Akishev Is Losing the Game

It looks like Daniyar Akishev’s state service career has passed a certain important landmark. It became evident at the January 25 meeting when Nursultan Nazarbayev publicly demanded the National Bank to change its current monetary policy for the first time.

Many local media have reprinted Akorda’s press-release on the meeting without any comment probably regarding it as an ordinary event. We will quote it in its entirety and then present our thoughts on it (text in bold by kz.expert).

“In the course of the meeting, the Head of the state was given a report on the 2018 National Bank’s operations results as well as the information on the current situation on the country’s foreign currency market.

Having acknowledged the positive development of a number of the economic indicators, the President of Kazakhstan addressed the issue of the effectiveness of the inflation reduction measures taken by the Central Bank.

“5.3% inflation is a good result. However, it is achieved via decreasing the volume of liquidity on the market and not via the economic efficiency. The National Bank and the Government are operating poorly in this regard. One can reduce the inflation even more by taking away the money, but it is unclear in what way this decision may affect the economy. At the same time, we should take note of a noticeable decrease of the long-term loans volume”, said Nursultan Nazarbayev.

Having commented on the approval of a number of the legislative amendments, the Head of the state also underscored the necessity of the monitoring of the situation on the part of the National Bank. In his turn, Daniyar Akishev spoke about implementing the requests stated in the current Address in re the crediting of the manufacturing industry. Apart from that, the Chairman of the National Bank reported to the President of Kazakhstan on the factors influencing the changes of the national currency exchange rate.

“The tenge exchange rate against the US dollar had decreased by 15.6% in the course of the year. The main reasons lie in the external factors. The world oil prices remain very volatile. The same can be said about the external conditions including the protectionist and sanctions policy. However, the regime of floating exchange rate has enabled us to adsorb all the shocks and preserve the gold and foreign exchange reserves that, as of the end of last year, constituted US$ 57. bln”, said the Chairman of the National Bank. 

Alishev also provided the information on the work conducted in the sphere of the crediting and recovering of the financial market.

“Due to the improvement of the financial sector, we are giving the healthy market players an opportunity for development. I believe, following the measures we have taken, the loan volumes will rise significantly. We expect that, in 2019, the growth will constitute more than 10% which is higher than the nominal GDP. Thus, loans will become more accessible and the situation will gradually improve. We push for a more balanced growth rather than an explosive one that may lead to problems in the future”, said the Chairman of the National Bank.

Concluding the meeting, the Head of the state gave a number of individual orders”.

The thing is that Nursultan Nazarbayev who was born in 1940 and received a technical education can hardly be called a professional economist despite the fact that he, for many years, had served as the Secretary of Industry of the Communist Party Committee of Kazakhstan and the Chairman of the Council of Ministers of the Kazakh SSR as well as obtained a Ph.D. in economy at the Russian Academy of Public Administration and also received a great many respectable academic titles. Rather, he is a practitioner with a vast experience in management. And, as such., he has always been dependent on the people close to him.

With that, being the leader of Kazakhstan from 1989 first serving as the First Secretary of the Central Committee of the Communist Party of Kazakhstan, then as the President of the Kazakh SSR and, finally, as the President of the Republic of Kazakhstan, Nursultan Nazarbayev has always been (and remains) under the external and internal influence (pressure) of the people who have any kind of interest in the country whether this interest is political, economic, social, private, state, self-serving, etc. Consequently, the policy determined and implemented by Nursultan Nazarbayev has always been a compromise, and often a multi-leveled and multi-channeled one at that. With a double or perhaps even triple bottom.

Thanks to his excellent political intuition, in the first years of Kazakhstan’s independence, Nazarbayev had developed a certain tactics that allowed him to, first, reduce his political responsibility for the wrong (unsuccessful, protests-causing, etc.) decisions, second, weaken the pressure exerted on him by those who wanted changes in the existing policy, third, ease his own balancing inside the country and on the global stage.

As part of this tactics, he would always choose a person capable, in his opinion, of completing the most topical task of the moment better than anyone. This person would be appointed the head of some agency (be it the government, the National Bank, Samruk-Kazyna, a ministry or a regional governor’s office), given a free hand and, inspired by the President’s trust, begin to carry the ball.

However, as soon as Nazarbayev realized that this person was unable to complete the task entrusted to him, that he had reached his limit or when the negative stance on him expressed by different elites became excessive, he would remove this official from his post.

In the newest history of Kazakhstan, there has been plenty of people who had been bet on by the President in order to subsequently fire them, move to a different position or exile them from the ruling elite or even the country when they had reached their limit. The most notorious examples are former Prime-Minister Akezhan Kazhegeldin, former Deputy Chief of the NSC Rakhat Aliyev (now deceased), former Minister of Energy, Industry and Trade Mukhtar Ablyazov.

To them, we should add several other figures that did not become emigrants and political opponents but were simply removed from their positions (for instance, Grigoriy Marchenko or Kayrat Kelimbetov) or even convicted for committing economic crimes.

So, as follows from Akorda’s official press-release of January 25, 2019, President Nursultan Nazarbayev has, for the first time, demanded the main financier of the country to change the current monetary policy of the National Bank of Kazakhstan.

Judging by the text of the document, the latter was seemingly able to explain himself to his boss by citing, among other things, the negative external factors. But the very fact that Nazarbayev has voiced the opinion of the regulator’s opponents who demand that, first, the National Bank starts crediting the economy, second, together with the government, stimulates the economic growth in the country indicates that the peak of his trust to Akishev and his professional opinion has passed.

From now on, a lot will depend on Daniyar Akishev himself.

If he chooses the way of Umirzak Shukeyev or Sauat Mynbayev (the ultra-flexible people ready to manage anything they are entrusted to do), there is a chance that, after leaving the National Bank, he will take the charge of some state agency (for instance, the Ministry of Economy or perhaps even the government). Or at least, replace that same Kayrat Kelimbetov as the Head of International Financial Center Astana.

If he will not follow this path or, more than that, start insisting on his righteousness, his fall will be unavoidable. Although, we believe, the first scenario is much more feasible. The times of the principled and fearless statesmen are but a thing of the distant past.


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