"THIS is number one bird in all Kazakhstan" says Musah the Berkutchi as he removes the leather cap from the head of the enormous golden eagle clinging to his arm.

At the first sign of light, the bird squawks and strains, stretching its wings almost to its full six-foot span in the freezing air. "It is my son's bird," explains Musah as we trudge across the steppe outside the village of Sugaty. We are about three hours' drive from the city of Almaty and in sight of Chinese border to the east. "My son is also Berkutchi - a traditional falconer - but he is not here today and the bird knows this."

For hundreds of years, until Kazakhstan was annexed by Peter The Great and absorbed into the Soviet Union, the inhabitants of Central Asia (today encompassing the Stans and much of Mongolia) were mostly nomadic. Few skills were as much revered as those of the Berkutchi, one who works with a berkut or golden eagle.

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But the communists gradually ensured the nomads settled and such traditions dwindled. Stalin oversaw mass deportations - some two million Kazakhs were dispersed across the USSR, and thousands died in labour camps.

Musah's skin is tanned by a life lived outdoors on the steppe. He believes it is his duty to preserve the old ways and pass them on to the next generation.When Musah finally releases the eagle, he does so by swinging his arm forward and propelling her into the air. "I have won the national tournament several times," says Musah. "And my son won it last year. It means that people have heard of us, but it doesn't mean we are wealthy. The villagers helped me build the museum but we don't get any other assistance. The government doesn't help us. Things aren't as good as they were before independence."

Today his family survives from the small admission charge paid by visitors to the tiny two-room falconry museum. Inside among the exhibits are two large carpet pictures - one of a Kazakh politician and another of Mecca. Like the majority of Kazakhs, Musah - short for Mohammad - says he is Muslim. I ask him what that means to him and he looks bemused. "It means we live together peacefully with our neighbours; Muslims, Russian Orthodox, everyone," he says. He can't remember the last time he went to mosque.

Official figures suggest that almost half the 16 million strong Kazakh population is nominally Sunni -with the rest being a mixture of Russian Orthodox and Jewish. Two years ago, the country's president, Nusultan Nazabayev, opened the largest mosque in Central Asia in the capital Astana, and almost every aul, or village, has had a new mosque built and paid for by the government in the past five years.

Close to the museum is the family's yurt, a large round felt tent stretched over a wooden frame, with girl playing outside.

"My granddaughter", says Musah proudly of the little girl on the cover this week, "her name is Akerim Jankoloshpi. She is Boloshak - the future - of our country. Maybe she will be Berkutchi one day. Or maybe she will be computer programmer."

At Turan university in Astana I meet Natalia. She is 20 years old and is one of the top students, eloquent and confident about her future: "I will be a manager in a business, maybe an international business," she tells me in English. She is typical of the current generation of 18 to 25-year-olds who can barely remember the system their parents grew up with. Some hope to study abroad - the UK is everybody's first choice - "because the Americans are silly".

There are about 450 Kazakh students in the UK as part of the president's Boloshak scheme. These chosen few receive full grants to pursue Masters and PhD programmes and in return, they commit to return to Kazakhstan to work for the government for a minimum of three years. Outside London, the highest concentration is in Scotland, particularly in Glasgow, Edinburgh and Aberdeen, where the country has a consulate serving the growing number of Scots firms seeking out lucrative contracts in the oil and gas fields of the Caspian region.

The Boloshak programme is an integral component of Nazabayev's petrol-fuelled dream of making the country one of the 50 most competitive countries in the world within 25 years. It is a contender for the 2009 chairmanship of the OSCE - the Organisation for Security and Cooperation in Europe - something the UK and the US have declined to support.

It is without doubt the tremendous potential of more than 30 billion barrels of proven oil reserves (comparable to those of Iran) that is currently fuelling the country's economic boom. And as oil and gas-producing nations become less attractive propositions, Kazakhstan is becoming the new darling of the oil-addicted nations, particularly the US and China. Though the industry is still very much in its infancy, the fact that it can count on vast reserves and is seen by the US as an important ally in the War on Terror, makes Kazakhstan, with its perceived political stability, a very attractive proposition.

Natalia's classmates, most of whom tell me they will also be managers and business leaders, are all impressively knowledgeable about Britain and Tony Blair and the war in Iraq. "Why do they stay there? People should live together like we do here, Russians and Kazakhs together."

They can barely hide their disdain when I answer their questions about how much young people in the UK know about Kazakhstan by saying that last year's film starring the fictional Kazakh journalist Borat was, for many young Britons, the first time they would have heard anything about the country.

The Kazakh government may have banned the film, but it turns out most of them have seen it, either by downloading it from the internet or having got hold of a pirate copy. Hardly anyone is genuinely offended by it - although they all want to know why Sacha Baron Cohen chose Kazakhstan to lampoon. "He could have chosen anywhere. Why did he choose us?"

"He should come here and see what Kazakhstan is really like," pipes up one. "No - he'd be torn apart," jokes another.

It is not long since Baron Cohen was in the news again here following his Golden Globe award for the film and the students are as surprised as the callers to a phone-in Europa Plus radio in Almaty - controlled by the president's daughter, Dariga. Callers, students and even Rustem Nurgazinov, the bright young man from the ministry of tourism charged with overseeing the country's image abroad, concedes that the film has given the country a great deal of publicity.

"The film is not important in the long run," says Nusultan. "But I can admit now that it has actually been good for Kazakhstan." And the world may be looking more and closely at Kazakhstan again soon. The Nomad, a multi-million dollar epic starring Goal actor Kuno Becker is in the running for Best Foreign Film in this year's Academy Awards tonight.

When I ask the students what is important to them, they respond almost as one. "Education, getting a good job - and helping the wider world learn more about Kazakhstan." They get all their news from the net or the TV and give the impression that when they voted for the first time a year ago, it was for Nazabayev, "because he has done so many things for our country".

The official capital, Astana, is now the biggest building site in Central Asia, growing to keep pace with the ambitions of the country's leader. Nazabayev's mausoleum-like office stands at the heart of the new political quarter. It is car-crazy, Lada-loving, 4x4-worshipping utopia but parts of the city have remained unchanged since it was a small outpost and the rest, the sprawling new administrative zone, is all futuristic glass.

In 1992 the then-communist leader, Nazabayev, eased away from the former Soviet Union and has since won the past three elections. Nazabayev has maintained a firm grip on the leadership. In 2005 he had 95% of the vote in an election that an OSCE monitoring report said was neither free nor fair. And 10 years ago he decided that the nation's capital should be in the centre of this country of more than one million square miles.

Much of the city, formerly an old trading post, is still a building site and one can hear the clanking of relentless construction. One day Astana will be home to more than three million people - the population is currently about 500,000.

The most impressive of the finished buildings is a castle built in a sort of Gotham-meets-Bladerunner style and known as the Triumph Of Astana. Apartments here can cost millions of dollars. Many politicians from the president's ruling Nur Otan party are said to live here.

And then there are the public buildings. The Bayterek tower receives an endless stream of visitors who take the lift to the top floor for a panorama. But it is Sir Norman Foster's glass pyramid, the Palace of Peace, based apparently on a design that came to the President in a dream, which is the most perplexing. From the outside it appears slightly unsure of itself, placed at one end of Nazabayev's huge new administrative zone, incorporating the two parliamentary buildings and the monumental office of the president. It is becoming a favourite spot for newly weds to pose for pictures.

Inside the pyramid, it is surprisingly tardis-like, with a cavernous lobby area to house the requisite cloakroom that will hold the fur coats of those attending a performance at the opera house within. Above the auditorium is a vast banqueting hall topped by a "sky garden" which leads to a small conference area in the very tip of the pyramid. At first the brightness of the white masonry is dazzling, but what really stands out is the colour of the perfect blue sky.

We head to a neighbourhood in the older part of town. Here, we pass residents filling urns with water from a standpipe and hauling home on sleighs. The snow will be a feature until April and as the temperature is hovering just below freezing, you learn to appreciate the importance of fur coats and hats.

A quick fashion audit reveals everyone's favourite this season - the otter hat. The most popular is round in style and sits on the head just covering the ears. Some are accessorised with a couple of fur pom-poms dangling from a leather cord. I'm overwhelmed - and instantly ashamed - by otter hat lust. Until I see them for sale. Rows upon rows of them, some the colour of freshly fallen snow and others, tinted to reflect every shade and hue you can think of. In the Kussenkovv hat shop in one of Astana's premier shopping malls, prices for fur millinery start at 40,000 Tenge (around £200).

"It is a week's salary or more," admits Natalya, a thirtysomething history teacher and part-time guide. "But for women a good hat is important. At least 70 cm thick and more in some places."

Certainly the ice fisherman, at least a dozen of whom arrive early each morning to dig a fresh hole through the ice, hope so. Many are huddled in their homemade tents made from clear plastic sheeting each wrapped securely around their collapsible stools to keep out the wind.

In Almaty, the former capital, the viciousness of the winter weather is tempered by glorious summers. It also - says cultural promoter Nour Makambetov - has the country's best nightclubs, "We bring in British DJs and the place goes wild."

Each weekend bureaucrats and business people in Astana fight for space on the Air Astana shuttle - the national airline is one example of a UK-Kazakh joint venture - back to Almaty. There, they flock to the giant outdoor markets and then head to the Tien Shen mountains at southern edge of the city. European visitors have enjoyed the challenges of hiking to the nearby Kyrgyz border, the tulip fields and the Charyn Canyon, said to be bigger the Grand Canyon.

"We hope that in a few years, more Kazakh children will take up climbing as a recreational sport," explains Kazbek Valiyev, Kazakhstan's most famous mountaineer and something of a national hero for his 1982 ascent of Everest as part of a Soviet expedition. "We are raising money to install climbing walls in schools and the curriculum allows all children to have at least one hour of climbing a week."

When I ask Dilnora Valiyev, a brand manager for Nestlé, who her heroes are, she names the president, a popular singer and Kazbek - who it turns out is her uncle. She and Ruslan, her Russian Tartar boyfriend form a handsome and hardworking couple. In addition to their day jobs, they are studying together for an MBA to further improve their chances of promotion.

"It is not enough to have just one degree now. Everyone is well educated so you need to have something extra to offer," she says. And although her grandparents speak Kazakh, Dilnora grew up speaking Russian - still the lingua franca in the country. The government however has stipulated that high ranking civil servants must speak Kazakh and, says Dilnora, "it is becoming fashionable among teenagers now to speak Kazakh so lots of us are taking extra classes".

Neither Dilnora or Ruslan think it is strange that no one is allowed to take photographs in Almaty's new shopping centre where crowds of youngsters are enjoying the dancing models in the newly opened Adidas shop and competing for a national title at the centre's climbing wall. It is packed, and the only place I see Western brand name shops in the city - Gucci, Armani and Clarke's shoes.

Almaty is one of the most expensive cities in the country - it has one of the highest number of luxury cars per capita. Its mountains, parks and beautiful Russian Orthodox cathedral make it decidedly appealing, not just for locals, but for the growing number of visitors. Who Wants to Be a Millionaire host Chris Tarrant recently came here for Kazakhstan's famed fishing.

But if you are an opposition politician or a journalist it can also be one of the most dangerous. Amnesty International and the Committee to Protect Journalists have both expressed concern over the unexplained deaths of political activists - including one killed in December 2005 and another last February. A number of newspapers have also fallen foul of a law that makes insulting the dignity of the president a crime. Many have been closed down and it is a similar story for the few TV stations that attempt to cover the news. Nurzhan Mukhamedjanova is the executive director of Channel 31, which "tries to show all sides of a story". She doesn't mention that two years ago an editor and a reporter from 31 were, according to the international group, the Committee To Protect Journalists, fired after pressure from the ministry of information.

"This lack of freedom and genuine choice is probably Kazakhstan's major weakness," a former senior diplomat who knows Kazakhstan well, told me. "It has a booming economy and because of that is able to stand up to Russia and China when it needs to. It is doing a tremendous amount of business with the UK, but there are still issues around transparency and freedom of expression and association."

Her view is echoed by another diplomat currently working in Almaty who did not want to be named."There is no transparency here and the administration is simply not mature enough to handle a position such as the OSCE chairmanship. It doesn't even have an idea of what it really involves."

One woman who is prepared to speak out is Gulnara Kaliakbarova. The Kazakh director of the Almaty office of Penal Reform International is a brave, hardworking and immensely pragmatic observer of the human rights situation. "Many people don't know their rights. In fact many people don't feel they need to know. They have become comfortable with the status quo. And it is hard to find a good lawyer here.

"In comparison with other countries that were part of the Soviet Union I think we are certainly in a better position - look at Uzbekistan where the number of refugees who came here shot up after the Andijan massacre. But even here the government is trying to control NGOs. People don't like to talk about politics. Last year the political party run by Dariga merged with her father's party which is a worrying development. The country tries to establish an image of multiparty democracy but it is not true."

But it is women such as Maira Abragimova, a teacher who tried to get a job with an oil company in Atyrau, the country's oil hub, who are perhaps the best example of Kazakhstan positive development. She started as a cleaner for TCO, the firm jointly owned by the Kazakh government and Chevron, and which offered English lessons to its staff. Maira took the initiative and claimed her right to free English lessons, only to be told that cleaners were not eligible. Luckily her own boss gave up his place in order that she could attend. After six months she was offered a job as a junior administrator. Five years on she runs the freight forwarding department, responsible for millions of dollars worth of business.

"I am grateful to our president," she tells me, "for everything we have achieved."