Kazakh Expert: Kazakhstan Can Be Connected to ‘Trailer’ under FTA Agreement
TEHRAN (Tasnim) – A Kazakh political expert said Kazakhstan could be connected to the “trailer” under the FTA agreement, noting that it is logical for Iran to look for allies and forge ties with old partners.
Kazakhstan has been among the important partners of Islamic Republic of Iran in Central Asia. Particularly, by signing a three-year provisional agreement with Eurasian Economic Union (EEU) –which Kazakhstan is a member state and a founder- in May 2018, and also signing the convention on legal status of Caspian Sea by littoral states –including Kazakhstan- in August 2018, in Aktau, the perspective of bilateral relations has been increasingly serious for analysts and experts.
The following interview is about the opinions of Alibek Yermekov, a Kazakh expert and researcher of “Kazakhstan Institute for Strategic Studies (KazISS)” about Iran-Kazakhstan relations.
Tasnim: Business and trade are among the most important fields of Iran-Kazakhstan relations. However, the countries’ analysts don’t evaluate current trade turnover acceptable. What are the main obstacles to the lack of development of trade between the two countries?
Yermenkov: In general, for goods of export interest to Kazakhstan, the market capacity of Iran is more than $ 8 billion. Thus, receiving more favorable conditions, Kazakhstani producers have the opportunity to increase exports more than 30 times, said the Minister of National Economy Timur Suleimenov. He noted that, for example, this kind of agreement was signed with Vietnam in 2015, and over the two years of its operation, the trade turnover between the countries increased by 2.6 times. The volume of mutual trade in 2017 amounted to $ 542.7 million, an increase of 48.2%, or $ 176.4 million, compared with 2016. At the same time, non-primary exports to Vietnam in 2015 amounted to $ 9.5 million, in 2017 it increased to $ 272.3 million (27 times). Kazakhstanis export products represented by including for a variety of Kazakhstan-made products. These are macaroni, confectionery, vegetable oil, meat, legumes, metal, condensers, batteries, fittings. This will allow in the future to increase exports.
In 2017, the trade turnover between Kazakhstan and Iran, according to the State Revenue Committee of the Ministry of Finance of Kazakhstan, amounted to 552.6 million dollars, it is worth noting that this is not the best indicator.
Tasnim: A few months ago Iran signed an agreement on establishment of a free trade zone with Eurasian Economic Union(EEU), in which Kazakhstan is a member and also a founder. In this regard, what kind opportunities has emerged? What kind of implications does it require?
Yermenkov: Today it is mostly consumer goods and agricultural products. But here is the paradox: what Iran has to offer, with rare exceptions, is already being offered by Turkey and China. Moreover, they have both logistics and retail, and the Iranian business will have to create everything from scratch, and in conditions of a severe shortage of working capital. The flow of goods is not expected in the near future. As for the goods from the EAEU, the situation is quite similar. The shelves of Iranian stores are crammed with high-quality goods and their own, and imported, the prices are quite low, so the chances for a solid market share in goods from the EEU are very few.
Tasnim: A small minority of Kazakhs live in northern cities of Iran such as Gorgan. What’s Astana’s view toward these minorities? Are there any challenges or opportunities in this regard, especially in cultural ties?
Yermenkov: Kazakh small minority is within the view of Kazakhstan foreign policy and its protection. Kazakhstan in this sense is fully agree and satisfied by Iranian national policy which is tolerant and multicultural.
Tasnim: In August, the Convention on legal status of Caspian Sea was signed by the presidents of 5 littoral states, which has caused reduction of disputes and so further cooperation. How can Tehran and Astana cooperate in this regard?
Yermenkov: Due to the lack of a legally registered sea status, regular monitoring of the environmental situation in the Caspian Sea is not conducted. The absence of norms leads to uncontrolled pollution of the waters of the sea. The signing of the convention does not remove all questions regarding the Caspian Sea. Thus, the wording regarding the distribution of the Caspian minerals is very vague. This made it possible to postpone the resolution of the most acute issues, to separate controversial points on which a compromise can and should be reached.
Determining the status of the sea is necessary for the free development of transit traffic, fishing, solving environmental problems and combating drug trafficking. Kazakhstan will be able to fully use the modernized ports of Aktau and Kuryk to communicate with Azerbaijan and Iran.
Tasnim: Iran and Kazakhstan are both within great transit projects such as “Belt and Road initiative” or “International north-south Corridor”. How do you see the mechanism of foreign policy behaviors? Cooperation or competition?
Yermenkov: Belt and Road Initiative is a more cooperation rather competition. This project corresponds to countries perspectives: for Kazakhstan it is preconditioned by its geographical position which lays between China and EU. This fact has a strong impact on developing Kazakhstan`s transport and economic policy and as a result great financial impacts on economic development. For Iran perspective on Belt and Road Initiative has a more geopolitical impact because the impact of US within the region, and in this sense China-Iran economic-trade cooperation only boosts regional security. Belt and Road Initiative corresponds to all parties’ interests.
Tasnim: The nuclear deal between Iran and the Group 5+1 (JCPOA) was seen as an opportunity and welcomed by Kazakhstan. But after scrapping the deal by the president of the United States, Donald Trump, new problems, such as unilateral sanctions against Iran, emerged. How does Kazakhstan view this situation? What’s Astana’s plan?
Yermenkov: It is logical that in such conditions, Tehran is looking for allies and forging ties with old partners. First of all, we are talking about Russia, to which Kazakhstan can be connected to the “trailer” under the FTA agreement.
It is possible that the economic agreement will also imply political support, and in Russia recently they are focusing on situations when the actions of the Russian Federation and Kazakhstan diverge. So, Astana will again have to be reminded that economics and politics are closely related, but still different things. Do not forget about the risk of "secondary" sanctions: the United States may prohibit dealing not only with Iranian companies, but also with their foreign partners. The prospect of such a scenario has significantly complicated the lives of Russian oligarchs, who fell under the last wave of American sanctions. With such a risk, Kazakhstani companies will need to think carefully whether it is worth entering the Iranian market at all.