ANALYSIS - Kazakhstan’s robust outreach to Caucasia, Middle East to seek investments
Pandemic, Russia's war in Ukraine prompts Kazakhstan to step up its effort to serve as a logistical and food transportation hub
- The writer is a UK-based analyst and has worked with universities in three Central Asian countries.
Over recently Kazakhstan President Kassym-Jomart Tokayev has launched several initiatives to attract investment and new opportunities for growth and development in his country.
The impact of the COVID -19 pandemic and the Russia's war in Ukraine on the global economy has propelled Kazakhstan to step up efforts to forge partnerships with Saudi Arabia, Iran, and Georgia to seek connectivity and turn the country into a hub of logistics, energy as well as food transportation.
Amidst the erosion of the modern model of globalization, the current international relations system is undergoing a complex transformation. Kazakhstan's Foreign Policy vision up to 2030 has also emphasized a focus on regional cooperation.
During their meeting in Cholpon-Ata, Kyrgyzstan on July 21, the presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan expressed a desire for effective use of transport corridors.
The proposed endeavors are aimed at unlocking the transport and transit potentials of the countries by improving connectivity so that Central Asia could benefit from its significant location at the crossroads of the North-South, and East-West routes.
In the same context, the Prime Minister of Georgia Irakli Garibashvili met Kazakhstan’s Prime Minister Alikhan Smailov during his visit to Nur Sultan on July 27, to discuss the development of the Trans-Caspian International Transport Route (TITR).
The two sides underlined the need to remove infrastructure restrictions on railway sections and seaports, as well as to review existing tariffs to make the project more competitive. Smailov expressed Kazakhstan’s support for all initiatives to develop the region's transit and transport potential.
“To build the capacity of TITR, together with other participants in the route, we propose to develop a roadmap for the simultaneous elimination of bottlenecks and the development of its potential for 2022-2025,” he said.
- Outreach to Tehran, Saudi Arabia
Earlier in June 2022, during his visit to Tehran, Kazakh President Tokayev discussed the development of the North-South corridor through Kazakhstan, Turkmenistan, and Iran, further to the Persian Gulf and African countries. Such a route will enable the delivery of goods efficiently.
Kazakhstan is eager to tap the potential of new logistical connectivity for even wider regional cooperation. Tokayev’s recently concluded a two-day visit to Saudi Arabia has also helped him to forge cooperation and find partners to diversify the economy rather than remaining dependent on energy exports.
According to Kazakh economist Almas Chukin, Saudi Arabia is positioning itself to advance common interests among energy suppliers in the Middle East, North Africa, and Eurasia. In the wake of the energy crisis being experienced by European economies, Riyadh considers Nur-Sultan a major player in the oil market.
Kazakhstan, being a major oil exporter offers ample investment opportunities for Saudi Arabia, as the economies of both these two countries have identical features and they want to explore joint projects.
Kazakh economist Magbat Spanov notes that as a major oil producer, Saudi Arabia is undertaking extensive economic reforms to reduce dependence on oil production. They have access to technology and expertise which is of particular interest to Kazakhstan.
Most of Kazakhstan’s existing oil fields were discovered during the Soviet era and their exploitation was determined by the priorities of past decades. Now the country is looking for a departure to different markets with new prospects.
“With its abundant financial resources, Saudi Arabia can become ideal to make financial investments in the energy sphere. There was some discussion about the exploration of new oil and gas reserves. There have been talks about coordinating volumes of future oil supplies and also for making adjustments to steer oil prices from facing any abrupt fluctuations in the market. Too high oil prices are also not very good as demand could decline abruptly,” said Spanov.
- Seeking agriculture market
The Saudis are an important partner not only as a leading oil supplier. According to political observer Nikita Shatalov, a partnership with Riyadh may allow Kazakhstan an entry point to a huge part of the Muslim world and its vast communities.
Kazakhstan is eager to export agricultural products to Saudi Arabia like grain, flour, and meat products. At a time when there are risks that could obstruct logistical flows of energy and grain supplies, Kazakhstan is eager to step up efforts to act as a logistical hub to facilitate future transportation.
Tokayev reminded Saudi investors that Kazakhstan ranks second in the world in terms of arable land per capita and fifth in terms of pasture resources (444.79 million acres). Being one of the 10 largest producers of wheat and flour, Kazakhstan is ready to serve as a stable, long-term supplier of wheat, flour, and oilseeds to Saudi Arabia. This implies that investments, technologies, and sales markets can be made to meet Saudi Arabia’s future agricultural needs.
At the same time, Kazakhstan is eager to invite investment to develop technologies, boost industries and expand markets which are the three spheres where Kazakhstan's President is eager to invite Saudi businessmen to explore investing in Kazakh tourism and recreation projects.
Considering Kazakhstan's extensive experience in the aerospace industry, this also opens prospects for investment from Saudi Arabia which is interested in the space industry, nuclear energy, the development of the petrochemical industry, and the production of green hydrogen among other areas.
According to the Kazakhstan Institute of Economic Research, during the pandemic, Kazakhstan's external trade dropped from $7.4 billion to $6.2 billion. That decrease was caused by a 42% drop in exports while imports increased by 30%. The balance of trade has turned negative.
Kazakh political expert Amirjan Kosanov points out that the next presidential election is due in two years (in March 2024), and Tokayev will have to show performance in terms of economic growth. Therefore, he is now in search of various options and Saudi Arabia could offer promising investment opportunities. Tokayev’s visit is believed to have opened wider prospects for his country to attract investments from Saudi Aramco, Ajlan Holding, al-Rajhi Investment company, and many other players to undertake joint projects.
- Axis of cooperation
Kazakhstan and Saudi Arabia are increasingly seeking to establish axis cooperation which may evolve into new regional contours of influence. Amidst emerging challenges aspiring economies do not wish to be sidelined, said Kosanov.
Financial analyst Andrey Chebotarev notes that a range of minerals including ferroalloys and Titanium have been offered to Saudi investors. He said that the Saudis may start investing in Kazakhstan’s petrochemical and fertilizer plants which are expected to generate business and employment opportunities. This in turn would help the country stimulate economic growth.
Kazakhstan will look at Saudi Arabia as an opening for seeking investment from Middle countries in the years to come. For this Kazakhstan is ready to offer special conditions and a wide range of concessions to investors to make the country an attractive destination.Anadolu Agency website contains only a portion of the news stories offered to subscribers in the AA News Broadcasting System (HAS), and in summarized form. Please contact us for subscription options.