Toppled Statue of Kazakhstan's Former President Nursultan Nazarbayev in Taldykorgan in eastern Kazakhstan: Upstream
As 2021 drew to a close, President Xi Jinping highlighted the priority of self-sufficiency in key commodities for China. In light of ongoing trade tensions with important suppliers such as the United States and Australia, Xi called for setting a 'strategic baseline' for self-sufficiency in certain commodities such as soybeans and energy resources. Chinese leaders have long considered overland access to resources to be more secure than seaborne supplies, but recent developments in China's neighborhood further highlight the fallacy of this assumption. Supply chain interruptions due to the COVID-19 pandemic already snarled China's access to commodities from neighboring countries in the previous two years, but as 2022 begins, China faces many new risks to its West, in Kazakhstan, Ukraine, and Afghanistan, just to name a few. In the weeks to come,
Chinasresourcerisks.com will consider these issues and more, beginning with the unrest in Kazakhstan in early 2022.
Kazakhstan's President Nursultan Nazarbayev with China's President Xi Jinping: Astana Times
Unrest in Kazakhstan
Just after Xi Jinping and Central Asian leaders celebrated thirty years of cooperative relations, unrest broke out in several cities in Kazakhstan on January 2, 2022, beginning in Zhanaozen, an oil town in the west of the country and the site of earlier demonstrations. According to Kazakhstani law enforcement, 225 people were killed in the protests. A sharp rise in prices for liquid petroleum gas (LPG), a low-carbon fuel for cars, was the immediate catalyst but the peaceful demonstrators had many reasons for dissatisfaction, including corruption, economic inequality, and inadequate access to clean water. Such grievances, including some regarding the terms of Chinese investments in Kazakhstan, had fueled protests periodically in recent years, but had always been swiftly extinguished. A second group of looters and violent protestors was connected to the apparently unresolved leadership struggle between forces loyal to Kazakhstan's longtime president Nursultan Nazarbayev (pictured above), who stepped down in 2019 and his successor, Kassim-Jomart Tokayev.
Demonstrators in Almaty hold a sign saying "We are ordinary people, not terrorists!!!" Source: Eurasianet.org
Tokayev claimed (falsely according to UN experts and most accounts) that 20,000 foreign terrorists were involved in the protests. The terrorism allegation was a pretext for inviting the Collective Security Treaty Organization (CSTO) to bring in some 2,500 peacekeeping troops in early January, mostly from Russia, but including smaller contingents from other CSTO members Armenia, Belarus, Tajikistan, and Kyrgyzstan, in a show of support for the Tokayev regime. This was the first time since its founding in 1994 that the Russia-led grouping sent troops to another country. These forces withdrew within a week. According to Pan Guang, Director of the Shanghai Cooperation Organization Research Center at the Shanghai Academy of Social Sciences and an advisor to the Chinese government on counterterrorism policy, the CSTO chose to intervene in Kazakhstan to avoid a crisis in Central Asia at the same time when another was brewing in Ukraine.
In a phone call with his Kazakhstani counterpart, Deputy Prime Minister and Foreign Minister Mukhtar Tileuberdi, Chinese State Councilor and Foreign Minister Wang Yi described the unrest in Kazakhstan as terrorism instigated by external forces. Wang Yi offered to strengthen cooperation in law enforcement as well as in regime security to prevent further external interference. This apparently did not include the military intervention by the CSTO, which Wang told Russian Foreign Minister Sergei Lavrov had China's support in the interest of counterterrorism and regime security in Kazakhstan. Indeed Chinese President Xi Jinping congratulated Tokayev on taking "decisive and strong action" to end unrest and stated that China would rebuff any efforts to instigate regime change in Kazakhstan or disrupt cooperation between the two countries.
The main atrium at Nazarbayev University: Photo by Elizabeth Wishnick
While China has called for stability in Kazakhstan, thirty years of lucrative investments involved close ties to Nazarbayev and his family members who have been sidelined in the aftermath of the January 2022 unrest. His three sons-in-law were just removed from key positions in the energy sector--Kairat Sharipbaev, chairman of KazTransGaz, and Dimash Dossanov, who headed the Kazakh-China oil pipeline joint venture and was director of KazTransOil. Timur Kulibayev, who played a key role in Kazakhstan's energy sector, including gas cooperation with China, and also sat on the board of Russia's state gas company, Gazprom lost his post as head of Kazakhstan's National Chamber of Enterpreneurs, Atameken, though at this writing he still retains his position as chairman of Association Kazenergy. Kulibayev, a billionaire and one of the richest people in the country, was the target of public ire after he criticized striking oil workers at a joint venture between KazMunayGaz and the China National Petroleum Company in 2011 protests in Zhanaozen, which were brutally put down by the authorities. Nazarbayev subsequently removed Kulibayev from his position as head of the country's sovereign wealth fund, but he went on to control the country's largest commercial bank. In 2019 protests erupted a second time in Zhanaozen, this time over China's plans to relocate industries with outdated polluting technologies to Kazakhstan as a part of bilateral cooperation.
The downfall of Nazarbayev's associates and their implication in corruption could complicate Chinese economic interests in the country in the future. Price fixing in the LPG industry is being investigated as an underlying cause of the January 2022 unrest and a joint venture between the China National Petroleum Corporation and AktobeMunaiGas is among the companies of interest to regulators in Kazakhstan. During the unrest, a key Nazarbayev loyalist, Karim Massimov, Kazakhstan's security chief and a former prime minister, was arrested on charges of treason. Massimov has also been a key figure in developing Kazakhstan's economic ties with China.
In recognition of Kazakhstan's strategic location at the crossroads of Central Asia and Nazarbayev's enthusiasm for regional economic integration projects, Xi Jinping launched the Belt and Road Initiative (BRI) in 2013 at Nazarbayev University--the university established in 2010 in Kazakhstan's capital Nursultan, also the former president's namesake. Since the 1990s, China has developed wide-ranging investments in Kazakhstan, especially in energy and strategic minerals such as uranium. To support the BRI, China also has invested in Kazakhstan's infrastructure, manufacturing, and logistics and the two have developed the Khorgos Gateway Dry Port in Kazakhstan to facilitate trade from China to Europe.
Kazakhstan's Khorgos Gateway Dry Port and the Belt and Road Initiative: Nikkei Asia
Although China's nationalist tabloid Global Times reassured readers that China's energy imports from Kazakhstan would not be interrupted, this is unlikely to be the case as Western companies have seen production reduced, at least temporarily. Given China's gas shortfall this winter, a decrease in the volume of gas from Kazakhstan (10% of China's annual pipeline gas imports) in the Central Asian pipeline to China would be a major concern, requiring additional purchases of liquid natural gas (LNG) from other suppliers. As protested raged in Kazakhstan, Uzbekistan indicated it would no longer be supplying gas to China so that it could meet domestic needs. Meanwhile, China hosted a delegation of foreign ministers from the Gulf Cooperation Council countries, including Saudi Arabia, Bahrain, Kuwait, and Oman, most likely to discuss future energy deliveries.
Flags of CSTO member states: Azernews
The role of the CSTO left China marginalized at a time when it seeks to play a greater role in Central Asian security in the aftermath of the U.S. pullout of Aghanistan. China has played a key role in the Shanghai Cooperation Organization (SCO)--a grouping that was founded in 2001 to address border and confidence-building issues among Russia, China, and Central and South Asian neighbors---but the SCO has no troops to draw on in a crisis. The SCO's Regional Anti-Terrorism Structure (RATS) did offer help to Kazakhstan during the unrest, but this would largely involve information-sharing by security agencies in member countries.
It remains to be seen what impact the CSTO intervention will have on Kazakhstan's relations with Russia and China as well as on their own partnership. For Russia, the stakes are high, as an analysis on a Chinese military website outlined. Continued unrest in Kazakhstan could be a foreshadowing for similar developments in Russia down the road, and, if left unchecked would diminish Russian stature as a security guarantor for Central Asia. To be sure, continued stability and authoritarian rule are in the interests of both Russia and China, but shows of force by Russia highlight its intention and ability to play a security role which China has yet to assume.