Asia Times: The high price of Kazakhstan's MiG affair



	November 19, 1999	atimes.com

Central Asia/Russia

The high price of Kazakhstan's MiG affair
STRATFOR.COM
Global Intelligence
Update Weekly Analysis November 18, 1999

Summary:

Kazakhstan has announced that it has completed its investigation into the illegal sale of MiG-21 fighters to North Korea. The completion of the investigation is likely to defuse a threatened suspension of US aid. But the incident has weakened relations between the Central Asian nation and the United States and will push Kazakhstan closer to a regional power, such as Russia or China. Relations between Astana and Moscow are so strained right now that the Kazakh government will likely grow closer to China, at least in the short term.

Analysis:

Kazakhstan's intelligence service announced on November 17 that its investigation into the illegal sale of MiG-21 fighter aircraft to North Korea was complete and that senior government officials had been involved, according to both local and international news reports. The current scandal is the second incident involving MiGs in the last six months, creating an ongoing embarrassment for President Nursultan Nazarbayev, who has worked hard to establish ties with the West.

Two recent scandals have revolved around Kazakh MiG fighters. In March, six jets were detained on a circuitous route to North Korea. Transported aboard a Russian cargo plane, the crated jets were to be taken through the Czech Republic to North Korea. But the cargo plane was detained in Baku, Azerbaijan, and routed back to Kazakhstan. Kazakh authorities launched an investigation but halted it in May, concluding that the shipment was just a huge misunderstanding - not a criminal offense. In August, news reports indicated that North Korea had purchased 30 to 40 Kazakh MiG-21s.

The sales so threatened to upset Kazakhstan's ties with the West, that Nazarbayev fired Defense Minister Mukhtar Altynbayev and the chairman of the country's security committee, Nurlan Balgymbayev, on August 9 for failing to fully investigate the March incident. Prime Minister Kosymzhomart Tokayev assured Western countries that the Kazakh government had no knowledge of the sale, and requested that North Korea return the planes. North Korea has at various times declined to return them and even denied knowledge of the planes.

The sales and the recent conclusion of the investigation have upset the delicate balance of Kazakh foreign policy. The recently independent state is also newly deprived of its major customer for its heavy industrial products, Russia. Kazakhstan is rich in resources but dependent on foreign investment to develop its infrastructure. Like its Central Asian neighbors, Kazakhstan is strategically located, but not politically or economically strong enough to fend for itself. It needs to ally itself with a stronger power, such as the United States, Russia or China. So far, Nazarbayev has favored Washington.

But the MiG affair has thrown a wrench into relations with the West. The United States has responded with threats to suspend the $75 million in aid it supplies Kazakhstan each year. In addition, the Organization for Security and Cooperation in Europe has alleged that the government has tampered with elections, further cooling relations between Washington and Astana. While the United States is likely to continue aid - as long as Nazarbayev fires the implicated officials - the flow of cash is unlikely to increase. The US Congress, already tight-fisted with foreign aid, will not be easily convinced to send more money to a nation which has exported weapons to a sworn enemy.

More importantly, the MiG scandals threaten the meager flow of foreign investment that helps prop up Kazakhstan's economy. Both US and South Korean investors - major investors in developing Kazakhstan's natural resources - are likely to be restrained by their governments. This threatens millions of investment dollars for the oil, gas and metallurgical industries; Kazakhstan was already strapped for funds before this crisis of confidence.

With Western help unlikely, Kazakhstan will increasingly need to turn to a regional power for both money and possibly security. Relations with Russia are rocky. Russia is a major partner in Kazakh oil exploration and export but tensions have arisen in other areas, such as the use of Kazakhstan's Baikonur space launch facility. Following an accident, the Kazakh government banned Russia from using its launch facilities until at least February 2000, and demanded financial reparations. The two governments are still haggling.

This places China in a particularly favorable position. In the absence of Western assistance, China by default is the best partner around - at least in the short term. This would be great for China, which needs fuel and is eager to invest in Kazakhstan's vast, undeveloped oil fields. As for the MiG issue, China is unlikely to complain. Although the illegal exports were making their way to North Korea via China's competitor in the region, Russia, China has the closest ties to Pyongyang. Nor is Beijing likely to be concerned about North Korea's arms, since Beijing uses its neighbor's belligerence as a lever in negotiations with the West.

China also has strategic interests in befriending its Central Asian neighbor. Like Russia, China wishes to contain Islamic unrest in Central Asia and to protect the integrity of its borders. China has recently stepped up its efforts to befriend its neighbors, taking part in talks to reduce military forces along the region's borders. The wealth of Kazakhstan's resources, waiting to be mined, is also a major lure.

Black market weapons exports have become quite common in the former Soviet states. Selling old tanks, small arms and even jets has become a source of quick cash. But for Kazakhstan, the sale of these 1960s-era jets has yielded an extraordinarily poor return on investment; just $8 million may have gone either to government coffers or the pockets of corrupt officials. The cost of this transaction may now be calculated in the country's strategic direction.

(c) 1999, Stratfor, Inc.
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