Kazakhstan is working to attract more investment from Gulf states as it develops transport routes akin to the ancient Silk Road between Europe and China, the country’s deputy foreign minister has told The National.
Gulf countries have poured investment into the oil and mineral rich central Asian country, deputy minister Roman Vassilenko said in an interview at the Astana International Forum in Kazakhstan's capital. These nations are seen as "an important source of potential investment”, he said.
Emirati transport and logistics giants including AD Ports Group and DP World already work at trade and port hubs in Kazakhstan. The country is expanding capacity on the so-called “middle corridor”, a trade route following similar paths to the Silk Road, connecting China with Europe through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and Turkey.
Several agreements were signed with the UAE when Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, visited Astana last month, Mr Vassilenko said, in sectors such as artificial intelligence, health care, renewable energy and infrastructure.
AD Ports Group, the operator of industrial cities and free zones in Abu Dhabi, said it plans to invest another $600 million to expand its operations in Kazakhstan, and aims to develop a multipurpose terminal to improve trade and expand its fleet in the Caspian Sea.
The investment in trade infrastructure comes as countries look to shore up supply routes for consumer goods and commodities and protect against shocks similar to those caused by the coronavirus pandemic and economic and political instability.
deputy foreign minister of Kazakhstan
“Abu Dhabi Ports is already working to help Kazakhstan develop maritime infrastructure on the Caspian Sea, as well as building up tankers for transporting our oil across it,” Mr Vassilenko said. “That is, of course, also part of the solution to the challenges that we face as we try to develop the middle corridor.”
The volume of products traded on the route, including crude oil and consumer goods, has increased from 560,000 tonnes in 2021 to 4.5 million tonnes last year, Mr Vassilenko said.
Relationships with the Gulf countries are focused on trade and investment, Mr Vassilenko added. Kazakhstan’s wealth of hydrocarbon and mineral resources, and keenness to widen its trading base beyond traditional allies Russia and China, mean that much of its foreign policy centres around finances and economics. Ties with major powers remain important – Beijing and Moscow are Astana’s largest trade partners, followed by the EU. But Kazakhstan is looking elsewhere too.
“Kazakhstan's foreign policy is sort of standing on several legs,” Mr Vassilenko said. “Russia is one. China is another one. Central Asian neighbours have a special place, of course, then the West, and then the Arab world. It's all part of the concerted vision that we have pursued ever since independence.”
Sanctions on both Russia and Iran have complicated trade for Kazakhstan and its central Asian neighbours, creating more need to bolster routes such as the middle corridor that travel through neither’s land territory.
Astana has adopted a neutral position on the conflict since Moscow’s invasion of Ukraine in February 2022. It continues to do business with Russia, from where goods from face wash to breakfast cereal and vodka fill the supermarkets of Astana. Conflict and instability in Afghanistan have also limited north-south trading routes.
“We are not only landlocked, but we are also limited in our options, so we can trade via Russia, and we have been doing this throughout our independence,” Mr Vassinlenko said. “Yet, we now understand that we need to develop alternative routes, and that's why the middle corridor comes in handy.”
When it comes to Iran, Astana sees “enormous” potential for trade, especially for transit to third countries, said Mr Vassilenko, who added that there are prospects for much better relations if ongoing talks between Tehran and the US reach fruition and sanctions on Iran are lifted.
Sharing a naval border in the Caspian Sea, Iran and Kazakhstan had a trade volume of $303 million in 2023, according to the Observatory for Economic Complexity. The trade was dominated by Iranian exports to Kazakhstan, mostly of polymers, ceramics and tropical fruit.
“The opportunities of trading via Iran with the world for Kazakhstan are enormous, and yet they are limited now,” Mr Vassilenko said. “Now you can still send goods via Iran, mostly food stuffs which are not sanctioned, et cetera, but it's still very limited. There is an infrastructure, and we have tried using this infrastructure in the past, meaning railways, and Iran offers beneficial tariffs for transporting our goods via railways, but generally normalisation of these relations will help.”
The world’s ninth largest nation by land area, Kazakhstan gained its independence in 1991 following the collapse of the Soviet Union, and produces 40 per cent of total current world supply of uranium, as well as crude oil. It also has other resources including rare earth minerals so attractive that they are becoming a leading area of policy for the country, as other nations seek to secure supplies.
Increasingly important in the development of consumer electronics, electric vehicles and medical equipment, rare earth minerals are highly sought-after by countries around the world, which are rapidly seeking to secure access to supplies. In April, Kazakh authorities announced the discovery of more than 20 million tonnes of metal deposits – a reserve that, if proven, would give the country the world’s third largest reserves of rare earth elements, behind only China and Brazil.
Kazakhstan not only needs foreign technologies to help it mine the precious reserves, it also wants to bring in foreign geologists to explore and discover more of them. The country has agreements with German, French, British and American geologists.
“I think in the next five to 10 years, you will hear more and more about rare earth metal developments in Kazakhstan, in particular in co-operation with the West,” Mr Vassilenko said.
