Eimear O’Casey | Associate Director & Bota Iliyas | Associate Analyst

Between 2 and 8 January, Kazakhstan experienced a triple shock to its hitherto stable status: nationwide popular peaceful protests, a violent insurrection, and a power struggle between President Kassym-Jomart Tokayev and Leader of the Nation Nursultan Nazarbayev. These developments have undermined Kazakhstan’s status as Central Asia’s most business-friendly nation. In this note, we explore what happened and what happens next.

  • The popular frustration with income inequality and poor governance that ignited the crisis is likely to remain unaddressed. A weaker social contract between the population and government will boost the prospect of increasingly regular protests in the next year.
  • While Tokayev has the upper hand in the elite power play for the time being, that balance remains precarious, putting pressure on political stability in 2022.
  • Russia’s influence in the country will undoubtedly increase as a result of its role in securing Tokayev’s position, undermining Kazakhstan’s successful multi-vector foreign policy and its agility in dealing with its partners.
  • Long-standing challenges to operators from both corruption and vested interests will now be exacerbated by security, operational and regulatory disruption as a result of elite power dynamics and anti-government sentiment.

A tale of two (or three) crises

Thirty years after gaining independence from the Soviet Union, Kazakhstan’s tightly controlled political and security environment was rocked between 2 and 8 January by violence and upheaval that threw into question most assumptions about the risk environment in the country.

Peaceful protests over living standards and demands for political reform between 2 and 4 January were followed on 5 January by violence – concentrated in the second city of Almaty – with mobs destroying property and attempting to take control of key state buildings. By 7 January, Tokayev had regained control, owing to the deployment of lethal force and an unprecedented invitation for assistance from the Russia-led regional security bloc the Collective Security Treaty Organization (CSTO). The official death toll has now reached 225, and nearly 10,000 have been arrested. While acute security and operational threats linked to the upheaval have now passed, the events will have a longer-term impact on the political, security and business environments.

Living standards and the democratic deficit …

A sharp, state-led increase in the price of liquified petroleum gas (LPG) led to peaceful protests that began in western Kazakhstan on 2 January. LPG is used as vehicle fuel by many ordinary Kazakhstanis who offer taxi services to supplement their incomes or as their main income. The protests quickly spread to other regions and encompassed wider issues, in particular deep-seated frustration with decades of high-level corruption and democratic deficit. Personal grievances varied across the different groups that joined the protests. That the protests began in response to the government’s decision to remove a cap on fuel prices in a country rich in hydrocarbons revealed the most salient issue: a population facing stark economic inequality and declining incomes was fed up with watching those with ties to the kleptocratic government become the primary beneficiaries of these resources. Tokayev’s opaque power-sharing arrangement with former president Nazarbayev since mid-2019 only exacerbated these grievances.

… will help sustain threat of protests

Tokayev’s response to the peaceful protests has been mixed. He went from dismissing the government and pledging to reverse the fuel hikes, to ordering law enforcement to “shoot to kill without warning”, to promising on 11 January to implement socioeconomic and law enforcement reforms. However, his inability in the early days of the protests – before violence erupted – to appease protesters by dismissing the government signalled that the population would not be satisfied with simply another cosmetic government reshuffle.

As such, the likelihood of fresh anti-government protests in the coming months will remain elevated in the likely event that the changes led by Tokayev are perceived as insufficient. After more than 30 years of independent statehood, the government needs to finally establish institutions for understanding and responding to social grievances.  

However, the government’s failure to date to investigate or pledge to investigate human rights violations during the protests, as well as reliable reports of harassment and maltreatment of journalists and government critics covering the protests, suggest that genuine democratic and rule of law reforms are unlikely to follow. While some Kazakhstanis have supported Tokayev’s response to the crisis, many others will likely struggle to see his administration as legitimate given its broad application of the term “terrorist” and extrajudicial killings of the said terrorists, and the failure to acknowledge credible reports of deaths and torture among peaceful protesters and bystanders.

Anti-government sentiments are likely to run high in the coming months, not least due to public anger at Tokayev’s decision to involve Russian troops in the crisis. As a result, we should expect episodes of popular protest to become more regular and those participating to feel increasingly empowered.

Elite games

Tokayev on 11 January distinguished between the peaceful protesters in the first days of January and the violent mobs that later looted shops and establishments in Almaty and set government buildings on fire. He has branded the latter as “terrorists” and claimed that 20,000 terrorists had attempted to first take over Almaty and then the rest of the country in a “well-organised coup”.

However, it remains unclear who these violent mobs were and whether they had a single instigator.

Tokayev is not offering any names, if he knows them. According to credible reports, there was little-to-no law enforcement presence in Almaty when the mobs had arrived, allowing them to decimate much of the city and even to temporarily take control over the country’s largest international airport. This, along with Tokayev’s steps to dismiss and sideline Nazarbayev and his loyalists since 5 January when the violence broke out, suggests that at least some of the violence was likely driven by internal power struggles, most likely between Tokayev and Nazarbayev. Publicly, since the protests began Tokayev has replaced Nazarbayev as head of the powerful National Security Council and fired Nazarbayev loyalist Karim Massimov as head of the main domestic intelligence agency and subsequently arrested him.

Tokayev’s decision to call for Russia’s help instead of relying on domestic law enforcement – an unpopular move that undermined Kazakhstan’s sovereignty – surprised many, and suggests that Tokayev did not fully trust the law enforcement amid a power struggle. However, in such an opaque political environment, the government is unlikely to reveal the people behind the violent upheaval and with the help of state media will spin a narrative portraying the government as saving the country from terrorist forces.

Political uncertainty

Tokayev has emerged from the unrest stronger, by weakening Nazarbayev’s entourage as well as criticising and distancing himself from the increasingly unpopular Nazarbayev, whose statue protesters in the south of the country toppled during the protests.

However, Tokayev’s campaign of dislodging Nazarbayev loyalists and replacing them with his own people is far from over and is likely to continue in the coming months. Nor is it likely to be straightforward. These power shifts, along with Tokayev’s pledge to address the uneven distribution of wealth developed under Nazarbayev’s rule, are likely to undermine the regulatory environment in the short-to-medium term. One set of well-connected individuals is likely to be replaced with another, and regulation is likely to be applied inconsistently to facilitate the removal of prominent local business figures associated with the other power centre. Although Tokayev will continue to attempt to distance himself from the disgraced Nazarbayev, long-term political stability in the country will remain under question. Anti-government discontent could turn against Tokayev, or the elite power dynamics could play out through organised unrest once again.

What now for multi-vectorism?

Kazakhstan’s relationship with its neighbours has also been thrown into question. Kazakhstan since the 1990s has championed a so-called multi-vector foreign policy – in which it maintains good relations with Russia, the West, and China and other Asian economies – seeking to avoid over-dependence on any single partner. It has been successful at this. Russia retained pre-eminence as a political and security ally, and through soft power as a result of educational, linguistic and cultural links. However, Kazakhstan had been able to avoid being forced to follow Russia’s lead on several geopolitical events, and to quietly pursue deepening economic ties with China in particular. Tokayev’s invitation to the CSTO to effectively come to his rescue – both directly or symbolically – has undoubtedly given Russia a new influence over the country.

While the government will continue to pursue multi-vectorism where it can, we can expect Russia’s leverage over Tokayev to be considerable. This could manifest in demands for greater Kazakhstani enthusiasm for moribund regional projects like the Eurasian Economic Union, for preferential access to Russian investors in strategic deals, and for Kazakhstani diplomatic support for Russian foreign policy vis-a-vis the West. This, too, is likely to drive tensions between the population and government. Kazakhstanis born in the 1980s-2000s have a distinct post-Soviet Kazakhstani identity and many will bristle at the perception that Kazakhstan has sold out to its big neighbour.

The not-so-stable centre of Central Asia

There is no question that the developments of early January have upset Kazakhstan’s status as the model of an independent, stable post-Soviet Central Asian country – albeit one that has done little to address endemic corruption and nepotism since independence. The crisis has laid bare how far-reaching public discontent is with the lack of trickle down from the country’s oil and gas wealth. It has also illustrated that the authorities, either because of incompetence or elite infighting, were unable to quell an organised insurrection.

While investors in Kazakhstan have become used to the pitfalls associated with elite power dynamics and the vestiges of Soviet bureaucracy and governance, new challenges now present themselves. Both the government and businesses will likely have to reckon with a more engaged and active population and civil society, and a likely increase in not only civil unrest but also industrial action in the next year. Meanwhile, ownership and management of major state holdings are likely to become more unpredictable and precarious, as Tokayev seeks to consolidate his ascendancy over Nazarbayev. At some point Nazarbayev’s allies are likely to seek to fight back, and Russia – with greater leverage over the government and the country – is likely to demand greater involvement in key areas of the economy, potentially at the expense of Western and Asian investors.

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