The KazAID Story

The KazAID Story

Written by: Prachi Agarwal

The ongoing Russian aggression in Ukraine has captured the world’s attention. Conversations focusing on the fragility of countries’ sovereignty and security are growing, especially among former soviet republics. Despite threats to sovereignty and security, Kazakhstan, the largest country in central Asia and a former member of the USSR, aspires to be a global superpower. However, the primary challenge to this aspiration lies in ‘promoting increased connectivity while maintaining a freedom of action’. The solution to this challenge may require using foreign aid as an instrument of foreign policy.

Thus, the primary aim of this blog is to describe and highlight pertinent issues for Kazakhstan’s foreign aid practices in the context of using foreign aid. The rationale behind such an endeavour is that KazAID (Kazakhstan’s foreign aid body) remains an under-researched area. KazAID’s establishment was driven by fulfilling Kazakhstan’s security needs and economic aspirations. While the role of foreign aid as a foreign policy instrument of the rich countries may be widely known, KazAID’s story shows that other developing nations could also challenge the existing western hegemony through strategic aid foreign practices.

Contextualising Kazakhstan

Kazakhstan has been carefully trying to maintain relations with its largest trading partners - Russia, the United States and China. Kazakhstan believes that Eurasian connectivity could benefit its economic and security interests. Simultaneously, Kazakhstan maintains close ties with Russia and China. Earlier in 2022, when protests broke out against the Russian invasion of Ukraine, Kazakhstan sought assistance from Russia to quell the growing protests. These protests were guided by the fear that Kazakhstan, too, may be invaded by Russia. These fears are not misguided as being a member of Russia’s Eurasian Economic Union (EaEU) is getting increasingly costly for Kazakhstan. Critics suggest that while the EaEU mimics the EU’s institutional framework, in practice it is an agency for Russia’s geopolitical interests. Being a member of the EaEU constrains Kazakhstan’s sovereignty and weakens its economy and it may want to leave the EaEu, thus inviting Putin’s wrath. China, too, pursues economic interests in Kazakhstan as its largest trading partner and an emerging source of Foreign Direct Investment (FDI). Such close ties with China and Russia may invite sanctions from the West. Therefore, Kazakhstan maintains a multivectoral foreign policy and foreign aid is a crucial, yet overlooked, aspect Kazakhstan’s foreign policy.

From Aid Recipient to Aid Donor

Kazakhstan delivers foreign aid through its agency, KazAID. However, Kazakhstan used to be a prominent aid recipient rather than a donor. Previously, Kazakhstan received aid under the OECD’s Official Development Assistance (ODA) banner. Figure 1 captures the trends in aid receipt amongst the Central Asian countries to show that until 2007, Kazakhstan received aid in the same proportion as most countries in the region, but post 2007, the amount of aid received drastically decreased. Simultaneously, the demand for aid among other countries in the region (barring Turkmenistan) continued to increase.

Figure 1: Trends in Aid Receipts (Source: Author’s Own; Data: QWIDS)

Some argue that this pivot may be due to the oil industry. In figure 1, the increasing trend (till 2007) occurred as Kazakhstan (and other Central Asian countries) needed assistance in transitioning to a market-based economy post their disintegration from the USSR. Simultaneously, due to its export policies for Uranium, wheat, and other natural resources, Kazakhstan experienced massive increases in its GDP.

In 1999, former President Nazarbayev had announced the intentions to reduce aid dependency. Following this decision, Kazakhstan took measured steps in reducing its loans and grants. Due to the increases in national income, the World Bank, in 2006, categorised Kazakhstan as an upper-middle-income country. Subsequently, in line with its foreign policy, Kazakhstan aspired to be included in the elite Organisation of Economic Cooperation and Development (OECD). Becoming a donor nation was critical in achieving this aspiration. In 2014, the government implemented the ODA Law which established the tasks, agendas, regulations and organisational matters for the same. This law served as the legal basis for establishing Kaz AID

What is KazAID?

KazAID was established through a presidential decree, under the Ministry of Foreign Affairs of Kazakhstan. It was founded with the aim of building regional cooperation, helping Kazakhstan integrate into regional systems, connecting Europe and Asia, and promoting peace and security in the region. Thus far, major chunks of its aid have been delivered to countries in the region, but KazAID intends to extend aid to Latin American and African countries, too.

With a unilateral aid of USD 2 million, Afghanistan has been KazAID’s largest aid recipient so far. KazAID also supplies aid to Tajikistan. Although Tajikistan didn’t list Kazakhstan as a ‘foreign donor’ in one of its reports, KazAID continued with its initiatives in the region to build ‘brotherly relations’. Such activities resulted in an invitation from the OECD for a conference in Paris in 2018. Subsequently, Kazakhstan’s international image improved considerably, even perhaps establishing Kazakhstan as a regional leader. However, countries in the region are still reluctant to accept this status.

Figure 2 shows the amount of developmental assistance provided as a share of Kazakhstan’s Gross National Income (GNI) to indicate that initially, the aid amounts increased exponentially and then stabilised as it received the OECD Paris Conference invite. This further alludes to Kazakhstan’s strategy of employing foreign aid to aid its own agendas.

Figure 2: Developmental Assistance provided as a share of GNI (Source: OECD, 2020)

At a conference, the Kazakh Ministry of Foreign Affairs expressed that KazAID is an essential tool for the region’s long-term growth and development which would ensure peace and stability in the region. Indeed, this would directly benefit Kazakhstan’s own security and economic interests, which highlights the importance of foreign aid in Kazakhstan’s multivectoral foreign policy.

Situating KazAID in Kazakhstan’s Foreign Policy & Identity as a Donor

Given Kazakhstan’s proximity, history and economic ties with Russia, Kazakhstan could have invited sanctions from the United States or the NATO countries. However, to avoid this, Kazakhstan has employed its aid agency to partner with the US, the UN and other important nations/ organisations. Through KazAID initiatives and ODA policies, Kazakhstan’s donor identity was built which reaffirmed its authority in the region. But, in doing so, Kazakhstan has contrasted itself against other emerging donors.

Kazakhstan uses a ‘hybrid identity’ as a donor to combine aspects of being a traditional and an emerging donor. Historically, Kazakhstan has always maintained partnership, self-reliance and non-interference in other nations’ internal affairs. This is significantly different from the practices of traditional aid agencies, such as USAID. Yet, the motivations of establishing an aid agency and practices match that of the traditional aid agencies, contrasting it from other emerging donors.

For a landlocked and transcontinental country, like Kazakhstan, the development of foreign policy is crucial. However, to effectively employ the landlocked location, Kazakhstan must diversify its foreign policy approaches to develop its foreign aid practices. To this end, Kazakhstan strategically engages in foreign aid practices to cushion itself from hostile nations while ensuring a dominant role in the region. Thereby presenting itself as a viable ally to Russia rather than a threat, despite maintaining relations with the US.

Author bio:

Prachi Agarwal is an independent researcher and development sector professional, based out of India. Her academic interests include, among others, understanding foreign aid in relation to power and hegemony in a global setting.

Mouzayian Khalil : 17 Aug 2022 10:54 |  Tags: Aid Assistance Development Donor Foreign Policy Kazakhstan Oda |  Comments (0) |  Close comments |  Report a problem

Reconfiguration of the natural gas production network in Europe

Source: Mike Benna (Unsplash image)

Reconfiguration of the natural gas production network in Europe

Written by: Kerem Öge

Europe is one of the key theatres of global natural gas trade. Despite the European Union’s (EU) commitment to transitioning away from hydrocarbons, natural gas still plays a key role in supplying and sustaining crucial energy demand for the continent. The trade in natural gas has enjoyed continuous growth over the last two decades (except a minor dip immediately after the 2008 financial crisis) until the Covid-19 pandemic hit the global economy in early 2020.

The macroeconomic shock induced by the pandemic has had a major impact on natural gas markets. Throughout the world, the demand for natural gas has declined due to lockdown measures and slowing down of economic activity. However, the demand for gas along with other energy sources surged in 2021 in response to the global economic recovery. High demand combined with various supply shortages around the world meant that the energy prices has once again soared in this period. Finally, in 2022, the price of energy including natural gas has skyrocketed due to Russia’s invasion of Ukraine.

The dramatic fluctuations in energy markets in the last three years facilitated significant debate about the future of natural gas in Europe. While many call for an immediate transition to renewables, unfortunately this is not realistic. In fact, what we are currently experiencing is not the end of natural gas in Europe, but a major reconfiguration of the natural gas production network. Specifically, there are four seismic changes that will transform the post-Cold War status quo in which Russian gas has steadily supplied European gas markets.

The first change is the phasing out of fossil fuels. As European countries refine their plans to reduce greenhouse gas emissions in response to the ongoing climate crisis, natural gas will eventually decline in strategic importance. However, the road to achieve zero emissions is long and winding, and natural gas plays a pivotal part in the process as a relatively ‘clean’ fossil fuel. Accordingly, while coal plants are being phased out in many European countries, the EU’s gas consumption is expected to remain relatively high in the next two decades, and almost 90 percent of this gas will be supplied by external sources.

The second change is the increasing availability of Liquified Natural Gas (LNG) thanks to the ‘shale revolution’ that originated in the United States. LNG provides a flexible alternative to long-term supply contracts that guarantee a certain amount of natural gas delivered by pipelines. In the next few decades, the increasing availability of LNG from Qatar and the United States may in fact facilitate the emergence of a global gas market. This would obviously have huge implications for many Eastern European countries who are currently completely dependent on Russian gas.

The third major change is a geopolitical one, which is often referred to as ‘pipeline politics’. In the post-1991 period, Russia has been a relatively stable supplier of natural gas to Europe via pre-existing pipelines that go across Ukraine and Belarus. In the last decade, numerous political and economic conflicts with these transit countries have motivated Russia to seek alternative routes such as Nordstream 1 and 2, South Stream, and Turkstream. Meanwhile, Azerbaijan also emerged as a modest, but reliable natural gas provider to Europe via Trans-Anatolian Gas Pipeline. Recent completion of some of these projects has seriously undermined Ukraine and promoted the emergence of Turkey as a new transit actor in European energy security.

The fourth and final change is associated with war and conflict in Eastern Europe. Russia’s invasion of Ukraine in 2022 prompted a severe political and economic response by the EU against Moscow. Specifically, the Nord Stream II project was shelved by Germany and the EU is currently proposing plans to phase out Russian gas by 2027. Needless to say, these developments have the potential to fundamentally transform EU-Russia relations and would have major implications for the other three processes described above.

At the moment, it is difficult to imagine how the new natural gas production network in Europe will precisely look. However, one can make certain predictions based on the four transformations described above. It is clear that LNG will be the winner in the short-term as a flexible substitute to Russian gas. Consequently, natural gas pipelines are likely to become less important from a strategic perspective as more and more countries in Europe switch to LNG. Similarly, renewables, such as solar and wind energy, will increasingly become more viable options due to high prices. Finally, Azerbaijan, Qatar and the United States are likely to emerge as key energy providers for Europe, while Russian Gazprom will eventually target other markets, most likely in Asia.

Author Bio:

Kerem Öge is a Lecturer in Peace Studies and International Development at the University of Bradford. Previously, he has worked as a lecturer at King’s College London, Aston University, University of Nottingham, and the University of Wales Trinity Saint David. Kerem studied at the Middle East Technical University for a BSc in International Relations and a Minor degree in International Economics. He has an MA in International Political Economy from the University of Warwick, and he received his PhD in Political Science from Boston College, Massachusetts in 2013. He has held postdoctoral positions at Université Laval and McGill University.

Mouzayian Khalil : 13 Jul 2022 12:23 |  Tags: Climate Crisis Energy Eu Natural Gas Natural Resource Trade |  Comments (0) |  Close comments |  Report a problem

Nigeria’s New Petroleum Industry Act Could Entrench Injustices in Oil host Communities

Shell Oil’s oil and gas terminal on Bonny Island in southern Nigeria’s Niger Delta (Photo by Pius Utomi EKPEI / AFP)

Written By: Dr Phillip Nelson and Dr Modesta Tochi Alozie (Research Fellows, University of Warwick)

After nearly two decades of legal limbo, the Nigerian government has finally signed the Petroleum Industry Act (PIA) into law. In Nigeria, the petroleum sector contributes significantly to the country’s economic growth and development. There are laws empowering the federal government to control and distribute the revenues generated from oil extraction. Many people in the Niger delta, the region where Nigeria’s oil exploration takes place, believe that the current fiscal framework guiding the distribution of oil revenues does not favour them. Concerns over the environmental harms of oil exploration also run deep within the Niger delta. The oil communities have been protesting against these legal frameworks and environmental harm, with many calling for resource and pollution control. Many commentators agree on the need for transformative reforms in the oil sector. The PIA, among other things, aims to address some of the grievances within the oil host communities.

The PIA aims to improve the governance of the Nigerian oil industry by ensuring accountability and transparency, while repositioning Nigeria for gas-based industrialisation as the world moves away from oil. The bill aims to address the massive lack of development in the Niger delta by requiring oil operators to contribute 3 per cent of their operating expenses toward a host community trust fund which is to be utilised for the socio-economic development of the Niger delta.

Yet, the PIA has not escaped criticism. It allocates 3 per cent of operating costs for community development, rather than the 10 per cent the local communities asked for. This minimal commitment has generated scepticisms about the willingness of the federal government to integrate local demands into oil policies and laws. However, what is less widely discussed, is the other ways in which the PIA risks entrenching existing injustices.

Chapter 3 section 257 (2) of the Host Community Section of the PIA states that:

“Where in any year, an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disrupts production activities within the host communities, the community shall forfeit its entitlement to the extent of the costs of repairs of the damage that resulted from the activity with respect to the provisions of this Act within that financial year: Provided the interruption is not caused by technical or natural cause.”

This blog highlights three avenues through which this approach taken in the PIA may entrench injustices in oil host communities if it is not implemented carefully. First, this section prescribes collective punishment that can be ineffective and morally hazardous. Second, that it could constrain citizenship and activism, and finally that the process of establishing the causes of oil spills may be flawed.

1. Collective punishments are morally hazardous and can be ineffective.

When an entire community is forced to forfeit their entitlements for acts of vandalism, sabotage (pipeline vandalization) or unrest, they are being collectively punished for acts that may be caused by only a very small number, or even a single individual. Herein lies our first concern with the clause above: punishing innocent parties for the actions of others is unjustifiable. Collective punishments exacted during the course of conflict have been generally outlawed since the Hague Regulations of 1899. The Geneva conventions also prohibit collective punishments, and many individual states have specifically outlawed such punishments in their military regulations. In the case of Nigeria, if oil extraction were hampered by civil unrest, punishing the community rather than establishing individual responsibility would violate international conventions. Additionally, collective punishments can incentivise otherwise well-behaved, individuals to dissent – if you are going to be punished anyway, why not take part, or take what you can get from the situation? Furthermore, historically the Niger delta communities have had a very terrible relationship with the federal government and collective punishments could entrench community hatred towards the federal government.

2. Constrains on citizenship

The requirement that the oil communities forfeit their host community funds if civil unrest impacts oil production has significant implications for citizenship and activism. Historically in the Niger delta, protests and activism have been used to challenge unjust laws and policies as well as other harmful impacts of oil exploration, such as environmental degradation. However, the federal government has often repressed protests in the oil communities and described them as undermining peace and security even when they have been peaceful. Based on this history, we argue that this section could provide a window of opportunity for the federal government to characterise any act of local resistance to the oil industry as civil unrest. Concern that any protests, even when legitimate, could result in withholding host community funds can discourage all anti-government protests, effectively stripping citizens of their rights.

3. The process of establishing the cause of oil spills is deeply flawed

Finally, the above section of the PIA states that local communities will continue to receive host community funds only when interruption to oil production is caused by ‘technical or natural causes’. The issue here is that the process of establishing the cause of oil spills has been a key source of controversy in the Niger delta. When an oil spill occurs, a ‘Joint Investigation Visit’ (JIV) is carried out by representatives of the oil companies, regulatory agencies, and community representatives to establish the cause of the spill. While in theory, there are measures in place to ensure transparency and accountability within the JIV process, reports of corrupt practices, unreliability, undue influence of the oil companies, and complaints about the limited participation of the local communities are widely documented. In many cases, oil companies have used their undue influence to misattribute the cause of oil spills to sabotage which absolves them of paying compensation to the oil communities. On the other hand, local communities argue that while sabotage and vandalization is a big problem in the region, the JIV process greatly underreports the amount of oil spills caused by operational failure and corrosion. Since the process of establishing the cause of oil spills is flawed, the causality of oil spills is necessarily in doubt. We argue that this provision is likely to provide further incentive for the inaccuracies in the JIV process to continue since the cause of the oil spill will determine the allocation of development funds.

Taken together, while the PIA can provide a significant fillip to the governance of the petroleum sector, we see three main issues with Chapter 3, Section 257 (2) of the Host Community Section of the PIA. This Clause provides for collective punishment, which has specifically been outlawed in many circumstances, and it remains morally hazardous and ineffective. The Clause can also discourage host communities from engaging in peaceful protest, which is their civil right. And it can incentivise further inaccuracies within the JIV processes. With these concerns in mind, we recommend to the Federal Government of Nigeria to use needs assessments to fully explore the reasons why some individuals and groups object to the extraction by vandalising oil pipelines, and to consider using development funds to mitigate these. Lastly, we recommend, improving the legitimacy and integrity of the JIV process by making the process fair, transparent and increasing the meaningful participation of local communities. Without addressing these issues, the PIA will potentially leave the oil communities at the mercy of the powerful oil companies.

Author Bios

Dr Modesta Alozie is the Lead Research Fellow on the Data and Displacement Project at the Department of Politics and International Relations, University of Warwick, UK. She holds a PhD in Development Planning from University College London. Her research interests are in oil politics, climate change and digital humanitarianism.

Phillip Nelson is a postdoctoral researcher, most recently employed at the University of Warwick. He holds an MA in Economics and International Relations from the University of St Andrews and an MSocSci in Peace and Conflict Studies from Uppsala University, Sweden. He was awarded his PhD in international relations from the University of Essex in 2019 for his thesis on individual and group motivations for participation in civil conflict, and has so far published work in the journal of Defence and Peace Economics.

Mouzayian Khalil : 06 Apr 2022 15:19 |  Tags: Environmental Governance Niger Delta Petroleum Industry Act |  Comments (0) |  Close comments |  Report a problem