The presidential summit between Russia and Kazakhstan saw a cordial exchange of greetings and the signing of a number of intergovernmental agreements, especially in the security sphere. The two sides remained divided on several important energy questions that could dominate the agenda of future meetings of the Commonwealth of Independent States (CIS), but geography and economic interdependencies seem destined to keep the two countries close collaborators regardless of the leadership transition in the Kremlin.
BACKGROUND: Russia’s new President, Dmitry Medvedev, appears just as interested as his predecessor, Vladimir Putin, in sustaining Moscow’s influence in Kazakhstan. “Astana did not become the first foreign capital that I visited as president of Russia by chance,” Medvedev, who assumed office on May 7, observed after completing discussions with Kazakh President Nursultan Nazarbayev on May 22 in the Kazakh capital. Rather, his choice was deliberate because “Russia values the genuinely friendly and mutually-advantageous relations with Kazakhstan, our strategic partner.” Nazarbayev reciprocated by describing their ties as tighter than that between any other two countries: “I think that nowhere in the world can we see such close and fraternal relations as those between Kazakhstan and Russia, as those between us and Russia and the CIS.”
Medvedev seems keener than Putin to strengthen the institutional role of the CIS, which coincides nicely with Nazarbayev’s priorities. “It is our duty to pay close attention to cooperation with countries of the Commonwealth of Independent States,” Medvedev observed during a joint news conference with Nazarbayev. “The time has come for ties to be intensified.” The Russian president also endorsed the Kazakh government’s proposal to make energy cooperation the priority issue of the CIS agenda in 2009.
Although Medvedev’s background as a former chairman of Gazprom may have contributed to his interest in making energy a core element of CIS as well as Russian diplomacy, one reason both sides readily agreed to have the CIS focus on energy issues is that Kazakh and Russian negotiators still have not finalized the details of their plan to more than double the capacity of the Caspian Pipeline Consortium (CPC). In April 2006, the two countries signed an accord to increase the volume of Kazakh crude oil transported through the CPC, which extends from the Tengiz field in western Kazakhstan to the Russian port of Novorossiysk, to 67 million tons annually by 2012. Russia's state pipeline monopoly Transneft has a 24% stake in the CPC, which was commissioned in 2001, while Kazakhstan owns a 19% share. Russian negotiators have been demanding a greater share of the CPC’s profits in return for agreeing to the expansion.
In May 2007, the Kazakh, Russian and Turkmen governments also agreed to construct a major new natural gas pipeline whose route would wind around the Caspian Sea from Turkmenistan through Kazakhstan to Russia. Although the planned Caspian gas pipeline is scheduled to enter into service in 2011, the details of this arrangement remain under negotiation. Kazakhstan is supposed to contribute half of the volume, while Turkmenistan will supply the remainder.
These oil and gas pipelines are seen as the main competitors to those backed by Western governments that would cross the Caspian Sea en route to Europe. The Russian government has objected to the development of such underwater pipelines until the littoral states resolve the Caspian Sea’s legal status. Moscow has also raised concerns that undersea pipelines could cause environmental damage. This deadlock has thus far ensured that Kazakhstan and Turkmenistan send most of their oil and gas northward overland to Russia.
The Russian and Kazakh governments also continue to disagree regarding Nazarbayev’s proposal to build a canal linking the Caspian and Black Seas, a connection that could potentially provide currently landlocked Kazakhstan a more direct outlet to the world’s oceans. Nazarbayev has called for the creation of a “Eurasia Canal” that would traverse Russia’s mountainous North Caucasus, whereas Russian officials have advocated simply upgrading the existing Volga-Don waterway. Nazarbayev implicitly threatened to circumvent Russian opposition on this and other transport issues if Moscow proved too unyielding: “We never intend to bypass anyone, still less Russia, if the opportunities are provided.”
IMPLICATIONS: Even pending the canal’s construction, commercial relations between Russia and Kazakhstan continue to expand. Russian-Kazakh bilateral trade amounted to $16.3 billion in 2007, a 27% increase over 2006. Some 3,500 Kazakh-Russian joint ventures were operating in Kazakhstan in 2006, while Kazakh investors were active in the Russian Federation, if on a smaller scale. According to Kazakh government data, during the first three months of 2008, bilateral trade rose to $4.13 billion, a 26% increase over the January-March 2007 period. Nevertheless, Moscow’s recent efforts to induce Lufthansa to relocate its transshipment facilities from Kazakhstan to Siberia underscore that Russian and Kazakh economic interests do not always coincide.
In any case, the two governments also signed accords aimed at promoting cooperation in high-technology sectors that could dominate the world economy in coming decades. Medvedev explained that, “Of course energy is a very important sphere, but the 21st century cannot be without innovative development.” To encourage bilateral cooperation in nanotechnology, Russia's state-owned Development Bank agreed to loan $300 million to the Kazakh Development Bank. Medvedev also said that the two governments sought to “transition to deeper nuclear energy integration.” He confirmed that Russia and Kazakhstan would establish a joint venture to build nuclear-power plants in Kazakhstan.
Resolving Kazakh-Russian disagreements relating to their joint operation of the Baikonur space launch facility was another important high-technology item on the summit agenda. In 1994, the two governments ratified an agreement that recognized Kazakhstan’s ownership of the site but allowed Russia to continue to use the location under a 20-year lease. A January 2004 accord, which entered into force in 2005, extended the leasing arrangement through 2050, with Russia paying $115 million annually to use the facility. The document also established a joint venture with both countries providing $223 million to construct a Baiterek complex to launch Angara carrier rockets, capable of delivering 26 metric tons of payload into low-Earth orbits. Although some Kazakhs oppose the facility’s continued use as an environmental hazard, others consider Kazakhstan’s major role in space as an important driver of scientific and technological development, as well economic growth.
The debate over Baikonur sharpened in 2007, when a Russian rocket crashed on Kazakh territory shortly after launch. Kazakh authorities claim that the accident produced approximately $60 million in damage. The Russian government subsequently offered only $2.5 million in compensation. On April 12, 2008, Anatoly Perminov, the head of the Russian Federal Space Agency (Roscosmos) told journalists that Russia intended to use the Baikonur center until 2050. The joint declaration at the May 2008 summit pledged that the parties would employ Baikonur in a way that benefited Kazakhstan, Russia, and other countries. Kazakhstan also agreed to support development of the Russian-controlled Glonass navigation system, a potential competitor to the U.S. Global Positioning System.
The two governments also discussed deepening their defense cooperation. Before Medvedev arrived in Astana, Kazakh Defense Minister Daniyal Akhmetov reaffirmed Astana’s interest in purchasing additional Russian weapons systems and in sending Kazakh personnel for training in Russian military academies. A Kremlin source stated that the Kazakh government had expressed interest in acquiring Russian air defense systems. Other media sources reported that Kazakhstan will purchase new warships solely from Russia. According to Interfax, the Kazakh Defense Ministry plans to order smaller ships from the Kazakhstani-Russian “Zenith” joint venture wharf in Uralsk, Western Kazakhstan, but will arrange for more sophisticated warships to be constructed by Russian shipyards.
Russian Defense Minister Anatoly Serdyukov accompanied the Russian delegation to Astana. Following the presidential consultations, Medvedev and Nazarbayev released a statement that, while not detailing any specific new weapons purchases, declared that “Russia and Kazakhstan will maintain close cooperation aimed at securing a solid joint defense within the common military strategic space under the Collective Security Treaty.”
CONCLUSIONS: Nazarbayev said at the news conference that Medvedev had accepted an invitation to return to Astana in July to celebrate the Kazakh capital's tenth anniversary. Nevertheless, the two governments will probably continue to argue over energy issues, in particular. Even so, both governments recognize that overlapping energy dependencies require Kazakh-Russian collaboration in this as in other areas. Kazakhstan still requires access to Russian energy pipelines to reach many European consumers, while Moscow relies on imports of Central Asian gas – all of which pass through Kazakhstan – to meet its domestic demand and release Russian energy supplies for export to Europe.
AUTHOR’S BIO: Richard Weitz is Senior Fellow and Director for Project Management at the Hudson Institute.