Tuesday, January 31, 2012

Why Zhanaozen Should Have Been Discussed at the Atlantic Council Conference


The Atlantic Council, in conjunction with the Embassy of the Republic of Kazakhstan and Chevron, hosted a conference on the occasion of the Twentieth Anniversary of Kazakhstan’s Independence and of U.S.-Kazakhstan Relations today, January 31st. The event was filled with Washington and Kazakh diplomatic heavyweights who were not only at the front rows of history, but were the very catalysts of change and innovators of policy that transformed world history. Among the notable speakers include current Minister of Foreign Affairs for the Republic of Kazakhstan Yerzhan Kazykhanov, Undersecretary of State for South and Central Asian Affairs Robert Blake and former CEO of Chevron Corporation Kenneth Derr. Several former U.S. Ambassadors were also in the room including William Courtney, Richard Jones, Larry Napper and Jackson McDonald. While the conference shed light on some of Kazakhstan’s foreign policy accomplishments with a nostalgic, almost fraternity-like hubris, the event failed to address contentious foreign policy topics such as the development of Kazakhstan’s democracy, the Zhanaozen events and the succession issue.

The word “Zhanaozen” was rarely, if at all, mentioned. Foreign Minister Kazykhanov briefly referred to the government’s ability to bring order and security to the Magistrau region. He noted that the recent labor events in Magistrau did not compromise investments in the region. No American diplomats mentioned Zhanaozen.

As a side note, it is worth mentioning that the state of emergency in Zhanaozen was lifted today, as scheduled. To give credit where credit is due, Nazarbayev promised the state of emergency would last until January 31st and held his promise by not extending it.

Is the lack of reference to Zhanaozen surprising given that many of the individuals at the conference were part of the oil and gas industry? Not necessarily.

When abroad, many Kazakhs I met held high regard for American companies operating in Kazkahstan due to their emphasis on meritocracy and lack of corruption. American firms such as Chevron pay better than their Kazakh counterparts and offer good benefits. I remember meeting two engineers who worked at TengizChevroil (TCO), a public-private partnership between Chevron, KazMunaiGaz, ExxonMobil and LukArco. The two engineers split their time between Almaty and Atyrau. Reportedly, TCO transported cadres of engineers to Atyrau, subsidized everything from beer to housing and after several weeks of hard work in one of the most tedious environments on the earth, the engineers returned to Almaty. Both engineers enjoyed their work and the sense of camaraderie they felt working with their engineering “class” of individuals from around the world.

At the Fourth of July barbeque in Almaty, I spoke with a Kazkah businesswoman who began her career working at Chevron. Proficient in English, Russian and Kazakh, she enrolled in a Chevron training program where she learned about the oil industry, supply chaining and logistics. After several years at Chevron, she started her own logistics company.

During lunch, I conversed with a diplomat from a European embassy. The diplomat told me at the end of the day, the events in Zhanaozen did not significantly alter the opinion of investors interested in investing in Kazakhstan. The events in Zhanaozen, while unfortunate, do not appear to signify a larger issue to businessmen, foreign policy officials and even to many Kazakh citizens residing outside of Western Kazakhstan.

While it is important to acknowledge the positive externalities generated by the investment into the development of Kazakhstan’s oil and gas sector, it is equally relevant to note that the events in Zhanaozen mark the emergence of workers rights as a political issue that demands state attention. A conversation on the Zhanaozen events is desperately needed, not to point fingers and play the blame game, but to develop comprehensive policies with respect to private property, workers’ rights, labor movements, and investment.

As Central Asia’s leading economy flourishes under the conditions of free-market capitalism, whereby competition between private firms regulates market activity, it is only natural that there will be those who gain and those who gain less. The six-month long strike of Ozenmunaigaz employees in Zhanaozen, organized to demand increased wages and improved working conditions, reveals the increased consciousness among workers about the workings of an industrial economy. Think about it – U.S. history is filled with disputes between organized labor and industry management: revolts of factory workers in Lowell, Massachusetts, the Pullman strikes, the violent clashes between Pinkertons and striking workers at Carnegie steel mill in Pennsylvania, and the Coal Strike of 1902. As Kazakhstan’s per capita GDP skyrocketed from $700 at the time of independence to $11,000 in 2011, it is a natural consequence of modernization and industrialization, as history demonstrates, that there will be tensions between workers and management.

Overall, the conference was fascinating and give the Atlantic Council an enormous amount of credit in organizing the impressive list of panelists. However, other than blanket statements proclaiming the imperative for Kazakhstan to ensure increased religious, political and media freedoms and provide a safe outlet for the actualization of a vibrant civil society, the panelists at the Atlantic council event did not delve into a comprehensive discussion on the status of Kazakhstan’s domestic politics and mechanisms through which the state can act to ensure a sustainable and prosperous development of Kazakhstan’s entire population. A thorough conversation exploring these issues of governance, investment climate and the maximization of individual welfare in a transitioning market economy is necessary and should not be avoided. 

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