KAZAKHSTAN USES ENERGY DEALS WITH RUSSIA IN “CONSTRUCTIVE DIALOGUE” WITH EUROPE

Russian President Vladimir Putin’s visit to Astana on May 10 was widely regarded as the Kremlin’s attempt to regain its political and economic foothold in Central Asia, as Kazakhstan has increasingly tilted westward.

Only one month ago Kazakhstan’s President Nursultan Nazarbayev gave a cordial welcome to a European Troika delegation and to Polish President Lech Kaczynski, who came to Astana seeking energy routes that would bypass Russia. But an even more discouraging sign for European leaders than Putin’s visit is the fact that Nazarbayev decided to forgo the May 11-12 energy summit in Krakow and instead traveled to Ashgabat, Turkmenistan, with his Russian counterpart, dispatching only a deputy foreign minister to Poland.

Within the current rules of East-West diplomacy, this sudden shift in favor of Moscow could be construed as yet another manifestation of Kazakhstan’s multi-vector foreign policy. But Foreign Minister Marat Tazhin, whose first trip to Washington coincided with Putin’s visit to Astana, assumed an unusually emphatic tone in his talks with the U.S. Secretary of State Condoleezza Rice, noting, “terms of a confrontational nature are unacceptable” in talks with Kazakhstan over the country’s expected presidency of the Organization for Security and Cooperation in Europe (OSCE). He added, nevertheless, that Astana seeks a “constructive dialogue” with the West on this issue (Liter, May 11).

Putin’s exceptionally successful talks in Astana, encompassing the legal aspects of using the Baikonur space launching site in South Kazakhstan, the Baiterek and GLONASS joint space research programs, nuclear energy cooperation, border protection, and military cooperation, can partly be attributed to the timing of Putin’s trip. The ruling elite in Kazakhstan are increasingly grumbling about the OSCE “sticking its nose into the internal affairs” of the country, specifically pressing Astana over democracy issues.

The Odessa-Brody-Gdansk pipeline project, it turns out, heavily depends on Kazakh oil to operate at full capacity. The lack of unanimity within the Ukrainian government over the Odessa-Brody-Gdansk route, particularly Ukrainian Prime Minister Viktor Yanukovych’s recent remark that the pipeline project could not materialize without Kazakh oil, has encouraged the Kazakh government to bargain for political concessions in its talks with the European Union. Experts fear that even with Kazakh oil supplies, the Odessa-Brody-Gdansk pipeline would not be utilized enough to make it a profitable enterprise. However, what is a headache for Europe is an excellent opportunity for Kazakhstan to pursue its own goals, allowing it to bargain with Europe and please Russia at the same time (Izvestiya Kazakhstan, May 11).

Another bitter pill Western companies have to swallow is the decision jointly adopted by Putin and Nazarbayev in Astana to hike the price of gas processed at the Orenburg joint gas processing plant and supplied to European markets to more than $145 per 1,000 cubic meters. Curiously, Putin announced that the decision had been taken at the insistence of his Kazakh counterpart. Nazarbayev, in turn, said the agreement was reached to increase the annual capacity of the Russian-favored Caspian Pipeline Consortium from the current 23 million tons to 40 million tons this year. The additional 17 million tons of oil would be used to fill the Burgas-Alexandropolis pipeline, which runs through Bulgaria and Greece, the project in which Kazakhstan is expected to buy shares. Nazarbayev added that Astana would direct, if not all Kazakh oil, at least the majority, of it through Russia, but on a “fair and mutually beneficial” basis (Panorama, May 11).

Notwithstanding Kazakhstan’s efforts to diversify its energy shipment routes, last year Kazakhstan exported 42 million tons of its total 52.3 million tons oil export volume, through Russian pipelines.

Moscow also intends to use its nuclear energy clout more effectively to entangle Kazakhstan in its geopolitical clashes with the West. Kazakh Minister of Energy and Mineral Resources Baktykozha Izmukhambetov and Sergei Kiriyenko, head of the Russian nuclear agency Rosatom, signed an agreement on setting up an international uranium enrichment center in Angarsk, located in the Irkutsk region of Russia. This will help Kazakhstan, the world’s second-largest uranium producer, to market nuclear fuel to third countries and revive the shuttered Ulbinsk steel plant. Kiriyenko announced plans for Kazatomprom and Rosatom to set up a Russburmash-Kazakhstan joint venture to prospect and drill for uranium. Putin optimistically assessed the agreement on nuclear cooperation as the first document aimed at realizing “our initiative to create a global infrastructure for nuclear energy” (Panorama, May 11).

Putin’s Central Asian tour culminated in Ashgabat where he, Nazarbayev, and Turkmen President Gurbanguly Berdimukhamedov issued a joint statement on plans to construct a gas pipeline along the Caspian Sea and passing through Kazakhstan; a 190-kilometers stretch of the pipeline will be laid by Kazakhstan. Uzbek leader Islam Karimov had signed the statement earlier. The rich gas reserves in the Turkmen sector of the Caspian, estimated to hold 5.5 trillion cubic meters, may be effectively used as a trump card in the prolonged energy dispute between Russia and EU countries, on the one hand, and Central Asian countries and the West on the other. The new gas triangle of Turkmenistan, Kazakhstan, and Russia seems to be working at an accelerated pace to sign the agreement on Caspian gas pipeline by September 1 and start construction of a pipeline with an annual capacity of 30 billion cubic meters in the second half of the year 2008. Berdimukhamedov pledged to supply any amount of gas needed to fill the pipeline (Khabar, May 12).

Currently Turkmenistan exports 50-60 billion cubic meters of gas annually to Russia and Ukraine through the overused Central Asia-Center pipeline. Uzbekistan is expected, according to joint declaration, to do its share to increase the capacity of this dilapidated pipeline. However, no one can be certain about the durability of the Russian-orchestrated energy alliance, although it offers Moscow another chance to reassert itself in Central Asia.