Return to: Index of "1993 Country Reports on Economic Practice and Trade Reports" ||
Index of "Economic and Business Issues" || Electronic Research Collections Index || ERC Homepage



                     Key Economic Indicators
           (Millions of rubles unless otherwise noted)

                                  1991      1992      1993
Income, Production,
 and Employment

Real GDP Growth (pct.) /1          -5.3     -13.2     -15.3
GDP (current prices) /1              80,983 1,213,616 1,369,700
By sector:
  Agriculture (incl. pvt.)          n/a       159,688   n/a
  Communication and Transport       n/a        80,716   n/a
  Manufacturing                     n/a       771,568   n/a
  Construction                      n/a        75,539   n/a
  Housing                           n/a        14,899   n/a
  Trade                             n/a        23,431   n/a
  Financial Services                n/a         9,032   n/a
  Government, Health                n/a        53,575   n/a
   and Education
  Other                             n/a        25,177   n/a
Net export of Goods
 and Services (92/93 mil. US$)    1,620.    1,399     1,099
Per Capita GNP (US$) /2           2,470     1,690       n/a
Labor Force (000's) /1            9,331     9,368       n/a
Unemployment Rate (percent) /1      0.05      0.45      0.50
Industrial Output (pct. change)   -13.8     -12.1       n/a

Money and Prices
 (annual percentage growth unless noted)

Money Supply (M2) /3              210.7     552.9     714.2 /5
Base Interest Rate (pct.)           n/a      60       180
Personal Savings (MRS Jan-Jul 93)   n/a       n/a     69,023 
CPI  (1991=100) /3                100       1,480     9,851 /7
Exchange Rate /3
    Rubles per $                  1.75      193.2       n/a
    Tenge per $                     n/a       n/a     5.7
    Tenge per $                     n/a       n/a     7.5

Balance of Payments and Trade
 (million of U.S. dollars unless noted)

Total non-FSU Exports (FOB) /3    1,620     1,489     1,002
  Exports to U.S. /1                n/a        94       117.6
Total non-FSU Imports (CIF) /1,4    n/a        469      254.1
  Imports from U.S. /1,4            n/a          6       13.3
Aid from U.S. /6                    n/a       n/a        42.4
Aid from other Countries
 (million Rubles)                   n/a     1,824.0     n/a
External Debt (pct. of GDP) /3      n/a       n/a       81.6
Gold and FOREX Reserves /1          n/a       n/a        722.9
Total Trade Balance /3            -3,160    -1,670      -488 /5
  Non-FSU Trade Bal.                n/a      1,020       748.1 
  Balance with U.S./1,5             n/a         88       104.3


1/  Source: Kazakhstan State Committee for Statistics
    (GOSKOMSTAT).  1993 figures are for 9 months, actual where
    available, otherwise GOSKOMSTAT estimates.  GOSKOMSTAT
    continues to revise its methodology to incorporate
    international practice.
2/  IBRD estimates.
3/  IMF Economic Review and embassy estimates.
4/  GOSKOMSTAT official trade data considers ruble zone trade
    separately.  Much of ruble zone trade is reexport.  Some
    U.S. trade falls into this category, but no firm data is
    available.  Total imports CIF in 1992 is about $800
    million according to IMF estimates.
5/  National Bank of Kazakhstan.  Report to Supreme Soviet
6/  U.S. Agency for International Development.  Includes USAID
    expenditure for all years.
7/  April 1993.

1.  General Policy Framework

    Kazakhstan continues to suffer a severe economic crisis,
but is beginning to expand development of its great natural
wealth, principally by means of foreign trade and investment. 
Kazakhstan is a multiethnic nation of 17 million people, vast
territory, and enormously valuable resources, located in the
center of Asia.  With its economy still very much in
transition, Kazakhstan is beginning to privatize part of its
economy and is rapidly establishing relations with major
economic powers and international companies.  With political
stability and economic reform, and with adequate access to
markets via fair transit, Kazakhstan can become an important
trade and economic partner.

    The decline in GDP continued, falling 15 percent in the
first nine months of the year, reflecting drops in agricultural
and industrial production.

    The potential of Kazakhstan is based mainly in three
sectors, hydrocarbons, other minerals, and agriculture. 
Kazakhstan could become one of the world's major oil and gas
exporters by early in the next century.  Although current oil
production, relatively stable at approximately 500,000 barrels
per day, is only about half again as much as consumption,
exploitation of oil reserves counted in the tens of billions of
barrels could dramatically increase production and export,
depending on the availability of export pipelines and transit
rights.  Kazakhstan is one of the richest mineral storehouses
in the world.  As with hydrocarbons, it has begun to open its
mines to foreign technology and investment, but state ownership
of mineral deposits is a drawback to attracting desperately
needed foreign joint ventures.  There are major deposits of
coal, chromites, copper, bauxites, phosphorites, iron, rare
earths, silver and gold.

    Kazakhstan is the only grain exporter, principally of
wheat, among the former Soviet republics.  A record harvest in
1992 (32 million tons) provided as much as 10 million tons for
export, but a smaller harvest in 1993 (25 million tons)
severely reduced exports.  Leaving aside weather variables,
yields are not likely to improve much without the privatization
of agriculture, and elimination of the stifling "state orders"
system.  Extensive pasturage helps sustain a livestock industry.

    Two years after its formal independence, Kazakhstan
attained monetary independence in November 1993, when it issued
its own currency, the tenge, following the collapse of the
ruble zone.  Through October, Kazakhstan attempted to remain in
some kind of ruble zone, and signed a number of agreements with
Russia which were never implemented.  The initial issuance of
the tenge, over November 15-22, was relatively smooth, although
the tenge still has not been allowed to float freely.

    The immediate period leading up to the issuance of the new
currency was accompanied by severe economic dislocation, and
near hyper-inflation.  Prices rose some 35-50 percent per month
in the latter part of the year.  A near tripling of the money
supply in the last months of the ruble zone was exacerbated by
massive unofficial flows of "old rubles" into Kazakhstan. 
Along with imported hyper-inflation in the initial months of
the year, these flows brought inflation over 1993 to
approximately 2,000 percent.  The movement of prices toward
world levels reduced distortions.  Prices in Almaty rose to
among the highest in the former Soviet Union.

    Wages and, especially, pensions did not keep pace, however,
putting the bulk of the population in increasingly difficult
straits.  According to some estimates, minimum wage and social
benefits fell to about one-fourth of 1991 levels; as much as 20
percent of the population could be in serious poverty.  For
these people, prices of most medicines were out of reach,
quality of diet further deteriorated, and social services were
severely curtailed.

    As 1993 wore on, Kazakhstan increased the pace of economic
reform and privatization, although implementation was slow. 
The Supreme Soviet adopted a good Constitution and a number of
improved laws, but the legal environment for business remains
mixed.  Lack of legal certainty deterred some investors, but
others moved forward on the basis of positive decisions by the
government, sometimes backed by Presidential or Council of
Ministers' Decrees.  Officials acknowledged that many economic
laws were transitional and would be further revised to reflect
the move to a more privatized, market-oriented economy.  In the
absence of an adequate oil and gas law, some international oil
agreements signed by the government included clauses affirming
their validity, notwithstanding existing legislation.

    A USAID/World Bank funded program of privatization began in
July 1993.  Under its terms, the State Property Committee (GKI)
oversees the disposal of enterprises.  Small-scale enterprises
(less than 200 employees), including shops and transport are
being sold at auction.  "Mass Privatization" included the
issuance of coupons to citizens, who would invest them in
holding companies, which in turn would purchase shares of most
medium-scale enterprises (200-5,000 employees).  Large-scale
enterprises would be privatized on a case-by-case basis.  The
Almaty Tobacco Factory is being sold to the Philip Morris
Corporation in the largest privatization with foreign 
investment in the former Soviet Union.  In general, government
policy continued to feature majority state ownership of large
or key enterprises.  Some policy-makers have indicated that the
government would over time reduce its stake.  Private ownership
of housing, already widespread, continues to broaden through a
voucher scheme.

    The still dominant state sector remained characterized by
inefficiency, price distortion, and overstaffing.  State-owned
enterprises were forced, by reduction of subsidies and heavily
subsidized credits (with inflation, these carry sharply
negative real interest), to behave more like commercial
entities.  Some, as in the non-ferrous metals industry, did
relatively well, mostly by exporting.  Most enterprises,
however, faced severe problems and some had to cease
production.  A special problem is getting paid for goods
shipped, especially from customers in the other former Soviet
republics.  This particularly hurt manufacturing, dependent on
inputs from other former republics.  Governments have sought
agreement on methods, including banking arrangements, to
ameliorate the payments problem, but a satisfactory system had
not been implemented by the end of 1993.

    The nascent domestic private sector, based primarily in
wholesale and retail trade, has flourished.  It began to
accumulate capital, which it appeared to invest as well as
consume.  Local entrepreneurs, particularly in trade and to a
lesser extent in small-scale manufacturing, were often creative
and energetic.  Some prospered through links to government
officials and bribery.  Along with the economic crisis and
ethnic anxieties, growing corruption is a severe problem facing
the young nation.

    The banking system has evolved considerably as Kazakhstani
bankers began to gain experience in trade and foreign
transactions and developed relations with foreign banks. 
Foreign and joint venture banks emerged.  The domestic banking
system as a whole remained undeveloped, and depended heavily on
subsidized credits from the National (Central) Bank.

    Kazakhstan firmly established its links with international
business in 1993, when it signed major agreements with Chevron
for oil production; with the largest-ever international oil
consortium, including Mobil, for the preliminary exploration of
the Caspian Shelf; and with Philip Morris.  Each agreement is
the largest of its kind in the former Soviet Union.  Most of
the other major international oil companies, and several oil
independents, as well as leading firms in other industries
pursued opportunities.  Important trade prospects include
infrastructure development, oil and gas and mining equipment
and services, and passenger aircraft.  From mid-1992 to the end
of 1993, permanent U.S. business presence in Kazakhstan grew
from a single office to more than fifty establishments, some of
them small businesses.

    One result is the fall in the share of Kazakhstan's trade
with Russia and the other republics from over 90 percent to
approximately 70 percent of total trade.  China, which
continued to upgrade its passenger and freight rail connection,
has become a leading source of consumer goods.  Other 
countries, including the United States, have increased their
trade with Kazakhstan.

    Structure of economic policy making:  Economic
policy-making is complicated and changing.  Authority flows
from the President through the Prime Minister to the Council of
Ministries.  Macroeconomic policy is under a First Deputy Prime
Minister.  Separate Deputy Prime Ministers, at least nominally,
oversee foreign trade, industry, and agriculture.  In reality,
most ministries are increasingly autonomous, as central budget
contributions to them have declined sharply in real terms. 
Principal economic ministries include the Ministry of Economy,
which oversees planning and foreign debt; the Ministry of
Finance, which has primarily budgetary and tax
responsibilities; and the Ministry for Foreign Economic
Relations, which controls export licenses.  Both the Ministry
of Energy and the Ministry of Geology are involved in oil and
gas agreements.  The National Bank issues money and credit. 
There is also a National Agency for Foreign Investment within
the Ministry of the Economy.

    In practice, much policy is determined by individuals, or
by temporary groupings.  The issuance of the national currency
was carried out under a committee headed by the Prime Minister,
with guidance from President Nazarbayev.  Most economic policy
was designed by a small group of economic reformers, which has
the support of the President on most issues.

    Fiscal policy:  The Kazakhstan government has distinguished
itself by its fiscal restraint.  The 1993 deficit is estimated
at approximately six percent of GDP, less than in 1992, and
within IMF Systematic Transformation Facility targets. 
Military spending remained low, with many defense activities in
Kazakhstan financed by Russia for its own purposes.  The move
toward market prices has increased the budgetary impact of food
and energy subsidies.  For 1992, the IMF estimated that half
the deficit was financed by domestic resources, principally
credit emissions.

    Monetary policy:  The end of the ruble zone and the
issuance of its own currency resulted in great variation of
monetary policy during 1993.  Limitations on the transfer of
ruble balances in mid-1992 meant that Kazakhstan exercised some
monetary authority throughout 1993.  Inflation and the
extensive issuance of credits to cover enterprise arrears
contributed to a steady and significant increase in the
non-cash money supply.  The country was plagued by cash
shortages throughout the first seven months of 1993.

    Russia's move to a new ruble and the subsequent movement of
huge amounts of old rubles into Kazakhstan saw the money supply
grow from a trillion rubles in September to between 3.5 And 4.5
trillion in November.  At the time it issued the tenge,
Kazakhstan claimed reserves of approximately $720 million, some
$230 million of which was in gold.  With the issuance of the
new currency, the government sharply restricted the money
supply.  Hundreds of billions of rubles were frozen in accounts
for up to six months, while government commissions ruled on the
legitimacy of their origin.

    Kazakhstan is a member of the IMF, the World Bank, the
European Bank for Reconstruction and Development (EBRD), and
the Asian Development Bank (ADB).  Kazakhstan reached agreement
on a Systemic Transformation Facility with the IMF in July 1993
and drew its first tranche of $83.5 million.  After meeting IMF
targets, it planned to draw the second tranche at the end of
1993.  In December, in Almaty, IMF managing director Camdessus
reviewed a letter of intent for a Standby Agreement, which the
government has submitted to the IMF.  If approved by the IMF
Board, Kazakhstan could receive an additional $167 million in
1994 (up to its full IMF quota).

    The World Bank coordinates assistance efforts for
Kazakhstan.  The World Bank signed a rehabilitation loan for
$180 million, and is negotiating additional credits.  In
consultation with the IBRD Kazakhstan is also seeking
additional donor support.  Kazakhstan is an observer of the
GATT, and has been awarded favorable consideration treatment by

2.  Exchange Rate Policy

    When it issued its own currency, Kazakhstan gained
responsibility for managing its exchange rate.  At the time it
clamped down on what had evolved into a relatively free and
floating unofficial foreign exchange market for the ruble.  The
government promised a floating rate for the tenge, but
initially supported it at an implicit peg to the Russian
ruble.  The initial rate for the tenge was 4.7 to the dollar,
which many observers viewed as unrealistic.  By mid-December
1993, the official rate for the tenge was 5.7 to the dollar. 
The street price for the tenge rose to about 7.5-8 tenge to the
dollar.  IMF and U.S. officials have urged Kazakhstan to let
the new currency float freely and Kazakhstani authorities have
promised to do so.  By the end of 1993, a growing number of
money exchange points had opened, and the transition to a
floating exchange system appeared to be in the works.

3.  Structural Policies

    Kazakhstan has freed most internal prices, but continued to
subsidize housing, public transport, energy, and some food
prices.  The wasteful state order system is in decline, but
still plays an important role, such as in agriculture.  Freeing
of prices has resulted in gasoline (retail) and wheat prices
(to the farmer) at levels approaching world market prices. 
Subsidies continue, but at a reduced rate.  Approximately 50
percent of the retail bread price is subsidized, but that price
significantly increased in line with the higher prices for
grain.  The State Anti-Monopoly Committee has some authority to
review prices.

    Steep real price increases accompanied the issuance of the
new currency.  At the same time, however, the government issued
a list of price controls for essential commodities.  Many of
these prices were at new, higher levels.  Barter trade
continues, but is shrinking with the increasing monetization of
the economy.

    Tax policies:  Sound fiscal management has reduced pressure
for revenue enhancement.  Revenues are derived primarily from
income taxes, a value-added tax, and export duties.  Social
spending accounted for the most significant portion of
expenditures in 1992, followed by financing of the economy. 
Tax officials indicate that, rather than impose new taxes, they
can enhance revenues by better enforcement.  At the end of the
year the government announced a series of tax increases and
enforcement upgrades, but it is unclear how these will be
implemented.  In October 1993, Kazakhstan signed a treaty with
the U.S. on the avoidance of double taxation.  A branch of the
private U.S.-based tax foundation opened in 1993 in Almaty.

    Regulatory policies:  Government regulation is extensive,
conflicting, and suffocating.  It is also a major source of
corruption.  Application of regulations is often uneven, as
many can be negotiated, or are more honored in the breach than
the observance.  Firms often complain that it is difficult to
export because licenses are required from three or more
ministries in Almaty, and sometimes from local authorities as
well.  With the appearance of the tenge in November, the
government intensified its effort to manage the economy.

4.  Debt Management Policies

    Kazakhstan accepted joint and several liability for all the
debts of the former Soviet Union, and was assigned a
proportionate share of 3.86 percent of total debt, equal to
approximately $2.5 billion.  While acknowledging its formal
obligations, Kazakhstan negotiated the "zero option," with
Russia, under which Russia would accept full responsibility for
FSU debt in return for all foreign assets of the FSU. 
Kazakhstan initially agreed, but as the agreement must be
accepted by all successor states, it has not yet gone into
effect.  Kazakhstan has paid neither its 1992 nor 1993
obligations under the existing debt.  Kazakhstan has paid
short-term obligations, including a $100 million loan from
Oman.  Commercial creditors have experienced some delays.  As
part of its financial divorce from Russia, Kazakhstan incurred
its first inter-governmental debt, to the Russian republic. 
One estimate indicates that debt could already total $1.5
billion, depending on enterprise arrears.

    Trade credits:  Kazakhstan also began to receive supplier
or trade credits from a number of countries.  Germany, Austria,
France, Japan, Hungary, and Turkey are among the countries that
have authorized significant credits, totalling over $100
million in each case.  The U.S. Eximbank indicated it was
willing to provide up to $238 million in short-term credit
insurance.  By the end of 1993, however, EXIM had not yet
agreed to offer medium-term credits.

5.  Significant Barriers to U.S. Exports

    U.S. exports to Kazakhstan appeared to be limited more by
the ability of U.S. firms to service the Kazakhstan market and
the availability of credit than by any specific barrier
established by the Kazakhstan government.  Structural barriers
include a still weak system of business law, including the 
absence of effective bankruptcy procedures, and the shortage of
domestic capital to pay for U.S. intermediate and capital
goods.  The government appeared to have adopted a strategy of
relatively low import barriers, paid for mainly by developing
exports of raw materials.

    U.S.-made products were increasingly in evidence in
Kazakhstan.  The U.S. has a small share of the private
automobile market.  U.S. consumer goods were popular. 
Kazakhstan became a market for U.S. capital goods, especially
for the key oil and gas, minerals, and agriculture sectors. 
Kazakhstan has engaged in discussions for the purchase of U.S.
commercial aircraft.  Several hundred U.S. businesses have
visited Kazakhstan to explore its markets.

    The government maintained no legal barriers to imports of
goods in general, or specifically to U.S. imports.  No import
licenses were required, as of the end of 1993.  There were,
however, a variety of restrictions on imports of services.  For
example, the insurance business is closed to foreign
companies.  Several U.S. Firms offering accounting and legal
services are currently operating in Kazakhstan, and foreign
airlines appear welcome.  Officials have indicated that as part
of the tightening of control over the economy with the
introduction of the new currency, the government would take
steps to limit imports, including the possible introduction of
import licenses.  The government proposed restrictions on
import of non-essential goods by means of protective tariffs
and duties as well as quotas, beginning January 1994. 
Standards and labeling requirements are in practice
nonexistent, and at present do not constitute a constraint.

    Kazakhstan has proven to be deeply interested in foreign
investment, and has attracted investors from all over the
world.  Joint ventures have opened not only for the
exploitation of natural resources, but also for the assembly of
photocopiers, for assembly and manufacture of mining and
agricultural equipment, and for oilfield supplies.  During
1993, the first international equity issue for a Kazakhstan
venture, the Bakyrchik gold mine, raised over $120 million on
the London financial markets.

    Formally, there is no equity or participation limit on
foreign investment, although in practice most foreign
investment is through joint ventures.  There are no export
performance requirements, local content requirements,
restrictions on foreign personnel (other than taxes), or
restrictions on repatriation of capital.  In practice,
repatriation of capital or profits may be limited by foreign
exchange availability, but this problem will disappear if a
freely floating exchange rate regime is adopted.  Many
investors and traders receive payment in commodities.  Foreign
firms are permitted in downstream operations and are allowed to
function as intermediaries, a role they frequently fulfill for
Kazakhstan government-owned entities.

    Government procurement practices are not limited by formal
"buy Kazakhstan" regulations, although there is a clear
preference to buy local if possible.  There is a growing
preference to buy from a foreign supplier rather than from the
former Soviet Union.

    Kazakhstan has a customs agreement with Russia, amounting
to a de facto customs union.  It still uses customs procedures
from the former Soviet Union, which can be cumbersome.  Most
goods transit other new independent states, unless they arrive
by air or via China.  Foreign firms can import items for their
own use duty free.

    Kazakhstan attained most-favored-nation status with the
U.S. in 1993 following the entry into force of an Agreement on
Bilateral Trade.  A Treaty on the Avoidance of Double Taxation
was signed by Secretary of State Christopher during his October
1993 visit. During his December 1993 visit to Almaty, Vice
President Gore presided over the exchange of instruments of
ratification which brought into force a Treaty concerning the
Mutual Encouragement and Protection of Investment.  Also in
December, the Overseas Private Investment Corporation (OPIC)
signed the first insurance and finance agreements for projects
under its agreement to operate in Kazakhstan.

6.  Export Subsidies Policies

    Strapped for resources, the government has sharply reduced
budgetary subsidization of state enterprises.  Many enterprises
received subsidized state credits, at interest rates so low
they were, in practice, gifts.  These subsidies, targeted at
maintaining production and employment rather than exports, tend
to be directed less at exporters which are already receiving
revenues than at domestic producers, or the rapidly declining
defense industry.  Rather than target subsidies at its exports
Kazakhstan does the reverse and taxes them.  The precise rate
of export taxes varies according to the product and can range
up to 30 percent.  Kazakhstan has protested as unfair
restrictions on its exports (mostly metals) imposed by the U.S.
and the E.U. under the antidumping laws.  The U.S. Department
of Commerce reached a consent decree with Kazakhstan in 1992
limiting uranium exports, imposed a 104 percent anti-dumping
duty on ferro-silicon, and is investigating Kazakhstani exports
of titanium sponge.  Europe imposed duties on aluminum exports.

    The government moved in 1993 to further limit and increase
controls on exports, imposing an additional burden on the
economy and further increasing opportunities for corruption. 
Responding in part to capital flight caused by enterprise
managers, the government ordered that beginning January 1,
1994, enterprises would lose their authority to export
directly, and instead be required to channel all exports of 18
critical products through approximately 10 state trading
organizations controlled by the Ministry of Foreign Economic
Relations.  The list includes: oil and gas, coal and coke, ore
and concentrates, ferrous and non-ferrous metals, alumina,
precious metals and stones, products of organic and non-organic
chemicals, radioactive chemical elements, grain, cotton, and
caviar.  These goods also would be subject to export quota. 
The regulations include a 100-percent surrender requirement for
export proceeds, although this may be reduced to 50 percent.

7. Protection of U.S. Intellectual Property.

    The civil code of Kazakhstan protects, in principle,
intellectual property.  However, the absence of criminal
sanctions and lax enforcement have meant in practice that
intellectual property rights are unprotected.  In 1992,
Kazakhstan acceded to the Geneva Convention on the Protection
of Intellectual Property and joined the World Intellectual
Property Organization.  In late 1993, the government submitted
to the Supreme Soviet a draft of a copyright law. If passed,
legal sanctions against copyright violators could be
implemented, and Kazakhstan would accede to the Berne
Convention.  The U.S.-Kazakhstan Bilateral Trade Agreement,
which came into force in 1993, obligates Kazakhstan to protect
intellectual property.

    In 1992, Kazakhstan established a National Copyright Agency
with jurisdiction over copyrights in arts, music, science and
software, and a National Patent Department which registers and
regulates patents and trademarks.  Registration of trademarks
began in July 1992.  Trademark violation is a crime, and courts
are empowered to arbitrate trademark infringement cases, but
enforcement is rare.

    Patent legislation guarantees the right of inventors to the
"name" of their product, but financial rights of patent holders
do not appear to be protected.

    Pirated video recordings routinely appear on Kazakhstan
television, but are apparently not mass produced in
Kazakhstan.  Sales of pirated counterfeit goods such as video
and audio recordings result in some loss to U.S. industry, but
the domestic capacity to pay is small.  There is no indication
that such items are exported.  Theatrical showings of motion
pictures are licensed.  Consumer goods with pirated trademarks,
particularly clothes, were sold in Kazakhstan but usually made
elsewhere.  Pirated computer software can be purchased. 
Software  development and manufacture take place elsewhere in
part because of limited local capability to produce advanced

8.  Worker Rights

    a.   Right of Association

    Kazakhstan joined the International Labor Organization in
1993.  The Supreme Soviet adopted a new Labor Code in 1993
which, along with the Constitution, guarantees basic workers'
rights, including the right to organize, the right to strike,
and the right to join a union of the workers' choice.  It does
not protect workers from threats or harassment from unions or
enterprise management.  Several strikes occurred in 1993,
including one in solidarity with a local media figure who lost
his job.

    Many workers remain members of the communist-origin,
state-sponsored trade unions.  These unions continued to deduct
automatically one percent of worker paychecks for dues, and
control the 30 percent of the workers salary deducted for
pension fund, and an additional 7.3 per cent for disability and
the use of vacation retreats.  The state-run unions often use
their power to enforce labor discipline and to discourage
workers from joining independent unions.

    Workers can form and join independent trade unions and
apply to have the mandatory dues deduction transferred.  There
have been numerous cases of state-sponsored unions or local and
other government authorities interfering with the right to form
free trade unions.  Independent unions are members of a
National Independent Trade Union Center, but only coal miners
have obtained international affiliation.  The government is
particularly worried about labor unrest in the Karaganda area,
especially among coal miners working in the large, but
inefficient underground mine system.

    b.   Right to Organize and Bargain Collectively  

    There are significant limits to the right to organize and
bargain collectively.  Independent unions have been organized
in some industries, but the process is difficult and often
arbitrary. Both independent and state-sponsored unions have
negotiated contracts.  If a union's demands are not acceptable
to management, they may be presented to an arbitration
commission comprised of management, the union, and independent
technical experts.

    c.   Prohibition of Forced or Compulsory Labor

    Forced labor is prohibited under normal circumstances.
Nonetheless, students and others traditionally have been
obliged to help with the harvest, with little or no
compensation.  Prisoners are also required to work, but they
receive some compensation for their labor.

    d.   Minimum Age of Employment of Children

    Minimum age for child labor is 16.  Some children work in
Harvest, or on family plots, but the abuse of child labor does
not appear to be a problem.

    e.   Acceptable Conditions of Work

    Most workers have suffered a decline in their standard of
living due to the economic crisis and severe inflation.  By the
end of 1993, the minimum wage was insufficient to cover the
purchase of even necessities working conditions are often
substandard, with shortages or absence of safety or protective
equipment.  The many unhealthy work places are part legacy of
the Soviet disregard for the environment.  Exposure of
Agricultural workers to unhealthful amounts of agricultural
chemicals may have declined due to disruptions of supply.

    f.   Rights in Sectors with U.S. Investment

    Rights and conditions in sectors with U.S. investment do
not differ substantially from other sectors.  However, work
places or enterprises with U.S. investment have much better
conditions of work than the norm.  U.S. companies have already
improved conditions at some job sites.

         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (Millions of U.S. dollars)

Category                                    Amount

Petroleum                                                 D
Total Manufacturing                                       0
    Food & Kindred Products                     0
    Chemicals and Allied Products               0
    Metals, Primary & Fabricated                0
    Machinery, except Electrical                0
    Electric & Electronic Equipment             0
    Transportation Equipment                    0
    Other Manufacturing                         0
Wholesale Trade                                           0
Banking                                                   0
Finance and Insurance                                     0
Services                                                  0
Other Industries                                          0

TOTAL ALL INDUSTRIES                                      D

(D) -Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic

To the top of this page