Changing geopolitical dynamics of Kazakhstan: what it means for Turkey

August 18. Today’s Zaman. LONDON

by Mehmet Ogutcu

Changing geopolitical dynamics of Kazakhstan: what it means for TurkeyWhen I first ventured into Central Asia as a Turkish diplomat back in 1989, it was still viewed as a terra incognito, yet to be declared independent – people could hardly pronounce the full names of these “stans.” Things have changed significantly over the past two decades as these countries have consolidated independence. Among them, Kazakhstan figures prominently as a “rising star” of the region, with significant economic and political achievements.

The global financial crisis, depressed demand growth and declining energy prices have shifted this region to an inward focus. Kazakhstan is grappling with a credit crunch, unemployment and a crisis in the banking system. The Russo-Georgian war and Russian-US negotiations over a new supply route to Afghanistan have also affected this changing regional dynamic. Uzbeks are not comfortable with Kazakhs gaining prominence as a leader in the region. Ultimately, once Kazakhstan is in position to strengthen its domestic position and look outward again with vigor, it may collide with Uzbekistan due to the new role Tashkent is claiming during this time of flux.

In geopolitical terms, intense competition for unimpeded access to the world’s natural resources and the growing need for a greater supply of hydrocarbons (and increasingly uranium), coupled with the commensurate vital geopolitical stakes of Russia, China and the West, have made this region a focal point of attraction and indeed a “battleground” of the 21st-century-style “Great Game” for the oil industry, traders, diplomats, generals, spies, bankers, environmentalists and NGO activities.

This strong and still growing interest has to do with the geo-strategic location of the vast landlocked region, sandwiched between Russia, China, Iran and Afghanistan, but also with its sizeable energy resources, critical for a high-demand growth and tight supply global context. The Caspian Sea was initially believed to be another Gulf, yet we later came to the conclusion that it is perhaps another North Sea, which is on the decline due to the depletion of reserves and decreasing production.

With an estimated 100 trillion cubic feet of natural gas and 27 billion barrels of oil, Kazakhstan boasts more energy reserves than all the other four Central Asian countries combined. Kazakhstan is not only a significant producer of energy in Central Asia, which affects supply and transit security for China, Europe, Russia and its southern neighbors, it has also become an influential player to reckon with in regional geopolitics, with its multi-vector diplomacy involving major powers.

Kazakhstan’s vast energy wealth is coupled with a unique geopolitical position – Kazakhstan has long borders with both Russia and China, as well as with three other Central Asian states and the Caspian Sea. It has also been courting the US, the European Union and other nations in the Islamic world. Kazakhstan styles itself as a force for stability in the region, as well as a driver of economic growth.

Kazakhstan: Russia’s strategic partner in Central Asia

Due to its position and good chemistry with the Kremlin and Beijing, Kazakhstan is strategically and geographically the middleman between Russia, China and its fellow Central Asian states (all of which it borders except Tajikistan). Russia has continued to play a dominant role in Kazakh political matters.

Moscow made Kazakhstan the center of the Central Asian universe, in that it made Astana the political go-between for Russia and the other four Central Asian countries. In Russia’s point of view, most of the Central Asian states are not important enough to be dealt with on a daily basis. Instead, Russia has looked to Kazakhstan to help Moscow deal with those other Central Asian states.

In line with its policy of forging good relations with all great powers, Astana has also made diplomatic and military shows of support for Russia, which it describes as its key ally. The most recent such show of support was in May 2009, when Kazakhstan refused to participate in NATO military exercises in Georgia.

I was in Astana to speak at a NATO security forum last June, when efforts by NATO representatives to downplay Brussels’ geopolitical rivalry with Russia contrasted sharply with comments made by the Kremlin’s hawkish representative to the Atlantic alliance, Dmitry Rogozin, who made it clear that a Western security presence in Central Asia was not welcomed. Rogozin suggested that NATO leaders were dreaming if they believed they would ever be able to establish a major presence in Central Asia, especially in Kazakhstan.

Outgoing NATO Secretary-General Jaap De Hoop Scheffer described Kazakhstan as “NATO’s most active partner in the Central Asian region,” but Rogozin later described Astana as Moscow’s “wife,” adding that “a faithful wife has her admirers who give her flowers. That is NATO – an admirer of Kazakhstan who gives her flowers. It is impossible to compare the close, kindred, family relations between Kazakhstan and Russia with relations with other families who come and visit, bringing cakes.”

There is no doubt that the Russian-Kazakh relationship is the most important one for both sides in the post-Soviet geography. Both countries share more than 7,500 kilometers of common border, the longest in the world and Central Asia’s only common boundary with Russia, and Kazakhstan hosts a sizeable ethnic-Russian population (35 percent).

Kazakhstan wants to be a world leader in the area of uranium production and has developed major strategic links with Russia. They have signed three 50:50 nuclear joint venture agreements. The government is committed to increased uranium exports to Russia and is considering future options for nuclear power. Together the two countries have created an “Energy Club” within the Shanghai Cooperation Organization.

Kazakhstan’s strategic cooperation with Russia was recently highlighted by discussions between the two and Turkmenistan to create a major energy transport corridor across the Eurasian landmass. Kazakhstan is also bidding to join the World Trade Organization (WTO) in a customs union with Russia and Belarus, scheduled to be operational from Jan. 1, 2010, with the option of membership open to other countries in the region. The three countries have two options – either to join as a customs union, which would be unprecedented as the WTO contains no provision for the admission of a customs union or, more conventionally, as individual countries.

But at the same time, Kazakhstan is still keen on developing alternative energy exports routes, i.e., China, Georgia and Baku-Tbilisi-Ceyhan (BTC), and diversifying its outreach with the rest of the world in order to reduce its excessive dependence on Moscow.

What about the Kazakhstan-China relationship?

China is set to become the most powerful, yet not as welcome, player in Central Asia as part of its strategic move to neutralize separatist and Islamist groups in the politically unstable Xinjiang-Uyghur Autonomous Region and across the border as well as to secure its land-based oil and gas supplies from Central Asia.

The West and Russia must anticipate an increase in Chinese influence across Central Asia over the coming years. Unlike Russia, which primarily bases its strategy on the development of military cooperation with Central Asian states, China is concentrating on economic cooperation. For China, Central Asia’s raw materials are of supreme interest.

Ever since Kazakhstan and China forged diplomatic ties in 1992, senior officials and diplomats from the two countries have maintained close contacts. The two countries have also signed a number of important documents, including the China-Kazakhstan Good Neighborly Treaty of Friendship and Cooperation. They are also the co-founders of the Shanghai Cooperation Organization. By developing ties with China, Kazakhstan aims to balance the geopolitical and economic influence of its northern neighbor, Russia. China aims to curtail the growth of US influence in the region and the possible establishment of US air bases in Kazakhstan.

China is the second-largest oil consuming country in the world. It sees Kazakhstan as the only reliable supplier of oil (and gas in the future) through land-based pipelines across Kazakhstan to its high-growth eastern seaboard provinces. China’s participation in the upstream of Kazakh’s oil sector has grown dramatically since 1997, when the Chinese National Petroleum Corporation (CNPC) acquired stakes in two oil fields: the Kenkiyak and Zhanazhol fields.

The recent construction of the Atasu-Alashankou oil pipeline is one of the most-discussed projects in Central Asia. It would form part of the longer and more ambitious “Kazakhstan-China” pipeline, which is planned to run from the western part of Kazakhstan to the western part of China.

China in April provided more than $10 billion in loans to Kazakhstan to ease Kazakhstan’s cash flow crisis. Like Russia, China is also investing in Kazakhstan’s uranium and alternative energy sectors. The CNPC has invested $2.2 billion in a natural gas pipeline that would run from Turkmenistan through Uzbekistan and Kazakhstan to China. The CNPC has also set up two entities to oversee a Turkmen upstream project as well as the development of a second pipeline that will cross China from the Xinjiang region to demand centers in southwest China. Apart from these, China has invested heavily in Kazakhstan’s infrastructure. Kazakhstan’s KazMunaigaz (KMG) and the CNPC closed a deal on the acquisition of JSC MangistauMunaiGas (MMG) shares from Central Asia Petroleum Ltd. Kazakhstan also sees its relations with China in broader terms than energy.

The relationship is evolving into a complex partnership that involves a growing inter-dependence in various sectors of the economy. China’s growing role in Central Asia is supported by the other countries in the region, most of whom see China as a way of reducing their political and economic dependence on Russia – of course without creating another heavy dependence on the eastern neighbor.

Could Kazakhstan remain the regional leader of Central Asia?

Kazakhstan has been showcased since its independence as a success story. Although there are still economic and political problems, it is nonetheless the most promising and capable country in the Commonwealth of Independent States (CIS), let alone Central Asia. The only viable challenger to Kazakhstan is Uzbekistan, which seeks to take advantage of the current economic and political difficulties faced in the region to reassert its historic role as regional leader, but its serious shortcomings in democracy and modernization will be unlikely to allow Tashkent to assert a strong leadership role.

Mehmet Ogutcu is a Mulkiye, London School of Economics and College d’Europe graduate, a former Turkish diplomat and a senior Organization for Economic Cooperation and Development (OECD) staffer. He is currently an executive of a major multinational corporation.