Kazakhstan is a country of contrasts, with no exaggeration: desperate poverty neighbors with arrogant wealth, economic growth is accompanied by decline of social sphere and expansion of state control, and tolerance abuts discrimination. Such is the set of topics in focus of Kazakhstani blogosphere this week.

Eilide, a blogger living in Armenia but closely watching the developments in Kazakhstan, wonders if everything is really as good in Kazakhstan as some of her country’s experts describe:

“They praise institutional development, stock market and financial sphere on the whole. A nice picture of rich and prosperous country. But there is crisis in banking sector, stock market is still very weak and most pension funds show low profitability. Or am I missing something?”, she asks [ru].

Although financial and banking sector do indeed demonstrate vesible sustainability in comparison with other CIS countries, expansion of the state raises serious concerns of the observers, especially after amendments in the subsoil legislation that had been introduced last year, giving the government an exceptional right to unilaterally cancel contracts with the foreign investors that work in the sphere of extraction of natural resources. (more…)

The row of dayoffs in Kazakhstan brought a dead season for news and blogosphere, following the 2005 law on national holidays, which made both Qurban Eid and Christian Orthodox Christmas non-working days along with the New Year celebrations. However, some developments were discussed by the bloggers, who have noticed some frivolousness in the overall picture.

Mantrovkz writes about flash-based cartoons that have appeared on the web [ru]. The prank stuff features a concocted chrachter, which reminds the head of the state:

The cartoons are made by some “Kaimak Surets” [Sour Cream Pictures - Kaz] with only one person behind it. He alleges he is living in California, working for a high-tech industry and says that cartoons will appear regularly in response to the political developments in Kazakhstan. “That’s my vision of the situation. As a Kazakh, I feel keenly about my country”, he says.”

(more…)

Over at The Registan, Josh leaves Central Asian territory in order to discuss Russian-European energy issues. Which are - in the end - also relevant to the focal region of this blog.

Nordstream, Russia’s ambitious subsea gas pipeline, puts the spotlight on Europe’s energy markets and the old continent’s long term supply with Russian gas. Josh says:

[W]hat matters is that this pipeline will be a geopolitical disaster for the EU, as it would essentially lock them into being dependent on Russian energy beneficence for the foreseeable future.

Let’s accompany Josh on his trip to Europe, but let’s take the (geo)politics out of the equation for a while. (more…)

While the usual discussions about political cobwebs and oil business intrigues kept the Kazakhstani bloggers busy, two dramatic incidents stood out: A rocket crash potentially threatening the health of thousands of people and the murder of a Russian blogger made the Kazakhstani blogosphere think about the value of a human life.

But politics first: Andy-taker draws attention to the fact that ministers in Kazakhstan are being shuffled, migrating from one government to another, without particular affixment to their profession. Pretty much the same happens on lower levels; maybe this is the reason for the people’s dissatisfaction with the officials?

After visits to a number of government bodies and agencies, Astanchanka is left very angry: “Bureaucrats are just killing me! They are rude and ignorant - ridiculously explaining this with low salaries and tiredness. Gorbachev was right: Citizens should start Perestroika from themselves” (RUS).

Raseyannaya from Ekibastuz (a town in Central Kazakhstan) is indignant towards those officials who are skeptical about non-traditional religions, consider Krishna followers as extremists and want to introduce religious education in schools. “Our state is secular”, she reminds people, “and even if I want to worship a Steam Iron, nobody shall have any objections” (RUS).

(more…)

There have been talks in Western political and economic circles about a new Trans Caspian Energy Project since the mid 1990’s. As conceived, two pipelines were to be built under the Caspian Sea, one transporting Turkmen gas the other Kazakh oil to Europe via the Caucasus and Turkey. However, various political factors prevented the project from realization. After the death of the self-isolationist Turkmen President Saparmurat Niyazov in December 2006, Western capitals revived the idea of the Trans Caspian Energy Project, hoping that under new leadership, Turkmenistan would open up to Western energy investments and would permit the export of Turkmen gas, then to be followed by a full flow of Kazakh oil, to Europe. Several months of diplomatic wrangling and ambiguity, surrounding this project-idea, basically ended in May 2007.

Various political observers noted that the agreement reached on May 12th of 2007 between President Putin and the Kazakh and Turkmen Presidents ensured Russia’s unimpaired access to Turkmenistan’s rich gas resources. According to the agreement Turkmen gas will be transported to Europe via Kazakhstan and Russia. In September 2007 all parties plan to sign a treaty to build a new pipeline. Additionally, the old Prikaspiisky pipeline, running along the coast of the Caspian Sea, will be rehabilitated. Russia, Kazakhstan and Turkmenistan along with Uzbekistan also agreed that two other gas pipelines will be reconstructed. After all these envisioned pipelines go into operation, Russia will become the sole importer of natural gas from the entire Central Asian region. (more…)

Where it all began: Vista from Villa Petrolea, Baku

Of course Joshua blogging at Registan.net beat me to it, writing an excellent post about a new International Crisis Group report on Central Asia’s resource-rich countries Uzbekistan, Turkmenistan and Kazakhstan.

The report argues that Central Asia’s oil and gas resources won’t counterbalance Russia’s monopolistic market position. The report also holds that the recent agreement between Kazahkstan, Turkmenistan and Russia does not rule out a trans-Caspian pipeline. The latter should be accompanied by our growing awareness of the region’s dire human rights situation.

The meat of the report, however, sheds light at the resource curse in the three countries. Like Joshua, I have some problems with the moulding of three very diverse countries into a typology of a very under-researched topic, and by extension also with the title of the report - Central Asia’s Energy Risks - for the same reasons that Joshua lucidly elaborates. (more…)

The significance of the Caucasus and Central Asia for the Western World is growing as ever. Especially after Putin’s Kremlin has terrified Europe by repeated blackmailing during its quarrel over increased gas prices with the Ukraine in winter of 2005 and with Lukashenka’s authoritarian Belarus in December of 2006.

In 2005, a gas pipeline, running from Russia through Ukraine, supplying 25% of European energy markets, has been shut down. It seems like Europe felt a horrifying chill of the Russian winter coming from the remote prairies of merciless Siberia, flowing through the empty gas pipes.

Apparently the West got finally convinced that an increasingly assertive, anti-western and authoritarian Russia is a dangerously unpredictable energy (and political) partner. After these events, western capitals started to talk even more enthusiastically about diversifying European energy supplies.

Specifically, the West considers transporting abundant Caspian gas and oil resources from Kazakhstan, Turkmenistan and Azerbaijan via the Caucasus and Turkey to Europe, bypassing Russia. This relatively new project is called Nabucco Project. It has been circulating in western political and business circles for quiet sometime already, with more or less intensity. (more…)

Japanese prime minister Koizumi has embarked on his first visit to Central Asia. He will be in Astana today and in Tashkent tomorrow. The reasons for such a high-profile Japanese state visist have been analysed by Nathan last week - it is mainly about securing Japan’s access to non-Middle Eastern oil and also tapping into Kazakhstan’s huge uranium deposits.

As for the oil, a look on the map reveals that Japan would have to ship Central Asian oil via China if it was to follow a logical geographical routing. However, relations between the two Asian economic super powers remain where they are, and Japan would love to find a corridor not controlled by its giant neighbour.

The Trans-Afghan pipeline, an idea that has surfaced frequently during the late-nineties, saw its planning suspended following US air strikes on Southern Afghanistan in 1998. Although things in Afghanistan have rarely stood so badly, Japan has not given up this ambitious plan to pipe Central Asian oil and gas to the South East:

“Without a doubt, Japan sees an opportunity for imaginative, entrepreneurial activity in the general area of energy,” said Col Langton.

One such opportunity is the “southern route” - an ambitious Japanese plan for a pipeline to run from Central Asia to the Indian Ocean via Afghanistan and Pakistan, avoiding China and Russia.

So - why does Koizumi not visit Turkmenistan, whose gas deposits were the founding block of any plans on the Trans-Afghan pipeline? Peter reported recently:

The Turkmen President Saparmurat Niyazov may have finally lost his patience with plans being made for his country behind his back. According to a BBC Monitoring transcript of a state television report, on June 14 Niyazov criticised the European Union in failing to consult with his government over the construction of a gas pipeline through Afghanistan, Pakistan and India.

(…)

In reprising the theme if his nation’s neutrality, Niyazov also reminded his listeners of Turkmenistan’s freedom to choose its own trading partners. He stressed that at the given moment, Turkmenistan offered greater preference to commercial relations with Russia and especially China.

Niyazov made his remarks before a delegation of Japanese businessmen led by Minoru Murofushi, Itochu Corporation CEO and head of the Turkmen-Japanese joint committee on economic cooperation. […] Niyazov made some pointed observations on how the Japanese Foreign Minister recently attended a meeting of Central Asian foreign minister in which he made remarks about the construction of the TAP pipeline, again without consulting the Turkmen government.

While the conflict between Israel and Hezbollah is swiftly turning into a guerilla war, analysts worldwide are looking for the real motive of the Israeli government attacking Southern Lebanon. It was thus only a matter of time before one writer draws connections to Central Asia and the recently inaugurated Baku-Tblisi-Ceyhan oil pipeline (BTC). Note that the link to the story comes from a Lebanese publication, which is purely coincidental… Or?

Michel Chossudovsky, writing for Global Research (Canada), asks:

Is there a relationship between the bombing of Lebanon and the inauguration of the World’s largest strategic pipeline, which will channel more a million barrels of oil a day to Western markets?

That sounds adventurous. What is it?

Prior to the bombing of Lebanon, Israel and Turkey had announced the underwater pipeline routes, which bypassed Syria and Lebanon. These underwater pipeline routes did not overtly encroach on the territorial sovereignty of Lebanon and Syria.

On the other hand, the development of alternative land based corridors (for oil and water) through Lebanon and Syria would require Israeli-Turkish territorial control over the Eastern Mediterranean coastline through Lebanon and Syria.

The implementation of this project requires the militarisation of the East Mediterranean coastline, sea ways and land routes, extending from the port of Ceyhan across Syria and Lebanon to the Lebanese-Israeli border.

Is this not one of the hidden objectives of the war on Lebanon? Open up a space which enables Israel to control a vast territory extending from the Lebanese border through Syria to Turkey.

It is somewhat relieving to read that the pipeline politics of the Israelis is only one of their hidden objectives, and that Mr. Chossudovsky doesn’t blame it all on oil. Nevertheless, there is a flaw in his argument. The BTC’s throughput covers around 1-2 percent of global oil demand, a respectable amount, however, no vital vein in the global energy grid. Also, one should not get the impression as if most of the BTC’s oil is transported to Israel, an impression the article undeniably creates:

Meanwhile, Israel has emerged as a new powerful player in the global energy market.

(…)

The objective of Israel is not only to acquire Caspian sea oil for its own consumption needs but also to play a key role in re-exporting Caspian sea oil back to the Asian markets through the Red Sea port of Eilat. The strategic implications of this re-routing of Caspian sea oil are farreaching.

Why would investors invest in Israel for it to become a new powerful player in the global energy market or as a hub for Central Asian oil? Wouldn’t it make more sense to have oil tankers take on most of the oil in Ceyhan directly and ship it from there?

News just come in that it might get very cold in Georgia and Armenia soon: Explosions on the main Russian-Georgian gas pipeline halted supplies and it might take several days until normal operations resume. These news come at a time of tense gas diplomacy throughout the region.

The Russian-Ukrainian gas dispute has fuelled fears in Tblisi that Georgia itself might see Moscow using gas supplies as an instrument to exert political pressure. Georgian President Saakashvili has already accused Moscow of being behind the blasts this morning. So it becomes a matter of urgency that Georgia diversifies its energy sources as soon as possible. Tblisi will mainly be looking towards Kazakhstan and Iran for achieving that aim and has encouraged Kazakhstan to participate in the Baku-Tblisi-Ceyhan pipeline.

Sending a clear sign that strict market rules apply, Kazakhstan has announced that it will not subsidise gas supplies to Georgia, despite recent love signs being sent between Astana and Tblisi*. 1000 cubic meters will cost $110 and no cent less. Saakashvili is reported to have said that he doesn’t mind higher prices as long as the gas keeps flowing. It seems that little by little, Soviet-inherited gas deals between the constituent republics are being softened, paving the way for both potential confrontation and co-operation.

Also, taking into account that Armenia will be without Russian gas supplies very soon, Yerevan would have to look towards other sources in order to keep supplies steady. Whereas Georgia has already commenced talks with Azerbaijan, that option looks hardly like a feasible option for Armenia. Unfortunately for Yerevan, the Iran-Armenia gas pipeline is still under construction.

Kazakhstan seems to benefit most from the New Year’s gas turmoil. Astana’s petrodollar bonanza will inevitably translate into further purchases of foreign energy utilities, given that domestic investment opportunities seem saturated due to the high amount of cash already being spent. TbilGaz, Tblisi’s monopolistic gas supplier was recently bought up by KazTransGaz. Also, Kazakhstan seems keen on buying a Lithuanian oil complex. This direct engagement in foreign energy markets will safeguard a diversified demand base for Kazakh hydrocarbon resources, Astana’s ultimate goal. The Lithuanian deal also seems interesting inasmuch it looks like a clear sign that Kazakhstan wants a chunk of the large European market for its products, challenging Russia’s quasi monopoly for eastern gas supplies.

Kazakhstan’s policy of a ‘multi-vectored’ foreign policy makes it less suspectible to using oil as a political tool as long as the cash is right.

*Georgia sees Kazakhstan as an honest broker and asked Astana to take up a mediating role in talks between Russia and Georgia over the separatist territory of South Ossetia. Also, Georgia supports Kazakhstan’s bid to the OSCE presidency in 2009.

Cross-posted on the Kazakhstan blog.