Kazakhstan faces the future

RUSSIA / FSU POLITICS - Report 27 Sep 2021 by Alex Teddy and Alexei Panin

​The long-standing conflict in Afghanistan consistently undermined the outlook of Central Asia for over 20 years. Yet within the region, Kazakhstan has been a relative economic success story in the context of conflict-ridden neighboring states and a divergent Soviet breakup.

Now, following the US-NATO withdrawal, the future of the region has come into renewed focus – although this time with more attention on the East, as China seeks to capitalize on the gap left behind. This report examines the current state of Kazakhstan and its outlook.

Nursultan Nazarbayev is the Leader of the Nation - and Chairman of the Security Council (equivalent of the CIA and FBI combined). He holds these offices for life. He was president of the country from 1991 until 2019. He even ruled Kazakhstan for the last two years of the Soviet era. Nazarbayev is 81 and in poor health. Yet, despite his physical incapacity he is mentally unimpaired.

Economically, the country is in China’s orbit – with Chinese firms directly or indirectly now owning nearly 25% of the Kazakh oil industry. Russian influence is still significant but declining, while the country has also skillfully incorporated investment from the West over the years and accumulated favor with many investors. Oil, gas and coal still form the great bulk of the economy. There are also metals aplenty in the country. In 2020 the country’s foreign trade turnover was roughly USD 100 billion.

Yet the economy has had a rough 18 months. Oil and gas prices sank very low, but gas prices are appreciating rapidly. This is the first good news Kazakhstan has had in a long time. There are some Kazakh guest workers in Russia and many of them lost their jobs in 2020 due to the lockdown. However, Kazakhstan is the richest of the Central Asian five. It is much less reliant on remittances from Gastarbeiteren abroad than the other Central Asian countries.

China has been the country's main trading partner for over 10 years. China seems to have an unquenchable thirst for energy. But as renewables become cheaper – albeit less reliable for the Chinese – even China is interested in cutting down on carbon emissions; this could be worrying for Kazakhstan.

Of particular interest is Kazakhstan’s role within the Eurasian Economic Union (EAEU). It has been a member of the trading bloc, which came into force in 2015 – creating a single market for goods and services. Yet however ambitious it may seem, including a stated aim of a single currency by 2025, it does not offer anything like the economic clout of China, the EU or the USA.

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