Kazakhstan Bogged Down By Corruption and Ailing Economy

Kazakh authorities arrested six prominent people tied to a scandal involving the alleged intent to embezzle $1 million from state coffers, according to EurasiaNet. The arrests include an important media head, and critics charge that the government is suppressing free speech and freedom of the press. Kazakhstan’s economy has suffered in part from rampant corruption and inept management.

Kazakh authorities arrested six prominent people tied to a scandal involving the alleged intent to embezzle $1 million from state coffers, according to EurasiaNet. The arrests include an important media head, and critics charge that the government is suppressing free speech and freedom of the press. Kazakhstan’s economy has suffered in part from rampant corruption and inept management.

Regardless of whether the recent corruption probe holds true, the systemic problems of authoritarianism and tainted governance cannot be ignored. The Central Asian country has suffered through a string of corruption incidents, and senior officials have been accused of criminal acts that include bribery and embezzlement.

Despite the allegations, President Nursultan Nazarbayev signaled his unwillingness to tackle deep-rooted corruption by retaining established leaders in his administration. Experts note a weak opposition during elections, and voters saw little change in parliament, partially explaining widespread voter apathy. Many felt change was necessary when the economy took a nosedive, but newly elected officials have been relegated to the lower house of parliament, while establishment bigwigs remain in key positions.

International observers highlighted electoral fraud and other unscrupulous tactics during the election process, raising further doubts over the legitimacy of the results.

Questionable Leadership

Nazarbayev won reelection in 2015, but detractors accuse his administration of favoritism and cronyism, and he has a less-than-stellar human rights record. Nazarbayev has followed the same path as other presidential dictators, as parliament approved a constitutional measure in 2007 allowing him to seek reelection for life, but this provision only applies to Nazarbayev because he is the first president. Kazakhstan gained independence from the Soviet Union in the early 1990s, but Nazarbayev has been in power since 1989.

Energy Sector Issues

The president made no major changes within his cabinet, but he removed former energy minister Vladimir Shkolnik, whose governance led to the nation’s oil surge. The president replaced him due to changing circumstances involving a lower-priced oil market. Kazakhstan is an oil-producing nation, and most of its exports derive from oil output.

The government announced heavy spending cuts in recognition of lower crude exports, with officials predicting that oil output could fall by a third in 2016. With that, corruption rears its ugly head in the energy sector as officials have been accused in the past of raiding funds stemming from oil exports, especially in the western region.

Mineral Wealth

Kazakhstan has other commodities to lean on, and is one the strongest-performing economies in Central Asia. Kazakhstan is also rich in precious minerals that include zinc, tungsten and copper. The economy retains a strong manufacturing sector, which exports a wide variety of goods, but the economy must contend with an overreliance on commodities, setting Kazakhstan on a dark path going forward as the commodities sector suffers through market turbulence.

Barclays Plc predicts that commodities could incur additional price dips in the near future, notes Bloomberg Business.