Economics, The Unavoidable Core of Kazakstan Protest

Kazakhstan suffered greatly from the biggest protest since its independence. As I recently returned to Almaty, I saw that everyday life is heading back to normal, and the reconstruction seems lightning speed. Yet, the scar is still apparent. The bank and convenience store from which I live upstairs were burned and under full reconstruction, and the city hall has been entirely covered to go through repairs and rebuild.

On the midnight of Jan. 19, the curfew in Almaty is officially over. The end of the curfew also marks the end of the state of emergency triggered by the protest starting Jan. 2. It was a genuinely reassuring sound to hear cars running on the street at midnight again.

As the country is at lightning speed in recovery and reconstruction, the vital question is what triggered the protest.  Moscow called the protest a color revolution, insisting that the outside powers and Kazakh opposition organized the riot to overthrow the current government.  However, what happened in Kazakhstan is not a color revolution, and the fundamental reason for the protest is far from this simple.

Like some other countries, Kazakhstan witnessed mass protests triggered by economic and social issues in the past years. The core focus of the Kazakhstan protest is not political but economical, and the massive protest reflects Kazakhstan’s financial struggle that the country faces and needs immediate address. It was extreme wealth and income inequality, rising living expenses, and corruption that triggered the biggest protest in Kazakhstan since independence.

The first layer is the extreme wealth and income inequality in Kazakhstan. In a recent meeting, President Tokayev has pointed out that 61.5% of the Kazakh national income is business profits. In contrast, the salary of Kazakh citizens only made up one-third of the national income.  Compared to other CIS countries, such as Russia, this income structure is highly unbalanced. Beyond the income structure, the high concentration of wealth is also alarming. According to a KPMG report in 2019, more than half of the Kazakh national wealth is controlled by 162 people. This level of inequality could easily create a warm bed for dissatisfaction to grow and, therefore, mass protests.  

While Kazakhstan’s average salary is less than $600, the country still generates a wealthy class, as President Tokayev mentioned in his speech. The extreme level of wealth inequality also reflects on the fact that Kazakh elites heavily invest in London real estate while half of the country makes less than $214 a month.  Comparing Esentai Mall, the shopping mall that carries the most luxurious handbags and clothes, and the markets in the outskirt of Almaty where a pair of socks is 300 tenge, less than 75 US cents, it becomes apparent that Kazakhstan lives in two different realities.

Meanwhile, the skyrocketing price tag for basic needs since the beginning of the pandemic has driven people further.  People went on the street in Zhanaozen because of the unbearable price for LPG, the essential fuel that people rely on for commuting and transporting affordable food. The protest in west Kazakhstan ignited national unrest.  

The rising prices were not just in energy but across the board. In October 2021, the cost of food increased by 11.4%. This price surge is not new to Kazakh people.  In the past two years, the Consumer Price Index in Kazakhstan went from 797.6 to 923.2.  The drastic increase in living expenses has forced people to their limits.

The value of tenge dipping has also fueled the rising living expenses to people. While Kazakhstan requires many imports for basic needs and everyday goods, tenge value dipping only further exacerbated the dissatisfaction within the people. The value of tenge dropped by 13% against US dollars in April 2020 alone. From October 2021 to now, US dollars to tenge rose from 1:425 to 1:435.  As Kazakhstan imports foods and everyday goods from outside, tenge depreciation could only drive the price for basic needs higher.

Furthermore, the long-lasting corruption issues in Kazakhstan exacerbated the people’s dissatisfaction. While corruption in the lower level of government has been under better control in the past years, it is still common among the Kazakh elites.  The Kazakh elites control most of the important sectors of the economy. Before the protest, former President Nazarbayev’s close family members headed many of the vital enterprises in Kazakhstan. Aliya, Nazarbayev’s daughter, held the monopoly in recycling. Meanwhile, Nazarbayev’s two sons-in-law held critical positions in the major Kazakh energy companies.

With easy access to massive national wealth, corruption activities become more effortless. There are accusations against some Kazakh elites for stealing national assets to benefit themselves. The evidence of corruption is almost everywhere. As mentioned previously, Kazakh elites are investing in real estate in London, and there are also documents showing that many high-level officials have bank accounts in Switzerland. At the peak of the unrest, private jets were flying in and out from Almaty airport, carrying Kazakh elites to Europe. It further proves the luxurious life that the Kazakh elites live.

To address the massive inequality and economic issues, the government has introduced a new national wealth fund and reformed the existing ones to provide better support to the Kazakh people. Meanwhile, the government introduced a new tax law to raise the tax rate for the mining company and the wealthiest citizens. Before the protest broke out, the government raised the minimum wage from 42,500 tenges to 60,000 tenges, roughly $137 now. The government has also stripped away the monopoly of Aliya Nazarbaeyva’s company in recycling as part of fighting against corruption. 

However, how effective are these new methods and policies still needs observation. It seems like these methods are only remaining on the surface. The increasing tax and new wealth fund do not fundamentally change the wealth distribution system and do not address the core issues of corruption. Meanwhile, with the rising price tag in Kazakhstan, how much of this rise of minimum wage could genuinely improve the condition for the poorest? 

While the Kazakh economy has flown high like the soaring steppe eagle on its flag since independence, the protest exposed all the challenges and issues the development has brought. These financial challenges and inequality triggered enormous demonstrations and unrest in January. While the country rebuilds itself quickly, the Kazakh government still needs to face economic challenges and massive social inequality that needs immediate attention.

Henry Huang serves as the Research and Communications Assistant at the DPRK Strategic Research Center in KIMEP University in Almaty, Kazakhstan. He graduated with a Bachelor’s degree from the George Washington University’s Elliott School of International Affairs. The views and opinions expressed in this article are those of the author.

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