Balance between West and Russia – is it possible?

Kazakhstan, one of the key countries in the EAEU and the closest allies of Russia, is afraid of falling under secondary sanctions due to parallel imports of goods from Russia

President Kassym-Jomart Tokayev is to visit Azerbaijan on August 24. He was invited by President Ilham Aliyev. One of the key topics of negotiations at the highest level may be the issues of possible deliveries of Kazakh oil to Azerbaijan with further access to Turkish and Western markets via the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, Russian Nezavisimaya gazeta (NG) newspaper reported.

There is no doubt, the issues related to the export of Kazakh energy resources were discussed in Sochi at the recent meeting of Tokayev with Russian President Vladimir Putin.

Tokayev’s visit to Sochi at the time when some serious contradictions between two countries is been detected, was directed to soften such trends.

The newspaper recalled the reason of Russia’s decision to suspend the activities of the Caspian Pipeline Consortium (CPC), through which Kazakh oil is exported. It happened after Tokayev’s speech about Kazakhstan’s position not to recognize the so called newly formatted republics of Donbass on the territory of Ukraine. The problem was solved only at the level of personal negotiations between Tokayev and Putin. After that, the head of the Kazakh state made a statement that it is necessary to speed up the process of diversifying the export routes of Kazakh oil and, possibly, gas.

“An alternative could be the Baku-Tbilisi-Ceyhan pipeline, but the problem is that the volume of oil pumped through this pipeline is minimal. It is necessary not only to invest in the expansion of this pipeline, but most importantly, in the creation of a tanker fleet, since Kazakhstan does not have a pipe along the bottom of the Caspian Sea. Work in this direction is already underway,” Dosym Satpaev, the director of the Risk Assessment Group told the newspaper. Kazakhstan already actively invests to expand the Caspian port of Aktau. In the future, this port will be able to perform two functions. The first is an increase in the export of Kazakh energy resources through Azerbaijan, Turkiye and further to Europe. Signing of an agreement on the supply of Kazakh oil via the BTC is not ruled out. As Reuters reported earlier, the document was planned to be signed at the end of the summer.

The second function of the Aktau is also important and connected to China. Beijing wants to increase the volume of cargo transit through Kazakhstan to Europe. China has already launched an alternative route through the Caspian Sea and it is passed Russia. The first train to Germany passed not so long ago. “This is a less convenient route, but as an alternative it will be more fully used. Therefore, Kazakhstan wants to draw these flows onto itself. Tokayev is going to Baku to negotiate on these two key topics,” Satpaev said.

In the large vision, Tokayev’s visit to Baku has several goals: firstly, Azerbaijan and Kazakhstan are members of the Organization of Turkic States (OTS). Last year, during the summit, agreements on close economic cooperation were signed. After the start of the special operation in Ukraine, the Trans-Caspian transport route became a priority not only for Kazakhstan. At the official level, Tokayev began to speak more often about the transit potential of Kazakhstan and about the export of Kazakh products through Azerbaijan.
It is known that during Tokayev’s visit, a program for the development of cooperation between the two countries until 2026 will be signed.

There is no doubt that consultations were held in Sochi on these two topical issues. “Perhaps a compromise was found in the expansion of economic cooperation between Kazakhstan and Russia,” the newspaper wrote. It is likely that the closed part of Putin’s negotiations with Tokayev concerned the issues of active inclusion of the republic in the project of parallel imports. Both leaders stated that the dynamics of trade between their countries is positive. Last year, the trade turnover amounted to $24.5 billion.

Satpaev noted that in any case statistics indicate this: in the first half of this year, the number of smartphones sold to Russia has increased. For example, in the first half of 2021, Kazakhstan sold smartphones to Russia for $37 million, in this half of the year – for $178 million. But experts are concerned that Russia wants to use Kazakhstan as a kind of transit zone for the supply of electrical products, which the West regards as products of a destination. This means that Kazakhstan may fall under secondary sanctions. Moreover, Kazakhstan is already included in the list of 17 suspected countries through which products go to Russia and Belarus. “The republic may fall under secondary sanctions, and this cannot but worry Tokayev,” Satpaev said.
The Tokayev’s upcoming trip to Baku was also discussed at the talks in Sochi, taking into account the aggravation of relations with Armenia, the development of trans-Caspian routes, which Kazakhstan and other countries use to bypass Russia.

“But there is an equally key issue – visit of Chinese leader Xi Jinping in Nur-Sultan in September. For Moscow it is very important to understand the boundaries that Kazakhstan has drawn for itself in relations with China,” Satpaev said. Tokayev views China not only as an economic partner, but also as a kind of guarantor of his country’s security. China has invested tens of billions of dollars in the Kazakh economy and will react negatively to any destabilization in the republic and in Central Asia as a whole.

“Central Asia for China is a backyard where there should be order and stability. If destabilization begins in one of the countries, then the domino effect will be throughout the region. China will view this as a threat to its national security. In this case, you can put a big bold cross on Russia’s relations with China. President Recep Tayyip Erdogan said in May that Turkiye was ready to take on the responsibility of ensuring the security of Kazakhstan. The main task of Kazakh diplomacy is not to fall under the crossfire of the West and Russia. Secondly, not to be drawn into any military conflict and, thirdly, to create a balance system in relation to Russia,” Satpaev believes.

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August 22, 2022