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Series: Central Asia and Japan: Part 3 Kazakhstan, Land of Steppes Making Skilful Use of Abundant Resources and a Balanced Foreign Policy | Toshio Tsunozaki Ambassador Extraordinary and Plenipotentiary Ministry of Foreign Affairs [Date of Issue: 28/June/2013 No.0220-0895]

Date of Issue: 28/June/2013

Series: Central Asia and Japan: Part 3
Kazakhstan, Land of Steppes
Making Skilful Use of Abundant Resources and a Balanced Foreign Policy

Toshio Tsunozaki
Ambassador Extraordinary and Plenipotentiary
Ministry of Foreign Affairs

Kazakhstan's abundance of oil, uranium and rare earth resources has recently also been attracting a growing number of Japanese firms. Kazakhstan is skilfully pursuing a balanced foreign policy among its neighbour, Russia and China, as well as the United States.

Kazakhstan is one of the Central Asian nations born out of the collapse of the Soviet Union in 1991. A territory of 2.72 million square kilometres places the country second only to Russia among the former Soviet republics. It has two major powers as neighbours-Russia to the north and China to the east-while on its western and southern borders are the other Central Asian countries of Turkmenistan, Uzbekistan and Kyrgyzstan. Most of Kazakhstan's territory, which is seven times as large as Japan, comprises steppes, and the Kazakhs are known as the 'people of the steppes', having continued a nomadic life on the country's ranging steppes until they were forced to settle down during the Soviet era. Kazakhstan's population is just over 16 million, of which the Kazakhs only account for just over 60 percent. Kazakhstan is in fact home to more than 100 ethnic groups, including the ethnic Russians who make up 22 percent of the population. Despite its multi-ethnic demography, however, Kazakhstan has yet to experience the kind of ethnic problems that have resulted in bloodshed in neighbouring Uzbekistan and Kyrgyzstan.

Kazakhstan has become increasingly important in recent years, primarily for its abundant mineral resources: oil, natural gas, uranium, rare metals and rare earths. The country's uranium deposits in particular are the second largest in the world. The second reason is its geopolitical position. Kazakhstan borders Xinjiang Province, the 'Achilles heel' of China, while there are no natural barriers between Kazakhstan and Russia down their long shared border, positioning the country as the 'soft underbelly' of both China and Russia. Kazakhstan and the other Central Asian nations are also adjacent to Iran and Afghanistan, so they occupy an important position in terms of the transmission of radical Islamism, as well as the various operations targeting those countries.

President Nursultan Nazarbayev has held power since Kazakhstan became independent in 1991, and his ruling party Nur Otan has a massive parliamentary majority. In that sense, the country is politically stable, but because the President has consistently removed any powerful candidates who might threaten his position, he has no successor lined up, and this has introduced an element of future instability into politics.

The economy is underpinned by mineral resources. The oil and gas industry in particular accounts for 30 percent of GDP and 60 percent of exports. In recent years, oil field development in the northern Caspian Sea had attracted attention, and Japan's Inpex Corporation is also participating in one project-the Kashagan oil field. For landlocked Kazakhstan, securing stable oil and gas transport routes is absolutely vital. During the Soviet era, the only oil pipeline ran out to north, that means to Russia, but oil sales channels have now diversified to include the Baku-Tbilisi-Ceyhan pipeline which runs from Baku (the capital of Azerbaijan) on the opposite coast of the Caspian Sea through Georgia to Ceyhan in Turkey, and another pipeline now completed through to China. Gas pipelines too have expanded from the routes to Russia that were all that existed in the Soviet era out to include the pipeline that runs through Turkmenistan, Uzbekistan and Kazakhstan to China. This diversification of sales routes enhances Kazakhstan's strategic position, and is one fruit of Kazakhstan's skilfully balanced economic diplomacy.

Since its independence, Kazakhstan has engaged proactively in the necessary economic reforms to make the transition from a planned economy to a market economy, working also to develop the foreign investment environment. As a result, the country achieved annual average per capita GDP growth of around 10 percent for the seven years from 2000 through to the Lehman shock, and growth has continued to hold at around seven percent since 2010. Per capita GDP has already topped US$11,000 (IMF, 2011), making Kazakhstan a star performer in Central Asia. The next challenge will be to diversify the national economy and break free of the country's resource dependence. To achieve this, Kazakhstan is looking for investment in the processing industry sector from Japan and other developed countries.

Kazakhstan is a master of diplomacy, achieving a balanced foreign policy among Russia, China, the US, Europe and other major extra-regional powers, while also maintaining good relations with countries in the region. Rather than being absorbed by one major power, Kazakhstan has maintained its independence and pursued a 'multi-vector' foreign policy. On the regional cooperation front too, it participates in regional cooperation institutions such as the Eurasian Economic Community and the Shanghai Cooperation Organization. It also took initiative of organizing the Conference on Interaction and Confidence Building Measures in Asia (CICA). In 2010, Kazakhstan was appointed chair of the Organization for Security and Co-operation in Europe (OSCE), hosting the OSCE summit meeting in December. Explaining Kazakhstan's diplomatic skill, one Kazakh has commented that "we people of the steppes used to ride all the length and breadth of our land, so we excel at scenting what is happening on all sides and making an immediate response, and that's where our aptitude for diplomacy comes from."

Japan and Kazakhstan established diplomatic relations in 1992, and the Japanese Embassy in Kazakhstan was set up the next year. However, in the sense of contact between Japanese and Kazakhs, the relationship had already begun back when around 10 percent of Japanese male citizens interned in the Soviet Union after WWII were sent to Kazakhstan. Locals were impressed by the diligence of the Japanese and the perfection of their work, and continue to talk about it to this day.

In 1997 the late Ryutaro Hashimoto, who was Prime Minister at the time, gave a lecture to the Keizai Doyukai (Japan Association of Corporate Executives) in which he advocated 'silk road diplomacy' consisting of the three pillars of political dialogue, economic cooperation and cooperation to build peace. Through his lecture the Japanese government announced a comprehensive basic diplomatic strategy for Central Asia including Kazakhstan for the first time. The September 11 incident in 2001 lent Central Asia even greater strategic importance. In 2004, Japan launched the Central Asia plus Japan Dialogue, with Japan's then-Minister for Foreign Affairs Yoriko Kawaguchi and other countries' foreign ministers gathering in Almaty, Kazakhstan for the first meeting. Five specific spheres of cooperation were subsequently determined: political dialogue, regional cooperation, business promotion, intellectual dialogue, and cultural and human exchange. The 2006 visit to Kazakhstan by then-Prime Minister Junichiro Koizumi, undertaken as part of the new relationship, marked the first visit there by a Japanese leader.

Economic relations between Japan and Kazakhstan still remained sluggish entering the new century, with the exception of some companies participating in oil development, but that began to change around the time of Koizumi's visit as Japan came to recognize the importance of Kazakhstan's mineral resources, particularly uranium, rare metals and rare earths. Kazakhstan, meanwhile, was looking to diversify the buyers of its resources, and also found the prospect of technologies and investment from Japan extremely attractive. There are already 47 Japanese firms operating in Kazakhstan (as at October 2011), with total investment reaching US$3.7 billion, but this is expected to rise still further particularly in the area of resources. Bilateral trade in 2012 saw both exports and imports of around 45 billion yen. Reflecting this progress in economic relations, then-METI Minister Akira Amari visited Kazakhstan in 2007, and the Double Taxation Agreement came into effect in 2009. In the same year the First Government and Private Sector Joint Commission between Japan and Kazakhstan on Economic Cooperation was held. A bilateral nuclear cooperation accord went into effect in 2010, and this year substantive agreement was reached in February on the Investment Protection Agreement between the two countries.

Japan has extended economic cooperation to Kazakhstan ever since the country's independence, in the field of infrastructure like construction of airport, bridge and roads, medical care, human resource development, etc. amounting to a cumulative total of more than 110 billion yen up until 2011.

The people of Kazakhstan are generally very fond of Japan and Japanese culture. There are no major political issues between the two countries; and the two economies are synergetic. Accordingly, the bilateral relationship seems likely to continue to develop in years to come.

(The views expressed in this article are those of the author, and do not necessarily reflect the official policy or position of the Government of Japan.)

(original article : Japanese)
(For the Japanese version of this article)

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