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USAID Information:
External Links:
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Kazakhstan
The Development Challenge
Kazakhstan has achieved rapid economic growth in recent years and substantial progress in economic reform, yet continues to face major challenges of diversification, competitiveness, and corruption that hamper growth of a sizeable middle class and reduction of the widening gap between rich and poor. While Kazakhstan's GDP growth rate was 9.5% in 2002, mostly due to the rise of the energy sector, approximately 26% of the population continued to live below the poverty line, and per capita income remained at only $1,600. Huge disparities exist between urban and rural areas, and among regions. For example, as stated in The Economist July 26, 2003 article, "A Survey of Central Asia," over 95% of the rural population in the Caspian Sea border region lives in poverty. This underscores a need to further develop small and medium enterprises, eliminate trade barriers, and expand domestic and foreign investment outside of extractive industries. Despite these economic challenges, Kazakhstan has made major achievements in USAID-supported banking reform and supervision, fiscal reform, small-scale privatization, and pension reform.
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Kazakhstan's performance in the transition to democracy has been mixed. Journalists, opposition leaders, and civil society actors have been targeted in the government's attempt to maintain control over society. Institutions, including the media, political parties, civil society, and the judiciary, are at nascent stages, and accountable and transparent government processes are not yet well established. An illustration of this is Freedom House's indices for democratization and rule of law in Kazakhstan, which are 5.88 and 6.13, respectively, with 7.0 indicating the worst possible score. Without a more pluralistic political power structure, achieved through the inculcation of democratic values, this fledgling democracy will continue to struggle. Corruption also continues to be a significant issue in Kazakhstan. According to Transparency International, Kazakhstan ranks 101 out of 133 countries in terms of perceptions of the extent of corruption. One critical human rights issue where some progress has been made is trafficking in persons as indicated by the re-classification of Kazakhstan from Tier III to Tier II in the U.S. Department of State's 2003 Trafficking in Persons report.
With respect to social development, Kazakhstan has experienced unprecedented declines in life expectancy and health status. This is due to a low level (only 2%) of GDP investment in the health sector, compared with international standards of 5% or more, as well as an ineffective health delivery system. A tremendous resurgence of infectious diseases is taking place in Kazakhstan, which poses an immediate threat to the sustainability of the country's transition. Tuberculosis (TB) case notification rates in Kazakhstan are the highest in the world and threaten to grow even higher as multi-drug resistant TB becomes more difficult and costly to cure. Already, current treatment success rates of TB in Kazakhstan are low (approximately 70% compared to an international standard of 85%). While by global standards HIV prevalence in Kazakhstan remains relatively low, there is an escalating trend (from 100 cases in 1996 to 3,730 cases today).
Kazakhstan's tremendous oil and gas resources, and strategic location make it not only a major player in the war on terrorism, but also the key to economic development for Central Asia. A genuine ecnomic and democratic reform agenda would directly advance U.S. national interests. The growing infectious disease rates in Kazakhstan also explain U.S. interest in the country. Given these factors, the fact that GDP growth for Kazakhstan is one of the highest in the world should not distract attention from the need to address the undercurrent of issues that Kazakhstan faces and which could eventually destabilize the country.
The USAID Program: The Program Data Sheets provided below describe six programs for which USAID is requesting funds in FY 2005. The strategy aims to promote the growth of small and medium enterprises and improve the investment climate; promote democratic culture; improve the primary health care system and prevent infectious diseases; encourage better use of the region's water and energy resources; prevent conflict; and support cross-cutting participant training and small grant programs. In the economic growth sector, small and medium enterprise growth, land reform, and trade are USAID priorities. Small and medium enterprise growth, critical to job creation, requires reform of the investment climate by, for example, simplifying business administrative requirements and the tax code. USAID support for land reform is intended to stimulate greater productivity of the agricultural sector, thereby accelerating economic growth and broadening the benefits of growth. USAID's strategic approach to supporting democracy in Kazakhstan is two-pronged: 1) laying the foundation for democracy by inculcating democratic values; and 2) strengthening democratic processes and institutions that provide a counterbalance to executive power. In the health sector, TB, HIV/AIDS, and health sector reform are priorities. Programs aim to reduce mortality and morbidity rates due to TB, isolate the incidence of HIV/AIDS to the current high-risk group of IV drug users, and encourage the shift from centralized curative care to preventive, primary care. Additionally, USAID programs incorporate cross-cutting components related to youth, gender, rule of law, and anti-corruption. As part of an assistance review, interagency discussions were held in November 2003 that reviewed indicators showing that economic progress masks serious structural deficiencies, human capital indicators have worsened dramatically, and political space is contracting. A need was identified to investigate options for leveraging GOK resources to promote SME development, and to focus resources on the run up to the October 2004 parliamentary elections.
Other Program Elements: Several centrally-managed USAID programs assist the Mission to achieve its goals. EcoLinks, a regional environmental program, fosters partnerships between local businesses, governments, and associations by linking them to counterparts in the United States. The Monitoring and Evaluation to Assess and Use Results Program allows USAID to tap into coordinated, cost-effective, and efficient approaches of data collection to support monitoring and evaluation efforts in the health and nutrition sectors. The Farmer-to-Farmer Program, funded by P.L. 480, complements USAID agricultural enterprise development work. The Eurasia Foundation's small grants program, managed by USAID/Europe & Eurasia, works with the private, public, and non-profit sectors in Kazakhstan to support small business development, encourage civic advocacy, and increase local government responsiveness to citizens' needs. Lastly, USAID's Office of Foreign Disaster Assistance conducts a regional earthquake preparedness activity that targets Almaty. The Departments of Commerce, Defense, Energy, Agriculture, and State manage programs complementary to USAID field activities in various sectors.
Other Donors: The United States is the largest bilateral donor in Kazakhstan, particularly in the health and democracy sectors. A number of other donors are active in Kazakhstan, all of whose assistance is well-coordinated with that of USAID. There is significant donor support in the financial sector. The European Bank for Reconstruction and Development (EBRD), International Bank for Reconstruction and Development (IBRD), European Union (EU), Islamic Development Bank (IDB), U.N. Development Program (UNDP), and the Germans provide assistance for the development of small and medium enterprises. Promotion of international trade (EBRD, IBRD, UNDP, IDB, Germany, and Japan); construction of public infrastructure to advance economic growth (the Asian Development Bank, EBRD, and Germany); and modernization of Kazakhstan's tax, treasury, and banking systems (EU, EBRD, the World Bank, GTZ, and Japan) also attract many donors. Additionally, the EU and the Germans are providing assistance in the agricultural sector; and the UNDP, WB, EBRD, Swiss, Canadians, British, and Danish are assisting with energy and water sector reforms. Open Society Institute, the EU, Germans, and the Organization for Security and Cooperation in Europe support initiatives related to democracy and governance while the U.N. organizations, World Bank, International Federation of Red Cross and Red Crescent Societies, and the German Development Bank are engaged in the health sector. Lastly, Mashav, the Israeli foreign assistance agency, through USAID support, provides training and implements demonstration projects in a variety of natural resource-related and business development areas.
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