KAZAKHSTAN: PRESIDENT DELIVERS STATE OF THE NATION ADDRESS

UNCLAS SECTION 01 OF 02 ASTANA 000594

SIPDIS

DEPARTMENT FOR SCA/CEN (M. O'MARA, T. PERRY),DRL/PHD (C.
KUCHTA-HELBLING)

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PHUM PREL OSCE KDEM KZ
SUBJECT: KAZAKHSTAN: PRESIDENT DELIVERS STATE OF THE NATION ADDRESS

REF: Astana 515

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1. (SBU) Summary: On February 28, President Nursultan Nazarbayev
delivered his annual state of the nation address before a joint
session of parliament. The address, entitled "New Kazakhstan in the
New World," was intended primarily for domestic consumption, with a
heavy focus on modernizing social and economic development in the
country. Nazarbayev emphasized the need to meet global competitive
challenges, and to utilize international standards. The president
listed political reform as one of the 10 major tasks facing the
nation in the coming decade, but he did not reveal any significant
new details concerning the plan for reform. End summary.

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THE PRESIDENT CELEBRATES PROGRESS, PROMISES MORE
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2. (U) On February 28, President Nazarbayev delivered his annual
state of the nation address before a joint session of parliament.
The president's speech, entitled "New Kazakhstan in a New World,"
stressed the themes of modernization and development, with a strong
focus on social and economic issues. The president reviewed
Kazakhstan's progress to date, declaring that Kazakhstan "has chosen
its own way of development," and has "achieved wide renown and its
standing in the international community is rising year after year."
He reiterated Kazakhstan's goal of joining the world's 50 most
competitive nations, acceding to the WTO, and fulfilling
Kazakhstan's 2030 development strategy, which was adopted by the
parliament in 1997. For the first time in recent years, the speech
was not broadcast live. President Nazarbayev departed from his text
on several occasions to scold ministers - and on one issue the press
- for not carrying out their tasks properly. The impromptu remarks,
in both Kazakh and Russian, showed a greater level of frustration
and dissatisfaction in specific areas than in his prepared remarks.

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SOCIAL SPENDING WILL RISE
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3. (U) In terms of bread and butter social and economic issues,
President Nazarbayev pledged, among other things, that pensions
would grow and would be indexed for inflation; employees in
educational, social, health, culture, and sports institutions would
be paid health allowances; employees working in harmful or difficult
labor conditions would receive additional allowances; and that 100
high schools and 100 hospitals would be built over the next three
years in impoverished rural areas. In addition, Nazarbayev
encouraged Kazakhstanis to have more children, and promised to
double the payment that families receive upon the birth of a child,
to increase monthly childcare allowances, and to introduce mandatory
maternity social insurance. (Note: According to the president,
290,000 children were born in Kazakhstan in 2006, an improvement
over the 220,000 that were born in 2000. End note.) In all, the
president planned to allocate 108 billion tenge ($864 million) for
social welfare improvement in the country.


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10 MAJOR TASKS FOR THE COMING DECADE
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4. (U) In keeping with the theme of further modernizing and
developing Kazakhstan, the president outlined 10 major tasks for the
country in the coming decade:

1) Maintain and grow Kazakhstan's economy, including by decreasing
natural monopolies, strengthening the financial system, creating an
efficient stock market, and ensuring Kazakhstan's accession the
WTO.

2) Further Kazakhstan's role as the "regional locomotive" of
economic development in Central Asia, and make it a successful
player in the global economy. Nazarbayev indicated that the primary
focus should be on markets in Russia, China, Central Asia, and the
Caspian and Black Sea regions, and he proposed establishing a
Eurasian Economic Union.

3) Increase the effectiveness of the country's extractive
industries, in part by implementing a responsible and mutually
beneficial energy policy and by insisting that foreign partners
respect the needs of the country and play a role in the
diversification of its economy.

4) Diversify the economy by promoting the development of
non-extractive sectors.


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5) Develop a modern infrastructure to sustain the country's new role
in the regional and global economy, including by exploring new
approaches to development and management of electricity and energy
resources and laying the foundation for nuclear energy use in
Kazakhstan. The president called for the completion of a thermal
electric power station near Lake Balkhash as soon as possible.

6) Provide modern education and professional re-training to help
develop an innovative economy.

7) Target social protection and social welfare development to those
who really need protection, such as the disabled, large families,
and low-income families, and end support for those who are reluctant
to find a new job or update their specialty. Nazarbayev also
pledged further progress in developing affordable
(government-subsidized) housing, particularly in the capital of
Astana, to ensure that Astana can attract a new "intelligentsia" --
highly qualified doctors, teachers, and technical and engineering
professionals. The president criticized government corruption in
this sphere, and called on his Nur Otan Party to oversee the
distribution of subsidized housing and ensure that it goes to those
it was intended to help, as opposed to corrupt local government
officials.

8) Modernize the political system by implementing the conclusions of
the State Democratization Commission (reftel).

9) Accelerate administrative reforms to meet international
standards, with the goal of creating a modern, professional civil
service.

10) Promote Kazakhstan's achievements in Central Asia and the
world.

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NO NEW DETAILS ON POLITICAL REFORMS
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5. (U) President Nazarbayev praised the work of the Democratization
Commission and reviewed the direction that future political reforms
would take, including a more powerful parliament, more powerful
political parties, judicial reform, and more powerful local
representative bodies. He did not reveal any significant new
details concerning these previously-announced reform plans (reftel).
However, he stressed that the reforms must not be "a copy of
foreign experience or abstract theory," and that they should "take
into account the needs of our society and realities in Kazakhstan."


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COMMENT
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6. (SBU) Comment: President Nazarbayev focused on his domestic
constituency, reviewing the many positive developments under his
leadership, directing social spending to key constituencies, and
promising great things to come. Given the target audience, he did
not elaborate significantly on foreign policy issues. Nonetheless,
his modernization agenda tracks closely with several U.S. policy
goals, including regional integration, economic diversification, and
political reform. As always, Nazarbayev framed the debate
carefully: saying all the right things about the need for further
reform, while caveating that the country must develop in its own
way, in response to the "realities in Kazakhstan." End comment.

ORDWAY