Mass protests and bloody clashes in Kazakhstan did not hesitate to affect the exchange rate of the national currency of the country’s main partner in the Eurasian Economic Union (EAEU) – Russia. The exchange rates of the dollar and the euro against the ruble renewed their multi-month highs at the auctions on January 5 and 6, slightly correcting on the 7th. Such an economic reaction, according to experts’ forecasts, will not be the only one – regardless of the resolution of the crisis in Kazakhstan.
Partnership between Russia and Kazakhstan in numbers
The trade turnover between Russia and Kazakhstan intensified last year: according to the Federal Customs Service (FCS) of the Russian Federation, in the first nine months of 2021 it amounted to $ 18.4 billion, exceeding the figure for the same period in 2020 by almost 40%. Russian exports to Kazakhstan increased by 32.6% to $ 31.1 billion, imports of Kazakh goods – by 53.4% to $ 5.2 billion.
Like Kazakhstan for Russia, Russia is not the number one trading partner for Kazakhstan. In the overall structure of Russian foreign trade, Kazakhstan has a share of about 3.5%. The largest trading partner of Russia is the European Union (35.7%). It is noteworthy that the EU also occupies a comparable share in the foreign trade turnover of Kazakhstan – about 30%. But the main trading partner among individual countries is China. In Russia, its share is also the largest – about 18%.
Kazakhstan buys from Russia mainly machinery, equipment and vehicles (more than a quarter of the total volume of Russian exports to Kazakhstan), metals, chemical products, food, agricultural raw materials and hydrocarbons. First of all, hydrocarbons (40% of imports), metals (one third) and chemical products come from Kazakhstan to Russia.
Are joint projects at risk?
As can be seen from the presented statistics, trade relations between the two oil-producing countries are mainly concentrated in the energy sector. The most prominent representative of the Russian oil and gas business operating in Kazakhstan is Lukoil, which participates in the Caspian Pipeline Consortium (CPC) and the development of such large fields as Tengiz and Karachaganak. However, the existing projects, according to experts, are not in danger. Real risks will arise if the crisis in the country drags on.
Refinery in Kazakhstan
Rather, the question is about joint projects that have not yet begun. Kazatomprom develops uranium deposits and has a strong influence on the global market, – independent industrial expert Leonid Khazanov told DW. – However, Kazakhstan does not have its own nuclear power plant. The government has already discussed the issue of its construction, and Rosatom could claim the role of general contractor. By the way, the Russian corporation already owns stakes in several uranium mining projects in Kazakhstan.
The ties between Russia and Kazakhstan are also quite close in the metallurgical sphere. According to Khazanov, KAZ Minerals, which specializes in the extraction of copper ore, intended to launch the Baimsky GOK on the basis of the Peschanka copper-porphyry deposit in Chukotka. For another major Kazakhstani player, the Eurasian Resources Group (which extracts iron and chrome ores, bauxite and coal, produces ferroalloys and aluminum), the Russian market is important in terms of the sale of ferroalloys and aluminum.
Macroeconomic negative
If the crisis in Kazakhstan cannot be quickly resolved, changes will take place not so much in the sectoral aspect as in the macroeconomic one, believes Igor Nikolaev, director of the Institute for Strategic Analysis of FBK Grant Thornton. “The ruble reacted very characteristic to what was happening (the dollar exchange rate on the stock exchange exceeded 77 rubles on January 6, at the end of December it was 74.5 rubles per dollar. – Ed.). This suggests that the Russian national currency, even in conditions when oil prices are high, is subject to the factor of uncertainty, “he told DW.
The crisis in Kazakhstan affects the exchange rate of the Russian currency
According to the expert, in conditions when the currency is weak, when uncertainty arises, including geopolitical, it “fails.” As Nikolaev says, the instability that has arisen will inevitably affect the sentiments of investors – both foreign and Russian: the economy is a significant negative. “
Risks for the EAEU
As for the prospects for the development of a single Eurasian economic space, the main initiator of the creation of which was the first President of Kazakhstan, Nursultan Nazarbayev, then, most likely, nothing threatens the EAEU as an economic entity, experts say. “Of course, what is happening in Kazakhstan cannot but affect the prospects of the EAEU, although ultimately the country will remain a consistent supporter of membership in the union,” says Alexey Portansky, a professor at the Higher School of Economics, a leading researcher at the Institute of World Economy and International Relations of the Russian Academy of Sciences.
Kasym-Jomart Tokayev
At least the country will not leave the union if Kassym-Zhomart Tokayev remains its head. “Under his leadership, Kazakhstan will definitely remain within the EAEU,” the expert continues. “If radical forces come to power, anything is possible, but this is most likely a fantastic scenario. and place his people. But he will not give up on the course of cooperation with Russia. “
At the same time, Alexey Portansky admits that there are certain tensions within the EAEU. In particular, over the years of its existence, the business of Kazakhstan expressed dissatisfaction with the fact that its products turned out to be uncompetitive when the ruble fell, when Russian goods became cheaper and more accessible than Kazakhstani ones. “This issue remains unresolved,” the expert concludes.
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