Kazakhstan: A Showpiece of Energy Wealth Rises in the Western Desert
Kazakhstan's port city of Aktau on the Caspian Sea has had some ups and downs in its short history. Founded just half a century ago, it thrived as a center of the Soviet uranium and chemical industries but then plunged into decline amid the economic chaos that accompanied the collapse of Communism. The last decade has seen Aktau reinvent itself as an oil town, and it now figures prominently in President Nursultan Nazarbayev's ambitious development strategy.
Kazakhstan's oil regions have taken a hit from the global financial crisis, but Aktau is nevertheless proceeding with bold projects to propel regional development. However, there is a risk that the city may become an island of wealth in a sea of poverty. As Aktau thrives, surrounding towns in the desert are struggling.
Aktau, the capital of Mangystau Region, is to be the site of one of Kazakhstan's most eye-catching developments: Aktau-City, a new $38 billion development project to be built alongside the existing city. Blueprints show Aktau-City as a glitzy business, tourism and entertainment center which could house up to a million people after completion in 2020, an exponential boost to Aktau's current population of 150,000.
Pride of place will be occupied by a tower in the shape of an oil derrick, and the plans also include a glass Crystal Bazaar of shops and entertainment facilities, an academic district with a new university and luxury accommodation on small islands in the Caspian. Aktau-City will be the "pearl of Kazakhstan," Nazarbayev said when laying the foundation stone in September 2007.
The project floundered for a while, with local officials blaming UAE investors for delays, but they now say it is back on track. In late September builders were swarming over apartment blocks on the edge of the Aktau-City site, adding finishing touches. The academic showpiece -- the Caspian State University of Technology and Engineering -- opened its doors to its first students this year.
Just a few kilometers outside Aktau, the idea of a place with sparkling skyscrapers and centers of educational excellence seems like a world away. A woman could be seen foraging on a stinking garbage heap among rusting pipelines and empty chemical cans a hundred meters from a polluted tailing dump, where radioactive waste from Aktau's disused Chemical Ore Mining and Smelting Complex has gathered.
"There's radiation everywhere," the woman, who declined to identify herself, said, gesturing wryly at signs containing a stark warning: "Radioactivity." She said she was seeking fuel for a cooking fire, but many local people search the garbage heap and disused plants nearby for scrap metal -- which may be radioactive -- to sell. These scrap-metal sales go a long way toward making ends meet.
This woman moved to Aktau from southern Kazakhstan five years ago with her husband and three children to take advantage of the oil boom, but the financial crisis has now struck. After her husband lost his job on an oil rig, he found employment at a gas facility, but quit because he never got paid.
Many blue collar workers in western Kazakhstan are suffering from the global credit crunch. Workers have been laid off, wages have been cut, and sometimes salaries are paid only after long delays, if at all.
In the town of Zhanaozen, three hours' dusty drive across the Ustyurt Plateau from Aktau, hundreds of workers -- 1,800 by some estimates -- downed tools this spring in protest at firings and wage arrears at their plants, and some declared a hunger strike. "People rebelled," a foreman at Zhanaozen's Burgylau drilling company who took part in the protest told EurasiaNet on condition of anonymity. The company is now paying on time, he continued: "There are no complaints now. We receive [wages] every month at the beginning of the month, and bonuses too."
Elsewhere, however, problems persist. In the middle of the working day, young men hang around Zhanaozen in groups, squatting on the floor and smoking. Some are oil sector shift workers on their days off, but many are unemployed.
Most have little chance of qualifying for the meager state assistance available, and they get by as best they can. "It's really hard," said one local, 22-year-old Artur Suleymenov. "I can't find [permanent] work." He lives in a two bedroom flat with 15 young housemates, all former inmates of an orphanage who survive by picking up temporary jobs in the shadow economy. The group recently did a construction job, but was never paid the $530 it was collectively owed.
Kazakh and Western energy executives are at pains to stress their role in boosting regional development through infrastructure projects and corporate social responsibility programs. National energy giant KazMunayGaz spends some $100 million per year on social programs, Serikbek Yelshibekov, its manager for business support, told a news conference on October 7, and it also spends billions of tenge annually on infrastructure in western oil areas.
Mangystau Region casts itself as a transport hub, and local officials hope that related projects will act as engines for development both inside the relatively wealthy city of Aktau and in poorer districts. Construction of a railroad linking the railhead at Ozen (near Zhanaozen) with Iran via Turkmenistan has been launched, there are plans to improve road infrastructure, and Aktau port is being upgraded.
The local economy can also expect a boost when oil from the giant Kashagan oilfield comes on stream, an event now expected to occur by 2013. [For background see the Eurasia Insight archive]. Oil will be shipped over the Caspian from a new port under construction at Kuryk near Aktau. It will arrive there via a pipeline to be built from Yeskene in the north Caspian area before being shipped over the sea.
Even without the expected boost from Kashagan, Mangystau Region already posts some impressive statistics. Gross Regional Product was $22,000 in 2008 - almost triple the national average of $8,000. The average monthly salary, meanwhile, is approximately $740, well above Kazakhstan's average of some $470.
Some locals say they would like to see more of a trickle-down effect from the oil wealth. In Zhanaozen, Suleymenov gestured at the potholed roads and crumbling apartment blocks around him. "This is an oil town," he said, "but no benefits are seen."
Editor's Note: Joanna Lillis is a freelance writer who specializes in Central Asia.