According to data provided by the Kazakh Statistics Committee, Russia is the second largest trade partner of Kazakhstan after the European Union. The two countries share a border of 7,600 km that stretches from the north-west to the south-east of the Republic of Kazakhstan from the east of the Caspian Sea and Volga plains to the mountainous Altay, and they are joined through historical, ethnic, and cultural ties.
Extensive efforts by America and European Union, trying to change Russia’s assertive policy on Syria and on Ukraine by imposing large volume of commercial and financial embargo and sanctions against individuals and businesses, could indirectly hit Kazakhstan because of the extensive economic ties that bind our country and the Russian Federation. To be fair, it should be acknowledged that Kazakhstan is not the only one involved in such situations. The Russian Federation’s other neighbors also are kind of being in the wrong place at the wrong time. Western sanctions against Russia have placed greater pressure on the Russian economy, but Russia is surely not the only country to be affected. The republics of the so-called near abroad have got under the hammer, too. In other words, they have long started to feel the negative effects of growing U.S. and EU economic measures against Russia. And the situation isn’t getting better over time. While those punitive measures affect all of Russia’s bordering neighbors, their effects are particularly serious for Kazakhstan and Belorussia. Both are tightly integrated into the Russian economy via the Eurasian Economic Union.
Kazakhstan’s main exports to Russia are rolled metal products (more than two thirds of total exports are being sent to the Russian market), ores and mineral fuels. Kazakhstan, unlike Belorussia and many other CIS countries, does not depend on Russia for energy (except in limited regional exchanges), instead producing and exporting its own crude oil and natural gas. But at the same time, the largest Central Asian economy is heavily tied into the Russian Federation’s financial and banking sector.
Russian banks such as Sberbank and VTB Bank are investors in large industrial projects in Kazakhstan, and Russia provides a large portion of Kazakhstan’s credit market. Unlike Belorussia’s rouble, the Kazakh tenge is directly tied to the Russian rouble. And therefore, a weakening of Russia’s currency would directly affect the tenge.
The republics of the so-called near abroad, including Kazakhstan, can now only hope that their economies would prove more resilient than their currencies have been to the fallout from the latest round of US sanctions. It remains to be seen what the long-term effects will be.
Gulf Times, in an article published with reference to Bloomberg and entitled «Nations in path of rouble storm see sanctions spillover contained», said: «Russia’s neighbours are hopeful their economies prove more resilient than their currencies have been to the fallout from the latest round of US sanctions. But from Kazakhstan, an oil-rich nation about the size of western Europe, to the Black Sea nation of Georgia, one of the smaller countries to emerge after the Soviet breakup, their top officials believe they can get away without suffering too much more damage.
«There will be no direct impact from sanctions, as well as counter-sanctions, on the economy of Kazakhstan,» its finance minister, Bakhyt Sultanov, said in an interview in Washington, where he was attending the spring meetings of the International Monetary Fund».
Sultanov does not refute suggestions about Kazakhstan’s being indirectly vulnerable to problems in the Russian economy and financial system through trade and the exchange rate. It is reasonable to expect that the Kazakh monetary authorities are examining response scenarios in case of further depreciation in the rouble.
According to Bakhyt Sultanov, Kazakhstan has held consultations with US officials and was assured that any American actions targeting Russia «will try not to harm the economies of other countries in the region».