Kazakhstan's President Nursultan Nazarbayev, recently elected to his fifth term in office April 26, will struggle to resolve numerous challenges facing Kazakhstan's economy and future political transition.
Over the past two decades, Nazarbayev has stayed in power by using the country's energy revenues to finance public expenditures and maintain a balance among clans. The decline of global oil prices has thus threatened the government's core source of power and influence. Energy revenues generally account for about 25 percent of Kazakhstan's gross domestic product and 60 percent of government revenues. The decline in oil revenues meant the Kazakh government could no longer execute its 2015 budget plan and was forced to cut expenditures by 10 percent.
To improve the economic situation and prevent social unrest, Nazarbayev will work to implement reforms to attract Western investment in the country, particularly in the energy sector. Prime Minister Karim Massimov has already conducted a world tour, including stops in Europe, the United States and Turkey, to promote investment in Kazakhstan. The Kazakh government has introduced measures to stamp out corruption and guarantee consistent regulations as well.
While facing a host of immediate challenges, Nazarbayev is also paving the way for a future transition of power. One proposal Nazarbayev is considering is giving more power to the country's parliament. He has even hinted that this shift could start after the election.
However, Nazarbayev's economic and political reforms could be met with opposition. Low oil prices may discourage Western energy companies from committing to large-scale investment in Kazakhstan. Local competition among the clans may thwart any transition of power to the parliament. Reforms have the potential to ensure Kazakhstan's future economic, political and social stability. But they also risk stoking social unrest. Nazarbayev will encounter resistance in the near term as he makes efforts to bolster the country's economy while paving the way for a new political reality.
