  Kazakhstan Waiting to be rich Mystery of the oil billions JUST as in Soviet times, the people of Kazakhstan have long been promised a better life. Oil, they have been repeatedly told over the 12 years since independence, will make a difference. During the 1990s, oil reserves in the Caspian Sea basin were thought to be enormous, matching those of the Gulf states. Although those estimates turned out to be exaggerated, the true size of the reserves is still substantial. Over the past few years, Kazakhstan has doubled its oil production, to almost 1m barrels a day in 2002, and plans to reach more than 2m by 2010. Reuters In anticipation of the oil bonanza, Kazakh officials have studied the experience of other countries that suddenly found themselves rich in natural resources. Alarmingly, the result in some cases has been lower growth rates, poor governance and an increase in corruption. In August 2000, President Nursultan Nazarbaev issued a decree for the creation of a national fund, based on Norway's much-admired management of its oil wealth. The fund's aims are to accumulate oil revenues for future generations, to stabilise the socio-economic development of Kazakhstan and to reduce the country's vulnerability to swings in the price of oil. Operational since 2001, the fund has accrued the tidy sum of $2.3 billion. This is one of several steps Kazakhstan has taken in the right direction, according to a report by Svetlana Tsalik, a member of Caspian Revenue Watch, an organisation sponsored by George Soros, a Hungarian-born financier-turned-philanthropist. The organisation seeks to monitor the activities of governments that have benefited from Caspian oil. What to do with the cash? Unlike Norway, Kazakhstan is underdeveloped and needs to spend money, Mr Soros said at a presentation of the report in Almaty on June 2nd. Some new wealth should be used now, he said, on priorities such as education. One of the report's recommendations is that the government should consult the Kazakh people about what the oil money urgently needs to be spent on. To date, however, the idea of involving the public in anything related to the presidential fund has been disregarded. It is difficult even to gauge what money actually goes into the presidential fund, and when. Lack of transparency is thus one of the fund's problems. “An oil fund can have an excellent investment strategy, yet still disappear in an instant if it is completely subordinated to a president,” said Miss Tsalik. The fund lacks proper checks and balances, and the few channels of accountability that do exist lead to President Nazarbaev. But the flaws in the fund can also be traced back to the reluctance of oil companies working in the Caspian Sea to publish the terms of their contracts with Kazakhstan. This has created the widespread impression that the state is not getting its due. Kazakh officials fret over contracts signed when the government did not have the necessary experience to deal with savvy oil-company representatives. Kazakhstan's lack of democracy and its newspapers' lack of freedom to report on the activities of the fund are other barriers that Kazakhs have to overcome if they are to turn their oil into prosperity for all.
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