2022 started with crisis and violence for Kazakhstan: from January 2nd, hard riots are inflaming the streets and are being sedated in the blood by Kazakh soldiers and Russian contingents, for a total of over 160 deaths and more than 2000 injured civilians, beside over 8000 arrests. In a Country rich in resources but full of poor citizens, that has been the symbol of stability in the Middle-East but also immobilized in a semi-autocratic regime until now, the crisis surely shows a deep socioeconomic wound, worsened by the economic corruption of the government. However, the spark that ignited the protests was the raise in fuel and energy prices, and apparently the most well known cryptocurrency, Bitcoin, also played a role. But what’s the link between the most famous digital currency and Kazakhstan’s deaths and protests?
In this first article about this subject, we will consider the political and economic situation in Kazakhstan in general and then we’ll dive into the causes and the events related to the recent protests. In doing so, it will then be easier to understand, in the next article, why cryptocurrencies play a role in the situation and why the kazakh events might be part of a larger tendency of the digital currencies’s market and how it has more than tangible consequences on the involved populations.
What is Kazakhstan?
Kazakhstan is the most stable Country in Western Asia - or the most static one - from a political point of view: the nation has been governed by the caste of Nursultan Nazarbayev, former secretary of the Kazakh Communist Party, that managed to build a centralized political and economic power system, obtaining great profits both for his clan and himself after the dissolution of the Soviet Union. Kazakhstan is a huge Country, as big as the whole Eastern Europe, and it is rich in natural resources, which led it to become the biggest world exporter of uranium and one of the biggest exporters of oil and natural gas (not to mention its gold mines). However, the majority of its 20 million citizens lives in poverty because Nazarbayev installed what can actually be defined as a kleptocracy, taking advantage of the enormous resources of the Asiatic State in order to obtain great riches for his allies and himself, with offshore assets in the Virgin Islands and in Europe, at the expenses of the Country’s population and growth.
Furthermore, the scarcity of infrastructures on the territory makes road transport the only way of moving goods and people and the price of fuel a crucial element of the living standard of the population. Therefore, it is clear that the social discontent was just waiting to be ignited by a spark in the richest Country in the region, where the average wage - about 550 euro per month - does not reflect the pharaonic lifestyle of the ruling class.
What triggered the protests?
In a Country with no opposition, the government's decisions often don’t reflect the actual needs of the population and it is not the first time that Nur-Sultan’s economic politics inflame the streets. In particular, during the Spring of 2016, a wide privatization of land property and a 85% devaluation of tenge compared to dollars led to street insurrections. This led Nazarbayev to step back and carry out a political change in 2019, making way for Qaasym-Jomart Tokayev, who already had a managerial role in the national security council. However, despite the moves to detach himself from the previous executive branch and to try calming the crowd by dismantling the government, it doesn’t seem that a true breakthrough in the Kazakh regime occurred, with Nazarbayev who is still seen as a “shadow president” by protesters.
This time, what initially started the protests in the North of the Country was the decontrol of the prices of LPG, a measure that the government took in order to face a never seen before crisis of the energetic offer in the Country, which caused the fuel’s prices to double in just a few days. This, paired with the rising prices of electricity and energy, had repercussions on all the consumer prices. While the riot was caused by the rising prices, as it often occurs in similar cases, its payload quickly grew, regarding the dormant intolerance for endemic long-lasting corruption of the ruling class, the unfair use of natural resources, the huge economic disparities and the widespread poverty.
The government’s response soon followed, with President Tokayev ordering both the police and the army to “shoot to kill without warning" and asking Russia and its other allies for help. Fearing for the instability of a territory that is fundamental for the economy of the whole area, they quickly sent their armies. The threat of a power vacuum in Kazakhstan, which shares 7.000 km of its borders and a close partnership with Russia, frightens the Kremlin. This is also due to the fact that a legitimacy crisis in the last Country still ruled by a sovietic-deriving leadership may cause uprisings in other Central Asian republics, on which Russia has a great influence.
The protesters want better life standards and systemic reforms of the political and economic systems, but their efforts are uncoordinated and they don’t have appointed leaders or solid alternatives to suggest. Apparently, the riots didn’t have any results, apart from the great number of dead and wounded. However, there is a side of the story that might be part of a larger tendency concerning new digital tools of decentralized finance, that is cryptocurrency. In fact, the mining of Bitcoin might be the main reason why a Country so rich in oil and natural gas suddenly found itself without supply and was forced to import fuel from abroad at a high price.
Translated by Immacolata Balestrieri