The Kazakh-Chinese trade flow including the deliveries of the contraband goods from China to Kazakhstan is one of the most non-transparent and at the same time sensitive issues for the country involving, apart from many other people, such influential figures as the daughter and the son-in-law of the First President Nursultan Nazarbayev.

The text of Governmental Decree 121 of March 19, 2019 titled “Regarding some questions of the state property transfer from the republican ownership into the communal ownership” has recently appeared on the Kaznet.

Here are the key passages from the document (text in bold by kz.expert).

“In accordance with Decree 161 of the Government of the Republic of Kazakhstan issued on June 1, 2011, titled “On approving the rules of the transfer of the state property assigned to the state legal bodies from one type of ownership into another”, the Government of the Republic of Kazakhstan hereby DECREES:

1. To transfer, according to the procedure established by the law of the Republic of Kazakhstan, the state-owned shares of the Khorgos International Center of the Boundary Cooperation JSC in the amount of 100 (one hundred) percent from the republican ownership into the communal ownership of the Almaty region”.

 “2) in Decree 1141 of the Government of the Republic of Kazakhstan issued on December 30, 2015, titled “Regarding some questions of the privatization planned for 2016 – 2020” (Collected Acts of the President and the Government of the Republic of Kazakhstan, 2015, #77-78-79, Art. 588):

to remove entry number 7

from the list of the large objects of the republican-level ownership subject to privatization on a priority basis approved by the said decree

in the section “the Ministry of Finance of the Republic of Kazakhstan”.

Recall that the Khorgos International Center of the Boundary Cooperation JSC located on the Kazakh-Chinese border is one of the main points of the non-organized flow of the people and the goods between the countries. Up until recently, the state-owned shares of the company had been confidentially managed by Kazakhstan Temir Zholy NC, however, on March 19, 2019, they were unexpectedly transferred into the communal ownership of the Almaty region.

The reasons behind this decision of the Kazakh Government and its leader Askar Mamin are yet unclear. Most likely, the nominal reason lies in the significant lag in terms of the construction and the infrastructure development on the part of the Kazakh side of the Khorgos International Center in comparison with the Chinese side as well as in the numerous problems related to the Kazakhs’ entering and exiting the zone and smuggling the goods purchased there.

It is also possible that the Government of the Republic of Kazakhstan has decided that the Almaty region and its Governor Amandyk Batalov will manage the project better than Kazakhstan Temir Zholy NC and its Chairman of the Board of Directors Sauat Mynbayev.

However, the date on which the decree was signed, March 19, 2019, makes us assume that the whole thing was a result of a certain compromise sanctioned at the highest level.

The matter is that the Kazakh-Chinese trade flow including the deliveries of the contraband goods from China to Kazakhstan is one of the most non-transparent and at the same time sensitive issues for the country involving, apart from many other people, such influential figures as Head of the Senate Dariga Nazarbayeva and her husband Kayrat Sharipbayev.

Earlier, we have already devoted several publications to these people (see Project Nur Zhol and Investors’ Protection Blanket, Whose Interest Is Hidden in Nur Zholy), and are now preparing a special report on how the business-interests of the First President’s eldest daughter have already resulted in the tightening of the customs control at the Kazakh borders and may even be reflected in the volume of the Chinese goods smuggled into the country.

As for the aforementioned compromise, most likely, it became necessary after the new leader, Sauat Mynbayev came to Kazakhstan Temir Zholy NC bringing his own team of managers and attempting to restore a relative order in the company, its affiliated structures and projects.

This was probably not welcomed by the people who, de-facto, control the Khorgos International Center of the Boundary Cooperation. The key person among them is Bolat Nazarbayev, the First President’s brother and one of the most famous and controversial figures in Nursultan Nazarbayev’s immediate circle.

If, previously, Bolat Nazarbayev’s power was enough to balance out the pressure from Kazakhstan Temir Zholy’s top-management, then, on March 19, 2019, when Nursultan Nazarbayev announced his resignation as the President of the Republic of Kazakhstan, the situation changed dramatically. And it seems that, in order not to allow for the conflict to escalate and, most importantly, to spill out, the Government of the Republic of Kazakhstan had decided:

• to hand 100% of the shares of the Khorgos International Center of the Boundary Cooperation JSC to the Almaty region whose Governor Amandyk Batalov is no stranger to Bolat Nazarbayev, otherwise, he would not have been able to govern the region for so many years;
• to remove this company from the list of enterprises subject to privatization until the end of 2020.

In our opinion, the future developments will depend on whether or not Batalov will be able to find the investors and the money for the development of the Kazakh part of the Khorgos International Center. If yes, then it is highly possible that, some time later, the company will be privatized after all. And the list those participating in the privatization will include, if not Bolat Nazarbayev himself, than Dariga Nazarbayeva’s husband or the persons closely associated with them. And even though it will hardly please the Kazakh civil society, in this case, there is a chance that the business-structures controlled by the Parliament Speaker’s family will manage to introduce the modern technologies and accelerate (simplify) the free trade zone visiting procedure for the Kazakh citizens.