Economic Relations between Kazakhstan and Russia

export coal from Kazakhstan, oil and gaseous condensate - 12 %, ores and

concentrates iron, chrome, zinc -10,3 % (7,9 %); products of inorganic

chemistry junction, inorganic and organic precious and rarely of metals of

radioactive elements and isotopes 13 % (13,5 %): an oxide and hydracids of

aluminum - 90 % of all outbound delivering; ferrous metals - 8,2 % (6,3 %).

In import from Russian Federation predominate: mineral products,

machines and equipment.

In 2001 basic paper of import was: purchase of mineral fuel, oil and

petroleum - 21,4 % (more than 77 % from common import of fuel, from them

coke, diesel fuel, lubricant oils, electric power;the machines and

equipment - 16,3 %, metallurgical production -14,5 %, vehicles -13 %,

production chemical and industries, coupled to it,-12 %, plastic and work

piece from it -4 % were imported.

On October 1 2001 in Republic of Kazakhstan 740 share and foreign

enterprises created with participation of Russia (including 466 share and

274 foreign enterprises) with the authorized capital - 22,7 billion tenge

operated. The share of the foreign founder in the authorized capital has

made 1,3 billion tenge, or 5,94 %. From them 121 enterprises manufactured

production, 72 - realized deliverings on export, 182 - had import receipts

and 456 realized delivering on a home market. In 2000 in republic 461

enterprises, in 1999 - 325 operated.

The enterprises created together with the Russian partners, realize

the following aspects of activity: production of crude oil, mounting of the

process equipment, construction of civil engineering buildings, manufacture

of the electric power both electro distributive and monitoring equipment,

pharmaceutical products, copper, woolen and synthetic fabrics, flour,

processing and conservator of production, rendering of different aspects of

services and researches, maintenance and repair of automobiles, activity in

the field of a wireless and television.

2.1 Some aspects of economic interaction Kazakhstan and Russia

For adjustment and intensive development of mutually advantageous two-

sided ratios within the framework of CIS Republic of Kazakhstan and Russian

Federation have necessary objective premises. Russia and Kazakhstan make a

basis of huge Eurasian region, in which historically there were steady

geopolitical, economic, ethnic and cultural links of two countries and

peoples. In many vital spheres the national interests of two countries are

close or coincide, both countries hold on to course on saving of common

defensive, humanitarian and information space and the stability and

prosperity of two countries, further democratic of a society and success of

market transformations are equally interested in hardening safety.

The interaction of Kazakhstan with Russia is a priority in external

policy, external economic and military-strategic course of republic. A

complex of the reasons conditions and factors having not tactical, but

basic essence and long-time character stipulates it.

Today common balance of mutual relation between Kazakhstan and Russia

has positive character, as consider each other as the strategic partners

and it establishes the important premise for their mutual cooperating in

the field of policy, economy, science, engineering and other spheres.

Kazakhstan-Russian economic partnership belongs to the most advanced

regions of two-sided ratios between two states, as for this purpose both

countries have premises for rapprochement. It in many respects defines

character, both mutual relation, and other economic links, folding in the

European direction, of Kazakhstan.

On today there are favorable and unfavorable factors inherent in

Kazakhstan on a path to economic cooperating to Russia.

Alongside with the favorable factors of a development of two-sided economic

ratioes exist as well unfavorable or constraining moment. The overcoming of

economic barriers by means of restoring cooperation links will allow

introducing the operations in frameworks EAEU (Euro-Asian Economic Union).

2.2 The factors of economic interaction of Kazakhstan and Russia

Favorable

a) Presence in Kazakhstan of large mineral operational lives.

b) Transit potential and favorable geopolitical position of Kazakhstan at

the center of the Eurasian continent: on a crossroads of trade and

transport paths from Europe in Asia: through China on Far East ports,

Pacific Ocean of the state; through Iran and Turkey in the Mediterranean

pool.

c) Determination of Kazakhstan and Russia as basic trade partners on export

and import.

d) Retention of Kazakhstan in the majority large international

architectures UN, Architecture of Economic Cooperating, Economic union

Central Asian of the countries (together with Uzbekistan and Kyrgyzstan)

and Central-Asian Bank of Cooperating and Development (CABCD); Great five

Republic of Kazakhstan in frameworks of CIS (Russia, Kazakhstan, Belarus,

Kyrgyzstan, Tadjikistan).

e) The large region with the common boundary (more than 6.000 kms) with

Russia, that has for two countries a serious value in matter of hardening

of their national and collective safety.

f) The residing in republic of the large ethnic interlayer of the European

origin (Russian, Ukraine, Germany) is one of the factors of rapprochement

of Kazakhstan with the European civilization and culture.

Unfavorable

a) A close arrangement of Kazakhstan to the inconsistent states Central

Asian of region.

b) Support by Kazakhstan of multifactor policy in a ratio of transportation

of the Caspian oil.

c) The boundaries Central Asian of the states from a point of view of

international law properly not democratic of Republic of Kazakhstan;

Kazakhstan has appeared as a matter of fact cut off from Western Europe

d) Increase of ecological crisis, that weakens its positions in region and

world, narrows down opportunities of fast industrial growth.

e) Absence in Kazakhstan of a direct exit to World Ocean, exterior warm

seas, that hampers links with the largest centers of a modern civilization.

f) Support by the countries of trade wars (introduction of limitation on

import of the goods, policy of an ascertaining dumping in relation to the

exported goods, raw interdependence of the countries etc.).

In the beginning 1990s. It seemed, that the revived democratic states

within the framework of their new statuses would be and further dynamically

to explicate the ratios, filling their contents, adequate to a new

position. However it has not taken place and in basic for past years of two-

way communications were characterized defined inertia.

As displays the analysis, the policy of Russia in a ratio of the

states of Commonwealth for flowing out five years did not differ by a

sequence.

There was a natural process of comprehension of key national-state

interests attended by searching for new, as it seemed, more perspective

partners.

Certainly, the today's level of economic integration does not answer

necessities national economic of Republic of Kazakhstan and Russian

Federation. Available on it is necessary to evaluate the today facts of

economic interaction between two countries as insufficient and requiring in

serious adjusting. The priority of a development of the Kazakhstan-Russian

economic links is possible to support with existing numerous perspective

directions of a development, it:

. Trade-economic cooperating of Republic of Kazakhstan and Russian

Federation;

. Frontier cooperating Republic Of Kazakhstan and Russian Federation;

. Development of industrial-cooperation links in machine-building and

chemical complexes, by means of creation of share financial and

industrial groups;

. Cooperating and development fuel and energy of complexes of Russia and

Kazakhstan;

. Cooperating in sphere of transport;

. Cooperating of Kazakhstan and Russia in mastering vehicle launching of

Baikonur;

. Cooperating in mastering natural riches of the Caspian sea;

. Scientific - technological cooperating;

. Cooperating in the market of agricultural production.

The historically folded trade ratios of the countries of the Eurasian

region, including Russia and Kazakhstan from times “Silk road” - allow to

hope for success in a development of economic cooperating in modern

conditions.

At the same time it is necessary to mark the common tendencies,

natural for the new independent countries. The orientation to the market of

long-distance foreign countries makes production of raw in branches of the

countries rarely for them raw refined in branches, as last valid by

considerably lower, than world, efficiency of the manufacture can not

acquire production first on world or close to world prices. Stronger links

with the world market of branches of the states of Commonwealth inevitably

preclude with their demand for production domestic resource refinery of

branches by virtue of its non-competitiveness in the world market. It

inevitably reduces different branches to of an economic development

resource producers and resource refinery of branches in the countries of

CIS.

2.3 Engaging the foreign investments

The participation of the foreign capital promotes the decision of the

following tasks:

- Heightening of efficiency of an export potential, overcoming of its raw

directedness and development import substitute of manufactures;

- Heightening of a scientific and technical level of production with the

help new scientific of techniques, methods of management and selling of

production;

- Magnifying of tax receipts in the state budget;

- Assistance to a development backward and depressive of regions and

creation of new workstations in national economy;

- Use of modern industrial and administrative experience through tutoring

and retraining of the staff.

It is necessary to mark, that the cooperating of Kazakhstan and Russia

can explicate in different regions of economy. For power engineering and

mineral operational life’s priority directions are: the opportunity of an

effective shared use of mineral operational life’s, introduction new and

development of available processing manufactures oriented on export to long-

distance foreign countries, creation of a reliable system energy supply,

development of the transport communications, which development is

stipulated by presence of investment operational life’s.

Figure 1. Structure of the direct foreign investments in Kazakhstan in 2000

[pic]

In structure of the direct foreign investments in Kazakhstan the share

of Russian Federation makes 5 %. In spite of the fact that the Russian

economy requires not less to investment means, the enclosure of the

investments serves the factor of interest by Kazakhstan. The interests of

Russia consist, first of all, in natural operational life (oil, coal, ore

etc.), mastering and development.

2.4 Cooperating in the field of electric power industry

As other step which has strengthened a positions of power branch, it

is possible to name creation on the basis of bankrupt CJSC “Ekibastuz

Energy Center”, half of which shares the European Economic Community of

Russia on account of cancellation of duties of Kazakhstan for the electric

power was transferred to the Russian partners from the Russian Academy of

Science.

Since 2000 the integrated power Grid of Kazakhstan works in a parallel

condition from European Economic Community of Russia and grid system of the

countries of Central Asia.

The parallel operation of electric power systems has allowed

considerably to boost quality of electrical power and reliability of

electro supply of consumers of Kazakhstan, Central Asia and Russian

Federation, operatively to realize flow both transit of electrical power

and powers, it is more rational to use power powers of electrical stations.

The electric power system of Kazakhstan and Russian Academy of Science

European Economic Community of Russia is called secure each other in case

of crashes. It will ensure with the electric power not only Republic Of

Kazakhstan, but also Southern Ural.

With the purposes of a heightening of efficiency of a parallel

operation the measures on simplification of customs procedures are studied

at migration of electrical power through the customs boundary.

The operation coal extraction of the enterprises is stabilized. In

2002 the production 78 mln of tons coal is forecast, from which more than

25 mln of tons will be exported.

2.5 Cooperating in the field of machine construction industry

The lowering of manufacture in machine construction industry and

metalworking is called by aggravation of a financial condition of basic

consumers of machine-building production, significant rise in price of

import furnishing work pieces.

The cooperating of Russia and Kazakhstan in machine construction

industry is possible at the expense of a shared use of available industrial

potential for issue of competitive production. On basis Kentau excavator

factory assembly manufacture of dredges together with joint-stock company

Tver excavator a factory and joint-stock company Sarex. On Pavlodar

tractor together with joint-stock company the “Altay” motor factory.

Barnaul and Sibzavod (Omsk) it is planned to adjust manufacture of new

tractors, and the enterprises agricultural machinary of Kazakhstan together

with Rostelmash can master assembly manufacture a grain and of combines.

Besides in machine building branch the creation JV on manufacture of

diesel drives (planned on the basis of joint-stock company the “Kustanay”

diesel factory and joint-stock company “Hurrah Laz”) and Transnational of

financial and industrial group “Electropribor”.

2.6 Cooperating in the field of a uranium industry

Annually Kazakhstan extracts and sells about 3 % (1,5 thousand tons)

from it Whole World of production. Production of the National company

“Казатомпром” consumes Russia, USA, Western Europe, Southern Korea and

other countries.

The company “Казатомпром” combines investigation, production and

manufacture of uranium, and also accompanying rarely of elements. Into its

structure go into: joint-stock company “Volkovgoelogy” one of highly

professional in all CIS of the geological enterprises, joint-stock company

“Stepgeology”. Three ore management “Central”, “Steppe”, “Sixth”.

The basic manufacturer of uranium fuel in Kazakhstan - Ulbinski a

metal works. This versatile enterprise specializing on issue rarely metal

and super conducting production, and also special material, used in an

atomic industry, electron technology, instrument making, space engineering.

The raw material - enriched uranium - is made in Kazakhstan or is delivered

from Siberia, on Ulba make of it tablets and deliver them on the Russian

factories, where make ready heat distributor of assembly for atomic power

plants. Ulbinski the metal works occupies the important place in a nuclear-

fuel cycle of Russia and Kazakhstan.

In the near past the nuclear -fuel complex of Russia and Kazakhstan

made a single unit. To tear this line-up was it does not pay Russians,

Kazakhstan.

Last years the Kazakhstan raw material in basic went on export, and

the fuel tablets on Ulbinski factory were manufactured from the Russian raw

material. Besides is acute there was a problem solvency. Russia paid for

services by the consumer goods. An exit from the folded situation became

the offer of the Kazakhstan side to the partners from Russian "«fuel

element" of start-up of a new uranium line-up. As a result of the

enterprise deliver each other necessary components, in particular from

Kazakhstan in Russia - fuel tablets. The financial accounts between the

countries are made at the end of a line-up in accordance with sale of

products higher remake in the exterior market.

Within the framework of this cooperating, with the purposes of an

ascertaining of the greater confidence the National company “Kazatomprom”,

releases the gold share, which is transferred and gives it the right to

superimpose the veto on such decisions of Kazakhstan,

As, for example, refusal to work in one nuclear-fuel cycle to not

produce fuel tablets for Russian Atomic Electric Station or other

irrational variations in the strategy and tactics of behavior in the

market. In turn, Russia has given us assurances of a reliability and long

term of the orders. It concerns uranium, but also tantalum raw material,

beryllium etc. Durability of strategic interests of the sides by the plans

on interchanging the shares Ulbinski factory on the similar shares of the

enterprises of a nuclear -fuel cycle of Russia.

In October, 2000 the long-term contract for manufacture CJSC Ulbinski

factory of dusts of uranium and fuel tablets for AES with their further

annual delivering in Russian Federation up to 200 т of a dust and 300 т of

tablets, on a period till 2005 inclusively is made.

Besides the arrangement on creation of the share enterprise on production

of uranium on deposits “Zarechni and “Budenovski” in Southern Kazakhstan is

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