Kazakhstan International Affairs - The Times Of Central Asia

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Kazakhstan to Expand Trade Cooperation with Chinese Provinces

On March 19th, Kazakhstan’s Minister of Trade and Integration Arman Shakkaliev met Ma Xingrui, Communist Party Secretary of China’s western Xinjiang Uyghur Autonomous Region (XUAR) to discuss strengthening Kazakh-Chinese trade cooperation and the opening of a Kazakh trade mission in XUAR’s main city of Urumqi. In 2023, trade turnover between Kazakhstan and China reached $31.5 billion, with the XUAR accounting for over 64% or $20.3 billion of the total. Referencing his country’s focus on trade cooperation with China, the Kazakh minister stated, “Targeted work is being carried out with each province and a joint action plan is being developed to increase trade and attract investment in projects in priority areas. Kazakh businesses are showing more and more interest in supplying products to the Chinese market. We very much appreciate the support of the XUAR leadership in resolving issues of access of Kazakh goods to China.” The minister further reported, “To increase trade between our countries, especially with the XUAR, the Kazakh Head of State has instructed the opening of a trade mission in Urumqi. The QazTrade organization, which is subordinate to the Ministry of Trade and Integration, will be involved in the activities of this representative office. In the future, it will become a conduit between our manufacturers and Xinjiang companies interested in purchasing products.” The parties also discussed prospective joint investment projects and in particular, interest from Kazakh businesses in Chinese investment in the construction of feedlots for cattle, the creation of meat processing facilities and processing of cereals.

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Creation of Kazakhstan–Azerbaijan “Supreme Interstate Council” Marks New Era of Cooperation

Diplomatic relations between Kazakhstan and Azerbaijan have developed dynamically since they were first established in August 1992, and have increased over the past 20 years, and grown especially since 2017. Over the last decade, the number of high-level visits in both directions have been rising to the point where they are now regular occurrences at an inter-ministerial level. That said, President Kassym-Jomart Tokayev’s state visit to Baku on March 11–12 represents yet another new phase in the two countries’ strategic partnership with a focus on trade, economic investment, and international cooperation. This new era is marked by the creation of their bilateral Supreme Interstate Council (SIC), a qualitatively recent development that will institutionalize and drive cooperation in new ways. (Readers should note here that the connotation of “Supreme” in this case signifies “high-level” rather than “having sovereign or autonomous power”. This is exactly the difference, respectively, between the Russian-language adjectives vysshii - literally “high-level” or “highest” - and verkhovnyi - the USSR’s Supreme Soviet, its highest legislative body, was verkhovnyi. This is a matter of choice of terms for translation. “Supreme” has been adopted following the usage of the countries concerned in their English-language public discourse, but it should not be misunderstood.) Although the Kazakhstan–Azerbaijan SIC has only just held its first meeting and is not yet fully institutionalized, it would seem from diplomatic indications that its activity is likely to resemble that of the Strategic Partnership Council (SPC) between Turkey and Azerbaijan. This latter forum was created in 2019 to subsume the two countries’ bilateral Strategic Cooperation Council, which was founded in 2010. Cooperation organized by this bilateral SPC broadly covers four issue areas: military-political and security issues, military and military-technical cooperation, humanitarian issues, and economic cooperation. These areas are listed in order of priority, meaning that the SPC and the SIC’s first focus is on cooperation related to military and security issue areas, plus other relevant issues that these may indicate. Nevertheless, cooperation in the humanitarian and economic spheres, which has been ongoing for some time, is sometimes folded into these top-priority areas within the existing consultative structures. The agreements signed at the November 2021 presidential summit between Kazakhstan and Uzbekistan had foreseen the formation of a bilateral SIC between them as well. Now that both these parties have ratified their Treaty of Allied Relations, also signed at that time, this SIC’s first meeting is scheduled for August of this year. Following the pattern of what is known about the SIC with Azerbaijan, it will be formally chaired by the two heads of state and organized by their respective foreign ministries. The speakers of their parliaments’ lower houses and representatives of security councils may join in the work as necessary. Thus, security and foreign-policy issues will be the main concern in the first instance. Nevertheless, like the SIC between Kazakhstan and Azerbaijan, the one between Kazakhstan and Uzbekistan is likely in the medium term to develop organizationally along the lines of the Turkish-Azerbaijani Strategic Cooperation Council, eventual transformation...

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Health Specialists Visit Almaty Reference Laboratory

In a statement released by the Kazakhstan Ministry of Foreign Affairs, public health representatives from Central Asian countries and Azerbaijan, attending the regional Workshop on the Biological and Toxin Weapons Convention (BTWC), paid a visit to the Almaty Central Reference Laboratory. The seminar held at the UN Hub in Almaty, was organized by the United Nations Office for Disarmament Affairs (UNODA) and the Ministry of Foreign Affairs of Kazakhstan, with the support of the European Union (EU). During the event, issues were raised concerning the implementation and strengthening of BTWC protocols. The seminar also offered opportunities to share knowledge and experience on improving legislation, discuss plans of national importance and implement confidence-building measures among members of the BTWC. Whilst gathered in Almaty, representatives of Central Asian countries and Azerbaijan visited the Central Reference Laboratory, built with aid from US investments. The Ministry of Foreign Affairs noted that experts in the field of biosafety gave a high assessment of Kazakhstan's flagship institution's biotechnological complex and the laboratory's activities and development of Kazakhstani scientists. Kazakhstan conducts research in two bio-laboratories, both of which have third-level safety regulations in place. The first is the Central Reference Laboratory in Almaty. In operation since 2016, the facility was built with funded assistance of around $130 million from the U.S. Defense Threat Reduction Agency (DTRA) and the Nunn-Lugar Cooperative Threat Reduction (CTR) Program. A similar laboratory, located in Otar, is run by the Research Institute of Biosafety Problems. According to Kazakh President Kassym-Jomart Tokayev, Kazakhstan cooperates with the U.S. in the field of biological security under the former anti-plague institute in Almaty, but due to the expiration of the contract, the Americans are no longer involved in the reference laboratory which funded by the federal budget, now only employs Kazakh specialists.

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Astana Projects Attract Qatari, Turkish, Russian Interest

This month foreign investment projects in Astana's real estate sector have been high on the agenda at meetings at the Investment Headquarters in Kazakhstan's capital. One such project is a new medical center to be constructed in collaboration with a Qatari holding company, and with the participation of American cosmetic skin care provider Cynosure. The first stage is set to comprise a medical center for 50 patients with a planned investment of 88 billion tenge (~$196million), and in the second, the Qatari partners intend to invest around 160 billion tenge (~$360 million) in a larger extension. According to reports, Qatari investors have also committed funds for the construction of branded international schools in Astana. The first, a Sabis school for almost 3,000 pupils and 530 children of preschool age, is scheduled to open in April this year. The second, to be constructed by International Community Schools Ltd, will accommodate 1,225 pupils and 100 pre-school children, involve private investment of 9 billion tenge (~$20 million), and create over 100 jobs. The Turkish Tiryaki Company discussed investment of up to $200 million in the construction of a wheat processing plant with a capacity of 240,000 tons per year, and Russian e-commerce giants Wildberries and Ozon expressed their readiness to invest up to 90 billion tenge (~$200 million) in constructing large logistics centers in Astana. The Austrian Lasselsberger Group's plans for investment of over 25 billion tenge (~$55 million) in a plant at Astana's Industrial Park Number One will produce 100,000 tons of dry construction mixtures per year and create some 200 jobs.

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Potential Impact of EU Carbon Tax on Kazakhstan’s Industries

From 2026, transboundary carbon regulations will be imposed on European Union countries. The introduction of a new EU carbon tax will also affect export of products from Kazakhstan . After the transition period, which began on January 1st 2024 and will run until the end of 2026, payment will be increased on emissions. Following discussions at a seminar for Kazakhstan’s industrial exporters on March 15th, the Kazakh Ministry of Trade and Integration reported that the new legislation will affect six industrial sectors including the production of ferrous metals and aluminum, cement, fertilizers, hydrogen, and electricity. Nurlan Kulbatyrov, Deputy Director General of QazTrade JSC stated that since Kazakhstan has an Enhanced Partnership and Cooperation Agreement with the EU, the country will be impacted by both the EU Green Deal and carbon border adjustment tax. To prepare for the changes, he reported that since last year, QazTrade, in collaboration with the Ministry of Trade and Integration, has been conducting awareness-raising activities on carbon taxation for export-oriented companies. An expert from the European Commission explained that cross-border regulation will mainly affect sectors associated with iron, steel and aluminum, which accounted for between 0.8 - 0.9% of Kazakhstan's total exports to the EU in 2022. EU countries currently account for 39% of Kazakhstan's exports, including oil, petroleum products, ferroalloys, coal, uranium and wheat. In 2023, Kazakhstan exported goods valued at $41.4 billion to the EU, including $388 million worth of carbon-intensive products. In the first phase, industrial enterprises will be required to submit quarterly reports to the European Commission comprising data on export volumes, greenhouse gas emissions connected to production and quotas used. After 2025, carbon regulation will come into force, and free quotas gradually levelled out. Charges will initially target direct emissions, but could later be extended to other sectors with risks of carbon leakage, such as oil refineries and chemical plants. Ainur Amirbekova, Director of the International Integration Department of QazTrade JSC, added that the introduction of a carbon tax by EU countries will inevitably affect the cost of Kazakhstan’s exports, and thus heighten competition. Since rising prices could potentially close markets for particular goods, Kazakh enterprises have been forewarned to address both decarbonization and the transition to alternative technologies as soon as possible.

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Optimism Meets Reality at the B5+1 Forum in Almaty

The inaugural B5+1 Forum, a conference dedicated to strengthening business between the five Central Asian republics and the United States, came to a close today in Almaty after a second well received day of panel discussions. The B5+1 Forum was created by the Center for International Private Enterprise (CIPE), which aims to use public-private partnerships to create a better environment for business and trade. The B5+1 platform brings international and local companies together with high-ranking government officials from all six countries, to learn about the difficulties that each side faces, and suggest new ways to attract partners and investment. Following an opening day focused on “Looking within Central Asia”, today’s speakers brought attention to “Central Asia’s place in the world economy”. The morning began with a keynote speech by Eurasian affairs expert S. Frederick Starr, who argued that because the five countries are now members of different trade blocs, the revival of the Central Asian Economic Union could break down their existing barriers to business and trade with the United States. During a morning session on international partnerships, foreign experts brainstormed ways to speed up the Central Asia region’s economic integration with the rest of the world. To an audience of business leaders whose overall mood was optimistic, the EU’s ambassador to Kazakhstan Kestutis Jankauskas and World Bank economist David Knight brought a dose of realism, by explaining that business in Central Asia is not performing as well as in other emerging regions. This, they both said, is because the governments – and business owners – have mostly still not let go of self-defeating ways of approaching markets and investment. The middle session went into more detail about the investment landscape, particularly in terms of IT and fintech. Jennifer Miel, executive director for Kazakhstan for the US Chamber of Commerce, mentioned that all five Central Asian countries have seen healthy increases in foreign direct investment since 2021. This was soon tempered by Anatoly Motkin of the agency StrategEast, who said that to achieve further sustainable growth, the region must unify its legislation and best practices, so that foreign investors can treat it as a single market as much as possible. The Forum’s closing session explored the role of business associations in public-private dialogue. The panel was moderated by Eric Hontz, CIPE’s director for accountable investments, and featured the executive directors of the US Chambers of Commerce in Kyrgyzstan, Tajikistan and Uzbekistan – Aisuluu Sydygalieva, Nilufar Bulbulshoeva and Tatyana Bystrushkina. Discussion centered on best practices and solutions for effective member representation. The B5+1 Forum forms part of CIPE’s program called “Improving the Business Environment in Central Asia” (IBECA). CIPE themselves are affiliated to the US Chamber of Commerce – the catalyst behind the B7 and B20 platforms – and receive funding from the US Department of State. Early indications are that the B5+1 Forum in 2025 will be held in Bishkek, Kyrgyzstan.