EU-Kazakhstan: Elections, trade and transition

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

A girl touches the handprint of Nursultan Nazabayev, on the top of the Bayterek tower in the city now called Nur-Sultan. [Georgi Gotev]

A small cultural contextualisation may prove helpful when discussing political reform in Kazakhstan, says Samuel Doveri Vesterbye. Here it is.

Samuel Doveri Vesterbye is Managing Director at the European Neighbourhood Council (ENC).

On June 9th, the Kazakh people will elect a new President. Since the country’s founding President Nursultan Nazerbayev stepped down in March, all signs point towards the former diplomat and Director-General of the United Nations in Geneva, Kassym-Jomart Tokayev, becoming the next President of Kazakhstan.

International institutors (like ODIHR mission under OSCE) have already focused some attention on the upcoming Kazakh elections underlining restrictive media provisions, eligibility requirements and defamation. Yet what also merits attention – within the context of the Presidential elections – is how the EU (Kazakhstan’s largest trading partner) is likely to support the country’s new and gradual political transition. A societal transition, which is likely to depend on the development of a competitive, open and stable economy, diversified away from fossil-fuel dependence. Besides continued cooperation with monitoring institutions like ODIHR, a move towards political transition will inherently depend on a more gradual approach, including domestic economic variables and the development of EU-Kazakh institutional relations.

There are a few things to watch out for in the upcoming months, and years ahead.

But first, let’s rewind to 2016, when the provisional application of the Enhanced Partnership and Cooperation Agreement (EPCA) was put in place. The trade agreement between the EU and Kazakhstan was regarded as historic due to it being one of the only two EU trade agreements signed with a country that is also a member of the Eurasian Economic Union (EAEU), the so-called “Russian alternative to EU integration”. But despite the EAEU posing no real economic threat to the EU (EAEU has poor arbitration, lower levels of standards and limited trade with the exception of raw-materials) two of its members – Kazakhstan and Armenia – made history in 2016 and 2018. Defying the Cold-War mentality, they became the first two countries to sign an economic agreement with the EU, while keeping a foot in the Russian-EAEU camp.

Fast forward to 2019 and the EU-Kazakh EPCA is more relevant than ever. The EPCA has helped standardize regulations, while aligning Kazakh laws with parts of the EU acquis to promote a rules-based level playing field. But despite this, Kazakhstan continues to face the problem of its economy being heavily dependent on energy exportation. Kazakhstan is Central Asia’s leading economy by all measures, yet over 80% of its current 25 billion trade with the EU is directly related to oil and gas. The main EU countries importing Kazakh products in 2018 were Italy ($8.8 billion between January-September 2018), the Netherlands ($4.8 billion), France ($2.7 billion), Spain ($1.5 billion) and Romania ($1.1 billion). The main EU investors were – in turn – the Netherlands ($3.8 billion between January-June 2018), Belgium ($797.5 million), France ($431.6 million), the United Kingdom ($292.9 million) and Germany ($145.6 million). A 45% export concertation in crude petroleum, followed by 20% export concentration in gas, copper, ferroalloys and radioactive chemicals, clearly shows the need for further diversification. Without it, Kazakhstan will continue to rely on the exportation of raw-materials, which is likely to negatively affect its currency, price stability and chances of increasing its economic complexity and potential over the long term.

EU-Kazakh relations

An important component of Kazakhstan’s future economic reform lay in its relationship with the EU and regional actors like China and Russia. For the EU, Kazakhstan is likely to play an important role as a future consumer market, energy producer, security-provider and trading-bridge with China. In return, Kazakhstan views the EU as an investment partner, while providing training, institutional know-how, political support and gradual reform.

In light of the new EU-Central Asia Strategy, increased EU financial and political support is vital. Whereas the strategy is fixed (Joint Communication will only get mild guidance in the form of the Foreign Affairs Council (FAC) conclusions) the real ‘next step’ lay in the implementation phase surrounding the new Multiannual Financial Framework. This will depend on how much input is given by the Kazakh government, its civil society, and experts alike (matching on-the-ground needs is crucial to avoid overlap and inconsistencies). An inclusive involvement with dedication towards border management, preventing radicalisation, communicating shared Euro-Kazakh thematic priorities, exchange in education/fellowships, will all play a determining role.

In July (after the FAC) the final strategy will be officially presented by HRVP Federica Mogherini to all Foreign Affairs Ministers from across Central Asia. The Deputy Foreign Minister of Kazakhstan, Roman Vassilenko, has already called the document ‘visionary’, ahead of any official government reaction.

Political reform

A small cultural contextualisation may prove helpful when discussing political reform in Kazakhstan. This reasonably young country has had limited exposure and working experience in dealing with democratic institutions. The emphasis on ‘gradual’ when speaking about democratisation therefore remains important. Any political transition or reform should be based on capacity building, strong institutional impendence, arbitration, stability, trust and a gradual approach.

Further engagement is needed to reform Kazakhstan’s legal and media environment. And arguable the willingness is present, as Nursultan Nazerbayev’s recent decision to step down as President looks likely to boost political momentum. Its success will in part depend on the Kazakh’s government and proper support from the private sector, including targeted investments to foster further capacity building for citizens, officials and civil society. Societal exchange and openness is likely to benefit from a step-by-step approach, supported by international institutions and the EU.

Leading Kazakh economists and policy-makers are fully aware of the country’s need to diversify and innovate to avoid falling victim of fossil-fuel dependence and – later – the middle-income trap. As a growing economy with a rising and educated urban middle class, its prosperity levels and demography is ripe for a more inclusive society and modern economy. Such a society necessitates accountability, good governance, better arbitration and social justice.

The recent show of willingness by former President Nursultan Nazerbayev to hold elections is a first step in the right direction. Kazakhstan is intelligently positioning herself towards the future: new international partners and a global economy.

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