A Balancing Act in Central Asia

As the largest Central Asian nation, landlocked, located between major powers Russia and China and aspiring to be considered a part of Europe, Kazakhstan is confronted with major decision dilemmas. A foreign policy that stood the test of time over the last three decades, it now faces serious challenges in maintaining the interests of competing powers with whom Kazakhstan must co-exist.

Recent events, such as violent domestic riots in January 2022 and Russia's invasion of Ukraine, have raised questions about the continued viability of its foreign policy in an increasingly polarized global order. However, rather than coercing it into aligning with a particular superpower, these geopolitical changes have encouraged Astana to balance to the best of its ability and diversify its economy.

Background

Since it gained its independence from the Soviet Union in 1991, Kazakhstan has followed a multi-vector foreign policy, balancing between Russia, China, the United States, and increasingly – Europe. Through multi-vector diplomacy, it looks to diversify its ties so that it is not excessively reliant on any one power.

Additionally, its foreign policy prioritizes neutrality and regional cooperation: it maintains neutrality in conflicts, avoids aligning with any particular group or nation, and looks to strengthen ties with neighbouring Central Asian states.

China continues to be a major trade, investment, and finance source for Astana. The construction of the Middle Corridor or the Trans-Caspian International Transport Route will connect China and the European Union (EU) via Kazakhstan and other Central Asian countries, opening up trade opportunities. Kazakhstan is also interested in benefiting from the Belt and Road Initiative (BRI).

While the U.S. has tried to engage with its financial sector, it cannot compete with Chinese investment and infrastructure support, and the trade turnover between the two countries is also comparatively minuscule. However, U.S. companies continue to be major oil producers in Kazakhstan.

Both the U.S. and China are concerned about radical Islamic terrorism in Afghanistan and Kazakhstan’s accompanying role in regional stability. While its relationship with China is more economic than military, China is now looking to boost security ties to strengthen regional stability. 

Due to geography and infrastructure, Kazakhstan cannot afford to distance itself from its ally Russia: Russian pipelines are critical to its economy. Its shared borders with Russia amount to 7,500 km with over 50 border crossings. The majority of its oil exports to Europe go through Russian pipelines. Russia also continues to be a major trade partner.

In January 2022, mass protests erupted in Kazakhstan over a sudden and substantial hike in liquefied gas prices, quickly spreading across the country and turning violent. President Kassym-Jomart Tokayev appealed to the Russian-led Collective Security Treaty Organization (CSTO) for assistance, which speedily intervened with troops and quelled the riots. This intervention gave rise to concern that Tokayev was indebted to Putin and that the country's sovereignty was at risk. Russia's subsequent invasion of Ukraine exacerbated this concern.

Analysis

Kazakhstan has maintained a neutral stance on the Ukraine war; it has not joined sanctions against Russia but has also not allowed Russia to use its territory to circumvent sanctions. This helps it maintain relations with Western countries despite pressure from Moscow. Further, since Kazakhstan is a member of the Eurasian Customs Union with no customs border with Russia, it is difficult to introduce any sanctions.

The Middle Corridor provides a much-needed alternative to the traditional Northern and Southern corridors passing through Iran and Russia, with both countries under Western sanctions. Kazakhstan has a key role in the Middle Corridor; about 85 per cent of overland transit from China to Europe passes through Kazakhstan. While many view China’s significant investment and economic involvement in the country with trepidation, others downplay these concerns about excessive Chinese influence.

Moscow is not averse to applying economic pressure on Kazakhstan. Russia has repeatedly suspended the operation of the Caspian Pipeline Consortium (CPC), a critical pipeline carrying almost 80 per cent of Kazakhstan's oil exports to Europe, on various pretexts. However, Kazakhstan is intent on maintaining its multi-vector policy. This policy is all the more important now to help it counterbalance pressure from Russia.

Other regional powers like China and Turkey provide a counterbalance, as do Western powers who do not want Kazakhstan to lean towards Russia. This foreign policy effort involves not just diversifying its diplomatic ties but also diversifying its trade and transport routes. However, even with this renewed emphasis on a multi-vector policy, Astana will continue to maintain Russia as a close ally and strategic partner.

India View

With a historical foundation of diplomatic ties, India and Kazakhstan have a shared interest in economic cooperation, regional stability, and combatting extremist religious terrorism. Their military cooperation includes joint defence-industrial projects, naval cooperation, joint peace-keeping operations and military exercises, and civil nuclear cooperation; India stands to benefit from Kazakhstan's abundant energy resources and relies on the Central Asian country for most of its uranium supplies. Both countries signed a strategic partnership agreement in 2009.

Over the years, Kazakhstan has tried to divert its economy from oil and gas and has consistently enhanced its FDI attractiveness; today, it ranks 25^th in the World Bank’s Ease of Doing Business Report. It is emerging as India's top trading partner in Central Asia, with over 200 projects in various sectors.