Environment and Security: Transforming risks into cooperation

32

Environment and Security

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Since independence, the coastal provinces of Kazakhstan have enjoyed a boom in the energy sector with massive investment in local industry and infrastructure. The in- vestments have mainly been made by major Western energy firms, which expanded their presence in the region in the early 1990s. Between 1993 and 1999 Kazakhstan at- tracted US$9.29 billion in Foreign Direct In- vestment (FDI), about 53% of which went to the oil and gas industry (Brill Olcott, 2002). FDI has continued to increase from US$1.8 billion in 1999 to US$4 billion in 2004. An estimated 80 to 90% of total FDI goes to the oil and natural gas sector.

has increased since 1991 respectively by a factor of two and four (Agency of the Re- public of Kazakhstan on statistics, Ministry of Natural Resources and Environment Pro- tection of the Republic of Kazakhstan 2001). The industrial sector employs 25–30% of the economically active population in each province. Turkmenistan is facing similar challenges. Initially revenue from energy and cotton ex- ports accumulated in the Foreign Exchange Reserve fund (FERF), an off-budget fund controlled by President Niyazov until his death. Spending from FERF is discretionary and is used to support major government infrastructure projects, some of which have been criticised for not being genuine de-

Because of the booming oil and gas sector, GRP in Mangystau and Atyrau provinces