Kazakhstan: The Central Asian Trade Hub

Kazakhstan: The Central Asian Trade Hub

The Republic of Kazakhstan is a multicultural, unitary, democratic, secular, legal, and social state with a presidential form of government. Kazakhstan, the biggest Central Asian country is one of the most resource-rich countries in the world. There are huge reservoirs of natural resources such as oil, and coal that contribute a major chunk of its economy. Besides, various minerals are found in Kazakhstan such as iron ores, copper, tungsten, molybdenum, zinc, fluorite, and uranium, etc. These are the divine gifts that play the role of bonus for a country if they are used precisely. The country encompasses 10% of the world’s reserves of iron ore, and 25% of the world’s uranium reserves and it is among the top ten countries with the highest gold reserves. The mining sector constitutes 30% of its GDP and drives 60% of the industry’s production. The exports of oil and gas constitute 70% of the total exports of the country and the contribution of oil to the GDP is almost 25%. Various groundwater sites for different purposes have also been developed in Kazakhstan.

Kazakhstan is working eagerly to diverge its economy in various sectors through proper plans. According to the World Bank report of 2019-2020, the GDP of Kazakhstan is over $ 180 billion which makes more than half of the region’s GDP. Kazakhstan is determined to attract investors. It transformed its administration, business strategy, trade, and industry to create a forthcoming environment for Foreign Direct Investment (FDI). Recently Central Asia attracted approximately 330$ Billion out of which 70% will be in Kazakhstan. According to Kazakhstan’s 2050 strategy it has plans to become one of the top 30 developed countries in the world. Russia has also shown its interest in investing in the mining sector of Kazakhstan and various minor businesses. Kazakhstan has established the Astana International Financing Center (AIFC) which deals with the maintenance of tax, visa, and employment issues for investors. For immediate response to trade disputes, a separate Court has been organized at AIFC that is out of the local judicial system of Kazakhstan.

After the withdrawal of US forces from Afghanistan and the Taliban takeover of Afghanistan, there is stability to some extent in the region. Kazakhstan can lead Central Asia to develop regional connectivity between the states for the augmentation of trade cooperation. By utilizing its geographical location, Kazakhstan can be a trade hub among China, Russia, South Asia, the Middle East, and Africa. China is well aware of the potential of Kazakhstan, therefore more than half of China’s BRI projects transit through Kazakhstan that connects Asia to Europe. Out of 261 BRI projects 102 are operating in Kazakhstan.

Moreover, Kazakhstan signed a trade agreement with Uzbekistan in April 2021 to assist each other’s economy. Although, a huge trade and economic cooperation hub is established at Gisht Kuprik-Zhibek Zholy border that will assist both states in logistics and trade. Gisht Kuprik checkpoint in the Tashkent region of Uzbekistan allows the Kazakh exports to move to Tajikistan and passing from Pakistan they will reach Gwadar and from here to the Middle East and Africa. In the Turkistan region of Kazakhstan Zhibek Zholy, checkpoint opens gateways for Uzbekistan to move its exports to Europe, Russia, and China. This agreement allows both states to trade with all Asian states and Also European states to flourish their economy which are the biggest markets for purchasers of their products. Kazakhstan also has direct access to the Caspian Sea that can be availed for the transportation of goods to Azerbaijan, Armenia, and Turkey and from Turkey to Europe. The Caspian seaport of Kazakhstan is making a record-breaking turnover.

Kazakhstan diversified its trade potential by utilizing all routes including rail, road, air, and sea. It can use alternate routes at alternate times that can avoid dependency on a single route. The railway of Kazakhstan is linked to the transit from China to Europe along the silk route through which it maintains the flow of goods. Kazakhstan is also a part of the Quadrilateral Transit and Trade Agreement (QTTA). QTTA is a trade agreement among China, Pakistan, Kyrgyzstan, and Kazakhstan that is an alternate route to warm waters from China to Pakistan’s Gwadar port.

In the Russian-Ukraine crisis, there is a huge disturbance in the supply chains of the West, particularly there is an energy shortage in Europe due to sanctions on Russia that was delivering oil and gas to Europe. Kazakhstan has a geographical landscape that is suitable to play a crucial role in this crisis by increasing its production of oil and gas that can be delivered to Europe and it can also offer gateways to various states for trading with Europe.

Kazakhstan is a very beautiful country and it can also generate huge revenue by attracting tourists. It is working to boost tourism through the various strategies for attracting tourists that will in turn help to boost its economy. After COVID-19, Kazakhstan is ready to open flights across the world after a long time.  It is also going to initiate direct flights from Pakistan from November 2022.

Kazakhstan thus has immense potential in terms of being a trade hub for Central Asia and also a tourist hub of the region. Moreover, there is immense potential to further enhance the bilateral ties between Pakistan and Kazakhstan therefore Pakistan should step up the momentum and further diversify relations with Kazakhstan.

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Sheraz Nawaz

Written by Sheraz Nawaz

Sheraz Nawaz is studying Strategic Studies at National Defense University Islamabad. He has interest in geo-politics and geo-economics. He writes on security issues and has special focus on Central Asia.

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