Kazakhstan’s economic diplomacy: on solid footing and with clear goals in mind

Our country pursues a peaceful and friendly foreign policy towards all states with which it has established diplomatic relations. There are no substantive contradictions in the area of political cooperation with any of them. Moreover, we have the same or similar views on most issues of bilateral interaction and international agenda.

Kazakhstan also sets ambitious economic goals. In particular, our country plans to become one of the 30 most-developed countries in the world by 2050. Achieving such a daunting task requires intensive economic contacts with foreign countries and international organisations. Therefore, an active foreign economic policy plays a leading role in Kazakhstan’s diplomacy.

This vision is consistent with international experience. One of the major trends in world diplomacy is the economisation of foreign ministries’ activities, meaning strengthening the focus on economic affairs such as promoting exports and attracting investments. This is most evident in the experience of countries such as Australia, Austria, Canada, South Korea, Sweden, etc. In the case of Kazakhstan, the main subject of negotiations with foreign diplomats is usually trade and investment cooperation.

In order to successfully implement the objectives of Kazakhstan’s foreign economic policy, it is necessary to meet mandatory requirements, which, in turn, are divided into internal and external.

Internal prerequisites. These include, first of all, the macroeconomic environment. It is problematic to establish strong mutually beneficial contacts with foreign partners if the country experiences certain economic difficulties. For instance, the high volatility of the national currency is a serious obstacle to the development of mutually beneficial trade and foreign investment.

The fact that there is a legal framework for economic cooperation and, most significantly, its unconditional enforcement are of paramount importance. This means the mandatory implementation of bilateral agreements on economic cooperation. We should not merely “sign,” but also scrupulously observe the letter and spirit of the adopted instruments.

Minimising corruption plays a special role in this area. It is not only about fighting it, but also about creating conditions that make it unfavourable. It is these criteria that are used by a number of foreign countries that have or seek to obtain high scores on the Transparency International’s scale.

External prerequisites. They are mainly reduced to the situation in international commodity, financial and credit markets; negative consequences of world crises and contradictions between leading players; stock and price collapses. Ratings and forecasts of international agencies, as well as assessments of reputable experts, are also crucial.

Failure of the above-mentioned preconditions to fully comply with modern requirements is often conducive to problems in the implementation of foreign economic policy. In this context, both highly developed countries and emerging economies are trying to maximise the benefits of cooperation with international economic organisations and financial institutions, including rating agencies.

The world economy is now suffering from turmoil caused by trade wars between the world powers. An economic confrontation between the U.S. and China, the U.S. and Russia, the EU and Russia, Japan and Korea contributed to the revision of global economic growth forecasts from 3.6 percent to 3.1 percent. There are risks of new stock market shocks and unstable commodity exchanges, which are fraught with negative consequences for the global economy.

Kazakhstan’s priorities in foreign economic policy include a number of factors that are essentially aimed at achieving the complex objectives of economic diplomacy. They are the following.

– Comprehensive support of Kazakh business abroad. In this regard, the Ministry of Foreign Affairs and its foreign missions have developed and introduced systems of institutional support measures. In particular, they provide comprehensive support across the entire range of mutually beneficial cooperation, including political, economic and legal aspects. Coordinated by the Foreign Ministry, Kazakhstan’s diplomatic missions are addressing issues of strategic interest to Kazakhstan’s business community in their receiving states.

– Promotion of non-resource export of Kazakhstan. The focus is on the implementation of agreements at the highest and high levels on the development of trade and economic cooperation with foreign countries.

After the creation of a line ministry (the Ministry of Trade and Integration of Kazakhstan, or MTI), the Ministry of Foreign Affairs, through its foreign missions, remains active in arranging expert negotiations, searching for business partners, establishing long-term contacts and monitoring the implementation of priority projects. It monitors foreign markets of goods and services and analyses the ways of increasing Kazakhstan’s non-resource export and the list of promising foreign countries for establishing trade missions and developing export there.

In this regard, our country is interested in the cooperation with China, the UAE, Iran, Vietnam, the countries of Central Asia (export of agricultural and livestock products), EU countries (export of chemical and metallurgical products), as well as collaboration within the EAEU.

One of the priority tasks of the Ministry of Foreign Affairs in the field of export remains the promotion of the defence industry of Kazakhstan to foreign markets. In general, work in this direction is focused on the implementation of memoranda, roadmaps and joint activities with the participation of the Ministry of Foreign Affairs, Atameken National Chamber of Enterpreneurs, KazakhExport JSC, Kazakhstan Industry and Export Centre JSC and other government bodies of Kazakhstan. Thus, active preparations are underway for the 6th international exhibition of armaments and technologies “KADEX-2020”, which will be held on May 28-31 in Nur-Sultan.

In general, all measures to support exporters will be undertaken through the one-stop-shop represented by QazTrade. This work will coordinate the state policy of promoting Kazakh exports. It is important to ensure proper interaction between the main actors of the foreign economic policy of Kazakhstan in practice (MFA-Kazakhinvest-MTI-Qaztrade).

At present, our cooperation with MTI is also being conducted within the framework of opening 11 trade missions of Kazakhstan abroad, including in priority sales markets of Russia, China and Central Asian countries. Special attention is paid to the promotion of Kazakh brands on the target markets.

One of the primary tasks of our foreign economic policy is attracting foreign direct investment (FDI) to achieve the goals of diversifying the country’s economy, developing innovative technologies in priority sectors, maximising the participation of foreign investors in the privatisation process, creating new jobs and addressing socio-economic issues.

The attraction of FDI is one of the most competitive fields in the world market. At the same time, further building a comprehensive three-tier ecosystem for attracting investments, expanding the list of priority countries in order to open foreign trade missions of Kazakhstan and using the experience of foreign independent partners can serve as tools for attracting FDI. In this context, in line with the instructions of the leadership of the country, special attention is paid to increasing investment cooperation with the United States, Japan and Germany.

Multilateral cooperation in the transport and logistics sphere by enhancing the transit potential of Kazakhstan, forming alternative routes, strengthening the legal framework, informing foreign partners about the possibilities of Kazakhstan remains an important factor in promoting the foreign economic interests of our country. This point has gained particular importance in the light of efforts to combine the new economic policy of Nurly Zhol and the China’s Belt and Road Initiative.

In order to promote the transit and transport potential of Kazakhstan, work is on-going to monitor and analyse risks in this area, including the full functioning of existing and the launch of new cargo transportation routes. There is a practice of conducting targeted events in the most priority countries with the presentation of transit and transport capabilities of Kazakhstan. Currently, cooperation with international organisations in the field of transport has been intensified within the framework of international transport corridors (Organisation for Cooperation of Railways, TRACECA, etc.).

In order to diversify and modernise the economy, it is necessary to deeply study and attract international best practices in economic sphere. This applies primarily to the development of the non-commodity sector of the economy, attracting FDI in the processing industry, the introduction of innovative technologies, the development and effective use of special economic zones. In this context, the experience of Japan, South Korea, Indonesia, Singapore, as well as the EU countries that do not have a sufficient raw material base but have achieved high indicators in building a smart economy, is of great interest to our country.

According to the forecasts of some researchers and leading analytical publications, the planet’s hydrocarbon resources will be practically depleted by 2050. This means that the global economy will gradually “switch” to new alternative energy sources. In this regard, many countries of the world are already actively developing renewable energy technologies to achieve the maximum indicator of renewable energy production in the overall energy balance. This also applies to the development and use of environmental technologies, which are closely interlinked and governed by obligations under the Paris Agreement.

Currently, Kazakhstan has created a solid institutional network designed to strengthen and expand bilateral trade and economic cooperation at the state level. There are 133 structures, including 60 intergovernmental commissions, 22 sub-commissions and more than 50 working groups for cooperation with foreign countries in a number of industry areas. The business community of Kazakhstan has established business councils with more than 20 countries. These platforms are an effective mechanism for the interaction of Kazakhstan with foreign partners.

The enhancement of cooperation of Kazakhstan with international economic organisations and financial institutions remains an important and determining factor in the foreign economic policy of our state.

In this context, it should be noted that there is constructive interaction between Kazakhstan and the OECD, WEF, WTO, international financial institutions (World Bank Group, IMF, EBRD, ADB, CAREC), international energy organisations (Energy Charter Treaty, International Energy Forum, OPEC, GECF, World Petroleum Council, International Energy Agency, etc.).

With the assistance of the Ministry of Foreign Affairs, Kazakhstan is actively participating in multilateral economic cooperation, especially in cooperation with international financial organisations, where the interests of our country are represented. This content is of particular importance in connection with the upcoming participation of our country’s leadership in the World Economic Forum in Davos (WEF) in January 2020.

Overall, the Foreign Ministry provides the necessary assistance to the state bodies of Kazakhstan in cooperation with the World Bank Group, the International Monetary Fund, the European Bank for Reconstruction and Development, the Asian Development Bank and the Asian Infrastructure Investment Bank. Almost all of these organisations have representative offices in our country. We are welcoming the opening of the IMF Regional Technical Support Centre for the countries of Central Asia, the South Caucasus and Mongolia in Almaty in the near future.

Prior to the formal initiation of the procedure for Kazakhstan’s accession to the OECD, high-quality homework should be carried out in all areas of concern. The interaction with the structural units of the organisation is enhancing. Currently, Kazakhstan is participating in 34 working bodies of the OECD. Such a gradual approach will provide us with stronger and more convincing positions for the accession negotiations.

The Foreign Ministry’s work on increasing the participation in the OECD is primarily aimed at improving the perception of the country’s image in the global community. Kazakh missions in the OECD member states are being actively involved in the outreach with the receiving countries, as well as with the organisation’s relevant committees, providing positive assessments from trustworthy resources. To increase the interest of the OECD member states, Kazakhstan should more openly share its experience, both positive and unresolved.

The Ministry of Foreign Affairs is carrying out active work within the framework of cooperation with the WTO. On July 24, 2018, during the meeting of the WTO General Council, an application of Kazakhstan for hosting the 12th WTO Ministerial Conference (MC-12) in Nur-Sultan was approved. For the first time the WTO Ministerial Conference will be held in the country that joined the WTO after its founding in 1995, and for the first time it will be held in the Central Asian region. Trade ministers from 164 member countries and 20 WTO observer countries will take part in the work of MC-12. Meanwhile, visits of the heads of at least 20 foreign countries are possible. The total number of participants in the event will exceed 8,000 people.

The foreign ministry works closely with leading international rating agencies (Fitch Ratings, Moody’s, Standard & Poor’s). In this regard, along with constant monitoring of current ratings, our ministry has established work through its missions to provide relevant information on the current socio-economic development of the country for its appropriate reflection in the ratings. However, there is an urgent need to establish constructive cooperation with European and Asian rating agencies in order to ensure balanced assessments.

For several years, Kazakhstan has been conducting a focused work on the formation of its own system of official development assistance (ODA). Namely, in Kazakhstan, the Law “On Official Development Assistance” and a number of regulatory legal acts have been adopted, human resources have been formed, and cooperation with donor organisations is developing.

Currently, the work on creating a national operator in the ODA field in a form of the KazAID Agency continues. The issue of institutionalising KazAID is still unresolved, which is associated with a number of objective circumstances. Nonetheless, Kazakhstan began to implement the first projects under the auspices of the national ODA system in collaboration with the United Nations Development Program (UNDP) and other donors.

Improving the legal framework of economic cooperation with foreign countries remains an important component of successful implementation of the foreign economic policy of our state. Currently, a number of treaties and agreements need to be amended. In this regard, we are carefully studying the existing legal framework of economic cooperation between Kazakhstan and various countries with a view to its possible improvement.

In general, foreign economic indicators are laid down as the determinants in the entire spectrum of activities of the Ministry of Foreign Affairs. The foreign ministry acts as an important link between domestic business and external partners in promoting economic diplomacy, attracting foreign investment, supporting domestic exports, interacting with international institutions of economics and finance, increasing tourist attractiveness, analysing and forecasting the global economy. We will continue and enhance this multifaceted work.

The author is Minister of Foreign Affairs of Kazakhstan.