The late February visit to Astana by US Secretary of State Antony Blinken and the upcoming 2nd European Union-Central Asia Economic Forum, scheduled for May in Almaty, are venues for the Republic of Kazakhstan to demonstrate that, despite the ongoing global turmoil, the country remains a trustworthy trade partner and an attractive location for potential investment.
The senior US official visited Astana to participate in a C5+1 summit with his Central Asian counterparts. While the war in Ukraine was the main topic on the agenda, Astana also reportedly explained to Washington that the country remains the region’s prime location for trade and investment. “Secretary Blinken and President Tokayev also discussed the ways in which both countries can strengthen United States-Kazakhstan economic partnership and enhance regional connectivity,” reported the State Department about a meeting between the Secretary and Kazakhstani President Kassym-Jomart Tokayev. In addition, a meeting with Foreign Affairs Minister Mukhtar Tileuberdi also addressed “economic connectivity to further deepen our ... strategic partnership.”
US-Kazakhstan trade in 2022 reached USD3.738 billion, significantly more than any other regional country (Washington’s trade with Uzbekistan was only USD331.7 million during the same year). In other words, the numbers speak for themselves, as most of US trade with the Central Asian region last year fell on Kazakhstan. Foreign direct investment from the US to Kazakhstan reached USD62 billion, an increase of “58.8 percent in the first three quarters of 2022 compared to the same period in 2021,” according to the Astana Times.
The upcoming Central Asia-European Union summit will help provide a similar message. The Forum’s objective is to “deepen and operationalise the engagement by both the EU and Central Asia in three key priority areas – green and digital transition, better business environment, as well as trade and connectivity.” Representatives from the European Investment Bank, the European Bank for Reconstruction and Development, and representatives from the private sector will reportedly attend. The EU and other institutions are already promoting investment in Central Asia, including Kazakhstan; one objective is to boost the competitiveness and trade promotion of micro, small, and medium enterprises engaged in agribusiness.
Kazakhstan and the European Union are major trade partners, particularly regarding energy. As a bloc, the EU is Kazakhstan’s biggest trade partner, accounting for 29.7% of the country’s total trade in goods in 2020. (Bilateral trade is ruled by the Enhanced Partnership and Cooperation Agreement (EPCA), which entered into force in 2020.) Astana is betting heavily on the Trans-Caspian International Transport Route (TITR), known as the Middle Corridor, to avoid passing through Russian territory to deliver goods to the European market. Similarly, European governments and businesses are undoubtedly interested in the Corridor, exemplified by constant visits, most recently by representatives from the German logistics and transportation company HHLA and the port of Hamburg in mid-March. In December, the Kazakhstani national atomic company Kazatomprom announced the delivery of a cargo of Uranium to Canada via the Corridor.
It is essential to note the effects of the war and international sanctions against Russia, namely the decision by multinational companies that operated across Russia before the invasion commenced to move their operations elsewhere. Throughout 2022, more than 60 companies moved their offices to Kazakhstan from Russia and Belarus.
The relocated companies include the US-headquartered coporation Honeywell, the international service InDriver, the Australian mining company Fortescue and the Japanese trading company Marubeni. “Our assembly site in Almaty, the first of its kind to produce ICSS (Integrated Control and Safety System) technology in Kazakhstan, provides an additional foundation for expanding domestic production capacity for advanced industrial automation systems in the country,” said Honeywell President for Central Asia, Türkiye and Israel Uygar Doiran in July 2022 during the opening of the facilities. New production facilities in Kazakhstan include a line to produce heavy-duty motorcycles for the Ural Motorcycles and a new service supercentre in Almaty by the Weir Minerals company. Moreover, the Dutch company Koppert is reportedly planning to produce biofertilizers and plant protection products in the Central Asian nation.
State agencies like Kazakh Invest and the Astana International Financial Centre (AIFC) are actively looking to bring new investment and trade partners to the Central Asia state. The AIFC’s Green Financial Centre (GFC) aims to attract green investment, which is part of Astana’s strategy to become carbon neutral by 2060.
Geography cannot be ignored, and Kazakhstan and the Russian Federation share the world’s second-largest land border (only after the US-Canada border). However, geopolitical considerations aside, Astana had striven since before the war commenced to show potential partners and investors that the Central Asian state is a location for any company wishing to enter the Central Asian and Greater Caspian markets. Of course, it is quite challenging to demonstrate that a country is a reliable and risk-free partner, given ongoing global uncertainty and tensions; however, Astana has achieved a significant feat: the government has attracted increasing investment and trade turnover from various new companies. Furthermore, through agencies like the AIFC, which include a stock exchange and an arbitration center, Astana strives to showcase to potential investors that it is capable of being a “one-stop-shop.”
The Kazakhstani government continues to walk a fine line regarding the war, given its geographical proximity to Russia. Bilateral trade between Astana and Moscow will continue. Nevertheless, during the Tokayev-Blinken meeting, the Kazakhstani head of state reaffirmed that his country will not be a tool for Moscow to circumvent US and EU sanctions and will continue to closely control sanctioned-goods and investments. The issue of what Astana is doing, and what more can be done, to monitor goods and comply with international sanctions has been widely analyzed by news agencies, including The Financial Times and The Diplomat.
Kazakhstan remains open for business, aims to become carbon neutral by 2060, diversify its economy away from a dependency on energy, and address the consequences of the ongoing war. This was Astana’s message to US Secretary Blinken and will be the same message at the upcoming EU-Central Asia economic forum in May. In addition, the relocation of several companies to Kazakhstan from Russia is providing an ideal opportunity to show other potential investors and trade partners that the Central Asian state is capable, if given an opportunity, of being a thriving location for their business.
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