Kazakhstan’s green economy: Greenbacks for the Nazarbayevs?

Companies close to the for­mer pres­i­dent enjoy a monop­oly on lucra­tive recy­cling fees.

Right around the time that Kazakhstan set out its stall as an aspir­ing play­er in the glob­al green econ­o­my, the youngest daugh­ter of the pres­i­dent began evinc­ing an inter­est in the environment.

Aliya Nazarbayeva’s first pub­lic for­ay into the sub­ject arrived in 2012 with her half-hour doc­u­men­tary, Awakening, which warned of the dan­gers of pri­or­i­tiz­ing eco­nom­ic growth over eco­log­i­cal balance.

Her appar­ent involve­ment in green ini­tia­tives since then has been more lucrative. 

And the results are being felt by hard-up motorists. Recycling fees col­lect­ed by a monop­o­lis­tic com­pa­ny enjoy­ing close busi­ness ties to Nazarbayeva have helped dri­ve up the price of cars on the local mar­ket to among the high­est in the for­mer Soviet region.

Good ROP, bad ROP

Kazakhstan copied its inter­na­tion­al peers in most respects when it came to adopt­ing what is known as an Extended Producer Responsibility pol­i­cy. The idea is that pro­duc­ers or importers of cer­tain goods pay a fee in advance for that item’s even­tu­al disposal.

The sys­tem for the recy­cling fee was devel­oped in 2015 and the tax on vehi­cles and vehi­cle com­po­nents duly came into force the fol­low­ing year.

The con­tract for col­lect­ing those fees was secured by a pri­vate enti­ty by the name of Operator ROP. Levies per vehi­cle can vary any­where between $1,000 and $9,000. That is a puni­tive range for a coun­try where nom­i­nal month­ly salaries stand at around $520 and dozens of times high­er than in Europe.

Operator ROP appeared out of nowhere in 2015. According to offi­cial doc­u­ments, its own­ers are a woman called Shnar Muktarova – who has no pub­lic pro­file – and anoth­er com­pa­ny, Eco Waste Solutions.

Eco Waste Solutions is in turn reg­is­tered to that same mys­te­ri­ous Muktarova and lists its legal address as being on the same premis­es of the Luxor Wellness Club, a high-end spa that was one of Nazarbayeva’s first pet projects.

The thread link­ing Operator ROP to Nazarbayeva is hard to detect, but there are strong­ly sug­ges­tive cir­cum­stan­tial clues. Her name appears, for exam­ple, on the reg­is­tra­tion doc­u­ments of Green Future Management. That com­pa­ny co-owns anoth­er firm called Autorecycling, which is one of only two in Kazakhstan licensed to recy­cle vehicles. 

Autorecycling pre­pares the cars for recy­cling by strip­ping them down and remov­ing haz­ardous com­po­nents. According to a report on the process by busi­ness new web­site Kursiv.kz, Operator ROP pays Autorecycling about $44 per car for this job.

The sec­ond com­pa­ny, RecyclingCompany, oper­ates a Karaganda-based plant that does the larg­er part of the strip-down job. It is owned by anoth­er female entre­pre­neur, Meruert Makhadi. 

Makhadi, like Muktarova, has a van­ish­ing­ly insignif­i­cant pub­lic pro­file, but she is linked via busi­ness ties to Nazarbayeva. A pub­lic reg­istry lists com­pa­nies ulti­mate­ly con­trolled by Makhadi and Nazarbayeva – Kazrecycleservice and Clean City NC, respec­tive­ly – as the co-own­ers of a com­pa­ny called Eko Polygon Astani.

This com­pa­ny, which spe­cial­izes in waste dis­pos­al, has earned around $2 mil­lion in state con­tracts since 2018. The capital’s waste man­age­ment ser­vice is among its notable clients.

Aliya Nazarbayeva (aeok.kz)

Nazarbayeva did not respond to requests for com­ment sent to the Association of Ecological Organizations of Kazakhstan, which she chairs. But any sug­ges­tion she prof­its off her prox­im­i­ty to pow­er would be famil­iar in Kazakhstan. Several of the chil­dren of for­mer pres­i­dent Nursultan Nazarbayev, who stepped down in 2019 after three decades run­ning the ener­gy-rich coun­try, enjoy promi­nent pub­lic roles and fab­u­lous wealth. Aliya’s sis­ter Dariga, a for­mer Senate speak­er, was forced by a British court last year to dis­close how she acquired $99 mil­lion worth of London prop­er­ty. A few months lat­er, the Financial Times alleged that their broth­er-in-law, bil­lion­aire Timur Kulibayev, siphoned tens of mil­lions of dol­lars off a pipeline project while man­ag­ing Kazakhstan’s sov­er­eign wealth fund. 

Lucrative waste 

Kazakhstan’s envi­ron­men­tal ini­tia­tives were osten­si­bly adopt­ed with every good inten­tion, but dri­vers are unimpressed. 

Prices for new cars have surged, a fact that may account in no small part for the rise in pop­u­lar­i­ty of cheap, smoke-belch­ing clunkers. 

And then in 2019, Operator ROP’s man­date was expand­ed to include col­lect­ing recy­cling fees for agri­cul­tur­al machin­ery. Farmers com­plain that this effec­tive­ly undid sub­si­dies intend­ed to revive har­vests and have warned that a knock-on effect on food prices is inescapable.

The per­son­al­i­ty of Nazarbayeva com­pli­cates things con­sid­er­ably. Net Utilsboru, a Facebook group that has become a hub of oppo­si­tion to the dis­pos­al fees, explic­it­ly pro­hibits mem­bers from pub­lish­ing posts focused on Nazarbayeva. Administrators told Eurasianet on con­di­tion of anonymi­ty that they were con­cerned that politi­ciza­tion of the top­ic could dis­tract from prac­ti­cal discussions. 

One key objec­tive pur­sued by crit­ics of the recy­cling fee is for it to be rad­i­cal­ly trimmed. In eco-mind­ed nations like the Netherlands, where recy­cling fees are also col­lect­ed at point of sale, the fee is 30 euros ($36) for all new cars – a tiny frac­tion of what Kazakhstan levies.

According to price mon­i­tor­ing car­ried out by Net Utilsboru, the costs of the most pop­u­lar car mod­els in Kazakhstan have spiked by 40 per­cent in dol­lar terms – and by 85 per­cent in the deval­u­a­tion-prone tenge – since the end of 2015. Price surges have affect­ed imports and local­ly assem­bled mod­els alike.

So far, the group’s efforts have been in vain. A peti­tion against the fees that Net Utilsboru admin­is­tra­tors post­ed on a local web­site last month quick­ly reached 40,000 sig­na­tures, only for the web­site itself to sud­den­ly dis­ap­pear offline. The site’s man­agers sug­gest­ed a dis­trib­uted denial-of-ser­vice (DDoS) attack was to blame. 

Trash talk­ing

Operator ROP has a com­bat­ive pub­lic defend­er in its chair­man, Medet Kurmagaliyev. 

In a recent inter­view with Baige News web­site, Kurmagaliyev bris­tled at the idea that the com­pa­ny was prof­i­teer­ing. ROP was best thought of as an infra­struc­ture devel­op­ment insti­tu­tion with an envi­ron­men­tal mis­sion, he argued. 

The high fees helped ROP sub­si­dize oth­er types of recy­cling, such as plas­tics, which are not sys­tem­at­i­cal­ly recy­cled in Kazakhstan, he claimed.

When prompt­ed by his inter­view­er to pro­vide a break­down of how the com­pa­ny rein­vest­ed the approx­i­mate­ly 58 bil­lion tenge ($135 mil­lion) that it claimed it took in from the fees last year, how­ev­er, Kurmagaliyev was skimpy on specifics.

A fight­back has also come from the state pro­pa­gan­da-coor­di­na­tion arm, the Information Ministry. Late last year, the min­istry pub­lished a state­ment cast­ing online oppo­si­tion to recy­cling fees as an attempt to manip­u­late pub­lic opinion.

Since the fees were intro­duced, it said, the num­ber of domes­ti­cal­ly assem­bled cars has risen sev­en-fold. The min­istry also claimed that ditch­ing the fees would actu­al­ly make cars more expen­sive, although it made lit­tle effort to sub­stan­ti­ate this argument.

If the gov­ern­ment looks prick­ly on this sub­ject, it is because it knows that pas­sions can run high.

In 2019, farm­ers staged an unusu­al­ly mil­i­tant trac­tor protest against plans to slap recy­cling fees on their machin­ery. Sector lob­by groups pep­pered par­lia­ment and the president’s office with let­ters of com­plaint. That notwith­stand­ing, the gov­ern­ment pushed ahead and by the end of the year, it approved the expan­sion of ROP’s man­date to include equip­ment like trac­tors and com­bine harvesters.

Yevgeni Mukhamedjanov, a cham­pi­on of greater trans­paren­cy in the recy­cling busi­ness who heads a start­up called EcoNetwork, is sym­pa­thet­ic to the pub­lic discontent. 

While Operator ROP reg­u­lar­ly pub­lish­es fig­ures on its web­site about the quan­ti­ties of goods recy­cled under its sys­tem, these are “impos­si­ble to check,” Mukhamedjanov said.

Most damn­ing­ly, he not­ed, in the more than five years that Operator ROP has exist­ed, Kazakhstan has still not cre­at­ed a nation­al sys­tem for recy­cling agri­cul­tur­al and house­hold waste. Landfills con­tin­ue to pose envi­ron­men­tal hazards.

As if to con­firm that point, the ecol­o­gy min­is­ter said on June 14 that the vol­ume of sol­id domes­tic waste on unau­tho­rized land­fills in Kazakhstan had reached 125 mil­lion tons.

Seen in this per­spec­tive, nods to the envi­ron­ment look to be in poor faith, Mukhamedjanov said.

In Kazakhstan’s green econ­o­my, “the right peo­ple get busi­ness­es cre­at­ed for them and force oth­er busi­ness­es to finance them,” Mukhamedjanov told Eurasianet.

Chris Rickleton is a jour­nal­ist based in Almaty.


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