Kazakhstan: Reaching Out to Central Asian Neighbors

Leaders of the resource-rich Central Asian region have the propensity to remain in power until mortality dictates otherwise. Much like the U.K. and Brexit, however, few wanted to see Central Asia’s longest reigning ruler, Kazakhstan’s septuagenarian President Nursultan Nazarbayev, crash out without a deal.

The sudden departure of the country’s official Leader of the Nation with no clear succession plan could have led to investment chaos, intra-elite fighting, and the unravelling in a matter of months of a system he had built over decades, à la Uzbekistan following the death of long-serving autocrat Islam Karimov in 2016.

In order to avoid just such a “no-deal” scenario and ensure the continuity of his policies, in March 2019 Nazarbayev carefully choreographed his own resignation and the election of a hand-picked successor, President Kassym-Jomart Tokayev, while retaining plum positions and powers for himself.

Tokayev’s assumption of the presidency was accompanied by protesters in the streets, increasing wealth inequality, rising Sinophobia among rank-and-file Kazakhstanis, a hard-to-kick economic dependence on oil revenues, and a lack of clarity as to which leader – the old or the new president – would actually be calling the shots. But, amidst this plethora of concerns, as argued in a recent Chatham House Report, Kazakhstan: Tested by Transition, one bright spot has been the tangible growth of intra-Central Asian cooperation, with the Nazarbayev-Tokayev ruling duo appearing eager to improve the regional dialogue.

Kazakhstan has long shaped its identity as a Eurasian state that has acted as more of an intermediary between Russia and Central Asia than as an integral part of the Central Asian region. But since 2017, in particular, Kazakhstan has been increasingly looking for opportunities to boost hitherto weak cooperation with its Central Asian neighbors. While this is first and foremost owing to the liberalization of Uzbekistan’s large market, there are other factors at work that get less airplay.

One such factor is a perceptible disentangling from the Kremlin’s policy directions as Kazakhstan has come to view Russia’s foreign policy as increasingly neocolonial. The example of the Russia-led Eurasian Economic Union is in many respects more off-putting than inspiring, and Nur-Sultan does not want to be locked tightly into the Union’s economic orbit. And in distancing itself slightly from Moscow in order to limit Russian leverage in its affairs, Nur-Sultan has shown itself to be more open to Central Asian regional initiatives.

As part of the leadership’s plan to offset oil dependence, Kazakhstan aspires to become the transport, telecommunications, and investment hub for Eurasian integration. The intense focus on connectivity and the development of logistical arteries and infrastructure could have the knock-on effect of boosting trade within the Central Asian region and reducing transit times, which are currently greater than in most other parts of the globe.

In addition, demographic trends and educational shifts that favor ethnic Kazakhs, together with a growing ethno-nationalist narrative, have allowed the state’s leadership to identify more closely with Kazakhstan’s common Central Asian heritage and, by extension, a common Central Asian region – although Kazakhstan’s leadership still remains eager to demonstrate that the country is not just another “stan.” The coming to power of President Shavkat Mirziyoyev in Uzbekistan appears to have made Kazakhstan more aware of the interconnectedness of the two countries in terms of geographical location and potential economic complementarities, as well as culture and history.

Not least, there is a growing recognition among the Central Asian states themselves – including isolationist Turkmenistan to a degree – that deepening regional trade is mutually beneficial, especially given the constraints associated with Russia’s economic problems. The strengthening of Kazakhstan’s ties with Uzbekistan has slowly kick-started regional cooperation as a whole: trade turnover between the Central Asian states in 2018 grew by 35 percent on the previous year.

But both Kazakhstan and Uzbekistan are keen to stress that there is no discussion of integration or institutionalization, not least because previous attempts at integration have been overtaken by Russia, leaving Central Asia without its own coordinating body.

The official consensus in Kazakhstan is that Uzbekistan’s economic reforms after years of isolation will spur “a healthy rivalry” and ultimately boost Kazakhstan’s own economy, in so far as the competition for foreign investment will require both countries to work harder to improve their respective business and regulatory environments. At the unofficial level, however, some Kazakhstani analysts view Uzbekistan’s rise as potentially unprofitable, given the possible diversion of some investments and market activity from Kazakhstan to Uzbekistan. Moreover, Uzbekistan has the advantage of having undergone a clear change of executive, while it remains unclear what developments await Kazakhstan once First President Nazarbayev leaves the scene for good.

It can certainly be argued that Uzbekistan does pose a potential threat in the long term to Kazakhstan’s entrenched position as Central Asia’s economic powerhouse: Uzbekistan’s population is one-and-a-half times bigger, even if its nominal GDP is three times smaller. Uzbekistan has a bigger market and a well-developed industrial sector and is already the regional leader in terms of security. But it is not as though the world’s interest is moving from Kazakhstan to Uzbekistan; rather, Uzbekistan is in the process of trying to catch up.

Despite this relatively upbeat picture, Kazakhstan’s combined trade with the other Central Asian states accounts for less than 5 percent of its total volume of foreign trade – a figure that cannot begin to equal its trade with Russia, China, and Europe. As a result, Kazakhstan will continue to give greater importance to positioning itself as a global player than as a regional leader.