Kazakhstan’s Balancing Act

By Daniel Wagner and Luca Costa

Kazakhstan has become the most developed country in Central Asia over the past decade as a result of its rapid oil-driven growth and pragmatic foreign policy. President Nazarbayev has skilfully balanced the country’s diverse range of interests and maintained a sensible equilibrium between Kazakhstan’s two most significant international partners—Russia and the U.S.—whose interests compete in the region. While Russia has an historical and geographic comparative advantage, Kazakhstan’s relations with the U.S. are significant and growing. Nazarbayev has balanced relations between Russia and the U.S. by sending cheap oil to Russia and becoming an integral part of Washington’s War on Terror.

One of the priorities of Russia’s foreign policy under President Medvedev has been to draw closer to those former satellite states with perceived strategic and geopolitical value—part of a broader framework designed to recapture the country’s influence in the region. Kazakhstan has made an effort to achieve genuine autonomy from Russia and reaffirm its national identity, while not hesitating to turn to Moscow for its security and defense needs. Military cooperation between Astana and Moscow today is strong and deeply rooted in mutual interest. Both countries are members of the Collective Security Treaty Organization (CSTO) among Central Asian States and the Shanghai Cooperation Organization. Since 1994, Kazakhstan and Russia have experienced increasing levels of military cooperation. Three joint military exercises were held in 2010, the same number is scheduled for this year, and approximately 15,000 Kazakh soldiers have been trained by Russian military personnel.

> Kazakhstan Map
Russia is Kazakhstan’s dominant trading partner by virtue of being a member of Russia’s Customs Union—  another vehicle through which Moscow is trying to re-establish its influence in the region. The Customs Union between Russia, Kazakhstan and Belarus formally came into existence in January 2010 and is expected to evolve into the creation of a single economic space by January 2012. Russia maintains predominance in bilateral trade between the two countries, as it is the transit country for Kazakhstan oil and gas exports.

Astana also has a well established relationship with Washington, which has grown since 1991 without significant obstacles. The U.S. was the first country that recognized Kazakhstan’s independence. Washington has considered Astana a reliable partner since that time, having actively supported the country’s candidature for presidency of the Organization for Security and Cooperation in Europe (OSCE) in 2010. Energy cooperation is one of the pillars of U.S./Kazakhstan relations, given Washington’s support for energy independence among the region’s countries. It sees diversification of Caspian Sea pipelines as a counter weight to Russia’s dominance in energy resources. Washington approved the agreement between Kazakhstan and Azerbaijan that allowed Astana to pump some oil exports through the BTC (Baku-Tbilisi-Ceyhan) pipeline, reducing its dependence on Moscow.

Non-proliferation has also been a pillar of the bilateral relationship between Astana and Washington. The Cooperative Threat Reduction Agreement—through which Washington has already paid more than $200 million to help Kazakhstan dismantle its WMD arsenal—is considered to be one of the best examples of non-proliferation policy, a card that Astana has played well.

Although Astana has found it less difficult to manage competing economic interests between Moscow and Washington, it has found managing competition in the military and security sphere more of a challenge. Kazakhstan has chosen to use its CST membership as a counterbalance to NATO, although it has been a member of NATO’s Partnership for Peace program since 1995 and cooperates with NATO through a  Partnership Action Plan. The Organization actively supports the country in several areas, from anti-terrorism measures and customs security to natural disaster response and migration.

Clearly, Astana’s relationship with Washington has been impacted by vacillation between NATO and the OSCE in the military sphere. NATO stubbornness in refusing overtures for cooperation from the CSTO may lead Astana to rely even more heavily on Russia for its security and defense needs, but this is not likely to entail any serious consequences in its long-lasting and firmly rooted relationship with Washington. Astana’s muli-dimensional foreign policy is centered on a carefully balanced strategy which alternates between concessions and displays of strength. For example, Moscow must tolerate Astana’s openness toward western investment in its oil sector and in return benefits from the continuation of military cooperation at NATO’s expense. Kazakhstan has been able to diversify its interlocutors and carve out a partially independent political line in a region in which the interests of several major global powers converge and compete. This seems consistent with satisfying the Obama administration’s objectives in the country, which is to encourage the development of a stable, secure, and democratic state that embraces free market competition and rule of law, while being a respected regional leader.

Nazarbayev undoubtedly sees Central Asia increasingly as a battleground for influence and supremacy not only among Russia and the U.S., but also, inevitably by China. As Russia continues to rise economically and politically, its ability to influence events in the region is likely to continue to grow. The same can be said about China, which has made little secret of its own ambitions to enhance its stature and access to energy in the region. At the same time, the U.S. is finding its ability to influence events in the region limited by a relatively static foreign policy and limited financial resources.

Russia will likely be the ultimate victor in maintaining its dominant role in the military and security sphere. It is entirely possible that, in time, the U.S. may cede its post-Soviet era economic influence in the Kazakh hydrocarbon sector to Chinese oil and gas companies, as is increasingly becoming the case elsewhere in the world. In the meantime, Nazarbayev may be expected to continue to delicately manipulate Kazakhstan’s foreign policy to its maximum benefit for Astana.
Daniel Wagner is CEO of Country Risk Solutions, a political risk consulting firm based in Connecticut, and also senior advisor to the PRS Group. Read more articles by Daniel Wagner.

Luca Costa is a research analyst with CRS based in Italy.
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