Kazakh leader names PM as chief of staff to reassert grip

ALMATY Mon Sep 24, 2012 11:43am EDT

Kazakhstan's Prime Minister Karim Masimov (R) walks with his Russian counterpart Dmitry Medvedev during their meeting in Astana, May 29, 2012. REUTERS/Dmitry Astakhov/RIA Novosti/Pool

Kazakhstan's Prime Minister Karim Masimov (R) walks with his Russian counterpart Dmitry Medvedev during their meeting in Astana, May 29, 2012.

Credit: Reuters/Dmitry Astakhov/RIA Novosti/Pool

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ALMATY (Reuters) - Kazakh President Nursultan Nazarbayev on Monday replaced his chief of staff with his long-serving prime minister, a compliant ally, to reaffirm his grip on the oil-producing former Soviet republic and dispel any talk of succession.

Nazarbayev, 72, ended months of speculation by removing Karim Masimov as premier of Central Asia's largest economy and bringing him closer to the workings of power just as confidence in his reforms had begun to wane.

The reshuffle, which saw outgoing chief of staff Aslan Musin given control of the state budget, was a move characteristic of Nazarbayev to keep the political elite guessing and stop any one group from accumulating too much power, analysts said.

"It's part of the cyclical nature of Kazakh politics," said Kate Mallinson, analyst at political risk consultants GPW. "He is reminding everyone that no one is eternal, and that he is the final arbiter."

Kazakhstan is the world's largest uranium miner and holds 3 percent of its recoverable oil reserves. Foreign investors have poured more than $150 billion into the country during its two decades of independence from the old Soviet Union.

Nazarbayev dominates political life and tolerates little dissent in his nation of 17 million people. A member of the last Soviet Politburo, he has ruled a country four times the size of Texas since before its independence in 1991.

The lack of an obvious successor is the main political risk in Kazakhstan. Political analyst Aidos Sarym said the reshuffle, which saw Masimov's deputy take over as premier, was a sign from the president that he had no intention of anointing a successor.

"The appointment of Karim Masimov or Serik Akhmetov serves only one goal: to balance the system of clan and group connections and allow the president to feel comfortable," he said.

Akhmetov, who was first deputy prime minister to Masimov in the previous government, was promoted to the premiership. The 54-year-old former head of the industrial Karaganda region began his working life - like Nazarbayev - in the Temirtau steel mill.

Trained in metallurgical engineering, Akhmetov received a postgraduate degree in Moscow before returning to run the steel mill's marketing division before its acquisition in the mid-1990s by ArcelorMittal's.

WIELDING POWER

Masimov, fluent in several languages including Mandarin, was largely popular with foreign investors and is credited with shepherding Kazakhstan's economy, worth $185 billion at the end of 2011, through the worst of the global financial crisis.

But critics say reforms to diversify Kazakhstan's resource-dependent economy have stalled. The government also drew scorn from creditors by allowing BTA, the country's third-biggest bank, to pursue a second debt restructuring since 2010.

Though high oil prices have shielded the economy from global financial woes in 2012, year-on-year growth in industrial production slowed to less than 1 percent in the first eight months of the year from 4.6 percent in the same period of 2011.

Nazarbayev said Masimov had first tendered his resignation last year. Novosti-Kazakhstan news agency quoted the president as saying he had refused to accept the resignation at the time and even now had "not let him go far".

"To be close to Nazarbayev is to wield power," said Sarym.

"You could be his cleaner, or trim his lawns, and that's power. When you're beside him all the time, formulating his decisions, planning his agenda and public speeches, such power is incomparably greater than that of the prime minister."

Masimov's predecessor, Aslan Musin, also grew more powerful during his four-year tenure as chief of staff. The 58-year-old former economy minister will now control state purse strings as head of the budgetary Accounts Committee.

Musin served briefly as Masimov's deputy in 2007, and some analysts said Nazarbayev would be wary of any consolidation of power between the two.

"In the near term, President Nazarbayev will be focused on rebuilding a loyal political bloc," Citi analysts wrote in a note.

Masimov's own political stature has grown as he distanced himself from Timur Kulibayev, the president's billionaire son-in-law, who was seen as a potential successor before his removal in December from the top job at the sovereign wealth fund.

The fund is the ultimate owner of the oil companies where a long-running protest by thousands of sacked oil workers erupted into deadly clashes with police on December 16-17, the biggest challenge to date to Nazarbayev's authority.

"If he (Masimov) had earlier been associated with Timur Kulibayev's group, he has developed into his own person in the last few years," said political analyst Andrei Chebotaryov.

(Additional reporting by Mariya Gordeyeva in Almaty and Raushan Nurshayeva in Astana; Editing by Mark Heinrich)

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