Central Asia is occupying an increasingly pivotal position in the European Union’s policy planning, in what is a strategic move on Brussels’ part to get its foot in the door of a region where Russia and China have traditionally vied for supremacy. While Moscow and Beijing are not shying away from demonstrating their hard power capabilities, the EU is banking on improved economic and political relations with Central Asia’s major countries, showcased by the first EU-Central Asia Economic Forum that took place earlier this month.
As regional leaders met in Bishkek for talks, the EU was eager to assure attendees that investment and aid would continue to flow to the region in line with existing programmes while cooperation would be expanded in a variety of sectors. The meeting, part of the EU’s Central Asia Strategy, was an attempt to boost ties between Brussels and the region. While the countries in the region have shown interest, the only country that has been showing genuine intent to deepen relations and actually affirmed its willingness for expanded cooperation is Kazakhstan.
This willingness is reflected in steadily increasing trade with, and foreign direct investment (FDI) flows from, the EU. In 2020, Brussels accounted for nearly a third of Kazakhstan’s total trade in goods while the Erasmus+ programme has allowed thousands of Kazakh students and staff to travel to Europe to study or teach. Heralding the existing relationship at the EU-Central Asia forum, Kazakh Prime Minister Askar Mamin called on other countries to bolster their ties with Brussels as part of their post-pandemic recovery plan.
Pacifying the Afghan cauldron
Even so, given the geopolitical conditions and internal challenges EU countries are facing, Nur-Sultan’s significance is set to rise in the coming years as Kazakhstan is well-placed to cooperate on common interests with the EU. One of the foremost issues is the pressing Afghanistan dilemma. In the wake of the US withdrawal from the country, it’s up to the EU to dramatically step up its efforts to ensure regional stability, yet it needs allies to do so. Kazakhstan is well-positioned to fill that role, both in terms of helping to stabilize the country and prevent chaos in the short term.
That’s because Kazakhstan – a Muslim majority country and staunch Western ally – enjoys much more sway with the Taliban than any Western country arguably ever could. This allows Nur-Sultan to act as a mediator between EU and Afghan diplomats, and could prove instrumental in moderating some of the Taliban’ most extreme tendencies – a key demand the EU has of the rulers in Kabul.
Indeed, this dynamic is already underway. Following the Taliban takeover of Afghanistan in August this year, Kazakhstan and other Central Asian countries were quick to express support for the Afghan people while calling on Kabul to not shy away from dialogue. And where Western governments have responded by withholding aid and access to finance, regional leaders are focused on avoiding a humanitarian catastrophe and the corresponding spread of extremism.
The tricky subject of energy
With climate change mitigation a priority for both the EU and Kazakhstan, the energy sector is also in for expanding synergies. So far, cooperation is unfolding via EU-sponsored energy programmes as part of the Enhanced Partnership and Cooperation Agreement (EPCA) since March 2020. But now that the green energy transition is an explicitly stated goal for both Kazakhstan and the EU, cooperation becomes even more important, further underlined by hints at a revival of nuclear energy in the bloc.
Kazakhstan, the world’s leading uranium producer, is currently the largest supplier to Europe’s nuclear energy industry, meeting more than one fifth of the bloc’s demand for the metal. In turn, the EU has been a source of political and financial support for the building of a uranium bank in Oskemen, northern Kazakhstan. Even so, with France in particular planning on building new reactors, Brussels must be strategic and proactive in securing uranium supplies for years to come.
In practice, this could be done through the establishment of a reactor fuel bank based on that which China and Kazakhstan recently opened, but dedicated to the EU. The Ulba Nuclear Fuel Plant, funded by a joint venture between Kazakhstan’s national atomic agency Kazatomprom and the state-owned China General Nuclear Power Group (CGNPC), will guarantee China a share in 49% of the plant’s output annually. Brussels would do well to ensure it’s not left out in the cold amid a global reactor construction boom.
Covid-19 recovery as an opportunity
The EU-Central Asia Forum clearly showed that trade relations will always remain the EU’s favoured route towards deeper understanding. More than 41% of EU exports go to Kazakhstan, making the EU the country’s largest trading partner. In the first seven months of last year, trade turnover between the two amounted to nearly $14 billion. Foreign direct investment in the same year exceeded $1.7 billion in the first quarter alone. At the same time, more than 4,000 firms with European capital and more than 2,000 joint ventures are now registered in Kazakhstan, cementing the bond between the two regions for a long time yet.
A joint project between the EU and Kazakhstan, Ready4Trade Central Asia, looks set to accelerate intra-regional and international trade from within Kazakh borders. The focus is on micro, small and medium-sized enterprises (MSMEs) at the centre of the country’s economic recovery, and that are seeking cooperation and know-how exchange with European companies to grow into each other’s respective markets on an equal footing.
While the challenges of the last two years remain fresh memories, Brussels is right to turn its sights to the future. Shoring up relationships with key Central Asian states, including Kazakhstan, will surely launch a post-Covid recovery for all parties.
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