Just 15 months after the Kremlin helped crush an uprising against President Kassym-Jomart Tokayev, threatening to turn his country into a fully-fledged client state, Kazakhstan is distancing itself from Moscow. The signals have come thick and fast — from the welcoming of Russian citizens fleeing the September mobilization to Tokayev’s refusal to recognize Russia’s claims in Southern and Eastern Ukraine, it’s clear Kazakhstan is tentatively enjoying a new freedom of maneuver.
Russia’s regional influence is waning, but Kazakhstan’s geopolitical reality is still a dilemma. The growing power of its eastern neighbor, China, means it needs to act with some caution. It has fostered and expanded trade relations, something that benefits China immensely as Kazakhstan acts as a land bridge and point of entry into Europe. But the country is also a growing focus for the European Union (EU), which is seeking to diversify energy supplies following the termination of its deals with Russia. Not only is Kazakhstan a significant hydrocarbon producer (globally it ranks 17th as an oil producer and 24th for gas), its mountainous terrain and abundance of sunshine mean Kazakh geography is perfect for both solar and wind power generation.
Much like its Caspian Sea neighbor, Azerbaijan, the wealth of Kazakh energy resources has attracted the attention of EU states worried they may struggle to keep the lights on. Germany in particular, has been looking for new avenues to diversify energy supplies and is particularly attracted by the prospect of plentiful low-carbon energy that will help meet its green energy goals.
During a visit to Kazakhstan in October, German Foreign Minister Annalena Baerbock explored the potential for low-carbon green hydrogen production in the country. This power source (hydrogen produced using electricity from renewable sources) is tricky to transport but can potentially be added to natural gas (though this is controversial.) During her trip, Baerbock announced the establishment of a hydrogen diplomacy office in Astana, which aims to promote green energy development in the region.
Both Germany and the EU established hydrogen funds last year, with $950m for the German H2Global project and $3.2bn for the European Hydrogen Bank. Berlin also made $581m available in late 2022 for green hydrogen projects in developing and emerging markets through the PtX Development and Growth funds. The comparatively low cost of production, by European standards, may make Kazakh hydrogen an attractive investment.
While moving hydrogen can be expensive, raising costs for consumers and eating into Kazakhstan’s green electricity cost advantage, companies such as the German-Swedish Svevind Energy Group see a future partnership with Kazakh producers as commercially viable. Svevind has already committed to building a 20 GW green hydrogen plant with Kazakh partners, which would be capable of producing one-fifth of the EU’s 2030 green hydrogen import target.
The German-Kazakh relationship is not new, dating back to the early days of Kazakh independence in the early 1990s, and Kazakhstan is Germany’s largest trading partner in the region. Germany is also Central Asia’s largest European trading partner. However, annual trade between the two countries ($5.6bn) is only a fraction of that between Kazakhstan and China ($19.7bn.) That imbalance and China’s proximity mean Beijing is likely to have more leverage.
The effect of Germany’s green foreign policy may also raise eyebrows. Baerbock, the Green party’s co-leader, promised that any German loans and infrastructure projects would be transparent and fair for Kazakh partners, in a barely veiled jab at Chinese investment practices. Increased transparency would offer the chance to reduce corruption and offer a better deal for Kazakh partner companies, though it would also reduce opportunities for government officials seeking self-enrichment. Transparency International ranks Kazakh corruption as worse than Brazil’s but better than Mongolia’s.
Baerbock has focused heavily on promoting human rights. She repeatedly drew attention to the connection between future German investment and respect for freedom, in a country that has cracked down on peaceful protesters and opposition groups in the past, as during the January 2022 unrest.
The early-mid 2020s represent a possible inflection point for Kazakhstan, as the nation seeks to build a better balance in its relationship with the Kremlin. Although it is shifting away from its historical political and economic reliance on Russia, its ties remain and it has become a major thoroughfare of sanctioned products for Russia (although it has promised a crackdown.) And China is no friend of the rules-based order, either geopolitically or economically.
There’s a lot to play for. Germany could find a reliable supplier of large amounts of traditional and renewable energy. But there are enormous hurdles to overcome if it hopes to secure both additional energy as well as improvements in the values and governance of Central Asia.
Jakob Barlow is a Graduate Fellow with the McLarty Associates Europe and Eurasia Practice. He holds an M.A. in International Relations with concentrations on International Economics and Great Power Competition from the Johns Hopkins School of Advanced International Studies (SAIS).
SaraJane Rzegocki is a Program Officer with the Democratic Resilience Program at the Center for European Policy Analysis (CEPA). She holds an M.A. in Political Science with a concentration in European Union Policy Studies from James Madison University.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.