- - Friday, March 2, 2012

BERLIN — Kazakh officials hope that recent trade deals with Germany and France will lead to a trade pact with the European Union that will fuel the Central Asian nation’s economic development.

“The government is making a strong effort to go beyond oil and gas, and is seeking also to diversify its foreign investors, looking beyond China, the U.S. and Russia to Europe,” said Robert Cutler, who specializes in energy security and geoeconomics at Carleton University in Ottawa, Canada.

Kazakhstan’s economy recovered quickly from the global financial crisis of 2009, soaring to a growth rate of 7.1 percent in the first half of 2011 over the same period the previous year.

But growth rates are slowing: The economy is expected to grow 4.8 percent in 2012, Mr. Cutler said.


This slowing, along with a desire for political stability following social unrest among oil workers in December, prompted Kazakh President Nursultan Nazarbayev to announce in January efforts to further industrialize and diversify the economy.

“The energy sector is currently the single largest contributor to the state coffers and thanks to this, Kazakhstan has impressive economic growth,” said Lilit Gevorgyan, an analyst at IHS Global Insight, an economic analysis and marketing intelligence firm in London. “But there are social consequences as well to this type of monotype economy.”

‘Virtual periodic table of elements’

Ms. Gevorgyan said deadly oil riots in the western town of Zhanaozen in December highlights the vulnerability of the former Soviet republic’s long-term political stability. That has prompted Kazakh officials to promote small and medium-sized businesses and a “stronger and wider middle class.”

Meanwhile, Europeans are searching for a reliable supply of industrial raw materials — and Kazakhstan’s wealth of rare earth and other mineral deposits make it an attractive investment.

Kazakhstan has long been known to be a virtual periodic table of elements,” said Mr. Cutler. “The problems have been to develop the deposits and get them to market in a commercially viable manner.”

Copper, zinc and other metals vital for industrial processes already are “on tap,” Mr. Cutler said, adding that Kazakhstan now wants partners to help mine its uranium and rare earths.

In turn, “companies from developed capitalist economies have been lining up to try and negotiate deals,” he said.

On Feb. 8, Kazakhstan and Germany signed trade and economic development agreements worth a total of $4 billion, which Mr. Nazarbayev described as a “breakthrough” in a joint press statement with German Chancellor Angela Merkel.

Kazakh and French officials discussed similar bilateral deals in mid-February.

One central aspect of the Kazakh-German deal established a partnership on raw materials, industry and technology between the two governments.

Story Continues →