Russian and Kazakhstani leaders have
indicated plans to prioritize multilateral
economic ties within the Customs Union and the
Common Economic Space (CES). Meanwhile, some of
their planned bilateral projects appear to have
dropped off the agenda.
Russia has
continued to extol the growing trade volumes
inside regional Eurasian groupings, and has again
pushed for the creation of a joint post-Soviet
currency. On June 15, Russia's Prime Minister
Dmitry Medvedev met his Kazakhstani and Belarusian
counterparts, Karim Masimov and Mikhail
Myasnikovich. Medvedev announced that their
trilateral trade turnover reached US$125 billion
last year, or an increase of more
than 35% year-on-year. He
also suggested that the three nations,
member-states of the Customs Union, needed a
common currency.
Masimov refrained from
commenting on the common currency plans, but
suggested considering the creation of a joint
railway venture. The new entity would facilitate
freight forwarding from the border between
Kazakhstan and China toward the border between
Belarus and the European Union.
The
meeting between Russian and Kazakhstani prime
ministers followed a trip to Kazakhstan by Russian
President Vladimir Putin. During a visit to Astana
on June 7-8, Putin and his Kazakh counterpart,
Nursultan Nazarbayev, signed an added protocol to
the bilateral friendship treaty, dated May 25,
1992, and extend it for 10 more years.
They also signed an agreement that removed
a mandatory 30-day registration requirement for
citizens of both countries who plan on traveling
to another state. Both sides discussed a possible
project to build a nuclear power plant in
Kazakhstan. Russia's RusHydro and Kazakhstan's
Kazakhmys energy giant also signed a cooperation
agreement. During talks with Nazarbayev on June 7,
Putin suggested drafting a joint
Russian-Kazakhstani action plan for 2013-2014 that
would set forth priority areas of bilateral
cooperation.
Russian and Kazakhstani
officials have repeatedly pushed for increasing
mutual foreign trade. At a meeting with Putin on
June 7, Nazarbayev announced plans to increase the
two neighbors' annual bilateral trade volume up to
$40 billion in 2012, or up from $24 billion last
year.
In 2010, trade between Russia and
Kazakhstan amounted to some $15.3 billion,
according to the Russian customs statistics. In
2008, trade between Russia and Kazakhstan amounted
to $20 billion, but it had dropped to about $13
billion in 2009 due to the global financial
crisis.
However, some of the earlier
pledges by the two countries to pursue bilateral
energy projects have tended to remain only on
paper. In 2005, Russia's gas giant Gazprom pledged
to set up a joint venture with Kazakhstan's
state-owned company KazMunaiGas to process natural
gas from northwestern Kazakhstan at the Orenburg
plant. It was expected that the Orenburg gas
processing plant would handle 17.6 billion cubic
meters (bcm) per year of Kazakhstani gas by 2012.
This has not happened, and during the latest
senior-level talks in Astana, both sides once
again refrained from mentioning the Orenburg gas
project.
Both sides have also been slow to
tackle the issue of the Caspian Pipeline
Consortium (CPC), a major bilateral project
expected to come on stream this year that owns the
Baku-Novorossiysk pipeline. The CPC has been
operating at low volumes due to Kazakhstan's
reluctance to commit more crude oil to the
pipeline. In 2008, Russia and Kazakhstan agreed to
more than double the capacity of the CPC from 32
million tonnes per year up to 67 million tonnes
per year by 2012. The deadline passed, but the
planned increase of the CPC pipeline's capacity
apparently still remains a distant vision.
Furthermore, the region's multilateral
economic integration has apparently created new
problems for Russia and Kazakhstan's bilateral
trade. For instance, the Customs Union
arrangements stipulate duty-free commodity trade.
But Russian officials complain that processed oil
products, supplied to Kazakhstan free of Russian
export tariffs, entailed losses to the Russian
federal budget amounting to an estimated $780
million in 2012. Subsequently, both sides are
discussing a new bilateral arrangement that would
involve reciprocally increasing shipments of crude
oil to Russia free of Kazakhstani export duties.
On June 21, Russia's Energy Minister
Alexander Novak said a new agreement on oil
product trade was due to be signed with Kazakhstan
by July 1. The deal envisages Kazakhstan supplying
some 1-2 million tonnes of duty free crude oil to
Russia. However, in early July both countries have
remained slow in clinching this arrangement. The
trade agreement was previously expected to take
effect from January 1, 2012.
Russia and
Kazakhstan continue to prioritize multilateral
economic ties within the Customs Union and the
CES. But, in the meantime, both states have
remained slow in implementing their earlier
bilateral commitments and tackling new problems in
their economic ties.
Prior to working
as Moscow-based independent researcher and
journalist, Dr Sergei Blagov was a newswire
reporter. He spent nearly seven years reporting
from Hanoi, Vietnam, between 1983 and 1997.
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