Kazakhstan Energy and Security

Kazakhstan Energy and Security

Economy, energy and environment

The Kazakh economy is mainly based on hydrocarbons and commodities linked to the mining sector, which account for 75% of the product composition of total exports. Kazakhstan has huge reserves of gas and, above all, oil which guaranteed significant growth rates (10% average per year) in the period 2000-07. The excellent results obtained in the economic field were also the result of prudent macro-economic policies, structural reforms and progressive access to international financial markets. This enabled the country to successfully transition from a Soviet-era planned and heavy industry economy to a liberal one. After a negative period, caused by the international economic crisis and the collapse in hydrocarbon prices, the Kazakh economy returned to growth in the 2010-11 two-year period (7% and 7.5% respectively). The credit is also due to the state investment policy and the intervention to support the economy and the banking system guaranteed by the National Petroleum Fund, whose assets increased to 100 billion dollars in 2015. The positive trend was confirmed in the following years with an average growth rate of 5%. However, the devaluations of the national currency in February 2014 and again in August 2015, as well as the collapse of the price of oil during 2015, caused an increase in inflation which negatively weighs on the growth forecasts for the two-year period 2016-18.

While low growth and Euro-Atlantic sanctions on Russia due to tensions in Ukraine should not unduly affect oil production and exports, the market price of black oil heavily affects state finances due to over-reliance on oil. national economy from the energy sector.

The main challenges for Kazakhstan will consist both in greater economic diversification and in a better attractiveness of international investors for the exploration and exploitation of energy resources, trying to prepare new routes for export, in order to reduce the infrastructural dependence on Russia. In this regard, starting from 2009 the Italian company E niis involved in an oil development and production plan in Kashagan, a huge Kazakh field discovered in 2000 and located on the northern Caspian Sea. However, important technical failures are slowing down its progress. Astana has only partially succeeded in achieving the second objective: since the end of the 1990s the government has attracted the main international oil companies – in addition to Eni, BP, Shell, Chevron, Total, Lukoil – but was unable to diversify energy export routes due to Russian resistance to giving up the monopoly on purchasing Kazakh resources. Even before the opening of a Trans-Caspian naval export channel to Azerbaijan, Astana benefited, in this perspective, from the growing regional projection of China, today connected to Kazakhstan with an oil pipeline coming from Caspian fields and with a gas pipeline from Turkmen. The development of the infrastructure network will allow Kazakhstan to bring gas to the south-eastern regions which, isolated from the country’s western fields, still resort to imports from their Central Asian neighbors.

According to indexdotcom, the wide availability of raw materials is not limited to oil and gas. Kazakhstan possessed about 90% of Soviet chromium reserves and about half of those of lead, copper and zinc. The country was, among the Soviet republics, the third largest producer of coal after Russia and Ukraine and is still the main exporter of fossils – which is the main source of the national energy mix – to the republics of the area.

The extensive use of coal for electricity generation (about 70% of the total) is one of the main causes of the significant environmental problems that afflict the country. Kazakhstan is one of the main producers of carbon dioxide on a world scale, both in absolute levels and per capita. Home to atomic tests and uranium extraction and exploitation in Soviet times, the country also records high rates of radioactive pollution.

Defense and security

Since joining the CIS Collective Security Treaty in 1992, the Russian Federation has been Kazakhstan’s main ally and strategic interlocutor. Bilateral security cooperation ties have since strengthened mainly through the institutionalization of the CSTO in 2002. The organization – which includes Russia, Armenia, Belarus and the Central Asian republics, with the sole exception of Turkmenistan and Uzbekistan – was equipped in 2009 with a collective rapid reaction force (Ksor) which held the first joint exercise in Kazakhstan in October of the same year. Main purpose of Ksorit is to counter regional cross-border threats, in particular the networks of organized crime and Islamic terrorism. Following the demarcation of their respective borders, in 2005, Moscow and Astana also launched joint patrol actions in an anti-terrorist key and to counter drug trafficking, which has one of the most important regional hubs in Kazakhstan.

The fight against terrorism is one of the areas of cooperation around which Sino-Kazakh security cooperation has grown. In addition to the multilateral framework of the SCO, the two countries collaborate against the Islamic Movement of East Turkestan (Etym), a terrorist group based in the Chinese province of Xinjiang. Although Kazakhstan has not been the subject of a direct terrorist threat, it represents an ideal base for the Central Asian cells of Etym, as well as of the more rooted and active Islamic Movement of Uzbekistan, as well as of al-Qaeda. In this perspective, Kazakhstan’s participation in counter-terrorist cooperation is of vital importance.

In line with the broader pursuit of a multi-vector foreign policy, Kazakhstan has deepened security cooperation with Euro-Atlantic organizations and, in particular, with NATO. A member of the Partnership for Peace (Pfp), which celebrated its twentieth anniversary in October 2014, Kazakhstan was the first Central Asian country to participate, since 2002, in the Pfp Planning and Review Process (Parp), which serves to ensure coordination national forces with those of the Atlantic Alliance. In the same perspective and to coordinate cooperation to reform the defense sector, Astana signed in 2006 an Individual Partnership Action Plan (Ipap). The deepening of the collaboration between Kazakhstan and NATO – a result of fundamental importance for the effort of modernization and professionalization of the national armed forces, qualitatively limited – occurred against the background of the support guaranteed by Astana for the international fight against terrorism and for operations in Afghanistan. In addition to guaranteeing NATO the right of overflight, Astana has granted the possibility of land transit for non-military supplies, contributing to the strengthening of the northern supply network linking Europe and Afghanistan via Russia and Central Asia. The active participation in regional anti-terrorist cooperation mechanisms finally materialized with the Kazakh joining the Partnership Action Plan against Terrorism (P ap – t), in which the country hosted several exercises of the Atlantic Alliance.

Kazakhstan Energy