Kazakhstan: Opportunity and Decay on China’s New Silk Road

RANSOM MILLER

Photo by Daniel Zaretsky, Creative Commons Licensing

On September 7th, 2013, Chinese President Xi Jinping gave a short speech at Nursultan Nazarbayev University in Kazakhstan (CCP). At the time, it passed by unremarkably in the global press, but it has since been seen as a turning point in Chinese foreign policy: the launch of the Belt and Road Initiative (BRI), a massive foreign investment plan with 140 members from Santiago to Timbuktu to Rome (Green Belt and Road Initiative Center). It’s a moment now viewed as the unveiling of President Xi’s ambitions for China on the global stage—when the world’s most populous country began to strive for superpower status.

The Sino-Kazakhstani partnership is the oldest in the Belt and Road, but it is unusual. Kazakhstan is a Muslim-majority country, and China is actively perpetrating a genocide against its Islamic population in Xinjiang, the province neighboring Kazakhstan. China is one of the world’s largest economies, and Kazakhstan is a landlocked nation without a single trade port. While Kazakhstani political elites work with and against Chinese BRI donors to plan, fund, and embezzle from massive transportation and infrastructure projects in Kazakhstan, the general population’s hostility towards China grows. It’s not the sort of relationship that one might expect to be so heavily publicized by state media, yet in 2013, Xi Jinping chose to give that very first speech in Astana. It wasn’t just symbolic of the original Silk Road that BRI draws cultural significance from; the speech was symptomatic of the interdependence of these two nations. The Sino-Kazakhstani relationship is vital to both countries' political futures, but given the serious economic and social challenges they face together, success is improbable.

Why Kazakhstan needs China

As a former Russian subject, Kazakhstan has geopolitical and cultural dependencies on its northern neighbor going back to the czardom’s colonial beginnings. However, since independence, it has sought to establish itself as more than a satellite state. Kazakhstan has increased and diversified its foreign partnerships, investments, and reliances, using bidding wars over control of its natural resources to obscure any hint of its true allegiances. In many ways, this policy draws on the tradition of non-aligned Cold War leaders (like Egypt’s Nasser) to pit global powers against one another, but on a far less volatile field. 

Unlike Nasser though, Kazakhstan isn’t far from the states that seek its acquiescence. In fact, Kazakhstan borders both Russia and China, providing a buffer between two of the most powerful nations in the world. There is a kind of unwritten international understanding that Russia is the primary influence on Kazakhstan’s politics and China its economy (Bitabarova 154), but these boundaries are by no means clear cut. Russian intentions in Central Asia are uncertain as Putin exerts control over proxies in Belarus, Crimea, and Caucasia while publicly making claims that Kazakhstan is an artificial nation conceived by the break-up of the Soviet Union (Stronski, 4). Kazakhstan has quietly rejected Russian attempts to formalize any kind of currency union or military alliance that would place it firmly within the Russian sphere (Stronski 5). Instead, Kazakhstan has continued to actively participate in Chinese multilateral institutions like the Shanghai Cooperation Organization and the Asian Infrastructure Investment Bank (Zogg 2) while also reaping the trade benefits of Russian-led initiatives like the Eurasian Economic Union (Mostafa and Mahmood 168), drawing on a variety of global interests to diversify its influences and retain its international independence. Chinese influence is partially valuable to Kazakhstan because it provides a degree of security against Russian hegemony.

While China and Russia are the primary powers here, the European Union and the United States also play a significant role. Other countries like Canada, India, and Japan also have substantial investment in Kazakhstan, competing for the vast quantities of oil, natural gas, and uranium native to the steppe. Over 70% of Kazakhstan’s exports are oil and related products, much of which is carried through Russian pipelines all the way to Europe (U.S. Commercial Services) (although it’s the Chinese investors who own some 30% of Kazakhstan’s oil extraction business), (Toleukhanova, “China & Kazakhstan” and Pottinger, “Chinese Oil Firm”) with Chevron as the largest private oil producer in Kazakhstan, extracting some 339,000 barrels of oil per day as of 2019 (Chevron). Kazakhstan extracts 43% of the world’s uranium with the second-largest reserves in the world—an estimated 12% of total worldwide supply (World Nuclear Association)—and Kazakhstan’s state-owned uranium extraction monopoly, Kazatomprom, mainly partnering with Japanese and Russian corporations, is the largest producer of uranium worldwide (Kazatomprom). The result of these investments is a competitive market of international investors, but not necessarily a guarantee of long term stability.

The problems with Kazakhstan’s export economy are two-fold: it isn’t sustainable and it isn’t providing the necessary capital to develop a domestic consumer base. Kazakhstan is subject to the whims of the oil and uranium markets—the rising and falling prices of its own resources—an unstable position to begin with. As China and the EU make the push to cut carbon emissions (Abnett), oil and natural gas might become less and less critical as renewable energy is made affordable. In the case that these countries continue to need some quantity of oil products, it is easier obtained from the oil rich, coastal port cities of the Gulf States or fields closer to Europe than the remote facilities of Kazakhstan. The necessity of Russian pipelines to ship Kazakhstani oil to European consumers means that it might make both economic and political common sense to end overland energy purchases from the steppe (Paddy) sometime in the near future. 

The second problem is that even when production is good and demand is high, much of the income generated by investors and resource extraction does not go into funding public projects (Zogg 4). Instead, it filters through the ranks of government, empowering the oligarchy in internal power struggles and their own wealth creation with little impact on Kazakhstan’s economic system. Although even the elites recognize that money must be spent to develop Kazakhstan’s trade hubs and infrastructure if the country is to thrive after demand for its resources wanes, the economic sieves that they have created are systemic. It is impossible to know the full scale of the operation and there is no accountability. The only evidence that remains are the skeletons of these projects, like the pillars of a light railway in the capital for which Kazakhstan borrowed 1.5 billion dollars from a Chinese bank. The Kazakhstani judiciary is rife with corruption, so there is no avenue for reform—the people breaking the law are the same ones who write it.

This is where BRI is said to be critical: developing infrastructure across Kazakhstan to make it a land trade hub between the European Union and China. This aspect of BRI is highlighted by the Khorgos Dry Port, free trade zones, and planned city infrastructure which all receive the lion’s share of Kazakhstani BRI press coverage. But, while Kazakhstan’s trade routes to Europe could be profitable some time in the future, at the moment, China is losing money on its trade investments in Kazakhstan (Bitabarova 158). There are a number of complications: interstate corruption, time spent in customs, and the trade deficit. At every border stop, there’s an opportunity for local officials to steal from the cargo supply. This means a lot of different customs officers all able to enact their own, unofficial tariffs on stops from Kazakhstan to Europe, increasing risk and costs. In doing so, they undermine the key benefit of a land route: speed. Every day that is added to the transportation time is money wasted, and Kazakhstan’s bureaucracy tends to add time (Rastogi et al. 39 and Hulin “Kazakhstan Stops Trucks to Free up Space…”). The trade deficit between Europe and China means that goods only go one way, so the journey back is yet another expense for corporations (Bitabarova 158). Air and sea are almost always the most cost effective ways of shipping from Kazakhstan, and the new railways haven’t significantly altered that equation. Even as China continues losing money year over year, it doesn’t matter if the projects will never net profit, China will continue writing checks.

Why China needs Kazakhstan

Under the USSR, Kazakhstan was a nuisance to China. Tensions between the two countries made a military presence necessary along their 1,700 km shared border. After the fall of the Soviets, Kazakhstan and China were quick to allay tensions with a border agreement, splitting contested territory between the two states and removing the need for expensive security measures. Kazakhstan recognized the “One China” principle and has complied with Chinese anti-terrorism iniatives by extraditing individuals to China based on CCP-issued Red Notices (Kembayev 205). 

China would have little interest in Kazakhstan if it were not for the previously semi-autonomous province of Xinjiang. There, on the border with Kazakhstan, China has enacted a genocide using detention and reeducation camps to strip an ethnically Uyghur and theologically Islamic population of their basic human rights and individuality (Zogg 3). It’s difficult to express the dehumanizing quality of this program, of the constant monitoring and abductions, of the sterilizations and forced marriages of Uyghur women to Han Chinese men (Associated Press, “China Cuts Uighur Births…”). It is one of, if not the most, horrifying events in modern history. 

Kazakhstan’s silence here is crucial. The largest population of Uyghurs outside of China (many of whom are fleeing Xinjiang) resides in Kazakhstan. Some of the people being detained in China are ethnic Kazakhs, and Chinese officials in Xinjiang have accidentally, and sometimes purposefully, forced Kazakhstani citizens into the camps (Putz, “Carefully, Kazakhstan Confronts China…”). At the moment, the citizens of Xinjiang have much more in common with fellow-Islamic Kazakhstan than their globally recognized rulers in Beijing. Condemnation by many of the world’s powers is damaging China’s popular perception abroad, but condemnation by Kazakhstan could lead to actual separatist movements and war. China doesn’t just need Kazakhstan as a buffer to keep Russia out, it needs it as a seal to keep Xinjiang in.

In 2016, when an amendment to the Kazakhstan Land Codes proposed to change the maximum term for foreigners leasing agricultural land from 10 years to 25, large protests broke out across the country in response to the perceived threat of Han Chinese laborers buying up their land (Le Corre, “Kazakhs Wary of Chinese…”). The state was caught by surprise and the amendment was retracted. The population of Kazakhstan is more religious than its secular government, and the genocide next door is more worrying to them than their leaders. Although public discussion of Xinjiang is suppressed by the government, Kazakhstan’s control over the minds and mouths of its citizens is less advanced than in China. People talk. Not only are there Uyghurs on the Kazakhstani side of the border, but there are Kazakhs on the Chinese side as well. 

The money that China pays to build infrastructure in Kazakhstan is both a bribe and an investment. It maintains the Kazakhstani government’s loyalty to Chinese authority while also serving as a potential foundation for energizing trade to Xinjiang (once the genocide is completed, of course). Even if the projects that China invests in are stalled by Kazakhstani elites’ corruption and mismanagement, it’s no great loss to the CCP. Money flowing into the pockets of the elite only increases the power of the authoritarian regime and furthers the stability of the powers that be. Uncertainty is the greatest enemy of the Party.

Will the program last?

The current trajectory of this partnership is not bright, and although things have not reached a breaking point yet, there is every sign of instability in the coming decades. Kazakhstan will continue to rapidly deplete its natural resources, and the additional influx of capital will only sift into the hands of wealthy political elites. That funding will either further empower Nazarbayev and his family or spread into the hands of various oligarchs, resulting in an inevitable power struggle following Nazarbayev’s death either way. The Nazarbayev family is massive and entrenched in every level of Kazakhstani power, and the internal struggle to determine the next ruler will be bloody.

Kazakhstan’s population is far removed from the political machinations of their leaders, and fear of China, for both the ongoing genocide and other, more xenophobic reasons, continue to divide the rulers from the ruled. This, in addition to high levels of wealth inequality, crime, and corruption, points towards an emerging break between the populous and leadership (World Bank 18, 66). Over the past several years, Kazakhstan has seen significant protests unlike anything that it has faced since independence. Sooner or later, something will happen: someone will be killed, oil prices will spiral, or Nazarbayev will die, and in the intervening struggle, the Kazakhstani people will play a deciding role in whatever comes next.

China’s plans appear to be preparation for a significant presence in Central Asia into the foreseeable future. The current set of BRI projects throughout Kazakhstan are largely unprofitable and will continue to be for at least the next five years, probably longer. They are investments in regime stability and Kazakhstan’s political future, no matter its form (Saltybayev 83). That is not to say that Chinese intentions in the region are static—far from it. Kazakhstan is important to Chinese investors because of its stability. If Kazakhstan enters a period of turmoil, Chinese policy could lean on existing economic dependencies to force concessions from the next set of elites. China could even opt for a more direct military intervention into Central Asia as it has been willing to do in the case of its own domestic “agitators” in Xinjiang.

Russia might intercede to prevent Chinese domination, but subversion of China’s supremacy in the region is more realistic than direct conflict. Moscow is currently under fire from its population for widespread corruption, and it’s stretched thin by its own set of geopolitical problems. Although the Kremlin might succeed in reconsolidating its power base in the coming years, it is, at the very least, improbable that Russia will have the economic or political will to seriously attempt to supersede Chinese authority in Central Asia. Negotiation between the two powers could permit maintenance of the borderland even after the disintegration of the contemporary state of Kazakhstan.

This is all predicated on a continuation of current policies; it is by no means the only way forward. Kazakhstan may well use its resources to reinvest in the construction of BRI infrastructure and local projects to begin fulfilling its own lofty goals. Elites might concede some power to the populace to increase trust in government institutions and root out some forms of corruption. Nazarbayev could bring his successor into the limelight to ensure a non-violent transition of power. The problem in Kazakhstan is not that these things cannot happen; it is that they have not. The current Sino-Kazakhstani relationship is unsustainable. The next one must not be.

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