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The Atlantic Council of the United States

Twenty Years of Kazakhstan Independence

Looking Forward: Where Should Kazakhstan be by 2031 and
How Will It Get There?

Chair:
Ross Wilson,
Director,
Dinu Patriciu Eurasia Center,
Atlantic Council

Speakers:
William Courtney,
First US Chargé d’Affaires and then Ambassador to the Republic of Kazakhstan (1992-95)

Lorne Craner,
President, International Republican

Stephen Sestanovich,
George F. Kennan Senior Fellow for Russian and Eurasian Studies,
Council on Foreign Relations

Location: Washington, D.C.

Date: Tuesday, January 31, 2012

Transcript by
Federal News Service
Washington, D.C.

ROSS WILSON: (In progress) – with the past 20 years and some of the challenges that that presented. For this – for this session we have four distinguished people to be with us: the honorable Lorne Craner, president of the International Republican Institute, former assistant secretary of state for democracy, human rights and labor, a friend of mine, one of our most sensible, sober advocates on the importance of democratic institutions and values around the world.
William Courtney, who served as our first chief of mission in Kazakhstan, initially as charge d’affaires, a couple of weeks, I think, after our embassy opened in Almaty, and then as our first ambassador. I’ll just note, when I flew – I remember distinctly, Bill, flying into Kazakhstan in 1993 with Secretary Warren Christopher when a telegram came to the airplane from Ambassador Courtney advising on what exactly to do when sheep’s head was served. (Laughter.) Bill subsequently served as U.S. ambassador to Georgia, and is special assistant to the president and senior director at the NSC with responsibility for relations with the former Soviet states.
Fred Starr is one of America’s preeminent scholars on Central Asia; presently serves as chairman of the Central Asia Caucasus Institute in the Silk Road program at Johns Hopkins University’s Nitze School of Advanced International Studies.
And finally, Steve Sestanovich holds positions – senior positions at the Council on Foreign Relations and at Columbia University. I had the honor of serving as deputy to Steve when he was ambassador at large and special adviser to the secretary of state for the new independent states during the second Clinton administration. I can’t think of anyone that I worked with over my career who did more to make service in government both intellectually stimulating and also fun.
Our – each of our speakers will – I’ve asked each to sort of focus their opening remarks on some different sets of issues as we look out at the future, and then we will – we will take some questions. So without any further ado, let me turn to Lorne Craner.
LORNE CRANER: Great. Well, thank you for your introduction. I’ll tell my wife tonight I’m very, very (censed ?). She already knows I’m – (word inaudible). (Laughter.) Thanks again for the opportunity to be here.
And I come to – before you not as a Kazakhstan expert, though I did spend a good bit of time there, over the past 10 or 11 years, including while I was in government and working for the International Republican Institute. And I will tell you, as somebody that deals in human rights and democracy, that there’s a lot to praise in Kazakhstan. First of all, I would point to the notable economic success that the country has experienced, the rise in overall living standards, the fact that it has become not only an important player in the region but an important player on the global stage. We all know it relinquished its nuclear arsenal, and I think that was one of the first things it did that drew such attention to it; and as it also made great strides in the field of human rights. We do polling in Kazakhstan, and according to the polling that we do – and we’re able to do it freely – President Nazarbayev is viewed by many in Kazakhstan as a strong leader capable of preserving stability, fostering economic development and providing solutions to social problems. In fact, in a survey we conducted less than a year ago, 90 percent of respondents approved of the way he was doing his job.
Thanks in part to abundant national resources, Kazakhstan, as I said, has experienced great economic success and has begun to create a middle class. And in my business, that is one of the things that you look for when you begin to expect political change, political demands with any country. And indeed, President Nazarbayev has stated that the road to democracy is irreversible.
As I said, there have been clear improvements made. I think the January 2012 parliamentary election marked the first time that a second-place party gained seats in parliament, regardless of the 7-percent electoral threshold. And although both of the second- and third-place parties have been quite close to (Nursultan ?), it’s still an improvement and, I think, a blessing to see opposition parties in parliament. And I, looking forward 20 years, would encourage Kazakhstan to continue to create more open political space. If they do so for political parties, they will ensure that the government is truly represented and reflective of the diverse population of the country. The elections themselves, I think, were also noted as an improvement. And again, they should continue to strive to improve those to gain legitimacy.
One of the things I noticed in particular in the region, whenever I would visit Kazakhstan, was their pride – and I think rightly so – on being a tolerant, multiethnic and multireligious society. Their constitution guarantees freedom of worship. And it’s certainly the case that major religions are able to practice freely and openly. I would note some recently adopted legislation in Kazakhstan is not the only issue – the only country facing this issue, but some legislation intended to combat extremism which would provide the government with broad powers to restrict the rights of certain minority religions. Kazakhstan I think should continue to strive to keep its reputation for religious openness.
Similarly, I would – I would talk – and this is something that we dealt with when I was in the State Department – issues of freedom of association and assembly, and in particular the fact that Kazakhstan has numerous NGOs – there have off and on been issues of whether there will be a new NGO law that would be more restrictive. I would instead look to Kazakhstan to build upon their reputation to allow all NGOS, including those who deal with political issues, to operate freely and without interference.

The last couple of issues I would point to is, number one, the separation of powers – and I know this will be a sensitive issue – but the separation of powers between executive, legislative and judicial branches of government and freedom of the press. The constitution guarantees freedom of the press, but as we all know, there have been many issues with that over the years.

I would say finally, Kazakhstan obviously is in a very tough neighborhood with a lot of tough neighbors, and these things, as they look forward, have to be moved very, very delicately. But one of the things that has always struck me personally about Kazakhstan is the sophistication of the people. I think President Nazarbayev was very forward-looking in terms of the education of his people, both within Kazakhstan and sending them outside Kazakhstan. And within the region, certainly you see groups of people that you do not see elsewhere in the region. So again, it’s my great hope that by taking in diverse opinions of political parties, NGOs and the press, and ensuring full religious freedom, that Kazakhstan will be able to continue the kind of development it has had these past 20 years. Thank you.

MR. WILSON : Thank you very much, Lorne. (Applause.)
Let me turn now to Ambassador Bill Courtney.

BILL COURTNEY: Ross, thank you very much. I do remember writing that telegram, actually, about the – how to carve the sheep. I especially – I was a little squeamish. I remembered a former U.S. president in Japan who had had a squeamish moment, and so I was a little scared to be too courageous. And so my preference was to lop off one of the ears and give that to the most junior person at the table and say, you know, you should be listening to your elders – (laughter) – and then I would lop off the other ear and give that to the senior security and intelligence official at the table and say, we assume that you are already listening, and then I’d pass the rest of the After two decades of independence, Kazakhstan is at a strategic turning point. Economic growth has been remarkable, but political development and the role of the private economic sector have lagged. A competitive private sector is essential to make the economy more productive, and competitive political, judicial and media institutions are vital for the long-term stability that only a democracy can bring. In other words, economic and political competition, and the degree of competition, will do very much to shape Kazakhstan’s success in the years ahead.

This is certainly true in a society blessed with increasing incomes, educated people and rising political and social expectations. Suppressed political and economic freedoms create tensions in society. Resolving them peacefully will be a challenge, unless Kazakhstan changes course and allows more open debate, wide political participation and rule of law practices that protect private property.

A gap between rising expectations and frustrating realities could lead to instability and vulnerability. In many ways, Kazakhstan is blessed. It is larger than Western Europe and endowed with a minerals bounty. People tend to pragmatism. Ethnic differences are muted – regrettably in part because public expression is limited. Rulers encourage interethnic harmony, although some Kazakh advantages, such as political dominance, raise concern among minorities.

Kazakhstan is far wealthier than in Soviet times. In 2010, according to the World Bank, per capita gross domestic product in current U.S. dollars stood at $9,136 in Kazakhstan – slightly lower than Russia’s 10,440 (dollars), but three times higher than Ukraine’s $3,007. These data, however, do not tell the full story. Much wealth disappears into corruption. Construction of the extravagant new capital in Astana diminishes funding for the rest of the country. The economy is unbalanced. For example, the World Bank reports that labor productivity in agriculture, in Kazakhstan, is just 1 percent of agricultural productivity in America.

Several independent assessments offer insights into economic prospects. One is the World Bank’s ease of doing business indicator. In a 2011 ranking, Kazakhstan was 47 out of 183 countries. This ranking has improved dramatically in recent years and is a hopeful indicator for private sector activity. Of the former Soviet countries, only Georgia, Latvia, Estonia and Lithuania ranked higher. Their average ranking, however, was 22. Their strong performance suggests that Kazakhstan can make more progress.

Another salient assessment is the Transparency International Index of corruption perceptions. It also ranks 183 countries. In 2011, again, only Estonia, Lithuania, Latvia and Georgia ranked above Kazakhstan. The average rank of the top four performers was 50, whereas Kazakhstan came in at 120. Here, too, Kazakhstan has some distance to go.

The example of these four countries is instructive. Their circumstances suggest that a more open business environment, a greater role for private property, reduced corruption and a more democratic political system will be among the determinants of Kazakhstan’s future economic success. The statement by the IMF mission to Kazakhstan last October offers a positive picture. It said that economic recovery continued to be strong with real GDP likely to increase by 6 1/2 percent in 2011.

International reserves and oil fund assets are strong, amounting to 40 percent of GDP. The IMF cautioned, however, that nonperforming loans in the banking system were extremely high by international standards. I would add that several more recent developments hint at improved economic reforms.

Finally, let me comment briefly on several points in President Nazarbayev’s state of the nation speech last Monday. First, he spoke of returning to state ownership as substantial part of previously sold assets. This comment highlights the most troubling part of his economics message: the emphasis on state domination and direction of major economic sectors.

In a recent survey of the rise of state capitalism in emerging economies, The Economist magazine pointed out that studies show that, quote, “State companies use capital less efficiently than private ones,” end quote. Moreover, the world’s great centers of innovation are usually networks of small start-ups, The Economist magazine said. Small business in Kazakhstan makes up too little of the economy, and this is an inhibitor to employment.

Second, President Nazarbayev rightly highlighted the importance of finding an optimal balance in the production of private and public goods. In this regard, the IMF statement pointed out that Kazakhstan had scope for increasing public expenditure in health, education and infrastructure. I would add that transportation, infrastructure and border arrangements will be important for the expansion of surface transportation between China and Europe – what might be called the new northern Silk Road.

Third, President Nazarbayev correctly emphasized the value of “improving local self-government and increasing the participation of citizens in considering issues of local development,” end-quote. He did not, however, draw the logical conclusion – free and fair elections, free media, freely operating NGOs and checks and balances in governance are essential to achieving this outcome.

The tragedy at Zhanaozen, and the hardline response to it, are illustrations of failures that become more likely in authoritarian conditions. How will Kazakhstan take advantage of its strategic turning point? Will it shift more toward private-sector economic activity? Will it move away from autocracy toward democracy? No one yet knows, but Kazakhstanis appear to be ready for the changes, perhaps more so than its rulers realize.

Thank you.

MR. WILSON: Thank you very much. (Applause.)

We’ve had politics; we’ve had economics. Let me turn now to Fred Starr to talk about some of the other regional issues.

FREDERICK STARR: Well, first, like everyone else in this room, among the enthusiastic well-wishers of Kazakhstan at this 20th anniversary. It’s very nice to see many former members of the very effective Kazakh embassy back here in Washington for this event.

Now, I – it doesn’t seem to me that it’s my job, or our job, to sit here and define where we think Kazakhstan ought to be in 20 years. It will be in 20 years where it wants to be in 20 years. And that – they’ll be making the decisions. There are some things that I think are worth noting, though.

First of all, among the achievements of the last 20 years, I would place very high the concept of this so-called multivectored foreign policy – balance in the foreign policy. It’s been picked up by every other country in Central Asia, including now Afghanistan as well. It really is an important conceptual breakthrough, and it’s Kazakhstan’s invention.

Now, the question I would raise about that is: Is this just a political phenomenon or is it also extended to the economy? And if so, how do you propose to extend this to the economy? You do not have a multivectored economic policy yet – or, maybe a policy, but not the reality. It seems to me that’s one of the most important and difficult challenges that Kazakhstan will face.

I – the mention has been made about new areas in diversification and the economy. In that list, Kazakhstan, although it was among the first to take up the challenge of continental transport after 1992, 1993 with its new railroads, new roads going east and west – nonetheless, it’s going to have to move a lot faster if it’s going to have a real role in the new emerging transport networks.

Why? Because all the insurance, freight forwarding, logistics, et cetera, service industries of continental transport will be based elsewhere or they will be owned elsewhere. If Kazakhstan fails to move quickly on this right now, it won’t be in the picture; it’ll simply be a point where firms and industries based elsewhere bring their goods through.

Now, with regard to relations around the world, of course, it is a complex neighborhood. I think it’s fair to say that Kazakhstan, like its neighbors, has handled this, by and large, masterfully up to now – China, Russia, EU, India and so forth.

Of these relationships, looking ahead 20 years, I would propose that the one that’s likely to have the biggest surprises, in a positive sense, is with India. And it’s not a surprise that a year ago President Nazarbayev was the only international guest of honor at the New Year’s celebrations in Delhi of the India government. It’s extremely important. Both sides recognize it. I think the potential in this area is vast, not just in the economic side, but in the sort of geopolitical side. And anything that happens there is to the good and everyone benefits from it, by the way.

Now, just a word about a topic that is of great sensitivity, and that is succession. This is all – the process is spelt out in the – in the Kazakh constitution and so there’s really nothing to say. I – however, as a historian – not as a pessimist, but as a historian – I have to note that among Turkic people, succession, for 2,000 years, has been a uniquely complex, delicate matter. And even though it might be spelt out utterly clearly in the constitution, and you have hundreds of very sober, competent people watching over this in Kazakhstan, it is an extraordinarily complex and delicate process in Turkic societies.

I’m not going to list them all, where it’s – where it’s brought them down. Seljuks it brought down; it brought down the Timor’s successors and so forth. The list is a very long one. And I’m not saying this out of some – being a prophet of doom, but just to say, look, if you’re really a well-wisher, acknowledge how sensitive and delicate this process is, and be alert to it – possibility – and we hope it doesn’t happen – but possibility of it going off the rails.

Now, one other matter – and two other matters: One, I’d like to – I’d like to – I’d like to acknowledge the immense importance of the educational investment that Kazakhstan has made. I’ve been involved with the opening of the new Nazarbayev University. It’s very impressive. It’s the – (chuckles) – beginning with the building – but other initiatives as well. It’s not the only country in Central Asia that has invested very solidly in education.

But returning to Lorne Craner’s point, it – I think we vastly underestimate the relevance of education for the development of free institutions in society. And on this point, the question I would ask for the future is not whether Nazarbayev University or Farabi University will be great institutions – I think they will be. The question isn’t that. The question is, will the secondary education be at a similar level? That’s where the action is, it seems to me.

And on that level, it’s not just the question of getting people into college, as our president here keeps saying. No, it’s a question of are you going to educate people with the skills necessary to fill the professions, the technical fields and so on, in the diversified economy. And it’s not clear that that’s the direction things are heading yet. I – on this point I have to – I have to congratulate your neighbors Uzbekistan because of their investment in vocational, technical education. But this is an important area.

Now, just two quick points: regional relationship Uzbekistan. Everyone has personalized this and said, well, somehow the two presidents just never got on. I think this is grossly simplifying what is a much more complicated matter. We forget the existence of the Kokand Khanate. It ruled all of southern Kazakhstan for a century and a half, and not very gently. And it created a whole sort of cultural relationship that is not fully in the past. So don’t think that simply the retirement of either of the two presidents is going to immediately change that. This is very complex. I think the West has grossly underestimated the subtleties involved.

And final point that I would make: We have – kind of at these events we tend, in a very nice, jolly way, to assume a linear path of development. You know, well, they do this and now, you know – Kazakhstan’s and Kazakh history has been nonlinear. It has had many discontinuous points. And we have to be alert to these too. Kazakhs themselves, I’m sure, are. But discontinuous and unexpected developments are part of the expected now, and why we shouldn’t – the burden of proof lies on the side of anyone who thinks that they should not be included in ones projections and thinking about Kazakhstan.

MR. WILSON: Thank you very much, excellent and wide-ranging comments. (Applause.) Ambassador Sestanovich.

STEPHEN SESTANOVICH: Thank you, Ross. When Ross said we tried to make government fun, what he meant was getting out early – (laughter) – getting out of the office early, which not – most people in government don’t understand the importance of. Since everybody’s obsessed with (ternary ?) anecdotes, I’ll tell one.

I had a conversation with General Tommy Franks before he made his first trip to Kazakhstan as commander of CENTCOM, for some exercises with the Kazakhstan military. And I said – we talked about the region, and I said, you know, Tommy, after you come back, come over and see me and we can discuss your trip. He came back, sat down, and he said, that fermented mare’s milk is really the worst stuff I have ever had. (Laughter.) He said, how do you drink that? And I said, you know, it’s interesting, they’ve never served that to me. (Laughter.)

So a month later, I had lunch with Ambassador Nurgaliyev, who’s sitting here – old friend, and I’ll join with everyone who said it’s good to see old friends here – and I asked Ambassador Nurgaliyev, you know, General Franks complained about the fermented mares milk, and I realized you’ve never served that. Is that because you like me or you don’t like me? Ambassador Nurgaliyev had a very diplomatic answer.

I want to pick up on what Fred Starr has said about nonlinear development in this way: Kazakhstan is in an extremely interesting position, if you think about the company that it has catapulted itself into in the past 20 years. Ambassador Courtney mentioned the figures for per-capita GDP, which put Kazakhstan in the company of, roughly, other sort of lower-middle income countries – Turkey, Mexico, Brazil, Chile – a dynamic group, you know, some of the most dynamic countries, economies in the world.

Twenty years out, some of those countries are not going to be in the same company. Some will have done better, others will have done worse. Some will have grown over the next 20 years – and it makes a big difference over 20 years – at 2 percent, and others will have grown at 6 percent. And so the differences among them will be noticeable. And when we reconvene here 20 years from now, it’ll be interesting to see who’s in that – who’s in Kazakhstan’s company.

But it’s not just a question of solving economic problems. There are also challenges that these countries face in thinking about the traditional problems that states have to deal with – security. Some of them will solve their security problems better than others. Some will be deeply challenged by those. So I thought I might talk a little bit about what kinds of uncertainties Kazakhstan faces over the next 20 years.

There have been some allusions to a rough neighborhood and some allusions to the brilliant conception of Kazakhstan’s strategy. And maybe we should think about how those go together, because I think Kazakhstan faces a lot of uncertainty, if you look around its neighborhood. Twenty years from now, will Kazakhstan border a China that is the leading economy of the world and a continuing success story – 20 more years of success? Or will it border a China that is more fragmented, that faces a bigger problem of separatism in the West, that has actually got a serious problem that it has to deal with? Remember, the biggest part of the Uighur diaspora is in Kazakhstan. Bordering Russia, is Russia’s – is Kazakhstan’s neighbor to the north going to be a flourishing democracy in NATO, or is it going to be in the last years of Putinism? In 2031 – that’s our endpoint here – President Putin will be 79. A young man. (Laughter.)

MR. : And virile. (Laughter.)

MR. SESTANOVICH: All that fermented mare’s milk that he drinks, that’s served to him on visits to Kazakhstan.

The region – which countries in the region will have been at war with each other? Open question to my mind. Which ones will have been at war with Kazakhstan? You know, another open question: Will – which ones will be run by the IMU? What will be happening in Afghanistan? Will it be a scene of kind of further splintered order and great power intervention or not? Beyond the region, how significant will be the retraction of America’s global role? What will be the existence of the – what will be the status of the EU? Will it have restored its dynamism? Or will Kazakhstan’s largest export market have fragmented and stagnated?

This – so these are all big questions for Kazakhstan. And some of them can be answered with educational policies and with legal reforms. But others will be addressed through the measures that states take to address their security, and that is by providing for defense. And I think that the – the government of Kazakhstan agrees with me, because Kazakhstan, I would point out to you, has had, over the past five years, the world’s fastest growing defense budget –
not often mentioned in meetings like this, but it’s an important one. Even so, Kazakhstan – think of Kazakhstan in comparison to the company I mentioned earlier. Kazakhstan spends about 1 percent and change of its GDP on security. Turkey spends 3 ½ percent. No, I’m sorry; Turkey spends a little under 3 percent. Chile spends 3 ½ percent. Kazakhstan is more in the neighborhood of another middle income country, Latvia, in terms of the amount of its – with smaller borders – amount of – that it spends on GDP.

So my question is what are the security policies of Kazakhstan going to be over the next 20 years? Is there going to be a change in its – I mean, I would say, broadly, Fred is right. There will be – its strategy will be multivector. But are there going to be some adjustments to it? And I think you can imagine a number of adjustments. You could imagine, first of all, a more significant tilt toward either Russia or China. Either of those is problematic, because those are probably two of the countries that, being right up against them, Kazakhstan would most like to secure its independence against.

It could preserve – I mean, pursue – more significant self-reliance in a – in a military sense. That’s presumably why Kazakhstan hosted its first defense industry exposition a year and a half ago with countries from – companies from South Korea, Israel, the United States, India, Russia, China participating, eager for a share of the market. It could pursue a more significant regional block. But as people have said in a variety of contexts, that’s hard to do. And maybe the regional problems are the most immediate and uncertain and explosive and the ones that need to be dealt with. It can pursue a more significant kind of outreach toward the distant great powers and friends, toward the West – Fred has mentioned India – toward the countries whose companies I mentioned were present at its defense exposition.

Kazakhstan will probably have to ask itself over the next 20 years, but it could be asking itself right now, what part does it want to have in the Obama administration’s pivot to Asia? The Obama administration is pivoting to Asia as a consequence of downgrading its involvement in Iraq and Afghanistan. But for Kazakhstan, that’s a pivot that it can still have a part in. What part is that going to be? I think it’s right to say that Kazakhstan has been extremely subtle, extremely successful over the past 20 years in addressing issues of security, in enlarging its sovereignty and independence. But I think that if you think – if you look at over the next 20 years, you’ll see some problems that are worrying for any state and, in particular, a state in this tough neighborhood, with dynamic great powers on its borders, and with a history of nonlinear development. Now, I think that’s the agenda that will have to be addressed in the coming generation. Thank you. (Applause.)

MR. WILSON: Thank you very much, Steve. We have about a half an hour for questions and answers. Please try to catch my eye if you have a question.

And I’ll just start out the discussion. The four of you referred, obviously, to the relationship with Russia. A couple of you referred – and some of the previous speakers as well – to the customs union with Russia, the Eurasia union that President Putin has proposed and that Kazakhstan has responded relatively favorably to. There’s an economic aspect to this. Some think there may be a broader domestic political context. And then there’s the broader foreign policy context, both with Russia and also in the region. I’m wondering if you could just comment a little bit on how you see that relationship – not just with Russia, but the customs union and the Eurasia union – unfolding over the course of the coming 10 or 20 years. What are the issues – and what are the issues we should be thinking about as we look at and try to assess what Kazakhstan is doing and how and why? And I’ll – whoever would like to start.

Fred?

MR. STARR: The German poet Heine wrote about the union that was being created of states in the Rhineland in the 1830s and ‘40s. He wrote: (in German). Oh, union, you dog. You’re not – you’re not – you’re unhealthy. Not everything that proclaims itself a union is a glorious success. (Laughter.)

I’m not sure that both of these projects – I don’t – I’m not sure that both of these projects are not very backward-looking. I think – I think they have – are connected really with individuals, not with great movements of events, and worst of all, they are utilizing economics for basically political ends rather than the other way around. I think it behooves Kazakhstan, at this point, to say what it is not getting into, what it does not think the European – what the economic union – tell us what it isn’t, as well as what it is. And tell us what you’re not prepared to do with regard to other arrangements, as well as what you are prepared to do.

MR. WILSON: Steve?

MR. SESTANOVICH: Well, if I could just come back to security – I don’t mean to be the only person who talks about this, but somebody’s got to. If you think about the relationship with Russia, one distinctive element of it has been that the military of Kazakhstan has been almost entirely an inheritance of the Soviet Union. But over the coming generation, that will change more and more.

I read a quote recently from the former defense minister – whose name now escapes me – who’s working for Rosoboronexport – a defense minister of Kazakhstan. That’s a very cosmopolitan pattern. You know, defense ministers all over the world love to go and work for the defense industry of other countries. And he said, we understand that – he said this as a, essentially, a representative of Russian business – we understand that the monopoly that Russia has had over the way in which the military of Kazakhstan has constituted itself is going to end. And sure enough, it will.

Over the next generation, Kazakhstan will be carefully – and it’s already doing some of this – buying high-tech equipment from the kinds of countries that I mentioned (today ?), you know, electronics from South Korea and Israel, cast-off transport planes from the United States. You know, the United States invested a huge amount in the past 10 years in all kinds of military capabilities, and it’s going to sell it all – sell off some of it. But that’s going to involve a kind of careful dance. It’s going to be multivector. Kazakhstan is going to do that in the same subtle way that it has done everything. But it’s going to do it. And 20 years from now, I would predict you’ll have a – you’ll have a defense establishment that’s significantly bigger and has a different look, reflecting new partnerships.

MR. COURTNEY: Let me talk about the internal aspect of the Eurasian Union. When Kazakhstan became independent, almost 40 percent of the population was ethnic Slav – mostly Russian, but a lot of Ukrainians, Belarusians and others. The Kazakhstani leadership and Kazakhstani society had been very keen and quite successful in dealing with Russia throughout the last 20 years. It has not only this large ethnic Slav population, much of which is in the northern and western oblasts that border on Russian oblasts, but also the length of the border that Kazakhstan has with Russia and the vulnerability of that border if Russia were ever to show the kind of interest in Kazakhstan that it has shown, for example, in Georgia.

So I think Kazakhstan has done a tremendous job of dealing with Russia. It’s one of the factors that’s made President Nazarbayev a great statesman. But the Kazakhstanis, in addition, had the wisdom to understand that the soft power capacity of Moscow was quite low. And therefore, most of the various contraptions that Moscow would propose would never amount to anything. So Kazakhstan, very willingly and quickly, would agree with whatever Moscow proposed, whether it was the Commonwealth of Independent States or the Collective Security Treaty Organization or whatever. And the response to the Common Economic Space and now the Eurasian union falls into that pattern.

The Eurasian union is not likely ever to amount to anything. It is a speed bump right now, because the tariffs of the Eurasian union are higher than what Kazakhstan would have in WTO. So it’s going to hurt Kazakhstan economically. But Russia itself is going through political instability. And the long-term permanence of the Eurasian union is probably not something that one can count very much on now. So this said, I think really, again, we have to consider that from Kazakhstan’s perspective of manages – managing its own internal ethnic situation and managing Moscow, it’s done a tremendous job.

MR. WILSON: Lorne, if you want add.

MR. CRANER: Just to add, I think Bill raised a really good point. In terms of looking at a union or bilateral relations with these countries or communal relations with these countries, I think Kazakhstan’s going to have to be very, very flexible, because I think, you know, we heard for many, many years things could not change in the Middle East. We’ve heard that for many years in Russia, and now we’re seeing a little different. Those who study China are beginning to wonder about that. But I think Kazakhstan – it doesn’t want to get pinned down into a 20-year agreement on this that, or the other with a lot its neighbors, because a lot of things could change over the next 20 years – including with India, which is developing enormously.

MR. WILSON: Great. Let’s move on to questions and answers. We have two here in the front. If we could bring up – and if you’d please identify yourself and state your question.

Jan Kalitski (ph), please.

Q: Thank you. Does this work? Jan Kalitski (ph) with Chevron. (To the ?) panel, could I ask you to address two – (inaudible) – of Kazakhstan’s local reach? One is a move to join the WTO, and what that means in terms of economic reforms within the country. As much as some people feel WTO accession will have a positive impact on economic reform in Russia, is that the case in Kazakhstan? Secondly, the Islamic outreach. As mentioned by the foreign minister, Kazakhstan chairs the OIC. Whether it’s through the OIC or in other ways, does Kazakhstan have a role to play vis-à-vis the Islamic world in its relations to the West?

MR. WILSON: Bill, do you want to take the WTO piece?

MR. COURTNEY: OK, although I will actually defer to you, because you know more about it than I do. The WTO – the incentive of reform, if you will, to go into the WTO probably right now means less to Kazakhstan than to Russia, because Kazakhstan is proceeding fairly quickly on a range of economic reforms. And therefore, I don’t think, ultimately, it’s going to make quite as much difference. Russia is having greater challenges, including, for example, you know that Kazakhstan’s having to take on higher tariffs because of this Eurasian union. It’s a sign of, you know, economic situation in Russia probably needs a bit more reform, even though, of course, Russia had the greatest economic reforms at the beginning.

MR. WILSON: I think – just a couple of points to add on – from my point of view on WTO accession. One of Kazakhstan’s challenges, I think, today and over the past several years in looking ahead is attracting foreign direct investment outside of the resources sector. And WTO membership is one of those things that’s kind of a Good Housekeeping Seal of Approval about your rules, about your regime, about the trading arrangements and providing a certain amount of additional reassurance to a would-be investor that the general rules of the road that are accepted around the world, well, more or less apply here. It doesn’t solve all your problems, but it solves – it solves some. And so I think WTO accession can be – and certainly I hope – would be marketed by the government as a way to promote more foreign direct investment outside of those extractive ministries that Kazakhstan needs to diversify – to diversify its economy.

There’s obviously a second additional benefit, which is – which has to do with improved foreigner access to the Kazakhstan domestic market, and that’s called competition, which, in most countries, has had a powerful effect. I have a little bit more familiarity with Turkey. Turkey joined the WTO or GATT ages ago. But it joined into a customs union with the European Union in the mid-1990s. And that was a powerful sort of cold shower for Turkish firms about what’s required to compete effectively in the international market. And as you look back over the last 15, 16, 17 years in Turkish economic development, it’s – it kind of all starts there, as Turkish firms emerge from a protected cloister that had – that in which they had operated in and start to – start to function on the world scene, and have the world function in their market and impose different pressures. Kazakhstan’s in a different place, but I think WTO accession can be help – can be helpful.

And then the third point – and Bill kind of alluded to this – is the WTO is a kind of roadmap for reforms that you need to make. And I think that’s the – the process of accession has already been helpful in orienting the government – these are the things that you need to try to work on in order to get into the WTO, but they happen to be the things that will be helpful in making Kazakhstan competitive, in helping attract foreign investment, creating jobs, et cetera, et cetera.

Anybody want to take on the Islamist outreach? Fred?

MR. STARR: Well, who knows? I mean, it’s too early to say. It’ll take time. That said, there is a very specific genealogy and, if you will, morphology of Islam in Kazakhstan that’s worth pausing on. It really came in, really, quite late among the northern Turkic peoples in the –
basically in the 12th century, 13th century. And it came on the wave of a bunch of interesting Sufi mystics from the territory of Kazakhstan – including, most famously, of course, Ahmad Yasawi.

And these guys were anti – they were highly personalistic – the whole – the whole strain of Islam in Kazakhstan – highly personalistic, highly mystical, highly antitraditional, highly anti-institutional, and even pantheistic, which fit in nicely with the Turkic Tengriism, and finally, with a cult of saints that was very, very deeply developed.

Now, none of this fits either the mainstream orthodoxy of Central Asia as a whole that exists in Tajikistan and in southern Kyrgyzstan and Uzbekistan, but even less does it fit any of the more fundamentalist currents which would wipe away all these things that I just mentioned. So it seems to me that this has the makings of a real intraconfessional conflict – not a problem between – maybe less of a problem between Muslim – pious Muslims and the society as a whole than among themselves. So I would say that’s something to watch out for with concern.

MR. WILSON: Steve?

MR. SESTANOVICH: I have a much less learned comment on this, which is that as Kazakhstan looks out toward the Islamic world, it sees societies that are becoming politically more democratic and socially more conservative. That’s sort of what the – and that is the trend of the Arab Spring, but it’s also what has happened in Turkey in the past 10 years. And if you’re thinking about how Kazakhstan engages with that, that’s a more – maybe a more complicated process of interaction than we used to think it would be.

MR. CRANER (?): Let me pick up on Steve’s point, which I think is exactly right. In Kazakhstan, there has not been enough open political expression for institutions and habits of cooperation and settling differences, if you will, to develop to assist the society and the government to manage the increased interest in Islam in Kazakhstan. There is a risk here. This –
the greater desire for political liberty and social conservatism both will pose challenges to how Kazakhstan, as a society, manages this increased influence.

With regard to chairmanship of the OIC, I would also put that in the context of President Nazarbayev’s own personal ambitions. Remember in 2010 Kazakhstan chaired the OSCE, and in 2011 I think there was maybe another one as well. I think some of this is President Nazarbayev feels that Kazakhstan – in his own role as international statesman – has reached the point that Kazakhstan deserves the opportunity to chair those kinds of things. So I think that’s somewhat, a little bit, separate from the internal Islamic dynamic.

MR. STARR: I think just on reach-out to the Muslim world, you could imagine – you could imagine some countries to which Kazakhstan’s model would appeal, but it is – it is kind of particular with the resource issue. I think the second thing worth remembering is what we’ve seen in the Arab Spring, which is if you leave liberalization for too long, it will just come out clearly with a 90 percent approval rating. That’s not an issue any time soon in Kazakhstan.

But it’s something that I hope President Nazarbayev and others are looking at. Tunisia – I’ve pointed a lot of Chinese to Tunisia – coastal development, a relatively liberal situation for people within the country – the interior more backwards – a lot of economic development. But I think Tunisia in particular is worth examining for a country like Kazakhstan. How did it get to that point? How did it happen?

MR. WILSON: OK. Ambassador Idrissov, and then Rich Kauzlarich. (Pause.) I think it comes on automatically.

Q: OK, thank you, Ross. I was trying to resist asking the question, because any – (audio interference, inaudible) – would be interpreted as a biased one.

But just one fact – for the OIC, the Islamic conference, the Organization of the Islamic Conference, Kazakhs are about to make history. The OIC chairmanship is a one-year rotating chairmanship. And I tell you that we make history by taking a one-and-a-half year chairmanship because – (inaudible) – asked us for – (inaudible) – for six months. So we are the only country to have a one-and-a-half year chairmanship of OIC – (inaudible) – used the opportunities.

My question would be to Steve. And you gave the geography; you mentioned Russia and China. This is very symptomatic and very traditional. Why don’t you expand your geography to the south? I was waiting very attentively for you to go to the south, and you stopped there. You talked about China; you talked about Russia, and you never spoke about the south. The lifeline for Kazakhstan in Central Asia is south. My question to you: about the south.

MR. SESTANOVICH: Well, forgive me. When I said “the region,” what I meant was the rest of what we typically call Central Asia – and not just Soviet Central Asia, but Afghanistan. And when I talked about the uncertainties that Kazakhstan faces in security terms, and thinking about the region, I mentioned – I asked, you know, which country of Central Asia will be run by Islamists? Who will be running Afghanistan? Which great powers will have intervened in Afghanistan to deal with turmoil there?

But I agree with you in this way that the countries to the south are not just a problem for Kazakhstan, although they surely are that. They’re at least – they frame a security agenda. They also represent opportunities. If – and the further south one goes, the easier it is to identify the opportunities. So everybody always says, well, the New Silk Road and India. Good, good. But the more problematic areas to the south for Kazakhstan, it seems to me, are the closer – the ones closer at hand – the immediate neighborhood, and then the next tier, Afghanistan and Pakistan.

If you – if you start at Kazakhstan’s borders and go south, you don’t simply find stable countries eager for cooperation with Kazakhstan. You find countries with rather different views and rather different agendas and rather different prospects for cooperation. And what I wanted to say was I think that those prospects are a challenge for Kazakhstan in the next 20 years as well as an opportunity. Thank you for that correction.

MR. WILSON: Fred, do you want to –

MR. STARR: Very quickly. It seems to me that the – a lot of the gloom over this issue to the south arises from a misconception on our part. And that is that somehow, as U.S. policy has sought to do for 20 years, we have become the champions of, quote, “integration.” Integration, everywhere to the south, including in Kazakhstan, means something against sovereignty, because of the European model.

Why aren’t we talking about simply coordination or cooperation? You can have a closed border and an open, efficient corridor. You can have secure borders and fast corridors. The minute we change our vocabulary on this and start thinking in those terms, then the possibilities suddenly become far more attainable than they are when we think, oh, we can’t get there until we integrate.

MR. WILSON: One-sentence addition to that. You know this book by Steven Pinker that came out this year, called “The Better Angels of Our Nature,” I believe, which is about – as he sees it – the spread of peace in the past couple of centuries, or past millennium. The biggest factor, if you take out everything else – and he’s a real scientist, so he doesn’t want to take out everything else – but the biggest factor is sovereignty, is the rise of secure nation-states that can create peace.

So I think you’re right, Fred, that integration is a formula which doesn’t often work, and may not work in this case, certainly not prior to the creation of successful sovereign states. But my point would be you have contested sovereignty, or at least problematic sovereignty, as Kazakhstan looks to the south, and you have uncertainty about what the regional dynamics will be.

MR. STARR: We’re in a postcolonial situation, and sovereign – the protection of sovereignty is the highest priority. Accept it: That’s reality. In the United States in the 1780s, 1820s, all the way through, we weren’t – and France has been giving us advice to integrate with Canada. Well, we tried with an army and – or integrate with Mexico; we tried that with an army. Integration is something, as you say, that maybe comes later, on the basis of sovereignty. It’s not an alternative to sovereignty. And that’s where we have negatively affected reality, I think.

Q: Sorry I’m using my ambassadorial powers. But I think it’s, again, symptomatic. Our interpretation of the south is broader. It’s not only Afghanistan, but some other countries. What would be your answer to that?

MR. WILSON: Good. Why don’t we go on to Ambassador Kauzlarich, right behind –

Q: Rich Kauzlarich, George Mason University. I’d like to come back to Turkey a bit. You know, we went through this period in the early ’90s where Turkey was asserting a role throughout Central Asia and the Caucasus that, perhaps, didn’t fare well. But picking up on Steve’s point about regimes that are going to be politically more democratic but socially more conservative, I wonder if there may not be a new opening, looking out 20 years, for, if you will, the Turkish model in a country like Kazakhstan.

MR. SESTANOVICH: You know, I remember in the ’90s talking to people in Turkish, kind of, educational organizations, NGOs, about their activities in the former Soviet Union. Because there was a kind of missionary zeal there which was not completely approved of by the Turkish authorities at the time, but they thought in a way that is not completely foreign in, you know, other Muslim states – you know, let’s export the ideologues.

And they thought, great. You know, these guys can go off and start schools in Central Asia. You know, it turned out they weren’t terribly welcome there and they didn’t have enough resources, really, to make an imprint.

But now I think you have quite a different situation. You’ve got – the government of Turkey represents what those people, those little NGOs, were aspiring to – that is, the empowerment of a politically democratic and socially conservative idea of what it means to be a Muslim society.

And in the – you don’t even have to put a lot of resources behind it, if you’re Turkey. The power of the example is much more potent. Turkey is one of the most dynamic countries in this or any region. And the impact of that – I agree with you – we are going to be seeing wherever Turkish culture is strong, but I think beyond it as well.

MR. WILSON: Anybody else?

MR. STARR: I’m probably more skeptical. I think – I think the influence of the Fethullah Gulen movement in Turkey is extremely powerful. I think that the Central Asians, across the board, have figured this out and they have reacted against it. And as they’ve developed their own educational institutions, they don’t need the Gulen schools, and I think they’re gradually going to be going home. And I think on this point, Kazakhstan’s position, in the long run, will be much closer to that of Uzbekistan than it’s been in the past.

MR. WILSON: The one piece I would add there, as somebody who spent a little bit of time both in Turkey and working on Central Asia, I think you’re comment about the Gulen movement in Turkey is a little bit of an oversimplification. But the other piece that’s going on here is that over the course of the last decade, or maybe a little bit less, Turkey’s attention has been focused on other things.

In the early 1990s, they were very focused – and President Demirel spent a lot of time, as some of us will recall, visiting these countries, cultivating relationships, helping get Turkish firms contracts, helping them, you know, establish investments, trading relationships, and so on and so forth. And the efforts that Steve referred to – not just by Gulenist-affiliated organizations, but by others – I think kind of reflected that.

But that’s not where Turkey’s attention has been. Turkey’s attention, for some reasons that have to do with its own tough neighborhood, has been much more focused on Iraq, on Iran, Syria, the Middle East, the Caucasus – and the Armenia – the discussions with Armenia a couple years ago reflected that great deal of concern about developments in Georgia in 2008 and since then. But – and you’ve had much less Turkish activity in the region.

They have – they have established this Turkic Union or Union of Turkic Peoples that’s, you know, one of these organizations people meet and talk about stuff. But I don’t know that it has – it’s not like the British Commonwealth in its – in its importance in any way, shape, or form. President Gul, current Foreign Minister Davutoglu, paid a number of visits to this region. They look at it as – they’re interested, and may have had a little bit of a role in Kyrgyzstan, in helping the post-election parties sort of form a government after the voting a year or so ago. But it’s not been in the forefront of Turkey’s attention.

If and as you look ahead 20 years, if and as the region to Turkey’s immediate south becomes a little bit calmer – could happen – you may well see a different kind of Turkish influence in the region. I would worry – come back to where I started – I worry less about the Gulenists, or maybe even the socially conservative part, and focus more on the economic piece. For a region that desperately needs investment, desperately needs to increase and diversify its economic relationships and its – and its overall economy, Turkey can be a window through which – through which Kazakhstan and all the others, I think, can modernize and develop and connect with the rest of the world in different ways.

I think we’ve exhausted our time for this session. We will be reconvening in the next room, in that direction, in five, seven minutes – now, basically. And so let me – please join me in thanking all of our panelists. (Applause.)

(END)