Washington Times
March 7 2008
Prize in Eurasian game
By Ariel Cohen
March 7, 2008
The Russian presidential election in which Dmitry Medvedev – Vladimir
Putin’s choice as his successor – was confirmed by the vast majority
of Russian voters last Sunday, has serious geopolitical implications
for the United States. Moscow has already demonstrated that there is
going to be more business as usual: Anti-Medvedev demonstrators in
Moscow were beaten up and arrested, and gas supplies to Ukraine
several interrupted.
One area where Russia is likely to expand its influence is
mineral-rich Eurasia, which many in Moscow view as their backyard.
The prize of Eurasia is energy resources around the Caspian Sea,
primarily in Azerbaijan and Kazakhstan.
>From the Caspian Sea and the Caucasus Mountains to the Chinese
border, Russia will compete with China and the United States for
influence and profit. Russia and China are anxious to curry favor
with Kazakhstan. They are both are interested in its energy and
mineral wealth and promise multibillion-dollar investments.
Kazakhstan exports most of its oil and gas via Russia, but pipelines
to China are already working and will be expanded in the future.
Azerbaijan is exporting its oil and gas to Turkey and beyond,
bypassing Moscow.
This week, Armenia, which is traditionally supported by Russia, and
the oil-rich Azerbaijan traded fire over the 1994 cease-fire line in
Nagorno-Karabakh. This happened after Armenian police has killed
eight demonstrators, arrested dozens and beaten up hundreds in the
aftermath of the flawed presidential elections that took place last
month.
The United States, which opposes Karabakh independence, has clarified
to the Armenian government that both domestic violence and escalation
of hostilities are unacceptable. Deputy Assistant Secretary of State
Matthew J. Bryza said that he intends to deliver a stern message in
Armenia: "We simply deplore the violence," he told the Associated
Press. "That simply can’t be repeated." Mr. Bryza said he intends to
press the government to lift a state of emergency it declared
Saturday. A new war in the Caucasus could disrupt supply of close to
1 million barrels of oil a day flowing from Azerbaijan into the tight
global market.
Kazakhstan is far from the conflict in the Caucasus. Despite
setbacks, including the spread of international financial
instability, President Nursultan Nazarbayev’s reform agenda,
implemented by Prime Minister Karim Massimov, is largely on track.
Mr. Massimov, 42, an economist fluent in English, Russian, Chinese,
Arabic and his native Kazakh, has played a key role in Mr.
Nazarbayev’s modernization program.
The United States has done much to develop the Kazakhstani energy
potential and still has much to offer, especially in macroeconomic
policy development. The subprime credit crisis has affected not just
Kansas, but Kazakhstan too, and its construction boom has ground to a
halt.
The United States can also offer Kazakhstan support in developing
innovative educational, management training and anti-corruption
programs. Kazakhstan will also need U.S. assistance and investment to
diversify its natural resources-based economy and develop high-tech,
financial services and agriculture. Mr. Massimov is planning to sign
later this year a U.S.-Kazakhstan Public-Private Economic Partnership
with his U.S. counterparts to accomplish these and other goals.
Kazakhstan’s potential is immense. It is 4 times as big as France,
currently surpasses Kuwait in oil production, and is projected to
export 3 million barrels of oil a day by 2015, more than Iran’s
current figure. Kazakhstan also has some of the largest reserves of
uranium on the planet, and is a major exporter of grain.
U.S. companies have played a leading role in the Kazakh oil industry
since 1990s, including developing the giant oil fields of Tengiz and
Kashagan, where Chevron and Exxon respectively are major
stakeholders. Chevron recently committed to a gigantic, $900 million
environmental clean-up project, becoming Kazakhstan’s exemplary
corporate citizen.
Yet, some in the United States express concern about state
"hyperactivity" in the Kazakhstani economic sector. President
Nazarbayev announced in his Feb. 6 state-of-the-nation address, that
the state would strengthen its role as an "influential and
responsible participant" in the oil and gas business. A Jan. 14
agreement on the Kashagan oil field doubled state-owned Kazmunaigas’
share in the project to more than 16 percent.
Mr. Nazarbayev says the state also plans to review underperforming
natural resources contracts and will play a greater role in
developing heavy industry and infrastructure. True, these are more
moderate measures than resource nationalism sweeping the world from
Venezuela to Russia, but U.S. policymakers should clarify that the
private sector is always more efficient in economic development than
the state. Kazakhstan needs to remain investor-friendly and
competitive, and should not take U.S. political support and business
sector commitments for granted.
Kazakhstan has been clear that it wants to reach out to Europe and
the United States. This year, it will launch the Road to Europe
economic program, aimed at becoming more compatible with European
Union laws, standards and protocols. During his Washington visit, Mr.
Massimov and his U.S. counterparts also will discuss Kazakhstan’s
accession to the World Trade Organization by 2015 or earlier.
Kazakhstan is also reaching out to the Turkic-speaking countries.
Azerbaijan, Kazakhstan, Kyrgyzstan and Turkey recently signed a
protocol to create an inter-parliamentary assembly of Turkic-speaking
states. This assembly would seek advice from councils of elders,
called White Beards, including prominent politicians, writers,
artists and scholars. In another effort to highlight its cultural
prowess and historic Turkic roots, Kazakhstan entered the Oscars this
year with an epic film "Mongol," which tells the story of Genghis
Khan, builder of the largest empire on Earth. The film got positive
critical reviews.
Mr. Nazarbayev has proclaimed the ambitious goal of seeing Kazakhstan
ranked as one of the world’s 50 most competitive states. Meantime,
Kazakhstan remains a model of ethnic stability, where Muslims and
Christians, Turkic-speaking Kazakhs and Russian-speaking Slavs,
Germans, Jews and Koreans live in harmony.
In 2009, the country will host its third congress of global and
traditional religions, and in 2010 will chair the Organization for
Security and Cooperation in Europe, in which the United States and
Canada also take part.
Kazakhstan, which has engineers serving in Iraq and is providing
humanitarian aid to Afghanistan, is also committed to the global war
on terror. It supports moderate Islam and rejects radicals from al
Qaeda, Muslim Brotherhood and Hizb ut-Tahrir.
The United States has important interests riding on ensuring the
peace in the Caucasus and improving relations with Kazakhstan and
other Caspian states.
Ariel Cohen is senior research fellow at the Heritage Foundation.