28-10-2009, 10:04 AM
Interesting newish piece:
Jerusalem Center for Public Affairs
[URL="http://www.jcpa.org/JCPA/Templates/ShowPage.asp?DRIT=2&DBID=1&LNGID=1&TMID=111&FID=443&PID=0&IID=3097&TTL=Kazakhstan:_Israel%E2%80%99s_Partner_in_Eurasia"]Kazakhstan: Israel’s Partner in Eurasia
- Ariel Cohen[/URL]
![[Image: 6208349239_Big.jpg]](http://www.jcpa.org/JCPA/UpLoadFiles/PGallery/6208349239_Big.jpg)
- Israel and post-communist, resource-rich states have similar geopolitical priorities in opposing terrorism and radical Islam.
- By developing closer ties with Kazakhstan - and with Eurasian countries in general - Israel can expand its ties to the secular Muslim Turkic states and its role in the new "great game" of Eurasia: economic development fueled by exports of the region's massive natural resources.
- Israel and the countries of Eurasia are economically complimentary: Central Asian countries are rich in natural resources, and can benefit from Israeli solar, irrigation/agricultural, medical and other know-how. Israel can offer high-tech, military, and advanced agricultural technology, cutting-edge medical sciences, and educational opportunities. As always in international relations, common interests define strong ties.
- On occasion, President Nursultan Nazarbayev used his good services to appeal to Iran on behalf of missing Israeli servicemen or call on Tehran to abandon its nuclear weapons, as Kazakhstan did in 1994. Unfortunately, these appeals usually fall on deaf ears.
- With oil prices rising, Kazakhstan may have left the nadir of economic decline behind, although banking and construction sectors were hurt particularly hard.
The June 2009 visit by Israeli President Shimon Peres to Kazakhstan once again focused Israel's attention on energy-rich, secular Muslim states of the Caspian and Central Asia: Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan. This was not Peres' first visit to the steppe country in the heart of Eurasia: he visited Kazakhstan several times before as foreign minister and deputy prime minister. This was a good long-term investment: Kazakhstan is as large as the entirety of Western Europe, but with a population only 1.5 times larger than the population of the city of Moscow. It is one of the most sparsely populated countries on Earth.
Given Israel's often-problematic relations with many Muslim states around the world, these countries provide a welcome relief and a model which the Jewish state would like to encourage. Some refer to them as a bridge to the Muslim world, as secular Kazakhstan, for example, has exemplary relations, albeit no religious or ideological affinity, with Iran, Malaysia, and other Islamic countries.
On occasion, President Nursultan Nazarbayev would use his good services to appeal to Iran to provide information on missing Israeli servicemen, or call on Tehran to abandon its nuclear weapons, as Kazakhstan did in 1994. Unfortunately, so far these calls have fallen on deaf ears.1
Since 1992, Kazakhstan has hosted the Conference on Interaction and Confidence-Building Measures in Asia (CICA), the only regional organization that Israel and Iran attend together. President Nazarbayev visited Israel in 1993 and again in 2000, while top Kazakhstani officials, from Prime Minister Karim Massimov down, followed suit. Israeli officials, including Peres, Natan Sharansky, and others, have visited the capital Astana on numerous occasions.2
Most importantly, Israel and post-communist, resource-rich states have similar geopolitical priorities in opposing terrorism and radical Islam, and are economically complimentary. Fifty-two Israeli companies are already working in Kazakhstan, although Kazakh investment in Israel is still miniscule. Israel can offer Central Asians high-tech, military, and advanced agricultural technology, cutting-edge medical sciences and educational opportunities, while Central Asian countries are rich in natural resources, and can benefit from Israeli solar, irrigation and other know-how. As always in international relations, common interests define strong ties.
The New "Great Game"?3
By developing closer ties with Kazakhstan - and with Eurasia in general - Israel can expand its role in the new "great game" of Eurasia - development and export of its massive energy resources. Fully dependent on oil imports, it is Israel's priority to diversify its sources of petroleum. In addition to buying from Egypt next door, Israel is also buying oil from Azerbaijan and Kazakhstan. The latter exports most of its oil via Russia, but in the future more oil will cross the Caspian via a tanker route and eventually - possibly - via a pipeline which will bypass Moscow's control.
Geopolitical continuity. Even before the 2001 U.S. military operation in Afghanistan, competition among the global actors in the Caspian and Central Asian regions has prompted many analysts to compare the situation with the "Great Game" - a confrontation between the Russian and British empires for influence in Central Asia in the nineteenth century and early twentieth century. Then, the Russian and British Empires competed all the way from Palestine to the Himalayas. In the twenty-first century, with the addition of China and the transnational factor of radical Islam, however, even more players are competing for influence in the region.
After the collapse of the USSR in the aftermath of its defeat in Afghanistan (1979-1989), U.S. and Western influence has returned to Eurasia, to the chagrin of many in Moscow. Upon achieving independence in 1992, the New Independent States (NIS) had to take into account their own defense and economic imperatives, including the need for investment in their underdeveloped economies, as well as construction of pipelines to access energy export markets. In order to maintain the existing balance of external interests, since the 1990s Kazakhstan has chosen a path of "multi-vector" foreign policy which takes into account the interests of Russia, China, the United States, the European Union, and to a lesser extent, smaller regional players: India, Turkey, Iran, Pakistan, etc.
Over the years President Nursultan Nazarbayev, regardless of the geopolitical climate at the time, has undertaken Eurasian integration initiatives, as well as consultations with the political leadership in Moscow, Washington, and Beijing on all important projects in the oil and gas sector. This multi-vector policy course has thus far prevented any single global political player from achieving complete hegemony over Central Asia.
The following quote from an interview with Kasym-Zhomart Tokayev, the long-serving foreign minister and prime minister, and currently the Chairman of the Kazakhstani upper house, illustrates the logic of the republic's foreign policy:
Several years ago, a blunt attitude to our relationship with Russia and China prevailed in some circles of the American establishment. They framed the issue this way: "You are either with us or with them." We kept explaining that as a key Central Asian state, Kazakhstan could not afford having tense relations with its neighbors. This would not only contradict the country's long-term national interests, but could also undermine regional security and stability....For us, relations with Russia, China, and the Central Asian countries are strategically important. Another policy course is simply not possible; it would be contrary to the national interests of Kazakhstan.4
Four key powers dominate the geopolitical situation around Kazakhstan's sector of the Caspian Sea - Russia, China, the U.S., and the European Union.
The Russian Vector
When dealing with the Caspian basin and Central Asia, Israel cannot ignore the legacy of Russian and Soviet domination of the region since the mid-eighteenth century. Today, Kazakh cooperation with the Russian-dominated CIS states, and primarily with Russia, is a top priority for Astana. Nazarbayev has often said that Russia is Kazakhstan's major foreign policy partner. On July 6, 1998, the two countries signed a "Declaration of Eternal Friendship and Cooperation for the 21st Century," a unique diplomatic document.5 In 2006, Kazakhstani-Russian bilateral trade reached $13 billion6 (compared to Kazakhstan's bilateral trade with China - $8 billion in 2006, with the European Union - $2.8 billion in 2005, and with the U.S. - $1.6 billion in 2006).
Russia's phantom pains of empire. Many in the Russian post-Soviet elite, however, never fully relinquished the notion that Kazakhstan is no longer "ours" or at least that it falls within Russia's "sphere of influence" - a special relationship that the majority of Russian foreign and security policy decision-makers believe the rest of the world should recognize. In the aftermath of the Georgia War, Russian President Dmitry Medvedev said as much in his August 31, 2008, address.7 This concept is still prevalent among the military top brass, security officials, and the Kremlin administration.8 Russian officials have even stated to their U.S. counterparts that they do not object to U.S.-CIS member relations, as long as these go through Moscow. Many in the West, however, think that the path of clearly demarcated spheres of influence is an obsolete, nineteenth-century geopolitical notion.9
While Moscow considers Kazakhstan its important partner in the region, a key member in the Commonwealth Security Treaty Organization (CSTO) - the military alliance of the Commonwealth of Independent States, and of the Eurasian Economic Cooperation Organization (EurasEC) - which comprises Russia, Kazakhstan and Belarus, Russia has apparently decided not to play some of the geopolitical trump cards it holds.
The ethnic card is certainly one of those. Moscow-based experts and politicians of the more nationalist persuasion often complain that the Russian government tends to neglect the "cultural heritage" and the status of ethnic Russians and Russian-speaking minorities in the CIS in favor of economic interests. Nevertheless, Russian President Medvedev, and before him then-First Deputy Prime Minister Sergey Ivanov, announced that Moscow will protect 30 million ethnic Russians living abroad.10 Moscow has thus far refrained from attempts to destabilize Kazakhstan's internal situation by instigating tension between the large, Russian-speaking community in the country's north and the Kazakhs. Pragmatism and caution on the part of the Kazakh leadership have also been essential in maintaining good working relations with Russia.
Kazakhstan's Foreign Policy Priorities
Two important factors affected the region's politics and development in the 1990s-2000s: first, the emergence of a number of political organizations dominated by Russia. Secondly, China's appearance on the scene as a major economic and geopolitical player in Central Asia. China's 2009 $10 billion loan, partially compensated by equity in Kazakh oil fields, indicates that economically China's role is becoming greater than that of Russia.
In line with its multi-vectored foreign policy, Kazakhstan fully participates in the Moscow-dominated CIS and the Beijing-and-Moscow-backed Shanghai Cooperation Organization (SCO), and has a good working relationship with the North Atlantic Treaty Organization (NATO) through the Partnership for Peace program.
It is also an active participant in the forum of the Caspian littoral states. Kazakhstan is also preparing to assume chairmanship of the Organization for Security and Cooperation in Europe in 2010 - the first time a former Soviet country will assume such a role.
Kazakhstan has been an active advocate of political and economic integration in the post-Soviet space. While keeping a monopoly on CIS integration initiatives, Moscow is busy reconstructing economic ties with its former allies. Although the ultimate degree of success for this approach has yet to become clear, Kazakhstan's continuous diplomacy towards integration has resulted in a gradual restoration of economic ties within the CIS. The CIS summit held in Dushanbe in 2007 finally adopted, under Astana's leadership, a new development concept for the Commonwealth.11 Through these efforts, Nazarbayev earned a reputation for being the "chief CIS integrator."12
In reality, it is difficult to impossible to integrate such divergent players as Slavic Orthodox authoritarian Belarus, Muslim Turkic Azerbaijan, democratic Ukraine, harshly authoritarian Uzbekistan and oil-rich Turkmenistan. Many observers question the effectiveness of the CIS beyond serving merely as a forum of communication for the leaders of post-Soviet states.13
The Shanghai Cooperation Organization (SCO). Since 2001, the SCO has served as a platform for cooperation on border protection, regional security and defense, as well as in the economic field. After Beijing and Moscow signed a Treaty of Friendship and Cooperation in 2001, China initiated the SCO as a "joint venture" with Russia. Today it also includes the five Central Asian states, with Mongolia, Iran, India, and Pakistan holding observer status. Iran and Pakistan are formally applying for membership.
Russia agreed to allow China to increase its profile in Central Asia because, during the doldrums of the 1990s, Moscow felt it could not deal with regional security challenges alone. Prior to September 11, 2001, the U.S. demonstrated little abiding interest in the region, despite desperate calls for help from Tashkent, Moscow, or the Northern Alliance in Afghanistan. Central Asian states found themselves facing Islamist terrorist entities, such as the Islamic Movement of Uzbekistan, which had links to al-Qaeda and the Afghan Taliban.
As the level of radical Islamist propaganda and the threat of terrorist attacks were on the rise, Russia and China offered protection to Central Asian leaders, taking advantage of the insecurity of their authoritarian regimes. Both the SCO and the Russian-dominated Collective Security Treaty Organization (CSTO) developed as politico-military tools. SCO includes a Secretariat in Beijing, yearly summits for the heads of participating states, and rapid reaction forces headquartered in Bishkek, which the member-states can use to combat terrorism (or to quell domestic unrest). In the last three years, Russia and China conducted join military maneuvers in the SCO framework.
In addition to enhancing regional security, the SCO also aims at balancing U.S. influence in Central Asia. An SCO declaration signed at the fifth summit in Astana held in July 2005, calling for the U.S. to decrease its military presence in Central Asia, in particular in Uzbekistan and Kyrgyzstan, was a major political victory for China and Russia in the SCO framework. The declaration quickly came to be more than a matter of words - in October 2005, Uzbekistan evicted the U.S. air force base located in the former Soviet Karshi-Khanabad airbase. And after intensive maneuvers around the NATO air supply base at Manas International Airport in Bishkek, Kyrgyzstan, the Kyrgyz authorities allowed the U.S. to continue operating the base - crucial to the supply of U.S. and NATO troops in Afghanistan - with the acquiescence of Moscow.
In 2007, an experienced Kazakhstani diplomat, Ambassador Bolat K. Nurgaliyev, assumed the post of the first SCO Secretary General. Among other issues, SCO focuses on regional energy policies.
The August 2007 Summit of the SCO also attracted international attention due to the unprecedented maneuvers of the SCO militaries, in which Chinese troops for the first time exercised on foreign (Russian) territory. Nazarbayev attended the exercise together with China's President Hu Jintao and then-Russian President Vladimir Putin. Observers compared the strengthening of the SCO military component with the creation of the Warsaw Pact half a century ago.14 Others were more circumspect in their assessments, as the two militaries exercised separately, with no real interoperability.
Nevertheless, in the last three years, Russia has been flexing its oil-fed muscles from the Arctic to the Indian Ocean. Putin initiated a $250 billion military modernization; resumed naval patrols along the coasts of North and South America; and ordered Russian strategic bombers to resume worldwide patrols, clearly aimed at challenging American military superiority.15 He welcomed Iranian President Mahmoud Ahmadinejad to the SCO summits, including right after the bloody and contested presidential elections of June 2009, and has supported Iran's bid to join the SCO as a full member, something China may oppose. All this leaves Kazakhstan in a tight spot, engaged in a three-way balancing act between its two powerful neighbors and the world's superpower, while seeking to play a greater role in regional security arrangements.
State-Building and Economic Development
In the early 1990s, the leadership of Kazakhstan had to make some fundamental decisions concerning the political and economic foundations of the state. Kazakhstan was transitioning towards democracy, a market economy, and a foreign policy that envisaged ties not just with Russia and the CIS countries, but also with Europe, the United States, China, Iran, the Middle East and others. At the same time, the leadership was preoccupied with selecting the right development model. Its leaders examined the experiences of other independent states with similar transition paths over the last decade, primarily the countries of Eastern Europe and Southeast Asia.
State-building priorities at the time included strong national security and a gradual transition to a market economy while emphasizing interethnic tolerance and political stability. Nazarbayev pursued an "economy first, politics second" approach to the country's gradual transition from central planning to a market economy, pointing out, "the market is democracy based on rigorous financial accountability."16 The Kazakh public demonstrated its support for this thesis in a number of polls. At that time, only 4-5 percent of the population saw promoting democratic processes as a top priority, while over 60 percent primarily wanted a stable lifestyle, peace, and personal security.17
The Kazakhstani population is diverse and multiethnic. Representatives of over 130 ethnic groups and 45 religious faiths live in the country. The principal confessions in the country are Sunni Islam (47 percent), Orthodox Christianity (44 percent), and Protestantism (2 percent).18 Five hundred ethnic cultural associations, nineteen ethnic national and local newspapers, radio and TV programs, and six theaters represent these groups.19
To facilitate policy coordination with Kazakhstan's ethnic elites, Nursultan Nazarbayev initiated the creation of the Assembly of Peoples of Kazakhstan (APK) in 1992, and made it official with his March 1995 decree. The APK is a unique interethnic association that acts as a representative body of the groups and religions living in Kazakhstan. On a local level, ethnic-cultural centers (Ukrainian, Jewish, Chechen, Tatar, Uzbek, etc.) represent the APK. The Assembly holds advisory status to the president and assists in implementing the state ethnic policy. According to Kazakhstan's new election laws, the APK can nominate candidates to the Majilis (the lower house of parliament). Nazarbayev is lifetime chair of the Assembly, which strives to "form and promote the ideas of spiritual unity, and strengthen and preserve international friendship and concord."20 The APK also works to prevent the violation of ethnic minority rights, and to promote the culture and history of all of the country's ethnicities.
Kazakhstan's effective state ethnic policy has alleviated any immediate grounds for ethnic intolerance and conflicts. Nevertheless, occasional ethnically-based confrontations do occur in the densely populated southern regions, which elicit a prompt response from law enforcement.21 Recent incidents included a mass scuffle between Kazakhs and Uighurs in the Shelek district of the Almaty region in May and November 2006. Similar widespread fighting erupted between Chechens and Kazakhs in Almaty's Enbekshiqazaq district in March 2007. To reconcile interethnic tensions, the Kazakh authorities typically set up an advisory council composed of elders representing all sides to the conflict.22 The government pays serious attention to building interethnic tolerance and national cohesion in Kazakh society.
Religious pluralism. Kazakhstan's Jewish community numbers over 10,000, including 2,000 Boukhara and Mountain Jews. Most of them live in Almaty, the largest city and former capital, with small communities in Astana, Pavlodar, Karaganda and other cities. An Israeli Chabad Lubavitch rabbi, Yeshaya E. Cohen, resides in Almaty. New synagogues are being built, often through generosity of Kazakhstani Jewish entrepreneurs.
A clear policy of protecting religious rights has served as an additional stabilizing factor. Since 1991, religious communities have built two thousand mosques,23 and renovated and constructed tens of churches, temples, and synagogues. The Muslim holiday of Kurban Ait and the Orthodox Christian Christmas were made public holidays.
In September 2003, 2006, and in July 2009, sessions of the Congress of Leaders of World and Traditional Religions took place in Astana, bringing together dozens of national delegations to discuss religious freedom and tolerance, and receiving generally positive feedback in the international media and public opinion, including among American and Western European political elites. Both Israeli Chief Rabbis, Yona Metzger and Shlomo Amar, and a prominent U.S. Reform rabbi have participated.24
U.S. President George W. Bush wrote in his address to Nazarbayev, dedicated to the September 2003 Congress: "The United States firmly supports the goal of the Congress to deepen inter-confessional understanding in order to develop the freedom of faith and freedom in general. Such meetings underscore the importance of promoting such values as tolerance and respect that form the foundations of democracy."25
At the same time, the possibility of regional destabilization by radical, political Islamic elements posed risks for Kazakhstan's post-1991 transition. These groups were already active in Central Asia prior to the Soviet collapse, and their numbers went up due to the more fluid borders that independence incurred.26 To mitigate the extremist threat, the Kazakh authorities exercise close control over radical Islamic elements and the various religious sects active in the country. Between 2004 and 2005, the Supreme Court of Kazakhstan pronounced eleven extremist international organizations, including al-Qaeda, Hizb ut-Tahrir, the Taliban, and the Zhamaat (Jamaat) mujahideen of Central Asia, as terrorist groups. The Kazakh government has to date stood firm in the fight against terrorism, primarily on the ideological, political and law-enforcement fronts. As of this writing, there have been no terrorist attacks on Kazakh soil or against Kazakh citizens abroad. Kazakhstan contributes to humanitarian assistance and reconstruction missions in Afghanistan, Iraq, and Tajikistan.
With inter-religious tolerance being a widely supported state policy, and the standard of living going up, Russian and other non-Kazakh minorities are apparently feeling secure and see no immediate reason to engage in political activities that could lead to separatism and threaten the independence and stability of the Kazakh state.
Training the future elite. Israel may be interested in becoming one of the countries in which Kazakhs receive higher education. In 2006, nationwide education funding reached $2.5 billion.27 Kazakhstan is investing its oil windfall in boosting the national education system and training high-quality professional personnel overseas. The country stands out in its neighborhood for the value it places on leveraging top-quality Western education to help make the transition to a modern market economy, in place of the centrally planned Soviet model, a success.
A major overseas academic training program - the presidential Bolashak [The Future] scholarship, launched in 1993 - provides governmental stipends of up to $3,000 per year for study abroad. Many of Bolashak's students have received undergraduate and graduate degrees in the best U.S., UK, and other Western colleges and universities, and are now working back home. To avoid the risk of brain drain because of graduates remaining overseas, families of grantees are obliged to pledge property to the government to guarantee that their scholars will return to Kazakhstan for a minimum of five years' employment. The goal is to prepare a bright generation of professional leaders "to transform Kazakhstan into a competitive, world class economy," say education ministry officials.28
The best and brightest alumni occupy positions of high authority, including deputy ministerial posts. The scope of the Bolashak program has broadened to include more than 60 academic disciplines, while funding has increased greatly in recent years and topped $96.5 million in 2007.29 Large Kazakh companies satisfy the demand for skilled professionals by funding overseas business education for their employees
Kazakhstan also recognizes the value of access to the World Wide Web. According to the International Telecommunication Union (ITU) - the United Nations agency for information and communication technologies, the number of Internet users in Kazakhstan has reached 1.25 million people (or over 8 percent of the country's total population).30 Eighty-two percent of Kazakhstani secondary schools have Internet connections. Unfortunately, a recent Internet law includes restrictive clauses that triggered criticism by pro-democracy NGOs and Western governments.
In order to give further impetus to the economy, the government has invested in developing Kazakhstan's homegrown business education capacity. The country's two leading colleges - the Kazakhstan Institute of Management, Economics and Forecasting (KIMEP) and Kazakh-British Technical University (KBTU) - specialize in economics and business. Leading British universities supported the establishment of KBTU with an eye toward training experts for the oil and gas industry.
However, there were reports recently of an ideological "tightening" in KIMEP, with some Western professors having been let go. Kazakhstan will do well if it recognizes that modern economic development goes with political pluralism and development of democratic institutions.
The Global Liquidity Crisis Hits Kazakhstan
The current economic crisis has affected Kazakhstan profoundly. As energy windfall revenues started to spread through the economy, the expansion of the middle class and businesses drove the demand for credit. Kazakhstan's banks became heavy international borrowers and, in the process, exposed themselves to the global financial market credit crunch of 2007-2008.
According to the IMF, the current recession will create a 2 percent decline in Kazakhstan's GDP in 2009. This is "a total reversal" from the robust GDP growth of 9.6 percent from 2003-2007, yet a better performance than neighboring Russia. To fight the recession, Astana has enacted a bank rescue and stimulus plan valued at around $19 billion (roughly 16 percent of Kazakhstan's projected 2009 GDP). The stimulus package will lead Kazakhstan's budget deficit to grow to 3.6 percent in 2009.31
The low domestic deposit base and low public confidence in the banking sector led Kazakh financial institutions to rely on external borrowing to raise funds for credit. Borrowing on the international capital markets helped Kazakhstan's banks double their assets in 2005 and again in 2006, leading to an overall ten-fold growth in assets since 2002, reaching $94.7 billion as of November 1, 2007.32 About one-third of these assets came from foreign banks, making the external liabilities of the Kazakh lending institutions high.33 Despite efforts by the National Bank of Kazakhstan to regulate the borrowing of the country's commercial banks, the external debt of the sector doubled annually since 2002. By the end of June 2007, it stood at $45.9 billion (around 45 percent of the GDP), up from $33 billion in the beginning of 2007.34 Amid this credit boom, analysts began expressing concerns that the banks' lending decisions, at times, may not have been wise.
The growth in wholesale borrowing by the banks and spectacular consumer and business lending showed no signs of slowing until the global subprime crisis hit in the second half of 2007. Analysts announced that "the level of indebtedness and its rapid expansion were not healthy."35 Excessive reliance on borrowed funds left the banks vulnerable when investors began restructuring their portfolios by selling what they considered to be the most risky assets.
By early 2009, however, the government was forced to bail out a sector saddled with over $50 billion in foreign debt, with President Nursultan Nazarbayev ordering the country's sovereign wealth fund, Samruk-Kazyna, to step in to prevent a collapse by taking over equity.36 Yet, BTA, the largest bank in the country, and Alliance Bank, the fourth largest, defaulted on their debt.
The Economist Intelligence Unit projected that if the stabilization plan now in place succeeds, the banking sector will slow down credit growth and move towards more sustainable lending policies, having only moderate effects on long-term economic growth.37 At the same time, continued investor wariness concerning Kazakh banks and the spillover effect into other economic sectors may pose severe risks in the near and medium term.
Gulnur Rakhmatulina, Senior Fellow at Kazakhstan's Institute for Strategic Studies, said in an interview to Kazinform that "it is essential for Kazakhstan's banking system to provide more funding to the real sectors of the economy so that we earn money by expanding our export capacity" and protect the country from overexposure to international financial crises.38
Yet, the worst may be over. The Kazakh economy is entering a recovery period, Bakhyt Sultanov, the Minister of Economy and Budget Planning, said at a government meeting on Aug. 18. "We can say with confidence that the decline in the Kazakh economy reached its lowest in the first half of 2009 and its trajectory is entering a recovery stage," said Sultanov.
The minister said that stabilization demonstrated itself in the industrial sector. The decline in production was 7.4 percent in March 2009 y-o-y, but in June 2009 there was a 7-percent growth. Agriculture is another sector which exhibits growth.39
Conclusion
Israel has a partner to appeal to the Caspian and Central Asian secular Turkic states. In a way, Israel went through - and is still going through - the excruciating nation-building process these countries are undergoing only 18 years after independence - think of Israel circa 1966.
While close to the United States, Israel has its own interests and expertise sets that are attractive to the New Independent States in the areas of security, technology, agriculture, science and education. New Independent States, including Kazakhstan, are looking to diversify their geopolitical partnerships, to get away from the bear hug of Russia, the dragon breath of China, or often-problematic relations with the United States.
Moreover, Israel is uniquely positioned with many immigrants who have ties to the Jewish communities, elites, and businesses in their former countries of origin. These are strategic assets that would be wasted if not used.
A partnership with Kazakhstan is particularly attractive for the Jewish state due to its policy of ethno-religious tolerance, vast natural resources, including energy, and closeness to Russian, Chinese, and Central Asian markets. Yet practitioners need to be aware of both widespread corruption, albeit recognized and regularly decried by President Nazarbayev and other high-level officials, and internal challenges to political stability inherent in the authoritarian political system.
Overall, there is a massive potential for security, economic, scientific, and educational cooperation which is most likely to grow in the years and decades ahead.
* * *
Notes
1. Michael J. Jordan, "Kazakhstan seen as bridge to Muslim world," JTA, December 18, 2008, http://jta.org/news/article/2008/12/18/1...slim-world.
2. "About Kazakhstan-Israeli relations," http://www.kazakhemb.org.il/?CategoryID=...icleID=163.
3. Some of the analysis presented here was first published in Ariel Cohen, Kazakhstan: The Road to Independence: Energy Policy and the Birth of a Nation (Central Asia Caucasus Institute, SAIS. Johns Hopkins, 2008).
4. Kasym-Zhomart Tokayev, "Vektory politiki i sosedstva" [Politics and Neighborhood Vectors], interview with Novoe Pokolenie, December 29, 2006, at http://www.np.kz/.
5. "Declaration on Eternal Friendship and Cooperation Oriented to the 21st Century," July 6, 1998, at http://cfo.allbusiness.ru/BPravo/DocumSh...umID=75130.
6. Zhanseit Tuymebayev, "Otechestvennyy biznes za gody nezavisimosti respubliki investiroval v rossiyskuyu ekonomiku $8 mlrd - posol Kazakhstanа v RF" [Over the years of the republic's independence, domestic businesses invested $8b in the Russian economy - the Ambassador of Kazakhstan to the RF], Trend.az, December 29, 2006, at http://www.trend.az/?mod=shownews&news=105013.
7. Interview given by Dmitry Medvedev to TV Channels Channel One, Rossiya, NTV, http://www.kremlin.ru/eng/speeches/2008/...6003.shtml.
8. Numerous interviews by author with senior Russian officials, intellectuals, experts, and journalists, Moscow, 1992-2005.
9. Interviews by the author, U.S. State Department officials, 2006-2007, Washington, D.C.
10. David J. Smith, "Medvedev's Message," http://www.acus.org/new_atlanticist/medvedevs-message; Ivanov: "Rossiya pomnit o sootechestvennikakh" [Russia Remembers About its Compatriots], Radio Mayak, June 14, 2008, at http://www.radiomayak.ru/doc.html?id=80273&cid=44.
11. "The CIS Summit Has Adopted the Development Concept," Prime-Tass.
12. Arkadiy Dubnov, "Nursultan Nazarbayev uzhe vtoroy desyatok let neustanno podtverzhdaet imidzh glavnogo integratora na postsovetskom prostranstve" [For Over a Decade, Nursultan Nazarbayev Tirelessly Confirms the Image of the Chief Integrator in the Post-Soviet Space], Fergana.ru, February 22, 2005, at http://www.ferghana.ru/article.php?id=3485.
13. "CIS: Heads of State Order Overhaul of Commonwealth," Radio Free Europe/Radio Liberty, November 28, 2006, at http://www.rferl.org/featuresarticle/200...14453.html.
14. Ariel Cohen, "Kazakh Vote: A Step Forward," Washington Times, August 21, 2007, at http://www.washingtontimes.com.
15. Ariel Cohen, "Russia's Deja Vu Parade," Washington Times, February 15, 2008, at http://www.washingtontimes.com/article/2...18475/1012.
16. Nursultan Nazarbayev, Annual Address to the People of Kazakhstan, October 1997, at http://www.akorda.kz/www/www_akorda_kz.n...84&lang=en.
17. Nursultan Nazarbayev, "Na poroge 21-go veka" [On the verge of the 21st century], Oner, Almaty, 1996.
18. U.S. Department of State, Bureau of South and Central Asian Affairs, "Background Note: Kazakhstan," February 2007, at http://www.state.gov/r/pa/ei/bgn/5487.htm.
19. Nursultan Nazarbayev, Address at the XII Session of the Assembly of Nations of Kazakhstan, October 24, 2006, at http://www.assembly.kz/eng/index.shtml.
20. "Regulations on the Assembly of Peoples of Kazakhstan," Approved by Republic of Kazakhstan Presidential Decree No. 856, April 26, 2002, at http://www.akorda.kz.
21. Kenesary Kaptagayev, "Chilikskiye sobytiya - glazami kazakhskix natsionalistov" [Chiliksk Events - through the Eyes of Kazakh Nationalists], Megapolis, December 25, 2006, at http://www.megapolis.kz/?np_id=72&sct_id=14.
22. Marat Yermukanov, "Officials Dismiss Clashes Between Kazakh and Chechen Youth as Hooliganism," Jamestown Foundation, Eurasia Daily Monitor, March 23, 2007, at http://www.jamestown.org/edm/article.php...id=2372045.
23. Nursultan Nazarbayev, Address at the Third World Kazakh Round-Table, Astana, September 29, 2005, at http://www.akorda.kz/www/www_akorda_kz.n...2&L2=L2-15.
24. Congress of World and Traditional Religions, http://www.religions-congress.org/conten...g,english/.
25. Assembly of the Peoples of Kazakhstan, "Who is Who in the Assembly of the Peoples of Kazakhstan," Volume 1, at http://www.assembly.kz/vzglyadsostoroni....1526148056.
26. Olcott, "Pipelines and Pipe Dreams."
27. Nazarbayev, Address at the ceremonial meeting dedicated to the 15th Anniversary of Kazakhstan's independence.
28. Isabel Gorst, "In pursuit of a professional elite education," Financial Times, June 27, 2007, http://www.ft.com/cms/s/2/b06f283c-2334-...10621.html.
29. Ibid.
30. "Kazakhstan: Internet Usage Statistics," http://www.internetworldstats.com/asia/kz.htm.
31. "The Recession in Kazakhstan," Stratfor, http://www.stratfor.com/analysis/2009061...kazakhstan.
32. Ben Aris, "Banking: A Breakneck Pace of Expansion," Financial Times, June 27, 2007, at http://www.ft.com/cms/s/2/af03befe-2334-...0621.html; and Elliot Blair Smith, "Kazakhstan's Bank Lending Frozen in Subprime Squeeze," Bloomberg, December 21, 2007, at http://www.bloomberg.com/apps/news?pid=2...ast_europe.
33. Asian Development Bank (ADB), "Kazakhstan: Country Strategy."
34. Economist Intelligence Unit, "Kazakhstan: Country Report."
35. Aris, "Banking: A Breakneck Pace of Expansion."
36. Kazakhstan's Banking Sector - #1 Alliance Bank, http://crisiscrunch.pbndc.com/?p=1099.
37. Economist Intelligence Unit, "Kazakhstan: Country Report."
38. "Kazakhstan's Own Economic Development Model Has Been Formed Over 17 years," Kazinform, October 25, 2007 (Russian), at http://www.kazinform.kz.
39. K. Konyrova, "Kazakh economy enters recovery stage: minister," http://en.trend.az/capital/macro/1524040.html.
* * *
Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security at the Davis Institute at the Heritage Foundation and the author of Kazakhstan: The Road to Independence: Energy Policy and the Birth of a Nation (Central Asia-Caucasus Institute, SAIS, Johns Hopkins, 2008).
Jerusalem Center for Public Affairs
[URL="http://www.jcpa.org/JCPA/Templates/ShowPage.asp?DRIT=2&DBID=1&LNGID=1&TMID=111&FID=443&PID=0&IID=3097&TTL=Kazakhstan:_Israel%E2%80%99s_Partner_in_Eurasia"]Kazakhstan: Israel’s Partner in Eurasia
- Ariel Cohen[/URL]
- Israel and post-communist, resource-rich states have similar geopolitical priorities in opposing terrorism and radical Islam.
- By developing closer ties with Kazakhstan - and with Eurasian countries in general - Israel can expand its ties to the secular Muslim Turkic states and its role in the new "great game" of Eurasia: economic development fueled by exports of the region's massive natural resources.
- Israel and the countries of Eurasia are economically complimentary: Central Asian countries are rich in natural resources, and can benefit from Israeli solar, irrigation/agricultural, medical and other know-how. Israel can offer high-tech, military, and advanced agricultural technology, cutting-edge medical sciences, and educational opportunities. As always in international relations, common interests define strong ties.
- On occasion, President Nursultan Nazarbayev used his good services to appeal to Iran on behalf of missing Israeli servicemen or call on Tehran to abandon its nuclear weapons, as Kazakhstan did in 1994. Unfortunately, these appeals usually fall on deaf ears.
- With oil prices rising, Kazakhstan may have left the nadir of economic decline behind, although banking and construction sectors were hurt particularly hard.
The June 2009 visit by Israeli President Shimon Peres to Kazakhstan once again focused Israel's attention on energy-rich, secular Muslim states of the Caspian and Central Asia: Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan. This was not Peres' first visit to the steppe country in the heart of Eurasia: he visited Kazakhstan several times before as foreign minister and deputy prime minister. This was a good long-term investment: Kazakhstan is as large as the entirety of Western Europe, but with a population only 1.5 times larger than the population of the city of Moscow. It is one of the most sparsely populated countries on Earth.
Given Israel's often-problematic relations with many Muslim states around the world, these countries provide a welcome relief and a model which the Jewish state would like to encourage. Some refer to them as a bridge to the Muslim world, as secular Kazakhstan, for example, has exemplary relations, albeit no religious or ideological affinity, with Iran, Malaysia, and other Islamic countries.
On occasion, President Nursultan Nazarbayev would use his good services to appeal to Iran to provide information on missing Israeli servicemen, or call on Tehran to abandon its nuclear weapons, as Kazakhstan did in 1994. Unfortunately, so far these calls have fallen on deaf ears.1
Since 1992, Kazakhstan has hosted the Conference on Interaction and Confidence-Building Measures in Asia (CICA), the only regional organization that Israel and Iran attend together. President Nazarbayev visited Israel in 1993 and again in 2000, while top Kazakhstani officials, from Prime Minister Karim Massimov down, followed suit. Israeli officials, including Peres, Natan Sharansky, and others, have visited the capital Astana on numerous occasions.2
Most importantly, Israel and post-communist, resource-rich states have similar geopolitical priorities in opposing terrorism and radical Islam, and are economically complimentary. Fifty-two Israeli companies are already working in Kazakhstan, although Kazakh investment in Israel is still miniscule. Israel can offer Central Asians high-tech, military, and advanced agricultural technology, cutting-edge medical sciences and educational opportunities, while Central Asian countries are rich in natural resources, and can benefit from Israeli solar, irrigation and other know-how. As always in international relations, common interests define strong ties.
The New "Great Game"?3
By developing closer ties with Kazakhstan - and with Eurasia in general - Israel can expand its role in the new "great game" of Eurasia - development and export of its massive energy resources. Fully dependent on oil imports, it is Israel's priority to diversify its sources of petroleum. In addition to buying from Egypt next door, Israel is also buying oil from Azerbaijan and Kazakhstan. The latter exports most of its oil via Russia, but in the future more oil will cross the Caspian via a tanker route and eventually - possibly - via a pipeline which will bypass Moscow's control.
Geopolitical continuity. Even before the 2001 U.S. military operation in Afghanistan, competition among the global actors in the Caspian and Central Asian regions has prompted many analysts to compare the situation with the "Great Game" - a confrontation between the Russian and British empires for influence in Central Asia in the nineteenth century and early twentieth century. Then, the Russian and British Empires competed all the way from Palestine to the Himalayas. In the twenty-first century, with the addition of China and the transnational factor of radical Islam, however, even more players are competing for influence in the region.
After the collapse of the USSR in the aftermath of its defeat in Afghanistan (1979-1989), U.S. and Western influence has returned to Eurasia, to the chagrin of many in Moscow. Upon achieving independence in 1992, the New Independent States (NIS) had to take into account their own defense and economic imperatives, including the need for investment in their underdeveloped economies, as well as construction of pipelines to access energy export markets. In order to maintain the existing balance of external interests, since the 1990s Kazakhstan has chosen a path of "multi-vector" foreign policy which takes into account the interests of Russia, China, the United States, the European Union, and to a lesser extent, smaller regional players: India, Turkey, Iran, Pakistan, etc.
Over the years President Nursultan Nazarbayev, regardless of the geopolitical climate at the time, has undertaken Eurasian integration initiatives, as well as consultations with the political leadership in Moscow, Washington, and Beijing on all important projects in the oil and gas sector. This multi-vector policy course has thus far prevented any single global political player from achieving complete hegemony over Central Asia.
The following quote from an interview with Kasym-Zhomart Tokayev, the long-serving foreign minister and prime minister, and currently the Chairman of the Kazakhstani upper house, illustrates the logic of the republic's foreign policy:
Several years ago, a blunt attitude to our relationship with Russia and China prevailed in some circles of the American establishment. They framed the issue this way: "You are either with us or with them." We kept explaining that as a key Central Asian state, Kazakhstan could not afford having tense relations with its neighbors. This would not only contradict the country's long-term national interests, but could also undermine regional security and stability....For us, relations with Russia, China, and the Central Asian countries are strategically important. Another policy course is simply not possible; it would be contrary to the national interests of Kazakhstan.4
Four key powers dominate the geopolitical situation around Kazakhstan's sector of the Caspian Sea - Russia, China, the U.S., and the European Union.
The Russian Vector
When dealing with the Caspian basin and Central Asia, Israel cannot ignore the legacy of Russian and Soviet domination of the region since the mid-eighteenth century. Today, Kazakh cooperation with the Russian-dominated CIS states, and primarily with Russia, is a top priority for Astana. Nazarbayev has often said that Russia is Kazakhstan's major foreign policy partner. On July 6, 1998, the two countries signed a "Declaration of Eternal Friendship and Cooperation for the 21st Century," a unique diplomatic document.5 In 2006, Kazakhstani-Russian bilateral trade reached $13 billion6 (compared to Kazakhstan's bilateral trade with China - $8 billion in 2006, with the European Union - $2.8 billion in 2005, and with the U.S. - $1.6 billion in 2006).
Russia's phantom pains of empire. Many in the Russian post-Soviet elite, however, never fully relinquished the notion that Kazakhstan is no longer "ours" or at least that it falls within Russia's "sphere of influence" - a special relationship that the majority of Russian foreign and security policy decision-makers believe the rest of the world should recognize. In the aftermath of the Georgia War, Russian President Dmitry Medvedev said as much in his August 31, 2008, address.7 This concept is still prevalent among the military top brass, security officials, and the Kremlin administration.8 Russian officials have even stated to their U.S. counterparts that they do not object to U.S.-CIS member relations, as long as these go through Moscow. Many in the West, however, think that the path of clearly demarcated spheres of influence is an obsolete, nineteenth-century geopolitical notion.9
While Moscow considers Kazakhstan its important partner in the region, a key member in the Commonwealth Security Treaty Organization (CSTO) - the military alliance of the Commonwealth of Independent States, and of the Eurasian Economic Cooperation Organization (EurasEC) - which comprises Russia, Kazakhstan and Belarus, Russia has apparently decided not to play some of the geopolitical trump cards it holds.
The ethnic card is certainly one of those. Moscow-based experts and politicians of the more nationalist persuasion often complain that the Russian government tends to neglect the "cultural heritage" and the status of ethnic Russians and Russian-speaking minorities in the CIS in favor of economic interests. Nevertheless, Russian President Medvedev, and before him then-First Deputy Prime Minister Sergey Ivanov, announced that Moscow will protect 30 million ethnic Russians living abroad.10 Moscow has thus far refrained from attempts to destabilize Kazakhstan's internal situation by instigating tension between the large, Russian-speaking community in the country's north and the Kazakhs. Pragmatism and caution on the part of the Kazakh leadership have also been essential in maintaining good working relations with Russia.
Kazakhstan's Foreign Policy Priorities
Two important factors affected the region's politics and development in the 1990s-2000s: first, the emergence of a number of political organizations dominated by Russia. Secondly, China's appearance on the scene as a major economic and geopolitical player in Central Asia. China's 2009 $10 billion loan, partially compensated by equity in Kazakh oil fields, indicates that economically China's role is becoming greater than that of Russia.
In line with its multi-vectored foreign policy, Kazakhstan fully participates in the Moscow-dominated CIS and the Beijing-and-Moscow-backed Shanghai Cooperation Organization (SCO), and has a good working relationship with the North Atlantic Treaty Organization (NATO) through the Partnership for Peace program.
It is also an active participant in the forum of the Caspian littoral states. Kazakhstan is also preparing to assume chairmanship of the Organization for Security and Cooperation in Europe in 2010 - the first time a former Soviet country will assume such a role.
Kazakhstan has been an active advocate of political and economic integration in the post-Soviet space. While keeping a monopoly on CIS integration initiatives, Moscow is busy reconstructing economic ties with its former allies. Although the ultimate degree of success for this approach has yet to become clear, Kazakhstan's continuous diplomacy towards integration has resulted in a gradual restoration of economic ties within the CIS. The CIS summit held in Dushanbe in 2007 finally adopted, under Astana's leadership, a new development concept for the Commonwealth.11 Through these efforts, Nazarbayev earned a reputation for being the "chief CIS integrator."12
In reality, it is difficult to impossible to integrate such divergent players as Slavic Orthodox authoritarian Belarus, Muslim Turkic Azerbaijan, democratic Ukraine, harshly authoritarian Uzbekistan and oil-rich Turkmenistan. Many observers question the effectiveness of the CIS beyond serving merely as a forum of communication for the leaders of post-Soviet states.13
The Shanghai Cooperation Organization (SCO). Since 2001, the SCO has served as a platform for cooperation on border protection, regional security and defense, as well as in the economic field. After Beijing and Moscow signed a Treaty of Friendship and Cooperation in 2001, China initiated the SCO as a "joint venture" with Russia. Today it also includes the five Central Asian states, with Mongolia, Iran, India, and Pakistan holding observer status. Iran and Pakistan are formally applying for membership.
Russia agreed to allow China to increase its profile in Central Asia because, during the doldrums of the 1990s, Moscow felt it could not deal with regional security challenges alone. Prior to September 11, 2001, the U.S. demonstrated little abiding interest in the region, despite desperate calls for help from Tashkent, Moscow, or the Northern Alliance in Afghanistan. Central Asian states found themselves facing Islamist terrorist entities, such as the Islamic Movement of Uzbekistan, which had links to al-Qaeda and the Afghan Taliban.
As the level of radical Islamist propaganda and the threat of terrorist attacks were on the rise, Russia and China offered protection to Central Asian leaders, taking advantage of the insecurity of their authoritarian regimes. Both the SCO and the Russian-dominated Collective Security Treaty Organization (CSTO) developed as politico-military tools. SCO includes a Secretariat in Beijing, yearly summits for the heads of participating states, and rapid reaction forces headquartered in Bishkek, which the member-states can use to combat terrorism (or to quell domestic unrest). In the last three years, Russia and China conducted join military maneuvers in the SCO framework.
In addition to enhancing regional security, the SCO also aims at balancing U.S. influence in Central Asia. An SCO declaration signed at the fifth summit in Astana held in July 2005, calling for the U.S. to decrease its military presence in Central Asia, in particular in Uzbekistan and Kyrgyzstan, was a major political victory for China and Russia in the SCO framework. The declaration quickly came to be more than a matter of words - in October 2005, Uzbekistan evicted the U.S. air force base located in the former Soviet Karshi-Khanabad airbase. And after intensive maneuvers around the NATO air supply base at Manas International Airport in Bishkek, Kyrgyzstan, the Kyrgyz authorities allowed the U.S. to continue operating the base - crucial to the supply of U.S. and NATO troops in Afghanistan - with the acquiescence of Moscow.
In 2007, an experienced Kazakhstani diplomat, Ambassador Bolat K. Nurgaliyev, assumed the post of the first SCO Secretary General. Among other issues, SCO focuses on regional energy policies.
The August 2007 Summit of the SCO also attracted international attention due to the unprecedented maneuvers of the SCO militaries, in which Chinese troops for the first time exercised on foreign (Russian) territory. Nazarbayev attended the exercise together with China's President Hu Jintao and then-Russian President Vladimir Putin. Observers compared the strengthening of the SCO military component with the creation of the Warsaw Pact half a century ago.14 Others were more circumspect in their assessments, as the two militaries exercised separately, with no real interoperability.
Nevertheless, in the last three years, Russia has been flexing its oil-fed muscles from the Arctic to the Indian Ocean. Putin initiated a $250 billion military modernization; resumed naval patrols along the coasts of North and South America; and ordered Russian strategic bombers to resume worldwide patrols, clearly aimed at challenging American military superiority.15 He welcomed Iranian President Mahmoud Ahmadinejad to the SCO summits, including right after the bloody and contested presidential elections of June 2009, and has supported Iran's bid to join the SCO as a full member, something China may oppose. All this leaves Kazakhstan in a tight spot, engaged in a three-way balancing act between its two powerful neighbors and the world's superpower, while seeking to play a greater role in regional security arrangements.
State-Building and Economic Development
In the early 1990s, the leadership of Kazakhstan had to make some fundamental decisions concerning the political and economic foundations of the state. Kazakhstan was transitioning towards democracy, a market economy, and a foreign policy that envisaged ties not just with Russia and the CIS countries, but also with Europe, the United States, China, Iran, the Middle East and others. At the same time, the leadership was preoccupied with selecting the right development model. Its leaders examined the experiences of other independent states with similar transition paths over the last decade, primarily the countries of Eastern Europe and Southeast Asia.
State-building priorities at the time included strong national security and a gradual transition to a market economy while emphasizing interethnic tolerance and political stability. Nazarbayev pursued an "economy first, politics second" approach to the country's gradual transition from central planning to a market economy, pointing out, "the market is democracy based on rigorous financial accountability."16 The Kazakh public demonstrated its support for this thesis in a number of polls. At that time, only 4-5 percent of the population saw promoting democratic processes as a top priority, while over 60 percent primarily wanted a stable lifestyle, peace, and personal security.17
The Kazakhstani population is diverse and multiethnic. Representatives of over 130 ethnic groups and 45 religious faiths live in the country. The principal confessions in the country are Sunni Islam (47 percent), Orthodox Christianity (44 percent), and Protestantism (2 percent).18 Five hundred ethnic cultural associations, nineteen ethnic national and local newspapers, radio and TV programs, and six theaters represent these groups.19
To facilitate policy coordination with Kazakhstan's ethnic elites, Nursultan Nazarbayev initiated the creation of the Assembly of Peoples of Kazakhstan (APK) in 1992, and made it official with his March 1995 decree. The APK is a unique interethnic association that acts as a representative body of the groups and religions living in Kazakhstan. On a local level, ethnic-cultural centers (Ukrainian, Jewish, Chechen, Tatar, Uzbek, etc.) represent the APK. The Assembly holds advisory status to the president and assists in implementing the state ethnic policy. According to Kazakhstan's new election laws, the APK can nominate candidates to the Majilis (the lower house of parliament). Nazarbayev is lifetime chair of the Assembly, which strives to "form and promote the ideas of spiritual unity, and strengthen and preserve international friendship and concord."20 The APK also works to prevent the violation of ethnic minority rights, and to promote the culture and history of all of the country's ethnicities.
Kazakhstan's effective state ethnic policy has alleviated any immediate grounds for ethnic intolerance and conflicts. Nevertheless, occasional ethnically-based confrontations do occur in the densely populated southern regions, which elicit a prompt response from law enforcement.21 Recent incidents included a mass scuffle between Kazakhs and Uighurs in the Shelek district of the Almaty region in May and November 2006. Similar widespread fighting erupted between Chechens and Kazakhs in Almaty's Enbekshiqazaq district in March 2007. To reconcile interethnic tensions, the Kazakh authorities typically set up an advisory council composed of elders representing all sides to the conflict.22 The government pays serious attention to building interethnic tolerance and national cohesion in Kazakh society.
Religious pluralism. Kazakhstan's Jewish community numbers over 10,000, including 2,000 Boukhara and Mountain Jews. Most of them live in Almaty, the largest city and former capital, with small communities in Astana, Pavlodar, Karaganda and other cities. An Israeli Chabad Lubavitch rabbi, Yeshaya E. Cohen, resides in Almaty. New synagogues are being built, often through generosity of Kazakhstani Jewish entrepreneurs.
A clear policy of protecting religious rights has served as an additional stabilizing factor. Since 1991, religious communities have built two thousand mosques,23 and renovated and constructed tens of churches, temples, and synagogues. The Muslim holiday of Kurban Ait and the Orthodox Christian Christmas were made public holidays.
In September 2003, 2006, and in July 2009, sessions of the Congress of Leaders of World and Traditional Religions took place in Astana, bringing together dozens of national delegations to discuss religious freedom and tolerance, and receiving generally positive feedback in the international media and public opinion, including among American and Western European political elites. Both Israeli Chief Rabbis, Yona Metzger and Shlomo Amar, and a prominent U.S. Reform rabbi have participated.24
U.S. President George W. Bush wrote in his address to Nazarbayev, dedicated to the September 2003 Congress: "The United States firmly supports the goal of the Congress to deepen inter-confessional understanding in order to develop the freedom of faith and freedom in general. Such meetings underscore the importance of promoting such values as tolerance and respect that form the foundations of democracy."25
At the same time, the possibility of regional destabilization by radical, political Islamic elements posed risks for Kazakhstan's post-1991 transition. These groups were already active in Central Asia prior to the Soviet collapse, and their numbers went up due to the more fluid borders that independence incurred.26 To mitigate the extremist threat, the Kazakh authorities exercise close control over radical Islamic elements and the various religious sects active in the country. Between 2004 and 2005, the Supreme Court of Kazakhstan pronounced eleven extremist international organizations, including al-Qaeda, Hizb ut-Tahrir, the Taliban, and the Zhamaat (Jamaat) mujahideen of Central Asia, as terrorist groups. The Kazakh government has to date stood firm in the fight against terrorism, primarily on the ideological, political and law-enforcement fronts. As of this writing, there have been no terrorist attacks on Kazakh soil or against Kazakh citizens abroad. Kazakhstan contributes to humanitarian assistance and reconstruction missions in Afghanistan, Iraq, and Tajikistan.
With inter-religious tolerance being a widely supported state policy, and the standard of living going up, Russian and other non-Kazakh minorities are apparently feeling secure and see no immediate reason to engage in political activities that could lead to separatism and threaten the independence and stability of the Kazakh state.
Training the future elite. Israel may be interested in becoming one of the countries in which Kazakhs receive higher education. In 2006, nationwide education funding reached $2.5 billion.27 Kazakhstan is investing its oil windfall in boosting the national education system and training high-quality professional personnel overseas. The country stands out in its neighborhood for the value it places on leveraging top-quality Western education to help make the transition to a modern market economy, in place of the centrally planned Soviet model, a success.
A major overseas academic training program - the presidential Bolashak [The Future] scholarship, launched in 1993 - provides governmental stipends of up to $3,000 per year for study abroad. Many of Bolashak's students have received undergraduate and graduate degrees in the best U.S., UK, and other Western colleges and universities, and are now working back home. To avoid the risk of brain drain because of graduates remaining overseas, families of grantees are obliged to pledge property to the government to guarantee that their scholars will return to Kazakhstan for a minimum of five years' employment. The goal is to prepare a bright generation of professional leaders "to transform Kazakhstan into a competitive, world class economy," say education ministry officials.28
The best and brightest alumni occupy positions of high authority, including deputy ministerial posts. The scope of the Bolashak program has broadened to include more than 60 academic disciplines, while funding has increased greatly in recent years and topped $96.5 million in 2007.29 Large Kazakh companies satisfy the demand for skilled professionals by funding overseas business education for their employees
Kazakhstan also recognizes the value of access to the World Wide Web. According to the International Telecommunication Union (ITU) - the United Nations agency for information and communication technologies, the number of Internet users in Kazakhstan has reached 1.25 million people (or over 8 percent of the country's total population).30 Eighty-two percent of Kazakhstani secondary schools have Internet connections. Unfortunately, a recent Internet law includes restrictive clauses that triggered criticism by pro-democracy NGOs and Western governments.
In order to give further impetus to the economy, the government has invested in developing Kazakhstan's homegrown business education capacity. The country's two leading colleges - the Kazakhstan Institute of Management, Economics and Forecasting (KIMEP) and Kazakh-British Technical University (KBTU) - specialize in economics and business. Leading British universities supported the establishment of KBTU with an eye toward training experts for the oil and gas industry.
However, there were reports recently of an ideological "tightening" in KIMEP, with some Western professors having been let go. Kazakhstan will do well if it recognizes that modern economic development goes with political pluralism and development of democratic institutions.
The Global Liquidity Crisis Hits Kazakhstan
The current economic crisis has affected Kazakhstan profoundly. As energy windfall revenues started to spread through the economy, the expansion of the middle class and businesses drove the demand for credit. Kazakhstan's banks became heavy international borrowers and, in the process, exposed themselves to the global financial market credit crunch of 2007-2008.
According to the IMF, the current recession will create a 2 percent decline in Kazakhstan's GDP in 2009. This is "a total reversal" from the robust GDP growth of 9.6 percent from 2003-2007, yet a better performance than neighboring Russia. To fight the recession, Astana has enacted a bank rescue and stimulus plan valued at around $19 billion (roughly 16 percent of Kazakhstan's projected 2009 GDP). The stimulus package will lead Kazakhstan's budget deficit to grow to 3.6 percent in 2009.31
The low domestic deposit base and low public confidence in the banking sector led Kazakh financial institutions to rely on external borrowing to raise funds for credit. Borrowing on the international capital markets helped Kazakhstan's banks double their assets in 2005 and again in 2006, leading to an overall ten-fold growth in assets since 2002, reaching $94.7 billion as of November 1, 2007.32 About one-third of these assets came from foreign banks, making the external liabilities of the Kazakh lending institutions high.33 Despite efforts by the National Bank of Kazakhstan to regulate the borrowing of the country's commercial banks, the external debt of the sector doubled annually since 2002. By the end of June 2007, it stood at $45.9 billion (around 45 percent of the GDP), up from $33 billion in the beginning of 2007.34 Amid this credit boom, analysts began expressing concerns that the banks' lending decisions, at times, may not have been wise.
The growth in wholesale borrowing by the banks and spectacular consumer and business lending showed no signs of slowing until the global subprime crisis hit in the second half of 2007. Analysts announced that "the level of indebtedness and its rapid expansion were not healthy."35 Excessive reliance on borrowed funds left the banks vulnerable when investors began restructuring their portfolios by selling what they considered to be the most risky assets.
By early 2009, however, the government was forced to bail out a sector saddled with over $50 billion in foreign debt, with President Nursultan Nazarbayev ordering the country's sovereign wealth fund, Samruk-Kazyna, to step in to prevent a collapse by taking over equity.36 Yet, BTA, the largest bank in the country, and Alliance Bank, the fourth largest, defaulted on their debt.
The Economist Intelligence Unit projected that if the stabilization plan now in place succeeds, the banking sector will slow down credit growth and move towards more sustainable lending policies, having only moderate effects on long-term economic growth.37 At the same time, continued investor wariness concerning Kazakh banks and the spillover effect into other economic sectors may pose severe risks in the near and medium term.
Gulnur Rakhmatulina, Senior Fellow at Kazakhstan's Institute for Strategic Studies, said in an interview to Kazinform that "it is essential for Kazakhstan's banking system to provide more funding to the real sectors of the economy so that we earn money by expanding our export capacity" and protect the country from overexposure to international financial crises.38
Yet, the worst may be over. The Kazakh economy is entering a recovery period, Bakhyt Sultanov, the Minister of Economy and Budget Planning, said at a government meeting on Aug. 18. "We can say with confidence that the decline in the Kazakh economy reached its lowest in the first half of 2009 and its trajectory is entering a recovery stage," said Sultanov.
The minister said that stabilization demonstrated itself in the industrial sector. The decline in production was 7.4 percent in March 2009 y-o-y, but in June 2009 there was a 7-percent growth. Agriculture is another sector which exhibits growth.39
Conclusion
Israel has a partner to appeal to the Caspian and Central Asian secular Turkic states. In a way, Israel went through - and is still going through - the excruciating nation-building process these countries are undergoing only 18 years after independence - think of Israel circa 1966.
While close to the United States, Israel has its own interests and expertise sets that are attractive to the New Independent States in the areas of security, technology, agriculture, science and education. New Independent States, including Kazakhstan, are looking to diversify their geopolitical partnerships, to get away from the bear hug of Russia, the dragon breath of China, or often-problematic relations with the United States.
Moreover, Israel is uniquely positioned with many immigrants who have ties to the Jewish communities, elites, and businesses in their former countries of origin. These are strategic assets that would be wasted if not used.
A partnership with Kazakhstan is particularly attractive for the Jewish state due to its policy of ethno-religious tolerance, vast natural resources, including energy, and closeness to Russian, Chinese, and Central Asian markets. Yet practitioners need to be aware of both widespread corruption, albeit recognized and regularly decried by President Nazarbayev and other high-level officials, and internal challenges to political stability inherent in the authoritarian political system.
Overall, there is a massive potential for security, economic, scientific, and educational cooperation which is most likely to grow in the years and decades ahead.
* * *
Notes
1. Michael J. Jordan, "Kazakhstan seen as bridge to Muslim world," JTA, December 18, 2008, http://jta.org/news/article/2008/12/18/1...slim-world.
2. "About Kazakhstan-Israeli relations," http://www.kazakhemb.org.il/?CategoryID=...icleID=163.
3. Some of the analysis presented here was first published in Ariel Cohen, Kazakhstan: The Road to Independence: Energy Policy and the Birth of a Nation (Central Asia Caucasus Institute, SAIS. Johns Hopkins, 2008).
4. Kasym-Zhomart Tokayev, "Vektory politiki i sosedstva" [Politics and Neighborhood Vectors], interview with Novoe Pokolenie, December 29, 2006, at http://www.np.kz/.
5. "Declaration on Eternal Friendship and Cooperation Oriented to the 21st Century," July 6, 1998, at http://cfo.allbusiness.ru/BPravo/DocumSh...umID=75130.
6. Zhanseit Tuymebayev, "Otechestvennyy biznes za gody nezavisimosti respubliki investiroval v rossiyskuyu ekonomiku $8 mlrd - posol Kazakhstanа v RF" [Over the years of the republic's independence, domestic businesses invested $8b in the Russian economy - the Ambassador of Kazakhstan to the RF], Trend.az, December 29, 2006, at http://www.trend.az/?mod=shownews&news=105013.
7. Interview given by Dmitry Medvedev to TV Channels Channel One, Rossiya, NTV, http://www.kremlin.ru/eng/speeches/2008/...6003.shtml.
8. Numerous interviews by author with senior Russian officials, intellectuals, experts, and journalists, Moscow, 1992-2005.
9. Interviews by the author, U.S. State Department officials, 2006-2007, Washington, D.C.
10. David J. Smith, "Medvedev's Message," http://www.acus.org/new_atlanticist/medvedevs-message; Ivanov: "Rossiya pomnit o sootechestvennikakh" [Russia Remembers About its Compatriots], Radio Mayak, June 14, 2008, at http://www.radiomayak.ru/doc.html?id=80273&cid=44.
11. "The CIS Summit Has Adopted the Development Concept," Prime-Tass.
12. Arkadiy Dubnov, "Nursultan Nazarbayev uzhe vtoroy desyatok let neustanno podtverzhdaet imidzh glavnogo integratora na postsovetskom prostranstve" [For Over a Decade, Nursultan Nazarbayev Tirelessly Confirms the Image of the Chief Integrator in the Post-Soviet Space], Fergana.ru, February 22, 2005, at http://www.ferghana.ru/article.php?id=3485.
13. "CIS: Heads of State Order Overhaul of Commonwealth," Radio Free Europe/Radio Liberty, November 28, 2006, at http://www.rferl.org/featuresarticle/200...14453.html.
14. Ariel Cohen, "Kazakh Vote: A Step Forward," Washington Times, August 21, 2007, at http://www.washingtontimes.com.
15. Ariel Cohen, "Russia's Deja Vu Parade," Washington Times, February 15, 2008, at http://www.washingtontimes.com/article/2...18475/1012.
16. Nursultan Nazarbayev, Annual Address to the People of Kazakhstan, October 1997, at http://www.akorda.kz/www/www_akorda_kz.n...84&lang=en.
17. Nursultan Nazarbayev, "Na poroge 21-go veka" [On the verge of the 21st century], Oner, Almaty, 1996.
18. U.S. Department of State, Bureau of South and Central Asian Affairs, "Background Note: Kazakhstan," February 2007, at http://www.state.gov/r/pa/ei/bgn/5487.htm.
19. Nursultan Nazarbayev, Address at the XII Session of the Assembly of Nations of Kazakhstan, October 24, 2006, at http://www.assembly.kz/eng/index.shtml.
20. "Regulations on the Assembly of Peoples of Kazakhstan," Approved by Republic of Kazakhstan Presidential Decree No. 856, April 26, 2002, at http://www.akorda.kz.
21. Kenesary Kaptagayev, "Chilikskiye sobytiya - glazami kazakhskix natsionalistov" [Chiliksk Events - through the Eyes of Kazakh Nationalists], Megapolis, December 25, 2006, at http://www.megapolis.kz/?np_id=72&sct_id=14.
22. Marat Yermukanov, "Officials Dismiss Clashes Between Kazakh and Chechen Youth as Hooliganism," Jamestown Foundation, Eurasia Daily Monitor, March 23, 2007, at http://www.jamestown.org/edm/article.php...id=2372045.
23. Nursultan Nazarbayev, Address at the Third World Kazakh Round-Table, Astana, September 29, 2005, at http://www.akorda.kz/www/www_akorda_kz.n...2&L2=L2-15.
24. Congress of World and Traditional Religions, http://www.religions-congress.org/conten...g,english/.
25. Assembly of the Peoples of Kazakhstan, "Who is Who in the Assembly of the Peoples of Kazakhstan," Volume 1, at http://www.assembly.kz/vzglyadsostoroni....1526148056.
26. Olcott, "Pipelines and Pipe Dreams."
27. Nazarbayev, Address at the ceremonial meeting dedicated to the 15th Anniversary of Kazakhstan's independence.
28. Isabel Gorst, "In pursuit of a professional elite education," Financial Times, June 27, 2007, http://www.ft.com/cms/s/2/b06f283c-2334-...10621.html.
29. Ibid.
30. "Kazakhstan: Internet Usage Statistics," http://www.internetworldstats.com/asia/kz.htm.
31. "The Recession in Kazakhstan," Stratfor, http://www.stratfor.com/analysis/2009061...kazakhstan.
32. Ben Aris, "Banking: A Breakneck Pace of Expansion," Financial Times, June 27, 2007, at http://www.ft.com/cms/s/2/af03befe-2334-...0621.html; and Elliot Blair Smith, "Kazakhstan's Bank Lending Frozen in Subprime Squeeze," Bloomberg, December 21, 2007, at http://www.bloomberg.com/apps/news?pid=2...ast_europe.
33. Asian Development Bank (ADB), "Kazakhstan: Country Strategy."
34. Economist Intelligence Unit, "Kazakhstan: Country Report."
35. Aris, "Banking: A Breakneck Pace of Expansion."
36. Kazakhstan's Banking Sector - #1 Alliance Bank, http://crisiscrunch.pbndc.com/?p=1099.
37. Economist Intelligence Unit, "Kazakhstan: Country Report."
38. "Kazakhstan's Own Economic Development Model Has Been Formed Over 17 years," Kazinform, October 25, 2007 (Russian), at http://www.kazinform.kz.
39. K. Konyrova, "Kazakh economy enters recovery stage: minister," http://en.trend.az/capital/macro/1524040.html.
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Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security at the Davis Institute at the Heritage Foundation and the author of Kazakhstan: The Road to Independence: Energy Policy and the Birth of a Nation (Central Asia-Caucasus Institute, SAIS, Johns Hopkins, 2008).