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The US and Kazakhstan – An economic partnership for the 21st century

STL | 16 January 2018

The US and Kazakhstan – An economic partnership for the 21st century

President Donald Trump hosted President Nursultan Nazarbayev at the White House on January 16, 2018. The visit reinforced the close commercial and trade ties between the United States and Kazakhstan that will create jobs and accelerate economic growth in both countries. President Nazarbayev proclaimed that these efforts are essential for Kazakhstan to achieve its goal of joining the ranks of the top 30 global economies by 2050. During the visit, numerous commercial contracts and documents were concluded, including new agreements between The Boeing Company, GE Transportation, GE Digital, Chevron, Air Astana, KazTemirZholy, SCAT Airlines, and the Samruk-Kazyna National Wealth Fund for the purchase of U.S. products and services valued at over $2.5 billion.

Highlights of this economic cooperation include:

Regional Trade and Economic Development

Government Cooperation. The United States and Kazakhstan continue to collaborate on implementing WTO obligations, resolving outstanding disputes, improving the Kazakhstani investment climate, and promoting greater bilateral investment. The two countries recently concluded an air navigation agreement, which will strengthen bilateral ties by easing the travel of senior officials between the United States and Kazakhstan.

Facilitating Regional Trade. Kazakhstan and the United States cooperate within the framework of the Central Asia Trade and Investment Facilitation Agreement, which promotes increased trade within the region.

  • Kazakhstan demonstrated leadership in trade issues by hosting the most recent meeting of the Central Asian TIFA format in Almaty on December 12, 2017. During this meeting, Kazakhstan and the United States agreed to initiate a new regional working group dedicated to the protection of intellectual property rights in support of trade and innovation.
  • In October 2017, Kazakhstan hosted the seventh Central Asia Trade Forum with the U.S. Agency for International Development in Almaty with participation of over 1,100 government officials, entrepreneurs, donors, and industry leaders from at least 15 countries, leading to over $25 million in signed letters of intent to conduct future trade deals.

Bilateral Trade. Bilateral trade in goods grew to $1.9 billion in 2016, and both countries remain committed to further expanding the trade relationship. The United States welcomes Kazakhstan’s interest in pursuing a bilateral civil aviation agreement. This agreement would enhance economic ties and facilitate business links by encouraging affordable, convenient, and efficient services to air travelers.

Trade in Commercial Aircraft. During their visit, the two leaders celebrated two separate deals between Boeing and Kazakh airlines totaling over $1.3 billion, sustaining an estimated 7,100 direct and indirect U.S. jobs. Specifically, SCAT Airlines ordered six Boeing 737 MAX 8 airplanes. With the first aircraft scheduled for delivery in March 2018, these will be the first 737 MAXs owned and operated in Kazakhstan and Central Asia, bolstering SCAT’s regional and international network. Additionally, Air Astana, the national flag carrier of Kazakhstan, affirmed its commitment, under the terms of an existing contract, to purchase three 787 Dreamliners, which are scheduled for delivery in 2021.

Railways. General Electric and Kazakhstan Temir Zholy (KTZ) concluded two new strategic initiatives valued at over $900 million, which will sustain or create over 3,500 U.S. jobs. GE Transportation will design and manufacture up to 300 shunter locomotives for KTZ, with delivery beginning in 2019. GE Transportation also signed an 18-year service agreement to maintain and support 175 current KTZ GE Evo locomotives beginning in 2018. The deal will include an expansion of the main KTZ rail facility in Astana.

Agriculture. The United States and Kazakhstan value our agricultural trading relationship and will continue to seek opportunities for cooperation, including through collaborative agricultural research. Joint work on research helps both countries work toward a safe and abundant food supply.

Afghanistan Development. The United States and Kazakhstan support sustainable stability and prosperity in Afghanistan through political support, increased regional trade, and economic development. Kazakhstan announced the completion of an Afghan civilian specialist training program and offered to continue training specialists in Kazakhstani institutions.

Digital Infrastructure. GE Digital and Kazakhstan’s Samruk-Kazyna National Wealth Fund signed a strategic partnership agreement aimed at accelerating the digital evolution of the Fund’s portfolio of industrial companies. The agreement demonstrates the companies’ progress in creating a sustainable digital ecosystem in Kazakhstan, and provides for the joint assessment of GE digital solutions based on the Predix platform.

Leadership in Space Exploration. The United States appreciates that Kazakhstan is the point of departure and safe return for American astronauts traveling to and from the International Space Station. The United States encourages Kazakhstan’s participation in the 2nd International Space Exploration Forum on March 3 in Japan. Kazakhstan and the United States will explore cooperation in the application of space technologies to assess environmental and natural hazards within the framework of the International Charter, which aims to provide a unified system of space data acquisition and delivery to countries affected by natural or man-made disasters.

Healthcare. The United States and Kazakhstan are improving health care services in Kazakhstan through cooperation with the United States Centers for Disease Control and Prevention. The University of Pittsburgh Medical Center is also working with Nazarbayev University to establish a world-class oncology center, which will serve the citizens of Kazakhstan and all of Central Asia.

Pharmaceuticals. Pfizer signed a memorandum of understanding with Kazakhstan to explore a localization project for the secondary packaging of a high-technology medical product. If concluded, the project could include measures to improve the cold chain system for the transportation and storage of medicines in Kazakhstan.

Kazakhstan and Future Energy

World Expo 2017. Kazakhstan hosted the 2017 Expo in Astana, highlighting leadership in energy innovation under the slogan “Future Energy.” The Expo grounds will be the future site of the Astana International Financial Center and a technology innovation park.

Strategic Energy Dialogue. In 2017, the United States and Kazakhstan elevated the previous bilateral Energy Partnership to the level of a Strategic Energy Dialogue, which will begin technical discussions in 2018. This enhanced format provides a framework for cooperation on civilian nuclear development, carbon capture utilization and storage, grid resiliency, and nuclear security and non-proliferation.

Oil and Gas Exports and Investment. Chevron and ExxonMobil entered the Kazakhstani market in 1993, becoming the first major oil companies to invest in the newly-independent country.

  • Chevron signed a landmark 40-year deal to develop the super-giant Tengiz field, and in the years since, Chevron has invested tens of billions of dollars in Kazakhstan to produce oil and gas, creating thousands of jobs and bringing world-class technology and expertise to the country’s energy sector.
  • Chevron signed a Memorandum of Understanding with the Kazakhstani Ministry of Energy to use $251 million of reinvestment funds to finance profitable projects in Kazakhstan.
  • With total investments surpassing $20.2 billion, ExxonMobil is active in the exploration, development, production, and transportation of oil and gas.
  • TengizChevrOil (TCO), a joint venture with KazMunaiGaz, Chevron, ExxonMobil, and LukArco, has made direct financial payments of over $124 billion to Kazakhstani entities, and is currently implementing a $36.8 billion expansion project.
  • The North Caspian Sea Production Sharing Agreement (NCSPSA) project is Kazakhstan’s largest direct foreign investment project, creating local jobs and business opportunities. The Kashagan Phase 1 project cost approximately $55 billion, with local content in goods, works, and services valued at more than $13.3 billion since 2004. The project will produce for decades and its shareholders, including ExxonMobil, expect to contribute billions of dollars in direct revenue to the Kazakhstani government.
  • Chevron and ExxonMobil have contributed to the development of Kazakhstan’s economy through participation in the Caspian Pipeline Consortium (CPC). In 2017, the CPC completed the Kazakhstani portion of an expansion project that could increase total throughput capacity to 1.4 million barrels per day. The pipeline system represents the most attractive export option for Kazakhstani crude oil from the Tengiz and Kashagan fields.

Nuclear Power. The United States and Kazakhstan are committed to cooperation advancing safe nuclear power.

  • Kazakhstan is a leading uranium supplier, producing over 24,000 tons of nuclear fuel in 2016.
  • In 2017, Kazakhstan opened the Low Enriched Uranium Bank in partnership with the United States. The LEU Bank provides a reliable source of fuel for countries transitioning to clean nuclear power and reduces the proliferation risk of enrichment technologies.

Regional Grid Modernization. The United States and Kazakhstan agreed to explore technologies and projects to re-integrate the Central Asian regional power grid and enhance energy security, improve economic stability, and facilitate commercial investment.

Power the Future – a regional effort within the framework of the 2015 “Joint Declaration of Partnership by the Five Countries of Central Asia and the United States of America” (C5+1) — helps support the region’s transition to low emission, climate resilient economies.

The Power the Future program supports renewable energy projects that increase energy efficiency in Kazakhstan, while improving the ability to develop and achieve goals for the reduction of greenhouse gas emissions.

Enhancing Human Capital

Visa Program. In 2015, Kazakhstan initiated a short-term visa-free entry program for U.S. citizens, and the United States began issuing 10-year business and tourist visas to Kazakhstani citizens. These visa regimes have facilitated travel to both countries, opening new opportunities for business, investment, and tourism.

Travel. Today, nearly 26,000 Kazakhstani citizens reside in the United States and over 5,000 U.S. citizens live in Kazakhstan. Last year, the United States Government issued nearly 18,000 visas to Kazakhstani citizens, and facilitated many visits to the United States.

Education. The United States committed to assist the Government of Kazakhstan achieve its goal to establish a tri-lingual society by 2050. The United States will resource development programs to improve access to English language education and train the next generation of English language educators in Kazakhstan. In 2017, over 2,800 Kazakhstani English teachers participated in professional development webinars.

  • In 2018, American teaching assistants will help improve English language instruction in provinces across Kazakhstan.
  • The “English Access Microscholarship” program has helped 480 economically disadvantaged youth attend after-school classes and summer learning activities.
  • The United States funds the “English for Journalists” program, which will improve the professional qualifications of 230 Kazakhstani journalists.
  • Bolashak Program. In 1993, Kazakhstan launched the Bolashak presidential scholarship program for international study. ‘Bolashak’, which means ‘future’ in Kazakh, demonstrates the importance Kazakhstan places on educating its youth at the best universities in the world.

The Bolashak Program is a recognized, all-expenses paid scholarship awarded to high-performing students from Kazakhstan for graduate study at an overseas university.

  • The United States has worked with the Bolashak program to help with the selection process and to widen the number of U.S. universities participating in the program.
  • Since its inception in 1993, more than 12,500 Kazakhstani students have been awarded Bolashak scholarships, with 2,315 completing a course of study in the United States. Upon completion of their graduate degree, Bolashak scholars return to work in Kazakhstan for at least five years.
  • Currently, 358 Kazakhstani Bolashak scholars are studying at U.S. institutions of higher learning.

 source: STL