The decision by the Organization for Security and Cooperation in Europe (OSCE) to award Kazakhstan the chairmanship of the organization for 2010 underscores a growing recognition of the country’s regional and continental importance. Kazakhstan is a strategic linchpin in the vast Central Asian-Caspian Basin zone, a region rich in energy resources and a potential gateway for commerce and communications between Europe and Asia.

However, it is also an area that faces an assortment of troubling security challenges. Ensuring a stable and secure Central Asia is important for the international interests of the United States and its European allies for several prescient reasons:

• • Asian Security: Because of its proximity to Russia, China, Iran, and the South Asian sub-continent, Kazakhstan’s security and stability is an increasingly vital interest to all major powers. Kazakhstan’s tenure as chair of the OSCE will become an opportunity for greater multilateral cooperation in achieving this objective while strengthening the role and prestige of the OSCE throughout Central Asia.
• • Afghanistan: Central Asia is a key staging area for U.S. and NATO military operations in Afghanistan against Taliban insurgents and Al Qaeda militants. Central Asia is a crucial conduit for U.S. and NATO troops and supplies into Afghanistan. U.S. offi cials recently reached new agreements with Russia, Kazakhstan, and other Central Asian countries to allow Afghanbound non-military supplies through their territories.
• • Trans-National Terrorism: The Taliban resurgence in Afghanistan stimulates cross-border terrorism that may endanger the stability of several Central Asian neighbors and undermine Western interests. Central Asian states have been the victims of Afghanistan-based transnational terrorism. These states, including Kazakhstan, can support international efforts to counter regional terrorist networks.
• • Organized Crime and Drug Traffi cking: Central Asia is an important transit region for narcotics traffi cking between Afghanistan and the countries of Europe and Asia. Joint initiatives that will enable the Kazakh government to control and monitor borders more effectively, intercept smuggling operations, and eradicate criminal networks will buttress international security and curtail funding to cross-border terrorist groups.
• • Energy Security: Central Asia has the potential to be a vital energy source for Europe. The region contains a vast storehouse of oil and natural gas, which Europe urgently needs in order to lessen its reliance on Russian and Middle Eastern energy supplies. Disputes between Russia and several energy transit states, such as Ukraine, have increased Europe’s interest in developing direct supply lines between Europe and the Caspian countries.

 
 
Challenges to International Interests

Despite the strategic significance of Central Asia and the Caspian Basin, in recent years Western countries have not paid sufficient attention to the region. This is due to a combination of factors, including the absence of a shared strategic framework for helping to stabilize and develop the heartland of Asia; insufficient focus on consolidating close political ties with key countries in the region through ustained high-level engagement; and opposition on the part of other major powers competing for influence in Central Asia.
 

> Kazakhstan Map
 
Many Western experts conclude that Russia’s leaders have sought to use multi-national organizations, Moscow’s political connections and its economic leverage to assert greater control over ex-Soviet neighbors. There are reports that the Central Asian governments were pressured to curtail Western security interests, including limiting its military presence in the region by, for example, urging Uzbekistan and Kyrgyzstan to evict the U.S. military from bases on their territory.

Kazakh leaders are supportive of a more effective American and European role in Central Asia to help promote the region’s security and development, but without undermining Astana’s cordial relations with Russia. Kazakhstan’s independent foreign policy helps provide Western access to the region and enhances its position as a vital transport corridor. Kazakhstan is also a stabilizing factor in the geopolitical competition of the regional powers for access and influence across Central Asia. With its reinvigorated commitment to securing Afghanistan and stabilizing the wider region, the Obama administration has an ideal opportunity to reach out to key partners such as Kazakhstan and to enhance Astana’s role as a regional stabilizer.
 
 
Kazakhstan as a Regional Stabilizer

Despite having the largest territory and economy in Central Asia, Kazakhstan is not a source of insecurity or threat to any of its neighbors. It does not employ territorial, ethnic, economic, or energy instruments to target and undermine any government in the region. On the contrary, Astana has sought to establish a system of collective security in Eurasia that would avert the emergence of a single dominant power. Kazakhstan’s “multi-vector” foreign policy, which seeks to pursue cooperative relations with all major powers, leads Astana to resist any hegemonic ambitions by larger countries that would undercut Kazakhstan’s political or economic independence.

While it is a member of the Commonwealth of Independent States (CIS), the Collective Security Treaty Organization (CSTO), and the Shanghai Cooperation Organization (SCO), Kazakhstan has sought to diversify its security relations and keep its freedom to establish and maintain international partnerships. Indeed, Astana has developed productive contacts with NATO by participating in NATO’s Euro-Atlantic Partnership Council (EAPC) and its Partnership for Peace (PfP) program. It was the only Central Asian government to negotiate an Individual Partnership Action Plan (IPAP) with NATO in January 2006.

NATO’s June 2004 summit affirmed the growing importance of Central Asia by designating the region as an area of “special focus” and stationing a liaison officer in the Kazakh capital of Astana in order to develop NATO assistance programs to modernize national military structures. A NATO Secretary General Special Representative for the Caucasus and Central Asia was also appointed.

Astana has underscored that neither the CSTO nor the SCO should become exclusive military alliances or anti-Western blocs that would challenge NATO’s mission in the wider region. Kazakhstan supports NATO operations in Afghanistan and grants overflight rights to U.S. and other NATO warplanes transporting non-lethal cargo to Afghanistan, as well as emergency landing rights for U.S. military aircraft in the Kazakh city of Almaty. The Kazakh authorities are also developing a Peacekeeping Battalion (KAZBAT), which is slated to become fully operational by 2011 and potentially available for international peace stability missions.

Kazakhstan is the only Central Asian country to have an Action Plan to assist in the reconstruction process in Afghanistan, including granting more than $3 million in the 2007-2008 fiscal year for social and infrastructure projects, humanitarian aid, and training for Afghan law enforcement and border patrol officers. For 2009-2011, Kazakhstan has committed an additional $5 million to improve the water supply and distribution infrastructure for shipments of grain and other commodities.

Kazakhstan also provides funding to support U.S. objectives in the region. Astana is the only regional donor giving significant aid to Kyrgyzstan, Tajikistan, and Afghanistan. According to the U.S. State Department’s Background note on Kazakhstan, “in 2006, Kazakhstan became the first country to share directly in the cost of a U.S. Government’s foreign assistance program. Through 2009, the Government of Kazakhstan will contribute over $15 million of a $40 million USAID economic development project aimed at strengthening Kazakhstan’s capacity to achieve its development goals.”

Kazakhstan has initiated and championed the Conference on Interaction and Confidence-Building in Asia (CICA). Modeled after the OSCE, the CICA process aims to promote peace and security throughout Eurasia through confidence-building measures and other means. The first CICA summit, held in June 2002, was attended by leaders from 16 states who signed the “Almaty Act,” as well as a declaration to eliminate terrorism and promote inter-cultural dialogue. The second CICA summit (hosted by Kazakhstan in June 2006) adopted the Catalogue of Confidence Building Measures (CBM) – a road map for implementing the CBM on a bilateral and multilateral basis. At the last CICA working meeting in India in February 2009, the participating states selected Turkey to chair the conference and host the third CICA summit in 2010. The Turkish chairmanship will expand CICA geographically and move it closer to Europe.
 
 
Multi-National Counter-Terrorism

Kazakhstan has been combating several potential threats to its own stability and that of its neighbors, including terrorism, drug smuggling, and organized crime. Although Kazakhstan is generally not a source of these maladies, it is a transit country for such illicit activities. Kazakh leaders have been especially concerned about possible terrorist strikes against their country’s energy infrastructure that could affect exports to European and other consumers. To counter terrorist threats, the Kazakh government has supported multilateral efforts in key multilateral organizations to make counter-terrorism an essential ingredient of their security focus. Astana has also assigned troops to the Central Asian Rapid Reaction Force (CARRF), which is designed to defend each country against major terrorist threats.
 
 
Regional Non-Proliferation

KazakhstanwasthefirstformerSovietrepublictoabandon its nuclear arsenal. It closed the largest nuclear weapons test site and has spearheaded regional denuclearization. Kazakh leaders have also made major progress in downgrading nearly all of the country’s highly enriched uranium, thus lessening the opportunities for such material to fall into the hands of foreign governments or terrorist groups. Astana’s non-proliferation initiatives have earned it praise from a number of international leaders.

With impetus from Kazakhstan, the Central Asian states have agreed to coordinate their nonproliferation and export control policies, especially to prevent the smuggling of Weapons of Mass Destruction (WMD) and related materials from the former Soviet Union. In September 2006 in Semipalatinsk, a former Soviet nuclear testing site in Kazakhstan, representatives of the five Central Asian states signed a treaty to create a Central Asian Nuclear Weapon Free Zone, which entered into force on March 21, 2009. The signatories pledged not to develop, manufacture, or otherwise acquire nuclear devices or to assist third parties in developing nuclear weapons programs. The treaty further addressed environmental protection as each of the five states share common problems of environmental damage resulting from the production and testing of Soviet nuclear weapons.
 
 
Counter-Narcotics Trafficking

Countering the trafficking of narcotics from Afghanistan through Central Asia is a major security challenge for all countries in the region, as well as an issue of concern for European and Asian states seeking to stabilize Afghanistan. Proceeds from large-scale smuggling finance organized crime and cross-border terrorism. Central Asian states, including Kazakhstan, have been active in joint operations to intercept drug shipments from Afghanistan and are expanding their counter-narcotics agencies to deal more effectively with the threat. The Central Asian Regional Information and Coordination Centre (CARICC), established in Almaty under UN auspices, serves as the main regional communication center for analysis and exchange of information on transnational crime and the coordination of joint operations. The OSCE, which Kazakhstan will chair in 2010, has established the priority of curbing drug and arms smuggling, strengthening border controls to curtail illegal migration, and countering the financing of terrorist and criminal organizations.
 
 
Energy Security

Kazakhstan is a major producer and exporter of crude oil, projected to export three million barrels of oil per day, or 150 million tons per year, by 2015. Kazakhstan also possesses substantial natural gas reserves and some of the world’s largest reserves of uranium.

The three energy-rich states of Central Asia (Kazakhstan, Uzbekistan, and Turkmenistan) understand that their political independence and energy security requires diversifying their energy customers and avoiding reliance on any single power or transit route. Currently, Russia is the main transit route for energy exports from Central Asia. Kazakhstan supports building oil and gas pipelines that would channel its energy resources directly to Europe and China. The Kazakh energy industry favors a direct energy connection with Azerbaijan across the Caspian Sea that would help supply the European market.

Astana is seeking to diversify its economy and avoid over-dependence on natural resources and energy exports. Until recently, oil and gas revenues have been aggressively used to develop a stronger economic foundation for expansion into new markets. Kazakhstan seeks to attract advanced technologies and modern management practices into its priority economic sectors, including high technology, financial services, and agriculture. However, the current global financial crisis poses considerable challenges to this agenda, not least because of the weaknesses it has exposed in Kazakhstan’s banking and financial services sector.
  
 
Economic Development

Sustained economic development is a major determinant of long-term regional stability. Kazakhstan has emerged as a successful model of economic development in Central Asia and the secular Muslim world. It has the largest economy in Central Asia with a Gross Domestic Product (GDP) exceeding the combined total of its four Central Asian neighbors. The government is in the process of negotiating its entry into the World Trade Organization (WTO) and is a leading proponent of deepening economic cooperation in Central Asia and the Caspian region.

Kazakh leaders have focused on developing the Euro-Asian Economic Community (EurAsEC), an organization that also involves Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. More generally, Kazakhstan has strongly supported deeper economic integration among these states. Nonetheless, Astana opposes over-reliance on any single country because this would undermine Kazakhstan’s independence and integration into the global economy.

In positioning Kazakhstan as a potential economic hub and the core of a “Eurasian transport corridor,” President Nursultan Nazarbayev has proposed creating a regional organization, styled as the Eurasian Economic Union (EEU), to harness and intensify trans-border cooperation in such areas as water resource management, transportation infrastructure, crisis-response, environmental protection, and region-wide economic development. Such a process, even without the support of all Central Asian countries, could be the first steps toward lowering barriers to trade, harmonizing customs, and building closer economic associations. Kazakh officials contend that closer economic integration would reduce regional tensions, attract greater levels of foreign direct investment, and increase the region’s leverage and competitiveness in the international arena. Integration has also been fostered by tangible investments and capital flows as Kazakhstan has played a major role in exporting capital to its neighbors.

Currently, the EU is the largest trade partner of Kazakhstan with about 40 percent of its external trade. Russia remains an important economic partner for Kazakhstan and is the number one individual trade partner for Astana, though its share in Kazakhstan’s external trade shrank from 80 percent in 1992 to 30 percent in 2008. Kazakhstan’s third major trade partner – China – is steadily developing ties with Kazakhstan, which Beijing views as its most important economic and security partner in Central Asia. Kazakhstan is also developing trade relations with the EU and is the Union’s largest trade partner in Central Asia. Astana has had a PCA (Partnership and Cooperation Agreement) with the EU since 1999, which provides a legal foundation for negotiating agreements in energy, trade, investment, and other areas. Some observers have proposed bringing Kazakhstan into the EU’s European Neighborhood Policy (ENP) in order to develop closer economic and political links with Europe. The government in Astana supports such an initiative because it would curtail over-reliance on any single partner.

Kazakh leaders also welcome American investment. Hundreds of U.S. companies are now based in the country, with their direct net investments totaling over $15 billion. Indeed, the United States is the largest foreign investor in Kazakhstan, providing nearly 30 percent of all Foreign Direct Investment (FDI).
  
 
Kazakhstan: The Next Stage

Kazakh political leaders place a high value on preserving national unity, territorial integrity, and political stability even if this has placed constraints on democratic pluralism. This tendency partly reflects Kazakhs’ experience with decades of Soviet imperialism following two centuries of Russian Tsarist colonization, which sought to divide Kazakh society and stifle any moves toward independence.

While in the last 18 years, Kazakhstan has managed to successfully strengthen its independence and build effective state institutions, the development of a democratic society remains a work in progress. In assuming the OSCE chairmanship, Kazakh officials made commitments to improve their country’s civil rights and political liberties, as well as subject Kazakhstan’s domestic developments to greater international monitoring.

Kazakhstan’s selection as the OSCE chairman-in-office involved concrete commitments by Astana to enact legislation that would bring it closer to OSCE standards in specific areas such as the registration of political parties, the electoral process, and media activity. The government also pledged to uphold the existing mandate of the OSCE’s Office of Democratic Institutions and Human Rights (ODIHR) and not support any future efforts to weaken this democracy promoting institution.

Observers note that Kazakhstan’s strong verbal commitment to democratic governance and the rule of law has not been matched by substantial progress in these areas. However, legislation passed by the Kazakh parliament that came into effect in February 2009 is intended to enhance political pluralism and media freedoms. Draft amendments to the law on religious organizations were rejected by the Constitutional Council, a reminder of the formal separation of powers between the executive, legislative, and judicial branches. Kazakh leaders recognize that efforts to develop democratic mechanisms must continue in order to ensure that Kazakhstan will be an effective leader of the OSCE in 2010. Domestic progress in the “human dimension” will also enable Kazakhstan to deliver on its commitment to protect the ODIHR mandate and its election monitoring capabilities.

To enable Kazakhstan to achieve its stated commitments, the government in Astana has launched a “Road to Europe” reform program to better prepare the country for its OSCE chairmanship. Three major goals were set forth in the program: 1) to step up economic cooperation with European countries; 2) to further improve Kazakh legislation and conduct reforms of the state administration; and 3) to properly prepare Kazakhstan for its OSCE Chairmanship in 2010.

While Kazakhstan has substantive experience in developing inter-ethnic and inter-religious coexistence, it looks toward the EU and the OSCE for assistance in improving its legislation on elections, political parties, and the mass media. In an effort to adjust its political system to best international practices, the Kazakh government sponsors professional training for Kazakh officials in European structures and promotes exchanges among Kazakh and European state agencies. Comprehensive political, economic, and cultural cooperation with European countries will contribute to the country’s development and improve its national legislation in accordance with European standards. The United States must also continue to be closely involved in a process that can simultaneously enhance Kazakhstan’s democratic evolution, strengthen Central Asian security, and fortify American and European interests.
 
 
(The process of democratization in Kazakhstan will be the topic of separate Policy Briefs issued by the CSIS-IND Task Force.)
 
 
About Csis And Ind About Csis And Ind

The U.S.-Kazakhstan OSCE Task Force Policy Brief is produced by the New European Democracies Project at the Center for Strategic and International Studies (CSIS) and the Institute for New Democracies (IND). CSIS is a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. IND is a nonpartisan and nonprofit organization dedicated to promoting good governance, human rights, and the rule of law in countries undergoing political transformation. CSIS and IND do not take specific policy positions.

CSIS-IND Taskforce Policy Brief team: Margarita Assenova, IND Director; Natalie Zajicova, Program Officer (IND); Janusz Bugajski, CSIS NEDP Director; Ilona Teleki, Deputy Director and Fellow (CSIS); Besian Bocka, Program Coordinator and Research Assistant (CSIS)
 
 
About The Project

The Center for Strategic and International Studies (CSIS) and the Institute for New Democracies (IND) have launched a new initiative to assist Kazakhstan in shaping its OSCE chairmanship agenda and to help strengthen U.S.-Kazakh relations. The CSIS-IND Task Force aims to bring together policymakers, regional specialists, representatives of non-governmental organizations, representatives of former OSCE chairing countries, and business leaders to offer implementable recommendations for shaping a compelling and focused agenda for Kazakhstan’s OSCE chairmanship. The CSIS-IND Task Force consists of two working groups based in Washington, D.C. and Astana. This introductory Policy Brief is issued by the project’s Washington Task Force.
 
 
Center for Strategic and International Studies and the Institute for New Democracies