During President Nasarbayev’s visit last year, Tony Blair expressed his hopes of Britain and Kazakhstan becoming leading trade, economic and political partners

Since first establishing diplomatic relations on January 9, 1992 – in the aftermath of the Soviet Union’s breakup – ties between the UK and Kazakhstan have expanded, deepened and become more complex.

Great Britain is Kazakhstan’s third largest investor, representing 14 per cent of foreign direct investment. But relations between the island democracy on the western edge of Europe and the oil-rich Central Asian state bordering China have moved far beyond simple commercial ties.

Commerce, firmly anchored in the energy sphere, is the cornerstone of the two countries’ relations. Kazakhstan possesses the largest oil and gas reserves in the Caspian region, and hopes to export some three million barrels per day of crude in a few years.

British multinationals Royal Dutch Shell, BG and BP participate in the country’s flagship hydrocarbon development projects. According to Paul Brummell (INTERVIEW), Her Majesty’s ambassador to Kazakhstan, more than 100 UK companies are actively doing business in the oil and gas sector.

According to the Kazakh National Bank, British exports to Kazakhstan in 2006 totalled just over £253 million, with imports reaching nearly £760 million, resulting in a cumulative turnover of £987 million.

During President Nursultan Nazarbayev’s visit to the UK last November, Tony Blair acknowledged the key role that business and petroleum play in London and Astana’s association.

“This relationship is obviously about trade and energy,” Mr Blair said after meeting with the Kazakhstani president.

But Mr Blair also gave a nod to other considerations, which have taken their place next to Kazakhstan’s considerable role in assuring global energy security.

“The role of Kazakhstan is increasingly important because it demonstrates that, first, you have a country that, by being prepared to open up its economy, has achieved significant advance – and that’s an important lesson,” he told reporters.

Mr Blair continued by saying that Kazakhstan also set an example in providing a secure home for a multitude of ethnic groups. “Particularly in [Central Asia], we need stable partners and I think there is a whole new and different relationship that Europe should have with Kazakhstan where we recognise that strategic importance,” he said.

Mr Blair finished by commenting that he hoped Britain would be a “leading partner in that endeavour, not just for trade and economic reasons, but for political ones too.”

Even within the commercial sphere, Kazakhstani-British relations have evolved into something more multi-faceted.

President Nazarbayev’s visit to London, his first since 2000 (during which he received the Orders of St Michael and St George), underlined Kazakhstani officials’ desire to draw closer to British financial firms and institutions, and use London’s stock market as a model and engine for Kazakhstan’s own development.

London has become the preferred location for Kazakhstani companies to tap into the international market. Seven firms have held initial public offerings on the London Stock Exchange (LSE) and ten are listed on the LSE’s Alternative Instruments Market (AIM).

LSE officials also signed a groundbreaking memorandum of cooperation with Kazakhstani counterparts from the Regional Financial Centre of Almaty (RFCA) – Kazakhstan’s project to create a Central Asian financial center to rival Hong Kong, Dubai or Singapore. The relationship was further cemented in May with a visit to Kazakhstan by John Stuttard, Lord Mayor of the City of London.

“The IPO listings of Kazakhstani companies in London have generated much interest,” says British ambassador Mr Brummell. “The listing at the end of 2005 of Kazakhmys propelled that company into the FTSE 100 and impressed many people in Kazakhstan and globally.”

“That helped to generate some momentum for IPOs,” Mr Brummell continues. “We certainly want to be involved in the development of RFCA.”

Britain’s involvement in Kazakhstan has branched into other areas as well. British Aerospace services holds a 49 per cent interest in Astana Air, the national carrier. HSBC is celebrating its tenth anniversary in the country. Pilkington is building a form glass factory in the south-central region of Kyzylorda.

Lord Foster has designed a number of cutting-edge constructions in Astana, including a “Pyramid of Peace” conference hall and cultural centre. British companies are also working in mining, manufacturing, power generation and agriculture.

Kazakhstan has also supported military operations in Iraq, contributing troops since 2004, and has offered its bases and airspace for humanitarian aid deliveries to nearby Afghanistan. It is the only Central Asian state to have signed a “Individual Partnership Action Programme” with the North Atlantic Treaty Organisation.

Perhaps the area that British officials speak with the greatest pride is their involvement in helping improve the Kazakhstani educational system and provide students an opportunity to study abroad.

A Kazakhstani-British Technical University was established in 2001, and several British institutions of higher learning are involved in joint developing programmes.

Most importantly, the British Council administers the Boloshak scholarships with the Kazakhstani Ministry of Education and Science, providing some 3,000 students the chance to further their studies throughout the world.

“The government does strongly value the education the students are getting through these schemes,” says Ambassador Brummell. “Bolashak scholars are a route to the top. One sees for example a number of ministries with young, dynamic deputy ministers who studied overseas.”

AGENDA

20-22 November 2006
Nazarbayev at the LSE
8President Nursultan Nazarbayev marked Kazakhstani companies’ winning run on the London Stock Exchange by symbolically opening the markets during a visit last November. Kazakhstani blue chips, starting with copper concern Kazakhmys PLC in 2005, have staged victorious initial public offerings, raising in total more than £2 billion. Four Kazakhstani companies are listed on the LSE’s Main Market. Another ten concerns with operations in Kazakhstan are traded on the Alternative Instruments Market (AIM). The president’s visit to London included meetings with Gordon Brown, Tony Blair, Queen Elizabeth II, Lord Mayor John Stuttard and Jean Lemierre, the President of the European Bank for Reconstruction and Development.

28-30 MARCH 2007
Lord Mayor’s visit highlights ties
8John Stuttard, Lord Mayor of the City of London, travelled to Kazakhstan in March this year and was impressed with what he found. Accompanied by a top-level delegation, his trip highlighted the growing ties between London City and Kazakhstan’s commercial capital, Almaty, which the Lord Mayor sees developing even further. “If you have a country like Kazakhstan, which is rich in oil, gas and minerals, and have a strong political leadership, plus a will to change from a soviet style of doing things to a free enterprise, capitalist style, clearly it is an opportunity for the City of London to engage in a very serious way,” he said.

27-29 JUNE 2007
London hosts forum for growth
8More than 70 captains of industry and top officials featured at Kazakhstan’s Growth Forum that ended yesterday at the Marriott Grosvenor Square Hotel in London. The event provided an unprecedented opportunity for delegates to learn more about Kazakhstan’s investment climate, legislation and tax issues, as well as social and political situation. A number of leading guest speakers further highlighted the nation’s growth sectors, which include oil and gas, finance, construction, real estate, metals, energy, infrastructure, transport, information technology, communications, agriculture and retail.