For any major power looking to grow its influence, Kazakhstan is a hidden gem. While short on name recognition, the Central Asian republic has the second largest uranium reserves in the world, also coming in sixth in iron, eighth in coal, and twelfth in oil. It is the ninth largest country in the world by land area, and the eighth largest wheat producer. It shares important cultural connections with Turkey, enormous borders with China and Russia, and a generous shoreline on the Caspian Sea with Russia and Iran. Additionally, through its heavyweight status in regional politics, it can project power far south of its borders, making the country relevant to Afghani, Pakistani, and Indian politics.
Any great power, established or rising, should be eagerly pursuing the prospect of increased cooperation with Kazakhstan as a smart strategic investment. However, although many US policymakers have been aware of the country’s strategic value for years, there has been little effort to prioritize a stronger relationship between the two states. As drains on institutional attention like the wars in Iraq and Afghanistan die down — and barriers to entry, like the global financial crisis restricting credit options or Russian economic dominance in the region — are knocked down by a recovering global economy and continued Russian economic weakness, Kazakhstan will become both more attractive and more available to global power players. Furthermore, as developed economies stagnate, private companies will increasingly be tempted to chase such robust emerging markets.
The question is not how Kazakhstan will attract attention; it’s what it will do with the spotlight.
The history of modern Kazakhstan begins in 1867 when the Russian Empire conquered most of Central Asia, renamed it Russian Turkestan, and went to work smothering local institutions, language and culture, paving the way for hundreds of thousands of ethnic Russians to colonize the region. After the Russian Revolution, the region became a soviet satellite called the Kazakh Autonomous Socialist Soviet Republic. Under Stalin, the Soviets collectivized industry and agriculture, which prompted a famine that killed or pushed out 38 percent of the population. Under the subsequent Great Purge, the Kazakhstani intellectual elite was also largely killed off. Later, under Khrushchev, the value of Kazakhstan’s land was realized, and it fell victim to the Virgin Lands initiative, which turned the country into a short-term agricultural center, but ultimately sucked the land dry. Today, the economy is still in recovery.
When the Kazakhstanis finally emerged from under communist rule in 1991, Nursultan Nazarbayev became president, a position he has held ever since. Nazarbayev is an authoritarian leader with a terrible human rights record, but he has walked a fine line of neutrality at the international level with aplomb. “Multivector foreign policy,” as the strategy is called, involves pursuing deeper ties evenly with every nation Kazakhstan negotiates with. Because of this, Nazarbayev has consistently tried to make nice with the West, a strategy that has led to slow improvements in everything from electoral standards to nuclear nonproliferation. Under his rule, the economy has grown at a steady clip that looks set to continue under the “Bright Path” infrastructure revitalization plan. A free-market floating exchange rate has replaced a centralized old system, and an ambitious privatization program for state-owned enterprises is taking root. Ever key to foreign direct investment, stability — paired with generous tax policies and the promise of gradual liberalization of the political system — continues to pay dividends.
The problem Kazakhstan faces is twofold: Nazarbayev is 76, and several simmering issues threaten to boil over in a critical transition period for the country. For a dictator so clearly interested in incremental change against a backdrop of unassailable stability and strong economic growth, the former threatens the very fabric of Kazakhstani society. While he has recently taken steps to ease a transfer of power, decades of work to encourage a stable society are at risk because of Nazarbayev’s strategic silence on the issue of a successor. By staying quiet, he has named no favorites, and made no enemies for decades, but age has forced his hand. Uzbekistan’s recently deceased president faced similar challenges, and Nazarbayev will surely be watching the succession process in Kazakhstan’s major central Asian rival with trepidation.
Compounding the inevitable tensions of succession politics, Nazarbayev faces the possibility of a discontented populace. With growth in the region at its lowest in 20 years, and oil prices at their lowest in more than a decade, sources of funding like Kazakhstan’s oil revenue-based sovereign wealth fund are being pushed to their limits. The $95 billion pool of money, which was a major source of funding for Nazarbayev’s Bright Path infrastructure development plan, usually returns enough interest from the invested principle to pay for annual budgetary outlays without eating into the principle investment. Last year, however, the fund suffered an $8 billion hit cover budget shortfalls. Now, Nazarbayev has exempted the fund from being reduced further in an effort to preserve the country’s long-term nest egg. Despite painful austerity, Kazakhstan’s 2016-17 budget still had to include significant loans from international organizations to bridge a deficit. Unless the economy improves drastically, the Kazakhstani effort to have its cake and eat it too will be reliant on creditors for whom maintenance of the status quo represents a lack of demonstrated ability to right the country’s finances. In other words, outside pressure may soon start to force budgetary concessions that will upset core investment programs. This, in turn, could lead to resentment and distrust in the government by voters. Signs of this are already appearing, as once-rare protests become increasingly common.
Along with the economic fundamentals to encourage unrest, Kazakhstan shoulders a growing problem with home grown Islamic terrorism, and increased regional tensions from water scarcity as Central Asia scrambles in the wake of the Aral Sea’s decimation.
The solutions to Kazakhstan’s problems may lie in large part beyond its borders. The best strategy when facing a choice between security and stability on the one hand, and liberalization and modernization on the other, would be not to compromise either. However, in Kazakhstan’s case, such a path will require significant outside support. These need should prompt the state to rethink Mulitvector Foreign Policy. While friendship with every major power is perhaps desirable for long-term, gradual political and economic improvement, it limits the positive benefits Kazakhstan can claim from each individual relationship. Neither China nor Russia get a relative advantage from knowing that Kazakhstan will do its best to remain amicable with both. Rather, both are incentivized to ignore the relationship because the upper limit on cooperation is limited by Kazakhstan’s desire not to offend the other, and because the realistic result is that any investment to gain a comparative advantage in political pull will be happily matched by their opponent. To put it bluntly, Kazakhstan is being courted by several suitors, but isn’t looking to commit to any of them. Therefore, the true, long-term value of a strong strategic alliance will elude the country.
What does a “deeper alliance” actually look like? For one, Kazakhstan could offer the US more presence on the ground in the region. The US has a deep interest in maintaining military capabilities close to Russia, China, India, and the Middle East, and currently its involvement is relatively limited. “More” comes in the form of new military bases (which would be a first for Kazakhstan-US relations), more significant joint training exercises like the annual Operation Steppe Eagle, bilateral extradition treaties for criminals in the drug trafficking industry, and a clear channel for high level mediation of economic problems. There is surely much more to gain than what’s listed here, much of which might only be discovered by simply asking the US what it wants in the region. However, this list is certainly substantial enough to prove that Kazakhstan has opportunities for serious bargaining leverage.
The prospect of a comparative advantage and deeper ties can motivate more outside investment while also returning control to Kazakhstan over what the investment actually looks like, which will be critical for maintaining stability through Kazakhstan’s medium-term challenges to domestic stability. Where before any act of kindness was welcome, Nazarbayev would now be able to make actionable demands for help on specific hurdles that Kazakhstan faces.
What sorts of “actionable demands” could Nazarbayev make? if Kazakhstan convinced the US that it was legitimately possible to win dominance over Russia in the country, the US could compete for that favor by buying sovereign Kazakh debt, maintaining a presence in the country via USAID, a humanitarian program, or expanding the US Trade and Development Agency’s current operations in order to encourage investment in the country from transportation. It could advise and support Kazakhstan’s continuing bid for closer ties with and eventual membership in the OECD, or provide vital expert support on the implementation of corruption-fighting measures in Nazarbayev’s 100 Steps reform program that have so far seen limited success.
Clearly, there is much to gain from a riskier, “pick favorites” form of foreign policy. Of course, it will continue to be suggested that this is a recipe for instability for Kazakhstan. While it may be true that choosing one favorite could make enemies out of tepid friends, it seems more likely that most allies will be slow to reverse their friendships, and one tepid friendship will be allowed to blossom into a bountiful partnership. Ultimately, Nazarbayev should consider the former strategy, for his legacy and his country. As any good investor knows, return is indivisible from a little risk.