Kazakhstan and the West: a strategic opportunity

Albert Einstein put it well when he said, “In the middle of every difficulty lies opportunity.” Far too often in the political risk profession analysts dwell on the negative; indeed, the term “political risk” itself connotes navigating dangers, rather than taking advantage of the many glittering possibilities the world offers. This is not mere semantics; it illuminates a mindset. The entire approach of analyzing world events is skewed
to the negative, to assessing catastrophes rather than to making the most of opportunities provided by the beguiling new era we find ourselves in. For example, in the recent history of the little-known (in Western terms) but extremely important country of Kazakhstan, Einstein’s comment flowers, taking on new meaning. Kazakhstan endured serious difficulties as recently as January 2022, but now the country presents us with real opportunity. We, in the West, need to be shrewd and creative and we need to grasp it.

KAZAKH DREAMIN.

Although the country had only recently emerged from its own crisis, the government nevertheless – to the surprise of many – answered the world’s wake-up call following the invasion of Ukraine by Russia, a traditional ally and patron. This should not actually be so surprising, if we take into account the multi-vector foreign policy initiated by its first president – Nursultan Nazarbayev – thirty years ago, and implemented by his hand-picked successor and former foreign minister, Kassym-Zhomart Tokayev.

Still, beyond its close political, strategic, and economic ties, Kazakhstan in practice has a long and indefensible border with Russia. Sensibly, it goes out of its way to avoid direct diplomatic confrontation with Moscow under almost any circumstances. And yet, despite traditionally close ties to the Kremlin, the country has refused to align itself with Moscow over the invasion of Ukraine. Importantly, Kazakhstan has neutrally offered its diplomatic offices to broker a peace deal, even as it refuses to recognize the two breakaway Russian-speaking Ukrainian provinces, Luhansk and Donetsk, as separate countries (as demanded by the Kremlin).

Instead, Kazakhstan has called for Russia to consider dialogue and a peaceful settlement of the war, publicly (and bravely) noting its close ties to both belligerents. Nur-Sultan (the capital) chose to abstain in the crucial United Nations General Assembly vote condemning the Russian invasion. To put it mildly, this is not what Putin expected. Going even further, President Tokayev decisively stated that he is cooperating with President Zelensky of Ukraine in coordinating humanitarian programs, while at the same time urging President Putin to consider an immediate ceasefire. Tokayev has kept his country’s traditional, multi-vector foreign policy intact – stressing Kazakhstan’s strategic autonomy, despite the overwhelming pressures of a war in Ukraine. Geographically, Kazakhstan finds itself in a very rough neighborhood, and yet the country has succeeded in maintaining positive relations not only with Russia and China over the years, but also with the European Union and the United States; it also has good relations with India, Pakistan, Iran, and Israel. This is no mean diplomatic feat.

However, as the West’s sanctions against Russia increasingly bite, Putin has sent out a message to his neighbors in the Russian-dominated Eurasian Economic Union to the effect of: “Join with us completely to help offset the coming economic strictures from the West. Otherwise your own economies won’t survive.” This is the hinge point of the issue, as Kazakhstan’s present multi-vector foreign policy suits Western interests. It is precisely to prove Putin wrong in policy terms over this stark choice to his neighbors, and to take advantage of the opening presented by Kazakhstan, that America and its European allies must come to the aid of a country with abundant possibilities, one which has proven its strategic independence so recently and so strikingly. How the West will respond will condition its relationship with this pivotal resource-rich state and the whole of the strategic Central Asian region for decades to come.

AUSPICIOUS BEGINNING, CHALLENGING PRESENT, HOPEFUL FUTURE.

Kazakhstan has seen many achievements over the first thirty years of its independence. With its first president, Nursultan Nazarbayev – at the helm from 1990-2019 – the country was blessed with a stability that did not seem possible at the time of the breakup of the Soviet Union. Kazakhstan resolutely embarked on a program of strong economic reform, as the economy moved from the strictly centralized planning of the Soviet years, towards a more capitalistic system and, consequently, enjoyed sustained growth.

This can best be seen in terms of its foreign direct investment record, as Nazarbayev made the country a magnet for such funds in the whole of the Central Asian region. Fully 70% of the total foreign investment for Central Asia settled in Kazakhstan during the president’s long term of office. Massive oil fields – Tengiz, Kashagan, and Karachaganak, to mention just a few – and the pipelines linking them to the world markets, via Russia and China, were developed with tens of billions of dollars of mostly us investment. Equally importantly, Nazarbayev fashioned a true multi-vector foreign policy – with Kazakhstan staying friendly with Russia, China, and the West, but keeping them all at arm’s length – despite living in the rough and tumble geostrategic neighborhood of Central Asia. In doing so, he safeguarded Kazakhstan’s strategic autonomy, whatever the long odds. Kazakhstan did not have an independent foreign policy prior to obtaining sovereignty, but the necessity of independence dictated this optimal foreign policy course for the country. Investments in oil, gas, metals, uranium, and agriculture have more than quadrupled the living standards of Kazakhstan’s citizens since the early 1990s.

Nevertheless, income distribution inequality has remained pronounced, and bureaucratic red tape and corruption rampant. People’s patience wore out when the lpg (liquified petroleum gas, a fuel) prices doubled. Violent riots erupted in the country on January 2, 2022, tragically claiming over 200 lives before they were quelled. While the immediate cause of the disturbance was this rise in fuel prices, the underlying reasons for the unrest also included income disparities, crime, and extremism. Obviously, there is a clear need for further economic reform (moving definitively toward a fully market-based economic model), and income disparity must be tackled, widespread poverty addressed, and corruption stemmed.

REFORM, KAZAKH STYLE.

The country’s leadership responded with a reform package, articulated by Tokayev on March 16. The implementation of the package and policies to ensure the country’s stability and prosperity going forward will be the most important test faced by the country since independence. Yet beyond the immediate crisis and the censorious comments of its detractors, there is significant, deceptively good political risk news emerging in Kazakhstan. First, despite thirty years of worry about the durability of the Kazakh state itself, the country has come through its trial by fire in reasonably good shape. Indeed, Kazakhstan’s underlying integrity and cohesion have never been in doubt. Kazakhstan as a political entity has proven itself to be a genuine, organic country, with a true sense of nation and nationhood thanks to the policies of the last thirty years. During his March 16, 2022 State of the Nation address, Tokayev made it clear that he views preserving “pivotal national sovereignty and territorial integrity” as his most important responsibility.

Second, in acting decisively and resolutely in the crisis, Tokayev made it clear that he will direct the country’s revived economic reform program, tackling the very practical underlying issues that people in Kazakhstan care about most: inequality, corruption, and fuel prices.

GRASPING THE VIABLE STRATEGIC OPPORTUNITY.

Moving beyond the first era of Kazakhstan’s independence, it behooves the West to be part of the second chapter in the country’s ongoing saga. Unthinking British sanctions proposed by think tanks and by leftist representatives in the Labour Party took none of these political risk realities into account. Such sanctions would only heedlessly damage the West’s interests, as much as Kazakhstan’s. Indeed, they would push Nur-Sultan into the bear embrace of its northern neighbor. Further, the Kazakh government has proposed a continuation of political reform: modernizing the electoral process; strengthening human rights institutions, the media and civil society; increasing the separation of party and state structures; and decentralizing more power to local governments as the country moves away from the “super-presidential” system. For instance, the Kazakh government has proposed that while regional and large city leaders will remain presidential appointees, local legislatures should be responsible for picking such officials from two put forward by the president, thereby beginning to organically redress the centralized nature of the system.

On May 25, 2021, Tokayev issued a decree allowing for the direct election of akims (the basic unit of local governance) in villages across the country. This reform builds on earlier efforts to increase pluralism in the country. As of April 2013, village akims have been elected indirectly by local representative bodies, with candidates selected by district-level leaders. Before this, village akims were appointed from the top, which remains the case with the akims of large cities and higher administrative units. As good realists know, embedding democratic rule is an organic process, requiring time and patience to take root. But, given the government’s political reform program, in a very tough neighborhood, it should be recognized that Kazakhstan is on the slow but steady road to having an excellent chance of success.
Kazakhstan is mostly doing precisely what every foreign investor has been

dreaming of (given its tremendous economic potential and boundless resources of coal, uranium, cotton, and copper): it is stabilizing the economy and society. Crucially, as the Ukraine example demonstrates,  Kazakhstan remains committed to maintaining its multi-vector foreign policy, just as the West is feeling a particular need for friends in Central Asia, following the chaotic American pull-out in Afghanistan. Of Kazakhstan’s massive economic potential there is no doubt: it has the world’s twelfth largest proven oil reserves (amounting to approximately 30 billion barrels in total); its oil output has trebled since 2001 and continues to trend upwards. Given the grievous need for Europe to find new, safer sources of supply in the wake of the Ukraine war, Kazakhstan amounts to a vital future source for a West sorely in need of energy diversification. Also, in energy terms, Kazakhstan’s uranium will be badly needed as the nuclear industry may experience a renaissance (as called for by French President Emmanuel Macron). Indeed, given the need for clean energy and more, resources coming from stable, pro-Western countries will be increasingly attractive.

Instead of ostracizing or neglecting Kazakhstan at this critical juncture – for all these decisive realist reasons – it is entirely in the West’s interests to diplomatically “lean in”, supporting Kazakhstan as it follows through on its reform agenda. It would seem obvious (though sadly it is not) that when a longstanding ally, through the pressure of overcoming internal crisis, is committed to doing precisely what the West urges it to do, more (and not less) strategic support is both the proper and the practical foreign policy response. Kazakhstan is that rarest of things: a viable strategic opportunity in need of being grasped by the West.