Nasha Gazyeta certainly faces government pressure. The KNB, the national security service (successor to the KGB), once claimed that the newspaper was supported by the CIA, probably because its publisher had taken a State Department–funded tour of US newspapers. The more present danger may come from the business sector because of its critical reporting of agribusiness. Actually, its criticism goes all the way through the food chain. The newspaper’s restaurant critic has never awarded any establishment more than a three-star rating, and she has given some scathing reviews. She writes under a pseudonym, a sensible precaution because on at least two occasions leather-jacketed men with short-cropped hair have shown up at the newspaper office demanding to know the identity of its restaurant critic. Timur and his colleagues refuse to disclose her identity. However, if she is ever named, the restaurant gang may want to think twice about confronting her. Under a male pseudonym, she is also the newspaper’s outdoors reporter, specializing in fishing and hunting. She probably shoots as straight as she writes.
Kazakhstan Needs Its Vegetables
Kostanai oblast—twice the size of Hungary or Portugal and almost as large as Kyrgyzstan—is the country’s top wheat-producing region. Its economy is dominated by large enterprises farming thousands of hectares. Over 40 percent of farmland is controlled by four holding companies, with one farming 900,000 hectares (an area the size of Cyprus or Puerto Rico). The companies own grain elevators, trucks, and freight cars, essentially controlling the market.
In this land of megafarms, Viktor Simanenko’s operation on the bank of the Tobol River is tiny—just 350 hectares. But unlike some farmers who have endured several tough years, he is making money. The clue to Simanenko’s success is in the name of his farm, Sadovod (gardener). While most farmers depend on a single crop, wheat, Simanenko grows potatoes, carrots, cabbages, beets, onions, tomatoes, cucumbers, and watermelons. He raises plants from seeds in greenhouses and uses river water to irrigate fields. He owns a local wholesale outlet that sells to retailers in Kostanai and other cities in northern and western Kazakhstan.
FIGURE 11.1 Viktor Simanenko knows his vegetables.
Simanenko portrays himself as a rebel with a cause. “In the Brezhnev period, I almost went to jail for eight years for commercial activity and hiring labor,” he boasts. He started farming in 1989, two years before Kazakhstan’s independence, “because I knew the country needed vegetables, and the local authorities weren’t doing anything to encourage entrepreneurship.”1
Wheat has been central to the economy of northern Kazakhstan for more than half a century. Under the Virgin Lands program, thousands of people were resettled on large kolkhozes, where the flat, open land was judged suitable for large-scale agriculture. The kolkhozes have been replaced by private farms, and Soviet tractors and combines by high-tech John Deeres with air-conditioned cabs, stereos, and GPS, but the agricultural economy of Kostanai oblast is still almost completely dependent on a single crop. More than 90 percent of farmland is planted for wheat. In good years, Kostanai produces as much wheat as Kansas, although yields per hectare are lower. However, climate, government policy, and fluctuating prices have left the region in a precarious boom-and-bust cycle.
Northern Kazakhstan is arid, with an average rainfall of twenty inches a year. Fields are not irrigated, and the region suffers from severe drought an average of two out of five seasons. In 2009, for example, above-average rainfall produced high yields, but the abundant harvest depressed prices. The next summer was hot and dry with low yields and high prices. Some farmers lost money both years and could not repay bank loans for seed, fertilizer, and equipment.
“Small and medium-sized wheat farmers are in a tough position,” Shaurab Zhempisov, a Kostanai State University agronomy professor, told me. “Last year’s debt is left for this year and they don’t know when they can repay.” Farmers will keep on borrowing because the government requires banks to make low-interest loans. The state also subsidizes seeds, pesticides, fertilizer, and diesel fuel. “It’s not a gift,” he said. “The farmers have to sell a portion of their wheat to Prodkorporatsia [the state grain corporation] at a fixed price that’s lower than they can earn if they export it.”
After independence, Kazakhstan’s wheat output declined. Production increased after 2000 when the government restored subsidies and encouraged wheat exports. Today, Kazakhstan is the world’s seventh-largest wheat producer, with major export markets in Russia, Ukraine, Central Asia, Europe, and North Africa.
Dependence on wheat has left Kostanai farmers vulnerable to swings in world prices. In recent years, the government has encouraged farmers to diversify. With prices rising for meat and dairy products, cattle-raising is the most profitable option. The megafarms have the capital and resources to diversify, but small farmers are stuck. “All their machinery and storage facilities are designed for wheat,” said Zhempisov. “They don’t have the money to buy new technology. They need the profit from wheat.”
“A single crop like wheat exhausts the soil, especially in a region of low rainfall,” said Almabek Nugmanov, deputy director of Kostanai State University’s Agricultural Research Institute. “For the rational and efficient use of soil, we need to rotate crops.” His institute is developing strains of rape, linseed, and sunflowers suitable for the soil and climate of the region. With irrigation, potatoes and other root crops also grow well. “There’s a big market for chips in Kazakhstan,” Nugmanov said.
For Nugmanov, farmers like Simanenko are pioneers in an agricultural revolution in the wheat belt. Zhempisov is not as optimistic. Only farms near rivers, like Simanenko’s, have access to enough water for irrigation, and farmers lack the capital to invest in equipment and storage for vegetables. As world wheat prices fluctuate, Kostanai’s farmers keep hoping that a good harvest and high prices for exports will make the next year the one when they can repay their loans. They are not counting on potatoes for profit.
Simanenko is proud of his potatoes, but the title he really relishes is that of onion king. Until his first harvest in 2007, onions—used in many dishes, including the popular shashlyk—were imported by truck from southern Kazakhstan and Uzbekistan. His locally produced onions were an instant hit, fresher and cheaper than the imports.
Simanenko does not rely on market forces alone. Every year, he asks the Russian Orthodox bishop to bless the Sadovod fields before planting. “One year, we missed a field,” he recalled. “It was hit by hail that cut the potato plants, and we lost the whole harvest.” Now each spring, full divine coverage is on his to-do list.
Oil, Guns, and Roses
It’s Kazakhstan’s equivalent of a booming Gulf Coast oil town. Atyrau, on the northern coast of the Caspian Sea, sprawls for miles across a flat, sandy landscape, with scrub grass and the occasional dried-up creek bed. New roads push out in all directions, lined with office towers, high-rise apartments, and storage and service facilities for the oil industry. Roadside billboards show President Nazarbayev mingling with oil workers or sitting in a high-tech classroom, demonstrating the government’s commitment to education. Energy company billboards trumpet their investments in the local economy and corporate social responsibility. One shows a peaceful, meandering river with the slogan “Care for the Environment.” It didn’t look like any river near Atyrau.
Atyrau’s main claim to fame, apart from oil, is that it is a transcontinental city, situated on both banks of the Ural River (formerly the Yaik) which forms the boundary between Asia and Europe. The region was conquered by the Russians from the Golden Horde in the late sixteenth century, and became home to the Yaik Cossacks. Since the ninth century, the Volga River, which enters the Caspian Sea below Astrakhan, had served as the main trading artery between Russia, Central Asia, the Caucasus and Persia. The 1,500-mile-long Yaik, rising in the southern Urals, offered another trade route. In 1645, the Russian merchant Guryev Nazarov built a wooden fort on the delta to trade with the khanates of Khiva and Bukhara. The Yaik Cossacks resisted attempts by the central gov
ernment to impose rules and regulations, and in 1773–75 joined other Cossacks in the Pugachev Rebellion, taking control of much of southeastern Russia. After it was suppressed, Catherine the Great issued a decree renaming most of the places involved. The Yaik River and the fort city of Yaitsk, north of Guryev, became the Ural River and Uralsk, respectively, and the Yaik Cossacks became the Ural Cossacks.
For centuries, the local economy depended mainly on fishing, most profitably for sturgeon whose roe are processed into caviar for export. In recent years, overfishing has depleted the sturgeon population, leading some environmentalists to call for a complete ban. However, with caviar prices high, profit trumps penalties. Local authorities lack the manpower to enforce fishing regulations, and fishermen sometimes bribe inspectors to look the other way. Other fish include carp, white fish, trout, roach, and bream, but the industry is in slow decline. The real undersea wealth of the region lies in its immense oil and gas reserves.
The world’s first offshore oil wells were drilled in the Caspian Sea near Baku, the capital of Azerbaijan, in 1873. By 1900, Baku had more than three thousand wells, and by World War II the region was supplying almost 75 percent of the Soviet Union’s oil needs. Although geological surveys indicated that the western region of the Kazakh SSR and the eastern shore of the Caspian Sea had reserves of oil and gas, exploitation did not begin until the 1980s. In 1979, the vast Karachaganak gas condensate field was discovered about one hundred miles east of Uralsk. It is estimated to contain 1.2 trillion cubic meters (42 trillion cubic feet) of gas and one billion tons of liquid condensate and crude oil. In 1997, Texaco (now Chevron) and the Russian state company Lukoil signed a forty-year production-sharing agreement with ENI (formerly AGIP) and the BG Group (formerly British Gas), the original two operators. The government holds a 10 percent stake through its state corporation KazMunayGaz (KMG). Local villagers complain about air, ground and water pollution from the wells and oil refinery, including emissions of hydrogen sulfide gas and high levels of cadmium and nitrates in the soil. They claim the toxic chemicals cause migraines, dizziness, hair loss, deterioration of vision and hearing, and skin diseases. They’d like the oil and gas consortium to pack up and go away, but most would settle for being moved to a safer place.
The Tengiz field (tengiz is Turkic for “sea”), also discovered in 1979, is located in low-lying wetlands along the northeastern shore of the Caspian Sea, about 220 miles south of Atyrau, which serves as its main supply and transportation base. Its development featured a battle between energy companies, with the government holding most of the cards. The name of the production consortium, Tengizchevroil (TCO), indicates the big winner—Chevron, with a 50 percent stake. Exxon Mobil has 25 percent; the government 20 percent; and Lukoil 5 percent. In 2001, the partners opened a US$2.7 billion, 935-mile pipeline to export Tengiz oil to the Russian Black Sea port of Novorossiysk.
MAP 11.1 Western Kazakhstan and oil fields (map by Brian Edward Balsley, GISP)
The biggest prize is fifty miles west of Tengiz. When the offshore Kashagan field was discovered in 2000, it was hailed as the world’s largest oil strike since Alaska’s Prudhoe Bay in 1969, with estimated recoverable reserves of 8–12 billion barrels of oil. It is not easy to extract, and early forecasts of when the oil would flow proved hopelessly optimistic. So was the cost estimate of developing the field, which has spiraled from $57 billion to at least $136 billion, and may go higher. The oil lies 2.5 miles below the seabed under shallow waters that freeze for five months of the year. In winter, temperatures can drop to minus 30 Celsius, and icebreakers can take thirty-six hours to reach Kashagan. Conventional rigs could not be used because of the harsh conditions; instead, the developers built an archipelago of artificial islands out of local limestone, encased in an impermeable membrane. Twelve oil wells have been constructed with a fifty-seven-mile-long pipeline to the shore. The field, which began commercial production in 2013, is operated by a consortium of seven companies, including KMG. In 2013, the Chinese government struck a $5 billion deal for a stake in the field. It’s expected to be the main source of supply for the Kazakhstan-China oil pipeline, a joint project completed in 2009 to carry oil from northern Kazakhstan and the Caspian Sea to Xinjiang. Kazakhstan hopes that oil from Kashagan will push the country into the top ten of world oil producers.
The pipeline’s Caspian Sea terminus is at Atyrau. With the Tengiz field in production, the Kashagan field coming online and the third-largest oil refinery in the country, the once sleepy fishing port and regional administrative center is experiencing a population boom. The oil industry is a magnet for poor migrants, mostly from rural areas, and for the oralmans, ethnic Kazakhs from other countries. Since the early 1990s, the government has offered them start-up cash payments and housing assistance to resettle in Kazakhstan. The oil boom has made moving more attractive. With Aktau, the other major oil port to the south, Atyrau is the fastest-growing city in the country.
Atyrau evidently has more oil than it needs. My plane from Astana parked literally twenty yards from the arrivals hall, an easy walk from the gangway. Instead, we boarded buses that drove out onto the tarmac and followed a circuitous route, depositing us several minutes later a few feet from where we had started. “They need to show they have plenty of petrol,” said Sasha. “I wonder which route they will choose for the luggage.”
Sasha was Aleksandr Peytchev, a Bulgarian career diplomat who is now the economic and environmental officer for the Organization for Security and Cooperation in Europe (OSCE) Center in Astana. I was traveling with him for a workshop for journalists from western Kazakhstan on covering environmental issues. That evening, we walked along the bank of the Ural River, talking about his career and the diplomatic cocktail-party circuit in Ghana and Kenya in the 1970s and 1980s. Our turnaround point was the Halliburton headquarters, which occupies a prominent riverside location. I’m not sure exactly what Halliburton is doing in Atyrau, but I suppose it’s providing, among other things, logistics and security for the oil industry. And it has a sizable staff. We stayed at the Ak Zhaik Hotel. With its stained, threadbare carpets and rickety, pressed-wood furniture, it was not the best hotel in town (despite the shop in the lobby claiming to sell “Elite Haute Couture”), although it was probably not the worst. It’s where oil companies accommodate their non-European and non–North American staff, the Pakistanis, Indians, and Filipinos. A sign on the breakfast bar—just past the “Potatoes—at home” and “Skramlet with vegetables” (a combination of “scrambled eggs” and “omelet,” I assume)—read: “All quests [sic] except Petrofax and Halliburton must pay for soft drinks and juice.” In the evenings the workers picked up their meals (and free soft drinks) and took them to their rooms to eat.
The main draw for the higher-paid energy company staff at the Ak Zhaik was the Guns and Roses Pub and Grille (that last “e” on grill is de rigueur, indicating that it’s not a greasy spoon such as the Burger House a few blocks away). Wood paneling, fake oak barrels, dim lighting, black and white photos of rock groups, English-speaking staff, and the usual pretentious signs: “Fine beer. Fine food. Fine music. Fine service.” The central motif is the Doors, with a large artistic rendering of Jim Morrison and a quote from him about spirituality and music or something like that. The food and drinks are pricey, but the place is filled with expats and well-heeled locals every night, with a large crowd at happy hour. And it’s one of several watering holes in Atyrau. Along the river, where many expats live in gated communities, I passed by Atyrau’s Irish pub row where O’Neills and The Celtic Dragon vie for customers. I usually try to avoid expat hangouts where they speak English even when you’re trying to practice your Russian, but Sasha wanted a beer, so I complied. Fortunately, we left town on Friday morning, missing “Rockin’ at Guns with the Jakies,” where a local band attempted covers of the Doors and Led Zepellin.
Mangystau’s Oil
The oil and gas reserves of Karachaganak, Tengiz, and Kashagan are the major prizes in the energy stakes, but more
than twenty other fields are scattered throughout western Kazakhstan. Near Aktobe in the north, the Umit oil field, on the pipeline to Xinjiang, is owned and operated by the China National Oil Corporation. In Kyzylorda oblast in the south, a state company runs the Kumkol field. There are two more large offshore reserves in the Caspian Sea—the Kurmangazy oil field and the Khvalynskoye gas field. The other major fields are in the sparsely populated Mangystau province in the far southwest.
North and west of the great environmental disaster that is the Aral Sea, the desert stretches for hundreds of miles, the monotony of sand and scrub occasionally broken by ridges, canyons, and rock outcrops. The only livestock that can survive in this barren terrain are camels; apart from a few oases along streams, the land cannot support sheep or cattle grazing. However, the region is rich in minerals—phosphates, iron ore, manganese, salts, uranium, and oil and gas. The first oil fields in Mangystau were developed in the 1960s, and by the mid-1990s the province was producing about 70 percent of Kazakhstan’s crude oil. Even as the northern oil fields have come online, Mangystau remains a major producer with more than a dozen fields, owned and operated by KMG and multinational energy companies.
The commercial and logistics center is the port of Aktau on the Mangyshlak Peninsula. In the early 1960s, the Soviets discovered uranium deposits nearby and established a secret mining settlement, code-named (in a backhanded compliment to the founder of Atyrau) Guryev-20. The planners laid out a town of broad, straight streets, numbering the residential districts and apartment blocks. The city is distinguished—or undistinguished, depending on your view—for having no street names. An address consists of just three numbers—the microraion, house, and apartment. It was Soviet central planning at its most sterile. At least they didn’t number the city. After it was clear that it wasn’t a secret anymore, it was named Shevchenko for the nineteenth-century Ukrainian poet and artist Taras Shevchenko, who was exiled to Kazakhstan for his nationalist views.
Postcards from Stanland Page 32
