At the end of this week Prime Minister Manmohan Singh will make his first official visit to Kazakhstan (April 15-16) and is expected to sign at least six agreements. These will include a nuclear energy pact that will broaden an earlier 2009 nuclear cooperation agreement to include joint exploration and research of uranium, and a long-negotiated Rs. 1,800 crore deal that will give India’s ONGC a 25% stake in the Satpayev oil field on the Caspian Sea.
Indian analyst and press reports on the upcoming visit focus almost exclusively 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.
This policy note suggests that this is an overly narrow and short-sighted view of what should be a broad-based, strategic, long-term relationship. Observers have failed to note, for instance, that this week’s meeting will mark the first trip to Kazakhstan by any head of state since the April 4, 2011 re-election of President Nazarbayev for a new five- year term. The planned visit—mirroring the significance of President Nazarbaeyv’s 2009 visit to India as a guest of honor for the 60th Republic Day celebration—demonstrates the increased prominence of Kazakhstan in India’s foreign policy agenda. By framing the relationship in broader, more balanced terms in the course of his visit, Prime Minister Singh and the larger policy establishment have the opportunity to build on this 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.
Aside from more abstract geo-political considerations, the 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 across the full spectrum of common interests including technological cooperation in IT, alternative energy, and space sectors. In addition are increased bi-lateral trade and investment in sectors like pharmaceuticals, agriculture, textiles, infrastructure, mining, and tourism; opportunities for greater cultural and educational exchanges from the very low base of Indo-Kazakh people-to-people contacts today; stronger military ties and more visible coordination on shared security concerns in Central Asia and beyond.
a) Energy Access
The most discussed aspect of the current India-Kazakhstan relationship is rooted in India’s growing demand for energy. In the field of civilian nuclear energy, it is expected that India’s demand for nuclear fuel will increase tenfold by 2020, reaching up to 8000 tons of uranium a year as India more than doubles its 20 nuclear plant capacity, a plan that is so far unchanged despite the nuclear crisis in Japan. India’s hydrocarbon consumption is also projected increasing at a rapid pace, with IEA estimating growth from 3-3.5 million barrels per day today to over 5 million per day in 2020.
Kazakhstan is well positioned to 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, and by some estimates is poised to emerge as the number one supplier of uranium in the world in the next 5-10 years with a presence across the uranium extraction, enrichment, and fuel fabrication markets. The predicted 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 in so far as Middle Eastern and Western hydrocarbon resources are largely closed to Indian investment.
To put things in perspective, however, the prospective 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 Kazakhstan’s reserves and sufficient oil to meet India’s needs for roughly 1.5 years. More broadly the transport of hydrocarbons is difficult given the lack of stable, reliable land routes. For nuclear fuel, the short-term need is more substantial and challenges fewer, but the broader point is that energy needs are not and cannot be the be-all and end-all of the India-Kazakhstan relationship.
b) Trade and Technology
The trade volume between the two nations has experienced rapid growth, rising from roughly USD 80 million in 2004 to USD 253 million in 2009 and USD 314 million in 2010. Major commodities of export from India to Kazakhstan are tea, pharmaceuticals, medical equipments, machinery, tobacco, and consumer items. Major items of import by India are asbestos, soft wheat, steel, aluminium, wool and raw hides.
These numbers are dwarfed by the volume of India’s trade with top trade partners like China (USD 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 USD 500 million market. The two countries’ business interests received a major boost when Kazakhstan’s Arcelor, now the second largest steel producer in the world, became a jewel in the crown of the India-origin Mittal empire. Furthermore, opportunities abound in underexplored sectors like agriculture, tourism, construction, and rare metals 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 businessmen will be held this year, is a step in the right direction.
Technology is another area of opportunity. The two sides have signed agreements to cooperate in fields such as information technology and space exploration and pledged to promote their bilateral trade in prior meetings in 2009. There are likewise opportunities for higher levels of technological cooperation, such as a reinvigorated set of cooperation initiatives between the Indian IT sector and the IT innovation city in Alatau (PIT Alatau), which was established in the wake of a 2002 agreement, but has not yet captured its full potential.
c) Geo-politics, Security, and Beyond
The relationship with Kazakhstan is one that holds considerable opportunity for India. There is a commonality of purpose between the two countries along some crucial parameters.
Given their geographic locations, both states have an interest in maintaing 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. 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.
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. Furthermore, over 100 Kazakh students have come to India under the ICCR (Indian Council for Culural Relations) scholarship programs for international students. Such people-to-people contacts, in the form of cultural exchanges, pr
ograms, and overall awareness, can be significantly expanded in both directions.
Of course, Kazakhstan’s population is only 15.8 million, so to some extent these exchanges seem limited, especially compared with India’s small-sized neighbours such as Sri Lanka or Nepal. But they are more significant than, say, with Georgia or Azerbaijan, and in that sense, have greater potential to spread Indian goodwill and influence in Central Asia.
With the opportunities inherent in a stronger Indo-Kazakhstan relationship however come risks which need to be appreciated if the ties between the two states are to develop in the coming decades. The first among these is dealing with the regime of Nursultan Nazarbayev, who, in this month’s re-election, has won what BBC News termed a “crushing” victory, winning over 95.5 % of the voters. India should calibrate its messages of support for the regime carefully, given international observers’ (notably, the OSCE’s) concern about the election and broader human rights.
While immediate prospects of instability appear to be relatively limited, in the longer-term potential for instability remains due to the highly centralized, controlled nature of the regime, the lack of strong political figures, and the relatively high level of corruption. Transparency International recently rated Kazakstan as the 105th most corrupt country in the world.
However, these potential risks should not be made a bone of contention because of the broader alignment of strategic interests between Kazakhstan and India. While Kazakhstan, with a population of 15.8 million, is unlikely to become a first-rank geopolitical partner for India, there are enough common interests between the two Asian states to strive for a multivalent partnership.
In light of the preceding discussion, this note argues that the conversation in Astana should go well beyond India’s immediate energy concerns and reframe the rhetoric to reflect the broader potential of the strategic relationship that can be mutually advantageous to both states. In particular, both countries should continue to reconfigure what is now often an arms-length transactional relationship that hinges on relatively narrow natural resource considerations. Furthermore, Prime Minister Singh should openly herald the importance of the strategic partnership and opportunities in areas like trade, industry, and information technology that can involve the private sector in further strengthening business and investment linkages. At the same time, the two nations should continue to develop inter-governmental links in “soft” diplomacy areas including cultural and educational exchanges.
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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