The GCC And Kazakhstan: Security, Energy And Economics – Analysis

Outside of Central Asia, the GCC states are important to Kazakhstan as the country continues reaching out to escape being squeezed between its two large and popular neighbors, Russia and China. Kazakhstan’s bilateral ties with the GCC states are deepening in such economic sectors as agriculture and energy.

For Kazakhstan’s relations with the countries of the Gulf are increasingly important and fit well into this balanced approach to foreign policy. Kazakhstan and the GCC states are continuing to develop robust economic and trade relations in the spheres of energy, trade, agro-investments, and commerce. Islamic financing banks and norms are also becoming more popular in Kazakhstan.

These relations are further consolidated by good personal relations between the leaderships of both sides. Members of GCC royal families increasingly go to Kazakhstan to pursue hunting, particularly in the southern parts of the country. Kazakhstan is specifically seeking to attract GCC royals by apparently building exquisite hunting lodges for visitors from the Arabian Peninsula. It should not be overlooked that the tribal and traditional nature of the GCC states and Kazakhstan appear, at least on the surface, to be very similar, and this signals a trans-regional security prerogative. Significantly, the tribes on the Arabian Peninsula, and the Zhuz (clans) in Kazakhstan, share many attributes towards family, finance, and power. One should always remember that upon their independence, the Central Asian states looked towards the Arabian Peninsula for ways to emulate life and to develop similar state models.

Kazakhstan’s relationship with Saudi Arabia is probably the most important of any GCC state on the bilateral level. Kazakhstani officials and Saudi officials travel to each others’ countries frequently and a Saudi based company ‘Central Asia Investment’ with a collective investment fund of 50 million USD is operating in Kazakhstan and has already built several socio-economic and industrial projects including part of the Kazakhstani parliament, hospitals, and mosques. In 2011, Saudi Arabia and Kazakhstan signed an agreement for the avoidance of double taxation and prevention of tax evasion with respect to taxes on income and also began discussion on Saudi Arabia’s desire to import grain and other agricultural products from Kazakhstan as part of Riyadh’s food security plan.

Other GCC states, such as Qatar, developed relations with Kazakhstan early after the collapse of the Soviet Union in areas of energy as well as participation in Doha’s many cultural and socio-political discussion forums. In early 2011, Qatar expressed interest in the North-South railway link to the Arabian Gulf. The planned north–south railway line has two parts: (i) the Uzen–Bereket line (596.0 km) in the north (466 km through Turkmenistan from Bereket to the Kazakhstan border and 130 km through Kazakhstan from its border to Uzen) to be financed by the governments of Turkmenistan and Kazakhstan for the sections located in their territories; and (ii) the Bereket–Atrek–Gorgan line (338.5 km) in the south from Bereket (256.5 km through Turkmenistan and 82.0 km through Iran) The 620-mile railway line will initially be used by Kazakhstan and Turkmenistan to transport goods across Iranian territory to the Arabian Gulf ports and out to world markets.

This is also the same route that Saudi Arabia and Kazakhstan discussed for agricultural support which is likely to be the same as Doha’s intent in terms of food security. However, it is notable that securing food security through Iranian territory from Central Asia to the GCC is fraught with potential blockades and trade disputes given the current regional environment. Kuwait is also pursuing relations with Kazakhstan in bilateral trade and economic activity including banking in order to improve roads, railways, ports and airports via the Kuwait Fund for Arab Economic Development (KFAED) and the Kuwait Investment Authority (KIA). Oman was one of the first GCC states to invest heavily in Kazakhstan’s emerging oil industry and was major partners in several projects via the Omani Oil Company (OOC). Muscat also financed a number of different infrastructure projects. Finally, the UAE is heavily involved in bilateral issues with Kazakhstan. Many Kazakhstani families who benefit from the UAE’s ambiance are purchasing property and part of a growing segment of the travel industry to the UAE’s seven emirates. Branches of Emirates Islamic Bank “Al-Hilal” were opened in the cities of Astana and Almaty in March 2010. The projects “Abu Dhabi Plaza” and “Aktau-city” are being built in Astana and on the banks of the Caspian Sea respectively, as well as the joint funds of direct investments of “Falah” for banking purposes. Wheat imports are also under discussion just as with Qatar and Saudi Arabia.

Given the above, these bilateral relations are now also underpinned by more hard core security considerations. GCC states are increasingly sensitive to the danger of an overflow from the Pakistan-Afghanistan crisis. Not only do they harbor millions of expatriate workers from these two countries in their midst but they are also home to many of their political dissidents. Kazakhstan’s role in providing a space for a comprehensive discussion of how the Euro-Atlantic and Eurasian space will engage with the challenges to the south will be of paramount importance to the GCC states.

Also in its oncoming Jeddah-based OIC chairmanship, Kazakhstan hopes to draw $500 million or more through increasing its emphasis on Islamic financing and in particular such debt instruments as sukuk, relying on technical assistance from Malaysia, of which the prime minister has declared his willingness to invest. Consequently, the most fruitful encounters between the GCC countries and Kazakhstan in the very near future may indeed take place in the OIC framework. Kazakhstan’s priorities for its chairmanship, worked out with other parties, will give special attention to the promotion of women’s rights (with a conference on women’s affairs in the Muslim world planned for 2012 in Astana) and the establishment of an inter-religious dialogue as a principal aspect of enhancing East-West interactions, as well as poverty reduction and combating terrorism and transnational crime. The GCC countries, specifically Saudi Arabia, will likely take a huge interest in Kazakhstan’s activities in this realm.

Finally, also within the security sphere, is how Iran interplays with Kazakhstan on a trilateral basis with the GCC states and the SCO as an organization. Iran is currently an Observer within the SCO. Currently, there is no common understanding or framework of security regarding the SCO and Gulf security. Nevertheless, Iran’s goal to join the SCO as a full member is to strengthen Iran’s geopolitical role. From Tehran’s point of view the SCO can perhaps help Iran to manage its challenges in its foreign policy particularly when it comes to events in the Gulf littoral where Russian and Chinese interests are growing. Drawing in SCO attention to the three islands dispute between the UAE and Iran is a possible long term goal that should not be discounted.

The most recent SCO meeting produced a communiqué that makes no mention of any “energy club” but only an “energy mechanism” that should be “open to all countries and organizations that agree with the SCO’s tenets and tasks.” However, the SCO is not a likely venue for energy cooperation, since its repeated failure to set definite criteria for new members instills little confidence in the organization’s dynamism, even if formal membership is not a requirement for participation in the “mechanism.” Agreements on energy security among SCO members have been reached bilaterally and multilaterally over the past ten years without any need for such a mechanism.

Not only has Kazakhstani President Nursultan Nazarbaev motivated the country to join various European international organizations as noted above, but also he has promoted his own vision of a Conference on Interaction and Confidence-Building Measures in Asia (CICA), which has held summit meetings in 2002, 2006 and 2010. Comprising twenty members from Israel and Egypt to South Korea and Vietnam, it has become an institutional framework for the development and discussion of various modest initiatives. Both the UAE and Qatar are members of CICA, which has memoranda of understanding with several other regional international economic cooperation organizations. The GCC might consider establishing such a memorandum of understanding so as to cooperate with CICA in the implementation of its policy initiative to establish a catalogue of confidence-building measures in the area of energy security.

As the “Arab revolts” lapse into late Summer and Fall, the security situation may give way to new relationships where Iran may be brought closer to the organization given Russian and Chinese interests concerning the future of Libya and Syria—but perhaps not as a full member. This move could usher in greater information sharing and support in the international arena. Significantly, Iran views “Persian States sphere of influence” around her geographical area as Tajikistan and Afghanistan. This argument goes further with the “Shi’a nations rim” in two tiers: Iraq, Azerbaijan, and Bahrain; and Saudi Arabia, Kuwait, Lebanon, and Afghanistan. Tehran’s approach is not only a challenge to the GCC, but also to Kazakhstan where Sunni Islam is prevalent but not prominent in state-orientation. Overall, Kazakhstan, whose image and bilateral relations are growing rapidly on the trans-regional level, will further capture the attention of GCC states in the coming months and years, further integrating the Gulf littoral with Central Asian security concerns.

Dr. Robert M. Cutler, Non-Resident Scholar, & Dr. Theodore Karasik, Director, R&D, INEGMA