From Speech of the President of the Republic of Kazakhstan N.A. Nazarbayev at the meeting of January 25th, 2002

Dear meeting participants!

It happens not very often that we get together in such a representative group - the Administration, members of the Parliament, Government, President's Administration, law enforcement agencies, akims - i.e. all decision makers who make up the backbone of our state and are responsible for the situation in the country. Such meetings should be arranged more often, they should serve the role of the State Council on solving basic problems and vital challenges encountered by the country.

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Economic results of the past year were quite positive. We managed to get over many crisis situations and secured the growth tendency in the economic development of the country. A great number of enterprises were reconstructed and are up and running, thus creating a large number of additional job opportunities for the unemployed. Considerable work has been done on the development of cities, small regional towns and villages.

We took serious actions in the import substitution area. The major part of social payments to the population was carried out. We increased salaries and pensions. Goal reserves of the country are being increased. Kazakhstan is a leading country among the CIS states in terms of the reforming processes being implemented.

Activities of the Executive branch also showed good results last year. The expected industry growth is about 13 percent. Nevertheless, success can never be the reason for relaxation, we still have a lot to accomplish, and the most important task at this point is identifying the key problems and setting major objectives for the year 2002.

Most of the general concepts and ideas were outlined in my Address to the people of Kazakhstan and the Report on the 10th Anniversary of our republic. Today we will be talking about the specifics of these issues.

The First. The Government should put more attention to the issue of better and wider scale processing of raw materials, and increasing their surplus value. We have to further develop the petrochemical and food industries, increase the production of rolled and metal products. All the companies operating in Kazakhstan should be engaged into this process.

The last few years demonstrated an effective process of technical rehabilitation of many production facilities, reconstruction and reestablishment of old industrial enterprises, creating new jobs and attracting more people to make long-term careers in the manufacturing industry. We are experiencing stable development in the sector traditional for our economy - the mining industry.

Profound economic analysis and planning, a well-defined implementation system with a structured hierarchy of concepts and projects, as well as perfectly coordinated and accountable fulfillment of established tasks should make up the foundation for a successful development plan and these strategy components should be given special importance in your work.

A serious, well defined and, even, out of standard approach should be taken in our work on the import substitution policy. This is especially important for the oil and gas sector, primarily, for the three projects - TCO, OKIOC and Karachaganak. We have to take any possible actions to make billions of dollars invested into the country to be fully utilized for its economy development, building new, modern oil refineries, plans for manufacturing oil and gas engineering products and construction materials.

This work should be carried out on a permanent basis at the strong support of the Government and akims, alongside with perfectly coordinated actions. Establishment of the entire infrastructure and attraction of the most professional workforce required for successful sector development should be secured here.

We have to put more efforts to import substitution in the food industry, as well as get prepared for more aggressive development of the nearby markets.

The Second In addition we should be developing the infrastructure and corresponding sectors - transportation, communication and financial fields, geology exploration, fertilizers, construction materials, machinery and equipment manufacturing.

There are some Programs in place, but it's necessary to manage the up-to-date activity.

As for motor roads/highways - Last year was successful for this sphere, but the contemporary situation cannot be considered as satisfactory yet. We have to obtain modern standards and technologies, advanced equipment. The Government allocated enormous funds for highway constructions. Government and akims must take active measures to utilize those funds in the most effective and comprehensive way. This year construction of "Almaty-Astana", "Astana-Borovoye" roads must be finalized, a high speed train should be launched, construction of the new railway line connecting Kostanai, Aktobe and Aktau seaport must be accelerated. All resources are currently available for that. Akims should put special attention to interregional roads, and particularly to those that connect big country localities.

Yet there are many drawbacks. Only specialized companies with adequate expertise and personnel must be admitted to the contracting and tender market. Development of nonmetal materials sector should be built and promoted on the modern and portable basis.

The financial sector still lacks the appropriate set of financial instruments.

Government and the National Bank should work out both the modern concept of the sector regulation and the adequate state surveillance mechanism.

The Third. It is absolutely necessary to clarify how and when reforming of the social protection system and nonproductive sector of economy will be accomplished.

What should be our further actions with Municipal Service Cooperatives and with the renovation of the housing stock? How and when shall we be able to move on with the social insurance program?

How are we going to develop the pension reform? What shall we do for improvement of the educational system? How is the wage distribution system going to be modernized? These are the problems that affect interests of millions of people. Thus, precise and clear-cut answers should necessarily be provided.

The Forth. Integration with Russia and Central Asian countries, our major economic partners, has to be facilitated during the coming years.

We must jointly work out harmonized policies and legal systems with all members of the European-Asian Economic Cooperation Organization.

The Fifth. Current year is very important in terms of public health.

The Government formed the State Commission on preparation and realization of the "Year of Health" program.

State Commission submitted the Program and Activity Plan where the following goals and objectives had been defined:

- improvement of public health;

- support of the public healthcare system;

- propaganda of healthy lifestyle .

In my turn, I set the following tasks for the Executive Branch:

· Cover the maximum number of rural population conducting preventive health surveys.

· Conduct health examinations of women at the copulative age and adolescents at the age above 12 - which makes more than 1,5 mln people.

· Conduct health surveys of all military servicemen at the active duty.

· Improve the sanitary and epidemiological situation in the regions.

· Introduce changes into the State Medicine Policy in order to increase quality and accessibility of medicines to the wider groups of population, create opportunities for development of the Pharmaceutical and Medical industries.

· Provide 180 thousand more children and adolescents (compared to 2001) with opportunities for full value healthy recreational and leisure activities this year.

· Reinforce first Sanitary and Medical Aid system through reestablishment of hospitals, strengthening the maintenance and technical facilities' base, procurement of Medical organizations with modern equipment and attracting professional personnel. Special attention should be brought to rural areas.

· ·Carry out wide scale Program on propaganda of healthy lifestyle and anti-tobacco, alcoholism and drug abuse campaign.

· In collaboration with the Parliament work out the effective legal framework for Public Health System.

As you might understand, this is not a full list of measures to be taken to sustain and improve the public health.

In order to fulfill the specified tasks we will have to mobilize all available human, financial, technical, managerial and other tangible resources.

At the same time it should be pointed out that many things are still being neglected inside the Public Healthcare System.

There is an opinion in the air that the Government left out the Pubic Healthcare to the fate of mercy, that subsidization is decreasing from year to year, but Healthcare Ministry officials have taken the silent "outsider" position.

And the reality is that in 2000 funding amounted 5 billion 765 million tenge, in 2001 - 8 billion 174 million. Furthermore, a considerable amount of money has been spent on repayment of previous debts for construction of hospital complexes.

In 2002 planned allocations to the sector from the State budget constitute 12 billion 31 million tenge.

The Sixth. Big prospects are faced by the agricultural sector. It is worth congratulating our rural population on heavy crop harvested in 2001 once again. We have finished the major reforming process in this sector; from year to year we have been increasing financing of the agriculture. For the first time over many decades countrymen enjoyed the feeling of ownership.

Now the key task would be taking the right steps and making the right decisions to effectively build on the new private platform and create on a voluntarily basis large scale commodity productions in places, where small productions are found inefficient. We are facing difficulties without large foreign sales outlets, and our task is to find them.

We have to stop irrational use of land resources, settle the problem of developing technical facilities and applying the right technologies and methodologies in the agro sector. These are the primary objectives to be targeted in our state economic policy.

We must be accountable for the rational use of state funds, get rid of the dependant mentality and set adequate measures to settle the problem of excessive rural population by attracting more people to urban areas, closer to market outlets.

I believe that now these objectives are clear for the most part of the rural population, alongside with the main approaches to their accomplishment.

The Seventh. The development of our country will mostly depend on the professional level of our state officials.

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This is the point I would like to emphasize today, - we all have to analyze our own shortcomings and get rid of them in the first place. Only then we will be given the right to make evaluations of our readiness to further political system reforming.

What is the problem?

We have to strengthen the performance, financial and personal discipline at all authority levels.

Our state officials often tend to neglect their duties and think of various reasons not to fulfill the outlines tasks. This happens either because of the poor decision-making and setting wrong tasks, or due to the lack of proper control and accountability mechanism.

Thus, e.g., a six-month old decision of the Government on reducing the regional management personnel has not been yet executed in five oblasts (regions).

We worked out and approved the Schedule of creating new jobs, but the South-Kazakhstan, Mangistau, Pavlodar and East-Kazakhstan oblasts disregard the plan.

An increasing number of new state bodies, Republican and municipal state enterprises and similar organizations are being created, in the conditions when there is no actual work to do for those.

As a result our state agencies start arguing, asserting their rights and advocating their status, trying to take on each other's functions, and as a rule, missing out the actual problems of the population. There are a lot of issues, which could have been solved but are kept down by the falsely prioritized intention to protect the reputation of particular state agencies.

The personal moral code of our state officials also remains a live issue. We have to thoroughly investigate the roots of our officials' indifference to advocating state interests, and non-enthusiastic attitude to their responsibilities. We need people capable of understanding and protecting the rights and interests of our people, not the ones who try to detach themselves from existing problems.

And the last. There still exists the problem of mixing private and state interests. We too easily overlook the facts of abuse of authority by representatives of business structures in state agencies, who use the entrusted power to serve their own interests. And vice versa there are a lot of cases when state officials interfere with the private sector operations.

The Country is coming out of the crisis period and moving onto the way of progressive and task-oriented development, when the well-defined and disciplined fulfillment of work is more important than introduction of constant change and innovations. And proper handling of budget funds is one of the priority areas here.

Despite the preventive and correction measures taken in this regard, including a number of special assignments, the situation is not improving.

The third part of 77 regulations on the use of the government reserves during 2001 were issued in December.

Several ministries and state agencies rushed into finalizing their projects only in December, and the Government continued to finance those.

This concerns not only the Government, but everybody present here.

The Ministry of Education and Science transfers all budget funds, which have been allocated to the applicants who later failed entrance exams, to their own Financial Center and does not return them to the state budget.

The Food Contract Corporation sells grain from state reserves and transfers received 3 billion tenge to some special account, not the state budget.

And what about akims? Random financial inspections in the regions returned facts of improper use of about 600 million tenge of budget funds!

I could go on and on with similar examples.

Each such case of improper use of budget funds is the violation of budget legislation.

To tell the truth, we still have problems with observing laws. 670 illegal acts of akims have been canceled in the field of land resources management only.

I have to admit, that most of the problems root from lower level state administration authorities, those who directly deal with the public. And views about the state are often based on the operations and effectiveness of these lower level governance bodies.

Entrepreneurship encounters certain difficulties and cannot develop to a full extent hampered by the bureaucracy, arbitrariness and corruption of officials.

This is, particularly, the case in the judicial and customs systems.

Thus, e.g., all parties of foreign trade activities are charged some dues at the Kazakhstan-China border. Organized criminal groups, well known to our law enforcement bodies, act in the area of customs posts.

And the Customs services management, apparently, being afraid of those who cover up such illegal acts, fail to do their own job.

I am giving a one-month period to our law enforcement bodies to take all necessary actions and to put things right in those regions. I will be having a special talk on crime and corruption issues with people in charge by the end of the first quarter of this year.

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Dear meeting participants!

People are often interested in the governmental position and views on certain political events. I would like to comment on a number of aspects of our domestic policy, which are having been actively speculated upon during the recent period. I mean the character and forms of political reforms in Kazakhstan society.

To begin with, Kazakhstan will not stay apart from the global trends of democratization. Over these several years we have implemented a whole range of profound political reforms - from establishment of the capable Parliament to building all conditions for emergence of new independent media and political parties, which are actively involved into the country's political life. The possibility of having public political discussions on democracy issues in Kazakhstan, could by itself serve as the answer to the question "Is there any democracy in Kazakhstan?"

Next, our extensive efforts on building more open and liberal society are beyond any doubts. This includes our work on decentralization, introduction of step-by step voting system and modernization of the legislative system.

Thirdly, we have to define our attitude towards the matters raised by certain political parties, so to say, distinguish truth from falsehood.

Over the recent ten years we have witnessed appearance of many movements and parties. Some were emerging and some - vanishing. This is a natural process for the free society.

"Democratic Choice of Kazakhstan" inspires my respect because of its commitment to political and economic reforms. Besides, the ideas declared are not new.

Most of these ideas are already present in the Program of Kazakhstan Development till the year 2010. Certain statements were outlined in my message announced in 1998. I hope that DCK will be the most constructive positive force. Thus, it evokes a surprise, how reformers and democrats get along with blatant conservatives and Bolsheviks - i.e. with "people of yesterday"?

They are opposing the private property that you possess! What kind of democracy they are voting for? Bolshevik type?

Concerning the so-called radical opposition - it is nothing more than a simple set of slogans drawing soreness of mouth.

It's amazing - how these people are not tired of repeating the same things again and again over so many years? Everything is around the following statements:

· "there is no democracy in Kazakhstan";

· "we must revise and redistribute everything that has been done for ten years";

· "we must terminate contracts with foreign investors".

Recently another fantastic scheme has appeared - all state governance branches must somehow voluntarily delegate its power to some weird "shadow government".

It would be very ridiculous and hollow, if it were not so sad.

The problem is that radical oppositionists having no strong background are using very high risk methods - reckless slogans provoking to ignore the official government, personal offences of high-rank officials, groundless accusations in nonexistent crimes.

This set of methods would work well for comedy shows, but not for politics.

I've received many letters from different regions of our country, where people express their concerns about the political campaign chasing the rule of the country Constitution and state authorities. And people consider this situation as the one having nothing in common with democracy. Long ago this phenomenon has been given a name - okhlocracy.

Let me go through some of the letters.

Representatives of public associations: Movement "Alpha" (the Chairman - Bazil'baev Zh.A.); the Semirechenskiy Cossack Community (Head of the community - Belyakov G.F.); Almaty regional branch SKO (the Chairman - Limanskij V.N.); The Association of Russian, Slavic and Cossack public associations (Salin A.B.) say:

"The oligarchs brought up by you and relied on as "the elite of the human capital", decided to engage into the democratization process, and to start with speculating on the idea of electing regional administration heads (akims), meanwhile accusing the President of all the possible problems for which they are equally responsible, having worked in his team for quite a long period of time ".

"All local communities, all social groups of the population, everyone who works for the benefit of Kazakhstan, should be protected from the arbitrariness and corruption, parasitism and "legitimate" humiliation on the part of those possessing money and informational influence".

"By their actions, the program and questions raised in the referendum agenda, the oligarchs have demonstrated their actual intentions, which go no further than re-division of the power, even at the risk of Kazakhstan breakup. Therefore they cannot be entrusted the management of the country …"

The program of democratization declared by DCK (Democratic Choice of Kazakhstan) and a number of other public organizations, propose nothing new for the development of Kazakhstan economy, and repeats the ideas and concepts having been discussed by many political parties and social movements during the last five years. And the proposed electivity of akims will bring negative consequences. For example, the electivity of governors, establishment of national republics and elections of their presidents in Russia almost resulted in the collapse of the federal state. In Kazakhstan there might be a danger of breaking up to 14 republics and three cities.

Dear Nursultan Abishevich! Under these circumstances we request you to make staff replacements within the state government system, create the accountability mechanism and take a lead in composing of a new team".

Members of the Assembly of Peoples of Kazakhstan - chairmen of branches of the Association of Kazakhstan Koreans; the Society of Germans "Vidergeburt"; the Tatar and Bashkir cultural center; the Polish society; the Greek cultural center and others write: "Radical reforms in the economy and politics during the 10 years of the country Independence facilitated building fundamental frameworks and set pace for steady economic and social growth, as well as helped to preserve the public peace and interethnic harmony in the republic.

We attribute the achieved results to the firm and consistent management policy carried out by the first President of the Republic, and express sound support to the policy aimed at the democratization of our society.

During these years we managed to prove our ability to live in peace and harmony, and do not question the wisdom of our President and his state policy directed at strengthening our multinational state.

We are addressing all of you, dear citizens of Kazakhstan, everyone, who cares about the future of our Motherland, the life and happiness of generations to come, please preserve and strengthen traditions of peace, keep up the interethnic stability, and do not let in any political speculations based on interethnic relations".

There is a large number of other address notes as well.

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Let's discuss the ideas proposed as panacea to all ills. For example, there is a lot of speculation about the parliamentary republic as the most advanced form of democracy.

According to this logic the neighboring Mongolia is more democratic than USA and France - presidential republics, not to mention the Great Britain or Spain - constitutional monarchies.

Besides, the instability of parliamentary republics, even the ones under the advanced democracy conditions, is a well-known fact. Italy makes a classical example, which lived through more than fifty Cabinets of Ministries over fifty post-war years.

Do we want to end up having a constant governmental crisis caused by the lack of well-developed institutional frameworks of democracy? I do not think so.

Regarding the electivity at all governance levels. I have to repeat that we launched the stage-by-stage electivity program on our own. There was no pressure on us. However, by speeding up this objective and normal process we will get into a never-ending elective race neglecting the actual work.

It is important to realize that without solving the problem on power decentralization the electivity turns to a pure formalism. And decentralization requires serious and complex work.

Administration of the President and the Agency on strategic planning started the fundamental research of the issue last year. Several agreements on involving TACIS, UNDP, World Bank, the Swedish agency on international development into the process have been achieved.

Based on this analysis the Agency on strategic planning developed a special concept paper and introduced it to the Government. What comes out of the foreign experience? Experts identify three models of state governance.

- Centralized, unitary, France as an example

- Federal, for example, Germany

- Mixed, for instance, Italy.

Federal model is not suitable for us. The French Constitution of 1958 does not set the legislative and tax autonomy. Poorer regions are financed by the rich ones.

The central governance has the right to cancel councils' decisions and even dismiss them. This system is closer to our model. In such a mixed governance system, typical for Italy, the issue of inter-budgetary relations gains particular importance.

Extreme tendencies in self-management can develop in separate regions into the elements of separatism. Therefore many Italian experts believe that the financial autonomy lacking serious limitations can undermine the economic integrity of the country and unity of its people.

Sweden governors are appointed by the Government. Representative bodies are elected. Just like in our country. Municipal elective bodies and relative executive commissions are in charge of the basic social functions only, i.e. the healthcare system and emergency and rescue services. Governor is responsible for the region. In Belgium, e.g., all local governance officials, including mayors of the lowest rank are appointed by the King.

All countries mentioned above are, undoubtedly, democratic. True experts say, that the issue of decentralization and self-management, i.e. the issue of electing or appointing is very serious, which requires hard long-term work.

The main approach relevant to Kazakhstan conditions is stated to be implementing the detailed functional analysis and legislative definition of responsibility of state authorities in the center and the regions. They say, that our constitutional frameworks look not bad.

Therefore we have to analyze the system of state governance, start building the appropriate regulatory and financial frameworks and set up strong economic foundation alongside with the actions on decentralization and further state governance and self-management systems' reforming.

Each task and function, which could count several thousands, should be absolutely clear, definition of which should be tasked for a special group. This work implies special methodology, and these processes should either be fully understood, or left out, not to betray people's trust.

I offer representatives of all constructive political forces of the country to work together with the Government Council on developing laws on decentralization, self-management and electivity. If those proposals meet the interests of our country, supporting its unity and stability, I will be ready to accept them. And there is no point in getting people flurried, organizing public meetings and collecting useless signatures.

Populism has always been dangerous. Only the steady state system allows overcoming the negative influence of populism. Turkey is a good example, where repeated interventions of the army into the political process were the only reason preventing radicals from getting into office.

But the most important thing is to understand that shaking up the country, coming out of the economic crisis, by continuous elections would means serious slow down of its economic growth and deterioration of the population's living conditions.

At last, we have to speak out about the problem, which has been kept quiet for a long period of time. We have to keep the geographic factor in mind, to remember about the region we live in.

Along all the borders of Kazakhstan we are observing the process of strengthening our statehood. The forced liberal governance model was not successful in any country of the region due to the fact that there should be certain historical experience and specific traditions of democracy in place to make it work. Nobody can jump over his own shadow represented by the history, national psychology and political experience of the nation.

We have to be realistic and understand, that only stage-by-stage reforms are capable of accomplishing the tasks of democratization and protection of the national interests.

Nevertheless, we clearly understand that we cannot do without democratic reforms. However, we need the weighed and practical approach, not populist slogans.

As for the propaganda of or agitation for the forcible change of the constitutional system, as well as any cases of defamation will be prosecuted under the law.

The country can be grateful to deputies of the Parliament of the last two convocations. They were the ones to pass the laws, which facilitated the reforming process, and stabilizing the state governance structure. I believe it is time for the Parliament to take on the functions of defending the achieved results.

There is a big difference between the normal democratic process, which requires a multifaceted, responsible approach and compromising, and the false democracy, based on offence and calls for disobeying the acting government. We have nothing in common with those advocating and pursuing the latter goals.

Therefore all of us should realize that we couldn't allow similar excesses happen.

Also as soon as law enforcement bodies initiate checks on the facts of infringement of laws, even tax related legislation, management of checked structures tend to start appealing to the media, and then to the opposition forces. Law enforcement agencies should abide by the law, nothing else, and not think about people standing behind.

Likewise, we have to have clear understanding of the fact that Kazakhstan will be developing in a democratic way, taking into account all our historical and regional peculiarities. Nobody has the right or is capable of imposing or canceling the democratic process to the independent state.