Publication: Eurasia Daily Monitor Volume: 5 Issue: 101

Apparently, there was a great deal of political calculation aimed at sobering up adamant western leaders to the hard-line stance of the post-Putin Kremlin in Dmitry Medvedev’s first foreign trip to Astana as Russian President on May 22. Whatever may be the true motives of Medvedev’s erratic overture, his friendly gesture was duly appreciated by his Kazakh counterpart Nursultan Nazarbayev, who had every reason to accept the new Russian leader’s trip as a mere continuation of the warm relations that existed under Putin. It appears that the two sides easily reached an accordance of views in signing the joint statement of bilateral cooperation and discussing a wide range of topics ranging from transport and communications to space technology development, the military partnership, interaction in Central Asia and within the UN, SCO and OSCE and, most importantly, energy policy,.

Last year, Kazakhstan’s trade volume with Russia reached $16.3 billion and showed a 27 percent increase over the 2006 figure, but the tension provoked by the complexity of issues on the agenda hung in the air throughout the talks, which were profusely punctuated by sugary smiles and ostentatious amicability. At one point Medvedev blurted out, “Today a lot of economic problems … sorry, projects, exist between [our] countries.” Observers note that it was not an unintentional slip of the tongue.

While main political issues between Kazakhstan and Russia seem to be settled, mooted divergences in the energy area are hard to conceal. Having many partners in the game, Astana increasingly sounds resolute in its dialogue with Moscow. Irritably whisking off the “rumors’ about Kazakhstan intending to bypass the Russian transit route by joining the transcaspian pipeline project to deliver its oil to the Baku-Tbilisi-Ceyhan pipeline, Nazarbayev assured Medvedev that Kazakhstan would not bypass Russia. “If all conditions are met, if it is advantageous to us,” he added ambiguously. Oil experts in Moscow fear Russian pipelines will fall short of capacity to handle the growing oil output in Kazakhstan after 2012 (Argumenty I Fakty, May 22).

Just before Dmitri Medvedev’s arrival in Astana, Russian Minister of Energy Viktor Khristenko and Kazakh Minister of Energy and Mineral Resources Sauat Mynbayev tried to solve long-running disputes. Mynbayev repeated Kazakhstan’s intention to increase the annual capacity of the Caspian Pipeline Consortium (CPC) by up to 67 million tons and in addition promised 17 million tons for the Burgas-Alexandroupolis pipeline that Russia plans to build in 2010. Very few believe, however, that Moscow will yield easily to the CPC shareholders’ demand to increase the volume of oil pumped through the pipeline without making the shareholders agree to a significant increase of transit tariffs. In a transparent political move, Russian Transneft in 2005 unilaterally invalidated the transit contract with Kazakhstan on the shipment of Kazakh oil to Lithuania via Russia. The situation was further exacerbated by intense rivalry between Kazakhstan and Russia for a 53.7 percent share in Lithuania’s Mazeikiu Nafta oil refinery.

Welcoming Medvedev, Nazarbayev suggested that Moscow could no longer use its pipelines as a trump card, stating that although the significant volume of Kazakh oil would flow in the Russian direction, already this year Kazakhstan would offer its territory as a transit route to deliver Russian oil to China. He routinely expressed Kazakhstan’s interest in setting up joint ventures in the petrochemical and oil processing area, but he underlined the greater importance for Russia of the planned transport corridor linking Western Europe with Western China. This project could not leave Medvedev indifferent. In essence, Dmitri Medvedev’s trip to Astana produced nothing or little new in Kazakh-Russian relations. The mutual development of nuclear energy amounted to a repetition of earlier declared intentions of Moscow and Astana in this area. Medvedev announced plans to set up a joint nuclear energy company and promised Russian participation in the construction of a nuclear power plant in Aktau (western Kazakhstan). Although this project is welcomed in Kazakhstan, which is experiencing acute power shortages, its construction, like many other unfulfilled plans, may drag on indefinitely (Panorama, May 23).

Likewise, in other areas such as space technology and equipping the Kazakh army, the progress very much depends on the political whims of Moscow. In 2006 Kazakhstan launched its first Russian-manufactured Kazsat satellite, a costly enterprise for a cash-strapped country. Reportedly, the second satellite of the Kazsat series is being prepared for launching. Nazarbayev enthusiastically added that Kazakh astronauts currently in training in Russia would soon begin space flight. Medvedev was more reserved on the subject, saying elusively that “at least we will do our utmost to achieve that goal” (Liter, May 23).

Space cooperation between Kazakhstan and Russia has long been overshadowed by deep-seated disagreements about the Baikonur space launching site leased by Russia. After repeated disastrous crashes of Russian Proton rockets over southern Kazakhstan, Kazakh authorities periodically had to ban further launches. In January of this year Russian Prime Minister Sergey Ivanov announced plans to relocate launches from Baikonur to the Amur region in Russia constructing for that purpose a new launching pad near the Vostochnaya settlement. Pessimists fear that if the Russians leave Baikonur, Kazakhstan will not be able to keep the whole infrastructure s space program may end up in failure. Kazakhstan also r and the country’elies heavily on Russian military hardware to modernize its army, particularly its air defense system. With a significant proportion of Russians within its population and its longest borderline shared with its northern neighbor, Astana welcomes cooperation with Moscow in various areas as a contributing factor of political stability. It remains, however, to be seen, what price Kazakhstan will pay for a friendly handshake with Dmitry Medvedev.