Karazhanov comments on problems experienced by Russia, Kazakhstan and the EAEU due to sanctions

The pressure imposed by the West requires the EAEU Member States to boost production with high added value and optimize the system of mutual settlements.

The EU countries and the United States have adopted several sanctions packages on Russia. The short-sighted policy of the Western states has aroused concern among the CIS countries. The matter is that the Russian Federation is one of their key economic partners.

Such aspects in Russian economy as the rouble exchange rate, export volumes, disruptions in imports and logistics are not the empty words for the post-Soviet states. According to Kazakh political scientist Zamir Karazhanov, the response to sanctions should be collective, at least at the level of the EAEU. In an interview with CentralAsia.news, the expert shared his thoughts on the scenario if restrictions were imposed on Kazakhstan as well.

- Zamir, let’s start with the trade volume between the Republic and the Russian Federation?

- Russia is a primary trading partner of Kazakhstan. In 2021, trade between the two countries amounted to $24.2 billion. Kazakhstan exported goods and services valued at $6.9 billion, and Russia – at $17.3 billion.

- The difference is twice as large.

- If Russia were the only partner, then Kazakhstan would have gone bankrupt under current realities. However, the Republic trades with other countries, including the European Union that Kazakhstan supplies energy resources to. Export earnings allow Kazakhstan to survive the discomfort of a trade deficit with Russia. If the Republic is under sanctions, then not only trade, but also many other areas of cooperation with Russia will face a crisis.

- Has it to do with the structure of mutual trade?

- The problem is that Kazakhstan and Russia have similar economies and problems. We supply energy resources and raw materials, but we have little to offer each other. Inorganic and organic chemical products, iron ores, mineral resources and agricultural products dominate in commodity turnover.

- Well, the world does not end in Europe for Kazakhstan, does it?

- An alternative to Europe for Kazakhstan can be China – another major importer of energy resources, whose position will be strengthened.

- As far as I understand, China can also consider Kazakhstan only as a raw material supplier?

- We can talk about industrial and innovative projects. However, why were they not implemented before the sanctions were imposed, under favourable conditions? Probably because economic reforms were postponed. Our economy is undiversified and uncompetitive.

- It turns out that Kazakh economy depends on the prices on the international raw materials markets?

- If the global price of oil falls, GDP growth slows down. In Kazakhstan, the share of the quasi-state sector (companies which have some relationship to the government) exceeded 50 percent of GDP; there is neither competition nor enabling market environment that stimulates business growth and enhances competitiveness through innovation in a number of sectors of the economy.

- Is it not yet worth hoping for Kazakhstan to build up partnerships in the manufacturing sector?

- For the above reasons, cooperation in the industrial and innovation sectors is weak. Certainly, we have vectors where we can implement our potential. But it’s not about them, but about the conditions. Do they exist? The question is rhetorical.

- What should be the strategic decision if Kazakhstan suddenly finds itself under sanctions?

- In the context of sanctions, it is important to maintain trade and economic contacts, investments and cooperation accumulated over 30 years. This means that “anti-sanction measures” need to be taken. They are tasked to mitigate the impact of sanctions on interstate relations. In this regard, there are more questions not for Kazakhstan, but for Russia and the EEC.

- As far as I understand, there is a serious problem at the level of the EAEU?

- We have a problem of mutual settlements, without which it is difficult to talk about trade. A system the functioning of which Western countries will be unable to impede needs to be set up. In Kazakhstan, businesses are talking not only about sanctions, but also about a new reality that offers opportunities. Sanctions have not burned all the bridges.

- Are there prospects for increasing trade?

- Russian companies which depend on imported goods or export their goods to third countries want to come to Kazakhstan. Kazakhstan has a pipeline that allows it to supply energy resources to China. Sanctions have not been imposed on transit yet. Kazakhstan can set up joint ventures and produce components for Russia’s industry. Kazakhstan can sell and buy grain in the Russian Federation to meet domestic needs. One can recall the experience of Finland that became a “window to the world” for the USSR.

- Remind me, please, what was the essence of this partnership?

- Export-import operations were carried out, technological products were imported through Finland. By the way, Finland helped build the Mir deep-sea submersibles.

- In other words, sanctions continue to be imposed, but the Russian Federation still has significant support all over the world?

- Many people compare the situation around Russia with Iran. But Tehran came face to face with sanctions, while Russia did not. Not only Kazakhstan and its neighbours, but even Turkey that initiated the Istanbul Process are maintaining relations with it.

20 05 2022, 09:34
Photo source: CentralAsia.news

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