Kazakh President starts European tour in Germany
President of Kazakhstan Kassym-Jomart Tokaev has begun his first official visit to the European Union in Germany, the EU locomotive. Yesterday, he met with German Chancellor Angela Merkel and President Frank-Walter Steinmeier. As a result of negotiations, a solid package of documents was signed. Today, Tokayev will address the 28th meeting of the Berlin Eurasian Club, as well as hold meetings with the leaders of German companies. It is expected to sign agreements totalling 2 billion euros.
On the eve of the trip, Kassym-Jomart Tokayev said in an interview with Deutsche Welle that Germany is a key European partner for Kazakhstan - 86% of Germany's trade with Central Asia falls on Kazakhstan. "Kazakhstan's attitude to the European Union is extremely positive," Tokayev emphasized. In 2018, the volume of trade between Kazakhstan and the EU exceeded $37 billion, which is half of the total foreign trade turnover of Kazakhstan. More than 80% of German investments in Kazakh economy are in the non-oil sector. Germany is a world leader in mechanical engineering, processing of resource materials and other fields, therefore, German investors will be presented the most interesting areas for business development in specially created economic zones in Kazakhstan.
Germany, for its part, is also interested in Kazakhstan. German Economy Eastern Committee board member and Knauf general partner Manfred Grundke noted on the eve of the Kazakh-German talks that Kazakhstan now provides new opportunities and potential for profitable business. "Growth forecasts for Kazakhstan are impressive. The EBRD forecasts that its GDP will grow by 3.5% in 2019. Forecasts for 2020 indicate that Kazakhstan is the engine of economic growth in the Eurasian Economic Union.
German business circles are increasingly talking about the attractiveness of Kazakhstan, including as a country with vast territories that can be used for environmentally friendly agricultural products. There are problems, though. According to the German Federal Statistical Office, bilateral trade fell by 17.5%, this year the trade has continued to decline due to reduced oil supplies from Kazakhstan to Germany.
But Kazakhstan no longer relies solely on oil revenues and is trying to get rid of commodity dependence. The republic has adopted a forced innovative industrial program, within the framework of which the government intends to attract portfolio investors. They rely on Germany, as one of the most successful in terms of innovative development states. Kazakhstan invites German business to cooperate in metallurgy, chemistry, pharmaceuticals, engineering, engineering, transport, hoping to create new high-tech industries to move away from its commodity dependence. Kazakhstan is one of the three post-Soviet states which are most attractive to a Western investor. The signing of a large-scale agreement once again proves that Kazakhstan remains Germany's important strategic partner in Central Asia.
However, there are barriers to expanding cooperation, German political scientist Alexander Rahr believes. According to him, Kazakhstan has no legal system that would be comfortable for European businessmen. "But this is normal, given the fact that independent Kazakhstan has existed for only 30 years. There are problems on the part of the West as well. We consider the whole world in terms of democratic, liberal, European values, human rights. If some countries meet these criteria more fully, the EU cooperates with them, they encourage them, provide them with loans, their friendship develops. What this leads to is also a big question. We need to be more pragmatic," Rahr noted.
Kazakhstan has already declared its commitment to political and economic reforms. "We will continue the political modernization of our society. Without political reforms, it is impossible to expect further economic development. That does not happen. After all, you can read Marx, who spoke about the economic basis and the political superstructure. The interdependence of the base and the superstructure," Tokayev said.
Expert at the Kazakhstan Institute for Strategic Studies Zhanar Tulindinova told Vestnik Kavkaza that Germany is a leading foreign economic partner in the EU. Over the past 14 years ,the volume of Germany's investment into Kazakhstan has amounted to some $5 billion. Moreover, Germany invests in the non-oil and gas sector of Kazakhstan: the processing industry, the agricultural sector and mechanical engineering. Approximately 900 companies with German participation have been working in Kazakhstan.
"German investments are valuable because t’s not just money, but technology transfer to Kazakhstan. Germany is a world leader in high-tech industry and engineering. It is a country with high-productivity agriculture, advanced chemical and pharmaceutical industries. This opens up great prospects for Kazakhstan in these spheres," Tulindinova noted. In addition, Germany is in the process of the so-called energy transition. In 2018, the share of electricity from renewable source was the biggest in Germany's energy balance. This leads to reductions in the supply of crude oil, coal and uranium to Germany, which has already affected the volume of German-Kazakh trade. In particular, the export of Kazakh oil decreased by 18%, and for 9 months of this year - by 27%. However, this reduction opens up prospects for cooperation in the field of energy and energy conservation. This suggests that Germany manages to achieve efficiency through energy-saving technologies. Kazakhstan, as the country that hosted the EXPO International Exhibition on Future Energy, have things to learn from Germany.