Analysis: Kazakh leader reinforces power with oil sackings

ALMATY (Reuters) - Kazakh President Nursultan Nazarbayev’s decision to fire his son-in-law for mishandling an oil workers’ strike is a signal to would-be successors that the veteran leader is not ready to relinquish his firm grip on power in the Central Asian state.

By removing Timur Kulibayev from the top job at the sovereign wealth fund, 71-year-old Nazarbayev is unlikely to appease the families of those killed when police opened fire during clashes that killed 16 in a western oil region last week.

The surprise decision to fire Kulibayev - on which the president has not yet followed through officially - may have more to do with preventing the husband of his middle daughter from gaining too much political power too quickly.

“There has been talk for the last 18 months about Timur Kulibayev as a possible successor and the strengthening of his team. Maybe the president considered that such talk was turning into political capital,” said political analyst Dosym Satpayev.

“This will show any sensible member of the business elite that nobody runs into political territory without the president.”

The violence in western Kazakhstan, presaged by seven months of protests by sacked oil workers, has presented Nazarbayev with the most serious challenge to the image of stability that he has cultivated in more than two decades in power.

Foreign investors, who have poured more than $120 billion into Kazakhstan since independence, cite a lack of clarity over the succession to Nazarbayev as the biggest investment risk in a country that holds about 3 percent of the world’s oil reserves.

A billionaire who rarely speaks in public, Kulibayev has often been cited by foreign investors as a leading candidate to succeed Nazarbayev, although the 45-year-old has always said he is a businessman with no political ambitions.

Nazarbayev, appearing on state television on Thursday, said he would take the decision to dismiss Kulibayev.

“The latest actions put a full stop to all speculation about a successor,” said Ivan Safranchuk, deputy director of the Moscow-based Institute of Contemporary International Studies.

“Most probably there will be no successor, and the current leader wants to stay in power under any circumstances.”

BEHIND-THE-SCENES MANOEUVRES

But resentment still runs deep with many people on the ground, even though the square in Aktau where hundreds of protesters had faced off with riot police was empty for a second consecutive day on Friday.

Officials say 16 people were killed in riots that broke out on December 16-17 in and around the oil town of Zhanaozen. Witnesses have said police opened fire, and some say the death toll could be higher. Nazarbayev has said police acted within legal grounds.

Kenzhegali Suyeov, head of an independent trade union in the regional capital Aktau, said oil workers had shown no jubilation at Nazarbayev’s sacking of key officials, nor even his pledge to find work for the oilmen he says were sacked illegally.

“They will find jobs for the people, but they cannot bring back those who died,” Suyeov told Reuters by telephone. “Those who lost people close to them would expect the interior minister to be fired, at the very least.”

Nazarbayev quashed succession talk in April by winning a presidential election with an overwhelming 96 percent of the vote. This secured the former steelworker, who has prioritized economic growth over democracy, another five years in office.

The topic resurfaced in the summer, after an unsourced report in a German tabloid newspaper that Nazarbayev underwent prostate surgery in Hamburg.

The president’s close adviser, Yermukhamet Yertysbayev, broke the official silence by saying Nazarbayev had gone abroad for a routine medical screening, something he does every year.

Perhaps more tellingly, Yertysbayev also named Kulibayev as the person most likely to follow the president’s course in a “force majeure situation.”

Safranchuk said it was “an open secret” that a section of the political elite had been unnerved by the strengthening of Kulibayev’s position.

“Nazarbayev has decided to weaken the person who would most probably lay claim to power,” Safranchuk said. “This step means he has no intention to step down.”

As head of the wealth fund Samruk-Kazyna, which controls assets worth $78 billion, Kulibayev’s position at the top of the chain of oil companies made him a scapegoat for the riots.

The fund's failure to revive the fortunes of BTA BTAS.KZ bank, which completed a debt restructuring to much fanfare last year, might also have diluted the president's trust in Kulibayev, said Eurasia Group analyst Gemma Ferst.

BTA, majority owned by Samruk-Kazyna, said on Thursday it would propose a second debt restructuring, a move that could see foreign creditors writing off at least half of their investment in the country’s third-largest bank by assets.

“Having injected billions of state funds into BTA already, it is understandable that Nazarbayev is highly dissatisfied with being asked for more from the oil fund,” said Ferst. This would hush talk of Kulibayev as successor, at least temporarily.

“Although his associates permeate Samruk-Kazyna and its subsidiary companies, they lack the traction to attempt any kind of rebellion, and his connections with the security services are poor,” she said.

MORE HEADS TO ROLL?

What might happen in the longer term is uncertain. Some analysts did not rule out that Kulibayev, who has a string of business interests beyond his role at the wealth fund, could be appointed prime minister after a January 15 parliamentary election.

“The way our political culture works, you cannot talk about the political death of such people,” said analyst Aidos Sarym.

Analysts said they had expected officials in central government to have been fired in the same manner that the heads of KazMunaiGas and its London-listed subsidiary KazMunaiGas Exploration Production KMGq.L were dismissed.

“The Labor Ministry and the government also ignored this issue for seven months,” said Meruyert Makhmutova, director of the Public Policy Research Centre in Almaty.

But the appointment of Deputy Oil and Gas Minister Lyazzat Kiinov as KazMunaiGas head may help to appease oil workers.

“Kiinov is an old oilman. Another plus is that he is from the Mangistau region,” said Makhmutova. “People in the west of the country are convinced outsiders will not solve the problems of the region.”