Industrialisation a la Stalin as Nazarbayev sees it

© mukhtarablyazov.org 20.02.2014

Mukhtar Ablyazov's contemplations on the devaluation.
 
Let us contemplate on the devaluation. Who gains from it and what does it bring to the citizens, the enterprises, the economy.
 
We understand that the total foreign exchange reserves of the country account for about 100 billion USD, of which about 70 billion belongs to the oil fund. The fund was initially created for the future generations of the Kazakhstan citizens. And now, when the country has accumulated its reserves, here comes an unexpected blow to its society – devaluation. Who in the country starts facing problems?
 
We shall start the analysis from Nazarbayev himself, his family and his immediate environment. It was Nazarbayev who, together with his minions, decided оn devaluation, therefore they did not suffer any losses. Moreover, they don't invest in dollars. They are all rich, keeping their money in foreign exchange and almost all of their major property is located outside Kazakhstan. Thus, President Nazarbayev, who – according to the Constitution – has to serve his people and represent the interests of the country and its citizens, did not suffer any losses as a result of the devaluation; neither did his family nor his associates. Tellingly, the devaluation was carried out secretly, underhandedly, with the intention of cheating the people who trusted the President; charged with the mission of serving them.
 
Now Nazarbayev says that the devaluation will improve the economy of the country and the situation of the exporters. So, what have we got here: people lost their money in banks overnight, their deposits were depreciated by 20% – and this is supposed to improve the country's economy? The whole population of the country became 20% poorer – and does this mean everything's just fine? What Nazarbayev says is that if you get worse, you get better. Do you remember Mao's famous quotation book? One of its well-known quotations was, ''The worse the better!'' During the period of Mao's rule, 80 million people out of 500 million were annihilated. How many of our citizens does Nazarbayev want to annihilate?
 
Now the authorities say that they have improved the exporters' economy. The main bulk of exports consists of oil and raw material enterprises, such as the enterprises of Mashkevich's group (ferrochrome etc), Arselor-Mittal located in Karaganda, enterprises of Kazakhmys (copper), Kazzinc (zinc). Who's has control over all that, whose economic interests lie in these regions?
 
There are no major or minor oil and gas producers which don't have the interests of Nazarbayev's family and minions at heart. Every citizen of the country knows that Nazarbayev controls this sector via Timur Kulibayev, his son-in-law, and the Chinese.
 
Not a single ton of oil is sold without the participance of Nazarbayev's family and minions. That is, we say this is to advantage of the oil exporters while in fact we should be speaking directly of Nazarbayev & Co's advantage. As for the smelters I listed above, everybody knows that Nazarbayev is the major shareholder of the Mashkevich's group, of Mittal with the ''Koreans'', of Glencore in Kazzinc.
 
So, if devaluation is profitable for these raw material exporters, we understand that it's first and foremost Nazarbayev who benefits from it, being the major shareholder of these enterprises. Nazarbayev charges some exporters with a task (sure the major shareholder can do that!) of increasing the salary by 10%, starting from April 1. Why not by 20%? They might as well do that. The devaluation was not 10 but 20%, after all! Was the exporters' business going bad before the devaluation? The oil price is more than $100 per barrel. The sector was functioning even when the price was $10 per barrel! They couldn't be earning more. In Russia, the oil export duty is about $400 per ton, the money going to the country's budget, while in Kazakhstan it is only $60 per ton. Did our oil producers' business get worse than that of the Russian ones? And what about raw material enterprises? Their product pricing is extremely high! They do not compete with the Russian products in Kazakhstan, sending everything for export. But the employees' salary in Kazakhstan is several times less than that of their competitors from around the world. Not by 20%. but several times less than the employees of similar enterprises. So, should it have been decreased by another 20%?
 
All right, so Nazarbayev was elected by the people? Is this how he represents the interests of the people? The authorities say that the trade balance and the competitiveness of the country should be improved. But at the same time, they publish official data for the year 2013, claiming proudly that the trade balance is positive and accounts for $ 46 billion. That is, exports exceed imports by said figure. To what extent and at what price do we want to increase this balance? With such trade balance indicators, with reserves of about $100 billion, why did the devaluation have to be carried out secretly, underhandedly? Why weren't the citizens' deposits indexed in KZT, while in 1999, when the country had almost no reserves, the deposits still were indexed?
 
There is every opportunity for this today. Why is it that in neighbouring Russia, the ruble is being weakened gradually, in accordance with world currency fluctuations, not underhandedly. Why does Nazarbayev cheat his people while expecting them to believe him? And how come the Head of the National Bank, the person responsible for the monetary police of the country, only finds out about the devaluation the night before it happens? Isn't he the one in charge of the country's monetary policy? And if not, what do we need him for?
 
And now, the banks.

Everybody knows that Nazarbayev, his family and his minions, control the key banks of the country. These are BTA Bank with KKB, Khalyk Bank and a number of other banks. It is obvious that the money in KZT was converted into USD before the devaluation. After the devaluation, the banks sold the dollars and benefited from this. Only the deposits of the citizens remained in KZT, so the citizens suffered losses. This even happened during the transaction providing for the purchase of BTA Bank stocks: the buyers estimated the stocks at 1 billion USD, yet decided to pay in KZT: 20% after the devaluation and 80% in 2017. It is clear that yet another devaluation is to happen in 2017. Here, too, Nazarbayev and his environment won again.
 
And now, the importers.
Kazakhstan imports almost everything except for grain and flour: meat, sugar, clothing, footwear, soap, toothpaste, cars, milk etc. And all this will go up in price by at least 20%. Who is it that the authorities are going to stimulate?
 
Nazarbayev talks a lot about industrialisation. Not long ago, he mentioned the 30s – the period of Stalin's rule – as an example, saying that we should build and organise the same way as in Stalin's epoch. According to Nazarbayev, Kazakhstan should take Stalin's industrialisation as a basis in order to develop the economy!
 
Yet the citizens of the country shouldn't forget the price of that industrialisation! The private peasantry was destroyed in the course of dekulakization, all the agricultural products were withdrawn. The forced sedentarization in Kazakhstan and the subsequent Asharshylyk (The Famine), a tragedy comparable in scale with Holodomor (The Man-made Famine) in Ukraine. People were forced into the kolkhozes, they practically worked for no pay, only for checkmarks in the foreman's notebook. The villagers did not have passports, so they couldn't relocate. Over 30 million people died in the camps, and in Kazakhstan, over 50% of population were killed. Do we want an industrialisation a la Stalin? Do we want to turn a blind eye to all the human lives thrown into the furnace of Stalin's industrialisation and forget about the victims of the repressions, about the conveyor belt of NKVD, about the GULAG?

In any case, even if Nazarbayev wants to recreate the best aspects of Stalin's industrialisation, first of all, he and his environment have to surrender all the money, land and other property to, as they said at that time, "the storehouse of the Motherland". Maybe in this case the industrialisation will be successful… Maybe this will inspire people!

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