In Re the Causes of the “Korday Conflict”

The tragic events in the Korday district of the Zhambyl region whose peak took place on February 7-8, 2020, is going to remain at the center of attention of both the state structures and the general public for a long time. Everyone is curious to learn what really happened and how it was possible in the country where interethnic acceptableness has been the norm for a number of decades and where maintaining internal political stability serves as one of the main goals of the authoritarian political regime.

In view of this, let us offer you our own understanding of the events based on both the information sources (including those in the security agencies) and the expert knowledge of how the underground sector of the national economy operates.

According to this view, the ethnicity of the people that participated in the said events on either side is of a secondary nature. In other words, it was indeed the Kazakhs who performed the role of the attackers and it was mainly the Dungans that were attacked. But not because the former do not like (hate) the latter or the latter provoked the former via their inadequate or offending behavior.

The thing is that the import of the Chinese-made contraband goods into Kazakhstan happens to be one of the most profitable and non-transparent sectors of the country’s underground economy.

The following factors serve as the economic basis for this business:

  • the low prime cost of Chinese goods when compared to their Kazakh analogues (not to mention the goods imported from Russia or the West);
  • the low level of life of the Kazakh citizens due to which they mainly focus on the price of the goods and not on their quality or environmental safety;
  • the neighborship of Kazakhstan and China when the distance between the production place and the final consumption place does not exceed several hundred kilometers.

After the fall of the USSR and the creation of the 15 independent states as well as the opening of the borders and the appearing of the opportunity to travel abroad freely, the import of Chinese goods became one of the most popular types of business not only in Kazakhstan but in the other CIS countries as well. Virtually everyone who wanted to do it and could do it was doing it. Later, however, this «crazy» business was divided into the legal and the underground parts.

Note that the division has almost always been arbitrary. The entrepreneurs who comply with the law and pay all the required taxes and fees do so strictly out of necessity. Whereas their colleagues who take the «alternative routes» involving corrupt customs officials and siloviks are prepared to operate legally when nothing else is possible.

As a result, over the course of the past 30 years, the Kazakh national economy has formed a big and invisible (for the official statistics but not for individual state’s representatives) sector. Like any other sector of economy, it’s developed under the influence of both internal and external factors. We are not going to either list or analyze the latter since this subject is quite broad and complex in and of itself.  We will only mention that the import of Chinese goods as a business has gone thorough the same stages as the legal types of entrepreneurship.

In other words, at first, it consisted of a number of small businesses, then mid and big businesses started to take shape among them. Therefore, in the context of Kazakhstan with its authoritarian political system and the «super-presidential» vertical, the big smuggling business could not have been built and could not have operated without participation of influential members of the ruling elite.

The late Rakhat Aliyev, the first husband of Head of the Senate of the Kazakh Parliament Dariga Nazaebayeva and the First President’s son-in-law, was one of them. He, of course, operated «in a big way». But the majority of this sector’s key players were not as high-profile, famous and influential as he. We are not going to name the names, but we will say that the Leader of the Nation’s brother Bolat Nazarbayev is one of the main suspects in this matter. 

Here are the main problems of this underground sector: a) the abnormally excessive business competition that exists due to the low entrance threshold and b) the extreme susceptibility to the actions of the state and its representatives. As a result, the business-processes in the sector are usually invisible to anyone except its actual operators, conducted in a fast fashion and mainly handled on a cash-basis.

According to our insiders, after the so-called «Khorgas case» when several high-rank siloviks from among the Kazakh NSC and Customs Committee officers that had been protecting the major organized criminal groups were arrested, this type of business got decentralized in a significant way. And Bolat Nazarbayev’s (and not just his) attempts to establish control of the flow have encountered resistance on the part of many of those involved in it, say our insiders.

However, the main problem of the sector lies not in the attempts of certain figures to «reign» but in the following:

  • the state has done enough to legalize the inflow of Chinese consumer goods into Kazakhstan albeit not always successfully;
  • the volume of the Internet-trade that allows the consumer to receive the desired goods directly has increased dramatically;
  • the purchasing power of most Kazakhs has decreased in a drastic way.

As a result, the competition in this underground sector has not simply become acute but, de-facto, has been transformed into a struggle for survival. And the groups mainly consisting of the citizens of the Dungan ethnicity have turned out to be able to meet competition more successfully than their competitors (mainly Kazakhs).

These are the main factors that have secured the upper hand for the Dungans:

  • the patriarchy of the Dungans with their big families consisting of several generations and with their tight and trusted connections with their kinsmen regardless of where the latter live;
  • the fact that the Dungans are concentrated in the areas of China located near the borders of Central Asia and Kazakhstan as well as in the areas directly adjacent to the Kazakh and Kyrgyz borders on both sides;
  • the entrepreneurial attitude and the industriousness of the Dungans as a people; the qualities they have developed over the centuries of the necessity to survive in a rather aggressive external environment.

As a result, the underground Dungan communities that we are reluctant to call «organized criminal groups» (if only because we are analyzing the economic aspect of the matter) have turned out to be able to meet competition much more successfully than their Kazakh competitors. They have been offering their whole-sale and retail clients as same Chinese-produced goods but at a lower price and with a fairly decent level of service.

The first became possible thanks to economizing on transaction costs, the smooth-running supply-chain and the low riskiness of their business-model supported by the intra-familial, intra-clannish and kindred ties as well as the shared mentality, language and survival practices.

We are not going to analyze the tragic events of the Korday district per se and try determining whether they happened as a result of the overlapping of several random circumstances or were organized deliberately in order to achieve a specific goal (be it exerting the pressure on business competitors, pushing them out, forcing the authorities to fire certain people or establish unofficial control of the trade «corridors» through which the Chinese-made contraband goods are delivered).

In this instance, all this is not particularly important.

We will say, however, that, in this instance, the silovics acted with restrained. So, for example, in contrast with the 2011 Zhanaozen tragedy, they did not use the automatic weaponry even though they had a hundredfold more reason to do so. Moreover, they let the arrested people go when the crowd started to pressurize them. In other words, they did not allow for the civil disturbances to continue.

Of course, they are unlikely to impose liability on all those who governed the crowd and led the people that killed, set fires and destroyed during the February 7-8 events. Just like they were unable to manage that in 2006 in Shanyrak and in 2011 in Zhanaozen.

However, this unavoidable failure on the part of the Kazakh authorities is but a peanut in comparison to the fact that they will definitely be unable to solve the problem of the Chinese-made contraband goods import into Kazakhstan.

Yes, Akorda will be able to rebuild the destroyed houses and other building in Masanchi and the neighboring villages at public expense, help the families of the bereaved and the injured, reduce the intensity of the clash between the Kazakhs and the Dungans. However, the authorities are clearly unable to offer high-paying jobs to the locals that could prompt the latter to leave the criminal groups that make money on importing Chinese goods into the country.

The proof of this lies in the Zhanaozen case where, after the tragedy of December 2011, the authorities have created plenty of additional jobs, nonetheless, the problem of unemployment in the region remains unsolved.


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