Mayor of Almaty – Viktor Khrapunov

Years as Mayor of Almaty

On June 15, 1997, Nursultan Nazarbayev summoned Viktor Khrapunov. After thanking him for his three years of work accomplished as head of the Ministry of Energy, he suggested that he become mayor of the nation’s capital. As is the practice in a country where everything is decided by the dictatorial president, Viktor Khrapunov began his new job the very next day.

The city he overtook was in a state of disrepair:

Empty public accounts. The city lacked the financial resources necessary for maintaining the streets, parks, green areas, rivers, public lighting, etc. Public employees’ salaries were paid six to eight months late. The case was the same for pensioners and federal student aid. Due to the lack of resources, schools, hospitals and cultural centers were left sitting idle.

Chaotic urbanization. After the collapse of communism, the rapid increase of private road traffic quickly saturated the existing road network. The city lacked a master plan, a reflection on land development and people’s transportation, and architectural standards to stem the progressive disfigurement of all constructed buildings.

Halted industrial sector. In a few years, following the collapse of the Soviet Union, entire sections of the Kazakh economy collapsed as well. 200,000 people lost their jobs. With their families (average family size at the time: 3.4 persons), this represented nearly 750,000 people left to fend for themselves and living in dire straits.

Abandoned buildings. The city was ravaged by building projects whose construction had been halted. The total surface area of these abandoned building sites accounted for nearly 850,000 m².

Power outages. In order to manage electricity shortages, a system of planned power outages took effect, depriving households of electricity interspersdely, neighborhood by neighborhood. During the night, entire zones of the city were blacked out for hours. Public lighting for streets and parks only worked for eight hours a night.

Gas shortage. The supply of gas to homes was fickle. Shutoffs of the steady gas supply left entire neighborhoods without heating. The aging gas distribution infrastructure caused frequent explosions buildings, with fatalities.

Extreme poverty. In the Eastern and Western outskirts of the city, tent villages were set up, like slums of Brazil. Several tens of thousands of people lived in these camps in the Region of Almaty, and were managed by its authorities.

Angry population. Public discontent was expressed through demonstrations of thousands of pensioners, teachers and doctors who were angry with authorities. They took over city squares and deliberately blocked private road traffic and public transportation, ending up suffocating an already congested city center.

Unauthorized fuel distribution. In the streets of Almaty, some 400 unauthorized fueling stations could be found. These mobile reservoirs were highly flammable. Contaminated and diluted with toxic substances, the fuel also posed a threat to public health. This activity was very lucrative – the fuel mafia sold it at ten times its purchase price.

Mafia takeover of retail. The end of communism brought an end to the city’s planned procurement of food and consumer goods. Small, private businesses replaced government commerce, initially in complete chaos.18,000 kiosks were built in the city, set up on sidewalks. Each of them ensured the livelihood of about ten people on average (180,000 people in total). These kiosks were dirty and unhealthy, and they disfigured the city and quickly became a hotbed of petty crime. Local thugs, who were more or less organized into gangs, racketeered kiosk operators. Not one day went by without militia intervention. The majority of crimes reported in Kazakhstan were committed in the capital.

Widespread tax evasion. In 1997, the city had more than 110 illegal markets, operating outside of any administration or taxation. These wholesale markets, where all sorts of merchandise, from cars to furniture, appliances, clothing and food, generated billions of dollars in sales, and hundreds of millions of profits annually, all made entirely under the table.

To make things even gloomier, the city found itself stripped of its status as capital city in December 1997. Economic and social misery was added on top of the population’s widespread depression, convinced that their living conditions could not get much worse. Furthermore, the transfer of the capital city weakened the municipal budget that was already feeble due to the fact that President Nazarbayev took out the largest national companies in his wake, which were also the main taxpayers to the city. In 1998, the city budget for Almaty (1.5 million inhabitants) was only $165 million.

In short, when Viktor Khrapunov took office, he had inherited a mess. As soon as he started, he surrounded himself by a team of specialists with whom he would analyze the situation and devise a 35-point recovery plan. The first emergency measures were financed by loans. Simultaneously, the mayor and his team made the strategic decision to focus on economic growth to replenish the city’s funding. The strategy proved to pay off. In 1997, the city had 7,400 SMEs; in 2004, when Viktor Khrapunov left office, there were 148,000. This dazzling rise was the basis of the city’s recovery. Taxes paid by these companies ensured a regular increase of the city’s budget, which more than doubled in seven years, to reach $360 million in 2004.

Within a few years, Almaty raised its head, cleaned up its finances, and emerged from its crisis. It became the biggest contributor to the national budget. In 2004, this contribution reached the record amount of $1.65 billion. The success was possible not with oil or natural resources, but rather only through the vitality of Almaty SMEs.

This explosion of economically and fiscally controlled activity was the result of a regulatory change that seemed trivial at first glance. Before 1997, it was forbidden to repurpose an apartment or an office into a shop. Viktor Khrapunov decided to allow the transformation of spaces on the ground floor into commercial facilities. Meanwhile, he took a radical but very unpopular measure – banning sidewalk kiosks. The result was immediate: the city’s commerce shifted from the sidewalks to brick and mortar stores, where municipal authorities could enforce their regulations and tax collectors could levy their taxes. When Viktor Khrapunov left the council in 2004, almost all sidewalk kiosks had disappeared from Almaty.

Upon taking office, the mayor resolutely took on another hotbed of crime and fraud – the fuel mafia. He banned unauthorized sale of fuel. He doled out plots of land to foreign investors (Exxon-Mobil, Texaco or Lukoil Russia) so they could build real, modern, safe, regulated fuel stations that were subject to city inspection. A total of 140 such stations were built. They would replace the 400 illegal stations, which were all dismantled. Bulat Nazarbayev, the President’s brother who made huge profits from them, was vehemently opposed to this.

To achieve their ends, the mayor and his team showed perseverance and courage. Viktor Khrapunov was subjected to intense pressure, and he received threats. During the two first years of his term, he lived under the protection of five security agents responsible for his and his family’s continuous safety. Later, the Mayor himself lightened up on his stance – he was accompanied in all his travels by a trusted driver.

Viktor Khrapunov also took on illegal markets. During his tenure, he managed to close 34 of them. The financial stakes and the resistance were so high that he ought to have continued the fight for several more years in hopes of completely eradicating the phenomenon. The battle was even more difficult to lead since these bazaars belonged to influential people, including several close family members of Nazarbayev himself: his brother, his sister, his children-in-law, etc. But the mayor was not intimidated. He wanted the law to apply to everyone equally. This is why he showed his inflexibility by bulldozing a bazaar illegally built by the president’s brother, Bulat Nazarbayev, on 4 hectares of city property. He had the fencing dismantled and 400 containers transported onto city streets. This feat, which was warmly welcomed by the population, earned Viktor Khrapunov an angry telephone call from the president himself, whose brother had alerted him. The mayor, however, did not yield. He even convinced the president that the problem rested in his brother’s unlawful conduct.

With regard to urbanization, the mayor took on evil by the root by delivering a master plan for the city to control real estate development and to channel the flow of traffic. The plan included the construction of highway interchanges in 19 locations, meant to relieve critical intersections in the city. The first two construction projects quickly began. In 7 years, the mayor had about 15 parking lots built, with parking spaces for 2,000. Dozens of streets and avenues were built, rebuilt or renovated. To relieve congestion of main thoroughfares, the decision was made to build a bypass to redirect cross-traffic (60,000 vehicles per day at the time). The Almaty Metro project was also launched with a budget of $800 million, tied to a 25-year concession to the English Depfa Bank to recoup its investments. The project, however, was abandoned by Viktor Khrapunov’s successor.

Land development was also a problem in the outskirts of the city, whose responsibility fell to the Region of Almaty, which had been too permissive as far as issuing building permits. Numerous individual villas were built, with neither coherence nor control. Viktor Khrapunov had the Kazakh government issue a decree that would draw a 20km perimeter around the city, where the Region of Almaty could no longer intervene without the consent of the City and architects. The mayor also opposed to the construction of private villas on very well-located plots of land in the city center and which had already been sold to promoters. Instead, he had a new green space built, with a public park called “21^st Century” and a golf course.

With Viktor Khrapunov’s arrival in the city hall, housing construction resumed. The mayor had all the halted building projects that had ruined the city landscape completed. When he left office, there were none. He pushed for the construction of housing meant for sale on future dividends on 29 hectares, granted by tender offers, in an environmentally clean neighborhood. A new neighborhood capable of housing 15,000 people was created. The city had housing built for the most disadvantaged (war veterans, orphans, pensioners). Special emphasis was placed on the city’s parks and monuments to give them a more homogenous and elegant style. 40,000 m² of flowers were planted in flowerbeds, terraces and parks.

The recovery plan, which included 35 projects, allowed rapid and concrete improvements to several other domains:

Tent villages located on the outskirts of the city. In 1989, homeless people, mostly of indigenous origin, were squatting on public land. Knowing that they were acting illegally, these people were ready to offer resistance to the authorities. Realizing the complexity of the problem, the Government of Kazakhstan decided to transfer responsibility of this land to the City of Almaty, land where tens of thousands of people lived in unsanitary conditions. Viktor Khrapunov ensured the construction of technical networks, roads, schools, ambulances and public amenities on this land.

Cultural offerings. The mayor took on the reconstruction of the Abay Lyric Opera. The hall was in a deplorable state, but the Ministry of Culture, which was responsible, blamed budgetary constraints for having done nothing. Viktor Khrapunov had the institution pass under the responsibility of the municipal budget and had reconstruction work completed in no time. The renovated theatre was opened in January 2001. Other theatres (The Natalia Sats Children’s Theatre, The Korean Theatre, The German Theatre) were able to move into new facilities: The Uyghur Theatre and the Lermontov Russian Drama Theatre were also renovated.

Rebuilding the airport. In July 1999, a serious fire broke out at Almaty Airport, and the passenger terminal was completely destroyed. Due to lack of resources, the Ministry of Transportation, which was responsible for the terminal in question, did nothing to rebuild it. For travelers arriving to Almaty, the unsightliness of this ruined carcass was embarrassing. Finally, the mayor took charge of the construction thanks to a deficit guarantee issued by the Ministry of Finance. The German company Phillipp Holzmann was going to begin construction when a political intrigue came to light regarding the Prime Minister at the time in association with the Region of Almaty. Together, they started an unusual plan to build a new airport 65km from Almaty which would assume all international flight landing and takeoff rights. As soon as the sale was completed, the German company left. Finally, after unsuccessful attempts at attracting several foreign investors, an agreement was reached with Depfa Bank, allowing the project to finish at $53 million. The new terminal was opened with great fanfare in December 2003.

Drinking water. In Almaty, the population was used to the disempowered communist system, and it consumed water indiscriminately. At the end of the Soviet era, 400 million m³ of water per year had to be pumped, purified, distributed and treated at great expense. Viktor Khrapunov had individual meters installed, which allowed for detailed billing, leading to a considerable reduction in water consumption per capita. This incentive measure had rapid and profound effects: in 2004, the city only consumed 267 million m³ of water.

Education. Between the country’s independence in 1991 and the arrival of Viktor Khrapunov as mayor of Almaty in 1997, not one school was built in the city. In 1997, the city only had 55,000 spots, while it was supposed to fit 73,000 pupils. Several schools had started rationing out the use of their classrooms. Between 1997 and 2004, twelve schools capable of holding 12,000 additional pupils had been built.

Sanitation. The mayor signed a contract with a Swedish company that would supply the facilities for the collection, removal from the city and burial of hard waste. 5,000 European-style bins were disseminated around the city for collecting waste. A waste sorting and processing facility was built and put into operation.

Support for the most disadvantaged. The vast majority of Kazakh veterans and wounded soldiers of the Second World War lived in Almaty (260,000 people). A law granted privileges to this lost generation, but it was no longer applied. Viktor Khrapunov did everything he could for this population, which he held dear: their very small pensions, which were finally paid out on time, were supplemented by an extension. Those who had to have a private vehicle for medical reasons finally received one. The mayor also took steps to support orphans and the disabled. Viktor Khrapunov had a veterans home built that could house 500, a clinic with modern equipment, an end-of-life hospice for victims of incurable diseases, as well as a school for children with physical disabilities.

In December 2004, when he had to leave office as mayor of Almaty, Viktor Khrapunov could be proud of the work he had done. In seven years, the city had changed completely. The quality of life there had been considerably improved. Throughout all these years, he had been tirelessly committed to the service of the inhabitants of the city, and it showed: Viktor Khrapunov was a popular, appreciated and respected mayor. His work and commitment earned him official recognition as well. From 2000 to 2005, for six years in a row, he was named “Person of the Year” in the category of best mayors. In 2002, he was named “Statesman of the Year”. In 2005, he was voted “Best Mayor of the Year” in the category of “Introducing New Technologies”. To this glowing record, an important point should be added: when he left office as mayor of Almaty, the city was still owner of its entire infrastructure. In a country where the presidential clan considered public property as private merchandise at his disposal for getting rich at the blatant expense of the population, this fact deserves to be acknowledged with emphasis. During his term as mayor of Almaty, Viktor Khrapunov regularly had to deal with Nazarbayev family members requiring him to sign some document or another or take this and that action for the benefit of their personal wealth. He consistently opposed.

During his tenure, Viktor Khrapunov intervened with the Prime Minister and the President to stop the transfer of the city’s gas distribution network to a private company Energocentr. In 2006, the president’s son-in-law, Timur Kulibayev, bought the network for $62 million. According to information provided by A. Goncharov, the person who acted as intermediary, 50% of the amount was returned to Kulibayev (“otkat”).

When he decided to allow transforming housing and offices into commercial spaces, the mayor was visited by well respected personalities of the city who had come to propose a deal. They asked him to postpone the enactment of the law for a few months to allow them to buy up the city’s ground floor apartments at low costs. This would have been an even easier maneuver, since these apartments were not very popular with the public, especially for safety reasons. Then, after the law took effect, they could have sold them to the sidewalk kiosk operators who would have been forced to abandon their sidewalks, guaranteeing lucrative profits. These profits, of course, would have been shared with the mayor. Once again, Viktor Khrapunov refused to be corrupted.

One of the president’s daughters, Dariga Nazarbayeva, wanted to take control of administrative spaces to set up her companies (NTK, Khabar, KTK, Karavan). Viktor Khrapunov demanded that the transaction take place at the market value of the properties, approximately 1,500 dollars/m². As ordered by the President of the National Register of Public Property, his daughter was able to acquire these offices, bypassing the city hall, for 50 dollars/m².

When Viktor Khrapunov took office, Almaty Airport had already been partially transferred to the Nazarbayev family. In essence, Timur Kulibayev and Nurshan Subhanberdin were able to grab up the airport infrastructure, valued at $22 million, claiming that the airport could not pay off a $3-million loan from their bank KazKommerzBank. The new mayor gathered documents proving that this acquisition had been made illegally and turned them over to the President, but his efforts were in vain. As for the passenger terminal, it remained city property until Viktor Khrapunov’s departure, who was opposed to any privatization. One of the first acts of his successor, Tasmangambetov, was to offer it for a pittance to SAT & Company, a company belonging to his own son-in-law Rakishev, who himself was Timur Kulibayev’s business partner. They were offered a concession of 20 years at an annual rent of $3.5 million, while the fees associated with international flights alone brought in nearly 24 million per year. The city’s accounts suffered at more than $400 million over 20 years. Besides this, the new owners would not pay back one penny to the city of the $60 million invested in the reconstruction of the terminal – contrary to the demand made so many times by the former mayor.

The positions taken by Viktor Khrapunov and his repeated refusal to get involved in suspicious or downright illegal transactions made him the target of attacks and smear campaigns in the media controlled by the presidential family.

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