Publication: Monitor Volume: 5 Issue: 114

On June 12 in Astana, Kazakh Prime Minister Nurlan Balgimbaev and Russian First Deputy Prime Minister Nikolai Aksenenko discussed current difficulties which Kazakhstan is anxious to resolve in bilateral economic relations. The Kazakh side urgently needs Russian consent to transiting oil from Atyrau and gas from Karachaganak via Russia to European markets. Pending construction of the Tengiz-Novorossiisk oil pipeline, which has just begun, Kazakhstan seeks higher transit quotas through Russia’s pipeline system. Moscow recently agreed to increase Kazakhstan’s annual oil transit quota to 9 million tons, but demands that Kazakhstan foot the bill for expanding the Atyrau (Kazakhstan)-Samara (Russia) pipeline’s throughput capacity to 15 million tons annually, from the present 10.5 million tons. Moscow is also prepared to transit Atyrau oil and Karachaganak gas by rail via Russia, using Russian tank cars. However, Kazakhstan–in common with other CIS and even CIS Customs Union countries–considers Russian railroad and tank car fees exorbitant. The Aksenenko-Balgimbaev discussions resulted in referring the issues to expert groups for further study–usually a recipe for procrastination.

On a slightly more encouraging note, the Russian side agreed to commence in July the overdue payments for its use of Kazakhstan’s Baikonur space flight center. The two countries had signed a lease agreement back in 1994, but Moscow managed to postpone until 1998 the payment of the annual rent in the amount of US$115 million. Moscow eventually agreed to begin the payments in January 1999 but failed to do so. Whether Moscow will be able to adhere to the payments schedule from July on remains questionable.

Kazakhstan, for its part, introduced in January 1999 tariff surcharges and import limitations on twenty-one categories of Russian commodities–mainly foodstuffs and certain consumer goods. Kazakhstan’s measure–exposing the hollowness of the CIS Customs Union–was necessitated by the devaluation of the Russian ruble and the resulting need to protect Kazakhstani producers against unfair Russian competition. In the meantime, however, Kazakhstan has allowed its national currency–the tenge–to free-float and to decline as well. Consequently, Balgimbaev was able to agree with Aksenenko that Kazakhstan would allow the surcharges and limitations on Russian imports to expire on June 23 without renewal. But, the same day, Kazakhstan’s Customs Committee Chairman Maratkali Nukenov announced that significant differences persist between Russia and Kazakhstan over customs tariffs and regulations, and that last week’s session of the CIS Customs Union’s Integration Committee (the executive organ of the Russia-Belarus-Kazakhstan-Kyrgyzstan Customs Union) had failed to settle those bilateral Russian-Kazakh differences, as each side appeared to seek protectionist advantages at the other’s expense (Habar, Itar-Tass, June 12).

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