QR Briefing: 3/9/2023
Author: Richard Spooner
Mar 9, 2023
CPC’s QR Briefing, is a summary and analysis of events and trends in the Republic of Kazakhstan (RK). With the decision to switch Kazakh language to a Latinized alphabet, which will be implemented in stages from 2023-2031, the country's name is now being rendered as Qazakstan, and Qazak Republic (QR) is gaining momentum, especially among young people, as a new acronym for the country, replacing RK, to resonate with President Tokayev's rebranding of the country as Jana (new) Qazakstan.
U.S. Secretary of State Visits Kazakhstan and Uzbekistan
Mukhtar Tleuberdi, Kazakhstan’s Minister of Foreign Affairs and Deputy Prime Minister, met with U.S. Secretary of State Anthony Blinken on February 28 in Astana. Among topics discussed was the difficulty Kazakhstan faces vis-à-vis Russia’s war in Ukraine, given Kazakhstan’s historical ties with both countries. At a press briefing following the meeting, Minister Tleuberdi stated, “Our economies have indeed been interconnected for a long time and it is for this reason that the current situation is very difficult for us, for our economy. We do not have a single company or economic sector under secondary sanctions. You understand that Kazakhstan is a member of the Eurasian Economic Union, and we have no customs duties between Kazakhstan, Russia, and other members of this union. That is why it can be very difficult to manage the free exchange of goods and services across our borders. But at the same time, we are trying hard to exclude any possibility of sanctions evasion by Russian or other foreign companies."
Tleuberdi noted that regular consultations are held between the governments of Kazakhstan and the United States to avoid negative impact on the economy of Kazakhstan. "Both countries have appointed officials who are in regular contact. The American side, and we are grateful to them for this, will inform us in advance about cases where secondary sanctions could be applied," Tleuberdi said.
Blinken stated the United States is committed to the sovereignty, independence, and territorial integrity of Kazakhstan and looks forward to further strengthening the bilateral relationship in the years ahead. Blinken noted that since independence, Kazakhstan has been a supporter of disarmament and global dialogue and has been promoting efforts in the field of international peace and security.
"The United States strongly supports Kazakhstan's reform agenda. Kazakhstan is a valuable economic and trade partner in the heart of Central Asia, and we appreciate the active role it plays in advancing common goals in the region. The United States was one of the first countries to recognize Kazakhstan's independence, and we are proud of our enduring friendship with the people of Kazakhstan. Together, we will continue to advance our shared priorities of peace, prosperity, and stability in the region and beyond," the U.S. Secretary of State stated.
CPC Security and Political Program Chair and former U.S. Ambassador to Kazakhstan (2008-2011), Richard E. Hoagland, made the following comment on the eve of Blinken’s visit:
“The Secretary of State’s trip to Kazakhstan and Uzbekistan this week is a strategic move by the Biden administration. Secretary Blinken will conduct a regular meeting of the C5+1, where he will meet with all the foreign ministers of the five Central Asian states. But the visit will also serve as a welcome reminder to the Central Asian leaders that U.S. foreign policy is paying attention to the region while their governments grapple with how to deal with their traditionally dominant partner, Russia, because of Putin’s criminal war in Ukraine. Washington has no desire to supplant Moscow in Central Asia, but it does want to remind the leaders of the region that the United States has not forgotten their multi-vector foreign policy and continues to be a reliable partner.”
Uzbek Investor to Build Cotton Processing Plant in Turkestan Region
Akim Darkhan Satybaldy recently received the head of Uzbekistan’s Global Textile Group, Muzaffar Razakov, to discuss improving the quality of raw cotton grown in the Turkestan region and creating a full-cycle cluster of cotton-related enterprises.
“There are opportunities for development in the region using special economic zones. In 2022, more than 126,000 hectares of cotton were cultivated in the region with a harvest of 361,800 tons, most of which was exported. Only 15% undergoes complex processing, and we need to increase this figure. I believe we have great prospects for implementing joint projects and sharing experience,” the Akim stated.
Muzaffara Razakov added that the parties have developed a roadmap for the project, whose implementation would begin in 2023.
“Contracts will be signed with growers in the Maktaaral district this year and 10,000 hectares of cotton will be planted, with 300 tons of high-quality cotton seeds to be delivered from Uzbekistan. If this pilot program yields the improved product we anticipate, then, according to the road map, next year the cultivation area will be increased to 20,000 and gradually up to 50,000 hectares by 2026,” according to a statement by the Akimat.
It is also planned to establish a logistics hub with the requisite infrastructure. “After the allocation of land and development of infrastructure, it is planned by 2026 to launch a cotton processing plant and factory for the production of knit fabric in the Maktaaral district,” the Akimat’s press service added.
Uzbekistan has been the center of cotton production and processing in Central Asia for decades, going back to the Soviet period. This project would become another welcome sign that two neighbors with certain common interests and issues have entered a new era in their relationship. Until recently, due to a long-standing rivalry between leaders Islam Karimov and Nursultan Nazarbayev, the countries had studiously avoided cooperation, even while signing treaties on eternal friendship. Now, since the death of Uzbekistan’s Islam Karimov in 2016 and the withdrawal of Kazakhstan’s Nursultan Nazarbayev from public life last January, Uzbekistan and Kazakhstan, under Presidents Shavkat Mirziyoyev and Kassym-Zhomart Tokayev, are engaging in bi-lateral cooperation that can only strengthen Central Asia economically and geopolitically as it faces significant challenges to develop new trans-Caspian logistical and transportation systems that would link the region more effectively with Europe, Turkey, the Gulf States, and other world markets.
New Gas Facility Might Appear at the Karachaganak Field
Kazakhstan’s Ministry of Energy has announced that, due to increased domestic demand and improved export potential, an additional natural gas treatment complex at the Karachaganak field in West Kazakhstan Region is under consideration. The facility would be put into operation by 2025 with initial capacity of 1 billion cubic meters per year, while a subsequent two-staged increase could grow annual capacity to 4 billion cubic meters.
In conjunction with this development, the Government has amended the model contract under which natural gas producers sell their output to processing facilities like Karachaganak, specifically incentivizing a phased commissioning of new fields, which would include fields owned by national companies KazMunayGas and QazaqGaz.
Karachaganak is Kazakhstan’s largest natural gas field and also produces significant volumes of gas condensate, a liquid hydrocarbon crude oil equivalent. Over 90% of the condensate produced at Karachaganak is sold to Western markets via the Caspian Pipeline Consortium with the remainder sold to Russia’s Transneft system. The gas is either re-injected into the reservoir to maintain pressure, cleaned of hydrogen sulfide (called “sweetening”) and used to generate electricity for Karachaganak facilities and local utility companies, or sold as raw gas under a long-term sales agreement to the Kazakh-Russian JV KazRosGas and processed at Gazprom’s nearby facility in Orenburg, Russia.
The field and refinery are managed by Karachaganak Petroleum Operating company (KPO), whose owners are ENI and Shell (29.25% each), Chevron (18%), LukOIL of Russia (13.5%), and Kazakhstan’s national oil company, KazMunayGas (10%).
In the years immediately following independence, ENI and British Gas won a government-held tender to operate the field (1993) but were unable to complete a final production-sharing agreement until 1997 due to difficulties in reaching a satisfactory arrangement with Gazprom to refine Karachaganak production at Orenburg, which at the time was the sole location available for stabilizing the condensate or processing the natural gas. Of course, before the collapse of the USSR, it made no difference that Karachaganak and Orenburg were on opposite sides of the Kazakh-Russian border. Karachaganak was Kazakhstan’s first challenge in negotiating with its northern neighbor so that Russia would not only recognize a significant asset developed by the Soviet Union as the sovereign property of the Republic of Kazakhstan, but also agree to do business together on that basis.
Renaming of Cities, Regions, Towns and Streets
Kazakhstani Deputy Prime Minister, Altai Kulginov, recently reported on plans to change up to 3,000 “ideologically obsolete” names of cities, towns, and streets. According to Kulginov, the program has been underway since late 2021, with 640 administrative entities renamed so far, and the changes are to be completed by 2025.
Starting in 2021, a specialized commission developed a list of geographical locations with special historical significance and historical figures who made a significant contribution to the country’s development, and it was decided that when determining a new name, the opinion of residents would be considered.
In 2022, part of Almaty Region was renamed Zhetisu, which in Kazakh means ‘seven rivers,’ the historic name for the southeastern part of Kazakhstan. At the same time, part of East Kazakhstan Region was renamed Abai Region for the revered Kazakh poet and philosopher, Abai Kunanbayev, who hailed from there.
Numerous streets in Astana will be renamed, and requests have been received from several cities and towns to undo decisions made in 2018 to rename streets in honor of former President Nursultan Nazarbayev.