Due to its geopolitical significance and economic potential, the MENA region (Middle East and North Africa) plays an important role in Kazakhstan’s foreign policy. Astana recognizes the need to develop economic relations and bilateral cooperation with the region. Several Arab countries are potentially lucrative markets for Kazakhstani industrial and agricultural products.
Worth noting, that Kazakhstan’s foreign policy engagement in the Middle East increased significantly in 2022. Efforts were accompanied by certain agreements and visits at the highest level. President Kassym-Jomart Tokayev held meetings with the heads of Iran, Qatar, UAE and Saudi Arabia. The parties agreed to expand the framework and outlined practical areas for further cooperation with trade, transport, logistics and financial spheres received priority.
Given the sanctions imposed on Russia, that also partially affect Kazakhstan’s economy due to Astana’s membership in the Russia-led Eurasian Economic Union, attracting Middle Eastern investments into Kazakhstan’s economy becomes more than crucial. In this context, joint projects in the agricultural sector and the development of green energy are high on the Kazakhstani agenda.
For instance, during President Tokayev’s official visit to the UAE that took place on May 15, 2022, the Kazakhstan Direct Investment Fund and Masdar signed an agreement to jointly build a wind farm with the first phase being focused on creating 500MW capacity with the possible use of a power storage system.
Cooperation with Iran is of particular interest as well. On 19 January 2023, the Eurasian Economic Union signed an agreement with Tehran on establishing a Free Trade Area (FTA). This will provide an additional impetus to cooperation not only within the EAEU format but also on a bilateral basis.
According to the results of bilateral cooperation for 2022, 12 agreements were signed between Kazakhstan and Qatar, including in the sphere of mutual trade. There has been an increase in exports of Kazakh sausage and confectionery products, meat and honey.
In July 2022, President Tokayev visited the Kingdom of Saudi Arabia resulting in the signature of 13 documents and the foundation of a Kazakhstan-Saudi investment forum. Riyadh has expressed a particular interest in investing in Kazakhstan’s agricultural sector.
Relations between Kazakhstan and the United Arab Emirates can be described as having reached a high level of development through a broad treaty legal framework of over a hundred documents, as well as a regular exchange of high-level and top-level visits. In September 2022, Prime Minister Alikhan Smailov visited the UAE. As a result, several documents have been signed in various sectors of the economy, worth a total of $900 million.
Meanwhile, between January and October 2022, trade between the two countries totalled $592 million, therefore there is room for improvement.
Last year, cooperation between Kazakhstan and Egypt was characterized by an expansion of the treaty base. A new area of cooperation is technical education. In the field of logistics, an agreement has been reached to form a special working group between the relevant agencies and business structures of the two countries to elaborate transport routes.
Work is also underway to expand cooperation in the energy sector, including through the establishment of cooperation in the fields of peaceful nuclear energy and the development of renewable energy sources.
Overall, the Egyptian market, with a population of over 100 million, is seen as a promising country for increasing Kazakhstan’s exports. The trade potential of air transportation of perishable goods has not been fully exploited either.
In 2022, Kazakhstan adopted and exchanged experience with Israel in the field of control and release of goods declarations, as well as monitoring of container shipments. In healthcare, a memorandum of cooperation was signed to further develop cooperation in such areas as pharmacology, transplantology, biomedicine, digitalisation of healthcare, personalized medicine, etc.
A key link in Kazakhstan’s policy towards North African countries, including Algeria, Morocco and Tunisia, is the dynamic development of trade and economic relations.
The market in the region shows annual growth and is developing into a new production-industrial zone. Some Kazakhstani companies, predominantly in the mining and services sector, are successfully operating on the African continent. The high demand for the products that make up Kazakhstan’s export product line demonstrates the significant potential for the development of mutual trade with North African countries.
Against the backdrop of the Russian-Ukrainian conflict and the disruption of global supply chains, cooperation in the area of food security seems beneficial, where the needs for goods correspond to Kazakhstan’s agricultural export potential.
For example, Egypt is the largest wheat importer in the world, with Russia and Ukraine providing 85% of the total supply. With the outbreak of the armed conflict and the imposition of sanctions on Russian exports, wheat prices have risen significantly. Cairo is now forced to look for alternative suppliers.
The difficult geopolitical situation also exacerbated food security in Libya, which imported up to 75 per cent of its wheat from Russia and Ukraine. The disruption in the supply chain has led to higher bread prices and increased public pressure on the country’s authorities.
Before the Russian invasion of Ukraine, Tunisia imported 80% of its wheat from Ukraine. Currently, Ukrainian exports have been decreased by the Russian blockade of Ukrainian exports through the Black Sea. The « Grain for Ukraine » initiative tries to remedy it. But this aggression triggered the highest price increase in 14 years. As a result, the bulk of the population faces difficulties in buying wheat-based food.
The main exporters of Kazakh grain remain the countries of Central Asia and Afghanistan, which together account for about 80% of exports. At the same time, North African countries could be potential buyers. To date, the export potential of Kazakh wheat and flour is estimated at between 9 and 10.5 million tonnes.
At the same time, to create sustainable trade links between Kazakhstan and North African countries, the logistical problems have to be addressed. Currently, many transport and logistics initiatives aim to increase the flow of goods between the countries. In particular, a corridor that goes via Uzbekistan, Turkmenistan and Oman, the North-South route through Kazakhstan, Turkmenistan to Iran and on to the Middle East and North Africa. This route is of particular interest to Astana, as the Kazakhstan-Turkmenistan-Iran railway was established to reach the MENA partners.
It should be noted that the route across the Caspian Sea to North Africa is reflected in the maritime cooperation concept of the Chinese One Belt, One Road initiative. According to that document, the 21st century is a century with a blue connotation, in other words, it is the century of maritime trade. The Concept emphasizes the importance of strengthening economic cooperation and establishing maritime partnerships.
Despite the existing problems, resolving the issue of goods delivery opens up opportunities for expanding trade and economic ties between Kazakhstan and the MENA countries. With this regard, the establishment of intermodal trade routes connecting Central Asia with the Middle East and North Africa is the subject of active joint work.
The cooperation between Kazakhstan and the MENA countries is developing dynamically but has a large yet unexploited room for growth. The basis for building sustainable cooperation is trade and investment, the development of which directly depends on the existence of a well-functioning logistics system.
All publishing rights and copyrights reserved to MENA Research and Study Center.
