, the Ambassador met with Dosym Satpayev, a 
well-known independent analyst whose articles frequently appear in 
the Kazakhstani press.  In his publications, Satpayev seldom 
criticizes President Nazarbayev directly, offering instead centrist 
assessments of Kazakhstan's political and economic situation. 
Formerly associated with the Soros Foundation, he chairs his own 
think-tank, the "Risk Assessment Group," which provides consulting 
services on the political and investment climate in Kazakhstan and 
Central Asia. 
 
¶4.  (SBU) Satpayev told the Ambassador that the recent take-over of 
the country's two largest banks by the state-owned Samruk-Kazyna 
National Welfare Fund (ref A) is part of a larger trend of increased 
government control over strategic sectors of economy.  In his view, 
this campaign began in the early 2000s, when the government mandated 
greater participation for state-owned KazMunaiGaz (KMG) in the oil 
and gas sector.   The mining industry was next, as evidenced by the 
merger of several major mining companies and the plan to form a new 
national mining company, Tau-Ken Samruk (ref B).  The financial 
sector was the natural next target, said Satpayev.  He explained 
that his Risk Assessment Group did a study of this trend in 2007 and 
"warned" the banks of impeding government encroachment.  Thus, three 
major economic sectors are now under the direct control of one 
government-owned "controlling structure," Samruk-Kazyna. 
 
POLITICS AND CIVIL SOCIETY NOT FAR BEHIND 
 
¶5.  (SBU) Satpayev maintained that the "trend of increasing state 
control is not limited to the economy" and that similar "controlling 
structures" can be seen in the political and social spheres.  Media 
giants ArnaMedia and NurMedia control a large share of the media 
market and are funded directly by Samruk-Kazyna.  The political 
sphere is dominated by one party -- the President's Nur Otan party. 
In the sphere of civil society, the government is pursuing what 
Satpayev referred to as "a cunning strategy" of supporting the Civil 
 
ASTANA 00000250  002 OF 003 
 
 
Alliance, a confederation of pro-government NGOs, and leaving 
"independent" NGOs wholly reliant on Western funds, a policy which 
he believes has led to a marked decrease in "independents." 
Satpayev sees a similar trend in the religious sphere -- the draft 
law on religion aims to strengthen the influence of "traditional" 
faiths like Islam and Orthodox Christianity, whose leaders are 
generally pro-government, at the expense of smaller 
"non-traditional" groups.  In Satpayev's view, the overall goal is 
to create "nomenclatura capitalism" -- a market economy with a 
tightly-controlled political space, "something like Singapore." 
"Except Singapore does not have our level of corruption," he 
quipped. 
 
IN INTER-ELITE STRUGGLE, BTA'S ABLYAZOV IS THE LOSER 
 
¶6.  (SBU) In Satpayev's view, the ousting of Mukhtar Ablyazov as 
chairman of BTA bank should not have been a surprise -- "it would 
have happened to any trend-setting bank eventually; the economic 
crisis just speeded up the process."  Another factor at play, 
however, was the "personal dislike" between Ablyazov on the one 
hand, and the Samruk-Kazyna Chairman Kairat Kelimbetov and Prime 
Minister Karim Masimov on the other.  According to Satpayev, 
Ablyazov's conflict with Kelimbetov dates back to 2001, when 
Kelimbetov first wanted to increase government control of the 
financial sector.  (NOTE:  Satpayev told us this conflict was the 
reason behind the Risk Assessment Group's 2007 report; leading 
bankers commissioned the Group to analyze different ways to resolve 
the conflict and how the society would react to each.  END NOTE.) 
Masimov did not get involved in the conflict until mid-2008, when 
the global economic crisis fully hit the financial system and 
"bankers got blamed for all the problems."  When it became apparent 
that foreign credit was not forthcoming, the leading banks asked for 
an inflow of cash from the government, in exchange for a 25 percent 
government stake and an agreement to submit to audits.  BTA's audit 
showed that its assets were "scattered across the CIS countries," 
with heavy investments in "politically unstable" countries like 
Georgia and Ukraine.  The government agreed to prop up the 
vulnerable institution, said Satpayev, "on the condition that the 
current management was removed." (NOTE: On the same day, an AmCit 
senior official told the Ambassador BTA was doomed to take-over 
because it had much too much debt to Western banks and because of 
the unacceptably high percentage of bad debts in its portfolio.  END 
NOTE.) 
 
¶7.  (SBU) Satpayev believes that Ablyazov was also the losing party 
to an intra-elite conflict over property and the control of 
resources.  Ablyazov's erstwhile "protector" in the Presidential 
Administration was its management chief, Bulat Utemuratov, a 
political insider and billionaire who left his post on December 15. 
With Ablyazov's "cover" removed, Kelimbetov and Masimov were free to 
use the moment of the financial crisis to gain control over his 
bank.  "It was a political conflict," said Satpayev, "but not one 
based on ideology.  This was a fight over property." 
 
POLITICAL OPPOSITION "WEAK" 
 
¶8.  (SBU) Asked for his assessment of the opposition parties, 
Satpayev said that Kazakhstan "is plagued by a weak political 
opposition" whose primary occupation is "shadow playing among its 
leaders."  The continuous internal struggles within this "outside 
opposition" suit the government -- "divide and conquer," as he put 
it.  The opposition parties increasingly blame the West for their 
failure to gain a foothold on power and accuse it of "selling 
democracy for oil" (ref C).  In the meantime, the economic crisis 
has created a "perfect moment" for new political leaders to emerge, 
Satpayev argued.  Several grass-roots movements that emerged in the 
fall-out of the crisis are successfully engaging with the government 
on their issues (ref. D); so far they are concentrated on 
socio-economic questions, but, in Satpayev's view, political 
engagement may not be far behind. 
 
THE "SHADOW OPPOSITION" 
 
ASTANA 00000250  003 OF 003 
 
 
 
¶9.  (SBU) In Satpayev's view, the real political counterweight to 
the government lies within the "shadow opposition":  political and 
business interests that are vocally loyal to the government, but are 
"getting ready for the post-Nazarbayev world."  Satpayev named three 
pressure groups he sees vying for influence with President 
Nazarbayev.  The first is what he termed "the old guard" -- people 
within Nazarbayev's political circle who are "averse to publicity." 
One old-guard clan revolves around Prime Minister Masimov, 
Kelimbetov, and Timur Kulibayev, the President's son-in-law.  The 
latter two are at the top of Samruk-Kazyna.  A second clan includes 
Utemuratov and Almaty Akim (Mayor) Akhmetzhan Yesimov.  A third 
consists of Astana Akim Imangali Tasmagambetov and people in his 
circle.  These old-guard clans align together on particular issues 
-- marriages of convenience -- but for the most part, they are in 
"continuous conflict" for influence with the President.  A second 
pressure group, according to Satpayev, consists of the business 
interests -- economic giants who have "extremely close ties" to 
politicians.  The third pressure group, one whose influence is on 
the wane, is the circle around Dariga Nazarbayeva, the President's 
oldest daughter and the former wife of Rakhat Aliyev.  In Satpayev's 
assessment, Nazarbayeva had all the makings of becoming a political 
force -- a media conglomerate, her own party, and a powerful husband 
-- but Aliyev's play for power "wrecked her plans."  Satpayev 
speculated that Nazarbayev gave his daughter two conditions: 
"divorce Aliyev and stay out of politics," and she has complied with 
both. 
 
KAZAKHSTAN'S POLITICAL FUTURE -- "I AM A REALIST" 
 
¶10.  (SBU) Satpayev believes that if Nazarbayev dies unexpectedly 
without leaving a clear successor, it would be "devastating" for 
Kazakhstan.  What would follow would be a vicious fight among 
interest groups for control of property and power.  This struggle 
would be among those with "financial power," with the traditional 
security forces falling behind "people with money."  In contrast to 
Russia, explained Satpayev, the Committee for National Security 
(KNB) is not a strong force onto itself, but rather a tool for the 
elite.  "I am a realist," Satpayev said; "Kazakhstan is, and will 
remain, an authoritarian regime."  Nazarbayev picking a successor is 
"the smoothest way forward," he stressed. 
 
"NEW TOOLS" OF CONSERVATION 
 
¶11.  (SBU) Satpayev believes that, to a certain extent, Nazarbayev 
is now hostage to the system he has created.  Numerous interest 
groups are dependent on him, and he in turn is dependent on them. 
This system of inter-dependence has become quite complex, and there 
have been times, in Satpayev's view, when Nazarbayev lost control. 
He pointed to the 2001 break-away of political insiders to form the 
Democratic Choice of Kazakhstan party (which later split into 
various opposition parties), and to the case of Rakhat Aliyev as 
evidence of cracks in the system.  In Satpayev's estimation, 
"controlling structures" like Samruk-Kazyna were created 
specifically to prevent further cracks from appearing.  "This is not 
evolution," underlined Satpayev, "this is conservation with new 
tools." 
 
HOAGLAND