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Nazarbayev May Rule Oil-Rich Kazakhstan Until 2020

Nursultan Nazarbayev Shaking Hands with Hillary Rodham ClintonJan. 14 (Bloomberg) -- President Nursultan Nazarbayev, who has ruled Kazakhstan since 1989, may remain in office until 2020 if voters back the move in a referendum, putting a potential succession battle on hold.

Both houses of Kazakhstan's parliament voted unanimously today to override Nazarbayev's veto of constitutional amendments that allow the referendum, which would supplant presidential elections scheduled for 2012 and 2017, state news service Kazinform reported from the capital Astana.

Campaigners gathered 5 million signatures, equal to 55 percent of registered voters, in support of holding a referendum on whether the president should remain in office until Dec. 6, 2020, the Central Electoral Committee said yesterday. No date has been set for the vote.

"This looks like an attempt to preserve the current situation, in which there's no clear successor," said Andrei Chebotarev, director of Alternative, a research institute in Almaty.

Nazarbayev, 70, was named "leader of the nation" in June, with immunity from prosecution for life and the power to dictate policy after retirement. The move led to speculation that the president would step down before the 2012 election and created a "ferment" among Kazakhstan's ruling elite as potential successors began to jockey for position, Chebotarev said.

'Signal to the Elites'

"There's no doubt that Nazarbayev would win the election," Chebotarev said. "The referendum will send a signal to the elites that the president is here to stay. He needs time to bring influential groups under control."

Today's vote in parliament met with criticism from Germany. Spokesman Steffen Seibert told reporters in Berlin that the German government "regrets" the decision, which goes against the principles of democracy to which Kazakhstan signed up during its 2010 chairmanship of the Organization for Security and Cooperation in Europe.

In 2007, Nazarbayev signed a law that exempted him from a constitutional limit of two terms as president. His Nur Otan party later won 88 percent of the vote in a parliamentary election and became the only party in the Majilis, the lower house. The president also appoints about a third of the lawmakers in the upper house.

Risk Factor

The Development Bank of Kazakhstan, a state-owned lender that promotes industry, in December cited the lack of a clear successor to Nazarbayev as a risk factor in a $2 billion bond prospectus. The lender joined Kazkommertsbank, the country's largest lender by assets, in flagging uncertainty about the issue as a borrowing risk in a stock exchange filing for its own $2 billion bond program.

"Foreign and domestic investors will be watching political events closely, but through their rear-view window, to gauge what they imply about the timing and nature of the transfer of power from President Nazarbayev to whomever succeeds him, and what this means for the profitability and predictability of their operations in Kazakhstan," Frank Gill, a director for sovereign ratings at Standard & Poor's, said by e-mail from London.

"Our baseline expectation is that the political situation over the three- to five-year horizon will remain stable," Gill said.

Kazakhstan holds about 3 percent of the world's oil reserves, according to BP Plc. Exxon Mobil Corp., Royal Dutch Shell Plc, Eni SpA, OAO Lukoil and China National Petroleum Corp. have investments in the country.

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