Why Did Nazarbayev Move Shukeyev?

Umirzak Shukeyev’s appointment as Vice Prime Minister and Minister of Agriculture and Akhmetzhan Esimov’s appointment as Chairman of the Samruk-Kazyna Fund are, undoubtedly, connected if for no other reason than the fact that Esimov has taken over Shukeyev’s post. Still, the question remains how exactly this was done.

The simplest explanation that is likely to be popular among officials is the assumption that Nazarbayev, first, has expressed gratitude to Akhmetzhan Esimov for the success of Astana EXPO-2017 and, second, has given his nephew the position that will enable him to secure a carefree old-age existence.

We believe, even if the president was indeed motivated by these considerations, they were by no means the crucial ones in the decision to move Umirzak Shukeyev to the de-facto “punishable by death” position of Minister of Agriculture. As for being Samruk-Kazyna Chairman, nowadays, this position is anything but a cushy job. So, let us try and understand the reasoning behind Nazarbayev’s decision.

Former Vice Prime Minister and Minister of Agriculture Askar Myrzakhmetov had survived only for so long at this position, a little over a year and a half. With that, if one is to believe the official press releases, the agricultural sector in Kazakhstan in on the rise. Considering the seasonal nature of the sector, a year and a half is practically nothing. For instance, Myrzakhmetov’s predecessor Asylzhan Mamytbekov had served as Minister of Agriculture for as much as five years.

Therefore, one may conclude that the personnel move was of the urgent nature. So, in the future, anything is possible – from appointing Myrzakhmetov to a different state position (for instance, a regional governor) to his arrest on suspicion of being involved in corruption.  The more so because agriculture remains one of most state-supported sectors and the mechanisms of the money redistribution are still non-transparent and arise many questions.

One way of another, there is no doubt that the president has lost faith in Askar Myrzakhmetov’s abilities to govern the agricultural sector in Kazakhstan and decided to replace him with a stronger manager. What were his motives? We believe it is not so much the professional and managerial abilities that matter when appointing an official in Kazakhstan as the scale, depth, and complexity of the sectoral problems. Note that these problems are not only of the economic but the social nature as well.

If we disregard the numerous programs of the sector development the last of which (for the years 2017-2021) was worked out under Askar Myrzakhmetov’s management, the stages of the state agricultural policy can be described as follows.

During the first years of independence, Akorda did not have a policy as such, therefore, it was de-facto governed by the then important players such as heads of elevators and collective farms, representatives of the local authorities, interested parties among the Kazakhstan elite, the government that at that time listened to the opinions of outside consultants, rural communities with their inflated expectations, etc. As a result, the agricultural sector in Kazakhstan was divided (if not disintegrated) into small pieces to the point that some farmlands had been allocated for private farming.

Then, the reforms stopped. There were no possibilities to invest or to improve the technological side of the industry. A crucial number of specialists and qualified professionals of the non-Kazakh ethnicity had left the country. Apart from that, the government had simply let things slide having thrown everything under the mercy of the new landlords. As a result, the agricultural sector lost the battle to the imported consumer goods that had filled the trade networks of the country. The two factors that helped the Kazakhstan producers to survive during those years were logistics and prices. The rest, including the consumer preferences, was playing against them.

In these circumstances, grain growing turned out to be a relatively profitable enterprise for the mid-sized and big players. Therefore, those who had obtained the facilities for grain preserving and processing and received the control of the land that could be used for grain growing won. A new agricultural policy was developed with the participation of these people. As a result, Kazakhstan got a number of vertically-built large and mid-sized companies that control many hectares of land (from several dozens to several hundred thousands), and not just in Kazakhstan but in Russia, too (take, for instance, Vasiliy Rozinov’s and Akhmetzhan Esimov’s (his secret partner’s) holding Ivolga).

However, the problems with the quality of the grain, the obsolete marketing, the difficulties with the access to the world market, the competition on the part of the other CIS countries had led to the constant oversupply of the goods and, consequently, to the regular drops of the grain prices below cost and to the grain loss due to lengthy preservation and stealing. Then, Akorda decided to concentrate on cattle breeding. This development that included importing the breeding stock from abroad and expanding the exports of meat and meat products became the main feature of the Agrobusiness-2020 state program worked out under Asylzhan Mamymbekov’s leadership. The program, however, failed because, as it turned out, apart from the breeding stock, the sector also needed enough of the high-quality feed-stuff. And the end product had to be sold and at competitive prices, too.

Then, the president replaced Mamytbekov with Myrzakhmetov, for better impact, having made the latter Vice Prime Minister as well. The state program of the agricultural sector development for the years 2017-2021 and the accompanying development maps were the main result of the new minister’s efforts. However, this fundamental work is nothing but his plans written on paper.

Even though the year 2017 has been more successful for the agricultural sector of Kazakhstan than the year before when, because of the weather, the quality of the grain turned out to be exceptionally bad, the president, it seems, has understood that half-measures such as decreasing the amount of land for grain growing and increasing planting of other cultures, changing the subsidies system, pseudo-cooperation among small producers cannot improve the situation. And so, he appoints Umirzak Shukeev Minister of Agriculture.

With all his mistakes and failures, former Chairman of the Samruk-Kazyna National Fund is, undoubtedly, one of the best managers at Nazarbayev’s disposal. He was able to start reforming the state holding (though it was largely due to the fact that the economic crisis led to the sharp decrease of the state earnings which sobered up both Nazarbayev and a significant part of his circle). We will not speak in detail of what exactly Shukeyev did in Samruk-Kazyna since this is a subject of a separate publication (or even a whole series of them) only pointing out that, on paper, it all looks quite good.

It is the shortage of the state top-managers capable of not only regulating but creating something cardinally new in the economy, that has forced Nazarbayev to appoint Umirzak Shukeyev new Minister of Agriculture, we believe. And Akhmetzhan Esimov has been sent to Samruk-Kazyna for precisely the reason that he is capable of continuing the work started by others Astana EXPO-2017 has proved.

Therefore, we believe Umirzak Shukeyev’s and Akhmetzhan Esimov’s appointments, with all the importance of the subjective factor, have, nonetheless, been mainly dictated by the scale, depth, and complexity of the problems that must be solved today. The fact that, during the past years, Nazarbayev had made poor personnel choices on a regular basis is another matter.

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