Perspective can make all the difference. Drive through the bustling streets of downtown Almaty, gallop across the vast windswept steppes, both offer a very different view of Kazakhstan. In this series, we speak to a number of experts to explore their unique takes on Kazakhstan at a pivotal point in its history. With President Tokayev nearing five years in office, he has made clear that implementing reform is central to his priorities for the former Soviet country. What issues Kazakhstan is currently facing that need to be addressed in those reforms? What challenges and opportunities lie ahead? Today we hear from Wilder Alejandro Sánchez, President of Second Floor Strategies, a consulting firm based in Washington, DC. Assel Nussupova met with Alejandro Sánchez in Washington, DC in February 2024, to discuss his perspective on Kazakh issues ranging from water-related challenges to the need for economic diversification to Washington's perspective on Central Asia.
Q: What challenges does Kazakhstan currently face and what do you think can be done by the country (and international community) to overcome them?
A: There are several that I can name, but I want to focus on environmental issues, particularly water-related. Kazakhstan’s future depends on adequately managing its water reserves, an issue that overlaps with the country’s foreign policy. I will argue that Astana needs to develop a “green multivector foreign policy” based on the country’s already well-known multivector policy.
This is my analysis of the situation. Kazakhstan’s water bodies are significantly dependent on neighboring states:
1. The Aral Sea, which resembles a group of lakes today, is shared with Uzbekistan. Hence, bilateral cooperation (not to mention managing support from international donors) is needed.
2. Lake Balkash is fed by the Ili River, born in China. Scientific research shows that infrastructure projects, like dams and irrigation projects in Xinjiang, are affecting water levels in the lake.
3. The Ural River, which commences in Russia. There is already a joint commission between the two governments, and there are reasons to be optimistic that the pollution of the Ural is decreasing; however, more cooperation is needed.
4. The Caspian Sea already suffers from pollution, over-fishing, and decreasing water levels. This situation will affect the Sea’s future, a vital artery of the Trans-Caspian route. Five states share the Caspian; hence, convincing several other governments to be involved in environmental protection is more challenging. This statement is particularly true about the Iranian regime, which has a terrible record of protecting its water bodies (e.g., Lake Urmia).
The 2021 Central Asian drought was particularly devastating across Kazakhstan, and we can expect harsher environmental disasters exacerbated by climate change in the near future.
President Tokayev explained last September in a speech his intention to overhaul the country’s water and irrigation bureaucracy so that the country does not suffer from water scarcity in the coming decades.
Agencies like USAID, the World Bank, and the European Union are donating funds for sustainable development, sustainable agriculture, and the development of green energies. However, there needs to be more interest across Central Asia and the Greater Caspian region to focus on environmental protection, including protecting vital water bodies like the ones I mentioned in this answer. This is a shame because the success of the TITR, or Middle Corridor, will depend on the health of the Caspian Sea.
Kazakhstan cannot protect the Caspian alone, as five nations share it. Hence, Astana must rally its fellow Caspian neighbors and convince them to work to save the Caspian. This means re-orienting or expanding the country’s multivector policy to include environmental issues, hence the term “green multivector foreign policy.”
Q: What areas do you believe are priorities that need to be addressed by the new government (Infrastructure? Diversification of the industrial base? Diversification of the transportation links?) What are your views on Kazakhstan’s efforts to diversify its economy?
A: Apart from environmental issues, I would add economic diversification. Kazakhstan already has powerful mining and energy industries. In Washington, those industries, including the country’s uranium reserves, are what Kazakhstan is primarily known for. Hence, agencies like Kazakh Invest are tasked with bringing investment to the country, particularly in areas other than energy and mining. That is a challenging task, and there has been limited success.
Thus, prioritizing the diversification of the industrial base is linked with more aggressively seeking international investors and partners. Given that Kazakhstan only has a population of 20 million, scattered across a vast territory, I can see why some companies are reluctant to invest in major projects in the country.
I will also mention infrastructure updates, specifically transportation: roads, bridges, and ports like Aktau. There is a documentary about Kazakhstan’s transportation infrastructure called Deadliest Roads: Kazakhstan. It is available on YouTube, and as of today, it has over 4.5 million views. The documentary provides an authentic and slightly pessimistic view of Kazkahstan’s roads and how harsh they are in the snowy winter months. However, the documentary also praises the resilience and adaptability of those who utilize underdeveloped highways and roads, for example. It is a hard life, but the people are harder.
Kazakhstan is a vast country. Hence, proper infrastructure is necessary to move commodities (and workers) from point A to point B. Upgrades of the national transportation network will also help the Middle Corridor be more successful, which will benefit the country’s economy in general.
Q: What can Kazakhstan do to leverage its geographic position to derive the most benefit from the Trans-Caspian Transport Corridor and other initiatives?
A: Kazakhstan is doing all it can do; however, upgrades take time. Expanding the infrastructure of Aktau port and buying or building oil tankers or cargo ships takes time (especially if you hire a shipyard to construct them from scratch), just like upgrading railways and highways. These are all medium to long-term projects. It’s not just about money but also about being patient and persistent.
I would add that Astana can focus on approaching other Central Asian countries, China and even Mongolia, to connect with the Middle Corridor to transport their commodities to Europe. In the case of China, this is a delicate situation as Beijing is more concerned about the Belt and Road Initiative, but I have read that some Chinese have already started using the Corridor to send goods. Likewise, I have read that some Uzbek companies also use the Corridor.
Kazakhstan can obtain good profits from customs and taxes for shipments from neighboring states that use the Middle Corridor to quickly reach Europe and the international market.
The success of the Middle Corridor can be linked to Kazakhstan’s overall objective to become a hub that connects Central Asia with the rest of the world. Look at the Astana International Financial Centre (AIFC), which has a stock exchange and an arbitration court and aims to be a regional finance center. Likewise, the Middle Corridor can help Kazakhstan’s international image grow (in addition to earning profits) by being the critical artery or node that connects East-West and West-East commerce, bypassing Russian territory.
Relations with Europe
Q: What are your views on Kazakhstan’s efforts to diversify its economy and improve transportation routes to Europe (for example, recent developments in terms of directing oil and gas supplies to European markets)?
A: I will always support economic and transportation diversification for any country since depending on one or two routes is never advisable. Geography matters very much. Kazakhstan cannot realistically look South to ports in Pakistan or India as that means having to cross through Afghanistan, which is a terrible idea. Going East to use Chinese ports is probably not feasible as that route would considerably increase shipment times.
Hence, Astana has to look to its Western transportation alternatives: Astana can either use Russia or the Trans-Caspian route. Moving oil and gas supplies via the Caspian is a complex issue. While I am not an oil or gas expert, reducing dependency on Russia and the CPC is advisable, given that Europe-Russia and US-Russia relations will not improve anytime soon.
The problem with the Caspian route is that to ultimately reduce total dependency on the CPC, Kazakhstan would need to build a pipeline across the Caspian to reach Baku. I have read about this objective since around 2005, and it has yet to move forward for various reasons.
What Kazakhstan is now doing is acquiring oil tankers to increase its Caspian tanker fleet. The UAE-based port operator AD Ports Group, in collaboration with Kazakhstan’s KazMorTransFlot, has reportedly purchased some oil tankers to increase the amount of oil that can be moved from Kazakhstan to Baku. This plan will not entirely reduce Kazakhstan’s reliance, or dependency, on the CPC, but it will help.
I would add that, as previously mentioned, the Caspian Sea’s environment must be protected. Hence, the Kazakhstani government must prevent oil spills and further pollution of the Caspian when more tankers arrive. Protecting the Caspian and utilizing it to move commodities are not separate objectives; they are linked and must be pursued equally.
Q: Do differing perspectives on Russia create tension between Kazakhstan and the EU? For example, how is the EU’s confrontation with Russia affecting its relations with Kazakhstan? In particular, the conflict in Ukraine and the resulting sanctions on Russia?
A: Indeed, the European Union, the United Kingdom, and other allies and partners of Ukraine across Europe would have liked to see Kazakhstan condemn Russia’s aggression more harshly, perhaps voting in Russia-related resolutions at the United Nations General Assembly. Generally, Kazakhstan (along with other Central Asian countries) tends to abstain from voting when the UNGA votes on Ukraine-related resolutions.
However, from monitoring Europe-Kazakhstan relations, I think that by now, two years into the war in Ukraine, most European governments now understand Kazakhstan’s delicate situation. Last year, President Tokayev went to Germany and met with Chancellor Scholz to assure him that Kazakhstan would respect international sanctions against Russia. They also discussed how to encourage more bilateral trade and German investment. President Emmanuel Macron of France also visited Kazakhstan last year. EU officials have also visited Astana. These high-level diplomatic visits demonstrate that Europe’s powerhouses want to continue trade and commercial relations and have diplomatic communications with Astana.
Last November, David O’Sullivan, the European Union’s special envoy for implementing sanctions, visited Astana to discuss the issue of sanctions. I believe that respect for sanctions is very much in Europe’s mind. So, as long as Astana respects them, relations with Europe (particularly diplomatic relations) will continue to strengthen.
Relations with the USA
Q: What place does Kazakhstan have in U.S. global interests?
A: Washington does not have a grand strategy towards Central Asia in general, and I do not foresee the US wanting to return to Central Asia anytime soon, like during the US military campaign in Afghanistan. Moreover, Washington nowadays is primarily focused on Ukraine (and therefore Russia) and China, with the Red Sea rising in importance due to attacks by Houthi rebels, which have disturbed a vital shipping corridor. Moreover, 2024 is an election year in the US; hence, domestic politics are on everyone’s minds.
So, there are many issues Washington policymakers have to address and focus on, and unfortunately, many issues and regions are not a priority. As an analyst who also covers Latin American and Caribbean issues, I attend many conferences and meetings in Washington, DC, where participants argue how Washington has forgotten these two regions while China increases its influence across the Western Hemisphere. Central Asia is not the only overlooked region; I can say the same about other areas and issues.
With that said, bilateral relations are reasonably strong. Certainly, Kazakhstan has a much better image than other Central Asian or Caucasus nations. When I go to events (e.g., meetings or conferences) about Central Asia in Washington, DC, the country is spoken highly of. In early January, at a roundtable with the US ambassador to Kazakhstan, Daniel Rosenblum, the diplomat explained that Washington understands Kazakhstan’s situation and praised Astana’s efforts to crack down on the evasion of the flow of sanctioned goods to Russia.
To give an example of a different situation, in August 2023, U.S. Senator Bob Menendez (D-N.J.), Chairman of the Senate Foreign Relations Committee, sent a letter to the President of the Kyrgyz Republic “regarding allegations that Kyrgyzstan has assisted Russia, or its proxies, in evading international sanctions.”
Q: What are fundamental factors that determine the relationship between Kazakhstan and the U.S.A.? Security due to its geopolitical position? Proximity of Russia and China and remoteness of the U.S.A.?
A: I have said before that a problem with Washington’s overall attitude towards Central Asia, in general, is that US-Central Asia relations are based on extra-regional factors, not a desire by Washington to increase ties with one specific country. For example, ten years ago, US-Kazakhstan/Central Asia relations were based on the Afghanistan war. Afterward, Washington was concerned about the rising role of China and the Belt and Road Initiative. Nowadays, the focus is on how Central Asia, in general, is reacting to the War in Ukraine, specifically concerning international sanctions against Moscow.
Hence, Washington has yet to engage with Kazakhstan or the rest of Central Asia because of an interest in the region, but rather, what we see is Washington engaging Central Asia because of extra-regional issues.
Therefore, I do not see a “special relationship” like the US-United Kingdom alliance developing with any Central Asian state anytime soon. With that said, if we briefly look at all Central Asian and Caucasus states, Washington has the closest relations with Kazakhstan and, I think, Georgia.
Q: What are the strengths and resources of KZ that we should try to highlight to US interests?
I would say that the US government and industries are generally well aware of what Kazakhstan can offer. Energy companies are very active in the region. The United States government has also helped establish and open a peacekeeping center to train Kazakhstani personnel for UN peacekeeping missions.
Moreover, the war in Ukraine had the unintended consequence of US companies moving their facilities from Russia to Kazakhstan. Like for example, Honeywell. Soon, there will be a Business 5+1 summit in Almaty, which will hopefully increase awareness of what Kazakhstan can offer to US businesses.
I think there is potential for Kazakhstan to become an IT hub. Microsoft reportedly opened a multi-regional hub for innovation last year. So I think Kazakhstan should focus on attracting major IT companies. Since a lot of the work can be done remotely, there would be fewer costs than a US company opening up a facility for manufacturing hardware there.
I have attended meetings with delegations from many, many countries who come to the US looking for trade and investment. The members of the delegations explain how, for example, if US company “X” opens a manufacturing facility in their country, the company won’t have to pay rent for a year, or the country will fly the company’s clients to visit the facilities for free. So I would say that Kazakhstan needs to highlight its strengths (a well-educated population, many natural resources, plenty of physical space for new facilities) and other benefits that companies can enjoy from setting up shop in Kazakhstan. I assume Kazakh Invest is already doing that.
Bilateral trade between Washington and Astana has grown in recent years, and now it’s at $3bn (2023), far more than other Central Asian countries. However, realistically speaking, US-Kazakhstan trade will not match Kazakhstan-Russia trade, which surpassed $20bn in 2023. So, the focus should be on investment.
From a diplomatic angle, there is acceptable communication between Washington and Astana. As a defense analyst, I was very pleased to hear about Kazakhstan’s decision to send over 400 peacekeepers to UN peace missions. I think the Kazakhstani peacekeeping center can be expanded more, with US support, to provide more training to other regional militaries for their future deployments to UN missions. Of course, Moscow will view defense cooperation between Washington and Astana with concern, but I think a balance can be found.
Q: What challenges does Kazakhstan face in the area of foreign policy with the USA, given the fact it can be drawn into the power rivalry between the USA and Russia or USA and China? Do you still think that despite such difficulties, Kazakhstan’s ties with the USA have had tangible and positive results?
A: Kazakhstan has had to walk a very fine and delicate line since the war in Ukraine commenced. I have been in meetings in Washington with the US ambassador to Kazakhstan and State Department officials, all of whom praise bilateral relations, and they explain that they understand Kazakhstan’s situation given its historically close ties with Moscow. Hence, I have said Kazakhstan’s foreign policy is evolving, and I am labeling it a “multivector foreign policy 2.0.”
The issue of sanctions is the major challenge Kazakhstan faces. There have been several reports by major news organizations that explain how sanctioned goods are still finding their way to Russia via Kazakhstan, Uzbekistan, and even Kyrgyzstan. The Washington Post wrote a critical report about it last July 2023. Obviously, Astana does not want Washington (or Europe) to think that Kazakhstan is willingly helping Russia against Ukraine.
Finally, I would add that the crackdown on the Uyghurs in Xinjiang is another challenge. The US and other countries have condemned the illegal detention of essentially the entire Uyghur population, not to mention ethnic Kazakhs and other individuals. In 2020, Sairagul Sauytbay, an ethnic Kazakh from Xinjiang, was awarded the State Department’s International Women of Courage Award. While the issue of Xinjiang has, sadly, decreased in importance in Washington because of other global crises, Kazakhstan’s image in Washington would undoubtedly improve if it provided refuge to Uyghurs escaping China. Indeed, the Astana-Beijing relationship is quite complex, but support and respect for human rights would be well received here.
Q: Can you name some significant outcomes?
In defense, the US has continued to invest in expanding Kazakhstan’s peacekeeping center, which is definitely a positive outcome.
Bilateral trade reached over $3bn in 2023, $3.7bn in 2022, $2.5bn in 2021, and $1.4bn in 2019. In other words, the trend is going upwards, which is excellent. Bilateral trade increases and decreases, but generally, the outcome is positive.
The visit by Secretary Blinken to Kazakhstan in February 2023 was quite significant, followed the same year by the historical Presidential C5+1 at the UN General Assembly.
Finally, Microsoft’s decision to open up a technology hub in Kazakhstan shows that private US industries see Kazakhstan as a stable location for investment.
Additional Question
Q: What’s your vision for the future of Kazakhstan for the next five years?
I want to be optimistic.
Let me start at the macro level and then discuss domestic issues.
I would like to see Kazakhstan return to the United Nations Security Council. If the upcoming deployment of peacekeepers to UN missions is successful, Astana should consider applying to join again so that Central Asia can have a voice in this important body.
At the regional level, I would like some of the blocs that Kazakhstan is a member of, like the Organization of Turkic States, to be more effective in promoting integration and trade among its members. That would also help the Kazakhstani economy.
Regarding environmental issues, I would like to see Astana develop a plan to protect the Caspian Sea and secure support from its Caspian neighbors. While climate-change-exacerbated natural disasters will, unfortunately, continue to occur, I want to see Astana be better prepared for the next drought by learning lessons from the 2021 crisis.
As a defense analyst, I would also like to see Kazakhstan’s defense industries increase their image and potentially secure international clients. I have monitored and written about Kazakhstan teaming up with Turkiye to manufacture UAVs and South Africa to manufacture infantry fighting vehicles. While the primary objective is to utilize these military vehicles and systems domestically, I want to see Kazakhstan successfully export them (not to Russia).
Anecdotally, at the Belgrade Partner 2023 defense expo, Taharqa Technologies, a Kazakh drone startup founded in 2022, displayed its NMD multirotor drone. Again, as a defense analyst, it is exciting for me to see a new company develop a new system. I hope Taharqa and other Kazakhstan defense companies will manufacture modern advanced military vehicles and other systems for domestic and international clients within five years. Seeing a "Made in Kazakhstan" drone flying across another country's airspace would be a big marketing and financial victory.
Finally, as I said, Kazakhstan is already known for its energy and mineral reserves, particularly uranium and oil. However, Kazakhstan should also be internationally recognized in other fields. So far, the diversification of the country’s industries has moved slowly forward. I would like to see Almaty become Central Asia’s IT hub.
By Assel Nussupova
Assel Nussupova is a highly accomplished analyst with an extensive background in economics and over two decades of dedicated service to the Kazakh government. Holding a prestigious Master's Degree in Economics from Georgetown University in Washington, DC, she has become a recognized authority in the fields of macroeconomics, commodity markets, financial markets, and economic and social policies. With a profound understanding of Kazakhstan's economic landscape and a global perspective, Nussupova is a sought-after expert who continues to contribute valuable insights to the field of economics. Additionally, she is a prominent contributor to the Astana Times, where her articles provide readers with expert analysis and in-depth perspectives on economic matters.
Follow Daryo's official Instagram and Twitter pages to keep current on world news.
Comments (0)