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Social Unrest Growing In Kazakhstan As Oil Prices, Currency War Batter Economy
Following last night's collapse in the Kazakhstan Tenge:
- *KAZAKH TENGE WEAKENS 4.4% VS USD ON INTERBANK MARKET TO 196.96
We thought it worth looking at yet another Eurasian nation at the mercy of the oil and currency wars...
Submitted by Eurasianet via OilPrice.com,
Sinking oil prices are putting the brakes on Kazakhstan’s once-soaring economy, forcing layoffs in the all-important energy sector.
With memories of the months-long strike in the western town of Zhanaozen that culminated in a bloody crackdown in 2011 still fresh in the memory, the government has put measures in place to prevent the seeds of industrial unrest.
As the global benchmark for oil was plunging below $50 per barrel last week, Sino-Kazakhstani drilling company Velikaya Stena (Great Wall) announced a raft of layoffs. A company official contacted by EurasiaNet.org on August 12 confirmed that 203 staff had been fired and that another 200 layoffs are expected in the fall.
Velikaya Stena, which is based in the western oil-hub city of Aktobe, is only one of many feeling the squeeze from the low price for oil, which accounts for a quarter of Kazakhstan’s economy and 60 percent of its balance of payments.
“Low oil prices have hit profits at Kazakh producers,” Alex Nice, Kazakhstan analyst at the London-based Economist Intelligence Unit, told EurasiaNet.org. “They have also struggled because, unlike the Russian central bank, the Kazakh National Bank has held the currency relatively steady against the dollar since February last year. As a result, labor costs for commodity producers have remained high in dollar terms.”
The scale of the revenue squeeze in the oil sector was demonstrated last month when the National Bank was compelled to step in and prop up Kazakhstan’s cash-strapped oil giant, KazMunayGaz.
The layoffs in Aktobe have heightened the mood of despondency in the energy sector, a source at CNPC-AktobeMunayGaz, a Sino-Kazakhstani joint venture between the two countries’ state energy companies, told EurasiaNet.org on condition of anonymity. “The mood is very low, because people don’t want to lose their jobs,” the source at the Aktobe-based firm said.
A distressed oil worker quoted in a report on the layoffs was indicative of a high sense of concern among those who still have jobs at Velikaya Stena, which has cut salaries by half in a cost-cutting measure to compensate for falling revenues. “I’m the only breadwinner in the family,” Kanay Borekeshov told the Moy Gorod regional news website. “I have four children. … The money we get is barely enough for us. And if they cut the salary and then leave us without work at all, we will be finished.”
“We currently have only seven teams working out of 24,” lamented Arman Kamalov, Velikaya Stena’s deputy director, in remarks quoted by Moy Gorod. “Work is drying up.”
The experience of Zhanaozen has taught authorities the value of more efficient negotiation. Since those events, the government has pressured oil companies to come to terms with strikers on the rare occasions that industrial action occurs. A strike in May at a company servicing the massive Karachaganak field in northwestern Kazakhstan was swiftly ended with a pay offer.
But Astana is showing that it is still ready to wield the stick.
Last year, parliament adopted legislation placing severe restrictions on independent trade union activity and criminalizing any action deemed to provoke an illegal strike.
Trade unions are also bristling over the drafting of a new labor code. In a statement on July 23, the Federation of Trade Unions of Kazakhstan condemned the pending legislation, which is intended to revise rules on numerous points, including contract termination and salary. “The new draft of the Labor Code strengthens the position of the employer at the expense of workers’ rights,” the statement said. “Adoption of the Labor Code will create the conditions for increased social tension in labor collectives and even across entire industries.”
While oil workers are alarmed by the impact of low prices on their employers, the CNPC-AktobeMunayGaz source told EurasiaNet.org there is little appetite for striking. “People are dissatisfied, but they understand that oil prices are low so they are treating [cost-cutting measures] with understanding.”
Over the near term, analysts believe Kazakhstan’s oil companies can weather the storm. “Currently, there is no reason to expect mass dismissals as the crisis is just emerging,” Kassymkhan Kapparov, director of the National Bureau for Economic Research, told EurasiaNet.org.
It all seemed so much brighter only two years ago. Astana was counting on a massive boost in output with the launch of the super-giant Kashagan field. Delays there now mean it will not start pumping oil, as well as generating revenue for the treasury, until 2017.
The government says oil output will be flat this year, at 80 million metric tons, while OPEC forecasts that Kazakhstan’s production will actually fall slightly in 2015. Kazakhstan’s budget is based on an oil price of $50 per barrel, so any sustained fall below that level will put pressure on government spending.
Officials are already dipping into the country’s National Fund – a pool of accumulated energy revenue set aside for a rainy day – to breathe life into the flagging economy, which Astana forecasts will grow at just 1.5 percent this year.
“Low commodity prices are likely to have a significant impact on Kazakhstan’s economy,” said Nice. “[Gross domestic product] growth is likely to slow to 1-2 percent this year, down from 4.3 percent in 2014.”
“The government has responded with an infrastructure program to offset weak investment, but it is cutting back spending in other areas,” he said. “If commodity prices and exports also remain weak in the coming years, it’s hard to see where the drivers of growth will come from.”
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How long before Kazakhstan turns to Putin? Or monetizes Borat?
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What happened to the Chinese fear porn?
Pravda Zero Hedge (PZH).
Do you dispute these events are taking place? If you do will you please share with us where you get your 'news'?
Bankers are spreading shit money around the world fostering this chaos.
Even in the US in MO and MD.
And Zero says it's all organic.
Shame on you.
Is there a single currency, any currency, that isn't weakening against the USD?
As I have said in many posts, the US, by design, has become survivor island for the investor class.
But that isn't sustainable without using force to destabilize other nations.
And blow up Chinese shit in China with a DE weapon.
It's not safe in the US anymore when the entire world wants to hurt you.
And you'll give up your freedom for security.
All by design.
The government will feed and entertain you.
Just shut up and do what you're told.
Until there is no difference between the US and China.
Fool me once, shambers on me, fool me twice, shambers on you.
Bankers? It is the desire to go into debt that gives them power.
These FED minutes coming out will be designed to sink the dollar. If not, we have global contagion starting. I believe the Chinese knew this and lowered the Yuan ahead of time to balance it. If this is right the JPY carry traders are the next suckers in line for a world of hurt.
These minutes coming out weren't written at the meeting they were decided yesterday and the day before.
China acted to get ahead of something. So you could be right. In any case, global currency wars are on. By the way, Russia has had a devaluation forced on it, and a recovery, and more devaluation. The west has crowed about this, but in fact, Russia has gained some advantages by the devaluation. For one, their budget is in rubles, and is sound. Import prices soared, hurting the rich, while most people enjoy the new job prospects as domestic replacement is now in full bloom. Both in food and consumer goods. Forcing Russia off of the petro rubel was a good thing, as no economy should rely of energy exports alone.
It's possible it's not in the minutes. But then some Fed will be out on Dow Jones news to hint at QE4. They have no choice. They have to do this.
I believe in this case that it's actually more likely the minutes will hint at something and also some Fed will be trotted out in a few days. The confidence is almost gone and they need the two-fer. The same news played twice for the home gamers. Doubling the effect of the dollar loss.
One of the big mistakes I see is the lack of the CBs saying gold has any value at all. Sinking gold is deflation as all the CBs own it.
It's also totally possible I have this completely wrong and the Fed seals our fate going into depression (which we are technically already there and have been there).
But I'm deciding on the suicide mission. Shorted USD against RUB. God help me. 66.3917 position, no stop don't care anymore lol.
Market has been moving up since 12 what do the banks know, why would the Fed be pre-pumping buying futures? It's the set up to get the most for the money, at least I think. Also gold is up. When does that happen?
Let's Rock or die. Or destabilze Russia, Asia Eastern Europe; yeah go for it Fed.
Annouce the QE4 because these are not the driods you're looking for.
Buy on the rumor, sell on the news.
It looks like Forex already knows. It's kinda like when everyone finds the Big W together at the same time as Mad, Mad, World.
Early release of the minutes HELLO $ ZERO. DESPARATE!
Good call, not quite a call for QE4 but definitely leaned towards no rate hike in Sept, not like they were going to anyway.
The carnage should occur over the next few days. How much $ does China, Euro others want? Look at the cooked CBs, they might have to buy some to protect themselves or they will let someone else take the fall. BOJ and ECB could buy but this is not the purpose. The system is letting loose, it's clearly visible in the commodities. It does appear that CBs are not allow to buy gold futures, silver futures, corn, oil, copper. Basics are really oil, copper and corn. The metals are down quite a bit but they wanted it that way because they told you they have no value, but yet they own them.
This will take some time. Next comes QE4.
Things can't get fixed until rates go negative, the rich lose a lot of their wealth and the negative rates unwind the debt. It's either that or hyperinflation (which is every country is printing; won't happen)
An ethnic divide exists in parts of the country. That will surely now be used to the full by you know who!
You stop it by killing its funding.
And the western bankers funding the ngo's.
Unrest would be growing in the land of the free save for fluoride in the drinking water, massive doses of mind-numbing TeeVee, infinite domestic spying by the NSA, most people in prison of any country, and a brutal police force that kills at the rate of 70 times that of other first-world countries.
The Use Of Flouridation For Mass Mind Control
http://www.rense.com/general79/hd3.htm
Police in the US Kill Citizens at Over 70 Times the Rate of Other First-World Nationshttp://www.globalresearch.ca/police-in-the-us-kill-citizens-at-over-70-t...
Officials are already dipping into the country’s National Fund – a pool of accumulated energy revenue set aside for a rainy day –
they saved some? holy fuck you gotta be shitting me.
Buzz, totally agree. Most notable thing in this report.
Has Nuland been there recently?
Has Nuland been there recently?
That group of apes are annoying me.
Yes, and she has done a major tour of all the Balkan states. Desruction rises from her shadow.
Venezuela - 99 tons.
Ukraine - 33 tons.
Kazakhstan? 205 tons.
"Ukraine - 33 tones"
That probably disappeared long ago, carried off in one of the C130s that have been flying regularly into Kiev and other major Ukrainian airports. The IMF doesn't give money away fo nothing, and Ukraine seems to have an endless suply from the IMF, even though there is zero chance of it being paid back and the country is in the midst of a war (both supossedly big no-noes for IMF lending).
One example of a growing contagin comming to your place soon.
Kazakhstan has to be the most corrupt place I have ever lived in. Everybody takes their 10%, so when the notoriously corrupt Government issues contracts for Government projects, the money has disappeared before the first brick is laid.
It's obvious that with the average salary being around $800 - $1,000 a month, that the owners of brand new Land Rovers are financing them illegally.
So maybe if those demanding bribes in the oil industry, police and other offical departments suspended their bribary activity, just maybe the oil companies could turn a massive profit this year and the workers jobs would be safe.
Would like to hear more about life in Kazakhstan. I met some khazaks in Ulaan Baatar. Fascinating people, in terms of endurance / living off the land.
Marginal cost of oil production in Kazakistan stands at USD 16, so production is still profitable. Furthermore Kazakhistan has transfered parts of its oil revenues in a state fund that can be tapped now.
Looks like Borat would be banned here based on his antisemite views. about 1 minute or so in video. Not a tribe lover
https://www.youtube.com/watch?v=q2l0nu6m2cw
Sacha Baron Cohen, in tribe form at its worst, promised a poor village monetary support in exchange for appearing on video.
He reneged on his end of the bargain and lied about the nature of his movie, Borat.
There, fixed it for MSM publication.