In an interview with Russian state television, Kazakhstan President Nursultan Nazarbayev chided the West for trying to influence other countries through mass and new media, echoing positions long held by the Kremlin. The aging Kazakh leader appeared reasonably healthy and articulate on the issues. But his comments may challenge his long-held multi-vector foreign policy, which sought to advance Kazakhstan’s national interests by balancing those of the West, Russia, and China. With Afghanistan’s future in doubt and domestic stability becoming a question for the first time, Nazarbayev is more openly tying Kazakhstan’s future to Russia.
The below article originally appeared in the March 7, 2012 edition of the Central Asia and Caucasus Analyst, a bi-weekly publication of the Central Asia-Caucasus Institute and the Silk Road Studies Program Joint Center.
The signature infrastructure project of Kyrgyzstan’s new leadership is a 268 kilometer railroad line that would link China with Kyrgyzstan’s southern provinces and Uzbekistan. President Atambayev insists that Kyrgyzstan would profit greatly from inter-regional transit trade if the US$ 2 billion-plus line were built. Restrictions on Kyrgyzstan’s once lucrative practice of re-exporting Chinese goods to Russia and Kazakhstan have been increasingly curtailed by new Customs Union rules, leaving Bishkek searching for new sources of national income and employment. While the railroad would lower the costs for traders, its price tag in both monetary and political terms will not be insignificant.
On the southern bank of a tiny river lined with concertina wire, half a dozen empty freight trucks are idling, waiting to enter Kazakhstan. Ken-Bulun may look like a minor border crossing between Kazakhstan and Kyrgyzstan, but it is a doorway to a market of almost 165 million people – the new Moscow-led Customs Union of Russia, Belarus and Kazakhstan. And the truckers are growing impatient.
At the main border crossing heading from Kyrgyzstan to Kazakhstan, freight trucks line the road for hundreds of meters for a days-long wait. Cars, taxis and minibuses jostle for the remaining road. The modest bridge spanning the Chui River has been largely gridlocked throughout 2010.
Cross into Kazakhstan, and there are no queues. A crowd loiters around the gates, looking for passengers, family members, business partners. The whole scene is reminiscent more of a prison gate than an international border crossing.
An excerpt from an interview I gave back in 2010 to a DW documentarian on regional trade in Central Asia. It was taken at Dordoi Bazzar outside Bishkek, Kyrgyzstan. He liked the background chaos, as is supposedly adds authenticity.
The first response is to a question regarding whether Russia can lead a Customs Union within the WTO (it can), and whether Kyrgyzstan could join that Customs Union without violating WTO rules (without changes to the CU’s tariffs, it can not).
The second response is to a question on the effect of the Customs Union on trade between China and the EU. There should be little, since most of China’s trade with the EU travels by sea. Some expediters, such as DB Schenker, have been trying to establish a road/rail logistics corridor that would be competitive with sea routes for some products. It is possible that new CU bureaucracy or transit trade regulations could curb any headway the private sector can make in this area.
Russia and its leadership have long relied on customs duties as a major indirect revenue stream, and the CU is a natural extension of that regime.
With Putin’s recent invitation for Kyrgyzstan and Tajikistan to join the new Russia-Belarus-Kazakhstan Customs Union, many have wondered whether Kyrgyzstan could join in line with its standing commitments to the World Trade Organization.
One commonly held misbelief is that the WTO and a customs union are mutually exclusive – actually there are several customs unions that function within the WTO (such as the EU). However, WTO rules do not clearly provide for customs unions between WTO members and non-members.
The question of whether Russia will try to draw more of Central Asia into the recently christened Customs Union of Russia, Kazakhstan and Belarus (CU) was put to rest on May 21. At a meeting of the heads of the Eurasian Economic Community (EurAsEC) member states, Russian Prime Minister Vladimir Putin made clear his intentions to expand the CU further south:
As far as I know, there is not a single member of EurAsEC which would not like to join the work of the Customs Union. We will work with you in this direction.