07ASTANA3152, KAZAKHSTAN: KORZHOVA DISMISSED AS FINANCE MINISTER

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Reference ID Created Released Classification Origin
07ASTANA3152 2007-11-19 12:03 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO9900
RR RUEHDBU
DE RUEHTA #3152/01 3231203
ZNY CCCCC ZZH
R 191203Z NOV 07 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 1205
INFO RUCNCIS/CIS COLLECTIVE 0304

C O N F I D E N T I A L SECTION 01 OF 02 ASTANA 003152 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 11/16/2017 
TAGS: ECON EFIN EINV ETRD KZ PGOV PREL KCOR
SUBJECT: KAZAKHSTAN: KORZHOVA DISMISSED AS FINANCE MINISTER 
 
REF: A. ASTANA 3025 
     B. ASTANA 2823 
     C. ASTANA 2716 
 
Classified By: AMB. ORDWAY FOR REASONS 1.4 (B) AND (D) 
 
Summary 
------- 
 
1.  (C) Finance Minister Korzhova, whose departure had been 
rumored for several months, has been dismissed and replaced 
by Bolat Zhamishev.  Korzhova's tenure was a problematic one, 
with the Finance Ministry showing itself ineffective at 
dealing with a number of issues, including the recent customs 
crisis.  President Nazarbayev has placed the blame squarely 
on Korzhova for a wide range of Kazakhstan's recent economic 
challenges.  Zhamishev has a wide range of experience for his 
new job, including two past stints as Vice Minister of 
Finance.  His appointment may portend positive changes for 
the Finance Ministry.  End summary. 
 
Finance Ministry under Korzhova 
------------------------------- 
 
2.  (C) Finance Minister Natalya Korzhova was relieved of her 
duties on November 14 and replaced by Eurasian Development 
Bank Deputy Chairman Bolat Zhamishev.  Korzhova, who had been 
in charge of the Finance Ministry since January 2006, was 
recently viewed as increasingly vulnerable, and her departure 
had been rumored for several months.  The head of the Customs 
Brokers Association, Gennadiy Shestakov, recently told 
Econoff that Korzhova had played a key role in pushing 
through a Customs Code amendment that led to the recent 
customs shutdown for imports from the United States (ref B 
and C).  Korzhova, who repeatedly vowed to fight corruption 
when she became Minister, may have also been weakened by 
linking herself to this decidedly uphill battle.  Corruption 
remains a critical problem and is particularly associated 
with the customs authorities, who operate under the Finance 
Ministry's umbrella.  In dealing with Embassy Astana on the 
customs shutdown as well as on various taxation issues, the 
Finance Ministry under Korzhova often displayed institutional 
paralysis.  The Ministry proved largely unable to negotiate 
or make decisions due to a fear that legal solutions proposed 
by Finance would leave its officials vulnerable to 
prosecution by the General Procurator's Office. 
 
Korzhova Takes the Blame 
------------------------ 
 
3. (SBU) According to a KTK TV channel broadcast, President 
Nazarbayev roundly criticized Korzhova and her Ministry's 
performance at a Security Council meeting on November 15. 
Using some harsh words (roughly translated as "outrage" and 
"blockheadedness"), Nazarbayev blamed the Finance Ministry 
for the current slowdown in the construction sector, rising 
gasoline prices, and beer shortages in various regions of the 
country.  Nazarbayev also mentioned the "August crisis," an 
apparent reference to a brief dollar-buying panic which 
ensued as a result of the customs crisis (Refs A, B, C). 
Thus, Nazarbayev essentially blamed Korzhova for the wide 
range of economic challenges that Kazakhstan has faced as a 
result of the global financial turbulence (Ref A). 
Nazarbayev added that he is not expecting any additional 
Cabinet changes in the foreseeable future, and that it is up 
to the current ministers to solve the problems at hand. 
 
Zhamishev:  Wealth of Experience 
-------------------------------- 
 
4. (SBU) Bolat Zhamishev brings to the Finance Ministry a 
wealth of relevant experience.  The 50-year-old Zhamishev 
served two stints  as a Vice-Minister of Finance between 1999 
and 2002 and was chairman of the Financial Supervision Agency 
during 2004-06.  Zhamishev held working-level positions at 
the National Bank of Kazakhstan during 1993-97.  This period 
could be described as a formative one for the NBK, when it 
was led by such prominent individuals as Daulent Sembayev (a 
founding father of the Kazakhstani banking system) and his 
progressive proteges Oraz Zhandosov and Gregoriy Marchenko. 
It was then that the NBK started developing into a highly 
professional, effective and somewhat independent central bank 
it is today. 
 
Comment 
------- 
 
5.  (C) Nazarbayev's harsh criticism of Korzhova, along with 
his statement that no additional Cabinet reshuffling is to be 
expected, implies that she may be taking the fall for the 
current economic challenges, some of which (particularly the 
construction sector slowdown and rising gasoline problems) 
have primarily external causes.  Her departure and 
 
ASTANA 00003152  002 OF 002 
 
 
Zhamishev's arrival may portend positive changes in a rather 
sclerotic ministry that oversees several key functions, 
including taxation and customs.  Zhamishev, whose resume 
appears to be that of a classic 'technocrat' (and who is not 
known to belong to a political party), may be just what the 
Ministry needs.  His appointment may also be welcome news for 
the banking sector, which was recently subjected to some &#x000A
;harsh remarks from Korzhova and to increasing inspections by 
her Ministry.  It is unclear, however, to what extent 
Zhamishev will be able to overcome the political and 
institutional burdens that plagued his predecessor, including 
fears stemming from aggressive oversight by the General 
Procurator's Office. 
Ordway

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