Taking matters beyond hydrocarbons

The changing fortunes of India’s thrust in Kazakhstan is connected to rising anxiety over Russian power and increased exertion of Chinese economic power. However, it is also the product of India’s visible assertion of its national interests in regional affairs under the Modi government.

With no land bridge and evacuation opportunities minimal, India has to look beyond hydrocarbons when engaging with Kazakhstan.

China embrace That Kazakhstani policymakers look longingly at India but end up dancing with China, is primarily due to the lack of sustained engagement by India as well as the market-economy measures used by India when compared to China.

Kazakhstan needs to been engaged in ways that are different from the way we engage Sudan, for example.

President Nursultan Nazarbayev recognises the potential of economic relations with India (the collateral benefit of such relations being security diversification). This has resulted in Nazarbayev stating that connectivity to India is an important component of the ‘NurZhol’ programme, with a decision to invest in Indian ports, warehouses and rolling stock (trains).

Indian private sector companies have not or cannot establish a significant presence in Kazakhstan due to their lack of understanding of local culture and also due to the lack of an ‘anchor’ Indian firm that they can cluster around.

In Kazakhstan, government-to-government ventures supported by the president have a larger probability of success when compared to private initiatives. A Korean power plant of 1.3GW being executed by Samsung is backed personally by the Korean president. A major Chinese petrochemicals joint venture is backed by the Chinese state oil company and was brokered by Li Peng when he was the premier.

One of the biggest beneficiaries of the newly-formed Asian Infrastructure Investment Bank (AIIB), after China, is Kazakhstan. China’s influence will only increase with the fetterless lending that AIIB will make on infrastructure projects. Yet Kazakhstan’s leadership appears quietly wary of China. It at a strategic point between Russia and China, and while the current regime has leaned towards Russia, the future of this alignment is uncertain.

Beyond oil What does an Indian state-led initiative need to look like? The ideas prescribed here eschew traditional approaches and ask for a state-led intervention in fostering economic relations. To that end they have been gleaned from conversations and talks with influential decision-makers in Kazakhstan over the past decade.

Mining/fertiliser : Potash mines are available and companies like Rashtriya Chemicals and Fertilizers (RCF) or Gujarat State Fertilizers and Chemicals (GSFC) should partner with the national mining operator and create a joint venture that can rival the world’s largest potash producer (currently that being Uralkali, Belarus). Numerous other mining opportunities exist and, as they say in Kazakh, “being present on the battlefield is half the battle won”. As such we do not have a state mining/mineral company presence in Kazakhstan; MMTC and others can surely play a role in exploring opportunities.

Digital/knowledge economy : There is need for engineering skills in Kazakhstan and as such companies such as Engineers India Ltd (EIL) and IRCON should explore setting up ventures.

This market is fragmented at the moment and there is a propensity to hire high-priced western companies. As part of its initiative on digital economy, India can have CDAC (Centre for Development of Advanced Computing) or similar organisations setting up operations in Kazakhstan to serve the whole Russian-speaking market.

Agriculture : An Indian state entity can seek a few million hectares of land on a lease basis to grow crops such as corn and soya to export to China and Russia. In 2008, the Chinese tried to do something similar but were met with street protests which resulted in cancellation of the deal. India on the other hand would be welcome. It also adds a dimension to food security — that of China’s supply now being in Indian hands. (Evacuation of food to India is not feasible due to transport costs.)

Swap trade with Iran : Post-sanctions, northern Iran will buy Kazakhstani oil and sell southern Iran oil via Bandar Abbas. IOL/ONGC can set up an entity with the Kazakh national oil company (KMG) to trade in such swaps providing sovereign guarantees that ensure a virtual monopoly in this sector.

Visa regime : With a GDP/capita of $13,000, Kazakhstan is already a middle-income country. The visa-on-arrival regime can be extended to Kazakhstan thereby allowing tourism and medical-tourism revenues that are currently going to Dubai, Thailand and Korea.

Club invite : India should consider inviting Kazakhstan to be the founding member of a CIS-Iran-SouthAsia (‘CISA’) confederation of states, to give the country a sense of belonging to the world stage. And indeed, what is the point in harping on civilisational ties when these cannot be converted into membership? This also allows both countries to differentiate themselves from the China-led Silk Road initiatives in the region.

Make up lost time India and Kazakhstan can look back on more than 20 years of squandered potential for a strategic partnership, with both sides more often than not acting at cross purposes.

Now that Kazakhstan is willing to reciprocate, India should be ready with its best diplomatic and economic face to once again start what it could have successfully concluded many years ago.

The writer has been in Kazakhstan for over a decade and is currently advisor to the president of KTZ, Kazakhstan’s national transportation and infrastructure company. The views are personal

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