The Future of Kazakhstan’s Multi-vector Policy

Kazakhstan must continue its multi-vector policy by deepening its non-Russian relationships, while shifting its focus to internal challenges. 

April 28, 2016

By Joshua Noonan 

In its first decades of freedom, Kazakhstan’s sovereignty has been guaranteed through a cunning policy of external balancing made famous in its “multi-vector policy.” After Kazakhstan acceded to the Eurasian Economic Union (EEU) in 2014, many regional experts concluded that Astana was secure in Moscow’s orbit. This act swiftly led to the conclusion that its much-vaunted multi-vector foreign policy had ended.

However, recent moves by Kazakhstan and the European Union (EU) signal that there is some life left in securing Kazakhstan’s security through external balancing. Kazakhstan must continue its current multi-vector policy by deepening its non-Russian relationships through bolstering defense ties and diversifying materiel procurement, while shifting its focus to a policy of increasing its own economic and military power in order to remain sovereign. Kazakhstan can best accomplish this through structural reforms and improving the rule of law.

Burdens of legacy

Historically, Kazakhstan has been intertwined with Russia as much as with Central Asia. Many regionalists often separated Kazakhstan from the rest of the region due to its ethnographic heterogeneity and deep economic integration with Russia. Kazakhstan was the site of the first Imperial Russian incursions into Central Asia, and witnessed intense migration, settlement and resettlement of non-local ethnic groups. Since the collapse of the Soviet Union, the government of Kazakhstan has worked to address the issue of economic over-reliance on Russia, but these efforts have been usually of marginal benefit to Astana. As much of the benefits of external balancing have been exhausted, internal balancing through institutional and economic reform must be conducted to assure Kazakhstan’s continued independence of action and sovereignty.

Kazakhstan’s historical experience restricts the flexibility that its multi-vector policy demands. Kazakhstan is home to a large ethnic Russian and non-Kazakh population. Even Alexander Solzhenitsyn argued that a Russian state should claim the northern parts of Kazakhstan due to its ethnic makeup. To counter a potential source of ethnically-driven instability, Kazakhstan in 1995 moved its capital from Almaty in the south-east to Astana, near regions where ethnic Russians were a majority of the population. As Russia and Ukraine came into conflict over majority-ethnic Russian regions in Donetsk, the north of Kazakhstan was highlighted as a source of possible instability due to its ethnic makeup and ethno-nationalist rhetoric in Russia.

With the events in the Donbas and Crimea in mind, the government of Kazakhstan has increased its efforts to strengthen various relationships outside of the EEU. The Ministry of Defense of the Republic of Kazakhstan has increased its procurement of materiel and defensive systems from non-Russian sources. Most interestingly, Kazakhstan and the European Union penned an “Enhanced Partnership and Cooperation Agreement” in November 2015. Nonetheless, the Russian Federation still demonstrated its influence by ensuring the agreement was not a Deep and Comprehensive Free Trade Agreement nor an Association Agreement of the kind that sparked the Kremlin’s fury against Moldova and Ukraine.

Economics also tie Kazakhstan to the Russian Federation. While, economic interdependence is seen as a generally positive phenomenon, the Russian Federation has instrumentalized parts of its economy and regulatory structure for political ends. There are hundreds of cases where Russian energy interests and market power were used to further the goals of leaders in Moscow. Most recently this was demonstrated by the Russian “pivot” to Asia, which utilized Eastern Siberian gas fields to drive Chinese capital investment after Western sanctions were implemented in May 2014. Moreover, the Russian Federation has acted to hinder Ukraine-Kazakhstan trade. Currently, it is only possible for Ukraine to send goods to Kazakhstan by first entering Belarus and then transiting the Russian Federation. This will play a role in harming inter-state and intra-EEU trade, and thus limiting the economic development potential offered to Kazakhstan.

International ambitions

Throughout the 1990s and early 2000s, Kazakhstan continued to engage regional, thematic, and global organizations to enmesh itself into the international system. Many point to the creation of the Shanghai Cooperation Organization (SCO) as a successful example of a space for maneuver between the strategic gravity of China and Russia. Such a platform would allow each state to choose the most beneficial perspective on a case-by-case basis, using the supporting regional powers as a source of coverage. In addition to participation in the SCO, Kazakhstan has continued to use China as an economic counterweight to Russia. This trend began after the collapse of the USSR and deepened as China sought additional overland natural gas, oil, and raw materials resources.

Based on its experience hosting Soviet weapons testing sites, Kazakhstan continues to advocate for denuclearization and non-proliferation activities. Kazakhstan acceded to the IAEA Additional Protocols in 2007, demonstrating its desire to actively participate in the global non-proliferation regime. Kazakhstan continues to support and cooperate with the IAEA, joining economic with diplomatic interests. By participating in this process, Kazakhstan will increase its ability to add value in the civilian nuclear value chain by hosting a nuclear fuel bank.

Outside of Eurasia, regional dialogues with the EU and Japan have worked to enmesh Astana deeply into the international system. This has facilitated inward foreign direct investment (FDI) and has bolstered business and trade ties. The EU and Kazakhstan have increased their value of trade from 2004 to 2014 by a factor of three. Japanese FDI inflows to Kazakhstan increased by more than fourteen times between 2001 and 2012.

The United States played a deeper role in Central Asia from 2001 to the present due to the conflict in Afghanistan. Kazakhstan allowed the crucial Northern Distribution Network (NDN) to transit its territory in support of the NATO-led coalition’s activities in Afghanistan. The United States and Kazakhstan have fostered deeper bilateral ties through the U.S.-Kazakhstan Strategic Partnership Dialogue.

Internal challenges

Several internal issues threaten the continuation of the multi-vector policy. The most pressing threat is the looming succession crisis. The successor to President Nursultan Nazarbayev has yet to be named or groomed. Without such a candidate, factions within the Kazakhstani elite may take it upon themselves to affect the succession process. These elites may harbor more parochial or less balanced interests than the current leader, upsetting Astana’s carefully-tended foreign relations. The current oil slump may pose a systemic threat to one of the main sources of Kazakhstan’s export earnings. The devaluation and float of the tenge has bolstered the financial position of the state by eliminating an overvalued currency, which was a hurdle to export-driven growth while also fostering the foreign reserves of the Central Bank of Kazakhstan. Nevertheless, relatively low World Bank GDP growth projections of 2.9% for 2016 and 4.1% for 2017 show the impact of the bursting of the commodity price bubble.

On a local level, Kazakhstan is making many changes as an act of internal balancing. Taken comprehensively, these changes will allow it to continue to engage the world effectively. Kazakhstan has also sought to engage the first-world business elite by recently abrogating its highly restrictive visa regime seen in many post-Soviet states. Unfortunately, efforts such as creating special economic zones and the hosting of world expositions are at best small-bore solutions. Kazakhstan needs systemic solutions to ensure growth, development, and institutional stability, but these issues may be secondary to the leadership, which cannot yet see past the death of President Nazarbayev. By engaging in a process of internal reform, Kazakhstan will be able to strengthen itself and assure its sovereignty.

To ensure its future, Kazakhstan should continue its multi-vector policy with the goal of preserving amicable relations with neighbors and friends. Nevertheless, a policy of internal balancing must occur eventually as the external balancing of the multi-vector policy runs its course. Thus, Kazakhstan must strengthen itself through reform and economic development. On the economic side, this includes structural economic reform to reduce the impact of state-owned enterprises and monopolies. Diversification must continue as Kazakhstan weans itself off of resource rents. On the political side, the issue of presidential succession must be settled in an orderly manner to ensure it takes place under the rule of law. Anti-corruption activities must continue alongside efforts to enhance transparency. From the external balancing of high international politics, the internal balancing of economics and reform must take precedence to be the new ballast for the Kazakhstani ship of state.

* See, Robert L. Larsson, Russia’s Energy Policy: Dimensions and Russia’s Reliability as an Energy Supplier, FOI-R– 1934 –SE, March 2006.

 


Joshua Noonan is a Presidential Management Fellow and member of the 2015-2016 CGI Rising Experts Program. He previously served in the U.S. Peace Corps as a Community Economic Development Advisor in Azerbaijan and then taught English in Kazakhstan for an Exxon-Mobile sponsored program. He also received a Fulbright fellowship to Azerbaijan and Georgia. Joshua is an alumnus of Johns Hopkins School of Advanced International Studies (SAIS) where he studied International Economic and Russian and Eurasian Studies. Follow him on Twitter

The views and opinions expressed in this article are those of the author alone and do not reflect the position of the affiliated organizations or the Center on Global Interests.

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