ALMATY (Reuters) – Kazakhstan’s President Nursultan Nazarbayev unexpectedly resigned on Tuesday after three a long time in energy, in what gave the impression to be step one in a choreographed political transition that can see him retain appreciable sway.

Referred to as “Papa” to many Kazakhs, the 78-year-old former metal employee and Communist occasion apparatchik has dominated the huge oil and gas-rich Central Asian nation since 1989, when it was nonetheless a part of the Soviet Union.

Bestowed by parliament with the official title of “The Chief of the Nation”, he was the final Soviet-era chief nonetheless in workplace and oversaw intensive market reforms whereas remaining broadly in style in his nation of 18 million folks.

“I’ve taken a call, which was not straightforward for me, to resign as president,” Nazarbayev mentioned in a nationwide TV handle, flanked by his nation’s blue and yellow flags, earlier than signing a decree terminating his powers from March 20.

“Because the founding father of the impartial Kazakh state I see my job now in facilitating the rise of a brand new technology of leaders who will proceed the reforms which can be underway within the nation.”

However Nazarbayev, a detailed ally of Russian President Vladimir Putin, mentioned he would retain key safety council and occasion chief positions and hand over the presidency to a loyal ally for the remainder of his time period, which ends in April 2020.

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Kassym-Jomart Tokayev, speaker of the higher home of parliament, will take over as Kazakhstan’s appearing president for the rest of his time period consistent with the structure, Nazarbayev mentioned.

Nazarbayev has no obvious long-term successor. His resolution hit the worth of Kazakh bonds, whereas the London-listed shares of Kazakhstan’s greatest financial institution, Halyk Financial institution, tumbled 5 p.c. The information additionally appeared to weigh on the Russian rouble. Moscow is Kazakhstan’s primary commerce accomplice.

The Kremlin mentioned Nazarbayev and Putin had spoken by cellphone on Tuesday, however gave no particulars of their dialog.

SMOOTHER TRANSITION?

“(Nazarbayev) will proceed to some extent to supervise issues, so it’s not like he has reduce the twine completely – he nonetheless has his fingers within the pie,” mentioned Theodor Kirschner of Capitulum Asset Administration in Berlin.

“{That a} 78-year-old received’t be sticking round ceaselessly shouldn’t be such a shock to anybody, and this transfer makes the transition smoother. This doesn’t actually give us a headache.”

Nazarbayev, who helped entice tens of billions of {dollars} from international power corporations and greater than tripled Kazakh oil output, mentioned he would proceed to chair the Safety Council and stay chief of the Nur Otan occasion which dominates parliament.

The brand new appearing president, 65-year-old Tokayev, is a Moscow-educated profession diplomat fluent in Kazakh, Russian, English and Chinese language who has beforehand served as Kazakhstan’s international minister and prime minister.

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Whereas praising Tokayev as “a person who could be trusted to guide Kazakhstan”, Nazarbayev – who has three daughters – stopped in need of endorsing him as his most well-liked inheritor.

“We count on Tokayev to be an interim determine,” mentioned Camilla Hagelund, an analyst at consulting agency Verisk Maplecroft. “The actual query is, who will likely be Kazakhstan’s third president.”

Kazakhstan’s President Nursultan Nazarbayev writes throughout a televised handle to tell of his resignation in Astana, Kazakhstan March 19, 2019. Kazakh Presidential Press Service/Handout through REUTERS

Kazakhstan is scheduled to carry each presidential and parliamentary elections subsequent yr.

Nazarbayev’s eldest daughter, Dariga, probably the most politically formidable of his kids, is a senator and as soon as led a political occasion of her personal. One other shut relative, his nephew Samat Abish, is the No.2 official on the Nationwide Safety Committee.

The pinnacle of state safety, 53-year-old Karim Masimov, can also be a detailed Nazarbayev confidant. He has served twice as prime minister and likewise labored because the president’s chief of workers.

However no matter who finally leads Kazakhstan, the transition could sluggish reforms, together with in the important thing power sector, in response to GlobalData analyst Will Scargill.

“Though Nazarbayev will retain some key roles, his resolution to resign will probably sluggish policy-making as political dynamics are restructured,” Scargill mentioned.

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Uncertainty might additionally damage investor urge for food for Kazakhstan’s greatest state-owned corporations, which the federal government deliberate to record as a part of a privatization marketing campaign.

BALANCING ACT

Nazarbayev steered his nation, which is 5 instances the dimensions of France in space, to independence from Moscow in 1991. He has since managed to take care of shut ties with Russia, the West, and China, Kazakhstan’s big jap neighbor.

Nazarbayev received 97.7 p.c of the vote within the final presidential election in 2015. Worldwide observers have lengthy judged elections in Kazakhstan to be neither free nor truthful.

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Nazarbayev tolerated no dissent or opposition and was criticized by rights teams who accused him of locking up his critics and muzzling the media, allegations he denied.

His authorities just lately pushed by various in style insurance policies – together with elevating public-sector salaries and forcing utilities to chop or freeze tariffs – stoking hypothesis that he was making ready for a re-election bid.

Members of Nazarbayev’s household have stakes in a few of Kazakhstan’s most profitable property, together with Halyk Financial institution and corporations in sectors starting from telecoms to gasoline buying and selling.

Further reporting by Karin Strohecker in London; Writing by Olzhas Auyezov/Andrew Osborn; Enhancing by Gareth Jones

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