The EU, the EEU, and the War in Ukraine: Political Risks and Management Options

Florence Ertel / Julian Plottka
seeks to determine the extent to which regime change is possible through the coincidence of
various factors (Giersch 2015: 10). In our analysis, we will identify the most important issues
arising from the macro-analysis and draw conclusions for risk assessment in Kazakhstan.
3 Macro-political Analysis: Prospects of the Proposed Economic Crisis Management
Despite the uncertainty regarding the objectives of some of the groups engaging in the events
of the Kazakh “Bloody January” of 2022, the majority of demonstrators expressed their dissatisfaction
with socio-economic development in Kazakhstan and the unequal distribution of
the country’s wealth, mainly generated by exporting hydrocarbons and other raw materials.
The liberalisation of trading LPG on 1 January 2022, resulting in a steep price rise, was the
initial trigger for the protests in Western Kazakhstan, where most cars run on LPG. In an early
response, the government accused petrol station owners of profiting from price speculation and
ordered a cap on the LPG price. Neither the price cap nor a later price reduction below the level
of 2021 helped to calm down the protests. This shows that the demonstrators demanded more
than a mere reduction of the price level for LPG.
In his ex-post assessment of the events in January, the Kazakh president upheld his narrative
that the protests were hijacked by foreign agents and terrorists. However, he also acknowledged
that many demonstrators were peaceful and expressed legitimate demands. These demands
included the fight against corruption, an investigation into the treatment of protesters during the
“Bloody January” as well as political and socio-economic reform. Tokayev took the inauguration
of the new cabinet on 11 January 2022 5 as a first opportunity to outline how the new government
would respond to these demands: in his speech, he announced steps to ease anger over
rampant economic inequality, a five-year freeze on salaries for top officials and the elimination
of corrupt systems widely believed to benefit the country’s oligarchs. In a TV interview in
mid-February 2022, he renewed his commitment to socio-economic reform. During a “Foreign
Investor Council’s Meeting” on 22 February 2022, he declared that “the principal idea behind economic
reforms is not abstract figures of GDP growth and place in global rankings but increase
of income and living standards” (President of the Republic of Kazakhstan 2022a) of the Kazakh
people. At least until Russia started its war against Ukraine, Tokayev was willing to put economic
and social reform high on the country’s political agenda.
To assess whether citizens’ discontent with the socioeconomic course of Kazakhstan is a potential
source of further unrest and therefore a political risk, we first put the citizens’ demands in a
long-term perspective on Kazakh economic development. Over the past twenty years, the upper
middle-income country’s success in poverty reduction has been considerable. While 62 percent
of the population lived on less than USD 5.50 per day in 2001, this number was down to just five
percent in 2018 (The World Bank 2022a). For the same period, Kazakhstan has had an overall
5 Tokayev forced the previous government, which had been appointed under the rule of the former president, to step
down.
22 Wirtschaft und Management · Band 33 · März 2023