Tuesday, June 11, 2024

Kazakhstan’s Deputy FM says EU & US ties remain strong as Central Asia’s largest country emerges as regional power

Kazakhstan’s Deputy Foreign Minister Roman Vassilenko

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In the three-plus decades since Kazakhstan emerged as an independent nation from the ashes of the Soviet Union’s 1991 collapse, the Central Asian giant has become one of Eurasia’s key economic and security heavyweights.

While the nation of nearly 20 million continues to be one of the world’s largest energy producers, its role as a political and economic hub for the vast region between Russia, China, and India continues to grow.

Within this context, Kazakhstan hosted the Central Asian Security and Cooperation Forum from July 13 -14. The Forum, which was co-organized by Kazakhstan’s Ministry of Foreign Affairs, focused its discussions on Asia’s global security, continental interconnectedness in Eurasia, the so-called ‘Middle Corridor’, and international competition for innovation and new technologies. The forum was attended by representatives from the US, Japan, China, India, Singapore, Russia, and Turkey, as well as dozens of other countries.

Roman Vassilenko, Kazakhstan’s Deputy Foreign Minister, shared his views on the current status and future of his country’s relations with the EU and the rest of the world in an exclusive interview with NE Global’s Federico Grandesso, who was in Astana to attend the forum.

Federico Grandesso from NE Global (NEG): How would you characterize Kazakhstan’s relations with the European Union and how do you see these relations evolving in the coming years?

Roman Vassilenko (RV): We are very satisfied with our relations with the European Union. Of course, as always, there is a lot of room for improvement and for expanding these ties.

Kazakhstan and the European Union marked the 30th anniversary of our diplomatic relations this year. We can be proud of what we have done together over these years.

We’ve signed a second-generation agreement called the Enhanced Partnership and Cooperation Agreement. It covers 29 areas of cooperation and was signed in 2015. It has been in full force since 2020. It is a very wide-ranging document, about 70% of this agreement deals with trade. This is a very good foundation for going forward.

Speaking of going forward, we are happy with the fact that in the past year and a half, the European Union has, shall we say, “rediscovered” with much greater clarity the importance of Kazakhstan and Central Asia.

We are already one of the key suppliers of natural resources to Europe. Kazakhstan is an oil-rich country, and we do send oil to Europe that accounts for about 9-10% of the EU’s energy needs.

But Kazakhstan is not just about oil, and the European Union understands that very well. That is why, as Europe seeks to put into effect the green transition and implement the Green Deal, and move away as much as possible from fossil fuels while developing alternative energy sources, Kazakhstan comes into much greater focus.

What the EU and Kazakhstan have done together in the past few months was to sign a Memorandum of Understanding on Rare Earth Metals, Green Hydrogen, and Battery Supply Chains. That was done by our Prime Minister Alikhan Smailov and the European Commission President Ursula von der Leyen last November. Last May, we exchanged and approved a specific roadmap for cooperation in this field.

Indeed, these new areas of cooperation have come to much greater prominence in recent months. The EU wants to have a diversified supply of rare earth metals, green hydrogen, and batteries. Kazakhstan has all of this in abundance. We want to offer all of this to our outside partners, including the European Union.

There are already specific steps that are being undertaken to develop cooperation with European companies and entities in these areas.

If we talk about green hydrogen, we need to talk about a huge project being implemented in Kazakhstan by the Dresden-based, German-Swedish company SVEVIND. It’s a project estimated at $50 billion, and will produce 40 gigawatts of power from solar and wind power stations in western Kazakhstan. Our government has allocated for this project a land of 27,000 km². It is not a given that the company will use all of this land to put up solar panels and wind turbines. The company is doing research into the best places within this allocated land plot.

The project was launched with the participation of German Federal President Frank Walter Steinmeier, who visited Aktau and the Kuryk Seaport in the west of Kazakhstan in June and has participated in the symbolic drilling of the underground storage for green hydrogen.

Producing green energy is only the first step in this grandiose plan that this company has, the second step is to produce 2 million tons of green hydrogen beginning in 2032. That will be about one-fifth of the demand for green hydrogen in Europe by that time.

The government and this company signed a relevant investment agreement and are now in the feasibility study mode. We are supporting this not just by allocating this land plot but also by offering beneficial conditions from the government for a major investor in the green energy deal and by also working with a consortium of German universities to establish the Kazakh German Institute of Engineering in Aktau, where specialists will be trained for the project. This will require, in its development stage, around 3,000 workers.

This is a specific example of a new kind of cooperation with the EU.

Attendees at the Central Asian Security and Cooperation Forum in Astana, Kazakhstan.

Out of the 30 critical raw materials that the European Union identifies as critical, Kazakhstan has already produced 16. We have known reserves of nine other critical raw materials that can be developed, provided relevant investment and technology exist to do that. We believe with research and exploration we can find the other five as well.

Kazakhstan is open to cooperation with European companies in this field. There are already examples of cooperation in rare earth metals, including a contract that was signed during Steinmeier’s visit in June, with the German company HMS Bergbau to develop lithium in Kazakhstan.

The Minister of Industry and Infrastructure Development, Marat Karabayev, is very keen to push cooperation with European companies even further. He will be going to Brussels for the Raw Materials Week of November 13-17. On November 16, there will be a Kazakhstan-focused day. Karabayev is planning to lead a delegation of about 100-150 Kazakh companies that deal with rare earth metals.

Overall, we are ready to provide our European partners the right to explore and develop more than 60 deposits of precious and non-ferrous metals in Kazakhstan.

In addition, Kazakhstan is ready to provide the EU with more than 175 processed commodities worth more than $2.3 billion annually in engineering, iron, steel production, food processing, and agriculture. As a significant grain producer, Kazakhstan has the potential to become a strategic partner for the EU in implementing the global food agenda.

To develop this trade, Kazakhstan and Europe need certain infrastructure and transport routes perhaps. Have there been major developments in this aspect?

Indeed. Another important area of cooperation with the European Union that we jointly foresee in the near future is in the development of stronger connectivity, as well as stronger transport, and logistics connections between Central Asia, Kazakhstan, and the EU.

Kazakhstan’s well-developed infrastructure offers plenty of transport and logistics cooperation opportunities. Our country is already working in this direction by creating a wholesale distribution network of logistics facilities, including an international center for industrial collaboration on the border with Uzbekistan, and an industrial trade and logistics complex on the border with Kyrgyzstan.

For us, the EU is our largest trading partner and the largest investor. It accounts for $40 billion out of the $134 billion in annual foreign trade that we had last year. The EU also accounts for $170 billion in investment in Kazakhstan, out of $410 billion invested in our country since independence.

Oil makes up the largest share of Kazakhstan’s trade with Europe, but we want to trade in other goods. For that, we need to develop so-called alternative routes of transportation. What I mean is that there are, of course, routes that have been in existence, some for decades, some more recently. And some of these routes are rather successful. They have been going through Russia and Belarus into Poland. Unfortunately, because of the current geopolitical tension, this route has seen some disruptions in recent months.

The parties – meaning East Asia, Central Asia, and Europe – have started looking for alternatives to these routes. That is why the so-called Middle Corridor, formally known as the Trans-Caspian International Transport Route, or TITR, has come to the fore.

The definition stands for the corridor that crosses Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and Turkey and then crosses into Southeastern Europe. This is an area where the EU, Kazakhstan, and other countries in the region are planning to invest significantly in the years to come.

The Middle Corridor has already seen major development thanks to joint efforts of the countries and companies along the route. The delivery time from China to Istanbul has been reduced nearly three-fold from 53 to 19-23 days. The next goal is to reduce it to 14-18 days by the end of 2023. Kazakhstan is seeking to join its efforts with the European partners to further develop TITR in cooperation with the EU’s Global Gateway initiative as well as G7’s Partnership for Global Infrastructure and Investment.

This route still needs a lot of development. It is a multimodal route, meaning it uses trains, ships, and pipelines to transport oil overland and tankers to transport oil across the Caspian and the Black seas. There are some hurdles and bottlenecks that need to be resolved, because this route, while it has also seen very significant growth in the past 10 years, wasn’t developed with a lot of attention.

Now this focus is very much there from the EU, Kazakhstan, and the countries in the region. The European Bank for Reconstruction and Development last month completed a study on the connectivity between Central Asia and Europe and identified steps that need to be taken to develop greater East-West connectivity in our region.

Another area of cooperation is green energy. Considering the experience and achievements of European countries in alternative energy, Kazakhstan is keen to implement new joint projects as we set an ambitious goal to increase the share of renewable energy sources in our energy balance from the current 4.5% to 15% by 2030.

Kazakhstan is ready to take part in the EU’s digital initiatives in Central Asia. In this regard, Kazakhstan has established a strategic goal to become one of the region’s largest digital hubs.

(NEG): How can Europe help in the bilateral EU-Kazakhstan dialogue?

(RV): The European Union and Kazakhstan are strengthening bilateral cooperation in all dimensions, including trade and investment, transport, energy, agriculture, travel, and education.

In 2022, our trade turnover increased by 38.3%, reaching about $40 billion (Kazakh exports– $32.4 billion, imports – $7.6 billion). Investment cooperation with EU countries has entered a qualitatively new stage. In 2022, direct EU investments in Kazakhstan’s economy grew by 23% and surpassed $12 billion.

We are ready to enhance our relations with the EU to a new level, in line with the abovementioned Enhanced Partnership and Cooperation Agreement.

Current geopolitical upheavals and the need to reorient global supply chains have increased this agreement’s relevance even further.

We are confident the consistent implementation of the agreement allows us to diversify trade, expand economic ties, attract new technologies, and increase the number of bilateral and regional investment projects.

We would welcome additional investments from the EU into several areas of Kazakhstan’s economy such as agriculture, the transition to a green economy, energy efficiency, and digitalization. Given the current geopolitical situation, it is important to develop international transport corridors to ensure a global supply chain of goods. In particular, we would welcome the EU’s continuous support for the development of the Middle Corridor, as discussed.

One area that would especially take our bilateral relations to a new level is visa facilitation for the citizens of Kazakhstan. Back in 2017, Kazakhstan unilaterally introduced a visa-free regime for citizens of all EU states to develop business cooperation, tourism, and human contacts. Last May, Kazakhstan and the EU agreed to start formal consultations to facilitate the visa regime for Kazakh citizens. We hope these consultations are prompt and fruitful, and contacts between the citizens of the two countries can be expanded.

We are hopeful we can soon agree on a visa regime facilitation for Kazakh citizens, which would include, among other things, a shortened list of required documents for visas and an extended duration of stay for our citizens.

Overall, we welcome our European partners’ keen desire and firm intention to work with us to strengthen relations across the board, and we welcome the fact that the EU considers our country a key partner in Central Asia. We will continue to work together to achieve common goals, including sustainable development, stimulation of economic growth, and support for reforms.

NEG: How would you evaluate the cooperation with specific countries, including Germany, Belgium, France or Italy?

RV: In terms of specific countries, I would like to mention the June 20 Kazakh-German Business Forum in Astana, which resulted in the signing of 23 commercial agreements worth more than $1.7 billion. Kazakh President Kassym-Jomart Tokayev and Germany’s Federal President Frank-Walter Steinmeier attended the forum. The parties agreed to cooperate in the processing of rare earth metals, the production of machine tools, and agricultural machinery, as well as in the textile industry, fisheries, and green energy.

France is one of the key trade, economic and strategic partners of Kazakhstan in the European region, and one of the top five major investors in our country. The November 2022 visit by President Tokayev to France gave a new impetus to relations between the two countries. President Emmanuel Macron reiterated his support for President Tokayev’s reforms to strengthen the rule of law, fundamental freedoms, and social justice required for stability and long-term prosperity. To date, France has invested more than $18 billion in Kazakhstan. Last May, we hosted the 15th session of the Kazakh–French Intergovernmental Commission with the participation of Olivier Becht, Minister-Delegate for Foreign Trade, Economic Attractiveness of France.

Following the session, the parties concluded a memorandum of understanding on cooperation in underground research between BRGM, the French geological survey agency, and the Geology Committee of the Kazakh Ministry of Industry and Infrastructure Development. A memorandum between the Akimat (the governor’s office) of the North Kazakhstan Region and C3Médical, a medical insurance services company, was also signed to develop telemedicine. These are just some examples of the expanding cooperation between Kazakhstan and France.

I am pleased to share that we are also expanding our cooperation with Belgium. Just last month, the first meeting of the Kazakhstan-Belgium Business Council took place in Astana to enhance bilateral economic relations. Belgium is an important economic partner for Kazakhstan in the European Union, and the two countries have a number of intergovernmental agreements aimed at deepening trade and economic cooperation, as well as promoting and protecting investments.

Economic relations between Kazakhstan and Belgium are developing dynamically. The inflow of investments from Belgium since 2005 has amounted to $11.52 billion. Moreover, the Kingdom has been a leading investor in Kazakhstan for many years. The trade turnover in 2022 exceeded $514 million, increasing by 19% compared to 2021. Pharmaceuticals, telecommunications, renewable energy, machinery, agro-processing, and food are considered the sectors with significant potential for cooperation.

I would be greatly remiss if I don’t mention Italy, one of Kazakhstan’s strategic partners. It is our largest trading partner in the EU. Our mutually beneficial cooperation is based on the Strategic Partnership Treaty signed in 2009.

At the end of 2022, trade turnover between Kazakhstan and Italy totaled $14.9 billion (Kazakh exports – $13.85 billion, imports – $1.05 billion), a growth of 54 percent compared to the previous year.

As one of the major investors in Kazakhstan’s economy – and the first trading partner in Europe, and the third globally – Italy has invested more than $15 billion in Kazakhstan over more than 30 years. Today, 270 Italian companies are successfully operating in various sectors of our economy, including energy, construction, light industry, agriculture, tourism, and trade. Approximately 400 Italian companies have trade and economic ties with Kazakhstan.

Italian transnational energy company Eni has played a particularly significant role in Kazakhstan’s economy since the early 1990s. It has recently expanded beyond traditional oil and gas operations to wind and solar power generation.

Cooperation between Kazakhstan and Italy is also actively developing in the fields of education and research, as well as culture. There is active cooperation on student exchange programs with Italian universities. More than 30 agreements have been concluded between Kazakh and Italian higher education institutions.

Since June 2022, regular direct flights have been established between Milan and Almaty by the Italian airline company Neos, which has facilitated increased tourist and business flows between the two countries.

Kazakhstan and Italy intend to continue their strategic bilateral relations.

NEG: Do you think Europe should be more involved in Central Asia?

RV: Yes, I believe it is in the European Union’s interest to partner with a stable, peaceful, and prosperous Central Asia. This would strengthen the region’s potential in transit trade between Europe and East Asia, provide more opportunities for successful investments and trade for European businesses, and help prevent potential security challenges for Europe in terms of drug trafficking or illegal migration.

We see this understanding in the fact that in 2015 the EU established the office of the Special Representative for Central Asia, currently held by an outstanding Finnish diplomat, Terhi Hakala. Two EU strategy documents for interacting with the region have been made public, the latest of which was in 2019.

Five Central Asian states have established a so-called “C5 plus” format of meetings that includes quite a few external partners in the region, including the US, China, South Korea, Japan, India, and Russia. Among the earliest examples of such an approach is the format of EU–Central Asia Ministerial meetings. Since 2007, we have held 18 such rendezvous with specific agendas and outcomes.

Moreover, in October 2022, Kazakhstan hosted the first meeting between the leaders of Central Asian nations, along with the President of the European Council Charles Michel. We are happy that a new tradition has been established as last month the second meeting in this format took place in Kyrgyzstan, while Uzbekistan has offered to host it next year. What is most gratifying is that six leaders have now agreed to institutionalize this format and turn it into a regular EU-Central Asia summit. This brings the apparatus of the European Commission very much into play.

NEG: Apart from Europe, how would you evaluate Kazakhstan’s cooperation and relationship with China and the US?

RV: China is one of Kazakhstan’s major trade and investment partners. For a decade now, Kazakhstan has been playing an important role in the successful implementation of the Belt and Road Initiative.

Recently, the two countries have further enhanced their relations to expand trade and develop new trade routes. For instance, during the visit of President Xi Jinping to Kazakhstan last September, one of the documents signed was a memorandum of understanding on the transit of goods via the Middle Corridor.

Last May, President Tokayev held talks with Chinese President Xi Jinping in Xi’an as part of his state visit to China. During the meeting, Xi Jinping described the ties between China and Kazakhstan as “unbreakable.” The visit resulted in the signing of 47 business and investment-related documents totaling $22 billion with Chinese enterprises and investors. President Tokayev and President Xi signed a joint statement, reaffirming their commitment to continuously deepen the eternal all-round strategic partnership based on friendship, deep mutual trust, and solidarity.

Our relations are looking upwards. The volume of Kazakh-Chinese trade has reached $31 billion, and the two leaders have agreed to increase it to $40 billion. In addition, China has invested more than $23 billion in Kazakhstan’s economy since our independence. This figure is continuing to increase.

Region-wide, China’s trade with Central Asia is also growing rapidly. Last year it reached $70 billion, of which Kazakhstan accounted for 45% ($31 billion). We believe all the conditions are in place to maintain this positive momentum and achieve a turnover of up to $100 billion by 2030.

When it comes to our relations with the United States, we appreciate their unwavering support for Kazakhstan, including endorsing our reform agenda, as stated by Secretary of State Antony Blinken during his recent visit to Kazakhstan.

Our relations are enjoying an upward trend. The bilateral trade turnover exceeded $3 billion in 2022, up 37.2 percent from 2021. The total inflow of foreign direct investments from the US to Kazakhstan exceeded $62 billion.

The two countries have particularly significant opportunities to expand cooperation in the agricultural sector, with American companies bringing innovation and technology. Overall, cooperation with the US is developing in the spirit of an enhanced strategic partnership, as demonstrated by increasing political dialogue, as well as trade, economic, and investment cooperation.

With both Washington and Beijing, there are important mechanisms of cooperation in the form of Central Asia plus China and Central Asia plus the U.S. dialog platforms.

NEG: How important is the Shanghai Cooperation Organization for your country?

RV: Kazakhstan assumed the presidency in the Shanghai Cooperation Organization (SCO) earlier this month until July 2024. As such, ensuring the successful work of the SCO is, of course, crucial for us. During our presidency, Kazakhstan will focus on fostering balanced development across all areas of cooperation, including security, trade, economy, culture, and humanitarian efforts.

Kazakhstan is aiming to enhance the work of the SCO and position the organization as a reliable platform for fruitful cooperation. Our country plans to organize approximately 80 events during the following year. Almaty has been designated the SCO cultural and tourism capital for 2023-2024 and will host many of these events. Of course, we look forward to contributing to the successful organization of the events, including the SCO summit, which will be held next year in Astana.

The summit’s outcomes will play an important role in upholding peace and stability in the region, promoting sustainable development, and strengthening humanitarian cooperation within the SCO.

Kazakhstan is one of the founders of the SCO. Therefore, the organization holds particular significance for us. We want to develop it and facilitate multilateral cooperation, covering almost all spheres of life in the region.

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Managing Editor of European Union & Italian Political Affairs


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