Kazakhstan's Nazarbayev to Extend Rule in Election, Delay Succession Issue

Kazakhs voted today in an election that is set to extend President Nursultan Nazarbayev’s two- decade rule in central Asia's biggest energy producer.

Nazarbayev, 70, who has been in power since 1989, called snap elections two months ago after scrapping a referendum to extend his term until 2020. Presidential elections were originally scheduled for 2012.

The Kazakh leader, who is seeking a new five-year term, has called for stability in the central Asian country after the Middle East was gripped by turmoil that ousted the leaders of Tunisia and Egypt. Nazarbayev’s continued dominance and the lack of an annointed successor increases risks for investors because it may complicate an orderly transfer of power when he eventually retires.

“I don’t see any inclination that he’s prepared to give up power and part of the reason for that is that he doesn’t know what will happen to him after he has left the presidency,” Anna Walker, a Central Asia analyst at London-based Control Risks, said in a phone interview.

Kazakhstan was ranked as the 105th most-corrupt country out of 178 surveyed, alongside Moldova and Algeria, on Transparency International’s 2010 Corruption Perceptions Index. The economy may expand as much as 6 percent this year after growing 7 percent in 2010, the central bank said in January.

The president was named “leader of the nation” last year, granting him immunity from prosecution for life and the power to dictate policy after retirement.

Oil Rich

The nation holds about 3 percent of the world’s oil reserves, according to BP Plc. Exxon Mobil Corp., Royal Dutch Shell Plc, Eni SpA, OAO Lukoil and China National Petroleum Corp. have a part of $120 billion in investments in the country, which is also the world’s largest uranium producer.

Nazarbayev faces three other candidates in the presidential contest, including Zhambyl Akhmetbekov of the Communist party, Senator Gani Kasymov and Mels Eleusizov, head of the Tabigat Ecological Union. All three have said they want Nazarbayev to win, the 56-member Organization for Security and Cooperation in Europe, said in a March 25 report that criticized “the lack of participation of opposition parties” in the vote.

Eleusizov said today he had voted for Nazarbayev, the news service Novosti-Kazakhstan reported from a polling station in the commercial capital Almaty.

Balloting among the 9.1 million-strong electorate started at 7 a.m. at 9,725 polling stations and was to end at 8 p.m. Provisional results are due tomorrow.

‘Pyramid Structure’

In Kazakhstan, where the opposition failed to win a single seat in 2007 parliamentary elections, Nazarbayev retains absolute control at the top of “a pyramid structure of vested interests and patronage networks,” said Kate Mallinson, a senior analyst at London-based political risk evaluator GPW.

Nazarbayev has plans to take part in the presidential poll in 2016, Yermukhambet Yertysbayev, the president’s adviser, said in February. Two months earlier, the aide had said the president might remain in power through 2022 because of his “excellent intellectual and physical shape.”

“There was no way to have a worthy opponent to Nazarbayev, as there was no real presidential election race,” said Olzhas Smailov, a 21-year-old student in Almaty, who said he put in a blank ballot in protest.

Nuken Mukhamediyev, 59, who receives sickness benefits, said he had voted for the president because of the lack of a real alternative.

‘Not Very Good’

“Nazarbayev isn’t young already, but other Kazakh politicians aren’t worth his little finger,” Mukhamediyev said. “It’s not very good that there is only one strong politician in Kazakhstan.”

The Development Bank of Kazakhstan, a state-owned lender that promotes industry, in December cited the lack of a clear successor to Nazarbayev as a risk factor in a $2 billion bond prospectus.

“The main question that worries everyone in Kazakhstan -- elites, citizens and investors -- is what will happen in terms of the power succession,” Dosym Satpayev, director of the Kazakhstan Risks Assessment Group, said by phone. “The issue of succession must be solved in the next five years. Otherwise he won’t be able to keep what he built in the last 20 years, all that will fall to pieces.”

‘Has to Move On’

While Nazarbayev deliberately hasn’t chosen any successor to avoid weakening his authority, the time will come when the president is going to have to step aside at some point in the next few years because of either ill health or old age, said GPW’s Mallinson.

“Investors are having to weigh up the reputational and financial advantages of doing business in Kazakhstan because the current regime eventually has to move on,” she said. “Until the day he is actually prepared to leave the stage, no one is going to know exactly who is actually going to succeed.”

To contact the reporters on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net; Willy Morris at wmorris@bloomberg.net

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