NAZARBAYEV'S STATE OF THE NATION SPEECH FOCUSES ON

UNCLAS SECTION 01 OF 02 ASTANA 000280 SIPDIS SENSITIVE SIPDIS DEPT FOR SCA/CEN - MARTY O'MARA E.O. 12958: N/A TAGS: PGOV PREL ECON EPET KZ SUBJECT: NAZARBAYEV'S STATE OF THE NATION SPEECH FOCUSES ON ECONOMICS, SOCIAL PROGRAMS -------------- SUMMARY -------------- ¶1. (U) President Nazarbayev's 2009 state of the nation address focused largely on the economy, as well as on government social programs. He only touched briefly on foreign policy, highlighting Kazakhstan's selection as OSCE chairman for 2010. He said little about democratic reforms. End Summary. -------------- FOCUS ON ECONOMY -------------- ¶2. (U) President Nazarbayev delivered his annual state of the nation address to parliament and other assembled guests, including foreign ambassadors, on February 6. His remarks focused largely on economic matters, as well as on government social programs. He showed great enthusiasm in discussing the economy, deviating several times from his prepared text. Nazarbayev noted that the state is strengthening its position in strategically important parts of the extractive sector, and pointed out that Kazakhstan had increased its share in Kashagan and several other projects. He said the government had to undertake measures to better develop the country's infrastructure, especially transport links and electricity. ¶3. (U) Discussing the banking sector and the domestic impact of the global financial crisis, Nazarbayev called for strengthening the Financial Supervision Agency (FSA),and said the government, FSA, and National Bank have to create a strong system of risk management. He said that the government needs to develop a new tax code that would faciliate economic modernization and diversification, and reduce the shadow economy. He argued that taxes should be lowered on the non-extractive sectors of the economy, especially on small and medium-sized enterprises, with increased output in the extractive sector compensating for the lost government revenues. -------------- COOPERATION IN CENTRAL ASIA -------------- ¶4. (U) Nazarbayev touched on foreign affairs only briefly, but made one comment of note. He first explained that Kazakhstan has to strengthen its economic and political cooperation with Russia, China, and the Central Asian states. He added, however, that with the "aim of strengthening security in the Central Asian region," Kazakhstan is also "widening constructive cooperation with the U.S., EU, and NATO." -------------- OSCE -------------- ¶5. (U) Nazarbayev contended that Kazakhstan had achieved a "qualitatively new level of international recognition," of which the most persuasive testament was Kazakhstan's selection as 2010 OSCE chairman. He said Kazakhstan has to develop a special program in connection with the chairmanship, which he named the "Road to Europe." Nazarbayev said that this program must "facilitate the development of economic cooperation, the attraction of technology and managerial experience, the perfection of our laws, and the development of our agenda, the strategic vision of our chairmanship of the OSCE." (Note: While Nazarbayev did not elsewhere directly touch on Kazakhstan's Madrid commitments on democractic reform, his mention of "perfection of our laws" may have been an oblique reference to the issue. End Note.) -------------- - DEMOCRATIC DEVELOPMENT AND DOMESTIC PRIORITIES -------------- - ¶6. (U) Nazarbayev contended that in the 16 years of the country's independence, Kazakhstan had realized its own model of "guaranteeing social stability, inter-ethic accord, and the formation of a Kazakhstani identity and common Kazakhstani patriotism. " He stressed that "long-term stability, peace, and accord" were critical to the further strengthening of the country and its economic prosperity. ¶7. (U) Nazarbayev said that political parties, as well as NGO's and other public organizations, would play the main role in the further development of Kazakhstan's political system. He said that "the model with Nur Otan as dominant party could be considered the optimal form of Kazakhstan's political system," claiming that this model would open a path for all other parties to participate in elections, to enter parliament, and to participate in all political processes. He argued that there are no obstacles to the emergence of new parties and the expression of their own points of view. ASTANA 00000280 002 OF 002 -------------- COMMENT -------------- ¶8. (SBU) While Nazarbayev did not clearly address the Madrid commitments, it is important to note that the government has in any event begun taking at least some steps toward implementing them. In January, the Central Election Committee (CEC) requested that political parties, including opposition parties, provide recommendations for election law amendments. The main opposition parties recently responded to the CEC with their own proposals. The CEC is currently inaugurating a series of working group meetings to discuss the issue further, and has invited political parties to participate in them. End Comment.