Economic Relations between Kazakhstan and Russia

Contents

INTRODUCTION 1

1. THE RUSSIAN-KAZAKHSTAN RATIOES AT THE PRESENT STAGE 5

1.1 Mutual Trade 8

1.2 Cooperating in oil gas and power 15

1.3 Cooperating in sphere of transport and communication 18

2. CONDITION OF FOREIGN TRADE BOTH DEV’T OF THE JOINT / ENTERPRISES KAZAKHSAN AND RUSSIA

2.1 Some aspects of economic interaction Kazakhstan and Russia 22

2.2 The factors of economic interaction of Kazakhstan and Russia 24

2.3 Engaging the foreign investments 26

2.4 Cooperating in the field of electric power industry 27

2.5 Cooperating in the field of machine construction industry 28

2.6 Cooperating in the field of a uranium industry 29

3. involvement in international organizations, kazakhstan and russia 31

3.1 The Eurasian Union: Realities and Perspectives 34

4. VITAL PROBLEMS OF THE PRESENT-DAY STATE OF 44 KAZAKHSTANI-RUSSIAN RELATIONS

CONCLUSION 61

LIST OF USED SOURSES 65

INTRODUCTION

The origins of Kazakhstani-Russian relations lie in hoary antiquity, when Kazakhs and Russians lived on the vast Eur­asian territory and, being neighbors, developed good-neigh­borly relations in all the spheres of human activity.

In analyzing the relations between Rus and the Great Steppe, one cannot fail to mention the work of the greatest specialist in this field, Lev N. Gumilyov. In his preface to Gumilyov's book, Ancient Rus and the Great Steppe, Academi­cian Dmitry S. Likhachev wrote this: Rightly taking into account the links between subsistence economy and the level of prosperity of ancient societies, and thus their military pow­er, the author also compares historical events and climactic fluctuations of the steppe zone of Eurasia. In this way he ar­rived at a series of clarifications, which enabled him to describe in detail the historical-geographic backdrop against which var­ious cultural influences came in conflict with the local forms of the original culture of Eastern Europe.

It must be noted in any analysis of the emergence of the 15 new, post-Soviet states on the map of Eurasia that certain specific features marked the gen­esis of each of them. The present study focuses on the processes of sovereignty of Kazakhstan, and the specificity of these processes lies in that from the very beginning the republic's political leadership did not initiate centrifugal tendencies, regarding reasonable integration an imperative of the times and endeavoring to ease as much as possible the destructive consequences at every stage in the disintegration of the Soviet Union. Kazakhstan was the last former Soviet republic to declare its independence - not out of any b gravitation toward the past or peripheral political development let us recall that Kazakhstan was one of the first to experience, in December 1986, the repressive pow­er of totalitarianism then already withering away but because it understood that artificial acceleration of this process is fraught with the danger of serious upheavals. The history of numerous bloody ethnic, social, and even interstate conflicts in the post-Soviet space bears striking evidence of that.

The immediate subject matter of the present study is not just the isolated process of the sovereignty of one of the post-Soviet countries but the emergence and development against this background of new interstate relations of two major re­publics of the Soviet Union, Kazakhstan and Russia. In our view, it is relations between precisely these two countries that can be seen as a model for the establishment of equal and mutually advantageous between newly independent states. This view is borne out by a sufficiently smooth and planned, though far from problem-free, development of bilateral Kaza­khstani-Russian relations, a meaningful historical tradition of mutual relations, and an absence of sharp turns or wavering due to subjective or external causes.

Another unifying factor is time—the many centuries of the history of mutual relations between the peoples of the two countries that have been neighbors in these great open spaces since the beginning of time. This far from simple history, full of drama and heroism, these strata of time bound together by the unremitting toil of numerous generations, unite the two peoples.

The Soviet period in the relations between the two states let us recall that, according to the 1977 Constitution of the USSR, the constituent republics of the Soviet Union were declared to be "sovereign Soviet socialist states" united in the Union of Soviet Socialist Republics and having the right to enter into relations with foreign states, conclude treaties and exchange diplomatic representatives, and - theoretically -secede from the USSR was marked by the prevalence of the so-called converted forms. The ubiquitous and all-round dominance of All-Union structures made meaningless all talk of real interstate relations between Kazakhstan and Russia. Both sides were in this case the objects of a grandiose social experi­ment. Although positive achievements of tills period cannot be discarded either.

The emergence and further development of relations of equal partnership between new independent states, the Repub­lic of Kazakhstan and the Russian Federation, became a sort of synthesis of the entire centuries-old history of Kazakh-Russian relations. Only now can the relations between the two countries be justifiably described as subject-subject ones. At this stage, both states solved such problems as defining their status in the system of world politics, establishing relations with leading world nations, and entering the field of international law.

The dominant role of Kazakhstani problems has deter­mined the chronological framework of the investigation.

The overall time frame covers the period from December 1991 the setting up of the Commonwealth of Independent States, which finally marked the disintegration of the USSR to the end of 1995.

In the four years, bilateral Kazakhstani - Russian rela­tions went through a series of significant stages the study of which can adequately determine the level of mutual relations between the two countries, the scope and range of integration. We single out three stages in the development of Kazakhstani-Russian relations:

— Defining the legal interstate relations of the two coun­tries December 1991 - May 1920

— Searching for a model of economic and political coop­eration between the states May 1992 - March 1994

— Expanding and deepening integration between Kaza­khstan and Russia in the economic and other spheres March 1994 - 1995.

Although some elements of legal contractual relations between Kazakhstan and Russia may be discovered before De­cember 1991, when attempts to preserve the Soviet Union were made, it will be more chronologically correct, in our view, to choose the moment at which the CIS was legally formed and the activity of the Union structures of authority was discontinued as the starting point of the study.

We propose that the signing in May 1992 of the treaty of friendship, cooperation, and mutual assistance between the two countries be singled out as the concluding moment of the first stage in the relations between Kazakhstan and Russia and at the same time as the beginning of the new stage. That doc­ument became the foundation for qualitatively new relations in the history of the two states, opening the first page in the official interstate relations in the new history of Kazakhstan and Russia. It determined the principles of bilateral relations in the political, economic, military-strategic, cultural, and spir­itual spheres, lending a colossal impulse to the entire subse­quent negotiation process.

During the search for a model of interstate economic and political cooperation between Kazakhstan and Russia, the prin­ciples were developed for bilateral relations, which were later recorded in the treaty of friendship, cooperation, and mutual assistance. The first official visit of President Nazarbayev of Kaza­khstan to the Russian Federation in March 1994 marked the beginning of the third stage in the development of Kazakh­stani-Russian relations - that of expanding and deepening in­tegration between Kazakhstan and Russia.

This division of the time frame of bilateral Kazakhstani-Russian relations into periods shows that one of the goals of the present work is to demonstrate continuous development between Kazakhstan and Russia in the post-Soviet period.

As the period of political history analyzed here is ex­tremely close to the present, it cannot be regarded as worked out in detail in Russian and foreign scientific literature. How­ever, the problems of development of the new statehood of post-Soviet countries of Kazakhstan in this case, of the birth and evolution of interstate relations, of their entry into the international community, are being studied ever more actively.

The crucial period of the disintegration of the USSR and the emergence on the map of the world of new, independent states was primarily reflected in scientific periodicals. Special mention should be made of the collective work The New Treaty of Union: The Search for Solutions.

Problems of mutual relations between newly independent states have also become the subjects of attention of Russian experts and political scientists. The period of disintegration of the USSR and of the development of Kazakhstan as a sovereign independent state are at present actively studied by Kazakhstan scientists. Works have been written on the problem of the emergence of the new statehood, development of the system of separation of powers, democratization of society, evolution of party structures and institutions of democracy, and the construction of a new legal and judicial system. Present State and Works on the subject of bilateral Kazakhstani-Russian relations from the moment the two states achieved indepen­dence can be divided into several groups. The first and the most numerous one deal with relations between Kazakhstan and Russia within the framework of the Commonwealth of In­dependent States.

In recent years the development of market relations has considerably boosted interest for economic and trade cooper­ation between the two independent states. Mention must be made of a joint work by the staff of the Russian Institute for Strategic Studies under the title Kazakh­stan:Realities and Perspectives of Independent Development, It should be noted, though, that this work suffers from an obvi­ously incomplete documentary and factual basis and a certain superficiality in the analysis of the problem.

The study is based on such sources as legal acts and interstate Kazakhstani-Russian treaties, agreements, declara­tions, joint protocols, and other documents and materials, as well as decrees, decisions, and resolutions of the organs of state power in Kazakhstan and Russia.

Extremely important sources for the study of the last five years in the history of Kazakhstan and of Kazakhstani-Russian relations are the works of President Nursultan Nazarbayev of Kazakhstan: Without the Right or the Left, The Strategy of the Formation and Development of Kazakhstan as a Sovereign State, The Strategy of Resource Saving and the Transition to the Market, The Market and Socioeconomic Development, and especially his new book, On the Doorstep of the 21st Century, as well as his speeches at various forums.' Just as important as sources for the present study are the books by President Yeltsin of Russia: Confessions on a Given Theme, Memoirs of a President as well as his official speeches, and also the works of other Russian politicians and public figures, which afford a deeper grasp of the essence of events happening in the post-Soviet space in the 1990s.

The process of market reform in the republic and the tendencies and prospects for further reform in the socioeconomic sphere are reflected in several books by Kazakhstan's Prime Minister A.M.Kazhegeldin: The Socioeconomic Problems of Development of the Republic of Kazakhstan in Times of Reform, Kazakhstan in Times of Reform, Problems of State Regulation Under the Conditions of Socioeconomic Transformation.

The formation of the republic's diplomatic service and problems of its civilized entry in the world community are studied in the works of K.K.Tokayev, Kazakhstan's foreign minister.

Intense legislative processes at all levels in the given peri­od necessitated close attention to the legal basis of the newly independent states. As far as Kazakhstan is concerned, that legal basis includes above all the Constitutions of 1993 and 1995, of which the content and the sociopolitical background may be seen as the quintessence of the given period in the country's history.

The main distinctive feature of the source base of the study is the fact that most documents of the given period of political history have not yet been moved to the archives; it was therefore necessary to turn on many occasions to various cen­tral and departmental current archives. The identification and systematization of many sources, their publication in a collec­tion of materials devoted to the development of Kazakhstani-Russian relations was in themselves an important task.

It may thus be said that extensive sources have been used in the analysis of the above-mentioned problems; their study made it possible to paint a comprehensive picture of the devel­opment of Kazakhstani-Russian relations against the background of the sovereignty of Kazakhstan in 1991-1995.

1.THE RUSSIAN-KAZAKHSTAN RATIOES AT THE PRESENT STAGE

In a context of events, which have taken place in region after September 11, the role of Russia in Central Asia a little has varied, as well as all has varied geopolitical formulated in region last years.

In these conditions of one of important external policies of tasks of Kazakhstan is the adjusting of tactics and strategy in ratios with Russia, which would correspond by modern geopolitical realities and long-term interests of our country.

Central Asia and Caspian Sea, so-called recently Caspian – Central Asia region, go into an region of traditional interests of Russia.

In this region it always had the important national interests, which, however, in different periods were defined by different circumstances and factors.

The key interests of Russia in this region at the present stage can be reduced to the following.

Central Asia has the important value in of a safety of Russia.

The importance of this region for Russia is stipulated not oil by the factor implying from desire to save influence on Caspian Sea;

Our region is of interest for Russia territorial, where its compatriots live. Are those, on our sight three dominating interest of Russian Federation, dominating, Caspian – Central Asia region at the present stage. It in this region has also other interests trade, cosmotron of “Baikonur”, industrial communications etc. but they now in basic carry not so priority character.

Until recently Russia ensured above-mentioned interests without the special efforts. All countries of region in the majority were that or are otherwise dependent on Russian Federation.But the events, which have occurred after September of the last year, have brought in serious enough variations to a geopolitical situation in Central Asia and have affected on common position of forces in region.

One of the occurred key variations consists that the break in sphere of traditional vital interests of Russia is watched which today faces to necessity Central Asia of policy.

As a whole by 2001 in Central Asia the private tripartite balance between interests of Russia, China, USA was folded.

The given balance can figuratively be presented as a triangle, in which upper corner Russia, in one lower corner - USA, in the friend - China settled down. These countries have occupied three strategic niches in Caspian – Central Asia region: military-political, oil and gas, commodity-raw.

The Russian presence at region last years was ensured, first of all, with strategic military-political component. A peaking of a problem extremism and the terrorisms in Central Asia, activation Islamic of driving of Uzbekistan, irreconcilable part of Integrated Tadjik opposition at immediate support Talib have established in 1999 - 2001 real threat for the countries of region.

In these conditions only Russia was considered by the states of region as the real factor and safety. It is enough to recollect, that these years the contacts through link DKNB, intensive two-sided ratios in military and military-engineering sphere were especially made active.

Thus, USA has occupied oil and gases a niche in our region, and Russia and China by virtue of economic circumstances could not with it compete in this direction.

In this geopolitical triangle Russia all the same occupied a little bit dominating positions. This majoring in many respects was determined strategic military-political component, which role in the international ratios is traditionally high.

In a context of a common global situation Russia forced to be reconciled with a determination of military basses of USA in region of its traditional interests.

Taking into account all these circumstances, Russia faces to necessity of the policy in Central Asia. The further prolongation above-mentioned of the tendencies will have for it painful enough consequences.

Despite of some variation of a role of Russia in Central Asia, for Kazakhstan the strategic interests in a ratio of Russia continue to be saved.

The necessity of activation of ratios with Russia and holding of constructive cooperating on much important for Kazakhstan to directions is dictated as well by that in case of essential weakening of Russia in Central Asia it will be fraught with negative consequences. The situation in region can become unstable and badly forecast.

In the whole traditional interests of Kazakhstan in a ratio of Russia are founded on four factors having long-time character and diminuendos by such eternal categories, as geography and history.

First, the maintenance partner of ratios with Russia is necessary valid intercontinental of an arrangement of Kazakhstan, for which the exit on the world market is vital for an economic development. Russia in this respect occupies the strategically important position; being by the state, on which region pass vital for us strategy of transport and communication.

Secondly, Russia is one of the important subjects of the international system, having significant political weight and rather large military-engineering opportunities. The Russian factor in many respects determines external policy a situation around of Kazakhstan, both on regional, and at the international level.

Thirdly, Russia is the major economic partner Republic of Kazakhstan. It not only imports different production and techniques to Kazakhstan, but also is the market of selling of Kazakhstan production. About 70 % of Kazakhstan industrial potential is involved on economy.

In - fourth, both states are combined with a historical generality, spiritual and cultural links. In region of Russia the man is Kazakh Diasporas including 740 thousand. In Kazakhstan Russian are second on number ethnic group, making about 30 percents of the population of the country.

In this context the Russian direction of exterior policy of Kazakhstan remains to one of priority and strategic.

As a whole at the present stage in the Russian-Kazakhstan ratios the following most priority and perspective directions of cooperating are meant:

• Mutual trade.

• Interaction in oil and gas and power sphere.

• Cooperating in sphere of transport and communications.

• Cooperating in sphere of safety.

1.1 Mutual Trade.

The interests of both countries are answered with magnifying of mutual trade. Russian Federation traditionally occupies the first place among the basic trade partners of Kazakhstan both on export, and on import. Trade turn over in 2001 from Russian Federation has made 4 639,3 million of US dollars (Diagrama1,2).

It is necessary to mark, that last years the growth of a share of Russian Federation in import and reduction in export is watched. The specific gravity of Russia in total amount of the Kazakhstan export is sequentially reduced (from 44,5 % in 1994 up to 20,2 % in 2001) and is augmented in import (from 36,3 % per 1994 up to 45,4 % per 2001). Within several last years of Kazakhstan has negative trade balance with Russian Federation.

Basic trade partners, in import, 1994-2001 (%)

	1994	1996	1997	1998	1999	2000	2001
•Russian Federation	36,3	54,8	45,8	39,4	36,7	48,7	45,4
• China	2	0,8	1,1	1,2	2,2	3	2,8
Poland	0,7	1	1	1,1	1,7	1,2	0,9
•Uzbekistan	7,8	2,1	1,5	2,2	2,4	1,5	1,3
•Kyrgystan	2,9	2,1	1,5	1,2	0,7	0.6	0,4
• Tajikistan	0,5	0,4	0,1	0,1	0,1	0,1	0

The Diagrama1

Basic trade partners, in export, 1994-2001 (%)

	1994	1996	1997	1998	1999	2000	2001
•Russian Federation	44.5	42	35,2	29.6	19,8	19,5	20,2
• China	4,6	7,8	6,8	7	8,5	7,3	7,1
Poland	1,7	0,4	0,4	0,8	1,4	0,8	1.5
•Uzbekistan	4	3,4	2,3	2,2	1,2	1,5	1.4
•Kyrgystan	1,9	1,9	1	1,2	1,1	0.6	1
• Tajikistan	03	1	0.8	0.8	08	0.6	0,6

The Diagrama2

Considering structure of export and import on groups of the commodity spectrum, it is possible to select the following characteristic features.

Export. Structure of export Republic of Kazakhstan in Russian Federation for the last few years has varied the separate commodity groups have occupied a leading position.

Now on four commodity groups (glow iris3) (fuel mineral, oil and petroleum; products of inorganic chemistry; grain bread and ores) are necessary about 80 % of the Kazakhstan export in Russia, whereas in 1994 on the pointed groups it was necessary 53,3 %. In 2001 as contrasted to 2000 the separate outbound delivering tended to lowering, so, for example, the specific gravity of export of a grain was reduced from 12 % up to 6 %; the export of products of inorganic chemistry was reduced from 14 % up to 13 %. Certainly, on lowering of export in Russia renders influence a variance between the in-house prices and prices of outbound delivering.

At the same time it is necessary to mark, that the reduction of export has taken place not on all basic groups of the commodity spectrum. The specific gravity of export of ore has increased from 8 % up to 10 % and export of fuel from 46 % up to 47 %.

Import of republic of Kazakhstan goes into first five of the countries of the basic trade partners of Russia in import. The specific gravity of import of Russia has increased in total amount of the Kazakhstan import from 36,7 % per 1999 up to 45,4 % per 2001. There were insignificant variations in groups of imported commodity production. So, the volumes of import were reduced

Diagram 3

Diagram 4

Transport, accordingly, from 15 % in 2000 up to 11 % in 2001, alongside with it the magnifying of import on such commodity groups is marked: fuel mineral (from 17 % up to 21 %), chemical production (from 14 % up to 16 %), black metals and work pieces from them (from 11 % up to 13 %) (Diagrama4).

The analysis of export and import displays, that in structure of import as against export there is no predominance of separate commodity groups, it more diversification, at the same time grows a specific gravity of articles of food, products of processing ready articles.

From 89 regions of Russian Federation 72 have trade - economic links with Republic of Kazakhstan. Depending on volume trade turn over with Kazakhstan these regions Russia can divide into a series of groups. The active participants of the foreign trade activity with Kazakhstan are first three groups of regions of Russia (table 1).

As a whole on 16 regions of Russian Federation from 72 it is necessary 80 % exterior trade turn over of Russia with Kazakhstan. The high activity pointed 16 regions is stipulated by more developed structure of their industrial manufacture with predominance of fuel-raw, petrochemical and machine-building specializations.

Feature of transport -geographical interregional links of regions of Russia with Kazakhstan is the directedness mutual goods traffic primarily with Ural, Western and East Siberia, and also with Moscow and Moscow region.

Basic groups of the trade partners of Kazakhstan in Russia