Small anti-government protests took place in the capital of oil- and gas- rich Kazakhstan today as the country’s only genuine opposition parties accused the government of effectively shutting them out of the country’s recent legislative elections.
Although the protesters’ may have had a point (the ruling party took 81 percent of the vote and its political allies a further 15 percent), opposition turn-out was poor, numbering only 100 demonstrators.
Reuters reported that these protesters symbolically burnt copies of the voting results and then departed peacefully, watched by large numbers of police.
But while Kazakhstan may not be at imminent risk of an ‘Arab Spring’ style uprising, the country still poses considerable political and reputational risks for international business looking to exploit the country’s vast and easy-to-reach oil and gas reserves, or its rich deposits of other commodities such as uranium.
Kazakhstan has recently been the scene of considerable political and labour-related violence.
In December 2011, Kazakh police shot and killed 16 striking oil workers during a protest in the town of Zhanaozen. The violence was described by the BBC as ‘the worst to have hit Kazakhstan in the 20 years since its independence from the Soviet Union’. The workers were demanding higher wages and independent labour unions.
The protests and the subsequent shootings suggests deeper tensions within Kazakhstan society and frustation at unequal wealth distribution in particular.
This is bourne out by a recent Maplecroft report on Kazakhstan assessed the country as being at ‘extreme risk’ for corruption, a indication that ordinary people have not necessarily reaped the full benefits of their country’s 7 percent annual GDP growth.
While frustration at corruption, economic inequality and lack of democratic governance rarely spill over into violence, as the same Maplecroft briefing noted, lack of serious reform means ‘the risk of incidents of instability and terrorism in Kazakhstan will be of increasing concern to operators in the coming years.’
It is in this context, that this week’s election protests were significant – not because they are a threat to the Kazazk regime but because they are a reminder that the government’s present democratic reforms are largely symbolic. They are also a reminder that there is political discontent simmering within Kazakhstan, despite government efforts to give the impressison to foreign governments and potential investors that all is well.
It is worth remembering too, that a lack of democratic governance does not only increase the long-term risks of instability, it also poses an immediate reputational risk to firms working in countries that are percieved as repressive. While Kazakhstan’s oil and gas reserves are certainly alluring to many firms, the risks associated with them may be considerable.
For further information about Maplecroft’s recent Country Risk Briefing on Kazakhstan see here: http://maplecroft.com/about/news/country-reports-january18.html#elm_kazakhstan.
