Priority status of security is obvious: if the country fails to survive, to preserve its security, we shall hardly be able to speak of the plans of sustained development. A retrospective look at the conception and subsequent development of the state of our forefathers graphically substantiates the fact that they waged a historically difficult and tough struggle for the benefit of their descendants and for the preservation of their statehood. And the necessity of incessant search for the solution of this strategic goal urges us to undertake a well-considered and adequate evaluation of the present day situation in the parity of geostrategic forces and trends in the changes thereof.

We understand only too well that all possible potential troubles threatening national security of Kazakhstan at present and in the nearest future do not imply and will never imply a direct military invasion or a threat to the territorial integrity of the state. It is perfectly clear that neither Russia, nor China, nor the West, nor any Moslem country has any impelling motive to attack us. And this relatively predictable state of calm and stability must be made use of to effectively strengthen economic potential of Kazakhstan which would serve the basis for our building a reliable system of national security.

To ensure our independence and territorial integrity, we .must be a strong state and maintain friendly relations with our neighbours, which is why we shall develop and consolidate relations of confidence and equality with our closest and historically equal neighbour - Russia. Likewise we shall develop just as confident and good-neighbourly relations with the PRC on a mutually advantageous basis. Kazakhstan welcomes the policy pursued by China for it is aimed against hegemonism and favours frienship with neighbouring countres.

Just as actively we shall consolidate our links and integration processes with Central-Asian states.

No less active should be the level of strengthening reations with the countries of the Near and Middle East.

The second component of our strategy consists in strengthening relations with major industrial democratic states including the United States of America. By and by these countries come to the awareness of the fact that emergence of an independent prosperous Kazakhstan meets their national interests.

Third, in every possible way we shall use the assistance and promotion granted by such international institutions and forums as the UNO, the IMF, the World Bank, the Asian, European and Islamic banks of development as it will secure support extended to Kazakhstan on the part of the world community.

The fourth element of our strategy consists in developing rich natural resources which may serve a reliable basis for the protection of national sovereignity and territorial integrity.

Fifth-with all Kazakhstani citizens we must develop a strong sense of patriotism and love to their country. Long-standing firm links between the people and the state have become rather lax while the new ones i.e. those between personal and national interests have not yet established. Fortunately, there appeared an understanding of commonness of interests of the people and the state. I have no doubt that such awareness would strengthen as living standards of people would experience improvement. In its turn it would enhance perception of such seemingly simple wisdom as, say, this: welfare of every citizen depends on sovereignty and security of the state he lives in.

Once our collective security is ensured, each and every would gain far more than when only one's personal interests are met, with the security of the society balancing on the brink of its being lost altogether. However lucky is a man, all the same he is defenceless if his country is in danger. It is the representatives of the domestic capital that must be particularly conscious of it thus demonstrating superiority of public interests as against private ones.

Yes, we must display to the world at large our unity, will to independence, civic motivation and patriotism so that any powerful country harbouring evil intents against us be already in the know that any attempts of using force or threats to use force would face tough resistance. Without clear-cut citizenship stand it would be too hard to implement other elements of the strategy whose aim is securing independence.

As regards our defence policy, it must be clear to all that we are a peace-loving nation and lay no claims to anyone's lands, resources or wealth. As to lands and resources, we have all these in abundance, and as to the wealth we shall make it with our own hands.

We, for our part, shall expect adequate attitude to Kazakhstan, the one we exercise to other countries and shall be ready to react adequately.

In our epoch, as the world abandons military confrontations, rivalry is being transferred from the military area to those of politics and economy.

We do hope that this trend would become predominant and shall do our utmost to enhance establishment of peace and good-neighbouriiness. Yet we must be well aware that Kazakhstan's consistent integration - in the course of its economic growth - in the world economy may willy-nilly involve the country in an unpredictable vortex of various regional conflicts of military, political, economic and confessional nature.

That's why absolute priority in security belongs to our foreign political activity and to the formation of a close network of Kazakhstan's mutually-advantageous relations with its neighbours and leading countries of the world.

Even today, in the end of the XXth century, after our learning the lessons of the World War II and the cold war, we have not yet parted with the threat of the world being split up into blocks and alliences. However such way is unacceptable to Kazakhstan which ensues from our five-element strategy. Ethnic composition of our country is too motley, our interests are too important and the prospects-too bright for us to afford dependence on the relations with some certain country or reliance thereon.

Kazakhstani people and Kazakhstani government must exert every effort to shaping up an economic field tolerable and liberal for major transnational capital, they must encourage creation of "warm climate" for long-term investments in the country. We must become extremely tough opponents of any military settlement in conflicts, we must advocate the principle of ..better a bad peace than a good quarrel". The best weapon of ours to ensure protection of national interests and parity of forces - for the nearest and remote perspective - must be conducting a policy of integration, primarily-consolidation of the Central-Asian Union among Kazakhstan, Kyrghyzstan and Uzbekistan, non-interference in affairs of other states, predominance of acts of consensus rather than confrontation.

Though we sincerely hope that the world has become conscious of utter uselessness of armed conflicts, let's not forget that any reasonable state relies not only on promises of other governments but also on the might of its own country.

That's why there must be no doubt that we shall attach high priority to the construction and modernization of our Armed Forces, to improving the level of their occupational training, their combat readiness and equipping thereof with modern armaments.

In order to build an up-to-date effective army, air force and naval forces of the Republic of Kazakhstan we have to strengthen their equipment and personnel and intensify the latter's training. It would continuously claim economical and effective spending of budgetary funds which we allocate and shall go on allocating for our Armed Forces. Besides, our country would make use of the military assistance and would co-operate with its neighbours in sharing the burden of regional defence.

As regards issues of security and integrity we must always be on the alert. Our affability and hospitality which we display and shall display should not be taken for open-heartedness and obedience.

Rated among leading priorities of national security must be a forceful demographic and migration policy. If our government bodies treat this issue indifferently, then on the threshold of the XXIst century we shall follow Russia into the situation of a "demographic cross" when the size of the population would go down but this time - not only because of external migration processes but also in a natural way. This trend has to be stopped immediately.

Our mission consists in destroying the old and preventing the appearance of the new barriers which create obstacles on the way to unity regardless of what these barriers are based on-be it habits, affections or particular interests, prejudiced attitude, religion, age community or such other factors. Through inhancing all possible forms of a dialogue as well as by consolidating mutual links and relations among people, gradually, step by step, we shall deepen our national solidarity and build our national potential.

Our strategy for gaining this priority constituting the society includes the following components:

- guarantee developing our own uniform civic motivation based on equality of opportunities for all the citizens of our country;

- ensure eventual elimination of causes for ethnic differences and mind that all ethnic groups have equal rights;

- narrow the gap between the wealthy and the poor in our society and pay particular attention to the problems of the country-side;

- steadfastly settle social problems which arise in the course of the transition and subsequent, periods;

- be more vigorous in building a reach Kazakhstan which would ensure both political stability and consolidation of the society in a long-term perspective;

- develop all forms of communication among people;

- strengthen mutual respect, tolerance and relations of confidence between various confessions.

Today it is not everybody that can answer a seemingly simple question: "Who are we - the Kazakhstanis?". Settlement of the problem of self-identification would take certain time and require a certain level of historic development.

For over 70 years Communist regime failed to form a united Soviet people. Many a post-colonial multinational country, even after the expiration of several decades, failed in completing this process. Several decades would elapse before this feeling takes shape and gets firmly established with us.

Yet even today we can name a number of factors which unite us. It is our land in its borders, our parents who cultivated it, it is our common history in which we jointly suffered from bitter failures and shared the delight of achivements. It is our children who are destinied to jointly live and work on this land. And each of us is at one in the awareness of his duty to his parents, in his striving to make life of our children ever better tomorrow. Today it is a real platform for unity and consolidation in the name of these specific objectives.

During the first years of independence and reforms we did our best to rapidly depart from Communist-collective elements toward private and individual ones. Rapid development of individualism based on private ownership not only promoted replacement of value reference points but also undermined indepth roots of inter-ethnic contradictions, it rapidly brought their potential down.

Chauvinism and nationalism however are not yet forgotten for good and all. Efforts to stir up these sentiments do not arouse the least interest with the population, rather the reverse: they only irritate people. Suffering rapid decline is russophobia, and regeneration of the Kazakh traditions and the language is perceived as quite natural. Unlike that of previous years, the society became more calm and constructive, it came to discuss ethnic problems with greater mutual understanding and openness.

Our movement to the market which is both cosmopolitan and international brings jts beneficial fruit - it relaxes inter-ethnic contradictions.

However, even a free market without an adequate role played by the state is not free from flaws. Like a pendulum, after gathering speed in transition from one system of values to another, it seems to have missed the point of equilibrium which we need so badly. Today we witness new poles of confrontation: between the poor and the wealthy, the rulers and the ruled, the country-side and the city.

The society is fully aware that the above gap exceeds the admissible limits. If Kazakhstan is a state of a thin layer of the well-off, then, by virtue of too low vitality, instability both within and without, it will be doomed to vegetative existence at best. We have already been a state of the poor though not in its pure form. First and foremost, the state must represent the interests of the middle class-farmers, "white" and "blue" collars, intelligentsia, petty bourgeoisie. Incidentally, these were the very groups that were so fiercely attacked by the Bolsheviks. They knew only too well where to deal the main blow to make a transition from capitalism to Communism. They delivered mortal blows against the bulwark of the capitalist state. Just remember how persistently we were instilled hostile attitude to kulaks, to "rotten intelligentsia", labour aristocracy and petty shopkeepers. Doesn't this enmity persist to this day?

Domestic political stability and development would rest on all the three classes: the rich, the middle and the poor. The society needs all of them, though naturally -'in a normal civilized proportion.

Polarization acquired a graphic manifestation in the relations established between the city and the countryside. In both cases we witness a global process of social differentiation with the gap therebetween growing steadily. Within the nearest decade the country-side must become a priority area from the point of view of giving an additional impetus to market transformations, to emphatic settlement of social problems and defelopment of infrastructure.

We are to expect considerable rejection of a free labour force in the country-side, significant migration to the city from the country-side and ever developing processes of urbanization. The country-side of today has become an epitome of major social problems: nonpayment of wages and pensions, backwardness, poverty and unemployment, poor ecology, poor infrastructure, education and health care. Meanwhile the country-side manifests the highest demographic potential.

Badly needed resources laboriously "collected" at the central level don't reach the country-side accumulating in the city. We must do away with such practices. In the shortest possible time we must complete all transformations in the country-side substantiating them with a vigorous emphatic social policy.

Our objectives are quite clear here. We' must grant peasants and countrymen an opportunity of more effective control over their lives and besides supply them with means to realize this opportunity.

Strategically these problems may mostly be settled with the help of economic growth. A well-off Kazakhstan would offer more opportunities for each and every. As the great world leader put it "high tide sets all ships afloat". Our strategy must be elaborated in such a way so that everybody has a chance of obtaining a portion of the ever growing national wealth.

Meanwhile many people will have it hard in the transition period and the Government has not enough means to help all of them. In this field our strategy would consist in directing state-rendered assistance to the most vulnerable groups of the population and to them only. However today we are more interested in raising the number of those who are able to cope with the difficulties on their own.

Speaking of the future for our children and relations among the people the way we see them, we must have a vision of the model of our future society, of the civilization which we intend to construct. Today when history discarded the dispute between a totalitarian and a liberal society, it became obvious that the models of the liberal society themselves vary greatly and differ from one country to another.

Basic difference is witnessed between the two types of models, Anglo-Saxon and Asian ones, which was demonstrated so graphically by Asian Tigers. Having common features, in certain aspects they manifested a striking dissimilarity. While individualism was specific of the first model, the second one was characterized by communitarism. In the first case they actively advocate a limited role of the state while in the second case this role is overemphasized: the state must be actively involved in planning and lead the private sector in the society an large. In the first model emphasis is made on the macroeconomy, in the second one - on the microeconomy, etc.

As I have already noted, in previous years we actively followed the Anglo-Saxon variant and the goal we set was rapid changes. Yet, today we face a strategic alternative - which way to choose. There is no consensus on this score in the society. We are a small, but nevertheless, part of Europe and historically we gravitate to the Western civilization - that's what some say. Others argue that we are predominantly an Asian country and consequently have to stick to the experience gained by the "Tigers", Japan and Korea. The third would say, however, that we are deeply imbued with Russian mentality and principles of collectivism and our choice must largely coincide with the perspective model of Russia. The fourth would object to it maintaining that Moslem population is predominant with us and we must make our choice in favour of the New-Turkic model.

However paradoxical but all of them are right and wrong at the same time. We are a Eurasian country having its own specific history and specific future. That's why our model would bear likeness to neither model. It world imbibe the achievements of various civilizations.

We shell face no alternative on this score. We shall act dialectically using both, taking advantage of the best achievements of all civilizations which proved themselves effective.

Our model would govern our own path of development combining elements of other models, but resting mostly on our specific conditions, history, new civic motivation and strivings, taking into consideration specifics of each stage of development.

Limited interference of the state with the economy combined with an active role thereof. Success of economic reforms and braking thereof on certain legs of the route requires reappraisal of the role of the state.

Authorities, both in the centre and in the periphery, must stop any interference with the economy, cease launching sowing campaigns, harvesting, etc. In the economy the state must play a substantial though limited part in creating legitimate limits of the market in which the private sector is offered a leading part. We mean finalizing formation of the legal basis that would provide for registering ownership rights, on shaping up competitive markets and reliable means of antimonopoly regulation, on maintaining fiscal and monetary policy, on developing a network of social protection, on providing for the development of requisite infrastructure, education, health care, and on pursuing effective environmental policy.

If, for the time being, the markets are weak and underdeveloped, if the market space is encumbered with fragments of the administrative system, the state ust interfere having in view development of the market and clearing of the space. So far as the economy itself is lingering in a transitory stage of unstable development, regulating role of the state and its interference must be duly adequate.

We must raise effectiveness and quality of state administration to at least an order, must help to enhance and supplement activities of the private sector and the national capital to correlate with the new world economic paradigm.

At the same time the state itself must be a guarantor of free economy. Its mission is to establish market rules and then safeguard their observance acting both just and impartial.

We are a sensible and vigorous nation. If rules of the game are clear-cut and their observance is easily provided for on a just and impartial basis, then I have no doubt that citizens of Kazakhstan will be quick enough to adapt to the market economy.

However the fact that the state will play a limited role on developed markets in no way implies that it will be deprived of will and power, thus turning into a passive observer.

Quite the contrary: it must be very strong for the laws to be honoured, it must be competent and knowledgeable as to the world and domestic markets for it to be on the alert for permanently changing conditions. It must minutely plan its activities so as not to be lax and disorganized, it must identify interests of various groups of the population and development priorities, it must closely co-operate with the private sector thus consolidating and cementing the society.

Today however the state exercises too great administrative zeal where it shouldn't and, on the contrary, it is fairly passive and inert where its role must be great indeed. However it becomes ever more obvious that such state of affairs turns into an obstacle in our development.

On the other hand, can we deem ourselves a strong state if we fail to decently (and completely!) collect taxes and duties, if we fail in paying wages and pensions on time, if laws and decrees are ignored time and again? That is why law-abiding taxpayers and honest owners of enterprises as well as the most vulnerable strata of the population suffer permanent losses. Meanwhile unscrupulous heads of enterprises and persons who defy paying taxes prosper and enrich themselves.

Everybody knows the strategy of solving these problems. Accordingly, our duties are as follows:

- eliminate persisting administrative interference of the government with trade and production;

- complete the process of privatization including real estate, the remaining small- and middle-range enterprises and the agro-industrial complex;

- sensibly organize and simplify the central Government and local authorities;

- seriously reappraise the role, powers and responsibilities;

- establish absolute supremacy of law and protect law-abiding citizens from crime. At the same time apply all power of laws and authorities to those who live a fairly-well-to-do life by using illegal means.

During the last three years our economic strategy consisted in achieving macroeconomic stabilization that implies reduction of the deficit of state budget and consistent pursuing of a tough monetary and credit policy. Today we are as close to the solution of this problem as never before. However, successes of today give us no grounds for being calm. We are sure to fail implementation of goals we set if inflation in the country exceeds the critical level, if the rate of national currency is far from adequate to the general condition of the economy and to our strategic objectives while interest rates remain high and inaccessible for the real sector or - on the contrary - are negative in real terms.

Lessons drawn from international experience are unequivocal. Any of the countries which scored outstanding economic successes had to obligatorily take all possible measures of tough suppression of high inflation rates in the period preceding rapid economic growth and subseguently it had to exercise close control over the macroeconomic indices to be kept in prescribed limits. Those who went astray were doomed to failure.

To become the first ever Asian Snow Leopard, we must deem, as a priority, utilization of the best international experience in the field of macroeconomic indices-low inflation, low budget deficit, steady national currency, high rate of savings. Such formula proved effective for Japan, Korea, Indonesia, Taiwan and Chile. Hopefully, it would prove as effective for Kazakhstan.

So far we have never faced the alternative: inflation or economic growth. We must never forget that our finite goal is economic growth, and macrostabilization is but a means of gaining this objective. Of course, financial stabilization, as no other process, has seriously comlicated the situation with many a social group. It couldn't be otherwise in conditions of systemic structural transformations. In fact, a market is a democracy, which rests upon a most severe financial liability. The majority of the population has already understood this wisdom. Naturally, macrostabilization was accompanied by tough depression and painful shortage of cash. But structural transformation of the real sector is underway, and presently both monetary and commodity masses would get reconciled.

Time will come and people tempered by the hard period in their life and work would overcome this crisis. As a Kazakh folk saying goes: "he who knows not what tightness is will never rejoice space". Through reducing inflation to an acceptable level, we transfer strategic emphasis onto the economic growth. But the economic, the more so government strategy in no way coincides with the monetary policy, and today we are capable of taking a far greater and more adequate range of measures. In this respect our attention in the nearest years would concentrate on the real sector of the economy meaning rehabilitation and growth thereof, an effective social policy, though in conditions of tough fiscal and monetary limitations.

When speaking about macrostabilization in a long-term perspective, we must be ready to countering troubles arising in this field. Significant influx of currency cash which might invade the country as a result of the development of our natural resources and of, hopefully, ever growing exports in certain sectors of the economy, might push the rate of our currency ever up thus seriously endangering it. This would imply "loss" of other industries, exporting and processing ones, first and foremost.

That is why we must be capable of absorbing a portion of the influx of currency cash without extensive use of import. By virtue of sparsity of the population and low purchasing capacity thereof, Kazakhstan's domestic market is negligible indeed. That's why we must prepare strategies of financial investments abroad well in advance having carefully studied the world experience and mechanisms currently effective on investment markets. From now on liberalization of prices which we have accomplished will never be subject to whatever doubts and changes.

Institutions of private ownership too would undergo consolidation at the expense of land property as well as by establishing of such a judicial system which would protect ownership rights and performance of contracts.

Privatization of enterprises. This process is mostly completed. It needs but finishing touches, primarily in the agrarian complex and social sphere.

Besides we need efficient regulation of the process of share circulation. As to state-owned blocks of shares at the enterprises of strategic import, they would be used with sense and measure.

We scored fine successes on our way to liberalization, yet in agriculture, in a number of industries and in the social sector the standard of market relations persists to be too low. Actually, the whole of the production sector suffers from the crisis of payment system which is the result of the actions of incompetent or corrupt chiefs of enterprises, who are not accountable or poorly accountable to related owners.

Building of an open economy and free trade is prompted by our situation as a connecting link between numerous major markets.

Such policy would be far more effective in linking countries and continents rather than any efforts to isolate one's own markets.

From the start our national capital must get hardened and be ready to combats on its own markets. It is a very tough mission but otherwise it would never win the day on external markets in future. However, while it is too young and too weak, is actually making its first steps and, wittingly, is in an unequal position, the state would protect it and help it to stand on its own feet as soon as possible.

When we compare countries which gained topmost economic results, even with insignificant domestic markets, with those which preferred the way of self-isolation, we come to see for ourselves that closed markets, excessive government regulation as well as attempts to achieve self-sufficiency, though capable of producing transitory improvements, are in the long run doomed to failure.

Besides we shall proceed with the develoment of power and such other natural resources with the aim of gaining revenues from exports which would promote not only economic growth but political stability and provision of national security.

As before proper protection of foreign investments and opportunities of profit repatriation would remain in the focus .of our most particular attention. There exist several sectors of economy (development of natural resources, infrastructure, communications and information) which are of paramount importance for our country. Development of these industries would enhance not only the economic growth but also the social sphere and Kazakhstan's integration into the world community. These are capital-consuming industries whose development requires both foreign capital and tough strategic control on the part of the state. However, as was recognized by Adam Smith, there exist certain public needs which are far less attractive for the private sector. In these cases and as a last ditch measure the state would assume implementation of these tasks.

Our situation as a major inter-regional transport centre demands establishment of a more liberal regime for foreign investments than in some states bordering our country. Only in such situation we shall be able to attract the badly needed influx of finance and knowledge, only then we shall be able to substantiate our opportunities and regular trade exchanges.

An open and liberal investment policy with clear-cut effective and strictly observed laws executed by an impartial administration would give a most powerful impetus to attracting foreign investments. Elaboration of such policy must become one of our basic objectives because it is hard to imagine in what other way Kazakhstan can achieve rapid economic growth and modernization without foreign capital, technologies and expertise.

We need a strong political will and effective actions for our investment climate to become more favourable and Kazakhstan itself - to rate as one of the first with regard to volume and quality of attracted foreign investments throughout the world. Besides we have to display supreme skill in utilizing relevant instruments needed in attracting as many world-famous investors as possible.

This was actually the very reason for my setting up - by virtue of a special Decree - of the State Committee for Investments and granted it a status of the only government body in Kazakhstan enjoying the right of conducting our policy in support of direct investments. One must remember that chasing foreign investments would be a long process which, incidentally, would never end. In this race we can't afford lagging behind.

The need to formulate industrial technological strategy for Kazakhstan ensues from world experience. With a rare exception all developing countries passed the way from labour-consuming to capital- technology- and science-consuming industries. One cannot improve inert and cumbersome structure of production overnight. World experience testifies to the expediency of a certain continuity consisting in a steadfast reduction in the gross national product of the share pertaining to agriculture and extractive industry while the share of processing industries, primarily science-consuming ones with high extra cost and that of the services industry, must go up.

We have every ground to believe that, given favourable conditions in the future of oil-and-gas extractive industry which is the vital basis of the country as well as of the entire extractive sector, they would experience a considerable rise. It offers us a starting point from which to proceed in building our structural policy. Besides, our industrial strategy, as a rule, would not affect separate enterprises. We shall use instruments of state policy in such a way so as to enhance development of industries most appropriate for Kazakhstan.

Not to become a country whose economy is oriented to raw materials only, we must develop light and food industries, infrastructure, oil-and-gas procession, chemistry and petrochemistry, certain subindustries of machine-building, finite science-consuming industries, services industry, tourism, all these - by priority rates.

Diversification of production would help us in ensuring sustainable growth. While the process of adaptation of entire branches and productions to the market in conditions of tough competition with liberal imports is underway, while our produce, save for raw materials, is hardly competitive on the world market, we are increasingly sliding to cumbersome raws-oriented structure of production whereas the whole of the civilized world advances in quite opposite direction. Downfall of production and its regressive structure is indeed a particularly dangerous factor which may no longer be ignored. If a free market is really free, it will invariably create new industries in our country. Our mission is to present Kazakhstan in the eyes of world community as an attractive site for investments, and to actively attract investors to most critical industries. However, so far, one cannot rely on the market only. The government must set about launching an active industrial policy of diversification thus transferring the emphasis from macro- to the microeconomic level.

At first, up to 2010, we shall have to focus on labour-consuming industries fairly perspective from the point of view of opportunities and competibility. They are - in order of priority - agriculture, timber-and timber-processing industries, light and food industries, tourism, housing construction and creation of infrastructure. By developing these industries we setlle not only structural issues of the economy, but also problems of employment and poverty which is particularly important at the moment.

We all understand only too well why economic growth is so vital for the future of our country. Without developing our economy we shall be unable to fund schools and hospitals, to protect our society against corruption and crime.