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Environment and Security
32
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.
Because of the booming oil and gas sector,
GRP in Mangystau and Atyrau provinces
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-
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