Kazakhstan

Capital Nur-Sultan
Population 18.74 million (2018) CIA
President Kassym-Jamart Tokayev

Introduction

Kazakhstan is the world’s largest landlocked country and the ninth largest country (by landmass) in the world. It is the powerhouse economy of the Central Asia region: its GDP is larger than that of all of the other Central Asian states combined. The country borders the Caspian Sea to the west, has a small border with Turkmenistan to the south west, and Uzbekistan and Kyrgyzstan to the south. China is its neighbor to the east; to the north, Kazakhstan is engulfed by Russia. The country—the ninth largest in the world—is disproportionate to its population, and is has one of the lowest population densities in the world. Its current capital is Astana moved from Almaty, the country’s largest city.

The vast steppes of Kazakhstan were originally populated by Turkic nomads—the area was incorporated into the Mongolian Empire under Genghis Khan, and was absorbed by the Russian Empire several centuries later. Following the Russian Revolution in 1917, the space of Kazakhstan was used by the government to exile various nationalities, including Poles and Ukrainians, resulting in large diaspora groups still present today. The country was absorbed into the Soviet Union until 1991, when it declared independence—it was the last of the Soviet republics to do so.

When it gained independence from the Soviet Union, in 1991, Kazakhstan established itself officially as a democratic republic, overseen by a president and a bicameral parliament. Power is highly concentrated in the hands of the president: since the transition from the Soviet Union to independence, Kazakhstan has had one president, Nursultan Nazarbayev. Elections in Kazakhstan are held for regional governance, the two houses of parliament, and for the president. Over the years, the OSCE has been critical of the management and outcome of election, contesting that the elections do not meet international criteria for fairness and transparency. Kazakhstan’s constitution does not denote a religion, and politics in the country tend to be secular. The country’s domestic political situation influences its external dynamics with outside actors—regional and global, and its membership in international organizations.

Kazakhstan tends to dominate or disregard relations with the smaller Central Asian actors, due to its size and economic might relative to theirs; instead, it focuses its geopolitical strategy on larger neighbors China and Russia, fostering strong ties with the two. This multivector foreign policy manifests in its membership in organizations: Kazakhstan is part of the Russian-led Commonwealth of Independent States (CIS) and Eurasian Economic Community (EurAsEC) and China’s Shanghai Cooperation Organization (SCO). It is also a member in the Economic Cooperation Organization (ECO), founded by the leaders of Iran, Pakistan, and Turkey. Kazakhstan also aims to keep favorable relations with western powers, chiefly the U.S. and EU. It has a Partnership for Peace with NATO and is active in UN peacekeeping missions. Kazakhstan’s goal is to keep balance with its neighbors and partners, motivated by its economy.

Kazakhstan’s economy is dominated on export and revenues from oil and gas extracted from the Tengiz and Kashagan fields in the Caspian Basin. It also has large mineral deposits, chief among them copper, uranium, and zinc. The success of this natural resource economy keeps Kazakhstan at a favorable trade balance and keeps domestic coffers full. Kazakhstan cooperates with international companies, like Chevron to extract its resources; for transport, the country relies on China and Russia. Kazakhstan faces challenges in diversifying its economy away from natural resources for the future. In an effort to cultivate its trade and other sectors Kazakhstan has pursued more cooperation with regional and global economic partners. It is in the process of establishing itself as a regional and international hub—in 2017, it hosted an energy-themed expo, the first of its kind in the post-Soviet area.

Kazakhstan is a massive country in Central Asia, accompanied with a massive resource-backed economy. While its domestic politics cause many an international eyebrow arch, the country is big enough and wealthy enough to carry on with business as usual. Kazakhstan’s regional vigor bring with it a certain regional responsibility—a position Kazakhstan is eager to fill. Further, the gas and oilfields of the Caspian are not indefatigable: one day, they will dry up, and Kazakhstan will need to be prepared to shift its economy into other sectors. Kazakhstan’s political situation, too, has its limitations: its current—and only—president, Nazarbayev, is old, and questions of succession bring to light cracks in the authoritarian model and threaten to upset the status quo of stability. So while Kazakhstan is full of bravado today, it would do well to look to the future and plan its international, domestic, and business relationships accordingly, hedging against the inevitable.

Quick Facts

Basics
Capital City Astana
Country Population 17.8 million
Largest City (Population) Almaty (1.8 million)
2nd Largest City (Population) Astana (1.0 million)
3rd Largest City (Population) Shymkent (680,000)
4th Largest City (Population) Karaganda (480,000)
5th Largest City (Population) Taraz (350,000)
President (Dates) Nursultan Nazarbayev (1990-Present)
Prime Minister (Dates) Bakhytzhan Sagintayev 2016-Present)
Currency Tenge
Politics
President Nursultan Nazarbayev
Prime Minister Bakhytzhan Sagintayev
Freedom House Score (1=Free, 7=Not Free) 6
Ruling Party Nur Otan
Past Presidents (Dates) N/A
Past Prime Ministers (Dates) Karim Massimov (2014-2016, 2007-2012)
Serik Akhmetov (2012-2014)
Daniyal Akhmetov (2003-2007)
Imangali Tasmagambetov (2002-2003)
Kassym-Jomart Tokayev (1999-2002)
Nurlan Balgimbayev (1997-1999)
Akezhan Kazhegeldin (1994-1997)
Sergey Tereshchenko (1991-1994)
How Central Banker is Appointed Appointed by President
Average Voter Turnout in Last 5 Elections
(% of Total Population)
87.64
Trade and Commerce/Economics
10 Major Import Partners
(% of Total Imports)
Exports Major
Partners (10)
Major Industries
by GDP
Top Exports Sanctioned by
(and Start Date)
Sanctioning
(and Start Date)
1. Russia (35%)
2. China (16%)
3. US (6.1%)
4. Germany (5.1%)
5. Italy (3.2%)
6. France (2.5%)
7. Turkey (2.4%)
8. Uzbekistan (2.1%)
9. Japan (2.0%)
10. South Korea (1.7%)
1. China (13%)
2. Russia (11%)
3. Netherlands (6.9%)
4. France (6.8%)
5. Italy (5.8%)
6. Germany (4.4%)
7. Turkey (3.9%)
8. Greece (3.7%)
9. US (3.0%)
10. UK (2.9%)
Oil
Coal
Metals (iron, manganese, zinc, copper, gold, silver, etc.,)
Tractors/ Agricultural Machinery
Electric Motors
Oil and Oil Products
Natural Gas
Ferrous Metals
Finance
Largest Sources of FDI by Country 1. Netherlands
2. China
3. USA
4. Russia
5. Switzerland
Demographics
Largest Ethnic Groups
(% of Total Population)
Largest Religions
(% of Total of Population)
Population Living
Abroad
Kazakh (65.5%)
Russian (21.5%)
Uzbek (3%)
Sunni Islam (70%)
Christian (26%)
Atheist (3%)
1 million
Major International Organizations (and date of accession)
1 UN–1945
2 SCO–1996
3 OSCE–1992
4 EEU–2014
5 CSTO–1994
6 CIS–1991
7 EBRD–1992
8 WTO–2015
9 IMF–1992
10 Organization of Islamic Cooperation (OIC)–1995
11 EAPC–1997
12 Economic Cooperation Organization (ECO)–1992
13 World Bank–1992

Politics

A consolidated authoritarian regime, the presidential republic of Kazakhstan has only had one ruler during its post-soviet history, Nursultan Nazarbayev. Bestowed with the title “Leader of the Nation,” Nazarbayev is the only head of state of a post-Soviet country who has held the post without an interruption since the collapse of the USSR. Local party chief and leader of the country already during the late years of communism, Nazarbayev’s faced the enormous challenge of building a modern state in a country without a history of independent statehood, where ethnic Kazakhs were in a minority, and the sense of national identity was weak and vague.

A quarter of a century later, Kazakhstan is the leading power in Central Asia. Benefitting from natural resources, Kazakhstan—the world’s largest landlocked country—is on Russia’s level of economic development and has not gone down the path of political instability or ethnic violence like most of its neighbors. To Nazarbayev’s supporters, the strongman president is a masterful nation and state builder in the vast multiethnic country that without him could be an impoverished zone of instability. To his critics, he is a corrupt dictator, who has enriched himself and his family, while violently suppressing any opposition to his rule.

In Kazakhstan, the president Nazarbayev is an undisputed ruler, exercising vast presidential powers, while governments have traditionally been run by technocrats. Nazarbayev has wielded his executive power to implement his “Special way” of pursuing economic modernization before political democracy. Symbolically, the country’s capital was moved from the most populous, historical city of Almaty in the country’s south to the planned, ultramodern Astana in middle of the country’s vast central steppes. Founded on Nazarbayev’s birthday, the new capital symbolizes Kazakhstan’s state building and balancing act in the diverse nation.

During the Soviet period, many internal enemies of the Soviet Union were deported to Kazakhstan and as a result, sizeable minorities of Poles, Ukrainians, Koreans, Chechens still live in the country even if most have migrated away. The share of ethnic Kazakhs of the total population of 18 million has gradually risen from the 40% after the fall of the Soviet Union to around 67% now. A sizeable Russian minority of around 21% continues to reside in the country and is mainly concentrated in Northern Kazakhstan—the areas adjunct to Russia. Lacking natural frontiers, many observers have pointed out Kazakhstan’s vulnerability in the event that Russia would pursue destabilization of the region. Therefore fostering a strong sense of Kazakh national identity without antagonizing the non-Kazakh minorities has been Astana’s driving imperative during the post-soviet independence.  

The majority of Kazakhs and a total of 70% of the country’s population are Muslim—almost exclusively Sunni. Around quarter are Russian Orthodox. But modern Kazakhstan is a strictly secular state, where religion plays only a minor role in the public sphere. Unlike the other Central Asian states, the multiconfessional Kazakhstan’s constitution makes no references to Islam. Religious political parties are prohibited, and the country’s authorities have exercised control over the Muslim community by the creation of a separate muftiate, the highest religious authority in Islam. Instead of religion, Kazakhstan’s nation building has relied on Kazakhstan’s nomadic and Turkic roots. Traditional nomadic practices and culture are celebrated across the country, and after Russia’s annexation of Crimea in 2014, more focus has been put on the promotion of the Kazakh language. Russian remains widely spoken and used in all spheres of the society and has the status of an official language, while Kazakh - a Turkic language, is the official state language.

Astana is gradually replacing the cyrillic alphabet with a Latin alphabet in the written use of the Kazakh language. The careful balancing and the heightened focus on cultural question are partially motivated by Kazakhstan’s quest to prevent tactics used by Russia to stir conflict in Eastern Ukraine from having success in Kazakhstan’s north, where the Russian minority is concentrated.

Executive

Kazakhstan’s government is heavily biased towards the executive branch, considered a presidential, secular, unitary republic. The president is elected with direct popular vote for five-year terms with a term limit of two consecutive terms. However, this stipulation does not extend to include current President Nazarbayev: a constitutional amendment states that term limits do not apply to the “first president of Kazakhstan.” The president holds complete prosecuting immunity while in and after holding office, preventing any sort of real or fabricated charges. In office, the president is responsible for appointing the prime minister and cabinet ministers. This also means Kazakhstan’s political system has been fully dominated by the president, who has appointed and dismissed the prime minister and cabinet ministers at his will without an input from the parliament.

The president is de facto undisputed, the supreme leader of the country’s politics with no alternative power centers in the country: in practice, the president has the right to veto any law proposed by the parliament and is formally the ultimate arbiter between the different branches of the state. But, in 2017, after the president’s proposals, the parliament passed constitutional changes that scaled down presidential powers and heightened the importance of the parliament. Rather than a move to parliamentarianism, the changes are moving Kazakhstan away from a full presidential to semi-presidential system of governance, which is seen as a preparation for the inevitable transition of power when the now 79-year-old Nazarbayev leaves the political scene.

Judicial

Kazakhstan’s judicial branch has two levels: the regional oblast courts and the national Supreme Court. The country also has a Constitutional Council, which specifically oversees the law and changes to the Kazakh constitution, as passed by the legislature; the court also issues decisions on elections and referendums. It has seven members, three of which are appointed by the president. The Supreme Court has 44 judges, who are nominated by the Supreme Judicial Council. The Supreme Judicial Council chair is also appointed by the president; and the president plays a significant role in encouraging the Senate to take up candidates for the local and upper courts alike. All judges serve for life. There is a great deal of interplay between the executive and judicial branches, with judicial nominees highly dependent on the approval of the president. This could lead to problems of checks and balances, whereby the judicial and legislative branches are beholden to the presidential agenda; but this is part of Kazakhstan’s strong centralization of power in the executive, and neither wholly unexpected nor inefficient.

Legislative

Kazakhstan’s parliament is a bicameral legislature, made up of an upper and lower house. The representatives of the lower house—Mazhilis—are elected every four years to fill 107 seats; the last election was in 2016. Currently, the leading Nur Otan, Nazarbayev’s party, holds 84 seats, effectively a supermajority. The remaining 14 seats are split evenly between the Communist party and the liberal party, Ak Zhol. The ruling Nur Otan party is a mass party with over 800,000 members but lacks a clear ideology beyond ardent support of Nazarbayev’s leadership.

The liberal party is an offshoot of a more hardline anti-Nazarbayev opposition from the early 2000s, but has refrained from direct criticisms of the president, while demanding a pro-business agenda. Effectively there is no parliamentary opposition to Nazarbayev’s rule.

The upper house of the parliament, the Senate of Kazakhstan, has 47 seats total—seven seats are reserved for presidential appointees; the other 40 are filled by elections, held on a rotating basis every six years. Parliament holds joint sessions of the two houses to approve the budget and change the constitution, and matters of policy such as passing the budget, changing tax code, and ratifying state treaties require approval from both chambers. Their combined approval is also necessary to appoint two members to the Constitutional Council and the Central Election Commission. The upper chamber Senate has more power than the lower house, and holds exclusive ability to approve the president’s appointments to the Supreme Court and position of prosecutor general.

In 2017, the Kazakh parliament passed constitutional changes that will shift the power of balance away from the executive every so slightly towards the parliament. This is understood to be preparations for a transition power from Nazarbayev to his eventual successor. From the executive side, in a televised address, Nazarbayev emphasized that a strong president was necessary in building the state, but that the time had arrived to balance the powers. The changes include the removal of the president’s power to propose new legislation, and make the government accountable both to the parliament and the president. Until the constitutional changes, the president could appoint and dismiss the prime and cabinet ministers at his will. Now the parliament can issue, with ⅔ majority, a no confidence vote at the government or individual ministers in which case the president is forced to accept the parliament’s will. The president will still retain the right to directly appoint the minister of defence and the minister of foreign affairs.

The decentralization of political power is a part of Kazakhstan’s comprehensive modernization agenda. The 2050 Strategy of Kazakhstan outlines an ambitious vision of positing the country amongst the top 30 global economies by 2050. The government seeks to address the country’s over reliance on gas and oil exports and the economic underdevelopment of the single industry towns – a Soviet legacy of central planning, by promoting private entrepreneurship and increasing political accountability of the local governance. Direct elections of regional leaders and fighting against corruption are included in the government’s program. To foster an atmosphere of public engagement and stability, the strategy includes a notion of ‘zero tolerance for disorder’. Proponents of the state-led modernization agenda argue that an orderly society is a prerequisite for stability and economic development.

Media, NGOs, and Civil Society

Notwithstanding Kazakhstan’s modernization scheme, the desire for progress has been accompanied by an unwelcome foe: an uptick in terrorist attacks in recent years. The terrorists are primarily from Islamic groups, their targets mostly Kazakh security forces, and occasionally civilians. The largest attack came in 2016, when a group of gunmen caused mayhem in an oil-producing town, Aktobe, for several days. The death toll was 25—most of the casualties gunmen—but with excessive damage and widespread fear. The violence is not limited to Kazakhstan’s borders: of the estimated 2,000 ISIS recruits from Central Asia, around 300 are from Kazakhstan.

In Kazakhstan, the extremist ideology and recruitment is spread mostly through online platforms; despite the online monitoring systems, there are still gaps in attempts to curtail the Sunni radicalism that has found its followers online. Still, despite this increase in the frequency and casualties from terrorist attacks in recent years, compared to its neighbors, Kazakhstan has remained relatively stable. But critics of the regime assert that the fight against extremism is used by the authorities as a pretext to crackdown on any opposition to Nazarbayev’s rule.

With no parliamentary opposition, and dissident journalist and activists often facing harassment and even long prison sentences, the civil society space is heavily controlled by the country’s authorities. Kazakhstan remains a consolidated authoritarian regime, where no independent media or protest is tolerated by the country’s authorities. The most extreme example of violent crackdown of protest was the 2011 Zhanaozen massacre. A protest of oil workers, who were demanding better wages and working conditions, was violently dispersed by the police. According to authorities, 11 people died in the course of the events, but activists contend that dozens were killed. The event was a clear overreach by local authorities. The local political and police leadership was promptly sacked, and some police officers put on trial. The event led to further tightening of the civil society space as the last remaining independent media outlets were closed by the authorities in the aftermath of the violence.

The state’s surveillance capabilities have also increased in the recent years as Kazakhstan has acquired the advanced SORM internet surveillance system from Russia. The system allows the authorities to monitor all internet traffic that goes through internet service providers based in the country. Individuals, who have criticized the Nazarbayev regime on social media, have recently faced even prison sentences. Authorities are quick to label any protest as extremist and against the state, but in the case of recent protest movements, economic factors have been the main driver of protest. In 2016, the authorities were taken by surprise, when a countrywide protest movement swept the country against a proposed land privatization law that would have allowed foreign investors to rent agricultural land up to 25 years—prompting fears of Chinese companies taking over the most fertile areas in the country.

Conclusion

After a quarter century of statebuilding, Kazakhstan has, on many measures, emerged as the success story of Central Asia. In terms of prosperity, the country is one of the top performers in the former Soviet Union. Backed by a powerful internal security apparatus, the Nazarbayev regime has kept its opponents unorganized and weak, but coercion alone does not explain the success of the country’s political leadership in consolidating power. Impressive economic development, security, and successful nation-building have earned the Nazarbayev regime genuine support amongst large sections of the society. Lacking a history of democratic governance or independent statehood, much of Kazakhstan’s political culture remains rooted in Soviet and earlier nomadic legacies, which highlight preference for strongman leadership and respect for authority. Compared to its neighbors, where political instability and violence have left a mark on the recent history, Kazakhstan has remained a paragon of stability.

Geopolitics

Kazakhstan’s foreign policy is shaped by its Soviet heritage of ethnic diversity and a geographic position as a wide open steppe that connects Russia to the rest of Central Asia and Chinese frontiers. From communism emerged a limping system in which the state was the party, and vise versa. The continuation of this party-state hybrid approach was embraced as a means to bring Kazakhstan forward through the end of the twentieth century and into the next. Progress necessitated a strong leader. This extends into Kazakhstan’s foreign policy, where President Nazarbayev and his chosen crew forge the country’s foreign policy path.

Kazakhstan has been highly active in its foreign policy, reaching out to initiate relations with its regional neighbors and global powers. Kazakhstan labels its foreign policy as multi-vector Eurasianism. It seeks to maintain good relations with all of its neighbours and has been a consistent proponent of deeper integration in the post-Soviet space. The world’s largest landlocked country started the Eurasian Economic Union and maintains an active role in the Collective Security Treaty Organization — both Russian-led integration projects. Kazakhstan’s close relations with Russia are to a degree informed by its geopolitical vulnerability. The large Russian minority is an imperative for Astana to make sure that they do not feel alienated by Kazakhstan’s foreign policy choices, which if they antagonized Russia, would leave Kazakhstan vulnerable to separatism and the type of hybrid war scenarios that Russia has used in Eastern Ukraine. Reaching even further out, Astana has hosted peace talks between the warring parties of the Syrian civil war since 2017. The country has called for more active cooperation and integration between the Central Asian states, but political rifts with Kyrgyzstan on top of Uzbekistan’s and Turkmenistan’s reluctance have put limits on the extent of their cooperation.

Kazakhstan has provided foreign aid to its poorer neighbors and to Afghanistan—a total of $450 million in 2017. These actions are a natural element of Kazakhstan’s multi-vector, international relations strategy: Astana keeps good relationships with its two superpower neighbors—Russia and China—while also staying open to cooperation with other global powers, such as the United States and the European Union. Kazakhstan is a member in Russian-led projects, but is also a member of China’s Shanghai Cooperation Organization, and in NATO’s Partnership for Peace. With its great power relationships, it must balance the benefits it receives from the partnership, like security, influence, and interconnectivity, with potential short- and long-term negatives, like loss of sovereignty, culture, or growing extremism.

Apart from the Caspian Sea, Kazakhstan lacks natural frontiers—it is bounded by Russia to the north, China to the east, and Kyrgyzstan, Uzbekistan, and Turkmenistan to the south. Kazakhstan's placement in the region has brought connectivity: Kazakhstan is a bridge between Europe and East Asia, Russia and Central Asia. All routes from Russia to the rest of Central Asia go through Kazakhstan; the close integration and open access guarantees that Russia has no need to coerce Astana into cooperation. Kazakhstan is also the key link in China’s Belt and Road Initiative—which Chinese President Xi Jinping announced in Astana—to connect Chinese markets with Europe.

The country has also used its natural resources and economic prowess to an foreign policy advantage—the policy of pipelines. But it is also a bridge in a negative sense. Drugs, weapons, extremists travel through Russia, Afghanistan, and the rest of the region. Its neighborhood tends to teeter on the edge of instability; the Kazakh government is preoccupied with spillover from regional conflict into its borders, and tends to hedge against flare-ups of violence in the area. Kazakhstan is certainly the most stable country in the region, something for which it largely has president Nazarbayev to thank. This begs the question: what happens to Kazakhstan’s stability, the bastion of foreign policy in the area, when Nazarbayev must turn over operations to a successor?

If Nazarbayev wants his legacy to endure, he needs to have strong institutions and policy in place, such as the 100 Concrete Steps Program—the Plan of the Nation, to provide a strong national strategy necessary to push the country forward. Looking to the future, Kazakhstan should hedge its bets in preparation for Nazarbayev's departure and regional shifts. But the effectiveness of Kazakhstan’s moves are not constructed on a one-way street. For meaningful and lasting gains, great powers, including the U.S., EU, and other countries must take strategic interest in Kazakhstan and region.

There is regional debate over whether Russia or China is more important to Kazakhstan’s identity and future. There is an argument that in the long term, Astana’s geopolitical orientation towards Russia and Eurasia will remain constant because of the strong importance of the regional ties and heritage; but there is an equally strong argument that Chinese money and cultural influence will overrun the region as China aggressively pursues its interests. To continue to float, Kazakhstan will need to continue to assert itself in regional cooperation agreements. It will have to divest from a natural-resource-centric plan and should launch new initiatives to position itself as new logistical hub of Central Asia for planes, train, and automobiles, becoming a Central Asian Dubai or Singapore. But it is not as simple as “declaring” itself: to be successful Astana should work with a multitude of partners, including Russia, India, Japan, and the U.S. and EU, to enhance regional connectivity, with itself as core.

Regional

Russia

After Belarus, Kazakhstan is arguably Russia’s closest ally. Presidents Putin and Nazarbayev meet several times every year and underline the eternal friendship and cooperation of their two countries. They share the world’s longest continuous land border—4,254 miles. Integration between Moscow and Astana is close: the two share Soviet heritage and the legacies and security questions posed by the USSR’s dissolution. In the 1990s, the relationship between the two countries was dominated by the transfer of the over 1500 nuclear warheads placed in Kazakhstan and the cleanup of the Semipalatinsk nuclear test site. Kazakhstan continues to host the Baikonur Cosmodrome — the launchpad of Russia’s space rockets, which is leased to Russia until 2050.

The Russian minority in Kazakhstan rapidly shrunk in size after the Soviet period, where the ethnic Russian population had at one time outsized the ethnic Kazakh population. The remaining ethnic Russian minority—around 20% of the total population, is heavily concentrated in Kazakhstan’s north, where they constitute a large majority of the population. More closely connected to Russia’s road and economic infrastructure than the rest of Kazakhstan, the northern regions have posed a challenge for Astana. If the relationship between Russia and Kazakhstan were ever to break down completely, Russia could easily destabilize Kazakhstan by promoting separatism in the northern regions—a prospect that many analysts pointed out after Russia’s annexation of Crimea. For Kazakhstan, it has been an imperative to maintain close and friendly ties with Moscow to maintain stability but a simultaneous challenge of how to carve up the maximum space for foreign policy autonomy.

Moscow continues to push heavily to maintain its influence in its near abroad, its sphere of influence, to which Astana has responded favorably. The two are members of the Commonwealth of Independent States (CIS), and they are founding members of the Russia-centric Collective Security Treaty Organization (CSTO) and Eurasian Economic Union (EEU); they also were co-founders in the Chinese-led Shanghai Cooperation Organization (SCO) that focuses on counterrorism initiatives. The tension between the two comes from the push and pull of needs: Russia wants Kazakhstan to succeed in the SCO and its cooperation with China, as it benefits Russia, but Moscow also strongly wants to maintain its primacy in the region’s security affairs. Kazakhstan, meanwhile, is keen to benefit from its partnership from Russia, but also has undertaken plan to build a route for oil to Europe that bypasses Russia, aiming to break Russia’s monopoly over the transport of Kazakh oil.

Russia’s attempts to use Eurasian Economic Union as a counterweight against western sanctions and the perceived attempts to gain market access without equal reciprocity have led to tensions between Astana and Moscow even if Kazakhstan remains Russia’s most reliable ally in the region. The country is certainly no Russian puppet: it resisted Russia’s pressure to take a pro-Russian stance in regional conflicts and has not endorsed the independence of Abkhazia, South Ossetia, or the annexation of Crimea. The nature of their relationship is also guided by leading personalities, Russian President Putin and Kazakh President Nazarbayev: the interplay of their countries’ international relations is subject to change as one of these sicons of policy step down in the coming decade. But for now, the two get along.

China

Perhaps the most influential country in Kazakhstan’s current geopolitical forecast and trajectory is China. Kazakhstan is a critical node in China’s pursuit of connectivity to Europe through Central Asia, and it can position itself as China’s most dependable partner as part of Beijing’s Belt and Road Initiative (BRI). The government in Astana has membership in China’s SCO, and has reaped the benefits of such partnership: the two countries have engaged in a multitude of regional projects to their mutual benefit. The Kazakhstan-China oil pipeline, owned by China’s National Petroleum Corporation and Kazakhstan’s KazMunayGas and running from the Caspian Sea to Xinjiang, is China’s first direct oil import pipeline transporting oil from Central Asia. China has discussed extending its high-speed train through the region, and Kazakhstan is working to build its own train line, partially financed by Chinese capital, to move Chinese goods, though the two trains run on different gauges. The 2,700 km Western Europe–Western China highway will reduce delivery time of goods from China to Europe by a factor of 3.5 compared to sea routes; the Kazakh government asserts that around 70% of Chinese goods destined for Europe pass through its territory. The Construction of Khorgos International Centre of Boundary Cooperation, a dry port and tax-free shopping combination, is at times promising but also plagued by chronic delays and inefficiency. The area is set to be the world’s largest dry port by 2020. The free trade zone should in theory bring the two countries closer together, bound by ties of commerce and industry, but problems in construction and customs passage on the Kazakh side have led to resentment from the Chinese side—and have fueled concerns that Astana is riding on Beijing's money and patience without providing services and progress in return.

Meanwhile, for Kazakhstan, cooperation between their government and Beijing is set against the backdrop of widespread suspicions of Chinese influence and intentions amidst the Kazakh civil society. In 2017, a Kazakh law that would allow Chinese investors to purchase well-placed Kazakh property led to massive protests. There is a fear over the push of Chinese culture in the country. China is home to a minority of 1.5 million Kazakhs, mainly in the Xinjiang province, where China’s harsh treatment of Muslims and the Uighur minority—related to Kazakhs—has caused an international uproar. And while China’s investments in Central Asia are partially motivated by attempts to keep up the region’s economic development and prevent spillover and transnational radicalism in the region, at times, their moves have directly the opposite effect. There is no doubt that trade relations between China and Kazakhstan will continue, impacting Astana’s strategic relationship with Beijing. But the overtures may be too much, and could result in a retreat towards Russia—still the cultural overlord and lingua franca in Kazakhstan—as an alternative to China’s might.

Kyrgyzstan, Uzbekistan, & Turkmenistan

Were Kazakhstan’s border-sharing to be divided into thirds, one third of its border would be meted out to the combined grouping of Kyrgyzstan, Uzbekistan, and Turkmenistan. But despite this proportion of space, little of Kazakhstan’s geopolitical initiative is directed at its neighbors. Kyrgyzstan and Kazakhstan have an on-and-off relationship. Kazakhstan is one of Kyrgyzstan’s biggest investors, and has poured resources into developing the relationship and infrastructure. But Kyrgyzstan’s 2017 elections pushed a solid wedge into that relationship, when Kyrgyz President Almazbek Atambayev accused Kazakhstan of supporting an opposition candidate. He went on to contend that Kazakhstan’s efforts in Kyrgyzstan were not all trustworthy. Kazakhstan responded by sending troops to the border until the end of the election and slowing border crossings into Kazakhstan; Kyrgyzstan responded in like. Atambayev declined to attend a CIS head of state summit in Sochi, and Kazakhstan’s election commission, the OSK, refused an invitation to monitor the elections. Still, Atambayev did not win the election; the incumbent lost to the current President, Sooronbay Jeenbekov, who has continued to push forward relations between Kyrgyzstan and Kazakhstan, which share the region’s closest cultural and linguistic ties.

The Kazakh-Uzbek relationship is summarily better, but only recently so. For some time after the two countries declared their independence from the Soviet Union, exchange between the two countries was terse and restricted. This is largely because of a difference in regional pragmatism and involvement. While Kazakhstan has preferred a hands-on approach to regional projects, Uzbekistan's former President, Islam Karimov, was more reluctant, choosing to keep his country isolated and engage with its partners strictly bilateral basis. The two share regional issues, such as narcotics trafficking, but even there, the response has been unilateral rather than joint policy.

In 2006, Kazakhstan erected a heavily fortified barrier, complete with barbed wire and searchlights, to curtail drug smuggling on the Uzbek-Kazakh border. Since the new Uzbek president, Shavkat Mirziyoyev, has come to power, the two Central Asian nations have worked to become better neighbors—even fraternal countries, opening the door for closer cooperation and possible regional integration. This is driven largely by Mirziyoyev’s personality and stark departure from the hermit-like status of Uzbekistan under his predecessor, Karimov. Unlike with other neighbors, the two have no unresolved border or ethnic issues, and they are invested in increased trade between them and interregional.

Turkmenistan is known for its closed borders and indefinite neutrality—features that make it a difficult regional nut to crack, which extends to the relationship between Ashgabat and Astana. The two have shared cultural ties over the years, but have yet to deepen their friendship. Their relationship is marked by their cooperation and argument on natural resources and transit. The two have cooperated on the Kazakhstan-Turkmenistan-Iran railway, and pipelines carry Kazakh oil to the Persian Gulf through Turkmenistan, while Turkmen gas flows north through Kazakhstan to Russia, Ukraine, and the rest of Europe, as well as to China. But they are embroiled in an ongoing dispute over the borders and access to the resource-rich Caspian Sea.

The leaders of the two countries signed a treaty on strategic partnership in 2017, celebrating 25 years of diplomatic relations, and agreed to pool resources to fight money laundering, financing of terrorism, and to deepen ties of industry. This does not portend an about-face in Turkmenistan’s relative isolation or Kazakhstan’s strategic thrust towards China and Russia, but their potential for enriched cooperation is an important development for the region.

Global

The United States

Kazakhstan’s relationship with the United States has been primarily driven by security concerns and initiatives aimed at utilizing Kazakhstan’s vast energy resources. In the 1990s, Kazakhstan emerged as a focus point in western capitals because of the over 1500 nuclear warheads left behind in the country, after the collapse of the Soviet Union. By mid-1990s, with the help of western experts, the Semipalatinsk nuclear test site was cleared of remaining nuclear weapons and fuel, but remains to this day one of the worstly contaminated sites in the world.

War on terror in Afghanistan lifted Kazakhstan again on the American foreign policy priority list. The Northern Distribution Network that was established in 2009 to reduce US reliance on Pakistan’s turmolous supply routes transported supplies through Russia and Central Asia to Afghanistan until 2015, when Russia cut of the corridor because of tensions over the crisis in Ukraine. However, in 2018, after president Nazarbayev’s official visit to the White House, Kazakhstan announced that it would open its Caspian Sea ports to nonlethal NATO supplies to Afghanistan. The new route will transport supplies on ships from Azerbaijan over the Caspian Sea, across Kazakhstan to Uzbekistan and from there to Afghanistan.

But unlike other Central Asian states, Kazakhstan has not a hosted American or other western military facilities on its soil during its operation in Afghanistan. This is due largely because of Astana’s aversion to antagonize Russia. Kazakhstan’s limited but cooperative engagement with the US highlights Astana’s persistent attempts to uphold its foreign policy autonomy without irritating Russia or letting Moscow dictate Astana’s foreign policy with outside powers. Kazakhstan’s ties with the US remain constrained by geopolitical realities. For United States, Kazakhstan’s importance is mainly instrumental — as a route for supplies or as a source of energy for American allies, or tied to wider security issues — proliferation of weapons of mass destruction and terrorism. For Kazakhstan, the United States remains integral in balancing between its powerful neighbors, Russia and China, but has no realistic prospect of pursuing the role of the primary outside power in the region.

The European Union

Kazakhstan, of all Central Asian states, has the closest ties with Brussels—though the pragmatic relationship between the two is heavily focused on trade rather than politics. In 2015, Kazakhstan became the region’s first country to sign a Partnership and Cooperation Agreement with the EU, which paves the road for further economic cooperation. Kazakh politicians have even floated the idea of the country eventually becoming an EU member, although such ambitions remain completely unrealistic and far off — especially when Kazakhstan has not joined the EU’s neighborhood policy,a prerequisite for an association agreement and membership negotiations. The partnership between Kazakhstan and Europe keeps tightroping on an uneasy balance of mutual economic interests bringing the two closer together but Kazakhstan’s human rights record setting limits to the extent of cooperation.

Conclusion

Kazakhstan’s international relations are influenced by the strength of the country’s position between economic and political giants China and Russia. The country’s importance as a hub for these two also make it an important director of policy for its smaller, less influential neighbors. Astana’s policy is further guided by the pipeline politics accompanying Kazakhstan’s wealth of natural resources. The government in Astana, driven by the single-leader approach of President Nazarbayev, has set course to secure Kazakhstan’s future while setting forth its importance and responsibilities. But at times political goals have been at odds with economic and foreign policy realities.

There is concern—not unfounded—that China’s economic influence in the region will swiftly be accompanied by cultural pressure that could force out Kazakh cultural heritage. As a result, Kazakhstan has retreated to Russia, with whom it shares more cultural heritage, but this, too, could put Kazakhs in a vulnerable position relative to Russia’s will. More disconcerting still is the inevitable shift in power center and potential shift in strategy that will accompany Nazarbayev's departure from politics. Consistency and stability have been key in his relationships with Moscow and Beijing, but so has personality, and there would be no guarantee that a successor—even a handpicked one—would command the same respect from regional leaders. In planning for this, Kazakhstan should continue its cooperation with regional actors but perhaps invest more in global partners like the EU and United States, that, with skin in the Kazakh game, might be more amenable to helping maintain the regional status quo or helping Kazakhstan posture forward in the future.  

Economics

Kazakhstan is a semi-open market economy—something it has been working towards since it gained independence in 1991 and began its transition away from the command-and-control economy of the Soviet Union. It is Central Asia’s largest economy by far, both in terms of absolute GDP and per capita—five times wealthier than the region’s most populous country, Uzbekistan, placing Kazakhstan in the same level of economic development and prosperity as Russia. In 2017, the current GDP was $159 billion; the GDP by PPP in 2017 was $423 billion, representing a growth of 3.3%. It saw its biggest growth from 2017–2018 in services, with 60.8%, followed by industry, which saw 34.4% growth, and agriculture, with 4.8% growth.

The world’s 16th largest oil producer with the 12th largest proven reserves, Kazakhstan’s economy has grown steadily through the 2000s with the help of large outside investments in the country’s energy sector. Dependence on oil revenues has led to major fluctuations in the total output, following changes in oil prices. Following the 2014 price drop, Kazakhstan’s economic growth stalled to close zero from previously steady growth of over 4%. Closely integrated with the Russian economy as the member of the Eurasian Economic Union, Kazakhstan’s economy has suffered from the economic downturn of its northern neighbor and the western sanctions imposed on Russia.

Kazakhstan is working to advance its economy in other directions. By reducing tariffs and opening the economy, Astana wants to move away from its dependence on natural resources. This strategy depends on the productivity of people and the interest of outside non-regional powers such as the U.S., EU and other Asian countries. Stretching from China to the Caspian Sea, Kazakhstan is seeking to position itself as the prime link in China’s Belt and Road Initiative, aiming to have 70% of the overland cargo traffic from China to Europe to pass through its territory.

Structure of the economy and key markets

Kazakhstan’s market is driven by its wealth of natural resources. In 1996, the Kazakh government signed on to the Caspian Pipeline Consortium, which included partners such as Transneft, Rosneft, Chevron, Lukoil, Shell, and BP, to create a pipeline network to transport Caspian oil from Kazakhstan’s Tengiz field to a Russia-owned terminal on the Black Sea. Supplemented by the Kazakhstan-China oil pipeline, completed in mid-2000s, Kazakhstan is a major oil exporter, with crude exports accounting for 40% of all exports. Kazakhstan is also world’s largest producer of uranium with the second-largest volume of deposits after Australia.

In response to the falling oil prices and economic output, in 2014, president Nazarbayev announced an ambitious new economic policy, Nurly Zhol. Investments in education and advanced technology, reduction of red tape are aiming to diversify the economy away from over dependence on natural resource extraction. Kazakhstan is already a regional leader in the production of cars, in fact Toyota has a factory there. Simplification of the tax code and registration procedures has boosted Kazakhstan’s score in the ease of doing business rankings from the 71st place in 2008 to the 36th in 2018. The ultimate aim is to shift the economic model away from extraction of oil and gas to service-based, consumer and entrepreneurship focused economy. To further open up the country’s economy to foreign investors, Kazakhstan joined the World Trade Organization in 2015.

Despite impressive gains, corruption remains widespread, hindering the business environment. Both the World Economic Forum and the World Bank have listed corrupted as the biggest barrier to entry in Kazakhstan for doing business. President Nazarbayev has declared fighting corruption as a top priority, publicly condemned officials for hiding offshore assets, and urged the development of e-government initiatives to increase transparency. But recent high profile corruption cases, including the sentencing of the former economy minister Kuandyk Bishimbayev to ten years of imprisonment for embezzlement, are often as much about elite infighting as concentrated efforts to reduce corruption.

Clientelism and informal networks continue to characterize the Kazakh economy. The business and political elites are intertwined often not only through business dealings but marriage. The Panama Papers leak revealed multi-billion offshore holdings connected to the members of the ruling elite, including the Nazarbayev family, who are accused of using political power to amass multibillion fortunes. One of Nazarbayev’s three daughters, Dinara Kulibayeva is Kazakhstan’s fourth richest person with a networth of $1.3 billion; and another, Dariga Nazarbayeva—a potential heir to the aging president—was longtime married to Rakhat Aliyev, a former government official who allegedly embezzled a multimillion fortune. They divorced, he fell out of favor and was accused of treason in Kazakhstan. Aliyev subsequently committed suicide at an Austrian prison while waiting for trial of a murder of an opposition leader.

Trade Snapshot

Kazakhstan’s trade is export-based, and the country has been running a positive trade balance since 1999. Over the last several years, the exports and imports of Kazakhstan have decreased at a steady rate. In 2011, exports were $79.5 billion; by 2016, they were $32.8 billion—an annual decrease of 16.1%. Likewise, Kazakhstan’s imports in 2011 were $38.9 billion; they decreased at a rate of 7.4% per year; by 2016, imports were at $26.6 billion. Crude petroleum dominates the list of Kazakhstan's exports, representing 40%; it is followed by refined copper, which accounts for 6.8%; petroleum gas, 5.9%; radioactive chemicals, 5.7%; and ferroalloys, comprising 4.6% of Kazakhstan’s exports. Kazakhstan’s top export partners are China, 13%, Russia, 11%, the Netherlands, 6.9%, France, 6.8%, and Italy, 5.8%. France tops the list of recipients of Kazakhstan’s petroleum, at 14%—other receivers are Italy and the Netherlands, both with 12%; Germany, 8.8%; Greece, 8.1%; China, 6.6%; and Spain 6.1%. Overall, the EU countries make up the top destination for Kazakh natural resources. Kazakhstan’s imports are closely tied to the petroleum industry: refined petroleum makes up 2.9%, a percentage shared with planes, helicopters, and spacecraft; after that are packaged medicaments, with 2.7%, and larges iron pipes, at 2%, and valves, representing 1.8%. Russia accounts for a whopping 35% of imports to Kazakhstan, the next runner-up, China, only makes up 16%. Other import partners are The United States, with 6.1%, Germany, 5.1%, and Italy, 3.2%.

Of course, one of the key aspects of Kazakhstan’s trade is not its own goods it distributes or brings in, but its transport, carrying, and holding for transit goods from Asia to Europe and Russia. The Khorgos Gateway Dry Port is a land crossing under massive construction, hoping to become the world’s largest dry port. It holds cargo en route, and other aspects of transit construction, such as the Altynkol railway crossing, are being modified to raise transit volume. As a part of this transit, Kazakhstan is exposed to an increasing number of Chinese goods that Kazakh residents prefer for their cheaper price and ease of access. It is like that as ties with China continue to deepen, Chinese products will flood the Kazakh consumer scene, leading to an uptick in their importance as a trade partner.

Foreign Money Flows

Kazakhstan is a key transportation hub to get Asian products to Europe and a vital part of the international energy supply. Both roles have relied on heavy outsider investment to build and maintain the systems. Kazakhstan receives the most FDI among the CIS countries. Top investors include the Netherlands, the United States, Switzerland, and China. In particular, the country has recently received more attention and funding to help modernize and move the economy away from resource-dependence, encouraging investment in other fields. The government in Baku has poured resources into developing manufacturing, the car industry, railways, chemicals, and minerals.

International organizations such as the OECD, World Bank, EBRD, and European Investment Bank have also invested in Kazakhstan over the years, mostly to prop up its infrastructure and public services, like education and healthcare. These organizations have also invested in small and medium enterprises (SMEs), enhancing the business climate for local businesses and small businesses started by foreigners in Kazakhstan. There are a sizeable number of investment projects in the country, ranging from food to tech.

China’s Belt and Road Initiative is a fantastic opportunity for Kazakhstan to grow and prosper, but the program comes with positives and negatives. China contributes to infrastructure, but the increasing Chinese presence has fueled fears that Beijing will use its power to exploit Kazakhstan; there is concern over encroaching Chinese influence. Prompted by fears of China taking over the most fertile land, protests erupted in Kazakhstan in 2016 against a land reform law that would have allowed foreign investors to rent agricultural land up to 50 years. Kazakhstan is seeking to channel up to 70% of China’s overland trade with Europe to pass through its territory. Investments in the rail and road infrastructure have already been substantial, and projects like the Khorgos Eastern Gate on the Chinese-Kazakh border, is home to tax-free shopping malls—staffed almost exclusively by Chinese with Chinese products, it caters to Chinese customers and to Kazakhs who travel from the Almaty and nearby villages to purchase Chinese goods at an even cheaper price. The region is administered by the International Center for Business Cooperation (ICBC).

Tax and tariff law

Kazakhstan’s tax and tariff laws are structured to encourage investment and keep businesses satisfied with the cooperation with the country. In a three-pronged plan, there is a 10-year exemption for corporation tax, an 8-year exemption from property tax, and a 10-year suspension on other taxes. After the 10-year corporate tax exemption expires, companies pay 20%—down from a previous 30%. Value added tax is at 12%, down from 16%. Astana has established incentives for investment in sectors the government has prioritized, such as agriculture and manufacturing; there are added-benefit tax schemes for nonprofit organizations and social organizations as well. There are tax-free shopping zones on Kazakh-Chinese border that appeal to Chinese and Kazakh populations alike.

Conclusion

Still heavily dependent on natural resources, Kazakhstan is making progress on the modernization of the economy. The 100 Concrete Steps Program—the Plan of the Nation—was launched on the premise that investments in human capital, transparent market economy with simplified rules and reducing corruption are the only way for Kazakhstan to achieve its ambitious aim of being among world’s top 30 most prosperous countries by 2050. China’s outreach to the west offers a golden opportunity for the country’s leadership by promising to turn the landlocked giant into a vital bridge of the 21st Century Silk Road. But despite the real reforms and even more ambitiously named reform programs, Kazakhstan keeps treading on the uneasy balance between the need to open up and diversify its economy with the elites’ imperative for regime survival and self-interest in preserving a system, where power of networks trumps market mechanisms.

Culture & Society

Kazakhstan’s territory is expansive, and within that vastness there is a combination of harshness and warmth. The image of the sweeping, unforgiving steppe is countered by the companionship of the yurt or the camaraderie of fellow travelers. Though the country’s nomadic culture was nearly obliterated by the Soviet Union, particularly during collectivization, there are still strains of that proud heritage in Kazakh culture, hospitality, and perseverance.

Before the Soviet Union, a unified concept of “Kazakh” and “Kazakhstan” barely existed organically among the people who occupied the land. Borders were meaningless. To this day, that vagabond spirit is still present, though the culture has settled in. Ancient trade routes zig-zag across the land, and it is fitting that in the twenty-first century the country is reclaiming its role as the bridge between the east and west.

But the land of the steppe is not just separated between east and west, it also spans cultural and heritage divides between the north and south. Of the great cities in Kazakhstan, to the south is Almaty, formerly Alma-Ata, named for apples, many varieties which can be traced back to the Kazakh countryside. Tulips, too, can be found in the rocky crevices of the mountains that tower above the southern city. Almaty, the former capital, is Kazakhstan’s largest and most cosmopolitan city. It boasts fountains and parks and boulevards with cafes and restaurants. Beautiful Orthodox cathedrals and Muslim mosques rise up from the pavement amidst the trees. The opera house is stunning—a visitor can step in to enjoy traditional Kazakh music played on a dombra or kobyz. But locals will warn of a darker side to Almaty as well. As the older, more established city, the clan networks are more widespread and active, as well. So a little extra jostling or haggling might be necessary to dislodge a stubborn exchange.

Astana is Almaty’s younger, newer sibling to the north. The city was practically crafted from thin air, and the capital was relocated there to create some separation between the north and south. Astana has an almost eerie quietness and perfection after the messy bustle of Almaty. Because it is newer, there are fewer heritage sites, but no shortage of landmarks. Astana is where Kazakhstan projects its future, albeit sometimes in a hodgepodge way. The clan networks are also less pervasive in Astana, with less hold and leverage on the local population. Some Kazakhs and foreigners have spotted out Astana to start businesses after becoming fed-up with the ever smaller pieces of the pie in Almaty. From the tall spires of the Baiterek tower, one can look out over the landscape and marvel at the sharp shards of Kazakh modernity poking up from the desert all around.

The countryside offers time and space to ponder if one travels through it. There are classic overnight trains connecting the two cities, but plenty of detours are available along the way. There are tulip tours to the south, and one can scope out the Aral Sea ship graveyard just part Aralsk. The Kazakh people are forward but not overly eager, perhaps tapered and honed by the consistent foreign interest in their region since oil was first discovered. But many foreigners have be lured by the expanse of space and found their home to settle in the place where, for centuries, its people were always on the move.

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