Kazakhstan: The Limits Of Cooperation

Nazarbaev (right) was quick to meet with Putin after his trip to Washington (file photo) (ITAR-TASS) Kazakh President Nursultan Nazarbaev's September 26-29 trip to Washington was viewed as a success. But if the visit's form showcased the strengths of Kazakh-U.S. ties, its content pointed to their natural limits. Meanwhile, a subsequent meeting between Nazarbaev and Russian President Vladimir Putin also underscored the limits of Kazakh-Russian relations.

WASHINGTON, October 5, 2006 (RFE/RL) -- The formal highlight of President Nazarbaev's time in Washington was a meeting with U.S. President George W. Bush on September 29.

In a friendly setting, Bush called Kazakhstan a "free nation," while Nazarbaev stressed that "Kazakhstan will always be a friend of the United States," "The New York Times" and "Kazakhstan Today" reported. A Kazakh-U.S. joint statement on September 29 declared "commitment to a shared vision of stability, prosperity, and democratic reform in Central Asia and the broader region."

Heaping Praise

In the statement, the United States lauded Kazakhstan's "efforts in preventing the proliferation of weapons of mass destruction" and called the two countries "steadfast partners in the international war on terrorism."

In his remarks to reporters during the September 29 meeting with Bush, Nazarbaev stressed that the United States is the major foreign investor in Kazakhstan. The bulk of those investments, of course, are in Kazakhstan's oil sector. In a footnote to his meeting with Bush, Nazarbaev met on September 29 with the heads of U.S. oil companies ExxonMobil, ConocoPhillips, and Halliburton, Interfax-Kazakhstan reported. Rex Tillerson and James Mulva, the heads of ExxonMobil and ConocoPhillips, respectively, announced after the meeting that they hope to pursue new projects in Kazakhstan.

There were no breakthrough agreements made on the visit, though Kazakhstan's national railroad company will buy 310 "environmentally clean" locomotives from General Electric from 2008-2012 for more than $650 million, AP reported on September 28. And Kazakhstan agreed to downgrade its remaining stocks of highly enriched uranium in a program financed by the U.S. Department of Energy and the National Nuclear Security Administration, UPI and ITAR-TASS reported on September 29 and 30. The fuel will be reprocessed in Kazakhstan, but it could be used later to generate energy at U.S. nuclear power plants.

Elsewhere, delicate maneuvering was evident. On the symbolically important issue of Kazakhstan's bid to chair the OSCE in 2009, the United States expressed general support for chairing the organization without any actual commitment to the year 2009, according to Kazakh Foreign Minister Qasymzhomart Toqaev.

Support For Astana's OSCE Bid?

Toqaev told Interfax-Kazakhstan, "I would not say that the American side is skeptical about the idea of Kazakhstan's chairmanship of the OSCE. The American side welcomes our country's chairmanship of the OSCE, but the question is when is it going to happen."

A similarly delicate balance prevailed on issues of protocol. Toqaev told Interfax-Kazakhstan: "The Kazakh delegation was accommodated not in a hotel but in the Blair House guest residence, which attests to the high level of the organization of the visit by the U.S. side."

At the same time, "The New York Times" noted that Bush received Nazarbaev at a small lunch, not a state dinner, in "a sign that Kazakhstan's leader is working his way into the president's inner foreign policy circle, but is not all the way there."

The Kazakh-U.S. relationship imposes intricacies on both sides. For the United States, the doubts voiced by critics about Nazarbaev's commitment to democratization and the extent of real political freedom in Kazakhstan limit the depth of Kazakh-U.S. cooperation beyond energy-sector investment.

For Kazakhstan, limits stem from the need to balance ties with the United States against ties with Russia at a time when the two nations' interests are increasingly seen as divergent, especially in the crucially important area of Eurasian energy politics.

Nazarbaev Also Meets With Putin

Eurasian energy politics were on prominent display when Nazarbaev met with Russian President Vladimir Putin in Uralsk, Kazakhstan, on October 3, only a few days after the Kazakh president's trip to Washington.

The highlight of the visit was an agreement to process gas from Kazakhstan's Karachaganak field at Russia's Orenburg processing plant. Under the deal, a parity joint venture between Kazakhstan's KazMunaiGaz and Russia's Gazprom will upgrade Russia's Orenburg plant, with Kazakhstan eventually acquiring a 50 percent stake in the facility, Gazeta.ru reported.

By 2012, the plant will process 15 billion cubic meters of Kazakh gas a year. Sergei Ivanonv, head of Orenburggazprom, an affiliate of Russia's Gazprom, told ITAR-TASS that 7 billion of the 15 billion cubic meters of gas processed in Orenburg will be returned to Kazakhstan.

Ivanov continued, "The remaining gas will be supplied to consumers in Russia, but export is also possible." No price details were announced, although Nazarbaev stated, "We have settled the question on the price of gas which will be sold from this deposit." According to Russia's "Vedomosti," the participants in the international consortium developing Karachaganak do not want to sell the gas for less than $100 per 1,000 cubic meters.

The deal has mutually beneficial elements. For Russia -- as experts noted to "Vedomosti" and Gazeta.ru -- it ensures continued access to the affordable Central Asian gas Russia needs to maintain its lucrative foreign exports as it faces declining yields at core domestic fields.

Russia Needs Kazakh Gas

As Yekaterina Kravchenko, an analyst at Moscow-based BrokerCreditService, said to Gazeta.ru, "It's no secret that Gazprom doesn't have enough gas, and that the Orenburg processing facility had a problem with raw material. With the agreement with Kazakhstan, the Russian company has solved the raw material problem at one facility at least." In comments to "Vedomosti," Alexander Rahr, an analyst with the German Council on Foreign Relations, put the deal in the context of competition between Russia and the United States for Kazakhstan's energy resources, arguing that Russia cannot fulfill its plan to become an "energy superpower" unless it ensures cooperation with Kazakhstan.

For Kazakhstan, the deal -- as described by Nazarbaev -- represents both a money-saving opportunity and a symbolic advance in its relations with Russia. On the pragmatic side, Nazarbaev noted that Kazakhstan would save $2 billion by acquiring a stake in the Orenburg plant instead of building its own processing facility, ITAR-TASS reported.

More importantly, Kazakhstan is poised to acquire a 50 percent stake in the Russian plant. Nazarbaev said, "For the first time, Kazakhstan is investing big money in the Russian economy, and for the first time, Russia is making it possible to invest this money," "Izvestiya" reported.

The limits of cooperation in Kazakh-Russian ties are as important a factor as they are in Kazakh-U.S. ties. But if the latter stem from the nature of Kazakhstan's domestic politics, the former are a result of Kazakhstan's desire to break free from dependence on Russian export routes for Kazakh oil and gas. In this context, Kazakhstan's ability to acquire an equity stake in a Russian energy-sector processing facility points to Astana's strengthening hand in relations with Russia, even though the deal does not advance Kazakhstan's desire to diversify its export options. By the same token, the delicate dance of Nazarbaev's visit to Washington demonstrated that Kazakh-U.S. relations are likely to remain stable within current boundaries as long as Nazarbaev continues to dominate Kazakhstan's political landscape.