Official Statements:

Kazakhstan’s Way Forward: Stability, Modernization and Prosperity

Address of the President of the Republic of Kazakhstan Nursultan A. Nazarbayev at the opening of the 2nd Session of the Parliament of Kazakhstan

September 1, 2005

As you know, this has been a fateful year in the life of our state and the development of Kazakhstan parliamentary democracy.

First of all, this year we celebrated the tenth anniversary of our Constitution and of the Assembly of Kazakh People.

Soon, the Parliament will also mark its 10th anniversary. We did not have any experience with modern parliamentary practices. We started seeking and found the right balance of social interests, setting up the system of checks and balances in our government. That was the time when we laid the legal foundation for the success of liberal reforms.

It gives me great pleasure to welcome here the deputies and everyone else who worked in the Parliament for all these years. I wish the incumbent deputies and the deputies of previous convocations every success in their work for the public good of our nation.

The last ten years have become the stuff of history.

I. We are on the right path: assessment of the national discussion of the Address by the President of Kazakhstan, and the international reaction to it.

Slightly over six months have passed since my Address “Kazakhstan on the path of accelerated economic, social and political modernization”. You know that I have recently visited most of the regions of our country, met with townsfolk and villagers, and talked to people at industrial plants and graduate schools. The Address has left no one indifferent.

What are the people’s main day-today concerns?

First, people were most interested in improving the standard of living, their personal prospects, and in the stability of the society. Clearly, everyone assesses the effectiveness of reforms from his personal vantage point depending on the quality of life, income, educational opportunities, and prospects for advancement of his family, friends and the society he lives in.

All the comments made during the discussion of the Address have been taken into account by various executive agencies in devising specific measures. We can already see some of the results.

Nevertheless, many practical challenges are still awaiting their solution, and I am confident that they will be the center of attention of the Government, the Parliament and local authorities.

Second, a particularly important outcome of the national debate about the Address is for me the broadening of the intense public discourse well beyond the day-to-day concerns of the population.

It is noteworthy that many comments and suggestions were directed at the support for small and medium size business, fair social policies in housing and the three-pillar pension system; child education and vocational training; fight against corruption; reform of agribusiness, modernization of the court system, etc.

Clearly, everyone is concerned about stability, and the need to avoid the unrest that has recently been observed in some neighboring fraternal states.

The whole spectrum of suggestions and recommendations submitted in the course of the recent debate will be taken into account in developing specific plans.

The broad public debate will need to be continued; it has already demonstrated that the people of Kazakhstan relate their personal wellbeing to the advancement of the nation as a whole and to its international standing. In the implementation of the reforms that we have embarked on, we can clearly rely on the support and commitment of our people.

Third, it is probably for the first time that our designs of social reforms have been so closely scrutinized and evaluated by the international political and business community. The concepts of Kazakhstan’s systemic modernization were the subject of many international conferences including a seminar at the Harvard University’s School of Government in Boston, and the Asia Society (USA) conference in Almaty this summer as well as at other prestigious venues.

Dear ladies and gentlemen!

As you know, after the publication of my Address, we have received the support and specific proposals from many world leaders, heads of international organizations and companies.

I greatly appreciate such genuine and sympathetic interest in the future of Kazakhstan and would like to thank everyone whose counsel and recommendations have been very important to us, including the President of Russia Vladimir Putin, U.S. President George W. Bush, his father President George H.W. Bush, President Bill Clinton, members of both houses of the United States Congress, the President of France Jacques Chirac, Austrian Federal President Heinz Fischer, the King of Spain Juan Carlos, British Prime Minister Tony Blair, the president of Korea Roh Moo-hyun, and Japanese Prime Minister Junichiro Koizumi, to name a few. I am grateful to all who have extended friendly support to my vision of further modernization, and could not name everyone in this address, such was the sheer volume of letters we have received. I deeply appreciate this interest and support of our initiatives and am fully aware that such level of international engagement is a testimony to our manifest successes.

Kazakhstan has been attracting increasing international attention as a promising and reliable partner and a regional power. The international community has been keenly following our progress and counting on us to make effective decisions that safeguard regional and international stability and security.

It must be pointed out that our achievements, lying in the foundation of the present chapter of historic transformation of the nation, can be traced back to 1997, the year we adopted the Strategy of Kazakhstan’s Development till 2030 and articulated Kazakhstan’s mission in the era of globalization. It was then that we identified the seven development priorities for the country. The consistent implementation of the Strategy has made possible the success of the liberal reforms; it has created the necessary and sufficient conditions for further economic, social and political modernization that I declared in my Address to the People of Kazakhstan last February.

II. Our strategy, and the main challenge of accelerating the development of Kazakhstan, is to strike the right balance between economic, social and democratic reforms

We have accomplished a lot, and ahead of schedule, in the implementation of this “Strategy for 2030”. Our citizenry observes these accomplishments and feels them in everyday life; the international community also recognizes what we have achieved.

President Bush said in his letter that “ The stability and prosperity that your country enjoys stand as a model for other countries in the region”.

We also have to take into account that over the last 15 years the world has changed beyond recognition, and it is continuing to change.

The challenges of our times compel political and spiritual leaders of states and nations to seek and choose the most optimal, from their point of view, templates and strategies of social development.

Kazakhstan has made its choice. Our new strategy and the whole philosophy of Kazakhstan’s social development have proven their validity and vitality. I believe they are clear to all.

Our goal is to build on the foundation of a modern and competitive economy an open, democratic and prosperous society of free citizens; a state based on the rule of law which is a responsible and respected member of the international community, and where the universal dynamics of a democratic nation evolve in harmony with the specific features and traditions of a multinational and multi-confessional society.

The main challenge of the current stage of accelerated development is to strike the right balance between economic, social and democratic reforms while taking into account the national interests and security in order to preserve political stability as the condition for strengthening our sovereignty and furthering our development.

James Wolfenson, who for many years headed the World Bank, wrote to me that “the main challenge in the immediate future is the practical implementation of the Address, which puts a fantastic burden of responsibility on the government of Kazakhstan”.

Now, six months since the Address, we can jointly assess the first practical results of the implementation of the goals of the Address.

III. The practical results of implementing the economic policies declared in the Address, and our plans for the immediate future: diversification of the economy, development of non-extractive industries, support of small and medium size enterprise, and accession to the World Trade Organization

Let me start with economy because I am a firm believer that one cannot build an open, free and prosperous society with a high standard of living in a weak, backward and dependant economy that does not possess a predominant middle class.

We can only succeed if the nation and the economy become competitive.

As you know, at this stage we have set our priorities as follows: diversify the economy, accelerate the development of non-extractive sectors, boost small and medium size enterprise, and accede to the World Trade Organization.

The Government has already adopted decrees on the creation of seven approved pilot clusters. I have signed the Decree on the special economic zone “Ontustik”, where we intend to create favorable environment for the textile industry.

As part of our industrial policy, this year we have brought into operation 64 enterprises and plan to complete 169 projects by the end of the year.

Over the course of the implementation of the strategy of industrial innovation, various development institutions had approved financing for 103 investment projects in the total amount of USD 2 billion. There are currently 62 projects under way with the total investment of about USD 1 billion.

We are now setting our sights very determinedly on nurturing and strengthening entrepreneurship and the freedom of small and medium size enterprise. Here are our practical steps in this direction:

First, the Tax Code has been amended and amplified to accord special tax treatment to small businesses. The relevant bill is now before the Senate.

Second, the government is finishing work on two bills: Law of Enterprise and Law on Amendments to Certain Laws of Enterprise. I believe these bills will be shortly submitted to the Parliament so that you, dear deputies, could consider them with all due deliberation and hopefully pass into law this November.

Third, the Fund for the Development of Small Business has been allocated 10 billion Tenge as initially proposed. I am confident that these resources will boost innovation by the small business.

Fourth, we are working on opening to competition non-core functions of state enterprises. We have adopted the decision on restructuring 19 national state-owned enterprises. The regional akims have been asked to open to competition over 800 non-core functions of local state-owned enterprises.

With respect to the strategically important national companies, the Council on Economic Policy has already approved the Concept of the National Holding Company, which will initially assume ownership of infrastructure enterprises.

The Parliament has passed, and I have signed into law, the bill “On state regulation of the development of agribusiness and rural areas”, which will spur the growth of agribusiness in accordance with market logic and the demands of a 21st century marketplace.

Here I would like to draw your attention to the imperative of systemic, deliberate and expeditious measures that would assure our accession to WTO.

Kazakhstan’s domestic agricultural producers will face particularly demanding pressures to increase their specialization and competitiveness. They will only succeed if our farming is industrialized through the implementation of the cluster initiative in production and processing of agricultural output. I’d like to reiterate that we would need to attract private sector resources, investments and credits into this endeavor.

IV. Further refinement of the national energy policy and strengthening Kazakhstan’s role in ensuring global energy stability and security

Great emphasis is being placed on the formulation and implementation of Kazakhstan’s energy policy and further development of our main industry that drives the national economy.

First, we have developed the long-term National Program for the Development of the Kazakh Sector of the Caspian Sea. This program is being successfully implemented. We anticipate that oil and gas output will grow primarily from the production in the Caspian Sea basin which in ten years may double its share in the global output.

The first contract for the development of the Kazakh sector of the Caspian Sea – the Kashagan field - has been signed, with commercial production expected to begin in 2008. By buying out 8 percent of the shares from the British Gas, this year Kazakhstan has become a co-manager of the field alongside such oil majors as ExxonMobil, Agip, ConocoPhillips and others.

In July 2005 the Ministry of Energy and mineral Resources signed a production sharing agreement with KazMunaiGas and Rosneft regarding the Kurmangazy field. According to expert estimates, Kurmangazy may posses up to 980 million ton of extractable hydrocarbons. We are in the process of negotiating other projects for the development of new blocks on the Caspian Sea shelf with the view of reaching oil production levels of 100-150 million ton a year by 2015.

The experience of other oil-rich countries proves that we must build an economy that would not be dependant on the abundance of natural resources. At the same time, the present record level of oil prices may cause a global economic crisis. Our macroeconomic policies must be sufficiently enlightened, taking this factor into account.

When completed, this National Program will allow us to export 2 million barrels a day in 2010 and 3 million barrels in 2015. The natural gas output will reach around 100 billion cubic meters a year.

Second, I would like to point out that Kazakhstan has always been committed, in theory and in practice, to the policy of open access to its natural resources and transparent cooperation with transnational companies which have been operating in Kazakhstan from the moment of its independence. Kazakhstan has demonstrated its commitment to the sanctity of contractual obligations. This record has allowed us to attract a steadily growing volume of direct foreign investment.

Third, Kazakhstan takes very seriously its new role in safeguarding international energy stability and security.

We are committed to taking advantage of geographic and transit advantages of our country. Without a solution to the problem of energy delivery to the global markets our resources will mean nothing.

Other major infrastructure projects are being developed in order to diversify and stabilize the delivery of Kazakh energy resources to world markets.

V. Implementing the Address’s social policies ahead of schedule, and the direction of further social reform

The February Address stated that we are building a socially sustainable state and society on the basis of a modern market economy.

What practical steps have been undertaken in this direction?

First, starting from July 1, we have begun the implementation of the entire package of social reforms, which is to be completed by 2007.

This year’s budget provides for an increase in the base salary. The minimum pension payments have reached 9,200 tenge, while the average pension has exceeded 12,000 tenge. Wages of state employees and civil servants have increased by 32 percent.

Second, benefits to the disabled adults of the first, second, and third categories as well as to disabled minors under 16 have been increased.

Third, special government benefits for war veterans and disabled have increased and a one-time payment of 30,000 tenge has been awarded on the 60th anniversary of the Victory Day.

Fourth, the housing problem has been addressed in an expeditious manner. The national budget allocated 6.3 billion tenge to the regions for the construction of housing units for low-income households. More than 1,500 housing units designated for low-income households are already under construction. 42 billion Tenge has been set aside from the budget to fund the construction in the different akimats of affordable housing to be distributed under a mortgage program.

Once completed, the housing construction program will provide housing for about 1 million citizens. The whole nation is experiencing a construction boom; the rate of housing development has doubled.

Fifth, the transition to the three-pillar pension system and mandatory individual medical insurance will radically transform the quality of life for our seniors.

Sixth, the National Program of Health Care Reform and Development for 2005-2010 has been launched.

In order to improve the quality of health care, special emphasis will be placed on supplying all the necessary world class medical equipment and supplies to hospitals, child care and maternity wards.

Thirteen major health care facilities are under construction in Kazakhstan. This year alone our expenditures on health care will grow by more than 30 percent on a year-to-year basis and reach 2.7% of GDP.

Seventh, our macroeconomic policy will determine the criteria for continuing wage growth corresponding to the growth in labor productivity and adjusted for inflation. This is important because only in this case economic development will lead to advancement in the wellbeing of households in real terms.

Thus, all my promises in this area have been fulfilled. There are, however, further plans, which would also be achieved without fail.

As you well know, I do not suffer from a lack of political will.

VI. Creating the environment for modern education and training as the determining factor of successful accelerated modernization of Kazakhstan

Modern education and vocational training are the decisive factor in the eventual success of Kazakhstan’s modernization strategy. I know I’m preaching to the choir on this account.

First, new approaches in higher education have to be developed.

As you know, starting from this year the top three thousand college students have the opportunity to advance their education in the leading universities of the world. The Bolashak Program is financed directly out of the national budget.

Our own universities, the Kazakhstan Institute of Management, Economics and Strategic Research and the Kazakh-British Technical University, are also world class schools.

Students who choose to continue their education in Kazakhstan will be given the opportunity to attend courses taught by leading international scholars invited to teach in Kazakhstan, as I indicated in my Address. For two universities alone this program will cost the national budget 2 million dollars.

The grants to students of colleges and vocational schools have more than doubled.

As promised, 600 million tenge has been allocated for the introduction of state guarantees of commercial student loans.

Earlier this year we have begun to implement a sizeable package of social safety net for students.

The development of new favorable conditions for the professional development and retraining of college professors has been initiated. The related social and economic issues will also be addressed.

I believe that we need to determine without any delay the most effective ways for the use of skills that our young specialists acquire.

Second, we won’t survive without our own national school of public governance. We have to start developing it now based on the best international experience. We need to create a thought-through training system of public leaders comparable to Harvard or the West Point Academy.

Consequently, in order for our country to have a ready pool of modern managers with a global outlook and first-rate skills, the government has been increasing its investments in education.

In 2005, the national outlays for education were 25% higher than the year before and reached 3.9% of GDP.

Thirdly, the State has to continue supporting on a priority basis the recent initiatives in the area of vocational education and specialized training.

The first such center for vocational training and advanced learning in the oil-and-gas sector is being set up in the Atyrau Region. We want to apply this experience to other sectors of the economy. Here, let me also emphasize the importance of studying the English language as a necessary precondition for integration of our executives in the global division of labor.

Fourthly and finally, let me say that at this stage of development the creation of a modern system of education and vocational training ought to involve both the State and the private sector.

The government and the Parliament should therefore work with the recently established Council on Entrepreneurship to devise additional economic and other incentives in order to encourage our big business to invest more in human capital, and thereby in its own future.

What I have just outlined is only a sketch of a comprehensive program of reforms in education and vocational training to meet the challenges of the 21st century.

The government should pursue these reforms with great resolve and according to the demands of the present.

VII. The current reforms are a solid foundation for speeding up Kazakhstan’s democratic reforms

In my February 2005 Address I advanced a comprehensive package of initiatives directed at further democratic and political reform of our society. We have initiated a broad public debate on this issue and begun to implement some of the reforms.

Today we can speak of the first and important practical results.

In May 2005, I signed the Decree “On Measures to Further the Utilization of the Potential of Constitution of the Republic of Kazakhstan”. In accordance with this Decree, all nominations of ministers responsible for social and economic affairs, heads of diplomatic missions, and chairman and two members of the Audit Committee will require hearings in the Parliamentary Committees of relevant jurisdiction.

1. The Central Election Commission has issued its recommendations for improvements in the election laws. Together with recently adopted amendments to the Constitutional Law on Elections; these recommendations have taken into account suggestions from regions, ministries and agencies, political parties and NGOs.

2. As part of the reform of the executive branch, the Parliament is considering a bill that provides for a more effective division of power between various levels of government. At the same time, we are undertaking a thorough examination of existing legislation in order to develop optimal conditions for local self-governance benchmarked against the best world practices.

3. We are also taking steps to ensure the transparency and accountability of executive power. In April 2005, I signed the Decree that obligates akims to report to the local public and sets out appropriate procedures. These reforms are clearly effective and will be continued. It should be noted that 80 percent of issues raised in reports by akims at all levels have already been resolved.

4. In August, the Government conducted pilot elections of akims in rural areas. It would be premature to assess the results of these elections, but it is clear that the lessons learned will help advance our administrative reforms.

5. The Ministry of Justice has developed and submitted before the government bills on introduction of trials by jury, as well as suggestions on how to enhance the role of the trial bar in judicial proceedings and enforcement of court decisions.

6. The reform of the judiciary, as part of the broader democratic reforms and modernization, was a key subject of deliberations at the 4th Congress of the judges. The participants debated the challenges of making adjudication process more efficient, fair and predictable. As you know, in March 2005 we submitted to the Parliament the bill “On Amendments to Certain Laws on Judicial Jurisdiction”. In the light of the proceedings of the Congress of the Supreme Court Justices, we need to mark up and finalize this bill still in this Session of the Parliament.

7. As you know, the National Commission of Democratization has launched the discussion on the draft Concept Paper on the Development of Civil Society in Kazakhstan. The draft will soon be completed and presented at the Second Civil Forum.

8. Non-governmental organization play an important role in identifying the necessary steps for the practical implementation of the reform declared in my Address. NGOs greatly contribute to the development of our civil society, protection of rights and freedoms, advancement of the democratic reform, charitable works, education etc.

In summary let me say that over the last six months we have carried out democratic reforms that have already brought visible results and clearly defined the forward democratic trajectory of the Kazakh society.

VIII. Expanding Public Discussion and Implementing the National Program of Democratic Transformation

Today I would like to propose for discussion and eventual implementation a set of measures that would advance the policies contained in the part of my Address on the National Program of Democratic Reforms. The Program will span six years, between 2006 and 2011; it will be implemented in two stages, the first running from 2006 to 2008, and the second from 2009 to 2011.

The broad public debates should help define, expand and clarify the specifics of the Program.

As part of the implementation of the policies articulated in the Address to the People earlier this year, here are some specific directions for the development of democracy in our society, which we need to discuss, clarify and implement as a joint effort by all our citizens.

First, we have to develop local self-government, clearly set the division of authority between central and local agencies of the executive branch and institutions of local self-government.

We will keep reforming the regulatory and legislative framework as well as the “social mechanism” of local self-government and strengthen the authority of akims at every level.

- We will need to create a new and more effective budget system at every level of government.

- Initially, we will need to expand the authority of the maslikhats particularly in providing oversight of the activities of akims. All akims will have to report to their constituencies on an annual basis on the results of their work.

To achieve these objectives, we need to pass next year the Law on local self-governance and devise a program for its development.

An efficient introduction of local self-governance will require the creation of a specialized agency – the Committee on local Self-Governance, which will be able to draw on the expertise of international organizations.

Second, as part of the drive to expand the authority of representative bodies, we will bolster the jurisdiction and oversight authority of the Parliament, its role in the formation of the Cabinet and other constitutionally defined bodies, and assess the possibility to increase the number of deputies in the Majlis and the Senate.

Third, the logic of devolution of power from the center to local levels demands the election of akims as a necessary step in strengthening the democratic foundations of the republic. This will empower the electorate to exercise public control and accountability in day-to-day decision-making.

Fourth, we need to strengthen the role and functions of political parties and fractions.

Fifth, we need to create a conducive environment for the growth and development of non-governmental organizations and labor unions in line with the universally accepted democratic norms.

Sixth, perfecting the system of protection of citizens’ rights and freedoms.

Over the next three years, it is necessary t

- introduce a comprehensive package of measures to strengthen the guarantees of the rights of citizens in judicial proceedings and during the enforcement of court decisions;

- increase the independence of the judiciary, transparency and efficiency of adjudication;

- gradual introduction of a system of judicial oversight of arrest warrants;

- introduction of trial by jury in criminal proceedings, adoption of appropriate laws etc.

Seventh, development of mass media as a key factor in guaranteeing the freedom of speech.

This requires a widespread development of the professionalism, independence and professional ethics of the press. The guarantees of media freedom should also determine the media’s responsibility to observe the rules of the Constitution and the laws.

Eighth, Creating a government program to combat corruption and pursue a systematic enforcement of practical measures for increasing accountability and control over governmental structures at all levels of our society.

What have we done in the last few months?

Since April of this year, we have been implementing a decree intended to advance an anti-corruption program in Kazakhstan. As part of it, we will develop a project of the government’s fight with corruption for the years 2006-2010. The central idea behind this project will be to build a multi-tier national anti-corruption system. Here are our first steps:

1. In May, we signed the decree “On The Moral Code Of Civil Servants”, which laid out the norms of ethical behavior, intended for the higher authorities in the government.

2. In June, I signed a law on changes and additions to the law “On Civil Service”, which increased the punishment for corruption and other white-collar crime.

3. Work has begun on the creation of public centers serving in Astana and Almaty, based on the principle of “one-stop service”, for which 500 million Tenge was allocated. One of the centers already opened its doors in May.

In addition to what we have already done and are planning on doing, it is necessary to undertake the following measures:

4. Ensuring transparency in the privatization process, decision-making regarding taxation, use of mineral wealth and land ownership.

5. Making changes and additions in the laws that regulate the transparency of the activities of multinational companies and state-owned enterprises, as well as private companies.

6. Opening public centers serving the population based on the principle of one-stop service.

I invite all public organizations to participate in this effort and jointly provide complete accountability of, and control over, government organs.

These are only a few of the main components of the “Nation-wide program of democratic reform”, which is up for discussion and implementation. This program must be expanded, improved, and when necessary corrected. It must be subjected to what I call the “test of national confidence”, ensuring the support of the majority of the populace. It is also necessary to consider the advice and experience of our allies with established democracies.

As you can see, we have much difficult work ahead of us. The National Commission on Democratization and Civil Society must summarize the results of this discussion in the near future, and prepare a packet of proposals regarding the legal outlines of the program of democratic reforms. Of course this will be accomplished with the active participation of the Parliament.

The adoption of this Program requires a delicate and balanced approach. Its consequences will have a major impact on our statehood and sustainable development.

Hence, I plan on creating, and personally chairing, a government commission on the program of democratic reforms. Among its members will be members of parliament, representatives of the President’s administration and the government, parties, associations and non-governmental political organizations. In June 2006, the Commission should make specific proposals.

Only such deep, democratic changes will be in step with our economic success.

It is well known that there are divergent points of view, even among those present here. Some suggest that we must wait until the conditions in the region become more stable, that we are not yet ready and that the people have not yet matured enough. Some believe that democratic reforms are not realistic for us, because they may have a de-stabilizing effect on our society, slow down our progress, and even that democracy in the Western sense is not compatible with our society’s traditions. These opinions must be considered as seriously as all others.

It is true that we do not have established democratic traditions, and we will have to go forward by “trial and error”. It will not be an easy path, and we are aware of this. We have to carry out these fateful reforms in the hope of further unifying the Kazakh people and mobilizing them in the interests of our nation.

IX. Adopting special measures to protect private property and guarantee contractual relations as a key to the accelerated modernization of the Kazakh society

Dear Members of Parliament, members of the Government! Ladies and gentlemen!

The success of our political and economic programs depends on the creation of a class of private property owners, who will make up the newly formed middle class. This is the element present in established democracies, where there is political stability despite the changes in the elites in power. This is why I have an ongoing concern with the development of small and medium sized enterprises. We have already accomplished a lot, but this is just the beginning. When we speak of democratization, we must settle these questions.

In connection with this, I would like to see us making final and irreversible decisions regarding such fundamental questions as: strengthening the institution of private property and the granting of contractual rights in Kazakhstan, which undoubtedly are the key to speeding up the process of modernization.

In the first years of our independence, government ownership dominated the economy. The legal base necessary for the development of a market economy was absent. The existing laws were hostile to private ownership and entrepreneurial activity.

Unfortunately, the staggering deficit of consumer goods, hyperinflation, and a rapid decrease in people’s standards of living created a negative public sentiment regarding private property.

Talking to many business people in the regions, I frequently found myself thinking that my policies of steadfast and consistent reform have, over the years, created the environment for the emergence of a new generation of property owners. My labors have not been in vain. I am proud of this achievement. Clearly, property ownership gives to a person his true freedom, but also a great measure of responsibility before the society.

Today the private sector, which employs 60% of the workforce, is responsible for 85% of economic activity. There is an ongoing development of small and medium sized enterprises. There is continuous growth and formation of the middle class, which is crucial to the process of modernization.

The important goal now is to secure the irreversible and stable development of middle class and private property owners who are aware of their positive social interests.

The institution of private property is protected by our Constitution. However, we must not forget that we lack the century-old traditions of respect for private property and the practical experience with contract law, that are characteristics of Western countries. For example, it is necessary to prevent a situation where the future of an enterprise or the fate of an individual citizen is determined by a government official, rather than by rule of law. Private property and its owners must be protected by the government and by society.

This will ensure the fundamental rights and freedoms of the individual, as well as the development of civil society. Hence:

First, I am proposing to develop a host of measures to further the legal provision of private property rights and enforcement of contractual obligations. The key role must be played by the unified law on enterprise, strengthening the principles and the systematic approach relating to the business activities of individuals. The legal protection of private property and contractual rights must include an independent method of settling disputes and a system of arbitration.

Second, it is important to consider how to cultivate respect for the institution of private property and contractual obligations at all levels of society. The continuing modernization of Kazakhstan requires a culture of contractual obligations at every level of society, including the honest relationships between private legal entities and individuals.

It is this that has helped many nations achieve success and prosperity.

I am confident that undertaking specific measures for strengthening the institution of private property in Kazakhstan and guaranteeing contractual rights in our society will create a strong foundation for our irreversible progress.

X. Kazakhstan at the forefront of struggle with international terrorism, extremism, drug trafficking, AIDS epidemic, and for the stability and security in the region and in the world.

The world has been witnessing our responsible, balanced and deliberate policies on a whole range of problems related to ensuring international and regional stability and security.

Recently, I have addressed our foreign policy priorities on a number of occasions. They remain constant.

This is the basis of our approach to the continuing participation of the Kazakh field-engineer squadron to help the Iraqi people. It is there on a life-saving mission, regardless of the recently dwindling number of other coalition members. In the same vein, we believe it vital for Kazakhstan to be an active participant in the Collective Security Treaty Organization, the Shanghai Cooperation Organization and in other forms of partnerships and integration efforts with our neighbors.

Our first priority is the development of cooperation with Russia, China, United States and European Union. We also attach great importance to our relations with the main nations in Asia and the Middle East.

Kazakhstan has always been – and will remain – staunchly committed to a broad international cooperation in containing nuclear proliferation, fighting against international terrorism, religious extremism, drug trafficking and other current threats. This corresponds to our national interests, too.

Let me draw your attention here to one other significant challenge to stability, security and sustainable development of our region. As you are aware, the international community has been following with growing concern the recent developments in Kyrgyzstan and Uzbekistan. Central Asia can be a region of stability, high economic growth, social and democratic progress. Alternatively, it could become an impoverished region torn by internal contradictions, ethnic and religious strives, contagious flare-ups of violence that spread from country to country.

One has to admit that the root cause of these explosive conflicts is the year-after-year accumulation of internal social and economic problems. Kazakhstan has “avoided” these predicaments thanks to our coherent systemic policy of sustainable development and increasing standards of living for the people, securing interfaith and intercultural accord.

I hope you would agree with me that it is in the interest of Kazakhstan and international community to achieve stability and prosperity in the entire region. Therefore we have launched the Central-Asian Integration Initiative that I proclaimed in February this year. This is not a Kazakh ambition to “shine” or lead. I believe it corresponds to the long-term interests of our fraternal neighbors, living in this region.

The concept of creating a Union of Central Asian States has received a positive international response. Responding to this, the French President Jacques Chirac wrote to me, “You know that my country was one of the founders of the European Union and as such we cannot but support your project for the creation of the Union of Central Asian States”.

I hope that soon, even by the end of the month the concept of the Union of Central Asian States will be further fleshed out and forwarded to the heads of state across the region for their consideration. If they accept the framework of the Union, it will become an important factor in the sustainable development of our region.

XI. Kazakhstan’s bid to chair OSCE is a testimony to our consistent course towards accelerated economic, social and political modernization of the country, our responsible and balanced approach to the regional and international stability, security, and development

I consider Kazakhstan’s bid to chair the Organization for Security and Cooperation in Europe in 2009 as a manifestation of our strategy of social development and of the practical course towards a comprehensive modernization of our country. There is nothing in our offer to chair OSCE of political opportunism or desire to show off.

Over its 30-year history, OSCE has many times proved its unique capacity to build international cooperation across the broadest range of issues.

The Republic of Kazakhstan joined OSCE in 1992 and voluntarily assumed the obligations of the Helsinki Final Act.

We are grateful to OSCE for its help and support during a difficult period in Kazakh sovereignty when OSCE provided assistance in developing democratic institutions, and the foundations of a civil society. We fully intend to keep up the level of cooperation with the OSCE since this cooperation is clearly relevant to our highest national aspirations.

I am also convinced that Kazakhstan’s unique experience in promoting tolerance, peace and stability, interfaith and interethnic accord in a society with many European and Asian features, can enrich OSCE’s outlook and vision of the contemporary world and the variety of ways to create an open democratic society.

This would allow the OSCE to respond more forcefully and effectively to the main contemporary challenges.

I see our bid to chair OSCE as our fundamental objective that corresponds to internal and external interests of Kazakhstan and equally importantly will strengthen the role of OSCE in the 21st century.

During the CIS summit in Kazan, which took place recently, the Kazakhstan bid to chair the OSCE in 2009 received official support by the leaders of the Commonwealth countries. We are grateful for their support.

Therefore, I am assigning to the Presidential Administration the task of drawing up a program that would prepare Kazakhstan for the chairmanship of the OSCE. This program will outline relevant responsibilities between the government, various ministries and agencies of the Republic of Kazakhstan. We anticipate that the subject of OSCE chairmanship will figure very prominently in the activities of the Commission on Democracy and Civil society, which will be the focal point of discussions with OSCE representatives.

Clearly, we will need to recommit ourselves as an active participant in the integration process within the OSCE framework.

Let me suggest that the Majlis should expedite the ratification of all the fundamental international legal instruments that deal with human rights and freedoms starting with the International Covenant on Civil and Political Rights and The Covenant on Economic, Social and Cultural Rights. You should consider this your top priority. Let me remind you that my Decree on Accession to OSCE was issued back in 2003.

In conclusion, I would like to offer to host in Kazakhstan an OSCE international forum on tolerance, interfaith respect, social and interethnic accord. We have already built a good record of holding similar events, including the recent Summit on Cooperation and Confidence-building Measures in Asia, the first Summit of the Leaders of World and Traditional Religions. We are gaining good experience in preparing the Second Summit of the Leaders, in addition to our as ten-year experience in convening the Assembly of the Peoples of Kazakhstan, which according to the U.N. secretary-general Kofi Annan “made Kazakhstan an example to other countries of international accord, stable and sustainable development”.

Conclusion

Dear Deputies, members of the Government, ladies and gentlemen!

We have reviewed the first practical results of the efforts to implement our strategy of comprehensive modernization and democratic reform in Kazakhstan; we have also set the most important priorities for the immediate future. We have chosen the right path and picked up a high pace of specific practical steps.

The fact that many people who left the country in the 1990s are coming back and staying for good speaks volumes about our success. It confirms that our strategy of accelerated economic, social and political reform and modernization of Kazakhstan is working, and working effectively.

Our main goal is to stay the course - and sustain the pace - of economic, political, social and democratic transformation. We are deeply optimistic about the future of Kazakhstan and its people; we should spare no effort in making this future dawn as soon as possible. I call on all citizens of all political persuasion to work together towards this goal.

In conclusion, dear deputies, I would like to note that within a few days you will decide on the schedule for the next elections of the head of state. Your decision will kick off the “the presidential race”. I hope that in debates over the elections you will not be distracted from the main goals that we have set to ourselves and that we have to attain together.

You know that I have always been a proponent of an open and fair competition of ideas and political visions through public debates, within the framework of the Constitution and other laws. I have no doubt that the people of Kazakhstan will vote for the leader who has a clear and proven strategy and a unified team of professionals committed to its implementation.

As the incumbent head of state, it is my objective to ensure that the upcoming elections will be absolutely free, fair and transparent, and their outcome will not raise a shadow of a doubt either among our citizens or in the international community.

Dear Deputies!

Our professional Parliament, elected in accordance to the Constitution, has worked for approximately 10 years now, and only a few days ago celebrated its 10th anniversary.

And if these years are just a drop in the ocean of History, for our Kazakhstan, these are significant times, a formative stage, equal to a century.

Undertaking our development, we always placed first and foremost the stability and unity of the people. Thanks to this understanding, we achieved our great successes and a respected status in the international community. Our Parliament’s role in these achievements was momentous.

As high as the peaks that we have already climbed are, there remain many more. It is important to remember that just in the previous session of Parliament were passed 78 laws, and it is evident that the work ahead will not be less. At present, the Parliament has for consideration of 50 draft laws. I would like you to pay particular attention to the laws directed towards the comprehensive economic, political and social modernization of the country, in light of the Address.

It is imperative to remember at all times that the characteristics of these laws will determine the results of the reforms that target the increased prosperity of the Kazakh people, the socio-political stability of the country and the timely implementation of the budget.

I believe that this task will be valiantly fulfilled by you. I wish you success in your efforts in the name of the prosperity of Kazakhstan.