COMMENT: Kazakh foreign minister insists balanced foreign policy remains intact

By bne IntelliNews October 7, 2008

Ariel Cohen in Washington -

Kazakhstan is known for its balanced, multi-vector foreign policy, which takes into account its strategic location between Russia and China, as well as established ties with Europe and the US. Yet after the Russo-Georgian war in August, many in Washington expressed concerns about whether this balanced approach can survive in the long term. The answer to that was provided in a presentation by Marat Tazhin, foreign minister of Kazakhstan, to the Heritage Foundation on October 2.

The relationship with the US, Tazhin said, is among the top priorities on Kazakhstan's foreign policy agenda. According to Tazhin, his country values the strategic partnership with Washington based on mutual trust, shared national interests, regional stability and security, and economic cooperation.

Energy is a vital comonent in the Kazakhstan-US strategic partnership. The centre of this energy partnership is the development of Caspian oil and gas reserves, but it goes beyond this. This year, KazAtomProm, Kazakhstan's national nuclear company became a co-owner of Westinghouse, the leading US energy company. Today, joint projects in oil and gas, as well the development of technical and service support for offshore and onshore fields in the Caspian Sea, are implemented with the assistance of US companies like Chevron, ExxonMobil, ConocoPhillips and others.

An energy security priority for Kazakhstan and the rest of Central Asia is the construction of reliable pipeline and transportation networks to provide access to international markets. Energy demands in Asia and Europe are higher than ever and China, in particular, is interested in increased energy imports from Kazakhstan. The increase in China's energy demand will drive the construction of the second oil pipeline from Kazakhstan to Xinjiang and beyond, and the gas pipeline from Turkmenistan via Uzbekistan and Kazakhstan to China.

On the diversification of exports routes to international markets, the Baku-Tibilisi-Ceyhan (BTC) oil pipeline project, which enabled the transport of oil from the region to Europe avoiding Russian soil, is the best sample of such cooperation. Kazakhstan has worked with the US, Georgia and Azerbaijan to make the project a complete success. Here the national interests of the US, Europe and all participating states match: Europe secures its supplies of energy, Kazakhstan and Azerbaijan enhance their export capabilities and independence, Georgia gets transit revenues and cheaper energy to fuel its economic growth, and the US moves forward in strengthening global energy security.

The conflict in the Caucasus in August seriously jeopardized the future of existing plans, according to Tazhin. However, Kazakhstan won't stop participation in the BTC project. Kazakhstan has started the building the Kazakhstan Caspian Transportation System, which aims to deliver oil from the Kashagan and Tengiz oil fields by tanker. Kazakh oil will then flow through BTC, which will allow an increase in the volume of oil exports by 23m tonnes in the near future. Energy exports remain a major source of Kazakhstan's revenue and it is planning its future economic policy based on the capabilities of the BTC and its possible expansion. The total amount of oil and gas output in 2007 consisted of 67.2m tonnes of oil equivalent. This year Kazakhstan expects to reach 70m tonnes, and by 2015, Kazakhstan plans to extract 100m tonnes of oil, most of which will be exported.

In cooperation with China, Kazakhstan has started construction of the "Western Europe-Western China" transcontinental highway, which would connect Berlin and Beijing. Kazakhstan plans to invest $7.5bn in this project.

Poppy problems

The important dimension of this strategic partnership is in the non-proliferation sphere. Kazakhstan fully supports the Proliferation Security Initiative (PSI) proposed by President George W. Bush in May 2003, which it joined it in 2005. PSI is a global initiative aimed at stopping shipments of weapons of mass destruction (WMD), their delivery systems, and related materials worldwide. PSI recognizes the need for more robust tools to defeat the proliferation of WMD around the world, and specifically identifies interdiction as an area where greater focus will be placed.

There is also the expanding bilateral military and security cooperation between Kazakhstan and the US. This January, Kazakhstan and the US extended the five-year Plan of Military Cooperation. The Plan provides delivery of weapons and military equipment, US assistance for training of Kazakh military personnel, joint military exercises, and develops military infrastructure in the Caspian, Tazhin said. This is a unique arrangement for a member of the Collective Security Treaty Organization (CSTO), which Russia views as a Moscow-led military bloc.

Kazakhstan continues to participate in the US-led coalition's efforts in Afghanistan. Kazakhstan, together with Turkey and United Arab Emirates, is one of only a few countries in the Muslim world to have supported the international coalition in Afghanistan. A small Kazakh contingent soldiered through in Iraq, saving the lives of hundreds of Iraqis, including many children.

Many in Eurasia recognize Afghanistan as a source of instability and drug smuggling, Tazhin said. Kazakhstan is providing $3m of assistance to Kabul, and Prime Minister Karim Masimov is planning to visit the country. Kazakhstan will build a school in the Samangan province, a hospital in the Bamian province, a highway in one of Afghan provinces, and will establish regular grain deliveries.

Kazakhstan also proposing to provide training for Afghan police and military forces, and teaching engineering and geology to Afghan students in Kazakh universities. At the Paris Donor Conference on Afghanistan in June, Kazakhstan announced that it has been working on an enhanced assistance package for 2009-2011.

In conclusion, Tazhin shared the latest news of economic and political development in Kazakhstan. President Nursultan Nazarbayev has mooted the creation of a new legal mechanism that would allow at least two parties in the Parliament, facilitating the registration for political parties, the improvement of election procedure, and the elimination of excessive bureaucratic barriers regulating the activity of media. Lawmakers are working intensively on this legislative package, and Tazhin believes that these amendments will be approved by the parliament before the end of this year.

Finally, Kazakhstan is also working on the adoption of a new Tax Code. This new Code is designed to modernize the existing obsolete systems of tax exemptions for companies and businessmen, to help to decrease corruption; to make taxation easier, while preventing the spread of "gray" and black sectors of the economy. The forthcoming tax legislation would and promote diversification of the economy by decreasing taxation for non-oil sectors while increasing taxes on oil producers, Tazhin concluded.

Ariel Cohen, Ph.D., is Senior Research Fellow at the Heritage Foundation and the author of Kazakhstan: the Road to Independence (2008)

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COMMENT: Kazakh foreign minister insists balanced foreign policy remains intact

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