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Zh.S.Yelyubayev Ж.С.Елюбаев
Doubtful Legislative Improvisation
The issue discussed in connection with recently adopted amendments and changes to the Law of the Republic of Kazakhstan «On Subsoil and Subsoil Use» (hereinafter the Subsoil Law) is relevant because it affects both the interests of subsoil users very and the State. The initiators of this legislative act assumed and seem to assume now that the adoption of these legislative provisions would facilitate strengthening of the national and economic security of the country. In my opinion, they are grossly mistaken, as these amendments and changes to the Subsoil Law, on the contrary, infringe on those key instruments of national identity (national and economic security, public safety) which they were trying to defend. I will give a summary of my position. Upon adopting this disputable law the authors of the discussed law and the Parliament of the Republic of Kazakhstan did not take into consideration the critical provisions of other regulatory legal documents of the Republic of Kazakhstan that directly regulate the issues of ensuring national and economic security of the country. For example, Article 28 of the Law of the Republic of Kazakhstan «On National Security of the Republic of Kazakhstan» of June 26, 1998 No. 233 (hereinafter the National Security Law) states that the provisions of the said law «is the basis for drafting and adopting other regulatory legal acts regulating separate directions and means (areas and instruments) of ensuring national security». Making amendments and changes to the Subsoil Law, the law initiators seem to overlook the cited provision of the law and to ignore the National Security Law because the new amendments and changes to the Subsoil Law apparently contradict many provisions of the special law regulating the issues of national security. Pursuant to clause 1 of part 5 of Article 18 of the National Security Law, government authorities «in the provision of economic security» are prohibited to «to adopt decisions and actions preventing the inflow of investments into the economy of Kazakhstan». The adoption of decisions and performance of actions contradictory to the above provision of the law causes «liability» of these authorities and their officers. Is it possible now to be sure that hasty and ill-conceived amendments and changes to the Subsoil Law would facilitate new investments into the country and protection of the investments already made? In our form conviction «no», and it is confirmed by a negative reaction of subsoil users and investors to this new law. If the Republic of Kazakhstan fails to ensure the stability of investment agreements and to support first investors, especially foreign investors who came into the country during the most difficult years when the economy was in a deplorable state, then no new foreign investments are likely to come as every investor bringing capital into the country is to know and be sure that the investor’s rights and interests in this country will be protected. The discussed legal innovation grants to the Government of the Republic of Kazakhstan/Competent Authority (MEMR), in the case of «causing threat to national security», the right to make amendments and/or additions to a subsoil use contract, in the event of a subsoil user’s unilateral waiver of such proposal, there are stipulated the grounds for a unilateral waiver of the contract (the new version of Article 45-2 of the Subsoil Law). These provisions, in fact, are the veiled form of nationalization. Meanwhile, reference to the key legislative act regulating the issues of ensuring national security, described in the previous paragraph, shows that the new provisions of the Subsoil Law also contradict the provisions of the National Security Law. Thus pursuant to clause 4 of Article 9 of the National Security Law only the President of the Republic of Kazakhstan, and not the Government of the Republic of Kazakhstan, and far less the Competent Authority in the sphere of subsoil use, has the right «to determine real, potential threat to national security and undertake necessary actions to ensure security of the citizens, the community and the state subject to the opinion the Security Council». Thus, the new provisions of the Subsoil Law also infringe upon the rights of the President of the country granted to him by the special National Security Law. The new provisions of the Subsoil Law incorporates the term «economic interests», significant changes to which as the result of «subsoil use operations in respect to subsoil blocks that have strategic significance» might be the ground for a requirement to make amendments and additions to a subsoil use contract, if they create «a threat to national security». Hence a question, how the term «economic interests» is to be construed; who will determine the status and level of «economic interests»; whether a subjective approach or abuse of power is possible; whether liberal interpretation of this term by state officials in the absence of the legislative construction would cause retaliation upon subsoil users disliked for whatsoever reasons by the state officials who make decisions on many issues related to coordination and approval of required documents necessary for exercising subsoil use right? It should be noted that the National Security Law does not contain the term «economic interests». However, this act contains such terms as «economic security», «national interests», and the last term is interpreted as «a combination of political, economic, social and other needs of the Republic of Kazakhstan, the implementation of which determines the ability of the state to ensure protection of the constitutional rights of man and citizen, values of the Kazakhstan community, and fundamental state interests». In this connection one more question is to be asked: whether «political, economic, social and other needs» of the state are not secured as required by the law? We see and hear other information from daily mass media broadcasts and speeches of top government officials stating that a political stability has been established in the country; the country achieved high economic parameters and not least because of development of oil and gas and power sectors allowing in the near future to be ranked among 50 highly developed countries of the world; high social security of all layers of the population is ensured in the country, and the state secure the constitutional rights of its citizens. What has made the Republic of Kazakhstan implement such extraordinary measures as the adoption of the said anti-investment and anti-market law, which provisions contradict the key law regulating the issues of ensuring national economic security of the country? It appears that introduction of the new provisions into the Subsoil Law was initiated by a group of top officials of the country, including the deputies of the newly elected Parliament of the Republic of Kazakhstan who place their populism and political ambitions higher than «national interests» of the state. It should also be taken into account that this retroactive law is to resolve current conflicts with individual subsoil users or to establish a legal database to influence the first investors of Kazakhstan. Meanwhile, neither the Government of the Republic of Kazakhstan nor the Parliament of the country conceived that settlement of conflicts with individual subsoil users in this way bring gross harm to «national interests» and creates «threat to national security», aimed at «weakening law and order; preventing growth of investment activity, including inflow of foreign investments into the Republic of Kazakhstan». I would like to point out to one important provisions of the National Security Law (part 2 of Article 18). Thus, when the state «for the purpose of protection of national interests of the Republic of Kazakhstan, including retention and strengthening of the industrial potential», exercises «control over the condition and use of the economic facilities of Kazakhstan, operated or owned by foreign entities and entities with foreign participation», should do it with obligatory «compliance with guarantees granted to foreign investors». Has it been provided for in the legislative innovations regulating subsoil use issues? Of course, not, on the contrary, this provision was violated. Finally, it should be noted that a possibility of «unilateral waiver of a subsoil use contract» by the Competent Authority and assigning retroactive force to the law is not the best law-making and law enforcement practice. This practice should be recognized as the worst, moreover, for the state that is seeking to be in the list of highly developed countries with a stable political system and progressive market economy as well as with actually functioning democratic institutes. This law pushed the Republic of Kazakhstan back for 15 years that is to the period when the country commenced developing the market economy and was trying to establish and attractive investment climate. Through the fault of the notorious «innovators of the law-making guild», the country might lose more that it is going to gain. The law as it was adopted cannot facilitate law and order in the country in the wide meaning of this word. The Kazakhstan Petroleum Law Association (KPLA) combining lawyers working in the petroleum sector of the country’s economy, will join healthy forces of the community to ensure law and order in this key sector of the economy. The dictate of the state regulatory agencies and state officials should not exist in the sphere of the budget-forming sector of the country’s economy; the effect of the laws of the state should promote developing a free market economy and establishing an attractive investment climate. The existing facts of violation of the law by subsoil users, investors and other business entities should be stopped on the basis of the applicable «appropriate» laws and not on the basis of doubtful legislative improvisation.
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