[Congressional Record Volume 155, Number 39 (Thursday, March 5, 2009)]
[Extensions of Remarks]
[Page E574]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          URGING KAZAKHSTAN TO COMPLY AND HONOR ITS CONTRACTS

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                          HON. EDOLPHUS TOWNS-

                              of new york

                    in the house of representatives

                        Thursday, March 5, 2009

  Mr. TOWNS. Madam Speaker, I rise today to bring attention to a 
growing concern facing a U.S. friend and ally in oil-rich Central Asia, 
Kazakhstan. In light of the heightened concern over the global oil 
supply shortage, we want to give special recognition to the critical 
role that Kazakhstan plays as a major world-wide supplier, and 
therefore we urge in particular that the Government of Kazakhstan step 
up to the demands. In so doing, Kazakhstan leaders should be very 
cognizant of the need to comply with the rule and sanctity of its 
contracts and do its best to ensure proper appropriation of profits to 
its citizens.
  Recently, Transparency International ranked Kazakhstan 150 on its 
Corruption Perceptions Index, with the worst country ranked 179. This 
puts Kazakhstan only slightly ahead of Hugo Chavez's Venezuela. The 
costs of corruption are exceedingly high--both for the Kazakh people, 
international investors and consumers--and will surely lead to the 
corrosion of that society.
  In recent years, Kazakhstan's economy has grown tremendously because 
of its large oil deposits, and the political elite have been successful 
in virtually monopolizing the benefits of this boom. But, regrettably, 
Kazakhstan has become a centralistic and authoritarian state under the 
27 year rule of President Nursultan Nazarbayev with little leverage for 
the development and activity of civil society.
  Kazakhstan's governmental system lacks the basic features of 
democracy; elections are neither free nor fair, there are few 
independent media outlets and what political opposition exists is 
manipulated, harassed, physically attacked or even killed. There is 
massive corruption on a grand scale in this environment of intra-elite 
allocation of benefits connected to oil production. Corruption in 
Kazakhstan is systemic, even within the country's anti-corruption 
agency, and no public office is free from executive interference. Long 
wait times, unwieldy bureaucracy, weak business law, short deadlines, 
employee discontent and the absence of explanatory information all 
breed corruption. Foreign firms have frequently reported harassment by 
the Financial Police in the form of unannounced inspections and 
intimidation. Forbes Asia Magazine reported that AES Corporation, an 
American company and one of the largest power companies in the world 
faced this type of harassment in June 2005. The Forbes article titled 
``Thug Capitalism,'' reported that AES was subjected to Financial 
Police raids and was forced to pay up to $200 million in fines before 
they decided they had enough and withdrew from Kazakhstan.
  Exxon Mobil, which is also in the consortium with ConocoPhillips, 
Eni, Total and Royal Dutch Shell experienced similar problems with the 
Kashagan project. The Kazakh government has repeatedly used delays and 
cost overruns to renegotiate its original terms with the consortium, 
using negotiating tactics similar to those perfected by Russia to 
extract concessions from foreign energy investors.
  Both the international investor community and the Kazakh people have 
every reason to be concerned over the Kazakh government's increasingly 
heavy-handed intrusion into business activity, especially in the energy 
sector. According to a recent report by ABC News: ``The U.S. Department 
of Justice prosecutors have long alleged in court documents filed in a 
case against a U.S. businessman that President Nazarbayev and his 
deputies accepted nearly $80 million in kickback from foreign companies 
in exchange for access to Kazakhstan's vast oilfields.''
  And perhaps the largest concern of all is the precedent set when 
this, or any, government is rampant with corrupt practices. Nations and 
lives become unglued. Take for instance the assassination attempt on 
the former head of Kazakhstan's National Security Service in Vienna. 
According to Radio Ekho Moskvy, Alnur Musayev and his companion were 
both wounded; and simultaneously, that the ex-ambassador of Kazakhstan 
in Austria who is also the former son-in-law of the Kazakh President 
Nursultan Nazarbayev, Rikhat Aliyev, was targeted but escaped. These 
events were officially confirmed by the spokesman of the Austrian 
Office of Public Prosecutor, Gerhard Jarosh. Exiled citizens must not 
become targets of their home country. They must be free to live their 
lives and express themselves without threat of life or limb. Such is a 
fundamental right and expectation of all democracies and free nations.
  Furthermore, the ex-Chairman of the National Security Committee of 
Kazakhstan was sentenced in absentia to 20 years of imprisonment. 
Rakhat Aliyev was also sentenced in absentia to 40 years in prison on 
multiple charges. However, when the Austrian Government investigated 
Kazakhstan's allegations of money laundering and corruption against 
Rakhat Aliyev, they found no evidence to substantiate such allegations, 
and thus have refused to extradite Mr. Aliyev for fear that he will 
never receive anything resembling a fair trial.
  Such activities are all too reminiscent of a pattern of violence and 
corruption we have long seen in Russia, and nothing can be more 
destabilizing both internally and externally. Moreover, these are not 
the qualities that we expect of the incoming Chair of the OSCE. 
Kazakhstan has made several promises to implement reforms that respect 
political freedoms and human rights. To date these reforms have not 
been implemented and on issues such as religious freedoms and freedom 
of the press, it is arguable that Kazakhstan is becoming more 
restrictive and less tolerant.
  The United States has sought a mutually beneficial relationship with 
Kazakhstan and provides aid to Kazakhstan in order to enhance economic 
growth, democracy, security, civil society and attend to humanitarian 
needs. However, it is evident that the current U.S.-Kazakhstan 
relationship is compromised by Kazakhstan's record of human rights 
violations and lack of immediate and necessary reforms before ascending 
to the OSCE Chairmanship. The U.S. Department of State has criticized 
President Nursultan Nazarbayev's government for human rights 
violations. A report from March 2008 faulted the government for 
practices including ``arbitrary arrest and detention'', ``restrictions 
on freedom of speech, the press, assembly, and association'', ``lack of 
an independent judiciary'', ``severe limits on citizens' rights to 
change their government,'' and more, including abuse of detainees and 
prisoners.
  As an influential OSCE member and global leader, the U.S. must now 
more than ever, begin to raise questions regarding Kazakhstan's human 
rights record and about allegations that Kazakhstan has attempted to 
kidnap and injure its dissidents. Kidnapping and bodily harm have no 
place among nation states and Kazakhstan should be made to answer for 
any and all violations before it assumes the Chairmanship.

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