The U.S., Kazakhstan and Stresses of Empire

How has the Obama Administration bungled U.S. relations with Kazakhstan?

July 29, 2010

How has the Obama Administration bungled U.S. relations with Kazakhstan?

Back in April 2010, President Barack Obama sang Kazakhstan’s praises at the 47-nation nuclear security summit in Washington — and President of Kazakhstan Nursultan Nazarbayev recently gave Washington important flyover rights to help supply U.S. and NATO forces operating in Afghanistan.

Yet U.S.-Kazakh relations appear headed for a period of significant stress following a series of Kazakh decisions to crack down on U.S.-owned or partially controlled energy companies operating in the country. What went wrong?

The government of Kazakhstan has recently imposed a new $20 per metric ton tariff on its oil exports. It has sequestered all the property of Caspian Gas Company, a subsidiary of American Petroleum, for overdue debts it allegedly owes the Kazakh-owned BTA bank. And the country’s financial police have issued a $1.4 million fine against the U.S. oil major Chevron for alleged environmental violations.

Also, the new export tariff will be imposed on the production and transportation of Chevron’s subsidiary TengizChevroil, even though Chevron was exempted from an earlier export tariff that was imposed on oil two and a half years ago.

So what went wrong?

While U.S. policymakers under President Obama thought they were being generous and supportive of Kazakhstan, they made two huge mistakes.

First, they never engaged the Kazakhs substantively on business and economic issues. The Kazakhs repeatedly signaled to Washington, both directly and through intermediaries, that they were eager to encourage more U.S. investment in their country — not just in the obvious oil and natural gas sectors, but also in many other areas.

Although individual U.S. companies have done very successful business with the Kazakhs, the U.S. business establishment never put together any major, coordinated strategy for expanding investment and business opportunities.

European nations — led by Germany and Britain — have been far more energetic, coordinated and successful than the much larger U.S. business community in developing their relations and opportunities with the Kazakhs. Indeed, German engineering companies and British banks and British, French and Italian oil and gas companies have led the charge.

Second, in contrast to the active and effective involvement of the British, French, German and Italian governments with their major corporations, the U.S. government has been negligent and complacent in its economic dealings with Kazakhstan.

The former U.S. Ambassador to Turkey and Azerbaijan, Ross Wilson, and Frederick Kempe, President of the Atlantic Council, noted at a recent conference in Washington, D.C., that U.S. policy towards Central Asia in general — and towards Kazakhstan in particular — under both President Obama and his predecessor has focused on strategic issues, not economic ones.

At the same time, U.S. policymakers have repeatedly lectured the Kazakhs for not proceeding faster on implementing democracy. Kazakh policymakers have been irked by the new U.S. focus on making Kyrgyzstan a poster child for democracy for the rest of Central Asia.

Yet they find it discomforting, to say the least, to observe the situation in neighboring Kyrgyzstan. Since the Kyrgyz people started to set up a new democratic system in April following the ousting of corrupt, long-time President Kurmanbek Bakiyev, that country has been rocked by the worst ethnic violence in the nation’s independent history.

The Kazakhs have also been disappointed that the United States has not been more forthcoming considering that President Nazarbayev risked seriously angering Russia when he approved U.S. Air Force cargo over-flights through Kazakh air space to Afghanistan.

In Kazakh eyes, Obama and Secretary of State Hillary Rodham Clinton took that important act for granted. That sentiment was underscored when Deputy Secretary of State James Steinberg visited Kazakhstan in mid-July, a visit that stands out only for its brevity.

However, the Kazakhs are now getting their own back. As their new policy of pins and needles demonstrates, U.S. corporations are paying a heavy price because their government ignored their own real interests and business opportunities in the strongest, most resource-rich and fastest-growing economy in former Soviet Asia.

The growing problems facing U.S. companies operating in Kazakhstan illustrate the stresses of empire management for the United States.

As has already repeatedly happened in Iraq and Afghanistan, major business and investment opportunities have been snapped up by other nations from under Uncle Sam’s nose while the U.S. government focuses on the supposedly more portentous issues of preaching democracy and prosecuting its international war on terror.

Yet the war on terror never seems to achieve any victories — and Kyrgyzstan, the new fashionable poster-boy for democracy in Central Asia, teeters further towards catastrophic collapse than at any previous time in its independent history.

Meanwhile, these serious and supposedly “strategic” policies of empire drive away investment opportunities from U.S. companies while the rest of the world deals with each other.

Far from abandoning the discredited policies of President George W. Bush, President Obama has intensified them. And far from re-engaging the United States from the rest of the world, he is increasing its practical isolation.

The pins-and-needles problems being inflicted on U.S. companies in Kazakhstan are just symptoms of a far deeper, more serious disorder.

Editor’s Note: This feature is adapted from an article that originally ran on Central Asia Newswire (CAN).

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Takeaways

Far from abandoning the discredited policies of President George W. Bush, President Obama has intensified them.

U.S. corporations are paying a heavy price because their government ignored business opportunities in the fastest-growing economy in former Soviet Asia.

The U.S. government has been negligent and complacent in its economic dealings with Kazakhstan.

U.S. policymakers never engaged the Kazakhs substantively on business and economic issues.