A key partner in Central Asia

As the Obama administration moves to “reset” relations with Russia with this week’s summit in Moscow, it can feel fortunate in its relations with several other countries of the former Soviet Union, no more so than Kazakhstan in Central Asia.

No need to reset relations there. Rather, the opportunity is to enhance current political and security ties, pursue shared regional and global objectives and expand a vibrant energy and commercial relationship.

Unquestionably, Kazakhstan’s most important contribution to global security has been its historic decision to give up more than 1,400 nuclear weapons remaining in its territory after the Soviet breakup. Weapons-grade uranium, equivalent to dozens of bombs, also was moved to the United States for elimination and kept away from dangerous hands in a joint covert operation known as Project Sapphire.

A major uranium producer, Kazakhstan more recently offered to host a multinational fuel bank under International Atomic Energy Agency control, which could ensure a backup supply of safeguarded low-enriched uranium as an alternative to independent national enrichment facilities. These invaluable initiatives address critical proliferation challenges facing next year’s Nuclear Non-Proliferation Treaty Review Conference.

Also important, Kazakhstan has been elected the first non-European chair of the Organization for Security and Cooperation in Europe (OSCE) starting in 2010 and is actively supporting international initiatives to restore security and peace in Afghanistan and Pakistan. With its relationships of trust with both Russia and the West, as OSCE chair, Kazakhstan will be in a significant position to promote more positive European security arrangements following last year’s conflict between Russia and Georgia.

Looking to Southwest Asia, Kazakhstan is the only Eurasian country to have adopted a special assistance program for Afghanistan reconstruction, focusing on water and food supply as well as law enforcement and border-guard training.

In energy, Kazakhstan is a regional and indeed a global leader, and it is using its resources to strengthen its economic position and commercial opportunities. It holds the largest oil reserves and the second-largest gas reserves in Central Asia, which are being tapped by such major projects as Tengiz, Karachaganak and, prospectively, Kashagan. They are entering the markets through rail shipments and pipelines that traverse Russia, China and the Caucasus.

Successful engagement with three regional states — Russia, Kazakhstan and Azerbaijan — will be critical for future European energy security, which underlines the importance of close and supportive relations with Astana, the Kazakh capital.

Like other countries, however, Kazakhstan has been seriously challenged by the global financial crisis. Economic growth that reached 10.7 percent in 2006 will likely contract to just 1 percent this year, unemployment has risen to 8 percent, and the country’s financial institutions, housing sector and economic enterprises are experiencing the greatest stress since independence. The government wisely created a new National Fund, which is playing a key role in maintaining economic stability and securing jobs and pensions.

Adding in gold and currency reserves, the government’s rainy-day funds amount to about $50 billion, and its state holding company, Samruk-Kazyna, is capitalized at an additional $30 billion - all critical in weathering the storm.

President Nursultan Nazarbayev and his government deserve credit for moving aggressively to stabilize the economy and restore growth - earmarking $25 billion (a quarter of its gross domestic product) to fight the crisis but also cutting corporate taxes in half over the next three years and focusing funds on such job-creating sectors as small and medium enterprise and infrastructure projects.

More broadly, Kazakhstan is implementing a strategy to become one of the world’s 50 most competitive economies — funding thousands of Kazakh students around the globe and undertaking pro-investment measures and expansive trade moves to lead hopefully to its early accession to the World Trade Organization.

What kinds of steps will accelerate Kazakhstan’s progress to these goals? Four in particular stand out.

• Open markets:A level and transparent playing field will maximize the free flow of energy, trade and investment and will stimulate economic growth.

• Sound policies: In particular, economic stability and a business-friendly environment are needed for future investment commitments.

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