International relations started to change radically towards the end of the twentieth and the beginning of the twenty-first century due to changes in the political, economic and social structures. The new system started to emerge as the bipolar world came to an end. First, we observe the changing world geostrategic balance with the appearance of multi-polar power centres. The power struggle to control the world is growing to the extent that some countries are openly trying to be the dictator. Consequently, countries are resorting to threats that were traditionally not resorted to, like, international terrorism, religious extremism and fundamentalism, drug traffic, illegal weapon trade, chauvinism and separatism. These threats endanger modern international relations, integration and globalization system, national, regional and international security. Under these conditions to maintain world peace and stability in each territory, including Central Asia, is very important. Hence, the role and significance of each region is growing rapidly. The growing connection among them requires cooperating with each other.

Central Asia comprises of the five newly independent republics—Uzbekistan, Kazakhstan, Kyrgyz Republic, Turkmenistan and Tajikistan. “Central Asia is a great geographic territory, which occupies the territory from the Caspian Sea in the west until Chinese Xingjian autonomous region in the east, from Kazakhstan in the north until Pakistan. It lies on 4 million square kilometers in Eurasian plain. Fifty ml. people live in this continent, which borders on Russia, Iran and China”, says A.Jalilov.¹ Geographic factors are closely connected to the state policy in geopolitics. Even if a country is favourably situated in its geographic position and has abundant natural resources but it can help development only if these factors are exploited fully. Judging the Central Asian region from its geostrategic condition and natural resources we shall try and see how the economic and political measures have influenced its role and importance in the sphere of international relations.

The importance of Central Asia is that it is situated in the “hub” of geopolitical struggles of many countries and it is a bridge connecting eastern countries with western ones.  Connecting Asian and European continents, its significance is recognized for its geopolicy, geoeconomics and geostrategy. A hundred years ago the territory was the main route for the Great Silk Road that connected Europe with China and India. The Great Silk Road is being reorganized again. Many countries are interested in thisand the idea will succeed.

The future will see the significant geopolitical role of Central Asia, as the transnational rail, automobile roads and new transport communications in Afghanistan will facilitate this. It will give a chance to the five Central Asian and Transcaucasian republics, and also to China as it continues building the Great Silk Road to China. Transport communications will give an impetus to trade, economic and cultural relations. The future will see Central Asia as a bridge connecting the two geopolitical centres—Asiaand Europe.

Central Asian republics are situated in a great geopolitical territory, they have the same infrastructure and economy but they are far from sea communications. That is why Central Asia cannot be compared with other countries, i.e. it is a continental territory. Europe, Asian-Pacific continent, South Asia and the Mediterranean countries are coastal countries; this factor gives them an edge, which facilitates trade and hence the development of its economy. One of the geostrategic problems for Central Asian republics is their continental position. This geopolitical situation causes certain problems for the countries in dealing with their foreign policy. But it can be used favourably for economic integration, which would resolve the problem. This continental integration would help to maintain peace and security in Central Asia.

Central Asia is a unique territory not only from the geopolitical point of view, but also from the geoeconomic one. The land-lock position of Central Asia is compensated by the existence of rich natural resources². The riches of Central Asia, for example oil and gas reserves attract many foreign countries. Explored oil reserve is equal to 15-31 bin barrels or 2.7 per cent of world reserve; natural gas reserve is 230-360 trillion cubic feet or 7 per cent of world reserve. Comparison brings out its real significance: Near Eastoil reserve consists of 55 per cent and South American reserve 8 per cent of all world oil reserves. According to some geologists, who are researching on this state that Central Asian and Caspian territories have not been explored completely.³ The exploration of hydrocarbon reserves is expected in the near future. These five republics are working in cooperation with many foreign countries to explore the above-mentioned reserves. Central Asian republics are trying to solve the problems and obstacles connected with the exploration of oil and gas reserves, mining and exporting. Hence, we see the significance of cooperation and integration in the case of continental countries; it is a requirement of the present day.

The role and importance of Central Asian continent in modern international relations is defined by the factors shown above. Having gained independence the challenge before the nations is their economic development. Socio-political, socio-economic and spiritual changes stimulate the countries to develop. But each republic of Central Asiais of paramount concern to many countries of the world. Their strategic position attracts Russia, China, Iran and Turkey. The US, European countries and Japan are interested in the economic potential of the region.

As a result, political games around the region have begun, which have caused many problems for these countries. The power resources of Central Asian and Caspian countries are geopolitical questions that should be solved mutually. It is very important for the world strategic powers whether the oil and gas pipelines pass through this or that country. These are the reasons for fierce competition among the leading world countries, leading to new contradictions, and threats to peace and security in the continent. Central Asia is a part of such region where lie the interests of world geostrategic powers. Some external powers are trying to destabilize the situation in Central Asia.

This situation requires the Central Asian countries to collectively secure peace in the region. Central Asia is an area of potential conflicts. There are destabilizing factors both inside and outside the continent. There are ethnopolitical, economic conflicts and some social and demographic, ecologic problems that are waiting to be resolved. Besides international terrorism and religious extremism, drug trafficking is on the increase too. The collapse of bipolar world security has changed the essence of security system; it is now connected with globalization and integration, which determines international relations. As globalization of international relations and interdependence of the countries have increased, problems of any nature be it political, social or economic, all lead to bankruptcy. Hence, politically and socially the countries become unstable.

Under the new international security system, countries are unable to resolve their problems alone or by resorting to traditional methods. The current problems in Central Asia, of course, affect the other countries. Adequate solution is required to solve these problems on a timely basis. To maintain peace in the world all countries should unitedly fight against the threats that are facing the Central Asian countries.

Ancient Ties

Archeological evidences clearly reveal links between India and the Central Asian countries, including Turkmenistan. These pre-historic links date back by about half a million years and span the Paleolithic, the Neolithic and to Bronze Age periods. This evidence lies in artifacts made of stone, bone, clay and metal.

Extensive work has been done on the earliest `all purpose’ stone tools in India and their diffusion to West Central Asia. These simple ‘chopper-chopping’ tools were made from pebbles found in rivers by sharpening one end through removal of flakes from one or both sides. They were primarily used for scraping or removing the skin and flesh of hunted animals. These implements and artifacts form part of what is know as the ‘Sohan’ or ‘Soan’ culture². Its existence in India was revealed by de Terra and Paterson in 1935.³ Later on, it was reviewed by Drummond and Paterson. Further explorations by B.B. Lal, G.C. Mahapatra, V.D. Krishnaswami, S.P. Gupta, O. Prufer and D. Sen, and N.R. Banerjee led to discoveries of Sohan culture in vast areas of India

Initially, Sohan culture was believed to be an Indian phenomenon only. However, some pre-historians of Soviet Union could find its penetration into parts of Central Asia through crossing of the Hindukush and the Pamirs. Works of V. Ramov, Kh. A. Alphasbayev and others published in Soviet journals may be mentioned in this regard. The link was not restricted only to the ‘chopper chopping culture’ of the Old Stone Age; it continued into the Neolithic period. The research work of these scholars also show   Indian influence some five thousand years ago.

The Indian links continued during the Bronze Age through sea and land routes. The discovery of the Lothal dockyard in Gujarat and further discoveries of Soviet archeologists elsewhere have strengthened this view. Archeologists like V.M. Masson, A.Y. Shchatenko, and B.A. Litvinski have thrown much light on the diffusion of the Indus/Saraswati valley civilization through the land route to south Turkmenistan. Excavations at Altin Depe, Khapuz Depe, Namazga Depe, Tahirbal Depe and Anan need to be highlighted in this connection.

India-Turkmenistan cultural links are revealed in pottery, copper and bronze artifacts, beads, ivory objects, terracotta objects and seals as well.  There are similarities in materials used, final shapes and manufacturing techniques.

 During the Bronze Age, the people of India and Turkmenistan had close links over a period of 4,000 years – from the end of the 3^rd millennium and beginning of the 2^nd millennium B.C. onwards – as revealed by the excavations in the Gujarat coast, Rajasthan, Sind, Punjab and the Gangetic plain in western Uttar Pradesh; and, in Turkmenistan, in the relics of Altin Depe/Altynetepe and other places.⁸

The ancient Turkmen city of Merv played a significant role in facilitating trade and cultural relations between India and Turkmenistan on the one hand and with other neighbouring countries of Iran, Turkey and Asia Minor as well. An Islamic geographer of the 12^th century mentions a prosperous merchant of Merv who had warehouses extending from the Volga basin to Gujarat in India. Both trade and transit trade made contributed then to Turkmenistan’s prosperity.

India and Turkmenistan had historic links since Central Asia and India formed a part of the Achaemide, Greek and Kushan empires. The   discovery of a 300-sheet palm leaf Buddhist-Sanskrit manuscript near Merv¹⁰ dated to the 7^th century AD containing the text of the Vinayapitaka of the Sarvastivad School needs a special mention.

Turkmenistan also formed part of the territory of the Parthian civilization (256 BC to 226 AD). Hyrcamia (modern Gurganch) was the capital of Parthia. Cyrus (Kurush) the Great of Iran and Alexander the Great of Macedonia ruled over the region.

Medieval Times

The trade between India and Central Asia was often disrupted due to the fluid situation in Afghanistan or due to Anglo-Russian rivalry. But trade with Turkmenistan continued through Iran. A sea and rail route – the Bombay-Batum sea route, the rail-route to Caspian Sea and the Turkmenistan port of Krasnovodsk across the Caspian – became popular towards the end of the 19^thcentury due to reduced transport and transit costs as well as restrictions imposed by Russian authorities on goods imported through Bukhara.

The Turkmen nobility played leading role in the Sultanate and Moghal periods in India. The Khilji and Tughlak dynasties were connected with this nobility.  The Khiljis migrated from Khalach of the Lebar Vilayet of Turkmenistan. The Tughlaks were Bakharley Turkmen.¹² Bairam Khan, the guardian of Emperor Akbar during his young days, was the father of the Hindi poet, Abdul Rahim Khan-e-Khana.

A Linguistic   Perspective

Turkmen is the most standard Turk language of Eastern and Western Turks. It is worth noting that the Urdu language has its origin in Indo-Turk contacts in medieval times.  Urdu itself is a Persianised Turkish word which originally meant ‘camp of the Turkish army’. In India, it means ‘court’ or ‘camp’. The language, in its initial stages, was known as ‘Hindi’ – the `language of Hind or India’. It was also known as ‘Hindwi’ or ‘Hindostani’.

This language traveled to different parts of India in the company of Sufis (Muslim mystics) and was freely accepted with the incorporation of regional or local influences. It was known as Gujari, Dakhni or Dehlavi.¹³ Hindi language was also influenced by the Turkic language. The number of Turkic words in Hindi, according to Dr. Bhola Nath Tiwari – a noted scholar – is at least 125.

Some of the Turkic words in current usage  in Hindi are: Urdu, Bahadur, Uzbak, Turk, chaku (knife), kainchi (scissors), Qabu (in control), chammach (spoon), thope  (cannon), thopachi (gunner), barud (gun-powder), biwi (wife), chechak (small-pox), lash (dead body), sarai (inn) and bawarchi (cook).  The s‘chi’ of Turkic language is very much in use in Hindi.

Turkmen are descendants of Iranians and Uighur Turks¹⁵. Uighur, the literary form of various Turkish idioms spoken north and south of the Tien Shan, derived its name from the Uighur script, which in turn is derived from the Syriac. It was widely used in Buddhist, Manichaean and Christian literature. Its use in Buddhist literature increased when Uighurs gained power in the Tarim valley around 860 AD and founded their own kingdom.

The languages of India and Central Asia had profound mutual impact. The genesis and development of Urdu and Turkic lexemes in Hindi are the result of Indian-Central Asian contacts. Sanskrit also had a profound impact on the languages of Central Asia and vice versa. The Shaka and Slav languages, which were spoken in Central Asia, had strong links with Sanskrit as well. The connection between Turkic languages and the Aryan languages is very ancient.¹⁶ Caldwell has given voluminous data and a massive analysis of the links of the Turk-Mongol languages with South Indian languages in his book, A Comparative Grammar of the Dravidian or South Indian Family of Language. The work, however, had many shortcomings. Caldwell links Dravidian languages with the Scythian languages which were also spoken in Turkmenistan.  But, the Scythian is a very loose grouping and, therefore, his study lacks a sharp focus.

Some valuable information about Indo-Central Asian linguistic links is also available in the History of Central Asia (written in Hindi) by Rahul Sankrityayan. The vocabulary of the Russian language given by him shows massive lexical similarity with Sanskrit.

Here, it needs to be mentioned that the difference between the languages of the Rigveda and Avesta and that between Sanskrit and Old Persian is mostly phonetic; and not grammatical. The Iranian languages of Central Asia and Iran are intimately related to Indo-Aryan languages. This needs mention as Old Persian was also used in the past in parts of Turkistan.

Dr. Ram Vilash Sharma, a well-known Indian scholar,  has brought many lexical, phonetic, morphological and syntactical similarities of the Turkic and Mongol languages with Indian languages in his Hindi publication, Bharat ke Prachin Bhasha, Parivar aur Hindi. He compares the languages of Turk-Mongol and Finno-Ugrian family with the languages of India.

Turkic, like many Indo-Aryan and Dravidian languages, shows the tendency of palatization. But unlike Dravidian and Indo-Aryan languages, it does not use cerebrals. It  adds the semi-vowel ‘y” before some vowels attached to ‘k’ and ‘g’. Arabian words ‘katib’ (secretary), malum (known) and ‘majkur’ (said earlier) become kyatip, malyum and majkyur respectively. This trait is found in Kashmiri also. Here ‘a’ in ‘majkur’ is shortened. The ‘b’ of ‘katib becomes ‘p’. Arabic ‘kitab’ and Sanskrit ‘rang’ become ‘kitap’ and ‘rank’ in Turkic.  Thus ‘b’ and ‘k’ are devoiced in that language. When the pronominal suffix ‘i’ (his or her) is added, then ‘p’ is again voiced and the word becomes ‘kitabi’. This trait is visible in Sanskrit also.

Like Dravidian languages, no word of Turkic has an initial ‘r’ and ‘l’. This tendency has become somewhat lax in Dravidian languages. Tamil ‘irandu’ (two) is sometimes spoken as ‘randu’.  Turkic and Dravidian languages usually do not use two consonants together in the beginning of a word. ‘Slav’ is pronounced ‘Islav’ (as ‘school’ is pronounced ‘iskul’ in eastern India).  The English word ‘club’ is pronounced as ‘kulup’ or ‘klup’. Like Prakrit, some mid-consonants become vowels or semi-vowels. Persian ‘agar’ (if) and ‘digar’ become ‘ayar’ and ‘diyar’. The fricative ‘f’ in borrowed Persian words becomes ‘p’ in Turkic languages. The fricative ‘kh’ of Arabic and Persian words usually becomes ‘h’. Arabic ‘fun’ (art), khala (mother’s sister), ‘khabar’ (news) and Persian ‘hafta’ (week) become ‘pan’, ‘hala’, ‘habar’ and ‘hapta’ respectively.

Like Dravidian languages, the use of aspirates is absent in   Turkic languages. Most of the Indian languages use dental and palatal sibilants – s and sh. The cerebral sibilant ‘sh’ is used mostly in Sanskrit words. The Aryan and Dravidian languages, and to some extent Turkic, have the tendency to convert dental and palatal sibilants into palatal ‘ch’ and ‘chh’. In Sanskrit, the roots ‘gash’ (gam, to go) and ‘prash’ (to ask) and  prashna (question) become ‘gachchh’ and ‘prachchh’ respectively. The Sanskrit word ‘bhasha’ becomes ‘peshu/pechu’ in Tamil; the Sanskrit root ‘ish’ (to drink) is transformed into ‘ich’ (drink) into Turkic.

Dr. Ram Vilash Sharma has pointed out many other similarities and parallels at the lexical level. Turkic lexemes for Sanskrit ‘kar’ (to do), ‘kal’ (time), ‘kup’ (well), ‘kati’ (how many), ‘kim’ (who) are:  ‘kil’,   ‘kara’, ‘kuyu’, ‘kach’ and ‘kim’. Turkic ‘kara’ (black), Tamil ‘karu’ and Sanskrit ‘kar (of ‘andhakar) are related.

Hindi uses the relative suffix ‘ka, ki, ke’; in Turkic, it is ‘ki’. `Janma’ (birth) of Sanskrit is derived from the root ‘jan’. In Turkic, ‘dagum’ (birth) and ‘ichim’ are derived from ‘dagh’.  The negative suffix – ma in Sanskrit – and –ma in Turkic is identical.

Indian languages, except for Khasi and Kashmiri, follow the ‘subject-object-verb’ syntactical pattern. Turkic language has the same. However, the pronominal suffix follows the verb in Turkic like in Sanskrit.

Neither the Sanskrit ‘ami’ (or ‘mi’) nor the Turkic ‘im’ are freely used as first person singular pronoun, I, as is done in Bengali and Marathi. The word for ‘I’ in the Sanskrit and Turkic languages is ‘aham’ and ‘ban’ respectively. Turkic languages uses a pronominal suffix after the noun as in ‘babam’ (my father; baba =father, -m = my). (Baba’ is used for father in many Indian languages).

The pattern of adding a pronominal suffix as well the suffix for ‘I’,  in this case,  is of Indian origin. It is followed in Arabic and Persian. Both Hindi and Turkic add the verb denoting ‘to do’ to the noun to make a verb (‘karana’ in Hindi, ‘kam karna, to do the work; ‘kilmak’ in Turkic, namaj kilmak, to do or perform namaj).

In many cases, a new meaning emerges when two words are added; also, the density of meaning is increased by re-duplication of words. The pattern for the formation of higher numerals in Turkic, Dravidian and many Munda and Indo-Mongoloid languages is the same.

New discoveries in Turkmenistan and other parts of Central Asia and India during colonial days have brought out a lot of materials on the culture and languages of the two regions. However, the studies of the colonial studies have many drawbacks. In many cases, the cultural and linguistic continuum – both in terms of time and geographical spread – was ignored. Differences, rather than similarities, were emphasized.  This deserves to be rectified.

It is over four years since the International Coalition of Forces led by the United St

ates of America swept the Taliban regime out of power in Afghanistan. Since then the International Security Assistance Force (ISAF) led by North Atlantic Treaty Organisation (NATO) is engaged in promoting stability and security in the region. This has had a positive impact on all the Central Asian countries, especially on Uzbekistan and Tajikistan. Here heightened militant activities by religious extremists and terrorists have posed serious security challenges to their integrity. Nevertheless, the military presence of the West in the region has changed the geopolitical map of Central Asia.

The United States has emerged as a powerful player in the region. Earlier Russia was the chief guarantor of stability and security in Central Asia. With religious extremism and terrorism acquiring global dimensions and the emergence of Afghanistan as the epicenter of extremism and terrorism, a global effort to fight this challenge became inevitable. Such an effort needed coordination and cooperation of all the States of the region and beyond. Russia extended full support and cooperation to Operation Enduring Freedom. Since Russia was facing challenges in Chechnya, Russia’s support was understandable. Similarly Russia’s assent to Kyrgyz Republic and Uzbekistan granting military base facilities to the United States has played an important role. However, it was their expectations that such military presence would be limited to achieve the objective of defeating extremist and terrorist forces and a ‘short’ duration would be enough for the International Security Assistance Force (ISAF) to complete its task. In the process, the United States’ involvement in Central Asia has deepened. Apart from the military base facilities at Manas in Kyrgyz Republic and Karshi-Khanabad (K-2) in Uzbekistan, Kazakhstan, Tajikistan and Turkmenistan have also offered support to Washington.

Although Russia had acquiesced to United States’ military presence in Central Asia, an area of vital importance to it, there was unease and disquiet in many circles, especially among the Russian armed forces who felt that this presence would not be short and possibly had a secret agenda. The agenda could be controlling the energy resources of Central Asia and reducing Russian influence in the region. Such a perception is natural against the background of eastward expansion of NATO. After the Taliban was swept out of power and the Al-Qaeda ranks were largely and effectively decimated, the continued presence of the International Security Assistance Force (ISAF), on the plea that instability in Afghanistan requires their continuation, has attracted critical comments. The same argument is advanced for the United States’ military base in Kyrgyz Republic.

The May 13 ‘Unrest’ in Andijon

Andijon is next door to Kyrgyz Republic Osh and Jalalabad provinces where the successful March 2005 demonstrations against the Kyrgyz President, Asker Akayev, culminated in his flight to Moscow. The movement was christened the “Tulip Revolution”. Some analysts have suggested that the Tulip Revolution has cast its shadow, now, over the Uzbek part of the Ferghana Valley.  This appears to be an extrapolative leap from an inadequate database. However, the case for a continuous watch and study of developments is valid because Uzbekistan is a key country in the region and traumatic changes would have major geo-political implications for Central Asia and its neighbouring regions.

Uzbekistan has been witnessing clashes between secular and extremist forces since its independence from the erstwhile Soviet Union in 1991. Some Central Asian watchers hold the view that political deprivation, the deteriorating economic conditions, corruption, drop in living standards, mass unemployment, and failures on the part of the Uzbek government to address these problems have enabled religious extremism to germinate. One may agree partially with this generalisation. However, one finds it difficult to understand why Hizb e-Tahrir and the Islamic Movement of Turkestan have been trying to establish a Caliphate undermining the secualar fabric of the region and also challenging the constitutional system. The main demands of the Hizb e-Tahrir and the Islamic Movement of Turkestan are:

• Return to the basic principles and commandments of Islam, purification of Islam of all later heresies and distractions;
• A political system based on Hakimiya and caliphate;
• Regulation of economy on the basis of various “Islamic economy” theories;
• Organisation of legal system within the framework of Shari’a, with administration of justice taking the priority over legislative and executive power.

In general, the people of Central Asian Republics do not believe that the establishment of a Caliphate would lead to resolution of all the socio-politico-economic problems. They are aware that the appeal to the ‘glorious’ past of Islam has not enabled the building of modern nation-states.

There is persuasive information/evidence that the protesters in Andijon received active support and guidance from outside Uzbekistan. The territory of neighbouring countries was used for planning and execution. Forces from the Islamic Movement of Turkistan (IMT), earlier known as Islamic Movement of Uzbekistan (IMU) and located in Pakistan and Afghanistan, were an integral part of the plan while Hizb-e-Tahrir and the Akromilar gave active support from Andijon. The Uzbek Jamoat (part of HUT) also played an important role in planning the attack on jail, government buildings and installations in Andijon City. Initially 20 mobile military groups were formed, each having 5- 20 members. They were later merged into six larger mobile military groups with assigned targets. Infiltration into Andijon Veloyat began on May 6, 2005 from the Dostlik Check post on the Uzbek-Kyrgyz border taking advantage of the rugged and mountainous region. The activities were well coordinated and persons with knowledge of military operations directed the “revolt”.

Why did the “terrorists” choose May 13? It was a Friday, the main day of public prayer, and the “terrorists” appear to have believed that they could rally popular support by linking their action to a religious cause and further strengthened by the freeing of imprisoned members of the banned Islamist Akramiya movement. However, local Andijonians refused to support such “terrorist” actions. The chief of the ’Devanboy’ mosque in Andijon said, “Akram Yuldoshev, (leader of the Akromilar), doesn’t know much about Islam. We are followers of Imam Hanifa and don’t believe in extremist ideas. However, Akram wants to achieve his political objective by using religion as a tool.”  Akromilar is one of the branches of Hizb-e-Tahrir which wants to create a Caliphate in Central Asia comprising Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, Mongolistan and Uzbekistan.” Akram Yuldoshev (leader of the Akromilar) who was born in 1960 in Bagh-e- Shimol area of Andijon City, was arrested in 1999 and put in Navoi jail.

As far as Islamic practices are concerned, the government supports them with a benign hand. It may be noted that Andijon Veloyat (Province) has 181 mosques while Andijon city has 20 mosques. There is one madrassa in the Veloyat. In 2005, eight hundred people had performed the Haj pilgrimage from Andijon province.

There are two streams in the Islamic revival movements in Uzbekistan. One is moderately radical and the other “ultra radical.” Both want to establish an Islamic state under Shari’a law. The Hizb–e-Tahrir is said to have chosen ‘peaceful’ political means to accomplish this aim; while the Tovba, Adolat, Islam lashkarlari, Nur and Islamic Movement of Turkistan (IMT) have embraced non-peaceful methods.

There is consensus that Islamic extremist elements belonging to the Taliban, Hizb -e-Tahrir, and Islamic Movement of Turkistan (IMT) pose a serious threat to peace and stability in Central Asia. They have access to foreign financial and material support out of narco-dollars and small arms trade in the region. Some Islamic countries have extended financial and ideological support to these elements.

In general, Western countries desire to see Western style democracy and civil society in the former Soviet Union republics. This is not appreciated by Central Asian people. Though democratisation of Central Asia is desirable goal, its imposition from outside would create instabilities in Central Asia. A number of non-governmental organisations (NGOs) working for the promotion of democracy and civil society in Central Asia states are funded by the West. Their role has come under a cloud after “Tulip Revolution” in Kyrgyz Republic and “Andijon Unrest”.

This brings into focus the involvement of Western countries in the ongoing political processes in Central Asian Republics.

The international non-official reaction to the violence in Andijon was largely shaped by sensational media reports which portrayed the incident as a massacre of innocent civilians. Very little mention was made of the fact that the insurgents were well armed and that they had quite clearly planned the event as a precise military operation. However, official reactions from most of the countries (including Russia) were in support of the Karimov government. The Russian Foreign Ministry said the government condemns the actions of extremists and highlighted the Uzbek-Russia “strategic partnership”. Minister Lavrov said, “I do not think any country will tolerate foreign forces seizing arms depots, staging violence, raiding administrative buildings and taking hostages on its territory,” Clearly, Moscow is unlikely to be a silent spectator in Central Asia. It is worth noting that Uzbekistan’s neighbours (Kyrgyz Republic, Kazakhstan and Tajikistan) have held religious extremists and terrorists responsible for the unrest in Andijon. White House spokesman Scott McClellan said, “The people of Uzbekistan want to see a more representative and democratic government. But that should come through peaceful means, not through violence.”

Phrases like the “Tulip Revolution” and “Unrest in Andijon” are likely to influence the geopolitics of Central Asia in time to come. The summit meeting of the Shanghai Cooperation Organization (SCO) held in Astana on July 5-6, 2005 also draws attention to these events. The summit’s call on the US-led “anti-terrorist coalition” to define a deadline on its military presence on the territory of SCO member countries is a strong signal to be noted in this regard. Initially Washington tried to deflect SCO’s call by claiming that it was guided by bilateral agreements with Uzbekistan and Kyrgyz Republic. However, Uzbek officials notified the United States July 31, 2005 that US forces would have six months to vacate the Karshi-Khanabad (K-2) air base, located 90 miles north of the Afghanistan border. United States’ military flew its last plane out from K-2 on Monday November 21, 2005. This is a noteworthy shift in the Uzbekistan-United States ties.

Kyrgyz Republic then Foreign Minister Roza Otunbayeva also joined issue with Washington. She said, “All of us are part of the anti-terrorist coalition, including our country. However, there is a time limit for everybody who comes to stay somewhere. We are members of the SCO. We raised this issue together with other member states.” Kurman Bakiyev who was elected the New Kyrgyz President on July 10, 2005, had expressed doubts about the need for United States presence at Manas. He told reporters on July 11, 2005, “This issue was raised at the SCO summit, since the situation in Afghanistan has changed. The situation in Afghanistan will soon stabilize. The country has had presidential elections, so the question about the coalition base’s presence in Kyrgyz Republic arises.”

The Russia-Uzbekistan “Treaty of Alliance Relations” signed by Russian President Vladimir Putin and Uzbek President Islam Abduganievich Karimov in Moscow on November 14, 2005 signifies Uzbekistan’s return to the Russian orbit. “The Treaty of Alliance Relations” provides Russia a new opportunity to assist Uzbekistan in security related matters. This Treaty need to be looked in the context of Andijon incident and also ‘Strategic Partnership Agreement’ which Moscow and Tashkent signed on June 16, 2004. Article 2 of the Uzbek-Russia Treaty of November 14, 2005 stipulates that: “If an act of aggression is committed against one of the sides by any state or group of states, this will be viewed as an act of aggression against both sides. The other side will provide necessary assistance, including military assistance, as well as giving aid through other means at its disposal.”  It appears as though the United States tilt in the region has received a course correction especially in security matters.

The Shanghai Cooperation Organisation (SCO) is an important initiative of June 2002. The agenda of the SCO has expanded from peace making on borders to security and economic cooperation. Several security related structures have been created such as Anti-Terrorism Centre in Tashkent. The SCO has emerged as a proactive regional grouping and is confident to address regional issues. The most visible changes in the security scenario were apparent at the Astana Summit meeting of the SCO in July 2005. The SCO member countries asked the United States of America and its allies to announce a time frame for withdrawal of their military presence from the Karshi-Khanabad (K-2) military base in Uzbekistan and Manas military base in Kyrgyz Republic. Following the SCO Summit and lifting of 539 Uzbek refugee by the United Nations from Kyrgyz Republic, Uzbekistan government took the decisive step asking United States to vacate K-2. In November 2005, the last contingent of the Unite States military left Uzbekistan. This clearly shows that Central Asian countries are coming close to Russia and China in economic and security arrangements. They have joined hands with Russian and China to counter the United States’ moves in the region. Russia and China have both strategic and economic stakes in Central Asia. It appears that there is increasing understanding between Moscow and Beijing to insure peace and stability in the region in order to keep the United States out. China-Russia joint military exercises during August 18-25, 2005 near Russia’s far-east port city of Vladivostok and near Chinese province of Shandong and Yellow Sea is a clear signal to this. American presence in Central Asia is a challenge to Russian and Chinese energy security and stability.

Of equal importance is the Collective Security Treat Organisation (CSTO), whose objectives are similar to that of the SCO but lays greater emphasise on military aspects. It is under this umbrella thatRussia has access to Kant military base in Kyrgyz Republic. Russia also has two other bases in Tajikistan. Reports suggest that it may acquire another base in Kyrgyz Republic, at Osh. It is clear that Russia has steadily increased its military presence in Central Asia after the initial readjustment of 1989-90. It is worth noting that United States in Central Asia is tied to a specific task. Russia’s re-engagement appears to be broad based. There is a strong possibility that Uzbekistan may join the Collective Security Treaty Organisation (CSTO). Secondly the Karshi-Khanabad (K-2) base could be offered to Russian. Thus we see Western presence in Manas in Kyrgyz Republic and Afghanistan, while Russian has established a strong military presence in Central Asia. Once again the geopolitical map is being re-drawn.

In the final analysis, religious extremism and international terrorism would remain challenges to Central Asian security and stability. The insurgency in Iraq against the American forces and its “successes” may be expected to give a fillip to such forces in Afghanistan and Central Asia. Imaginative and creative initiatives by the governments in Central Asian Republics are needed to improve the economic conditions and weaken the appeal of religious extremism.

The local population (except a sizeable number in Namangan, Andijon and Ferghana provinces) is not in favour of radical Islam. However, they are not capable of resisting Islamic prohibitions when imposed.

As far as the issue of democratisation is concerned, one should welcome emergence of genuine political opposition in Central Asia, however, no external prescriptions are desirable. The Indian democratic experience and liberalisation after 1991 could be of value to Central Asian Republics. Human Rights, civil society and democracy are perceived locally as new instruments for perpetuating hegemony. Imposed from outside, these concepts are not likely to be successful. They have to be home grown and take account of local historical, social, economic and political processes.

Dear people of Kazakhstan!

Distinguished members of the Parliament and Government!

Ladies and Gentlemen!

Today, Kazakhstan stands on the doorstep of a new stage of social and economic modernization and political democratization.

My understanding of the essential components which will allow us to claim a place in a group of countries representing the top of world ratings consists of the following.

First, the foundation of a flourishing and dynamically developing society can only be based on a modern, competitive and open market economy which is not confined only to the extracting sector. It is an economy based on respect and protection of private property rights and contractual relations, initiative and entrepreneurship of all members of society.

Second, we are building a socially oriented community in which the elder generation, motherhood, childhood, and youth are all surrounded with care and attention. We are building a community which provides high quality and advanced social standards of life for all strata of the population of our country.

Third, we are building a free, open and democratic society.

Fourth, we are creating and reinforcing a law and order state which is based on a system of checks and balances.

Fifth, in Kazakhstan we guarantee and ensure full equality and harmony among all religions. We respect and nurture the best traditions of Islam and of other world and traditional religions while we are building a modern secular state.

Sixth, we strive to preserve and develop the ancient traditions, language and culture of the Kazakh people while also providing interethnic and intercultural harmony and progress of the single nation of Kazakhstan.

Seventh, one of our most important priorities is positioning Kazakhstan as a rightful and responsible member of the international community, carrying out important functions to provide geopolitical stability and regional security.

Today, in annual address to you, my fellow countrymen, I want to present key priorities in Kazakhstan’s advance to the group of the world’s most competitive and dynamically growing countries of the world.

Priority I: Kazakhstan’s successful integration into the world economy is the basis for a qualitative breakthrough in the country’s economic development.

We want to see Kazakhstan as a country developing along the global economic trends, as a country which is embracing all that is new and progressive, as a country which holds a small but its own specific niche in the world economy, and as a country which is quickly adaptable to new economic conditions.

We should be ready for fierce competition and use the advantage of it in our best interests. Kazakhstan can and must actively participate in multilateral economic projects which promote our integration into the global economy and are based, among other factors, on our beneficial economic and geographical location and available resources.

The state, for its part, must clear all legal, administrative and bureaucratic barriers from the path of business initiatives and provide direct support to promising new business start ups in the private sector.

Considering integration in the world economy as an essential condition for qualitative breakthrough in Kazakhstan’s economic development, I believe we should concentrate our efforts in the following directions.

1.1. Implementation of breakthrough international projects, development of industries and production of goods and services competitive in specific niches on the world market.    

We should establish and develop manufacturing projects with a focus on exporting the end products; joint ventures in oil and gas, transportation, and other areas of machine building, metallurgy, chemical industry and agriculture.

We should develop biotechnology centers with active international participation. Our Information Technology Park should be developed as an IT center for the region.

The Government must develop and put to work special programs aiming to support competitiveness of national goods and services. We ought to have specialized organizations supporting private businesses and promoting their goods and services in the world market. We need to carefully study the experience of such organizations globally and adapt it to our conditions.

1.2. Integration into world economy by participating in regional and international economic unions and associations.

Kazakhstan can and must actively participate in multilateral international projects. Such actions will assist our integration in the world economy and support our exporters.

In terms of regional partnerships we intend to support further broadening of mutually beneficial cooperation within the Eurasian Economic Community and contribute to establishing of the Single Economic Space.

We should also focus our attention on projects of the World Bank, the European Bank for Reconstruction and Development, the Asian Development Bank and the recently established Eurasian Development Bank.

1.3. Joining the WTO will be an additional tool for economic modernization and strengthening Kazakhstan’s competitiveness on the world markets.

The negotiations on Kazakhstan’s accession to the WTO are moving ahead at full speed. A major part of our laws regulating international trade regime either have already been harmonized in accordance with WTO requirements or are under discussion in the Parliament.

I strongly believe our country’s accession to this international economic organization opens vast opportunities for strengthening Kazakhstan’s competitiveness on the world markets. These opportunities, however, must be skillfully and fully utilized.

We should eliminate all economically unjustified limitations on foreign investors’ participation in equity of local companies in those sectors where we have not done it already.

1.4. State support for development of export-import financing.

Support and financing for export of processed goods and import of high tech equipment should become a priority.

Today our export of finished goods is only US$2 billion per year. This volume has been stable for almost a decade. Today it is necessary to achieve sustainable and continued growth of export of finished goods. We should rely on best international practices and actively cooperate with foreign export-import agencies.

1.5. Kazakhstan’s participation in equity of international companies involved in research and development of new technologies.

As an addition to internal scientific capacity, I believe it is time for Kazakhstan to take the initiative and participate in the international business of new technologies through equity investments in high tech companies including those at the very early stages.

Our Innovation Fund has a key role in this task and will be responsible for this work.

We could follow the examples of other countries which have purchased equity stakes in new high tech companies across the world in order to gain access to advanced technologies in the most breakthrough directions of economic development.

By doing so we can become owners of intellectual property rights and patents. For such projects we must more broadly involve our honorary consuls in foreign countries.

The Government should carefully explore the issue of Kazakhstan’s technological initiatives internationally.

1.6. Establishing favorable conditions in Kazakhstan for production of goods protected by intellectual property rights and registered trademarks.

I am sure that strengthening Kazakhstan’s reputation as a tough guarantor of intellectual property rights and registered trademarks will allow us to speed the diversification and development of new sectors of our economy.

I believe Kazakhstan should implement a broad public campaign aimed at establishing a cultural intolerance of counterfeit products, and should institute measures of administrative and criminal punishment for those who violate intellectual property rights and are involved in the fraudulent production of trademark goods. I am confident such procedures will gather support and encouragement from international producers of high technology and science intensive goods and will create an additional inflow of foreign direct investment and diversify Kazakhstan’s economy.

1.7. Establishment of science centers and educational institutions meeting the highest international standards.

We should establish and develop modern scientific centers and technology parks with international participation. We should support the process of implementation of new technologies and the formation of a flexible system of personnel cross training.

Development of scientific potential should be aimed at narrowing the gap between applied research and actual production and businesses.

We should establish necessary preconditions for attracting leading academic centers and institutions to Kazakhstan. To do this, we need to utilize so called incubation projects for joint development of branches of international educational institutions in Kazakhstan.

I believe in order to stimulate development of incubation projects the Government should resolve a number of organizational issues including free grants of land for development of science centers as, for example, it has been done in India, financial grants for start up capital and for establishment of basic infrastructure.

1.8. Development of a modern and competitive transport and communications infrastructure.

  The essential task for Kazakhstan’s transport and communication complex is its integration with the Eurasian transport system. Development of a transportation and communications complex should fully utilize the advantages of the geostrategic location of our country as a bridge between Europe and Asia.

We should reach final agreement with our neighbors on implementation of streamlined procedures for cargo shipments.

All of these tasks should be stated in the Transport Strategy of the Republic of Kazakhstan till 2015 and implemented under that Strategy.

While implementing these tasks we should pay particular attention to the development of public-private partnerships.

1.9. Pursuing an open policy on natural resources exploration.     

 We have started and will continue carrying out an open policy for natural resources exploration in the future, providing transparent and stable conditions for cooperation with transnational corporations and our major neighbors. This will strengthen Kazakhstan’s reputation as a promising and reliable partner, contributing to global energy security.

Our attention should be focused on diversifying and ensuring stable channels for delivery of energy resources from Kazakhstan to world markets and on an accelerated development of facilities for deep processing of oil and gas.

1.10. Development of Almaty as a regional center of financial services and a business hub.

Dynamic development of Almaty as the main financial center in Central Asia should be focused on creating favorable conditions and opportunities for large financial institutions in Kazakhstan to become major providers of credit, insurance and other of financial services for major regional business projects.

In order to provide for the effective work of this financial center it is necessary to create appropriate infrastructure, primarily telecommunications. It is obvious we should also concentrate on attracting management which has an excellent business reputation and experience in creating and managing such centers and free economic zones abroad.

We should pay particular attention to development of auxiliary services in free financial and economic zones.

1.11 Practical implementation.

To implement in practice the First Priority I instruct the Government:

• Carry out an analysis and introduce amendments to the existing legal and normative base in 2006. Draft new versions of laws of the Republic of Kazakhstan “On competition and limitation of the monopolist activities”, “On concessions” and “On the city of Almaty as a regional financial center”.
• Carry out reforms of the tax and customs administration, redirect the government assistance to domestic producers, modify domestic standards of technical regulation in accordance with international standards of the WTO, and continue reforms of the financial services market.
• Develop and implement special economic “adaptation program” as Kazakhstan moves towards accession to the WTO which will allow supporting certain industries of our economy during the transition period, particularly our agriculture by developing agricultural products’ processing.
• Continue focused research in all sectors of the global economy where Kazakhstan can be a competitive supplier and based on the results of this study establish a specific and focused program fostering international competitiveness of national products and services.
• Create a list of specific medium and long term projects in collaboration with development institutions and leading Kazakhstan companies. Further work on creating industrial zones, in particular in Astana, as well as special economic zones, transportation and logistics centers. Special attention should be paid to the development of the Khorgos center of cross-border cooperation with China.
• Establish a managing company which will consist of all state institutions of development to coordinate their activity.
• Approve the Transportation Strategy of the Republic of Kazakhstan till 2015 this year which will ensure effective cooperation with businesses in developing infrastructure based on public-private partnership. Establish at least two to three aviation hubs to provide a high quality transport between Europe and Asia. Establish technical maintenance center in Astana to cater for the aviation industry.

Priority II. Further modernization and diversification of Kazakhstan’s economy as a basis for sustainable economic growth.

In order to support sustainable and robust growth of our economy, the state has to encourage demand for high quality products and services using the instruments of fiscal and monetary policy and those of state regulation of efficient redistribution of principal factors of production.

To be more specific I believe that we have to focus on the following areas to further modernize and diversify Kazakhstan’s economy.

2.1. Monetary policy.

The main objective of monetary policy is to ensure inflation is kept in check. It is the responsibility of the National Bank and the Government. They have all the necessary powers and instruments for that.

The other objective of monetary policy is to ensure financial market stability, support needed flexibility of a real exchange rate to reduce negative effects of growing inflation and at the same time stimulate economic growth.

The National Fund has an important role to play in this regard. I believe that the Government will ensure a transparent and effective way for the Fund’s resources to be accumulated and used.

2.2. Fiscal discipline and effective tax policy.

Tax and customs policy reforms have to become important instruments of the entire economic modernization policy.

It is important to use a flexible fiscal policy providing incentives for diversification and development of the new industries, attracting foreign capital and know how to these sectors.

I believe that the value added tax rate has to be reduced in order to develop and expand production.

It is worth considering establishing a special department in the Tax Committee of the Ministry of Finance to check tax revenues from the biggest taxpayers. The department has to employ big independent international auditors who do not have any conflicts of interests.

We must maintain stringent fiscal and budget discipline.

2.3. Improving the effectiveness and economic returns from energy and mining sectors.

We should open up new niches in domestic and global markets through developing high value refining and processing in oil, gas and mining industries.

Every oil and gas field is to be considered as an integral enclave for development of entrepreneurship in areas from modern utility services to the latest engineering and software.

Kazakhstan has to have the reputation of a reliable supplier among consumers.

This year I expect the Government to start implementing a complex master plan of petrochemical production development in Kazakhstan for the next ten years.

2.4. Effective state asset management.

The Government has to establish a transparent and clear state asset management system. It is necessary to make an inventory of state ownership and establish a single database for the country. Unified criteria have to be applied in making decisions on rehabilitation and bankruptcy. Bankruptcy is to be the last resort if it is not possible to rehabilitate loss making state owned enterprises.

The practice of inviting the same bidding managers preferring bankruptcy as the most profitable way of state asset management has to be stopped and as much as possible a competitive environment has to be created in this area. International companies should be engaged if needed to manage the largest state assets.

2.5. Improve effectiveness of economic relations between the Government and private sector based on market principles.

We have to optimize the Government’s participation in the economy through administrative reform.

New economy requires new management solutions which can be only made by state managers who think in a modern way and are result oriented.

To develop contractual relations in the society and strengthen the institution of private property it is necessary to introduce additional legal and administrative measures as well as an independent dispute settlement and arbitration process.

Both representatives of the authorities and all the other economic agents have to bear economic, administrative and even criminal responsibility for infringing contractual obligations.

It is very important for us to have adequate legislation to protect minority shareholders’ and founders’ interests. Legal guaranties against renationalization have to be also considered.

I would like to especially underline the need to introduce an e-Government system as quickly as possible. It would improve effectiveness of Government agencies, resulting in reducing corrupt practices and administrative barriers.

2.6. Providing wide scale Government support for entrepreneurship, while expanding and strengthening small and medium sized businesses.

The Small Entrepreneurship Development Fund has to become a real source of financial resources and expertise for a wide section of the population willing to utilize their entrepreneurship potential and initiative. The representative network of the fund has to be expanded, and efforts aimed at entrepreneurship support in the regions have to be strengthened.

The hidden monopolies in metallurgy, banking, insurance, chemicals and other sectors are to be destroyed. This has to be done by reforming anti-monopoly legislation as well as by establishing attractive and transparent conditions for new companies, both domestic and foreign, in other words, by increased competition in these sectors.

We must also block bureaucratic attempts to establish control of industrial assets.

2.7. Creation of regional engines for economic development through establishment of regional corporations of social development and entrepreneurship.

The Social Entrepreneurship Corporations (SEC) are stable business entities doing business for profit from production and sale of goods and services. The main difference of an SEC from a commercial corporation is that it reinvests its profits for social, economic and cultural purposes of the people living in the region in the interests of whom the SEC was established.

SECs could be incorporated in different regions of Kazakhstan by transferring to them municipal property, land, non-profitable but working enterprises which could be used to start new businesses.

Each SEC has to become a regional development institution and could operate as a holding company managing government assets in its region of the country.

Afterward, as management experience and capitalization of the SECs develop, their areas of responsibility could be expanded and diversified allowing them to operate regionally and internationally.

Their operation will be aimed at bringing in new projects, developing small and medium sized businesses, and strengthening business cooperation.

In the end, the SECs would become large employers and engines of the country’s development, and not be a burden to the state because they will not create a need for more government employees.

2.8. Territorial development corresponding to the needs of balanced economic development.

Today we need a new strategy of territorial development aimed at speeding up economic activity in developed regional centers which are able to become the engines of economic modernization of the country as a whole and facilitate effective economic specialization of each region. All these have to be reflected in the Kazakhstan’s Territorial Development Strategy until 2015.

2.9. Development of Astana as a city of modern international standards and one of the largest centers of international interaction in Eurasia.

Astana has already become the largest modern and fastest growing city in the country in a very short period of time. It can become a model capital in the Eurasian region and serve as a basis for ensuring sustainable development of our country.

We have to implement a number of large scale projects to this end.

A modern, innovative and fast growing cluster of medical services is to be established on the left bank of the Ishim River in Astana based on a new center offering modern medical care.

A prestigious international university to create a unique academic environment must be established in our capital.

Also we have to secure development of an industrial zone where building material production, furniture, food and other competitive industries will be concentrated.

Every builder has to spend a part of its capital to develop the social sector of the city.  It is an important factor to involve business and the people in the process as the city develops.

We have to pay special attention to renew the city image as an attractive place for the world business community, business tourism, scientific and cultural international events.

In the future, development of the city has to develop into a regional growth zone including the cities of Temirtau, the Karaganda agglomeration, and the Schuchinsk and Borovoe resort zone.

2.10. Practical implementation

To implement in practice the Second Priority I instruct the Government:

• To complete developing regulations under the Law “On foreign exchange regulation”, streamlining foreign exchange transactions.
• Reduce the VAT rate by 1% starting from 2007 and by an additional 1-2% from 2008 to 2009.
• Reduce the social tax by 30% on average which has to provide incentives for employers to increase salaries.
• Introduce fixed income tax rate of 10% for all individuals starting from 2007.  To keep the income level of low paid employees, I propose deducting a minimum wage, instead of a monthly calculated index, from their taxable income.
• Introduce a reduced single tax rate for small businesses starting from January 1, 2007.
• Work out specific proposals in six month to establish the abovementioned special department within the Tax Committee.
• Start active implementation of the complex master plan of petrochemical production development for the next ten years during 2006.
• Develop the Single Registry of state owned property defining clear goals for its use and effectiveness criteria.
• Develop and submit for discussion a set of additional measures aimed at increasing responsibility for fulfilling contractual obligations.
• The National Bank and the Agency on Oversight and Regulation of Financial Markets and Financial Institutions need to develop a law to protect the rights of investors, shareholders, and founders, possessing minority interests in chartered companies.
• Speed up the implementation of e-Government. To do that, pass a law “On national identification number registries” and to make necessary amendments to the law “On informatization” during this year. In practice it will be done in the following way: every citizen will have a universal personal code instead of the existing variety such as taxpayer registration number, social individual code, passport number, and so on.
• Submit proposals on improving anti-monopoly and competition protection legislation in the next six months.
• Complete development of a Territorial Development Strategy of Kazakhstan until 2015 this year.
• Develop the Concept of incorporating Social Entrepreneurship Corporations in the next three months and incorporate SECs in specific regions by September 2006.
• Begin implementation of a Strategic plan for the development of Astana development until 2030 and a State program of social and economic development of Astana for 2006-2010.
• Introduce amendments to the legislation on the Samruk state holding company and develop a program for offering public shares in national companies on the stock market in the next six months.

Priority III:  Developing a modern social policy, protecting the most vulnerable groups of the population and supporting economic development

The following are major priorities for the further modernization in the social area.

3.1. Supporting the most vulnerable groups of the population.

The Government, as before, will continue the financial support of socially vulnerable groups of the population.

I consider it is possible and necessary to increase the level of state support for veterans of regional armed conflicts and certain other groups of the population.

There is a need to remove current imbalances in pension payments to armed forces and law enforcement agencies pensioners and put the system in order.

The time has come for private sector participation in providing social services, especially in the areas of education and new vocational training, as well as increasing the responsibility of businesses for the stability of the society.

3.2. Reorienting the social support system according to conditions of the market economy.

The most effective social policy has been and remains the policy of sustainable employment. I believe the Government should bear full responsibility for the support of only those members of the society who really need help.

In this connection, the policy of social support should be focused within the frameworks determined not by “the needs of social layers” but by “the training of capable citizens to enter the workforce”. The state system of citizens’ support should be constructed to stimulate their retraining and learning new profession.

During my live TV session with the people of Kazakhstan in August last year, I received many proposals about payment of pensions and social payments month to month. This issue will be solved.

In order to expand the sphere of social care and the volume of social services and to improve their quality, the list of guaranteed and additional social services should be developed and legally approved and changes in the order of their allocation should be introduced.

It will be necessary to introduce state standards for social service, obligatory licensing of organizations involved in social care services and accreditation of their employees.

3.3. Issues of housing construction and real estate market development. 

This is the third year of housing program implementation. We have had enough time to fully appreciate its advantages.

Only in the year 2005, using all sources of funding more than 5 million square meters of housing were built, exceeding the 3 million square meters stipulated by the program. This figure is 1.8 times higher than the level of 2004.

We need to thoroughly study the successes and failures of this work and correct the housing program.

We should create incentives for large scale development of individual housing construction.

It is necessary to develop further the system of housing construction savings for citizens whose income does not allow them to use the mortgage system.

The market for leased housing should be developed in country in accordance with world standards and made transparent for the authorities and attractive to business.

3.4. Transfer to modern principles and standards in healthcare.

Implementation of the State Program of Healthcare Development and Reforms has generally proved the correctness and effectiveness of chosen strategic directions.

At the same time, given the new tasks, I consider it is necessary to complete this year the work of implementing a package of legislative and administrative reforms in the healthcare sector taking into account the change to international standards.

We need to attract leading foreign companies to establish and manage modern clinics in Kazakhstan at the highest levels.

New approaches to the payment system for medical workers have to be implemented reflecting the final results of their work, including its quality, volume and complexity of medical assistance, as well as their qualification level.

3.5. Ensuring environmental protection according to international standards.

In 2006, an Environmental Code should be adopted aimed at harmonizing our environmental legislation with leading multilateral pacts. We should change to new standards and improve the system of state control.

On the whole, by 2010 we should create basic environmental standards of sustainable development of society.

3.6. Introduction of international standards of social responsibility for business.

Kazakhstan’s business already stands firmly and is starting to realize its social responsibility and structure its activities accordingly. Our national companies and large investors serve as examples by donating money to charity, educational projects, healthcare, sport and culture, and providing real support for unprotected citizens.

This practice should become the norm for all business communities, as is the case in the developed countries.

For example, joint activities of business and the educational system in training qualified personnel for the economy serve the interests of both companies and the country.

It is evident that a serious educational campaign is needed, as well as a program of support for business initiatives.

I believe the time has come to develop commonly acceptable rules of social accountability of businesses and increase their social responsibility in solving national tasks based on the best international experience in this area.

Standards of social responsibility of business are determined in the United Nations Global Compact.

3.7. Creation of an effective system to develop labor resources.

We need a modern concept of migration policies.

The current favorable social and economic situation in Kazakhstan creates conditions for inflow of a foreign workforce.

The Government, considering the experience of other countries, needs to develop a mechanism for conducting a one time legalization of labor migrants illegally working in Kazakhstan by registering them with internal affairs and other appropriate authorities.

Moreover, we need to develop mechanisms to attract highly qualified and professional workers to Kazakhstan who could work in our country on a permanent basis.

We should not forget, however, educating, improving qualification and professionalism of our own workers.

Our attention should be focused more on creation of conditions for preparatory training in special centers, and the adaptation and integration of oralmans (Kazakh repatriates) into our society. If they are taught the language and a profession, as is the case in other countries who have returnees, they will adapt to new conditions more quickly.

3.8 Practical Implementation.

To solve the above mentioned tasks of social protection, I charge the Government with the following:

• increase the wages of civil servants and of those paid from state budget on average by 30% starting from 2007;
• as of July 1, 2006, increase the size of special state allowances:

–  for persons equalized to war veterans, by 2.4 times (from 2,472 tenge to 5,974 tenge);

–  for persons equalized to disabled war veterans, by 1.2 times (from 5,871 tenge to 7,313 tenge);

– for widows of soldiers killed during the Great Patriotic War, by 1.6 times (from 2,781 tenge to 4,326 tenge);

– for families of killed (dead) servicemen, by 1.5 times (from 2,884 tenge to 4,429 tenge);

– for spouses of disabled veterans of the wars who died later, by 2.7 times (from 927 tenge to 2,472 tenge);

– for persons, decorated with orders and medals of the former Soviet Union  for selfless work during the Great Patriotic War, as well as for persons, who worked (served) not less than six months on the home front, by 2 times (from 1,030  tenge to 2,060  tenge).

– for persons who participated in liquidating the catastrophe at the Chernobyl Atomic Energy Plant in 1988-1989, by 4 times (from 515 tenge to 2,060 tenge);

• from July 1 of this year make the one time differentiated increase of pensions for armed forces and law enforcement pensioners.

Moreover, I entrust the Government to conduct a number of actions to improve the social system in our republic:

• From 2007 on, switch over to paying pension and social payments in current month by allocating about 30 billion tenge for these purposes.
• In 2007 develop the draft Code of Healthcare and the healthcare system.
• Develop a Program of education and professional training for qualified domestic personnel working in specialties through a system of professional technical and higher education institutions.

The program should use the potential of foreign companies working in Kazakhstan and our private businesses by creating incentives and mechanisms for them to participate in the system of professional and technical education.

• In 2006, it is necessary to adopt a Labor Code, the concept of which meets all international standards, the requirements of the International Labor Organization and the World Trade Organization.
• In 2006, the Government should develop objective criteria for inclusion of oralmans in the immigration quota based on their education and qualification.

Dear people of Kazakhstan! While increasing our economic prosperity, we should not forget about the people who in different times and under different circumstances sacrificed their lives and health when it was needed for their motherland, and we should not forget their families and dear ones.

Kazakhstan never forgets its social responsibility to these people. From 2002, annual expenditures in the national budget for providing social assistance and social security including those allocated for 2006 increased from 160 billion tenge to 362 billion tenge, more than twice.

As you can see, the state will continue to increase the size of its assistance as the opportunities allow.

Priority IV: Development of modern education, with a continuous increase of qualification and retraining of personnel bringing further prosperity of culture of the people of Kazakhstan

4.1. Development of a system of modern education and training to produce qualified personnel.

Education reform is one the most important instruments which allows ensuring the real competitiveness of Kazakhstan.

We need a modern system of education, appropriate to the needs of our economic and social modernization.

This is why as we move toward twelve year education, we should not eliminate an option of ten year secondary education for those who wish to continue their education in professional and technical institutions. The conditions for lifelong education should be created.

We should develop proposals for a twelve year educational system for those wishing to receive a higher education.

The system of higher education needs optimization of higher educational institutions with special focus on the development of technical education. In order to train modern government policy makers Academy of Public Administration should be transformed into a National Public Administration School with the participation of foreign partners and meeting highest international standards.

In order to stimulate the development of the system of education, the partnership between private and public sectors should be strengthened. The system of providing joint public-private educational loans should be improved.

There is a need for differentiating the cost of state grants depending on the status of the higher education institution or specialty.

4.2. Reinforcing the role of culture in the process of forming Kazakhstan’s statehood based on its multiethnic and multi-religious nature.

It is now the time to optimize the public-private participation in the development of culture, in creating conditions when our talented individuals can have decent life based on their creative activities. This should include state support of large international auctions of art in the country, support of talented musicians and performers, and the creation of a private company with minimal state participation for insuring and transporting art exhibitions and other measures.

Employment in cultural activities is a huge source of flexible local labor demand which will immediately reflect upon the wellbeing of our population.