Ilona Bērziņa, BNN
The visit of US Secretary of State Antony Blinken to Kazakhstan was a clear and unambiguous signal of further strengthening of economic and political ties with this Central Asian country. Kazakhstan, on the other hand, has made signals of moving away from Russia’s political orbit in favour of establishing closer ties with the most democratic countries of the world.
Latvia has a role to play here as well.
Antony Blinken’s visit to Kazakhstan and his meeting with representatives of Kazakhstan, Kyrgizstan, Tajikistan, Turkmenistan and Uzbekistan as part of C5+1 format – a
is like a «stab in the heart» for Moscow, notes The New York Times.
Antony Blinken’s words of US loyalty towards the sovereignty, territorial integrity and independence of Kazakhstan and countries of this region, as well as what he said about the US being full of commitment to make relations with Kazakhstan closer will help this country distance from toxic Russia to the point of Moscow’s influence returning to the region becomes highly unlikely. Rephrasing the words of Kazcommercbank council member Beibit Apsenbetov – if your neighbour is an alcoholic and hooligan, you should leave.
Central Asia needs trade diversification
Kazakhstan is an inland country that does not have access to the sea, except for the coastline with large saltwater lakes – Caspian and Aral seas. Because of this, the country was forced to use land export routes through Russia and China to deliver goods.
However, according to US-based news agency Eurasianet editor Peter Leonard, the shock from Russia’s invasion of Ukraine has served as the engine for Kazakhstan to develop oil and freight transportation roads over the Caspian Sea, around Russia. At the same time, he warned that Russian leaders, though self-assured and arrogantly, feeling that the Central Asia is starting to shake and break away from its orbit, may attempt to pull them back. It is the objective of the entire democratic world to prevent that from happening.
You don’t have to be a prophet to understand that together with threats of use of force, which is no longer as intimidating after Russia’s countless fails in Ukraine, there are also economic tools. However, the system has changed, so this won’t work as well any more.
Antony Blinken mentioned during a joint press-conference with Kazakhstan’s Minister of Foreign Affairs Mukhtar Tleuberdi, sanctions against Kazakhstan’s biggest trade partner have had «economically exhausting influence» so far. At the same time, Blinken also promised Kazakhstan compensation for the losses caused by anti-Russian sanctions.
Prior to the press-briefing US Assistant Secretary of State Donald Lu mentioned that diversification of trade is becoming an existential topic for Kazakhstan and its neighbours. «The goal is to avoid hurting the Central Asian republic, its people or economic interests,» Voice of America reports Donald Lu’s words.
The biggest economic partner for the US in Central Asia
In 2021 Kazakhstan’s GDP reached USD 197.1 billion. In 1991, when Kazakhstan announced its independence, its GDP was USD 24.92 billion. In 2019 this country’s economic growth was 4.5%. According to official data, as of January 2023 Kazakhstan’s economic growth rate was 5.6%.
According to provisional results for 2022, Kazakhstan’s foreign trade turnover grew by 32.1% and was USD 134.4 billion. Export grew by 39.9%, reaching USD 84.4 billion. Imports grew and reached USD 50 billion. Generally the positive trade balance is USD 34.4 billion (data published by Kazakhstan’s Ministry of Economics).
It is also important to point out that Kazakhstan is the biggest oil producer in Central Asia (an increase of +11% was reached in petrol processing in 2022) and is the second biggest oil producer in OPEC+ after Russia. Influence from US, French and Italian companies is also important in this field. 50% of the Tengiz oil field, which produces one-third of Kazakhstan’s annual volumes of petrol products, is controlled by US company Chevron. According to The New York Times, it is a sector in which American companies are deeply involved and have the will to expand in. It should be noted that
recently Kazakhstan has started exporting oil to Germany.
The great interest from US towards Kazakhstan also comes from the fact that direct foreign investments from US already exceed USD 62 billion; mutual trade turnover in 2022 increased by 37.2%, exceeding USD 3 billion.
Approximately 590 companies operating in Kazakhstan have US capital. Global economic leaders are beginning to take notice of Kazakhstan’s market. It is no surprise that Kazakh minister of foreign affairs mentioned during Blinken’s visit that Kazakhstan is the biggest economic partner to the US in Central Asia.
Latvia is an important cooperation partner as well
«Kazakhstan is a valuable economic and trade partner in the heart of Central Asia, and we value the role it plays in the region,» said Antony Blinken during his visit to Astana. The US Institute of Peace stresses it is important to «help Central Asia connect with the outside world, using multiple vectors that govern more balanced ties with the global economy.»
One of these «vectors» is the traditionally good relations between Kazakhstan and Latvia,
as well as the two countries’ interest in forming tighter economic dialogue, including in transport and logistics.
Latvian and Kazakh businessmen agree that exports of Kazakh goods through Latvian ports to Nordic Europe and Scandinavia will open up wide opportunities. It is no less important that the export potential of this Central Asian country serves as an opportunity to assist with development of Latvian sea ports. However, considering the geopolitical situation, the need for a new Central Asian and European connection has become more topical than ever before.
The good news is that during the official visit of Latvian President Egils Levits to Azerbaijan, the deputy director of Ministry of Transport Department for Coordination of Logistics and International Cooperation Andris Maldups agreed to promote cooperation by developing an alternative corridor that will connect TRACECA corridors with Baltic and Scandinavian countries.
[TRACECA was formed in Brussels in 1993 in order to improve political and economic independence of former Soviet republics and to improve their access to European and world markets using marine, railway and land transports. This organisation unites 27 countries, including EU member states, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Iran, Moldova, Turkey, Ukraine, Uzbekistan, Tajikistan and Turkmenistan.]
It is no less important to keep in mind that officials have also discussed expansion of cooperation in the Trans-Caspian corridor, as well as attraction of new freight and creation of new services. The first pilot shipments in the direction of Baltic region and Scandinavia are planned to come in the coming months. All of this indicates that Latvia and Central Asian countries are seriously interested in the creation of an alternative corridor and continuation of mutually beneficial economic cooperation.
It is already clear this project will help bring new freight for Riga and Ventspils, as well as Liepaja in the future. Latvian Railway will definitely benefit as well. Looking at it from this aspect alone, it becomes clear that cooperation with Kazakhstan is vitally important for Latvia’s economy.
Also read: US to strengthen strategic cooperation with Kazakhstan and Central Asia