The Trump administration’s national security strategyunveiled last year emphasized the need to rebalance U.S. alliance relationships in a competitive international environment. In the Indo-Pacific, the United States plans to retain primacy in the maritime domain through alliances with Australia, Japan, and India. On land, the U.S. needs partners in the Eurasian crossroads of Central Asia.
Kazakhstan appears to be one of the first Central Asian countries willing to be a strategic American partner, especially in the economic sphere. If restoration of economic competitiveness is to be the basis for American power, openness to American business in the twenty-first century has become as important as willingness to provide military bases was during the second half of the twentieth. Kazakhstan seems definitely open for American businesses.
The visit to Washington by Kazakh President, Nursultan Nazarbayev, last January, highlighted the “close commercial and trade ties” between Kazakhstan and the United States. After his meeting with President Trump, both countries agreed that they must focus on creating employment and accelerating economic growth. President Nazarbayev declared that “these efforts are essential for Kazakhstan to achieve its goal of joining the ranks of the top 30 global economies by 2050.”
As a former republic of the Soviet Union, Kazakhstan has faced the challenge of opening its economy and society after years of rule from Moscow. It must balance its relations with two giant neighbors, Russia and China, in addition to dealing with other Central Asian states while building Kazakh national identity.
The country’s rising economy has dampened and absorbed criticism over the state of human rights and the absence of political competition. The oil sector remains the main vehicle of economic growth but the non-oil economy is also expanding. Kazakhstan’s growth now involves considerable activity in construction, manufacturing, agriculture, transport, and trade.
U.S.-Kazakh bilateral trade in goods now stands at U.S. $ 1.9 billion and, during President Nazarbayev’s visit a number of agreements, were signed between Kazakh and American companies including Boeing, GE Transportation and Digital, and Chevron. Kazakh companies and the $67-billion strong Kazakh Samruk-Kazyna National Wealth Fund also offered to purchase American products and services to the tune of U.S.$ 2.5 billion.
One of the arrangements --a bilateral civil aviation agreement -- aimed at “encouraging affordable, convenient, and efficient services to air travelers.” Boeing and Kazakh airlines signed deals for U.S. $ 1.3 billion for purchase of Boeing airplanes both Boeing 737 MAX 8 and 787 Dreamliner that would help create 7,100 direct and indirect jobs in the United States.
Kazakhstan stands 36th out of 190 countries in the World Bank’s ‘Ease of Doing Business’ rankings and has some of the best economic indicators amongst its neighbors. In recent years, the government has undertaken reforms of the regulatory framework, public administration and public sector enterprises.
Further reforms, deemed desirable by the International Financial Institutions, would make the economy stronger. The growth potential of the non-oil economy would then be tapped further and greater emphasis laid on diversifying the economy.
At a recent conference hosted by Council on Foreign Relations (CFR), titled ‘Kazakhstan in a changing Eurasia,’ the country’s First Deputy Prime Minister, Askar Zhumagaliyev, pointed out investment opportunities for American companies in Kazakhstan. He emphasized Kazakhstan’s role as a bridge between Europe and Asia while also being part of the New Silk Road that might emerge from China’s Belt and Road Initiative.
According to Mr. Zhumagaliyev, President Nazarbayev’s vision is to digitize the country’s economy by 2022 and put in place e-governance, alongside improvements in human capital and the creation of an innovation ecosystem. Kazakh officials envisage an important role for American companies and institutions as they move to implement their plans.
Already, the United States and Kazakhstan have started working together in the field of agriculture. The U.S. has provided access to technology and helped upgrade Kazakh agricultural practices. This joint collaboration has helped Kazakhstan have abundant food supply that it can export to countries like China and others.
People-to-people relations are also increasing. Over 26,000 Kazakh citizens live in the U.S. and over 5,000 American citizens currently live in Kazakhstan. In 2015, Kazakhstan launched a short-term visa free entry program for American citizens and the U.S. issues 10-year business and tourist visas for Kazakh citizens.
Kazakhstan’s location in Central Asia makes it ideal as a country for facilitating regional trade. The 2005 Central Asia Trade and Investment Facilitation Agreement (TIFA) has become the mechanism to boost regional trade. Kazakhstan has consistently championed trade issues and regularly hosted meetings under the TIFA format.
At the last TIFA meeting in December 2017, Kazakhstan and the United States “agreed to initiate a new regional working group dedicated to the protection of intellectual property rights in support of trade and innovation.”
The Kazakhstan government has supported American South Asia strategy by “guaranteeing continuous logistical support and access to Afghanistan,” and the U.S. government acknowledges Kazakhstan’s “contributions to humanitarian efforts” in Afghanistan. Almaty is also in favor of an “an Afghan-led and Afghan-owned peace process” that would bring stability and security to Afghanistan.
Stability in Afghanistan has become an important priority for the Trump administration as well as for Kazakhstan under President Nazarbayev. Kazakhstan’s policy towards Afghanistan has been one of supporting long-term stability, economic prosperity, and integration of Afghanistan within Central Asia.
To that effect, the Kazakhs have provided “financial contributions to the Afghan security forces” as part of “fair burden sharing,” training of Afghan civilian and security personnel including Afghan women, and support for Afghan transportation infrastructure development projects. Kazakhstan allows the United States to use two of its Caspian Sea ports – Aktau and Kyurk - as transit hubs for shipping non-military material to Afghanistan.
The Kazakhstan government has also provided a $50 million scholarship program for Afghan students to study medical sciences, business management, engineering, and agriculture.
Emerging out of the former Soviet Union, and sharing a long border with Russia, Kazakhstan cannot ignore Russia as a factor in its decision-making. Astana must also weigh China’s concerns in its policy-making. At the same time, Astana has also made it clear that it would not forego the enormous benefits of a close relationship with the United States. That relationship is now progressing.
Husain Haqqani, director for South and Central Asia at the Hudson Institute in Washington, DC, was Pakistan’s ambassador to the United States from 2008-11. His latest book is Reimagining Pakistan.