Kazakhstan: Steady So Far with a Future as Vast as Space

Imagine Singapore, if Singapore had natural resources and was one of the largest countries in the world. Kazakhstan, where I spent two weeks watching the World Wrestling Championships, is only 27 years old. Tajiks, Kyrgyz, Uzbeks, Russians, and Kazakhs blend in seamlessly, and the British have considerable influence. Its capital was renamed five times in the last 60 years: Akmolinsk, Tselinograd, Aqmola, Astana, and now Nur-Sultan. Along the way, the capital moved from Almaty--bordering China and Kyrgyzstan in the southeast--closer to Russia in the north. 

Within historical context, Kazakhstan's rise from Soviet vassal to independent modern state is miraculous--if only because potential pitfalls were so numerous. Following the collapse of the Soviet Union, many countries were left on their own. One of these countries was Kazakhstan, the world's ninth largest. Into the void came the European Bank for Reconstruction and Development (EBRD), which invested nearly 9.1 billion USD since 1991. Today, it's clear who has the most influence: the EU, Russia, and China. 

Look at the flags displayed outside a NurSultan strip mall.

One may want to remind increasingly nationalistic Western voters these global investments were prudent because they helped increase worldwide supplies of Kazakhstan's uranium, oil, natural gas, and tin--while giving foreign powers the ability to influence political affairs in mutually beneficial ways. In Nur-Sultan, a Huawei building towers over pristine asphalt roads containing Russia's old Lada cars as well as brand-new Toyotas, a testament to steady global investments that promoted free trade while avoiding enemies. (Kazakhstan does business with both Iran and Israel.) 

Nur-Sultan is named after Nursultan Nazarbayev, Kazahkstan's president from April 1990 until March 2019 and former member of the Communist Party. Many English language articles allege corruption, but do not provide relevant background. First, as a member of a single party governance system focused on GDP growth--which he delivered--the assumption was any opposition group formed during the Cold War would be funded by foreign powers. (Given the CIA's track record, this assumption was not without merit.) Second, most of the allegations concern activities designed to circumvent the United States' arbitrary political preferences, including regarding Iran. (Unlike the United States, Kazakhstan has no enemies, so one could argue its multi-vector foreign policy, which emphasizes good relations with other states while balancing Chinese and Russian influence, has been successful.)

Above all, Nazarbayev doesn't get the credit he deserves for advancing Kazakhstan from a country with the world's fourth-largest stockpile of nuclear weapons to a model for de-proliferation. 

It's true Kazakhstan's most valuable company is KazAtomProm, a nuclear company, but its privatization has provided checks and balances without sacrificing nuclear energy and knowledge--knowledge that came with tragic consequences. The Soviets conducted over 500 military experiments with nuclear weapons in Kazakhstan, mostly at the Semipalatinsk Test Site, causing radiation sickness and birth defects. It was Nazarbayev who closed the Semipalatinsk Test Site and who subsequently gave Kazakhstan so much credibility in nuclear affairs that it held international talks in Almaty as part of worldwide efforts to encourage Iran to pursue a similarly peaceful nuclear energy model. In addition to nuclear weapons, the Soviets left a legacy of space exploration, now in the form of KazCosmos, Kazakhstan's more complicated version of NASA. In short, any way you view the country's development, the number of drastic failures that could have occurred during the transition of a left-behind nuclear and space-ready country into a respected member of the United Nations were vast, leaving little margin for error. For that reason alone, it's hard to criticize Kazakhstan, though Human Rights Watch has no such qualms, reporting, "There was no meaningful improvement to Kazakhstan’s poor human rights record in 2018." 

A few casual observations are in order: Russian and Kazakh are the most common languages, and in larger cities, most people can speak at least a bit of both. A blend of Mongolian and Russian have created a striking hybrid of white-colored faces and Asiatic eyes, made even more eye-catching when locals bleach their hair blond or wear blue contacts. As for the physical landscape, it's all new. Think of it as the "Las Vegas development model": you have land in the middle of nowhere, a relatively small population, and no restraints on what or how you can build. One result is uniquely-designed buildings, but I was most impressed with the overall layout. 

Inside a shopping mall.

Outside the shopping mall.

You can see architects had a single plan for the city center, creating angles where prominent buildings could be viewed inside arches of nearby places. Throw in old-time Las Vegas neon lights, and NurSultan starts to look like a place that's co-opted the mafia and provided plenty of space for everyone to play nice--for now. 

Russian Church.
I tried to buy a St. Christopher card but they didn't have any.

Hazrat Sultan Mosque

Will Kazakhstan's steady development continue in peaceful and sustainable ways? According to The Astana Times, "'The share of non-oil revenues is growing steadily from 61.4% [in 2019] to 71.2% in 2022,'" a good sign. At the same time, "the number of civil servants and employees in national [government-owned] companies will be reduced 25% [from] 2020-2024," a predictable cause of grievances, even if necessary; in "2018, government procurement totaled 4.4 trillion tenge [almost 63 billion USD], 75% of which were carried out in a non-competitive way through purchases from one source"; and "the number of targeted social assistance [welfare] recipients [grew] from approximately 77,000 to more than 1.4 million in five years... [and] spending on social support has increased 17 times since 2017." In addition to the above issues, respecting different ethnic groups while enforcing primary use of an uncommon language, Kazakh, may prove difficult. Ultimately, like space, Kazakhstan's sheer vastness provides hope--as well as growing pains--assuming the country is able to maintain its balancing act. 

© Matthew Mehdi Rafat (2019)

Bonus: Kazakhstan's museums had a wide gap regarding two major historical events: 1) the famine of 1932-34, which apparently wiped out one-third of its population due to the Soviet Union's forced farming collectivization (an action Nikita Khrushchev criticized in his 1963 book, Khrushchev Speaks); and 2) several waves of forced deportations into Kazakhstan by the Soviet Union, especially from Ukraine. The latter is interesting because it could help establish a historical narrative of Kazakhstan as a country of involuntary refugees, providing a more tolerant basis for future immigration. 

Update: unrest and rioting in January 2022 caught many by surprise, but the result of reducing welfare benefits while increasing everyday costs, including fuel, seems predictable. The world wants to shun petroleum-based output but is unready to implement climate-friendly technology on a mass scale. Until the gap between promise and reality is bridged, many governments--not just Kazakhstan--face challenges modernizing their economies while preserving social stability. 

Replace "Communists" with Russia to See America's Current Allegations in Historical Context

Justice Robert H. Jackson, concurring, Dennis vs. U.S., 341 U.S. 494 (1951): 

"The Communist recognizes that an established government in control of modern technology cannot be overthrown by force until it is about ready to fall of its own weight. Concerted uprising, therefore, is to await that contingency, and revolution is seen not as a sudden episode, but as the consummation of a long process. The United States, fortunately, has experienced Communism only in its preparatory stages, and, for its pattern of final action, must look abroad. Russia, of course, was the pilot Communist revolution which, to the Marxist, confirms the Party's assumptions and points its destiny... 

No decision by this Court can forestall revolution whenever the existing government fails to command the respect and loyalty of the people and sufficient distress and discontent is allowed to grow up among the masses. Many failures by fallen governments attest that no government can long prevent revolution by outlawry. Corruption, ineptitude, inflation, oppressive taxation, militarization, injustice, and loss of leadership capable of intellectual initiative in domestic or foreign affairs are allies on which the Communists count to bring opportunity knocking to their door. Sometimes I think they may be mistaken. But the Communists are not building just for today -- the rest of us might profit by their example." 

Bonus: 

"National unity, as an end which officials may foster by persuasion and example, is not in question. The problem is whether, under our Constitution, compulsion as here employed is a permissible means for its achievement. Struggles to coerce uniformity of sentiment in support of some end thought essential to their time and country have been waged by many good, as well as by evil, men. Nationalism is a relatively recent phenomenon, but, at other times and places, the ends have been racial or territorial security, support of a dynasty or regime, and particular plans for saving souls. As first and moderate methods to attain unity have failed, those bent on its accomplishment must resort to an ever-increasing severity." -- West Virginia State Board v. Barnette (1943)

Georgia: Desperately Seeking the EU but Enjoying its Independence

When I landed in Tbilisi, Georgia, I expected cows, green pastures, and funny-looking hats. 

*Not* what Georgians actually wear.

Instead, I saw a modern airport with far too many Mercedes-Benzes in the parking lot and widespread use of RFID-enabled payment systems. Interestingly, Tbilisi is closer to a cashless society than America, and one reason PayPal is valued more than AMEX is because the future doesn't involve credit cards per se, but the technology that allows payments to occur. 

In any case, in Tbilisi, many people speak three languages (Russian, Georgian, and English); are wary of Russia; can't say no to Russian money; and desperate to join the EU. Such conflicting characteristics create unique experiences. The most interesting Georgian citizen I met was an ethnic German raised by a Jewish grandmother in Russia who speaks better Russian than Georgian. The day before, I had met a Muslim Georgian-Ukrainian software tester working for a Danish company who attended Turkish primary school. She speaks four languages fluently. 

After a tour of the local Supreme Court, which includes a museum housing a Soviet-era courtroom, I told my translator the United States had surrounded Russia with military bases, implying America was becoming the new and overextended Soviet Union. Her response? "You [America] should conquer them!" 

FYI Joseph Stalin was Georgian, born Ioseb Besarionis dze Jughashvili. 

Despite its history of conflict with the Soviet Union, or perhaps because of it, Tbilisi has become a hybrid of Russian and American influences. Freedom Square is next to Pushkin Square, named after a Russian poet. The beautiful parks I saw were designed by Russians, not Europeans or Americans. The long, foreboding escalators to underground metro stations were also made by the Soviet Union and still in use. 

Afraid of heights? Too bad.

Unfortunately, not all of Georgia's Soviet influence can be praised. Witness the utilitarian block-shaped housing structures and, believe it or not, coin-operated elevators. 

The one Georgian lari is inserted in the contraption on the right.

If I have unduly focused on Russia in a piece about Georgia, it's because the country was under Soviet occupation from 1921 to 1991, with the Soviet army entering as recently as 1989 to quell inter-ethnic conflict in the bloody Sukhumi riots between Abkhazians and Georgians. 

History does not forget, and in 1992-1993, similar tensions flared up, leading to war in the Abkhazia region. The failure of diplomats to create an effective post-war framework presumably led to the 2008 Russo-Georgian crisis, which, depending on whom you ask, centered on Russia's desire to expand its territory, Georgia's failure to abide by the terms of its Gazprom contract, and/or the Abkhazians' desire for independence and their alleged claims of mistreatment by Georgians. 

Not until 2012, when billionaire philanthropist Bidzina Ivanishvili's "Georgian Dream" team swept elections, did Georgia finally look to be on its way to prosperity. (Note: many billionaires have Russian ties--Ivanishvili went to Moscow to pursue a Ph.D. in economics and made his fateful business connections there.) 

Before we discuss the fun stuff, let us have a quick Georgian history lesson. Around 1800, having been invaded by the Persians, Arabs, Turks, and Mongols, Georgia asked the Russian Empire to enter and protect it from outsiders: "At the end of the 18th century, Georgia... united herself to Russia of her own accord, on condition that Russia should defend her against her external foes." (Act of Independence of Georgia in Georgian National Museum, Soviet Occupation exhibit.) (I just realized I should have titled this article, "Let the Right One In.") 

The post-WWI climate, especially from 1918 to 1920, must have created issues because in May 1920, the Soviet Union's Red Army invaded Georgia and took Tbilisi by force. 

Lenin approved the invasion on the condition that it be a guaranteed victory, and the Red Army delivered. The results of the ensuing occupation were disastrous, with the Bolsheviks purging elites, church leaders, and intellectuals. 

The Bolsheviks didn't stop at murder--they also violated the cardinal rules of peaceful governance: 1) leave religion alone; and 2) don't raise taxes excessively. 

Consequently, as far back as 1936(!), Georgians were asking Americans to assist them. Had Germany not presented more problems than the Soviet Union in 1938, Georgian history might have been different. In 1941, however, Nazi Germany invaded the Soviet Union, and though the Soviets defeated the Nazis, they lost 26 to 27 million Soviet lives in the process. Considering the Soviet Union's sacrifices, as well as its status as WWII victor alongside the United States, it must have been difficult for any country to openly interfere with the Soviet Union post-1945. 

Why does Georgia in particular have such a turbulent history? Although it lacks substantial natural resources outside the disputed area inhabited by Abkhazians, it's an important trade route and now delivers substantial natural gas to the EU. (The contract establishing Georgian payment and obligations for transit of Russian natural gas to the EU is fascinating, even if you're not a lawyer.) Aside from Georgia's competitive "New Silk Road" location, it has excellent wine, beer, and tea, none of which are exported widely for some strange reason.

How does all this affect you, an aspiring world traveler looking for interesting destinations? For its level of infrastructure, Georgia is inexpensive. Hipsters have taken over, gentrification is on its way, and soon Georgia may get its wish and become just like any other boring Western European city. As of today, however, I was stunned by how much beautiful artwork is displayed everywhere and casually so. Take a look at a few pieces I saw while strolling around Tbilisi. 

Mziuri Park

Hey, if a Dunkin' Donuts sign in magical-looking Georgian script isn't art, what is?

Tbilisi's most attractive feature isn't its low prices but its understated cosmopolitanism. While the current American president talks about building walls, Georgians probably love Americans because they told the Soviet Union to tear one down. 

My favorite bookstore, Prospero's Books and Caliban's Coffeehouse--English majors, commence mental orgasms--is owned by a Russian woman who sells pocket booklets of the U.S. Constitution. I am sitting there now, next to two attractive brunettes who have glossy Russian language magazines on their table. (Do I dare disturb them in a minute?) 

I would tell you much more about Tbilisi, but I can't add anything you can't easily discover yourself once you arrive. An airport ride to the city center should cost no more than 35 lari. There's no Uber, but there is Maxim. Stay near Rustaveli Avenue or Freedom Square--every major museum and tourist attraction is nearby, including the very touristy Meidan Bazaar. Don't miss the G. Leonidze Museum of Georgian Literature, which doesn't have books but does have interesting exhibitions (after seeing one about snipers on the Armenian-Azeri border, I've decided I'll never live near a border) and a cool cafe outside. The Museum's staff-only viewable artwork on the walls are more beautiful than ones in the MOMA. 

Incredible painting. "Pushkin in Tbilisi" by  Lado Gudiashvili.

If you are rich, stay at the Biltmore Hotel (there are two locations--the MoMa design is the new building, but I like the old one on Rustaveli Ave.); otherwise, check out Airbnb or Radisson Blu (also near Rustaveli Avenue) or perhaps the trendy Fabrika Hostel.

See the churches--the most beautiful ones are the Holy Trinity Church (aka Sameba) and Sioni Cathedral. 

Georgian wedding--a common occurrence on weekends.
Find a priest who chants Biblical verses in the ceremony for the full experience.

Mkskheta is a small city close to Tbilisi and easy to visit. Signagi and Svaneti (don't miss tasting/smelling Svanuri marili aka Svan salt!) are popular destinations as well. Batumi is a beach town apparently fun to visit in the summer. 10% of Georgians are Muslims and many reside in Akhaltsikhe (New Castle). If you go to New Castle, Vardzia is nearby. 

When in Tbilisi, walk into the "basement bakeries." Occasionally, you'll see steps leading underground to brick-walled restaurants or stores. I've never been disappointed by any of the commercial basement dwellings I've found. 

Eat khinkhali, khachapuri, and churchkhela with flavored soda (most popular flavor is cream, and it's usually only one lari). At times, it seems Georgian cuisine requires at least two sticks of butter in each dish--I couldn't finish my portions--but at least you won't go hungry. 

Khinkhali

Adjarian khachapuri

So what is Georgia, other than eager to forge its place in the world? Imagine a place built by the Soviet Union, infused with hipsterism, yearning to be free like Americans, having a language derived from the Greeks, and being flooded by foreign capital. In short, Georgia's future is not set in stone, and its magical realism won't last much longer. If you want to visit, do it soon so you can see Tbilisi as what Europe ought to be--young, naive enough to believe in America's stated ideals, and doing its best to combine the old with the new.

© Matthew Mehdi Rafat (2017)

Update: I just got a sulfur bath, and I feel great. I've had the Turkish hammam experience, but it didn't do much for me. The Georgian sulfur bath is different--your body absorbs some of the sulfur, which, depending on your skin type, will generate some noticeable effect. (My skin felt nice in a way I can't exactly describe.) 

You pay between 35 to 100 lari for a private room, depending on the number of people and the size of the room and bath. If it's just you and a friend, you may pay 35 lari. You can check out the bath before you decide which room you want. Towels and soap costs extra, about 2 lari each. If the water in the bath is too hot, try to adjust it by turning on the cold water tap that goes into the small pool. 

100 lari, high-end sulfur bath. Room next to it had several comfy chairs.
Not the one I used.

You will get your towel, enter the room, lock the door, strip, put on the slippers provided for you, and submerge yourself into the small sulfur pool. You have up to one hour, but half an hour was enough for me. A massage costs extra. (The Georgians claim to have their own massage technique, but they've just tried to copy the Thais.) After you finish sitting and relaxing in the small pool, you will take a shower (if you want soap, remember to buy it beforehand), dress, and leave. You'll probably be quite thirsty. I liked the experience, and I felt more relaxed afterwards.

What should you not do in Tbilisi? Strip clubs. There are two nearby the Rustaveli metro stop, one called Venus and another called Matine(?). I paid 30 lari to enter, and only four women were inside. One of the women sat next to me, and after I confirmed the drink she wanted was only 30 lari, she ordered. I received a bill for 1200 lari, and I had to waste 20 minutes of my time playing dumb until they let me go. (They only let me go when I texted my location to a local Georgian friend. Thank you, WhatsApp.) My Turkish-Arab friend living in Georgia told me some of these places even scam visiting Georgians, and he'd heard of one club threatening a tourist until he paid 400 USD.


 

Capitulation is here...again (Good times to follow)

For anyone who has monies in a 401k, a Roth IRA, or some other retirement account and is under 35 years old, now may be a good to enter the market and use up some of that financial gunpowder.

From Barry Ritholtz: "The criminal enterprise, formerly known as Russia, has decided to halt trading. With its stock market down 57%, Putin & Co. are being even more risk averse than Paulson, Bernanke, et.al. & Co."

You know times are bad when Russia halts trading. But people with a long-term horizon of at least ten to fifteen years may want to add to existing positions. The economy and the stock market go through boom-bust cycles, and you can't enjoy the boom unless you get in on the bust. I've personally seen my retirement funds decline in value by over 10,000 dollars in the last two to three months. I've continued adding to positions, especially in the Asian markets. Barring some cosmic wrath directed at me, I don't need the retirement money now, tomorrow, or even ten years from now.

From Warren Buffett: "We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful."

If this isn't fear in the air I smell, maybe it's eu de depression. Come November, we will have a change, with either candidate bringing fresh ideas to the White House (McCain with less tolerance for pork and corruption, and Obama with, well, Obama). Good times will be here again, because a) we can (or should try harder to) learn from Japan's mistakes bailing out their banks; and b) financial services are still not that vital to an economy, once liquidity is restored.

We had a great economy back when Citigroup, BofA, and WaMa were just small or midsize banks. I still remember Citigroup being "just" 19 dollars during the heyday. Banks were never meant to be growth stocks. When they go back to paying a stable dividend, maintaining good credit profiles, and selling some insurance, the world will be a better place. And if I never have to hear about credit default swaps, I will be a happy man.