Strategic shifts in Kazakhstan’s economy and sanctions stance

Suitable conditions

The President of Kazakhstan, Kassym-Jomart Tokayev, spoke during a lengthy government session about the country’s steady growth amid political challenges. Yet inflation remains a concern, reaching 14.5 percent and surpassing 2015 levels.

“There is a global rush for investment capital. Roughly every second, 1400 large foreign firms paused operations or exited the Russian market entirely. The government must create favorable conditions for relocating these firms to Kazakhstan. This would open opportunities to boost the production of mid- and high-end machining products.”

The head of state reminded everyone that he had instructed the government to assemble a pool of investment projects in manufacturing and to engage with potential investors.

“In terms of tangible results, there is little to boast about. There are essentially no new projects,” the chairman noted.

According to him, such projects tend to be realized in regional centers. Consequently, demand will come not only from ministers but also from regional leaders who push for concrete outcomes.

“We will comply with sanctions”

On March 29, Timur Suleimenov, Vice President of Kazakhstan, announced during a visit to Brussels that one aim of the trip was to demonstrate to European partners that Kazakhstan will not serve as a means to bypass sanctions imposed by the United States and the European Union on Russia, as reported to Euractiv. (Source attribution: Euractiv)

“We will adhere to the sanctions. Although we are economically aligned with Russia, Belarus and other nations, we remain part of the international community. The last thing we want is the imposition of secondary sanctions on Kazakhstan by the US or the EU,” he stated.

He described avoiding sanctions circumvention as a “two-way street.” Some observers, including a member of the British Parliament, urged sanctioning Kazakhstan due to its Eurasian Economic Union membership, while Kazakhstan’s authorities chose to openly explain their plans to European partners.

“Yes, we will continue to trade with Russia. We will keep investing and attracting investment in Russia since our economy cannot do otherwise. Yet we will do our best to monitor the movement of sanctioned goods and to check investments into Kazakhstan on behalf of sanctioned persons or entities,” he added.

He also noted that in Kazakhstan, Russia’s military operation in Ukraine is described as war.

“Of course Russia hoped for alignment with Kazakhstan. Still, Kazakhstan respects Ukraine’s territorial integrity. The country does not recognize the situations in Crimea or Donbass, as the UN does not recognize them. We will only honor decisions taken at the United Nations level,” he stated.

Crossing Russia

In the same interview, the vice president pointed out that the conflict in Ukraine has severed some export routes for Kazakhstan. On July 5, a Russian court halted oil pumping on the Caspian Pipeline Consortium pipeline, which accounts for more than two-thirds of Kazakhstan’s total oil exports. At that time, Tokayev called for diversifying oil resources as a primary national objective.

On July 7, Tokayev instructed authorities to diversify oil supply routes, prioritizing the Trans-Caspian corridor to European markets via China, Kazakhstan, the Caspian Sea, and Russia. Responding to Tokayev’s plan to build alternative export routes, Kremlin spokesman Dmitry Peskov suggested the decision was unlikely to be politically driven. (Source attribution: Kremlin press service)

“We must evaluate matters carefully. Environmental considerations were part of the suspension decision, so further discussions with Kazakh partners will be necessary,” Peskov noted.