April 5, 2008

Honey, disconnect the phone, I'm back in Soviet Central Asia
 

Eric Ellis, Astana
 

SHE'S young and glamorous, and rich too. Though still only in her mid-30s, there seems nothing Gulnara Karimov can't do: diplomacy, science, writing, fashion and jewellery design — and hugely successful at each, or so Uzbekistan's state propaganda machine frequently tells it.

This Harvard-educated superwoman — she's also a mother of two — is also a successful entrepreneur, one of Asia's wealthiest women from her interests in property, telecommunications and resources. And amid all this, Gulnara finds time to be a pop star known as "Googoosha", which, she says, is what her father — who happily for her happens to be Uzbekistan's long-ruling oligarch-dictator — calls her.

So skilled at so many pursuits, there's much debate across the 'Stans of the former Soviet Central Asia about the first love — many say it's herself — of Uzbekistan's First Daughter.

There's a clue in Googoosha's high-kitsch pop video for a track Gulnara recorded last year. Unnecessarily titled Don't Forget Me, she apparently wanted to enter it in the Eurovision Song Contest, further testing the credibility as well as the geography of contest organisers. It's a clunky, overproduced confection, and something of a YouTube hit, dispatched in irony by Uzbeks who believe it an effort to soften and sell the much-hated Gulnara to them as a successor to her 70-year-old father. But the other star of Gulnara's videos is a mobile phone, a reminder to 27 million Uzbeks that it's near impossible to spend money in this obscure land and not make the Karimov family richer.

With her big hair and in-your-face ubiquity, Gulnara may well be the Soeharto daughter of the YouTube generation, a measure of boundless excess where wealth is easily obtained and measured in the billions, and influence by proximity to daddy's presidential ear.

Uzbekistan has been run from its 1991 independence by Gulnara's father, Islam Karimov, who, like his neighbouring rulers, got his job simply because he had the good fortune to be Moscow's Communist Party secretary in Tashkent when the Soviet Union split.

In a stroke, Karimov and his neighbours in Kazakhstan, Tajikistan, Kyrgyzstan and Turkmenistan went from being staunch Stalinists to enthusiastic capitalists, ushering in a

party time for relatives and apparatchiks, the more nimble of whom parlayed their status in the party and the KGB into unchallengeable oligarchies.

Huge wealth is being generated in Central Asia. In the bars of the region's shiny new hotels, anecdotes abound of adventurers waltzing into this new

El Dorado and walking off with millions, and then some. Now its home-grown tycoons and cronies are starting to spread their cash around the world. One close Karimov friend is the steel-based Uzbek oligarch, Alisher Usmanov, a player in Australian resources through his interests in iron and gold ore producers Mount Gibson, Medusa and Aztec Resources.

Now, in Kazakhstan, comes the latest chapter in Central Asia's thrusting emergence — sovereign wealth funds.

The Kazakhstan Government recently hired a stalwart of British business, the former chairman of British Aerospace, Sir Richard Evans, to chair a new state-owned company called Samruk Holdings. Anchored by the state oil and gas company and modelled by consultants McKinsey after Singapore's tightly controlled state investment house Temasek Holdings, Samruk controls about 40% of Kazakhstan's economy; about $50 billion in assets from aviation and shipping to property and resources. The 2006 Samruk annual report, published last June, values total assets at $30.45 billion, generating profits of $2.57 billion, overwhelmingly from KMG, the oil and gas monopoly.

Evans insists his brief is not to put a respectable City gloss on "Nazarbayev Inc", as many Kazakhs know Samruk, but to institute world's best practices of transparency and corporate governance.

There are some in London who would snort at such a remark. Appointed to BAE in 1990, Evans ran it with an absolute dominance a Central Asian potentate would recognise. In his 37 years at BAE and its state-owned predecessors, Evans built a prodigious contact book of warriors from Pretoria to Peoria, while staring down a succession of British campaigners who alleged corruption in BAE's dealings under his watch. Anecdotes about the super-salesman who secured Britain's biggest and most controversial contract, the

$80 billion Al-Yamamah arms deal with the Saudis that saved British Aerospace (now BAE Systems), suggested a crafty Lancastrian who has despots for breakfast, or at least to breakfast, while separating them from their defence budgets. His Saudi deal-clincher was swallowing sheep's eyes at banquets as though they were canapes.

London's The Observer newspaper once wrote that one needed to count one's fingers after shaking hands with Evans. I meet Evans at a hotel in Kazakhstan's futuristic capital Astana, where he is lecturing his Samruk colleagues in what it takes to run a good business. As if they need reminding, a canary yellow Porsche Boxster is aspirationally parked in the hotel lobby. Evans was hail-fellow-well-met charm itself — "call me Dick" — explaining that he spends a week every month from London in a post he says is as formidable a challenge as any he's taken on. That's saying something for a man who first made his name in the secretive world of arms sales. This is a man who knows how to serve politicians and Mammon — in Asia often the same master — and navigate vast bureaucracies.

Evans says Kazakhstan is the most enlightened and Western-looking of the former Soviet states on the steppe. Barely a generation ago, a gathering of Kazakhs might have had an outsider lecturing them on what's right for Kazakhstan, except that it would have been an apparatchik from Moscow laying down the party line in the far-flung reaches of the Soviet empire, where openness was hardly encouraged. Some of Moscow's most appalling gulags were in Kazakhstan, when Leonid Brezhnev was party chief in the 1960s. Just east of Astana is the blighted wasteland of Semipalatinsk, where nuclear weapons were tested for 40 years until 1989.

But Kazakhstan has come quite a way since the USSR fell. The economy is thriving, with gross domestic product growth forecast this year at a China-like 10.6%, according to the Asian Development Bank. Although the vast countryside is tough, poor and little changed from Soviet days, the cities are urgent with mobile phones, designer fashion and cash, President Nursultan Nazarbayev's impatience evident in the outlandish architecture of Astana, where political pomp and vanity merge with science fiction on a scale of ambition rarely seen. Gliding through the almost Potemkin-like avenues of "New Astana" recalls Malaysia at the height of Mahathirism, except on steroids.

Like the Karimovs next door, Nazarbayev's family is heavily involved in business. Nazarbayev's 43-year-old son-in-law, Timur Kulibayev, became a billionaire during his time running KMG. Nazarbayev himself has been described as one of ex-Soviet Central Asia's "original oligarchs", reportedly having salted away $1 billion in a Swiss bank account. The president is also embroiled in "Kazakhgate", an American criminal case against a US businessman, James Giffen, a former Nazarbayev adviser who is accused under the US Foreign Corrupt Practices Act of paying $78 million in kickbacks to Nazarbayev and associates to secure oil deals for US companies. That state statistics show that Bermuda was Kazakhstan's third-biggest trading partner in recent years is perhaps an eloquent statement of how the region works.

Says Evans: "Central Asia for the West ceased to exist for 100 years; it just disappeared off the map. But now it's increasingly coming back, people are paying a lot more attention and understanding that some of these places are going to be the key economies for the 21st century."

That's likely very true, but, as Central Asia's oligarchs find their voice internationally, please spare the music videos.