This paper examines the historical patterns of United States trade with Kazakhstan from the early post-Soviet period through the mid-2000s. Drawing on data from the U.S. Census Bureau, the United Nations Statistics Division, the CIA World Factbook, and the U.S. Department of State, the paper traces how Kazakhstan's trade relationships evolved following the collapse of the Soviet Union, how rising oil revenues transformed its economy, and how the post-9/11 strategic partnership with the United States accelerated bilateral trade. The analysis identifies a consistent upward trend in U.S. exports to Kazakhstan, linked to energy price dynamics, economic reforms, and Kazakhstan's growing role as a regional financial and political power.
Today, the Republic of Kazakhstan has emerged as both a growing political and economic powerhouse among the former states of the Soviet Union. As the largest of the former Soviet states (except for Russia itself), Kazakhstan possesses both the natural resources and the economic clout to forge new economic and strategic alliances with former military adversaries, including the United States. Indeed, the North Atlantic Treaty Organization has expanded to almost twice its former membership during the Soviet era, and Kazakhstan is well situated to become a prominent member of the international community in the future. To determine the economic impact of these transitions on the United States, this paper provides a review of relevant peer-reviewed, scholarly, and governmental literature to examine the historic trends in U.S. exports to Kazakhstan. A summary of the research and significant findings are presented in the conclusion.
Much has transpired in the last two decades for the people of the former Soviet states, and the impact of these changes has had a particularly significant effect on the volume of goods and services being exported to the Republic of Kazakhstan. While some constraints to international commerce continue to exist, growing confidence in the rule of law and the elimination of corrupt business practices among political and business leaders have contributed to an increase in exports from the United States to Kazakhstan virtually across the board. According to Wyzan (1995), "In 1992 firms continued to ship goods across state boundaries, assuming that the central bank of Russia (CBR) would cover the credits" (97). The collapse of the former Soviet Union had profound effects on the level of trade experienced by Kazakhstan because of increasingly problematic conditions within the nation's banking system, its former ties with the Soviet Union, price disputes, and the concomitant impact of rising inflation (Wyzan 97).
As a result, trade steadily declined by more than a third in 1992 (Wyzan 97). As Wyzan emphasizes, trade is a reciprocal enterprise: "Kazakhstan's close economic ties to Russia meant that many Russian firms were in turn dependent on trade with Kazakhstan. Much of the industry in Siberia and the Urals relies upon Kazakhstan for its raw materials or to purchase its products" (Wyzan 97). For instance, Kazakhstan continued to account for more than 50 percent of the output purchased from the Krasnoyarsk harvester factory alone, and Russian companies naturally wielded a great deal of pressure on policymakers in Moscow to release additional credits to Kazakhstan (Wyzan 97).
At that time, trade with Kazakhstan was primarily conducted through bilateral deals signed by individual firms or regional councils; the prices established through these processes approximated internal Russian prices (Wyzan 97). These approaches to trade development provided the framework for the liberalization of price levels, as energy costs remained at between 20 and 30 percent of prevailing world market levels (Wyzan 97). Other initiatives that helped spur early trade development in Kazakhstan included a subsidy from Russia in 1992 representing approximately 10 percent of Kazakhstan's GDP; additionally, Russia experienced a trade surplus of R139 billion with Kazakhstan (exports of R284 billion and imports of R145 billion) in 1992 (Wyzan). Kazakhstan's total exports to the Commonwealth of Independent States amounted to R582 billion in 1992, compared to imports of R787 billion (World Bank 1993:21, cited in Wyzan 97–98).
This investment in Kazakhstan's trade development was not without benefit for Russia. Total Kazakh debt to Russia rose from R250 billion in 1992 to R500 billion in 1993, also representing approximately 10 percent of Kazakhstan's GDP (Wyzan 98). The following years witnessed a growing need for policymakers in Kazakhstan to identify additional trading partners. According to Wyzan, "At the end of 1993 Russia's policy appeared to be swinging in a more 'selfish' direction, as indicated by an unwillingness to subsidize trade with Kazakhstan and even a certain jealousy toward Kazakhstan's dealings with Western corporations" (107). The terrorist attacks of September 11, 2001 further changed the relationship between the U.S. and the former Soviet states in fundamental ways.
Today, Kazakhstan represents a key partner in the U.S.-sponsored war on terrorism. According to the U.S. Department of State, "Since September 11, 2001, the Government of Kazakhstan (GOK) has provided unlimited overflight rights for U.S. aircraft, waiving fees on more than 4,000 flights in support of Operation Enduring Freedom (OEF). In support of Operation Iraqi Freedom, in August 2003, the Kazakhstani Government sent a 29-member engineering contingent to assist in reconstruction efforts in Iraq" (U.S. Government Assistance to and Cooperative Activities with Eurasia 2). Not only has the Kazakhstani government been highly cooperative in helping the U.S. government dispose of the nuclear materials that are a legacy of the Cold War, but these former adversaries have become even closer trade partners in the succeeding years — to their mutual benefit.
Kazakhstan represents a strategic ally for the United States both in terms of its abundant natural resources and its proximity to Russia. As U.S. government analysts emphasize, "Participation by the Kazakhstani Government in the Aktau-Baku-Tbilisi-Ceyhan oil transport system will also provide a major new outlet for Caspian energy to world markets. The U.S. government promotes democratic and market reform in Kazakhstan in an effort to bolster stability and prosperity in the key region of Central Asia" (U.S. Government Assistance 3).
The country enjoys an abundance of natural resources, especially oil, which has also helped promote its economic development and therefore its demand for various imports from historic and new trading partners. Kazakhstan's GDP stood at $40.7 billion in current prices, and the country experienced consistent and robust economic growth in recent years. According to U.S. government analysts, "The Oil National Fund, established in 2001, currently holds about $7 billion in assets and serves both stabilization and saving functions. Kazakhstan continues to play a leading role in Central Asia in economic reforms, with a solid banking system, growing mortgage markets (at a volume of more than $1 billion in 2005), and approximately $4.5 billion in pension accumulations" (Economic Reform 11).
Despite such progress in facilitating trade development and ensuring future political stability, some problems remain. Notwithstanding efforts by the Kazakhstani government to diversify its economy, the country remains highly dependent on its proven oil resources, and corruption is still a problem (Economic Reform 11). Analysts at the U.S. Department of State report that Kazakhstan has launched a number of initiatives intended to diversify its economy away from overdependence on the oil sector by developing its manufacturing potential: "The policy aims to reduce the influence of foreign investment and foreign personnel. The government has engaged in several disputes with foreign oil companies over the terms of production agreements; tensions continue. Upward pressure on the local currency continued in 2007 due to massive oil-related foreign-exchange inflows" (Kazakhstan 3). Fueled in large part by continuing growth and foreign exchange earnings, Kazakhstan has announced plans to assume a leading role in the region as a financial center and has developed a banking system comparable to those in Central Europe for this purpose (Kazakhstan 3).
"Data sources and graphing approach used"
"Export statistics and oil price correlation findings"
The research showed that the Republic of Kazakhstan has emerged from the chaos following the collapse of the Soviet Union in the early 1990s to become a prominent regional leader, driven by healthy economic growth and abundant natural resources. While some significant problems remain, the research also showed that policymakers in Kazakhstan have recognized many of these constraints to development and have taken steps to address them. Longstanding challenges such as corruption and an overreliance on a single resource are not resolved overnight, but based on the findings of this study, it can reasonably be expected that U.S. interest in Kazakhstan as a strategic partner in its ongoing counterterrorism efforts will continue to grow, and Kazakhstan's imports of U.S. goods and services will likewise continue to increase in the process.
You’re 61% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.