U.S. Department of State

Annex A: Assessments of Progress in Meeting the Standards of Section 498A of the Foreign Assistance Act of 1961

KAZAKHSTAN

Kazakhstan has expressed a commitment to the protection of human rights, democracy and the rule of law. However, the Constitution concentrates power in the presidency, granting the President considerable control over the legislature, judiciary, and local government. President Nursultan Nazarbayev has been his nation's only leader since the break-up of the Soviet Union. He was elected to a new seven-year term in a flawed 1999 election. He extended his previous term in office via a deeply flawed 1995 referendum without a contested presidential election (which, according to the Constitution then in force, should have been held in 1996). A law passed in 2000 allows President Nazarbayev, as the country's first President, to maintain certain policy prerogatives and a seat on the Security Council after he leaves office.

The 1999 Presidential election was held nearly two years earlier than previously scheduled. The Government used a restrictive electoral law to limit the field of serious candidates, based on convictions for political offenses. Candidates received unequal access to the media, and there were numerous instances of intimidation of voters and the opposition prior to the election. The Organization on Security and Cooperation in Europe (OSCE) determined that the process in this referendum fell far short of its standards for open, free, and fair elections.

Although an improvement in many ways over the 1999 presidential election, the 1999 Parliamentary elections were marred by election law deficiencies, executive branch interference in the electoral process, and a lack of government openness about vote tabulations. There was convincing evidence of government manipulation of results in some cases. The OSCE mission sent to observe the elections concluded that the elections were "a tentative step toward democracy" but "fell short of [Kazakhstan's] OSCE commitments."

The Government has engaged in a four-year process to produce new electoral legislation as a basis to hold free and fair elections. That process included a series of broadly inclusive roundtable discussions under OSCE guidance; discussions within the Permanent Council on Democratization (PDS), a non-exclusive body created by the Government in late 2002 to discuss and debate the full range of political issues; intensive technical cooperation throughout 2003 between the Government and the OSCE Office for Democratic Institutions and Human Rights (ODIHR); and wide publication in July 2003 of the Government's first draft of a new election law. President Nazarbayev made a rhetorical commitment to free and fair elections during a speech to the nation in April 2003.

Parliamentary by-elections (for three seats) held in December 2002 and local elections held in September 2003 saw serious irregularities that showed again the inadequacy of current electoral legislation, and increased the urgency of calls from across the political spectrum to adopt a new law, in line with international standards. The Government submitted its draft law to Parliament in late November 2003. ODIHR's assessment of the draft proposal determined that it was not OSCE-compliant. Parliament has taken no formal action on the draft as of the end of the year, though numerous MPs proposed constructive improvements to it throughout working group sessions in December and January. Parliament has scheduled its first reading of the draft for late January 2004.

The independent media and civil society organizations have been subjected to intimidation and remain under pressure from the Government. Media that are critical of the Government often are the subject of lawsuits or other forms of harassment, leading some journalists to practice self-censorship.

In Kazakhstan, the executive branch dominates political institutions and the Parliament. The President has the power to appoint local governors and the cabinet. Currently, the Parliament cannot initiate changes to the Constitution or allocate funds without the approval of the executive branch. It has tended to toe the Executive's line. However, Members of Parliament (MPs) have been displaying more independence. For example, in 2003 MPs made several hundred changes to the Government's draft law on private land ownership. The Government reacted to the amended version Parliament passed by calling for a no-confidence vote. By a wide margin, the lower house voted to remove the Government; however, when the votes of the Senate - whose members are not popularly elected - were factored in, the vote failed. Nevertheless, the slim margin of victory prompted the Prime Minister to resign in June. Parliament also appeared to be increasingly responsive to NGOs and other key interest groups. A parliamentary working group made several hundred changes to a draft law on the media before passing that law in December 2003. Preliminary assessments of the original draft by international and domestic human rights groups had determined that the law would further restrict freedom of media. Parliament also played a role in the Government's decisions to withdraw two other pieces of controversial legislation, including a proposed Law on NGOs and a proposed Law on Importation of Nuclear Wastes. The Parliament has developed into a forum for policy debate, and has been marginally more assertive in taking actions independent of the executive branch. Some Members of Parliament are outspoken members of opposition political groups; many of them have spoken out on the issues most sensitive to the Government, or formally demanded answers to questions on those issues.

The court system's independence is compromised by constitutional, legislative and administrative arrangements that subjugate the judiciary to the executive branch. Executive branch control was modestly reduced after the process of transferring responsibility for the courts' administration from the Justice Ministry to the Supreme Court was completed in 2003. Dismissal decisions are made by presidential decree, except in cases of members of the Supreme Court, for whom a presidential proposal to dismiss must be confirmed by the Senate. Though still modest, judges' salaries have increased several times in recent years. There is no tradition of judicial independence. The constitution establishes the necessary procedures for a fair trial. Trials are public, defendants have the right to be present, the right to counsel, and the right to be heard in court and call witnesses for the defense. There is also a presumption of innocence and the right of appeal. However, a gap exists between these principles and actual practice. In 2002, the Government prosecuted two leaders of a prominent opposition political movement for abuse of power during their tenures as public officials. Although corruption is endemic in the Government, there were widespread charges that the timing of the arrests was politically motivated. Embassy observers at the trials noted that in both cases the prosecution failed to present evidence that the defendants had committed crimes, yet the judges sentenced them to six and seven years in prison, respectively. One of the two was released in May 2003 after appealing months earlier for a presidential pardon; he subsequently publicly announced he would not participate in further political activities. The second appealed for a presidential pardon in August 2003; the Government later announced that it was investigating bringing further additional criminal charges and suspended consideration of the pardon.

A new Law on Political Parties, enacted in July 2002, required all political parties to complete a re-registration process under new, much stricter criteria that did not meet OSCE/ODIHR standards. Only seven of the 19 parties registered at the time of the law's passage survived the re-registration process it mandated. Of the nine political parties registered as of December 2003, five are overtly pro-presidential, including the President's party, and a party headed by the President's eldest daughter. One reformist party and the Communist Party are the only ones that are consistently critical of the Government. The opposition Democratic Choice of Kazakhstan (DVK) was denied re-registration as a public association in 2003, but is still active and supports candidates who are listed as independent on ballots. DVK announced that it would seek to register as a political party in 2004. In 2003, the Republican People's Party of Kazakhstan (RNPK), which chose not to seek re-registration under the new political parties law, saw in 2003 its leader convicted of tax evasion, its party paper closed under the weight of multiple libel judgments, and the editor of the paper convicted separately of tax evasion.

Although Kazakhstan is politically stable, concerns remain that political authoritarianism and corruption undermine its ability to pursue broad and lasting democratic reforms. The Constitution and laws generally provide for basic freedoms; however, the Government restricts these in practice, and democratic institutions remain weak.

Section 498A(a)(2): "make significant progress in, and is committed to the comprehensive implementation of, economic reform based on market principles, private ownership, and integration into the world economy, including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."

Since its independence in 1991, Kazakhstan has taken major steps toward developing a market-based economy and, as a result, has attracted over $21 billion in gross foreign direct investment, over half of it in the oil and gas sectors. U.S. companies are the largest foreign investors. They alone invested almost $6.6 billion gross in Kazakhstan during this period. A bilateral investment treaty between the U.S. and Kazakhstan entered into force in January 1994. A bilateral trade agreement has been in force since 1993 providing reciprocal Normal Trade Relations (NTR). An OPIC agreement to make available investment insurance for American firms investing in Kazakhstan has been in force since 1992. Kazakhstan is compliant with the freedom of emigration provisions of the Jackson-Vanik amendment (subject to a semi-annual reporting requirement on its continued compliance with these provisions). A U.S.-Kazakhstan Treaty on the Avoidance of Double Taxation also is in force. Laws providing fair treatment for foreign investors are in place, although in practice they are not always fully implemented. The American Chamber of Commerce is active in Almaty and the U.S.-Kazakhstan Business Association was created in 1999 in Washington, D.C.

The bulk of Kazakhstan's economy is owned by private companies, including over 84% of small and medium enterprises. 68% of large firms are entirely or partially privatized (almost 50% are entirely privatized). Private companies produce 75% of GDP and dominate almost all economic sectors. Although the Government of Kazakhstan repeatedly has delayed the full privatization of several large enterprises, it has sold partial interests in many of these companies to private investors.

Kazakhstan's strong macroeconomic performance continued in 2003, with GDP growth expected to be 11.3% due to strong world prices for Kazakhstan's hydrocarbon exports, solid economic conditions among its primary trading partners, and continued prudent macroeconomic policies. According to the last available figures, the non-oil economy has also grown strongly at about 8% on average in 2000-02. Inflation, at 6.9%, has been in single digits for the last three years. The current account has a deficit of about 1.9% for 2003. After sharp declines during the 1990s, overall employment has grown since 2000. Unemployment declined to 9.25% in 2002, and real wages rose by about 10%.

In 2000 Kazakhstan established a National Fund to save oil and mineral revenues for future generations and to stabilize the macro economy from adverse external shocks, such as periods of low oil prices. As of January 2004 the Fund's assets exceeded $3 billion. Notwithstanding the sustained strong growth of the economy, poverty remains a serious concern, especially in rural areas. The rising oil wealth has yet to benefit significantly the majority of the population.

In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under the U.S. anti-dumping law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet Republic to repay all of its debt to the IMF in 2000, seven years ahead of schedule. In 2002, Kazakhstan's official sector became a net creditor to the rest of the world. Moody's upgraded its credit rating to minimum investment grade in September 2002. Economic growth in over the past three years, along with tax and financial sector reforms, has contributed to improved government finances. A new tax code, which represents continued progress toward establishment of a transparent and effective tax system, went into effect in January 2002. Kazakhstan also was able to reduce the Value Added Tax from 20 to 16 percent and reduce social (payroll) taxes in 2001. In 2002, the Government drafted a new Customs Code, to increase efficiency and transparency in trade transactions, and a new Land Code, which allows privatization of agricultural land.

Although the Government of Kazakhstan has taken many steps to create a more Western-style business environment, the momentum of structural reform has slowed since 2000. Local and foreign businesses must deal with frequently changing and unevenly implemented legislation, a poorly functioning court system, frequent regulatory and personnel changes, entrenched vested interests, the "capture" of important sectors, and a cumbersome and often corrupt bureaucracy. The IMF has criticized Kazakhstan's poor investment climate, particularly for small and medium-size domestic and foreign investors, outside the oil and financial sectors. Foreign companies encounter difficulties obtaining work permits for expatriate employees as the Kazakhstan Government has pressured foreign firms to boost local employment and use local inputs. More troubling were attempts by the Government to re-open contracts with foreign oil and gas companies, although President Nazarbayev has publicly stated that existing contracts will be honored.

The USG funds a successful program in support of small and medium enterprise growth and an improved policy and regulatory environment for SME growth under the U.S.-Kazakhstan Business Development Partnership, a Presidential initiative, formally launched in October 2002. Some key results under the first year of the partnership are disbursement of over 31,000 loans to small and medium businesses, $160 million increase in mortgage lending, 36 regional trade deals totaling over $14 million, and simplified procedures for obtaining land and building permits.

The World Bank, Asian Development Bank, and European Bank for Reconstruction and Development are all active in Kazakhstan. In 1993-2001, the World Bank had financed 15 projects in Kazakhstan and disbursed $1.14 billion for their implementation. The active World Bank portfolio in Kazakhstan comprises nine operations with total commitments of $566.2 million. The portfolio includes seven investment projects under implementation: 1) Road Transport Restructuring; 2) Atyrau Pilot Water Supply; 3) Agricultural Post-Privatization Assistance; 4) Uzen Oil Field Rehabilitation; 5) Irrigation and Drainage; 6) Electricity Rehabilitation; and 7) Syr Darya Control and Northern Aral Sea. Another investment project - Nura River Cleanup and the Global Environment Facility (GEF) grant for Drylands Management have been recently approved by the Board of Directors and are awaiting Parliament's ratification.

The EBRD primarily supports development of small and medium-sized enterprises (SMEs), transport and communications infrastructure, financial institutions and industrial enterprises. Since September of 1992, Kazakhstan has received $1.9 billion for 23 EBRD-funded projects. The ADB has provided technical assistance in 2002 in areas such as rural and agricultural development, road rehabilitation, promoting childhood development, and developing an energy strategy.

Kazakhstan applied for membership in the World Trade Organization (WTO) in 1996. In December 2002, Kazakhstan's WTO Accession Working Party met for the fifth time. Kazakhstan's initial disappointing offers on goods and services, and more recent slow progress on customs and taxation issues, have significantly slowed its accession process. The Government has stated that it would like to coordinate the pace of its WTO accession process with the members of the Eurasian Economic Community (EAEC) that have not yet joined the WTO (Russia, Belarus and Tajikistan).

The U.S. has provided technical assistance in Kazakhstan's accession process. Although the Government of Kazakhstan has shown a renewed focus on WTO accession, much work remains to be done in the negotiation process for Kazakhstan's goods access offers to meet its future WTO partners' expectations.

Kazakhstan has endeavored to strengthen protections for intellectual property. Kazakhstan joined the Bern Convention for the Protection of Literary and Artistic Works in 1999 and acceded to the Geneva Phonograms Convention in 2000. Kazakhstan has signed but has not yet ratified the 1997 WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. Current laws, however, do not provide clear retroactive protection to sound recordings as required by the Bern Convention and TRIPS Agreement. Nevertheless, the Government announced that in 2003 Kazakhstan intends to amend its Copyright Law to include additional provisions on retroactive protection of copyrights. Despite an increase in confiscations of pirated goods and the gradual growth of licensed dealers, enforcement remains the most serious obstacle to a sound IPR regime. The Government agency charged with IPR protection is under funded and the judicial system does not effectively prosecute IPR related cases. Public awareness of IPR issues is growing due to Government and private sector efforts and the Government is actively working to inform judges and police about their responsibility to enforce IPR protections. The Government of Kazakhstan has expressly asked U.S. Government for assistance in implementing a legislative reform program that will enable conformity with TRIPS and their removal from the 301 Watch List. Through USAID, the USG is preparing to provide such assistance under USAID's Trade Facilitation and Investment Project

Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

The Government's overall human rights record remained poor in 2003. Although there were some improvements in a few areas, serious problems remain. It diverged from its OSCE commitments and its respect for internationally recognized human rights primarily in the areas of freedom of speech and pluralistic political expression. The Government continued to improve in some areas, most notably respect for religious freedom and criminal justice reform. The Government won international praise for its efforts to promote religious tolerance. Nonetheless, the gap between law, including the Constitution, and actual practice undermines citizens' faith in public institutions and rule of law. President Nazarbayev acknowledged in an April 2003 speech that citizens' faith in the criminal justice system remained weak.

There were cases when members of the security forces beat or otherwise abused detainees. There were instances of arbitrary arrest, and of individuals held in prolonged detention without charge. Criminal actions taken against police for abusing detainees continued to increase and those convictions were increasingly publicized. However, human rights observers believed that the cases brought against police cover only a small fraction of the incidents, which they characterize as routine. Corruption in the judiciary remained pervasive, though the Government is currently preparing a draft law to institute jury trials. Other, notable criminal justice reforms continued. In December 2002, the Government lowered minimum criminal punishment requirements for dozens of crimes, which led in 2003 to a sharp drop in the prison population. Several prison facilities were rehabilitated during 2003 with government funds. The Government continues to actively participate in a program to implement international human rights standards in prisons. However, many have charged that abuses of prisoners began to increase, after years of decline, after the head of the prison system was replaced in July 2003. A reform-minded civilian was named in September 2003 as Interior Minister, the first time that position has not been filled from the military ranks. As a result, pre-trial detention facilities were rapidly moved in late 2003 from the control of the Interior Ministry; the Justice Ministry now oversees both prisons and pre-trial detention facilities.

The Government generally respects freedom of religion and most denominations worship without government interference. The environment for religious tolerance improved during the year after President Nazarbayev began an initiative called "Peace and Harmony" to encourage inter-faith and inter-ethnic dialogue. The initiative included two high-profile conferences - in February and September 2003 - which drew religious and secular dignitaries from around the world. Instances of local governments harassing Islamic and Christian groups whose members they regard as religious extremists were corrected by higher level officials or courts on several occasions in 2003. Representatives of Jehovah's Witnesses and some other non-traditional religions alleged incidents of harassment by local governments, though they acknowledged that such incidents fell markedly from previous years. Despite concerns about regional security threats from groups claiming a religious basis, the Government has refrained from imposing new legal restrictions on religious freedom. The Constitutional Council ruled restrictive draft amendments to the Religion Law unconstitutional in April 2002 and the Government has made no effort to introduce new amendments since.

The Constitution and the Media Law provide for freedom of speech and of the press; however, the effects remained in 2003 of what appeared to have been a coordinated campaign against the independent media in 2002. In 2002, the Government brought criminal and administrative charges against several independent media outlets, leading to suspension or closures of the most sharply critical ones. Also in 2002, some independent journalists were physically attacked and some outlets were the victims of vandalism. One independent journalist was arrested and charged with raping a minor. Legal experts commissioned by the OSCE Chairman-in-Office determined that his January 2003 trial suffered from serious procedural violations, that there was insufficient evidence for a conviction, and that the defense's theory of a government set-up had not been disproven. The journalist was granted parole in December. In 2003, the outlets most critical of the Government that remained were the continuing subjects of lawsuits, including several for libel, some of which were brought by government officials. As a consequence of these methods, most journalists practiced self-censorship; at least one left the country.

Amendments to the Media Law from 2001 imposed foreign rebroadcast and Kazakh language requirements, though no media outlets were sanctioned under these provisions in 2003, as some had been in 2002. Throughout 2003, there was wide public debate on further amendments to the Media Law. Parliament's lower house passed a version of the law in late December 2003 which many claim will give the Government more tools to temporarily suspend or close unfriendly media outlets. Despite the restrictive legislative environment, the Government continued to issue new licenses for various types of media and the overall number of media outlets increased, as it has for the past several years. The Government continues to own some major printing and distribution facilities and to enjoy influence over most of those owned privately. Publishing houses, which also are responsible legally for the information that they publish, were reluctant to publish anything that might contain "undesirable" stories. Both the Criminal and Civil Codes contain articles establishing broad libel liability. Some media nonetheless continue to regularly criticize the Government, and to report on controversial issues. .

The Government sporadically infringes on citizens' rights to privacy. Kazakhstan's authorities are believed to tap phones and monitor the correspondence of some members of the political opposition. Legislation covering prosecutors, passed in August 2002, expanded the legal authority of the Government to monitor individuals' activities. Freedom of association, while generally respected, is sometimes hindered by complicated registration requirements for organizations; the minimum membership for a political party was raised to 50,000 under legislation passed in July 2002. Freedom of assembly is restricted by requiring a permit to hold a demonstration or public meeting and groups must make requests for such permits at least ten days in advance. Authorities have at times refused to issue such permits or have detained demonstrators for not having one. Courts fined some organizers of unsanctioned demonstrations. Opposition activists have been denied permission to use rented facilities at the last minute, reportedly at the instruction of Kazakhstan's security officials.

The Constitution provides for the right to emigrate and the right of repatriation; both are respected in practice. Thus, since 1997, U.S. Presidents have determined that Kazakhstan is compliant with the freedom of emigration provisions of the Jackson-Vanik Amendment. In July 2001, the Government formally abolished the exit visa requirement for temporary travel of citizens. The Committee for National Security (KNB) - which oversees the Border Guards - has legal authority to deny permission to travel in and out of the country, but emigration is not hindered. Certain situations remain in which temporary or permanent exit from the country may be denied, including pending criminal or civil legal proceedings, unserved prison sentences, evasion of duty as determined by a court of law, presentation of false documentation, failure to document the continued support of dependents, or travel by active-duty military.

The Constitution states that, "everyone is equal before law and court. No one may be subjected to any discrimination for reasons of origin, social position, occupation, property status, sex, race, nationality, language, attitude to religion, convictions, place of residence, or any other circumstances." In September 2002, the Government created the position of Human Rights Ombudsman. Although it is an institutionally weak office, its authority is greater than that of the Presidential Human Rights Commission. The Ombudsman gave regular public briefings in 2003, though he rarely discussed controversial issues. Kazakh is the state language, although Russian retains official status and is widely used. Minority ethnic groups are represented in the Government, but ethnic Kazakhs hold the vast majority of leadership positions and their proportion in those positions has been increasing.

Traditional cultural practices limit the role women and disabled persons play in society. Women are limited in their ability to own and manage businesses or real property. The President and other members of Government speak often in support of women's rights and official state policy maintains that constitutional prohibitions on sex discrimination must be supported by effective government measures. Only one Government minister is a woman, although women also hold the chairmanships of the Central Election Commission and the Agency for Migration. There are laws mandating the provision of accessibility to public buildings and commercial establishments for the disabled; however, the Government does not enforce these laws and few accommodations exist in practice. The Government provides almost no care for the mentally ill and mentally retarded due to a lack of resources.

The Constitution and the Labor Code guarantee basic worker rights, including the right to organize, to bargain collectively, and to strike; however, the Government exercises considerable influence over the major trade union associations. The law provides mechanisms to protect workers who join trade unions from threats or harassment by enterprise management, though those mechanisms are rarely used.

Section 498A(a)(4): "respect international law and obligations and adhere to the Helsinki Final Act of the Conference on Security and Cooperation in Europe and the Charter of Paris, including the obligations to refrain from the threat or use of force and to settle disputes peacefully."

Kazakhstan has made a strong commitment to respect its international legal obligations and OSCE commitments to refrain from the threat or use of force and to settle disputes peaceably. Kazakhstan is at peace with its neighbors and has defensive military forces that do not pose an offensive threat to the region. Kazakhstan is also a strong proponent of dialogue and cooperation among the states of the former Soviet Union. Kazakhstan is an active member of NATO's Partnership for Peace.

Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."

Kazakhstan has been an active participant in coalition efforts to resolve the conflict in Afghanistan. Kazakhstan provided a one-time donation of wheat to help feed the people of Afghanistan during the conflict. Kazakhstan is committed to establishing a multi-ethnic national identity and is generally sensitive to the concerns of the large ethnic Russian community and the communities of the dozens of other nationalities that live in Kazakhstan.

Section 498A(a)(6): "implement responsible security policies, including—

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

Kazakhstan continues to be a strong partner in preventing the proliferation of nuclear, biological and chemical materials of concern. As a further sign of its commitment, in 2002 Kazakhstan became a member of the Nuclear Suppliers Group. When the USSR broke up, Kazakhstan was one of the four Soviet successor states with nuclear weapons on its soil and the second Soviet successor state to accede to the NPT as a non-nuclear weapon state, doing so in February 1994. All nuclear weapons were removed from its territory by the end of April 1995. In August 1995, Kazakhstan's safeguards agreement with the International Atomic Energy Agency entered into force. Following up on a conference on a Central Asian Nuclear Weapons Free Zone in September 1997, which it hosted, Kazakhstan participated in negotiations with its neighbors in the Fall, 2002, resulting in a proposed text of an agreement establishing such a zone. The text has been circulated to the five NPT nuclear weapons states, which have provided their views. It is a Party to the START Treaty and eliminated all strategic offensive arms on its territory under START well ahead of schedule. Kazakhstan also is a successor state party to the INF Treaty. It has been an active participant in the implementation of the START and Intermediate and Shorter Range Nuclear Forces (INF) treaties by virtue of its representation on their implementation commissions, the Joint Compliance and Implementation Commission (JCIC) and Special Verification Commission (SVC). Kazakhstan is also a signatory to the Comprehensive Test Ban Treaty.

Since 1994, Kazakhstan has been a member of the Moscow-based International Science and Technology Center (ISTC), a multilateral nonproliferation program redirecting former weapons of mass destruction scientists to peaceful activities. Efforts to engage former weapons scientists in Kazakhstan have expanded under the aegis of the State Department's Bio-Chem Redirect Program, working with the ISTC and emphasizing long-term sustainability for peaceful scientific endeavors. The Government is also committed to maintaining a military force consistent with legitimate defense requirements.

The Government of Kazakhstan has consistently stated that its policy is not to transfer conventional weapons to terrorist-list states, or to engage in the proliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technology. We are not aware that it has engaged in any transfers or proliferation of nuclear, biological, or chemical weapons, their delivery systems, or related technology.

However, the 1999 transfer of MiG-21 fighter aircraft from Kazakhstan to North Korea raised serious questions about the Government's controls on conventional military technology and its commitment to non-proliferation in this area. As a result of USG interaction with Kazakhstan on this matter, the Government provided extensive, concrete nonproliferation commitments and agreed to take specific steps to ensure that no such transfers occur in the future. In October 2002, Kazakhstan passed a new export control law, and U.S. export control cooperative efforts continue to work to prevent future transfers. The U.S. has also urged the Government of Kazakhstan to ensure that its missile-related policies and practices are consistent with international standards, and in particular, the Missile Technology Control Regime.

Kazakhstan became a State Party to the Chemical Weapons Convention (CWC) on April 22, 2000. While concerns remain, Kazakhstan has undertaken much progress in implementing its CWC commitments. The United States remains committed to working with the GOK to resolve outstanding CWC issues. Kazakhstan is actively reviewing whether to become a State Party to the Biological Weapons Convention and the U.S. has offered assistance to Kazakhstan in preparing accession documents and modifying Kazakhstan's domestic legislation to conform to BWC requirements.

Kazakhstan ratified the CFE Treaty on October 30, 1992. It ratified the CFE Flank Agreement on May 14, 1997. Kazakhstani representatives have participated actively in the CFE Joint Consultative Group, the body responsible for CFE implementation, as well as in the CFE adaptation negotiations completed in November 1999. Kazakhstan signed the CFE adaptation agreement at the November 1999 OSCE Summit in Istanbul. Finally, Kazakhstan has never declared CFE Treaty-Limited Equipment in the portion of its territory covered by the Treaty. It has provided annual notification that it has no TLE in the area of application in past years.

Kazakhstan is a participating State to the OSCE Vienna Document 1999 and its predecessor Vienna Document 1994. The Vienna Document is an OSCE regime of confidence and security building measures. Kazakhstan has submitted Confidence- and Security-Building Measures (CSBM) annual data declarations for the years 1995-2001 and has willingly undergone CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

The United States worked closely with Kazakhstan to dismantle nuclear weapons facilities at Semipalatinsk and in the destruction of nuclear delivery systems, including 147 SS-18 silo launchers and seven Bear G heavy strategic bombers. In 1994 the United States also cooperated with Kazakhstan to reduce the risk of proliferation by removing 600 kg of highly-enriched uranium from the Kazakhstani production facility at Ust Kamenogorsk in the "Project Sapphire" program. The United States has also cooperated with Kazakhstan to dismantle a biological weapons production facility at Stepnogorsk that took place in 2000. The Agreement for the Peaceful Uses of Nuclear Energy, signed by the United States and Kazakhstan in 1997 after Kazakhstan provided assurances of non-cooperation with proliferating states, entered into force in November 2000. After Kazakhstan voluntarily shut down the BN-350 nuclear reactor at Aktau two years ahead of schedule, the United States and Kazakhstan completed the packaging of the spent nuclear fuel from the reactor on June 18, 2001. Cooperation continues on the decommissioning and safe shutdown of the reactor itself.

The U.S. Nuclear Regulatory Commission and the Kazakhstan Atomic Energy Committee also renewed their agreement for nuclear safety cooperation through 2004. Prime Minister Tokayev issued a decree in October 1999 exempting from taxes U.S. assistance funds paid to Kazakhstan's scientists under the Initiative for Proliferation Prevention (IPP) projects, allowing the resumption of six projects that had been suspended over this issue and the funding of four new projects by the United States. The USG is funding an "Ecological Survey of Industrial Sites" environmental monitoring project at Stepnogorsk through the International Science and Technology Center in cooperation with the U.S. Environmental Protection Agency.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant trans-border pollution, and promote sustainable use of natural resources."

Kazakhstan suffered severe environmental degradation under Soviet rule. There is broad-based support for domestic protection of the environment. The Government's resources are inadequate to address some of the world's most challenging environmental problems: desiccation of the Aral Sea, protection of the fragile Caspian ecosystem, remediation of the Semipalatinsk nuclear testing range, clean-up of the Baykonur space launch facility, extremely polluted cities, desertification, and development of mechanisms for regional transboundary water management.

The Government has shown an interest in regional cooperation on environmental policy and has agreed to the establishment of a coordination and information sharing mechanism as a first step toward fuller cooperation on trans-border and international environmental problems. It has taken some steps to establish public policy mechanisms to address environmental issues, including reorganizing the Ministry of Natural Resources and Environmental Protection in 2002 into the Ministry of Environmental Protection and transferring the Committee on Water Management and Committee on Forestry, Fishery and Hunting to the Ministry of Agriculture. National environmental NGOs are gaining access to the policy-making process on environmental issues. Kazakhstan has developed a new water code that complies with international standards on water rights and water user associations. It is an active member of the Interstate Coordination Water Commission of Central Asia.

Kazakhstan signed and ratified the Aarhus Convention on environmental information in 2002. It also began implementation of a main principal of the Rio+10 Declaration: public access to environmental information. It contributed to the development of the Regional Environmental Action Plan for Central Asia, which Kazakhstani representatives presented at the 2002 World Summit on Sustainable Development.

In 1999, Kazakhstan signed and deposited its instruments of ratification of the Convention on International Trade in Endangered Species (CITES), which will facilitate further efforts to conserve threatened and endangered species in the area. It has taken active measures to comply with CITES quotas on Caspian sturgeon fishing. In 2002, the U.S. Fish and Wildlife Service conducted a training workshop related to CITES implementation, obligations, and enforcement.

Kazakhstan discusses Caspian Sea environmental protection issues regularly with the other four Caspian littoral states, and is a signatory to the recently developed "Framework Convention for the Protection of the Marine Environment of the Caspian Sea". Kazakhstan has been an active and constructive player in regional and international efforts to alleviate the deteriorating environmental conditions and fosters regional cooperation in the Aral Sea basin. Kazakhstan is now implementing several projects with funds from a World Bank loan to help rehabilitate key structures on the Syr Darya river. This will lead to the restoration and stabilization of the North Aral Sea. To address the water management problem of the Syr Darya River, Kazakhstan and other basin states, with technical assistance provided by the U.S. Government, established the 1998 Framework Agreement on the Use of Water and Energy Resources of the Syr Darya Basin.

The United States and the European Union have worked together with the Ministry of Environmental Protection to establish an independent, non-profit, and non-political Regional Environmental Center (REC) in Almaty in 2001. The mission of the REC is to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decision-making among the countries of Central Asia. In 2002, the U.S. Environmental Protection Agency, U.S. Embassy and Ministry of Environmental Protection signed a Memorandum of Understanding to provide the REC with funding for its grants program.

Section 498A(a)(8): "deny support for acts of international terrorism."

Kazakhstan does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Kazakhstan has strongly supported U.S. actions against the perpetrators of the September 11, 2001 terrorist attacks on the United States. President Nazarbayev has frequently and publicly reiterated his support for the U. S. in the fight against international terrorism. In addition to its public support for U.S. efforts, Kazakhstan granted the U.S. permission to use its airspace for military and humanitarian flights, with over 1300 U.S. overflights in support of OEF to date. In July 2002, Kazakhstan signed an agreement to allow the U.S. the use of the Almaty Airport as an emergency divert airfield for OEF. Kazakhstan provided wheat for humanitarian relief efforts in Afghanistan. In August 2003, Kazakhstan sent a 27-member combat engineering contingent to Iraq that had destroyed over 300,000 pieces of unexploded ordinance by the end of 2003. Kazakhstan also has been actively searching for terrorist financial assets in Kazakhstan and has blocked the assets of an individual listed on the E.O. 13223 terrorist list.

Kazakhstan is a party to nine of the twelve international counter-terrorism conventions. In 2002, it ratified the Convention for the Suppression of Terrorist Bombings and the Convention for Suppression of the Financing of Terrorism. It is in the process of ratifying the Convention on the Physical Protection of Nuclear Material. The two on which it has not yet acted are the Conventions for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (Rome-1988) and for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (Rome -1991). Also in 2002, Kazakhstan enacted tougher anti-terrorism laws with increased penalties.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics signed a Memorandum of Understanding declaring themselves jointly and severally liable for the foreign debts of the Soviet Union. In December 1991, Russia and seven other republics signed an agreement that assigned to each of the newly independent states a share of all the external assets and foreign debt of the former Soviet Union (FSU). Kazakhstan signed both the October and December 1991 agreements. The December 1991 agreement provided that Kazakhstan's share of the FSU debt would be 3.86 percent. Beginning in 1992, Russia sought to replace the joint and several liability principle by seeking full liability for the foreign debt of the FSU in return for all the external assets of the FSU. On September 6, 1993, Kazakhstan signed a "double zero option" agreement with Russia under which Russia agreed to pay Kazakhstan's share of the foreign debt of the FSU in return for Kazakhstan's share of the external assets of the FSU. Please see section 498(a)(9) of the Russia assessment regarding indebtedness to the United States incurred by the former Soviet Union.

Section 498A(a)(10): "cooperate with the United States Government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."

The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs that was established in March 1992. The U.S. side of the Commission visited Kazakhstan in August 1994 and Kazakhstan promised cooperation on the POW/MIA effort. The Government has been cooperative with all related interviews conducted in Kazakhstan.

Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing of military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."

We have no evidence that the Government of Kazakhstan is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.

CHECKLIST FOR GROUNDS OF INELIGIBILITY UNDER SECTION 498(b) OF THE FOREIGN ASSISTANCE ACT OF 1961

KAZAKHSTAN

Section 498A(b)(1): Has the President determined that the Government of Kazakhstan has "engaged in a consistent pattern of gross violations of internationally recognized human rights or of international law?"

No. The President has not made such a determination at this time. Although Kazakhstan's human rights record remained poor in 2003, there were some improvements and a reversal of some of the most troubling developments in 2002. Much more work clearly remains. The United States and its Embassy have exerted strong and consistent pressure through diplomatic efforts to promote further improvement by the Government in these key areas. Our assistance programs are instrumental to these efforts, and relied upon by a growing but vulnerable civil society. Improvement of Kazakhstan's human rights situation and its closer adherence to international standards will depend in part on continued engagement and assistance from the United States.

Section 498A(b)(2): has the President determined that the Government of Kazakhstan has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union?"

No. The President has not made such a determination at this time. Kazakhstan has been a leader in nuclear nonproliferation. It eliminated all strategic offensive arms on its territory under the START Treaty well ahead of schedule. Kazakhstan deposited its instrument of accession to the NPT in 1994, ratified the Comprehensive Test Ban Treaty in September 1996, and became a member of the Nuclear Suppliers Group in 2002.

Section 498A(b)(3): has the President determined that, after October 24, 1992, the Government of Kazakhstan "knowingly transferred to another country -

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology control Regime; or

(B) any material equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine [d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon?"

No. The President has not made such a determination at this time.

Section 498A(b)(4): Is the Government of Kazakhstan "prohibited from receiving such assistance by section 101 or 102 of the arms Export Control Act or sections 306(a)(1) and 307 of he Chemical and Biological Weapons Control and Warfare Elimination Act of 1991?"

No. The Government of Kazakhstan is not prohibited from receiving assistance under these statutes.

Section 498A(b)(5): has the President determined and certified to the appropriate congressional committees that the Government of Kazakhstan "is providing assistance for, or engaging in, non-market-based trade (as defined in section 498(k)(3) with the Cuban Government? If so, has the President taken action to withhold assistance from Kazakhstan under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30 day period?"

No. The President has not determined that the Government of Kazakhstan is providing assistance for, or engaging in any non-market-based trade, with the Cuban Government.