(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

LONDON  - In the midst of chaos lies opportunity. Profit-hungry investors will have the Sun Tzu aphorism in mind as Kazakh President Kassym-Jomart Tokayev cements his grip on power after an uprising that almost cost him his job. Billionaires deemed close to predecessor Nursultan Nazarbayev are easy targets for more aggressive state revenue-raising. In time, that may give foreigners a look-in.

International investors have so far had a rough ride in the Central Asian nation, dominated by the Nazarbayev family since independence from the Soviet Union three decades ago. Problems like a long profit-sharing dispute between the state and oil majors in the Karachaganak oil field serve as a warning. Mooted privatisations of companies like national carrier Air Astana and telecoms group Kazakhtelecom also failed to materialise. The one major initial public offering, of $9 billion Kazatomprom in London, omitted some of the uranium miner’s key assets.

In his two years in power, Tokayev has hardly cast himself as an economic reformer. But the threat of more unrest will keep the former diplomat on his toes. Given that the initial spark for the protests was the scrapping of a fuel subsidy, his quest for legitimacy thus lies in at least trying to boost living standards by raising more revenue.

Hemming in those who made fortunes under Nazarbayev is thus the obvious step politically and fiscally. Imposing higher taxes, as Tokayev hinted on Tuesday he might do, on tycoons invested in miners like Kazakhmys and ERG, the successor of disgraced miner ENRC, or Kazzinc, which is majority owned by London-listed Glencore, could kill another bird if it pushed them into selling down their stakes.

There’s no obvious clique of businessmen that Tokayev might want as replacements. That’s a potential opportunity for multinationals – assuming the state becomes an interim custodian of the tycoons’ former stakes, it may at some point need to sell them on. That said, Tokayev has no reason to rush his shakeup. Go too fast or too hard and he risks dangerous pushback from Nazarbayev loyalists. A controlled squeeze that gradually brings foreigners on board is his best chance of success.

 

CONTEXT NEWS

- Kazakh President Kassym-Jomart Tokayev ordered his government on Jan. 11 to extract greater tax revenue from the mining sector, which he said was profiting from higher metals prices.

- “In exchange we can provide large incentives for the exploration and development of new deposits for large mining and other companies,” he said, without providing further details.

- Tokayev also said Russian troops deployed to help quell nationwide unrest would start leaving this week. Protests were initially sparked by higher fuel costs, but snowballed into violence and looting that resulted in at least 164 deaths and nearly 10,000 arrests.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Ed Cropley and Oliver Taslic) ((For previous columns by the author, Reuters customers can click on AFANA/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe |dasha.afanasieva@thomsonreuters.com; Reuters Messaging: dasha.afanasieva.thomsonreuters.com@reuters.net))