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Cablegate: Kazakhstan: What's Behind the Current

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E.O. 12958: DECL: 09/04/2019
TAGS: PGOV PINR ECON KCOR KZ
SUBJECT: KAZAKHSTAN: WHAT'S BEHIND THE CURRENT
ANTI-CORRUPTION CAMPAIGN?

Classified By: Ambassador Richard E. Hoagland: 1.4 (B), (D)

1. (C) SUMMARY: The well-connected Israeli Ambassador
analyzes that the current anti-corruption campaign in
Kazakhstan is not a political-economic clan struggle to
succeed President Nazarbayev. Rather, it is Nazarbayev
himself cracking down to preserve his generally positive
economic legacy and to improve Kazakhstan's international
image. END SUMMARY.

2. (C) During a one-on-one lunch that the Ambassador hosted
for Israeli Ambassador Israel Mei-Ami on September 2, Mei-Ami
gave a more nuanced analysis of the high-level corruption
prosecutions in Kazakhstan currently dominating domestic and
international headlines than we have heard before. Mei-Ami
is a credible source because he was born in Soviet
Kazakhstan, is a native Russian speaker, and has a broader
and deeper range of contacts, both in the public and private
sectors than any other foreign ambassador in Kazakhstan, with
the possible exception of Russian Ambassador Mikhail
Bocharnikov. Bocharnikov, however, is an Africanist who has
"returned home" to the Former Soviet Union, and tends
sometimes to be dismissive about Kazakhstan.

NOT A SUCCESSION STRUGGLE?

3. (C) According to Mei-Ami, the current anti-corruption
campaign and supposed political struggle are not a
political-economic clan show-down to jostle for position to
succeed 69-year-old President Nursultan Nazarbayev, who is in
fine physical and mental health. Rather, it stems from
Nazarbayev's instinctive and carefully calculated response to
the current global economic crisis that has hit heretofore
economically successful Kazakhstan hard, in part because
Nazarbayev's economic and financial policies of the last two
decades have embedded Kazakhstan in the global economy.
Nazarbayev sees Kazakhstan's global economic standing as
endangered. In Mei-Ami's view, Nazarbayev is alarmed that
his legacy itself is threatened, and is, thus, acting to rein
in some of the worst corruption.

4. (C) COMMENT: If true, this might explain why, after
years of inaction, Kazakhstan's parliament passed, and
Nazarbayev just signed, anti-money-laundering legislation.
It would also suggest why, after years of progressive
economic policy, Nazarbayev is now sometimes leaning backward
instinctively toward "homo sovieticus" solutions like his
ill-considered decision, at least provisionally, to dump
World Trade Organization accession in favor of the
Russia-Belarus-Kazakhstan Customs Union. END COMMENT.

ECONOMIC CRISIS THREATENS NAZARBAYEV'S LEGACY

5. (C) Mei-Ami cited a source who has direct, first-hand
access to one of the principals who took part in a meeting
earlier this year (date unknown) when Nazarbayev convoked
Prime Minister Karim Masimov and the several economic
ministers, as well as Chairman of the Central Bank Grigoriy
Marchenko, and thundered, "Stop lying to me like you do to
the media and tell me the truth. Where do we stand
economically?" Reportedly, they laid out in honest detail
the "real reality" for the President -- that the
usually-tolerated, mind-boggling corruption in Kazakhstan
(including in the President's family) threatened to bring the
banking and financial sectors down like a house of cards.
First, second, third, and even fourth-tier banking executives
had been embezzling like crazy during the fat years when
international lenders jostled each other with sharp elbows
while standing in line to dump ever more money into
Kazakhstan. According to Mei-Ami's sources, Nazarbayev was
both appalled and shaken, and roared to his assembled

advisers the equivalent of "off with their heads!"

BUT THERE'S STILL A CLAN TO WATCH

6. (C) Mei-Ami said that his mostly high-level business
sources have explained to him that the current situation is
not really a "clan war," but that, nevertheless, one clan is
the "deer in the headlights" -- the
Masimov-Kulibayev-Nigmatullin (MKN) clan (Prime minister
Masimov, Nazarbayev's billionaire son-in-law Timur Kulibayev,
and Karaganda Oblast Governor Nurlan Nigmatullin).

7. (C) In Mei-Ami's view, Nazarbayev does not necessarily
feel politically threatened by this clan -- thus Mei-Ami's
analysis that the current situation is not a power struggle
for succession -- but is making it clear that they must
"shape up or ship out," to put it mildly. And so Nazarbayev
has instructed his close ally, Chairman of the Committee for
National Security (KNB, ex-KGB) Amangeldy Shabdarbayev to go
after some of the MKN clan's closest associates. If, in the
meantime, the KNB can identify some of the more flagrantly
corrupt officials not necessarily part of the MKN clan, then
more power to them. However, in a paranoid political culture
that is common to the post-Soviet world, this has opened the
door to petty -- and sometimes not so petty -- political
vendettas. As a result, Mei-Ami said -- and we have heard
this from other sources -- the bureaucracy is paralyzed
because ministers and deputy ministers are desperately
hunkered down and averse to making any decision at all,
unless they are forced to do so, for fear that the kind of
decision-making they are used to -- greased palms -- will
drag them into the current shake-out.

8. (C) In Mei-Ami's view, Nazarbayev's ultimate goal is not
only to preserve his own image, but also to "bucket-out" the
cesspool of business-as-usual Kazakhstan. Mei-Ami judges
that Nazarbayev not only cares deeply about his own legacy,
but also sincerely wants the country he has struggled cannily
for two decades to build to be successful in its own right
and, thus, internationally respected. Therefore, according
to Mei-Ami, Nazarbayev's anti-corruption campaign, including
hits against some high-level officials, is generally
legitimate.
HOAGLAND

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