International Policy Digest

RIA Novosti
World News /12 Jul 2016
07.12.16

Kazakhstan: A Key Player in Eurasia’s Energy Security “Club”

Plunging oil prices have negatively impacted the economies of China, Russia and Europe. But Central Asia’s energy potential raises economic hopes. The IMF Managing Director, Christine Lagarde, indicated in a speech at Nazarbaev University in Astana that Kazakhstan could create ‘…an environment where new investment can thrive and that is open for everyone.’ Lagarde’s remarks are a clear recognition of Eurasia’s importance to the future global economy as regional networks work to drive economic enhancement.

For Russia and China, Kazakhstan may well be a linchpin – a mechanism through which both states can connect to the Eurasian region. Vladimir Putin has endeavored to establish a common energy market by working with Kazakhstan’s political elite. Kazakhstan hosted the Eurasian Economic Union in Astana giving light to Russia’s interest in multilateral energy diplomacy. Russia’s eastward approach is a result of continuing sanctions against Russia, as well as Russia’s rejection of the EU’s ‘pan-European Energy Community with a common regulatory space.’

Rather than conforming to EU rules, Russia opted for the creation of a Eurasian Energy “Club” – a concept dubbed by Putin in 2006 at the Shanghai Cooperation Organization (SCO). Realizing this objective requires the support of Central Asia states – Kazakhstan, Uzbekistan, Tajikistan and Turkmenistan.

Mounting interests in the region places considerable pressure on Kazakhstan. For one, the EU’s involvement in Eurasia encompasses broad ranging initiatives from development programs to the promotion of democracy and human rights. To be precise, the EU budget for bilateral and regional development increased from €675 million to €1.028 for 2014 to 2020. Simultaneously, the Eurasian Economic Union of which Kazakhstan is a member currently serves 182 million customers and is the biggest trading body of its type. Europe is still the most significant source of demand for trade in oil, but this Post-Soviet state cannot turn away from Moscow’s regional presence.

Moreover, former Australian diplomat in Moscow, Bobo Lo, characterized Sino-Russian relations as an “axis of convenience.” This perspective suggests whilst economic ties are strong Russia and China have not formed an alliance. Yet such characterizations negate the complex and multidimensional aspects of the high-level bilateral relations, particularly given the common interests shared in relation to Eurasia’s economic potential. After all, the Eurasian Energy Club concept flagged by Putin received strong endorsement from China. This is now being evidenced on the ground by China’s New Silk Road project.

The ultimate goal of the New Silk Road, otherwise known as the “One Belt, One Road,” project realizes Beijing’s interest in Europe. In fact, a Memorandum of Understanding (MOU) was signed in 2012 between China and the EU to enhance energy security. The goal of this political relationship is to stimulate energy and transportation interconnectivity through ‘…an open, transparent, efficient and competitive energy market.’

The backbone of Kazakhstan’s mounting economic prospects is partly due to the instalment of a Sino-Kazakh oil pipeline. In 2012, China imported over 86 million barrels of oil in comparison to the year before, marking a 14.1 percent increase. The pipeline has guaranteed China access to the Caspian Sea oil fields, which contain the largest deposits of Kazakh oil. In essence, China’s tactical investments are geared towards building strategic links to Europe through strategic energy diplomacy.

China’s aspirations of completing the New Silk Road and Russia’s ambitions of strengthening the Eurasian Economic Union give birth to common interests in Central Asia, particularly Kazakhstan. Investment in Kazakhstan will be boosted by both states to ensure the viability of the region. There is no doubt that transport infrastructure will be a high priority, as well as the development of human resources which are vital to an ever expanding and technologically driven global economy.