Mirroring the symbolism of Nazarbayev’s 2009 visit to India as a guest of honor for the 60th Republic Day celebration, the timing of the recent meeting demonstrates the increased prominence of Kazakhstan on India’s foreign policy agenda.
The two leaders signed seven bilateral agreements. These included a nuclear energy pact that covers joint exploration and research of uranium, collaboration on the construction and operation of nuclear power plans, and a commitment by Kazakhstan to supply India with over 2,000 tons of uranium by 2014. The two sides also concluded a long-negotiated Rs. 1,800 crore deal that gave India’s ONGC Videsh Ltd. a 25% stake in the Satpayev oil field on the Caspian Sea. Press reports on the visit have focused primarily on these two facets of India’s strategic interest in Kazakhstan: securing a reliable source of uranium and expanding hydrocarbon resource ownership to feed India’s rapidly growing demand for energy.
While energy linkages are vital, excessive rhetorical focus on nuclear energy and hydrocarbons distracts the attention of policymakers and India Inc. from the bulk of the long-term opportunity—the still vast, untapped potential of deeper ties with Kazakhstan across the full spectrum of common interests including cooperation in the IT, alternative energy, and space sectors; increased bilateral trade and investment in areas such as pharmaceuticals, agriculture, textiles, infrastructure, mining, and tourism; and, critically, geopolitical considerations including India’s abiding interest in a stable, independent, and economically prosperous Central Asia.
An earlier Gateway House policy note highlighted the dangers of framing the relationship solely in energy terms and encouraged the adoption of a broader strategic framework. Positive steps have been taken during the April 16 meeting in this direction—beyond energy deals, the Prime Minister and President Nazarbayev announced a Joint Action plan for 2011-14 that details specific milestones in a range of bilateral cooperation areas including hydrocarbons and nuclear energy, but also the promotion of common security interests (e.g., agreements on cyber security, mutual legal assistance, and fighting narco-trafficking) and technological linkages (e.g., the establishment of a joint IT center at the University of Astana).
The relationship still calls for a more coherent articulation of these various initiatives to Indian stakeholders outside the policy establishment, practical steps to ensure deeper economic cooperation (for instance, announcements of joint projects and/or special economic zones and privileged tax treatment for India-Kazakhstan joint ventures), more visible coordination on shared security concerns, and credible investments in “soft” ties including increased cultural and educational exchanges from the very low base of Indo-Kazakh people-to-people contacts today.
By framing the relationship in broader, more balanced terms in the coming years, India has the opportunity to build on the existing symbolism and cement the emergence of India as a “fourth leg” in Kazakhstan’s traditional tri-vector policy of balancing its relations with Russia, China, and the West.
The opportunities extend to energy access, incrased trade and technology exchanges and greater geopolitical and security partnerships.
a) Energy Access
At the heart of the discussion of the India-Kazakhstan relationship—and evident in all press coverage of the Prime Minister’s Kazakhstan visit—is India’s growing demand for energy. In the field of civilian nuclear energy, India has been planning to dramatically increase its nuclear power capacity from 4.7 GW today to 20 GW by 2020, with annual nuclear fuel consumption projected to increase tenfold to 8000 tons. Though some slowdown in nuclear industry development appears to be increasingly likely in the wake of Japan’s Fukushima disaster, long-term plans appear to be unchanged and India’s demand for nuclear fuel in the near to medium-term will still be substantial. Much of this demand will need to be met by growing uranium imports while India develops its domestic uranium deposits. India’s hydrocarbon consumption is also projected to increase at a very rapid pace, with IEA estimating growth of demand from 3-3.5 million barrels per day in 2011 to over 5 million per day in 2020.
Kazakhstan can help India address these needs. It is the second largest source of recoverable uranium after Australia with an estimated 15-19% of the world’s total reserves. Extrapolating from current trends, the Central Asian nation is poised to emerge as the number one global supplier of uranium in the next five years with a presence across the uranium extraction, enrichment, and fuel fabrication markets. Kazakhstan’s extractable resources of oil are estimated to be 7.8 billion tons, and those of natural gas 100 trillion cubic feet—large resources by any measure and doubly important insofar as Middle Eastern and Western hydrocarbon resources are largely closed to Indian investment.
The nuclear coperation agreement and ONGC’s hydrocarbon investment announcements made last week are therefore highly positive steps. However, to put things into perspective, the Satpayev field is relatively small—it is estimated to hold in place reserves of 253 million tons of recoverable deposits (or 1.85 billion barrels), amounting to 3% of known Kazakhstan reserves and providing sufficient oil to meet India’s needs for only 1.5 years. The value lies more in the diversification of India’s strategic oil sources and the potential for larger future deals if the current transaction proves to be a success.
More important, the transport of hydrocarbons from Central Asia to India is problematic given the absence of stable, reliable land routes. In the case of the Satpayev field, for instance, this means that the oil will not enter the Indian market directly, but will be sold within the region with compensating oil purchases from India’s traditional oil market counterparts.
For nuclear fuel, the short-term need is more substantial and challenges to trade fewer, but the current opportunity is smaller – India’s three-year uranium purchase commitment constitutes less th
en 4% of Kazakhstan’s likely uranium production volumes over the same period. These observations do not discount the value of increased India-Kazakhstan energy cooperaion, but do highlight the broader point that immediate energy deals should not be the be-all and end-all of the India-Kazakhstan ties – India’s long-term energy security calls for a longer planning horizon and a broader view of the relationship.
b) Trade and Technology
The trade volume between the two nations has experienced rapid growth, rising from roughly $ 80 million in 2004 to $ 253 million in 2009 and $ 314 million in 2010. Major export commodities from India to Kazakhstan are tea, pharmaceuticals, medical equipment, machinery, tobacco, and consumer items. Major items of import for India beyond the energy field are asbestos, wheat, steel, aluminium, wool, and raw hides.
These numbers are dwarfed by the volume of India’s trade with top partners like China ($ 61.7 billion in 2010), but nonetheless suggest that the relationship with Kazakhstan is at an incipient stage and holds promise. For instance, almost all major Indian pharmaceutical companies have a presence in Kazakhstan and have increased their share of the $ 500 million market. The two countries’ business interests received a great boost when Kazakhstan’s Arcelor, now the second largest steel producer in the world, became a jewel in the crown of the Mittal empire. Furthermore, opportunities abound in underexplored sectors like agriculture, tourism, construction, and rare metal mining. The National Economic Chamber of Kazakhstan’s and the Confederation of Indian Industry (CII)’s agreement to develop bilateral business cooperation, according to which several networking events for industry representatives will be held this year, is a step in the right direction.
Technology is another area of opportunity. The establishment of a joint IT center at the University of Astana is a beginning, but there are more opportunities for higher levels of collaboration here, such as a reinvigorated set of cooperation initiatives between the Indian IT sector and the IT innovation city in Kazakhstan’s Alatau (PIT Alatau), which was established in the wake of a 2002 agreement but has not yet captured its full potential. The two states could also strengthen their cooperation in high technological fields, particularly bio- and nano-technology, and join forces in promoting clean energy.
c) Geopolitics, Security, and Beyond
Because of their geographic locations, both states have an interest in maintaining a peaceful and stable Central Asia, most notably in Afghanistan, the locus of regional instability as well as illegal drug routes that extend through the region.
During the April summit, both India and Kazakhstan pledged their support for a speedy resolution of the Afghan conflict and cooperation in the future reconstruction of the state. Furthermore, India is a member-state of CICA (Conference on Cooperation and Confidence-Building Measures in Asia), an OSCE-type organization founded by Kazakhstan, and Kazakhstan has been a major supporter of India’s UN Security Council bid. Both governments have stated their commitment to strengthening their collaboration in those forums, as well as the Asia Cooperation Dialogue (ACD) and the Shanghai Cooperation Organization (SCO), where Kazakhstan is again a major supporter of an expanded role for India. Beyond the diplomatic plane, security cooperation can be strengthened by joint training and military exchanges focused on common issues of concern like terrorism and drug trafficking.
Cultural linkages between the two countries are so far at a nascent stage. India has been active in the interfaith conferences held in the Central Asian state. In the sphere of educational exchange, the Kazakh embassy reports that there are now nearly 1,000 Indian students in Kazakhstan, mostly in the medical field. India has trained more than 700 specialists and scholars from Kazakhstan in various fields under the ITEC (Indian Technical and Economic Cooperation) program sponsored by the Ministry of External Affairs since 1992, at an average of less than thirty per year. Over the years, a hundred Kazakh students have also come to India under the ICCR (Indian Council for Cultural Relations) scholarship programs for international students. Such people-to-people contacts, in the form of cultural exchanges, programs, and overall awareness, can be significantly expanded in both directions.
However, even in the context of Kazakhstan’s small population—somewhat larger than New Delhi at 16 million—these exchanges seem limited, especially compared with the robust exchanges that India has with its smaller neighbours in South Asia such as Bhutan, Sri Lanka, or Nepal. But they are more significant than, for instance, with any other Central Asian nations, and in that sense, have greater potential to spread Indian goodwill and influence in the region along with cementing abiding, multi-generational links with Kazakhstan that will stand India in good stead.
With the opportunities inherent in a stronger Indo-Kazakhstan relationship come risks which need to be appreciated if the ties between the two states are to develop appropriately in the coming decades.
The chief among these is managing the potential risks of close collaboration with the regime of Nursultan Nazarbayev who in an April 3 vote gained what BBC News termed a “crushing” victory, officially winning over 95.5 % of the electorate. The election, criticized by some observers, extended Nazarbayev’s rule, already in place for over 20 years, for another 5-year term. The monopolization of power by Nazarbayev and his family has faced criticism, though often muted, over the years from the West; international monitors say that police routinely torture suspects; and Kazakhstan languishes at No. 162 on the Reporters Without Borders’ Press Freedom Index.
Immediate prospects for instability appear to be very limited and the analyst consensus is that the regime is genuinely popular with the growing middle class—an unsuprising development given the astonishing rise in incomes from $ 1000 to $ 12,000 over the past two decades. In the longer term, however, the potential for instability during any future transition of power from Nazarbayev remains due to the centralized nature of the regime, the lack of alternative political figures outside of the Nazarbayev circle, and the relatively high levels of corruption, with Kazakhstan being rated 2.9(out of 10) by Transparency International.
These potential risks should not be made a bone of contention in India’s ties with Kazakhstan. First, from a purely realpolitik standpoint there is a broad alignment of strategic interests between Kazakhstan and India—there are enough common concerns between the two Asian states to secure a successful and multi-valent partnership. Second, any objections by the West to India’s closer alignment with Kazakhstan are unlikey and, in any case, would be hypocritical given the United States’ and Europe’s deep relations with the Nazarbayev regime (as witnessed in Kazakhstan’s 2010 presidency of the OSCE).
At the same time, India should pursue tactical measures to minimize the risks of the relationship—this will mean calibrati
ng messages of support for the regime carefully as has already been done during the Prime Minister’s visit, engaging multiple sectors of Kazakhstan’s society beyond more personal relations with Nazarbayev’s circle, and carefully scrutinizing trade agreements and joint projects to minimize the potential for corruption and corresponding reputational blowback for India.
In conclusion, this note argues that further conversations between Delhi and Astana should continue to go beyond the immediate energy concerns. The two countries should continue reconfiguring what is still often seen as an arm’s-length transactional relationship that hinges on relatively narrow natural resource considerations into a broad strategic alliance. The Indian policy establishment should more openly herald the importance of this strategic partnership, visibly promote opportunities in areas like trade, industry, and information technology, involve the private sector in further strengthening business and investment linkages, and, at the same time, make real investments in inter-governmental links in “soft” diplomacy areas including cultural and educational exchanges.
Key Agreements from the April 16 meeting
The Seven Agreements between India and Kazakhstan are as following:
1. Agreement between ONGC Videsh Ltd. of India and National Company Kazmunaigas of Kazakhstan on Satpayev Exploration Block:
(i) Participating Share Assignment Agreement
(ii) Carry Agreement
(iii) Joint Operating Agreement
2. Agreement between India and Kazakhstan for Cooperation in the Peaceful Uses of Atomic Energy
The Agreement envisages a legal framework for mutually beneficial cooperation between the two sides in the peaceful uses of nuclear energy including fuel supply, nuclear medicine, use of radiation technologies for healthcare including isotopes, reactor safety mechanisms, exchange of scientific & research information, exploration and joint mining of uranium, design, construction and operation of nuclear power plants etc.
3. Joint Action Plan for furthering the Strategic Partnership between India and Kazakhstan (Road Map) for the period of 2011-2014
The Roadmap outlines the joint action plan for implementation of projects to be undertaken by both sides during the period 2011-14 for the implementation of Inter-Governmental Agreements. The Roadmap details specific milestones in a range of areas of bilateral cooperation including hydrocarbons, civilian nuclear energy, space, information technology & cyber security; high-tech and innovative technology, pharmaceuticals, healthcare, agriculture and cultural exchanges.
4. MoU between Indian Computer Emergency Response Team(CERT-In), Dept of Information Technology of India and Kazakhstan Computer Emergency Response Team (Kz-CERT), Republic of Kazakhstan
The MoU envisages development of cooperation in the area of Information Security and covers the scope of mutual response to cyber security incidents, exchange of information on spam and other cyber-attacks, exchange of information on prevalent cyber security policies and exchange of human resources.
5. Treaty between India and Kazakhstan on Mutual Legal Assistance in Civil Matters
6. Agreement between the Ministry of Agriculture of India and the Ministry of the Agriculture of the Kazakhstan in the field of agriculture and allied sectors
The document envisages cooperation between the two Ministries in the field of agricultural research and technologies, food and agricultural production. It also envisages cooperation in the spheres of agricultural science, food processing, crop production, plant protection and agricultural trade.
7. Agreement between the Ministry of Health of India and the Ministry of Health of the Republic of Kazakhstan on cooperation in the field of healthcare.
Dr. Katherine Foshko is the Russia Studies Fellow at Gateway House: Indian Council on Global Relations. This Op-Ed was written as a part of her research paper, titled India in Central Asia: Time for a new strategy.
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