It is sometimes all too easy to overlook Kazakhstan. British businesspeople and policymakers who may be familiar with more distant, Far Eastern markets often know little of this huge Central Asian country, strategically placed at a crucial geographical and cultural crossroads. They may know that it is a former Soviet republic – a label that Kazakhstanis are keen to lose – and that it has considerable oil and gas wealth. But many would struggle to name the capital (Astana) or even place it with any confidence on a map.
There are several reasons why that needs to change. Kazakhstan presents a range of business opportunities for British business, from clean energy to education, rare earths, and many others in between.
Western governments are clearly stepping up their engagement with Kazakhstan, for both geopolitical and economic reasons.
The US Secretary of State, Antony Blinken, was there at the end of February, expressing US support for the independence, sovereignty, and territorial integrity of Kazakhstan and the other Central Asian countries. The US has invested some $50 billion in the country since independence.
In November last year Ursula von der Leyen signed an agreement with Kazakhstan aimed at securing raw materials, specifically minerals, to drive forward the EU’s digital and green economy goals.
And Britain too is engaging more with Kazakhstan; the Prime Minister’s trade envoy, Emma Nicholson, visited in early March, and Foreign Secretary James Cleverly is expected to visit next week – the first such visit for many years. Some 600 British companies are registered in Kazakhstan and British businesses have invested over £13 billion in Kazakhstan since 2005.
So why exactly are senior western politicians now engaging more with Kazakhstan? And why should British firms in particular pay attention? I would point to five main reasons.
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First, geography. Historically on the ancient Silk Road, Kazakhstan has long promoted its strategic location as a transit country between Europe and Asia, With the Russian market off-limits because of international sanctions, Kazakhstan – which opposes the war in Ukraine – represents a viable alternative market for many firms.
It’s worth noting, though, that this does not mean evading sanctions. The Kazakh government has made it clear that it will respect international norms and standards and it cannot afford to be seen as a rule-breaker.
Second, reform and stability. Under President Tokayev, Kazakhstan is reforming both politically and economically, privatizing state assets, promoting the market economy and removing the influence of oligarchs who flourished under his predecessor. Parliamentary and electoral reform continues steadily. The country is stable and at peace.
Third, wealth of resources. Oil and gas remain the mainstay of the economy. But as the EU has recognized, the Kazakh rare earth and minerals sector is coming into its own as countries scramble to secure the strategic raw materials needed for tech development and green growth – a market today dominated by China. Socially responsible extraction and processing facilities as well as secure supply chains will be needed for the west to take full advantage of what Kazakhstan has to offer. This represents an excellent investment opportunity.
Fourth, regulation and the business environment. Kazakhstan is doing everything it can to encourage foreign direct investment and there is help available from government agencies, notably Kazakh Invest. While corruption is still a worry, the government is committed to action on this front.
The Astana International Financial Centre (AIFC), established five years ago, provides a reliable, open and familiar basis for arbitration and legal action if things go wrong. Its justices are largely British, and its court system uses English common law. AIFC court decisions are final and cannot be appealed in the national court system.
Fifth, human capital. Kazakhstan is a young country with an increasingly talented workforce. For thirty years the government has prioritized overseas higher education through its Bolashak scholarship scheme for study abroad. Half of all students who took part in the scheme went to British universities, and many of those graduates now occupy senior positions in government and industry. The government is now focused on transnational education, successfully attracting foreign universities to set up shop in Kazakhstan. In 2021 De Montfort University Kazakhstan was established in Almaty – the first British university campus in the country, delivering high-quality British higher education to a new generation of young Kazakhs.
Kazakhstan as a higher foreign policy priority?
So the Foreign Secretary’s visit is very timely. Whether for geopolitical or economic reasons, it is high time for Kazakhstan to feature higher on the UK’s foreign policy priorities list. Its energy resources, for example, could play a significant role in helping the west reduce its dependence on Russia for oil and gas, for good. Many Kazakhs are familiar with the UK, and there is much goodwill towards us. Reinforcing our strategic commitment to this key Central Asian partner is long overdue.
Michael Gifford OBE was British Ambassador to Kazakhstan, 2018-21