After the June 9 presidential elections, Kazakhstan will start to undergo serious changes in the highest echelon of state power and business-elite. For instance, according to the information received from our insiders, the First President’s son-in-law Timur Kulibayev will be deprived from his unofficial position of the oil-and-gas industry supervisor and lose control over the shadowy cash flows.
In the first publication of this series, when commenting on the transaction between Kazakhtelecom JSC and Swedish mobile operator Tele2 AB of May 23, 2019, as part of which the national company is acquiring the foreign investor’s share in their joint venture Khan Tengri Holding B.V., we concluded that -
- The total price of the political, economic and purely corporate risks in Kazakhstan has lately increased to the point when even the strong and highly-qualified foreign investors that came to the country during the first years of the independence now prefer to leave the republic.
- The process of the governmentalization of the national economy in Kazakhstan is successfully continuing due to many reasons of the economic and the internal political nature.
First — due to the narrowness of the domestic market when the number of participants cannot surpass a certain optimum (in this case, apparently, two). This is necessary to retain at least some kind of market competition and to keep the profitability on at least a medium level. Second — because, in Kazakhstan, every state monopoly or a large quasi-governmental structure has a certain elite group (influential figure) standing behind it and lobbying its interests.
In the second publication, we conclude that the process of governmentalization in Kazakhstan has always been of a personalized nature since, in such cases, someone very influential (usually a relative or a close associate of Nursultan Nazarbayev) always lies behind the state. And, by the looks of it, it is this person that, in the foreseeable future, will become a real co-owner of the asset thanks to the state privatization campaign currently underway in Kazakhstan.
In our opinion, the increase of the share of Nazarbayev’s close relatives and associates in the most lucrative sectors of the national economy (which is particularly noticeable in the oil-and-gas industry, nonferrous-metals industry and now in the communication industry) is a result of not only their greediness but the opportunity of effectively realize their extra-market advantages that they have due to their closeness to the epicenter of the Kazakh power — Nursultan Nazarbayev.
Therefore, we expect that Nursultan Nazarbayev’s resignation from the presidential post and handing this position over to Kasym-Zhomart Tokayev will seriously accelerate the process. At least, our insiders in Akorda say so.
Particularly, the insiders warn that, after the June 9 presidential elections which Kasym-Zhomart Tokayev is to win thus affirming his authorities as the head of the state, the country will start undergoing some serious changes in the highest echelon of power and business-elite.
According to the insiders, these changes will be caused by the following.
a) the necessity to urgently change the state’s socio-economic policy since the previous one had successfully failed and foreign investors whose arrival was so coveted by Akorda never came to the country;
b) the internal political processes inside the ruling elite that have to do with the fact that Nursultan Nazarbayev who, today, is demonstrating his ability to perform via his regular meetings with state officials and civic leaders will retire into the background simply due to the physical decline and will be stood in for by either Kasym-Zhomart Tokayev as the official head of the state or by Dariga Nazarbayeva as the shadowy epicenter of power.
It is the First President’s eldest daughter that, today, has moved into the foreground which is evident not only from the fact that she has replaced Kasym-Zhomart Tokayev as the head of the Senate of the Kazakh Parliament thus becoming the second top public official in the country but also from the dramatic increase of Kazakhtelecom’s share on the communication market — the story that opens this publication series.
But the matter is likely not to end here. Based on the information provided by the insiders, it is expected that two people from the First President’s immediate circle are to get under the blow from Dariga Nazarbayeva. We are talking about Timur Kulibayev and Bulat Utemuratov.
Particularly, Timur Kulibayev will be deprived from his unofficial status of the oil-and-gas industry supervisor and lose control over the shadowy cash flows.
Obviously, the omnipotent son-in-law of Nursultan Nazarbayev and the head of the Atameken National Entrepreneurs Chamber will not accept such a turn of events voluntarily. Moreover, judging by the fact that the press is now regularly printing the materials on behalf of Atameken that Timur Kulibayev himself is actively engaged in communicating with high-rank officials, is signing all kinds of agreements and trying to get into the spotlight, he has already started to seek the public support.
Nonetheless, in our opinion, Timur Kulibayev is unlikely to be able to withstand the pressure from Dariga Nazaebayeva if only because Akhmetzhan Esimov (Nursultan Nazarbayev’s nephew and the Chairman of state holding National Welfare Fund Samruk-Kazyna) is certain to go against him and perhaps the NSC Chief Karim Masimov will do so as well.
The thing is that, apart from the purely political motives, here we are talking about the private economic interests as well. Particularly, we are talking about a possible sale of a part of the state’s share in KazMunaiGas JSC NC. Now that Akhmetzhan Esimov and his closest associate Alik Aydarov have managed to restore some order in this quasi-governmental structure, its value as an asset and a source of income has increased significantly.
According to the announcements in the press, KazMunaiGas JSC may go public in 2020, and not only at the Astana International Financial Center but also abroad. Which, by the way, presents a unique opportunity for the Kazakh dollar billionaires (both officially-recognized and unofficial ones whose number surpasses the number of the first according to our estimates) not only to invest in an excellent asset but, by doing so, also hide their money from the Western regulatory and supervising agencies.
Note that, in this case, they may employ the same scheme that Timur Kulibayev has employed before for the benefit of his father-in-law: when the shares of the Kazakh oil-extracting companies were sold to Chinese investors who not only paid the set price but also added something extra in the form of a big part of their shares.
Thus, judging by the current developments, it is not at all certain that Timur Kulibayev will serve as the commissioner/organizer of the shadowy part of KazMunaiGas’ IPO. It is very likely that Chairmen of Samruk-Kazyna National Welfare Fund and of KazMunaiGas JSC Akhmetzhan Esimov and Alik Aydarbayev will be the ones involved in this lucrative business.
And since this can only be done with the direct support of Dariga Nazarbayeva, we estimate Timur Kulibayev’s chances to keep his unofficial status the oil-and-gas industry supervisor as minimal.
Perhaps this can explain Timur Kulibauev and his wife Dinara’s unexpected intention to sell a part of Halyk Bank’s shares on the market.
To be continued
NOTE FROM EDITOR: this is the third article from a series of publications on the latest redistribution of property in Kazakhstan’s economy to the benefit of Nursultan Nazarbayev’s relatives.
