Kazakhstan Pt. 2: Astana, WTF? Diagnosis: major inferiority complex

Written by Tyler Cole | 10 May 2011

Astana is just strange and confusing.

Arriving into Astana tired in an overnight train from Pavlodar, I caught a cheap taxi to where my Couchsurfing host lived in the older part of the city. The taxi driver got lost, and ended up making a huge detour through almost the entire city (luckily, I agreed on the price beforehand). This was my first introduction to the bizarreness that is Astana.

Leaving the Soviet-era buildings around the train station, the taxi crossed the river (artifically widened) and made a loop around “new” Astana which was just a whole bunch of buildings with futuristic architecture and shiny facades. I could see, though, that this new part of the city was built purely by force of incredible amounts of petro-dollars. Any other city has residential areas that spread out from the center, but the “new” Astana just sort of rose out of nothing in the Kazakh steppe.

Talking later with my Couchsurfing host, Emanuel, he gave me a rough run down of what’s been happening in Astana.

Emanuel was originally from Mexico and had been working with the World Bank for several years before taking a three year assignment in Kazakhstan, so he had quite a bit of insight to the Kazakh economy. His project was assisting the government in diversifying their economy, since at this point in time it is almost entirely dependent on oil production.

The “new” Astana was basically the result of the government grasping at modernization and trying to break from the Soviet legacy with fistfuls of cash. They had commissioned futuristic theaters, an opera house that is supposed to be a rendition of the Sydney opera house, and the even a circus that looks like a shiny, metal flying saucer and flashes gaudily at night. Comically (is that the right word?), the opera house and circus are only used a few times a year at most.

Emanuel said most of the new buildings, built quickly and of questionable quality, also largely sat empty. Still, though, rent was incredibly expensive if you didn’t want to live in Soviet-era housing with prices that would exceed almost anything similar in a large European or US city. Why they were so expensive was still a mystery to Emanuel, and he sort of just figured it was due to the cartel nature of land and property development in the city. That is, a small group of people have control of the supply and do not allow others to enter the market, which allows them to artificially set the price instead of allowing market demand to do so.

Emanuel was also at a loss to explain the quantity of nice cars in the city. He was very much aware that the average annual income was less than $7,000, but despite that there seemed to be no lack of Mercedes and BMWs cruising around. I had always thought it was sort of a status symbol for which people sacrificed other things to obtain, like a savings for education or good quality housing, but that still didn’t seem an adequate explanation. At first I thought he posed the question to me in a way that indicated he was going to tell me, but after I told him I had no idea he responded in the same way.

There is definitely a moneyed class in Kazakhstan associated with the government and oil production, but the quantity of people I saw shopping for luxury goods in the Khan Shatyr shopping mall (basically a futuristic-looking tent complete with an artificial beach) didn’t seem right. I suppose there was still massive poverty in the countryside among people who lived nomadically or in villages, and I was just seeing the sliver of people who picked the right straw.

It made me feel better about not really understanding the bizarre nature of the economy that Emanuel, intimately familiar with the economy, also couldn’t really make sense of it. It seemed there were too many layers of corruption and back room deals to break it apart and analyze like you could a more developed country’s economic system.

It was a classic rentier economy (http://en.wikipedia.org/wiki/Rentier_state), in which the government controls resources and then allocates funds, as opposed to something like the US in which private individuals pay taxes on their income from private production to fund the services of the government. This difference might be clarified if you listen to this podcast from Planet Money about the difference between Egypt and Libya (Libya is a rentier state).

In any case, Emanuel gave the government credit since they were seeking help about how to diversify the economy, a task which he was not particularly optimistic about. With a tiny population and global competition fierce in typical developing country manufacturing niches, some of the few options he saw for the country were agribusiness and continuing production of other natural resources.

He gently put it that the rich in the country might have to get used to a less profligate way of life when the oil tap is turned off. A friend of his described Astana as Las Vegas without the fun and Abu Dhabi without the beaches. I could also tell that the less well off were still in a tough place; I was outright cheated on a restaurant bill that was more than doubled when the workers noticed I was a foreigner (I just left with paying the bit that I owed without objection), there was bribe attempt when I was registering my visa (which is free, you can find my journey to get Kazakh visa registration here), and prices in the supermarket were a good 30-50% higher than what you would find in the US (everything is imported because very little is produced in Kazakhstan).

Besides that, I had a great time hanging out and talking with Emanuel, but the rest of Astana was, well, just weird. I had a mildly journalistic impulse to learn more about the city, but also wanted to get out and go to the (supposedly) much nicer Almaty as soon as possible. I almost felt bad about leaving Emanuel since Astana had so little to offer, but was heartened to find out that his girlfriend, a French girl he met working at the World Bank, would be coming to stay with him in the summer.