Why come to Kazakhstan?

Russia may have set the bar pretty high, but Kazakhstan still has to be one of the most extraordinarily business-unfriendly places on the planet. A visit to this vast Central Asian state is like a modern reworking of Malcolm Bradbury’s satire Why Come to Slaka?, which catalogued the dubious attractions of a fictional East European state in the Cold War.

On the surface, this giant, underpopulated nation is doing remarkably well. From being virtually bankrupt a decade ago, the two main cities — Almaty in the south, and the northerly capital of Astana — now brim with confidence and cash. Mercedes and Bentleys jostle for road space with Ladas and Moskvitches; octogenarian babushkas take out loans with HSBC and Citibank to refurbish their plush inner-city apartments. On the road north from Almaty to Shymbulak and Medeo — the beautiful venues for the 2011 Asian Winter Games — sits a surreal collection of millionaire houses, each boasting at least one Mercedes (for the owner’s wife) and one Lada (for her decorator).

This new money flows from Kazakhstan’s vast natural resources. The country’s topographical bleakness belies a wealth of minerals and energy. Uranium, tin, molybdenum, coal and zinc abound, as does a lot of very high-grade potassium (as the title song of Borat put it, ‘all other countries have inferior potassium’). And there’s oil by the sheikh-load — up to 125 billion barrels, much of it in the world’s last untapped super-giant field, Kashagan, straddling the Caspian Sea.

Ten years ago, Kazakh politicians welcomed foreign investors with open arms. Everyone from ExxonMobil to Shell rushed in, as did hundreds of smaller mining firms, many of them based in Canada. They paid taxes, built schools, and gradually refilled the central bank’s coffers. But the country’s self-confidence grew with its wealth — and so did the whispers within Astana’s bureaucracy.