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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 29,749 24,205 22,400 60
GNI per capita
 US $ 1,780 1,510 1,350 119
Ranking is given out of 208 nations - (data from the World Bank)

Books on Kazakstan


Update No: 390 - (26/10/13)

Summary: China is fast proving itself to be a valuable customer and investor in Kazakhstan, pushing out competition from Russia and India. But Astana still relies on trade with the EU to keep it in petrodollars even though talks between the two sides are strained over Kazakhstan's human rights and justice record.

On September 7, during a tour of Central Asia to secure hydrocarbons, Chinese President Xi Jinping struck a deal with Kazakhstan, giving China a stake in its enormous and lucrative Kashagan oil project. Kashagan is the world's largest oil discovery in fifty years – holding estimated reserves of 35 billion barrels of oil, with between 9 billion and 13 billion barrels that can be tapped – and that deal was just one of 22 oil and gas agreements worth around $30 billion signed by China across Central Asia during Xi's visit.

Under the Kashagan deal, Kazakhstan sold an 8.33 per cent stake in the offshore oilfield in the Caspian Sea to China National Petroleum Corp for about $5 billion (a stake that came up for grabs in July when US oil major ConocoPhillips sold it to Kazakhstan). CNPC also agreed to pay up to $3 billion to cover half of Kazakhstan's costs of the second phase of Kashagan's development, which is expected to start after 2020.

The deal has left India out in the cold. The 8.4-per cent stake originally sold to Kazakhstan by ConocoPhillips was promised last year to India's ONGC overseas oil company, but that can't happen now. Russia – once an imperial force with Kazakhstan in its hand – also doesn't have a share. The field is developed by a multinational consortium of other, largely Western, companies – Italy's ENI, US major ExxonMobil, Royal Dutch Shell, France's Total and Japan's Inpex as well as Kazakhstan's Kazmunaigaz. Between them, those companies have invested $50 billion over the past 13 years, making Kashagan the world's most expensive oil project, and China's cash injection is clearly welcome.

Kazakhstan, which holds three per cent of the world's recoverable oil reserves, still relies on Western expertise and investment to develop its oilfields following the brain-drain that occurred after the collapse of the Soviet Union. But in recent years it has vowed to gain greater control over how its energy fields are managed and to take a larger slice of profits from sales. As a business partner, China is favourable to Russia, which is prone to demanding steermanship. But even though Kazakhstan is embracing cosier economic ties with China, Europe is still its biggest partner.

Over 40 per cent of Kazakhstan’s exports go to the EU market – mostly oil and uranium. But relations between the two sides have soured since Kazakhstan chaired the OSCE in 2010 and faltered on promises to strengthen democracy. After a year of relative silence between the two sides, on October 9-10, the European Union and Kazakhstan re-ignited negotiations on an enhanced Partnership and Cooperation Agreement. But the will to compromise in order to expand ties didn't appear to be there. Negotiations focussed on “political dialogue, cooperation in foreign and security policy, economic cooperation and justice and home affairs”, and discussions were frayed due to disagreements on Kazakhstan’s poor record on human rights, the way in which it administers justice and the fact that it has not yet joined the World Trade Organisation.

As stated by the EU Central Asia Monitor, Europe wants a stable and reliable partner in Central Asia, but it also wants that partner to have democratic values, good governance and rule of law. The Kazakh government’s handling of the Zhanaozen protests in late 2011 (see New Nations, January, 2012) has shown that the country is failing on these points (witnesses and defendants were tortured and verdicts were falsified). In its report published on September 30, “Kazakhstan: Waiting for Change”, the International Crisis Group found that the government of Kazakh President Nursultan Nazarbayev has spurred the country’s role in the global energy sector but left it with weak political institutions, corruption, censored media and frequent infringement of human rights.

The report summarises: “Since Kazakhstan hosted the 2010 OSCE summit, it has enacted laws that systematically curtail political and personal liberties. Opposition politicians, the media and civil society face fines and imprisonment for criticising the government. The concentration of power in the hands of a small group, the weakness of the political institutions and the overwhelming concentration of economic growth in the cities of Astana and Almaty threaten to undo gains made in the past two decades... In a post-Nazarbayev era, an individual or group will likely need to tighten control in order to consolidate power. Kazakhstan’s political institutions are not designed for competition or pluralism. There is a strong danger of infighting, and thus further instability, among the political and economic elites. In the event of popular protests, demonstrators would run the risk of exciting security forces already prone to deadly crackdowns.”

Deirdre Tynan, Crisis Group’s Central Asia Project Director, said: “If it doesn’t make a significant effort to push forward with political, social and economic reforms, Kazakhstan risks becoming just another authoritarian regime that squandered the advantages bestowed on it by abundant natural resources”.

Even so, because Kazakhstan currently enjoys strong economic growth from the recovery and sale of its natural resources, it believes that it is the “stable” partner in Central Asia that the EU is looking for. The economic relationship between Kazakhstan and the EU is not evenly balanced – EU exports to Kazakhstan account for roughly 0.4 per cent of the Union’s foreign trade turnover – and so Europe has the upper hand. But if the EU decides to put democratic values ahead of its need for Kazakh hydrocarbons and Kazakhstan can wrest more control over its oil projects, China may begin to become an even more attractive alternative. For now, Kazakhstan will continue to pay lip-service to the EU's rhetoric.

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