Publication: Eurasia Daily Monitor Volume: 1 Issue: 101

Iran has never ranked as a top priority for Kazakhstan’s foreign policy. On the contrary, Kazakhstan has adopted a remarkably reserved stance towards Iran, so as not to irritate the United States and its new geopolitical interest in Central Asia. To a great extent Iran’s drive to conquer Central Asian markets and expand its historically strong cultural, political, and economic influence in the region was encouraged by inconsistent foreign policy strategies of the region’s post-communist leaders. Kazakhstan President Nursultan Nazarbayev, addressing his counterparts from Georgia, Kyrgyzstan, Azerbaijan, and Russia at the 2000 Eurasian economic summit, ostentatiously declared, “Here, in Central Asia, we are not going to pull up our pants and run after the United States begging for a democracy. We will accept no criticism of the policy we are implementing, no interference in our domestic affairs under the pretext of democracy” (Panorama, April 28, 2000). At the same time, on a diplomatic level, Kazakhstan has generally not gone beyond stressing the need for better relations. The joint communique issued during Nazarbayev’s first visit to Iran in November 1992 said that the views coincided only on some regional and international issues.

Although Iranian Trade Minister Mohammad Shariatmadari visited Astana October 3-5, there has been little progress in bilateral relations since that first 1992 meeting. The two sides have signed slightly more than 50 documents, mainly relating to trade, but most of the agreements have not been implemented.

Only in the area of trade have bilateral relations exhibited some dynamism. In 2002 the trade volume between Iran and Kazakhstan barely reached $500 million, whereas in the first half of this year this figure had already reached $367.1 million.

The most promising area of economic cooperation is the export of Kazakh grain to Iran. In their talks in Astana, Trade Minister Shariatmadari and Kazakhstan Prime Minister Daniyal Akhmetov reached an agreement to ship 1 million tons of Kazakh grain to Iran by the end of this year, nearly one fourth of the annual export capacity of Kazakhstan. But even this volume is far below the previously targeted level. In June 2002 the Iranian Ambassador to Kazakhstan, Murtaza Safari, had announced that Iran could import 2 or 3 million tons of grain and 2 million tons of steel, the total volume of Iran’s annual steel imports, from Kazakhstan. The Ambassador added that Iran could purchase an unlimited amount of steel from Kazakhstan (Panorama, June 21, 2002). But Kazakhstan’s crisis-prone steel industry failed to meet that demand.

These shortages were partly compensated with increased Kazakh oil shipments to Iran. Last year Kazakhstan supplied Iran with 50,000 barrels of oil each day. Kazakhstan uses the Aktau seaport to bring the crude oil to refineries in Northern Iran. This efficient route will allow Kazakhstan to ship up to 2 million tons of crude to Iran by the end of 2004. Between April 2000 and April 2004, some $415 million worth of oil has been sent to Iran, but it difficult to tell whether Iran profited much from these operations since the high sulfur content of Kazakh oil means higher processing prices.

Despite positive trends in trade relations, there is not much reason to be euphoric about economic ties. This time the highlight of the Iranian Trade Minister’s visit was the signing of a bilateral draft agreement on developing trade and economic relations. It closely resembled an agreement signed in 1999 but never implemented. The 74% increase in trade volume registered over the last year is the result of a massive increase in the export of Kazakh goods to Iranian markets. However, the expected Iranian investments in Kazakhstan’s oil and agricultural sectors remained so meager that Kazakhstan’s Minister of Industry and Trade, Adylbek Zhaksybekov, merely said, “This, of course, alarms our Iranian partners. We must [stimulate] Iranian investments” (Khabar TV, October 4).

It appears that the doors to key branches of Kazakhstan’s economy are already closed to Iranian investors. Western and Chinese companies have effectively blocked Iranian access to Kazakh oilfields. Kazakhstan, swayed by American political ambitions, is reluctant to consider the Iranian route to ship its hydrocarbons to Persian Gulf countries. Potential Kazakh-Iranian cooperation in nuclear energy fields is highly problematic due to Western mistrust of the Iranian nuclear program.

The Iranian trade minister’s visit to Kazakhstan was not a complete failure. Both sides identified areas of cooperation in agriculture and developing oil infrastructure, and each agreed to open trade centers in Iran and Kazakhstan. For Iran, the most important part of the Astana talks is likely that its leaders have made another attempt to shake off the country’s economic isolation.