The great blanket at the center of Asia

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ITALY – Rome June 18 2014. On June 12th, the Italian premier Matteo Renzi met the President of the Republic of Kazakhstan, Nursultan Nazarbayev. It was the first official visit of the Head of the Italian government in the former Soviet republic. A significant change in the Italian foreign policy that has been centered, over the past 60 years, in the relations with the United States and Europe. 

ITALY – KAZAKHSTAN 

Italy is a major economic and trading partner of Kazakhstan. In 2012, the annual trade volume between Kazakhstan and Italy amounted to $ 16.4 billion. According to the National Bank of Kazakhstan, the total amount of Italian investments in 1994  – 2014 was approximately $ 5.7 billion. At the same time, the total Kazakh investments in Italy has exceeded $ 1.6 billion. In Kazakhstan, there are currently about 200 Italian companies that carry out their activities. Cooperation develops in almost all sectors, including the development of mineral deposits, the processing of agricultural products, food and light industry, agricultural machinery, energy, production of consumer goods. 

Italy, therefore, is already a strategic partner that, now more than ever, looks at oil and gas fields in Kazakhstan with a deep interest. The basis of this interest are multiple: on one hand, there is the Italian perpetual dependence on foreign energy (80%) ; Italy imports, according to Eni, 30% of gas from Russia, 40% from North Africa (Algeria and Libya), 15% of the countries bordering the North Sea (mainly the Netherlands and Norway). Domestic production accounts for only 15%. On the other hand there is the wide spreading of the geopolitical instability in some areas. Today, with a boiling war in Ukraine, and especially, in the light of the recent explosion of the Ukrainian gas pipeline, it has become more problematic to supply gas from Russia. With Libya in chaos, another Italian oil supply reference point is in discussion. Algeria continues to supply natural gas to Italy, but there are frequent attacks on its plants. Even more critical is the situation of only one regasification pipeline, concentrated in one terminal. The raw material, on the whole, comes from Russia, the Netherlands, Norway, Algeria and Libya. Tarvisio, in Friuli region, is the terminal of Russian gas; Passo Gries, in Piemonte region, receivers the gas from the North (the Netherlands and Norway). Mazara del Vallo, in Sicilia region, is the entry point of the gas from Algeria and Gelo for the one coming from Libya. Finally Panigaglia, in Liguria region, is the principal berthing point for LNG regasification. Thus, the Italian interest in the Kazakh gas is clear. 

Let us see more clearly the Kazakh Republic, a country recently rose to international media headlines: Kazakhstan, in fact, rose to prominence in the news for signing, on May 29th 2014, the EAEC along with Russia and Belarus; the Eurasian Economic Union is preparing to become a new economic hub, a bridge between East and West. 

KAZAKHSTAN, GEOLOCATION 

To give an image of the country, Kazakhstan is the great blanket located in the center of the Eurasian continent. 

Its territory covers around 2 million 724.9 thousand square kilometers and consequently occupies the ninth place in the world for its size. In the North West the republic has common borders with Russia, 7591 km (the longest continuous land border in the world), in the East with China, 1783 km, in the South Kyrgyzstan with 1242 km, 2351 km with Uzbekistan and with Turkmenistan 426 km. The total length of all land borders is 13200 km. In addition to this, there are two seas in its territory: the Caspian Sea and the Aral Sea. Kazakhstan is the largest country in the world that does not have direct access to the oceans: 44% of its territory is desert and 14% is semi-desert. The steppes covering 26% of the land, the forests 5.5%. 

On December 16th 1991, Kazakhstan was born as an independent republic after the USSR dissolution. It has a population of 16 million 670 thousand people, divided into 130 different ethnic groups practicing 40 different denominations. Its capital is Astana. The official language is Kazakh; whilst Russian has an interethnic language communication status. Its monetary unit is the Tenge. 

On the official website of the President of the Republic, Kazakhstan is defined as: “A unitary state with a presidential form of government, secular, legal and social democrat whose highest values ​​are the individual, his life, rights and freedoms” . The President of the Republic shall be entrusted with the main directions of domestic and foreign policy of the state and representing Kazakhstan within the country and in international relations. 

Also from the official website: “The President is the symbol and guarantor of the unity of the people and state power, inviolability of the Constitution, the rights and freedoms of any individual and citizen”. The Government will implement the executive power of the Republic of Kazakhstan, directs the system of executive bodies and exercises control of their business. 

The legislative functions are carried out by the Parliament of the Republic of Kazakhstan, which is composed of two chambers that act on a permanent basis: the Senate and the Majilis. The Senate is composed of deputies elected in this way: two per each oblast (the big city and the capital of the Republic of Kazakhstan), more than fifteen Members of the Senate appointed by the President of the Republic. The Majlis is composed of 107 deputies elected as provided by law and 9 are chosen by the people. The electoral mandate of the Senate is 6 years; 5 years for the Majilis 

Currently there are three parties in the parliament chambers: “Nur Otan” People’s Democratic Party, “Ak Zhol” Democratic Party of Kazakhstan and the People’s Communist Party of Kazakhstan. 

Geographically the country is divided into 14 regions and 2 cities of republican significance; Astana and Almaty are the cities of republican significance, while the regions are: Akmola, Aktobe, Atyrau, East Kazakhstan, Taraz, West Kazakhstan, Karagandy, Kostanay, Kyzylorda, Mangystau, Pavlodar, North Kazakhstan, South Kazakhstan. 

As regards the interethnic division, in 2009, according to official sources, Kazakhstan was divided as follows: 63.07% Kazakhs, Russians 23.70%; Uzbek 2.85%; Ukrainians 2.08%, 1.40% Uighurs; Tatars 1.28%; Germany 1.11%; Others – 4.51%.

KAZAKHSTAN, WEALTH, ECONOMICAL AND POLITICAL PLANS

Soil and subsoil are among the greatest riches of the republic: there are 5,000 sites, for an estimated value of tens of billions of dollars, of zinc, tungsten and barite, silver, lead, chromites, copper and fluorite, molybdenum and gold. And again, Kazakhstan also has significant oil and gas reserves in the western areas, an amount that allows the country to be defined one of the major world oil producing countries, with a sales volume of over 80 million tons of oil and gas condensed in one year. According to President Nazarbayev’s plans, the annual oil extraction will be increased to 120 million tons by 2020; Kazakhstan is currently at 9th place in the world for oil reserves;  8th place forxcoal and 2nd place for uranium reserves. 

Moreover, Kazakhstan has always invested in the agricultural sector and is a cereals great producer: Kazakhstan is among the top ten wheat world exporters and it is a flour export leader. Agriculture is well developed in the north of the country: 70% of the arable land is used for corn, wheat, barley, millet. In the south of the country rice, cotton and tobacco are cultivated. Kazakhstan is also known for its gardens, vineyards and pumpkin plantations. Zootechnics is the agriculture main branch; the key areas are the sheep, horses, camels, pigs, poultry and fish breeding. 

ASTANA ECONOMIC DEVELOPMENTS FROM 1991 TO TODAY 

Since 1991, the “Per capita GDP” has increased 16 times: from $ 700 to 12000. According to UK experts estimates, in the first decade of the twenty-first century, Kazakhstan is the third largest and dynamic economy after China and Qatar, among the 25 most dynamic economies. The World Bank has defined the Kazakh Republic as a “high average income country (…) Over the independence years, Kazakhstan has attracted $ 150 billion of foreign investments, about 70% of the total international investments in Central Asia. The international currencies Country reserves (June 2012 data) consist of approximately $ 85 billion, of which more than $ 50 billion are related to the National Sovereign Fund. The 2011 ”Doing Business” ranks Kazakhstan at the 47th place, leaving behind all the countries of the CIS. In 2011, the IMD Competitiveness World Ranking of the International classified Kazakhstan at the 36th place ahead of Indonesia, Turkey, Italy and many other countries. And yet the Kazakh Republic is at the 38th place, among 148 countries, in the 2014 World Economic Forum Network Readiness Index (NRI). 

The export of Astana is highly dependent on petroleum products shipments and its related services (73 percent of total exports). Other exports are ferrous metals, copper, aluminum, zinc and uranium. 

The main export partners are China (19 percent of total exports), Italy (17 percent), Russia (8.4 percent) and the Netherlands (8 percent). Others include: France, Switzerland, Ukraine and Canada. In March 2014 Astana registered a trade surplus of U.S. $ 3805.90000000. And the balance of trade in Kazakhstan registers an average of 1.42965 billion dollars from 1998 to 2014, reaching an historic peak in June 2011, 6771.90000000 USD, from a recorded $ 22.10 million in November 1998 (Source: Agency of Statistics of the Republic of Kazakhstan). 

From 2013, the Kazakhstan trade turnover with Russia and Belarus has exceeded $ 24 billion (source: Deputy Minister of Regional Development, Kairbek Uskenbaev). 

For the future, like every oil producers, Kazakhstan is trying to diversify the economy aware that the black gold does not last forever. It has focused on innovativeness, starting from enterprises modernization. Another important project is to give life to the new “Silk Road” to boost the country’s historical role as a link in the Eurasian continent becoming a big regional “shopping” and transit center, a bridge between Europe and Asia. And it is in this light that must be read the recent economic and political events, such as the Eurasian Economic Union, a Mr Nazarbayev’s target since the birth of the republic. The goal is to double the volume of freight passing through the country by 2020, arriving to the staggering figure of 50 million tons of goods in transit per year. 

Earlier this year, Mr Nazarbayev mentioned ten guidelines in his speech: patriotism, innovation, geology, agricultural production, science, regional development, transport, expo 2017, energy (including the exploitation of nuclear energy, even if there is a strong internal anti-nuclear movement), tax breaks and incentives for SMEs, economics (financing up to 3% of GDP on scientific research). Objective: to increase the GDP by 4.5 times to switch from a per capita GDP of 13 thousand to 60 thousand Euros. Among the most significant investments, kindergarten free of charge up to 6 years stands, together with the increase in schools and education in general. A strong pulse is given to the social modernization with new schools in rural areas, professional colleges and universities, all under construction, as well as clinics and hospitals. Another cluster of Astana is tourism: the republic is trying to take advantage from the landscape combined with health and wellness tourism. Speaking of tourism, Astana is focusing on sporting events and fairs: from 2008, the Economic Forum is held in Astana, which houses 150 countries; in 2017 Astana will host the Energy Expo. 

OUTSIDE THE NATIONAL BOUNDARIES 

Searching stability, the Central Asian region lives always in tension because of terrorist groups (both internal and external) that come and go from the neighboring warring countries as Afghanistan, Iran and Syria. In this uncertain environment, Kazakhstan is trying to act as a mediator between the parties. In 2010, when there was the Kazakh OSCE chairmanship, Kazakhstan has launched and promoted the Conference on Interaction and Confidence Building Measures in Asia, the OECD Asian analogue. Kazakhstan actively collaborates with various countries-partners in international organizations such as the CIS, SOC, EurAsEC. In order to join the WTO in 2013, Kazakhstan has amended some 50 standards; a reform process began in 2004. In January 2014, the president told the nation to have a plan to hang up the top 30 developed countries: “The strategy must be translated into a program of specific, concrete actions that will make the country and the life of Kazakh people better day after day, year after year. In today’s message, I want to inform the people of Kazakhstan of a plan to hung up the 30 developed countries. “

Evidence of its commitment are the bilateral economic agreements signed over the past two years: in 2013, 21 approximately $ 30 billion agreements signed with China; 10 signed with the CIS Customs Union, others with the European Union. There were numerous meetings to carry out a political-economic integration with Turkey. Moreover, meetings with individual European heads of State, Romania in the first place. Notably, ever in 2013, an active collaboration with the United Arab Emirates has been started.

The same Kazakh ambassador in Italy, Mr Adrian Yelemenessov, in an interview released to AGC COMMUNICATION, has defined the Kazakh objectives for the Afghanistan stabilization: “Since 2007, we are following a special plan to provide aid to Afghanistan each year, providing free technical and humanitarian assistance; rebuilding the” Talucan – Kunduz – Shirkhan – Bandar ” highway together with a school and a hospital. For young Afghans we have implemented a program to prepare 1,000 professionals in Kazakh universities. It is important to understand that promoting peace and stability in Afghanistan, we work to provide security at global, regional levels, and, consequently, also to our level. “

SOME ASPECTS YET TO IMPROVE 

Kazakhstan is among the Central Asian countries criticized in terms of press freedom. Other criticisms come from non-profit civil rights organizations; even if Astana has recently changed the law about migrant workers ​​(recent Kazakh participation in the 103rd Work conference), generally speaking, in Central Asia, the harmonization process with the international standards is still evolving and will appear a long process. It is noteworthy the issue of armaments: Kazakhstan has recently bought some S 300; it is implementing the drones manufacture; Astana has signed defense agreements with Belarus. These moves could be read in the light of new economic policies centered on the EAEC and China.

Furthermore, the development, in 2013, of Islamic economics in the country are noteworthy as foreign investment and as bank offices opening in the country. Usually, Islamic finance moves, on one hand to invest in developing countries with strong commitments in the “commercial” banking sector (real estate, technology development, agricultural) and on the other hand where there is a Muslims demand to allocate their profits banks in respect of Islamic culture and tradition. Another critical point, at the moment not to be resolved  in the short term, is the implementation of Kashagan. In the developing of this oil and gas field many countries are engaged. On June 12th, Italy has signed a new agreement with Kazmunaigas about Eni presence in the Caspian Sea. And last but not least, a critical point coming outside the border: corruption. According to Transparency International, Kazakhstan ranks 144 out of 177 countries with a score of 26/100 (Italy, for comparison, ranks 69th place, and has a score of 43/100).