In Kazakhstan: China invested $27B but now Russia gains more say including the oil pricing power

in early january 2022 kazakhstan witnessed the most serious conflict in the 30 years since it gained independence from the former soviet union what started as a protest over rising fuel prices eventually spread like wildfire across the country the president of kazakhstan declared a state of emergency and the entire government resigned but the protests kept escalating in the end the russian-led csto or collective security treaty organization sent troops into the country to temporarily quell the conflict kazakhstan is strategically located involving the direct interests of china russia and many other countries around january 13th russian coalition forces began to withdraw from kazakhstan we approved the decision of phased a withdrawal of csto and commissioning the strategically important objects under kazakh protection we start withdrawing today tomorrow by 14 aircraft all the forces of our colleagues will be withdrawn armenia tajikistan and belarus the kyrgyz forces are leaving on their own because they are nearby further within five days as the objects will be transferred the remaining forces will also be withdrawn we plan to complete all the work by january 19th the military intervention of russia is quite disturbing for the chinese communist party or ccp kazakhstan is the launching point of china's one belt one road initiative and an important gateway to all countries of the cis or commonwealth of independent states the portal of china's silk road plan and the main transport corridor to europe it can be expected that after this incident relations between kazakhstan and russia will become closer which will adversely impact the ccp for example russia has been pushing kazakhstan to allow the eurasian economic union to impose tariffs on oil and gas produced in and transiting through kazakhstan if kazakhstan agrees russia will have the power to set prices for oil and gas trade between china and central asia let's look at the general situation in kazakhstan located in central asia kazakhstan is the world's largest landlocked country with a population of about 19 million and its gdp accounts for 60 percent of the entire central asian region it's rich in oil and natural gas its oil reserves are about 5 billion tons accounting for 3.2 percent of the world's total proven reserves ranking 11th in the world in 2020 natural gas reserves are about 2 trillion cubic meters accounting for about 1.5 percent of the world's total reserves in addition to fossil fuels kazakhstan's mineral resources are also significant for example its uranium reserves which are used to make nuclear fuel account for 1.5 percent of the world's total for a long time kazakhstan enforced price controls on fuel the low fuel prices resulted in long-term losses of the country's energy companies which led to a shortage of domestic energy supply and a decline in quality as well as a dependency on government subsidies in response the current kazakh government has attempted to introduce market-based reforms on january 1 2022 kazakhstan's liquefied natural gas or lng price control policy was officially abolished and the price of lng rose sharply soaring to 28 us cents per liter in contrast for most of 2021 it was approximately 11 cents per liter in the past decade kazakhstan's economy has been in turmoil and its population has fallen to near the poverty line the rising price of liquefied natural gas which is used in large quantities as motor fuel has only worsened people's hardship the average monthly salary in kazakhstan is 570 us dollars but most of the wealth is concentrated in the hands of the rich and powerful public discontent began to erupt over soaring prices declining living standards and long-standing grievances over government corruption in addition a world bank report pointed out that kazakhstan has been experiencing the worst economic crisis in 20 years on the one hand kazakhstan's economy is highly dependent on oil gas and mineral resources the decline in oil prices and the pandemic have devastated the national economy on the other hand kazakhstan has been under authoritarian rule for more than 30 years and the family of former president nazarbayev controls many industries in kazakhstan as the unrest subsided incumbent president tokaiv who was considered a puppet president took the rare step of publicly condemning his predecessor nazarbayev for enabling the creation of a wealthy class of predators in the country this has raised questions about whether the former president used the mass movement to orchestrate a coup nazarbayev was the de facto top leader of kazakhstan during the former soviet union from 1989 after the collapse of the soviet union he became the first president of kazakhstan in 1991 and ruled for a long time after nazarbayev left the presidency in 2019 he continued to hold the post of chairman of the national security council or nsc and remain the top leader of kazakhstan the number two man in the nsc is his nephew kazakhstan's oil and gas sectors are controlled by the former president's family and many profitable energy enterprises are owned by several of nazarbayev's sons-in-law the kazakhstan newspaper republica reported in 2002 that nazarbayev secretly stashed 1 billion u.s dollars worth of state oil revenues in his swiss bank account in the mid-1990s later a dog with its head cut off appeared outside the newspaper's office with a warning there won't be a next time the incumbent president asked for russia's help as kazakhstan became embroiled in an increasingly volatile conflict prior to that the ccp said on several occasions that the incident was an internal affair of kazakhstan implying russia shouldn't be involved on january 6th russia sent troops to kazakhstan the army entered in the name of the csto or collective security treaty organization after the collapse of the soviet union the cis countries formed this organization of which kazakhstan is a member as a result of the russian military intervention the current president refused to resign from his post at the request of senior officials from the former presidency and took back the powers of the country's highest authority the security council driving the former president completely out of power whose whereabouts were unknown since the outbreak of the protests the current president also said he would reveal the evidence of the attempted coup does the former president have a foreign power behind him is the ccp involved it's unclear at this point we know that there are two divided groups within the communist party and that the former leader jiang zemen's group is a rival of the current xi jinping government jiang's faction still wields some influence domestically and internationally after more than three decades in power it has complicated the situation between the major countries kazakhstan which has always had close ties with russia for historical reasons is also a member of the eurasian economic union and belongs to the same tariff area as russia china's rapid economic development in the last decades has resulted in huge capital as the largest country in central asia kazakhstan has been targeted as a critical country to win over by the ccp since 2013 china has leap to become an important partner of kazakhstan the france broadcasting corporation reported that china has invested in 55 large-scale projects in kazakhstan with a total investment of 27.3 billion u.s dollars of which more than 10 projects have been completed and eight are frozen or cancelled in fact not only in kazakhstan but also over the past decade the ccp has leveraged its burgeoning economic power to penetrate five central asian countries investing tens of billions of dollars to compete with russia for leadership in the region the communist party has also become the biggest investor in central asia mostly in oil natural gas and minerals china the world's largest consumer of resources has been looking abroad for more than a decade expanding its sovereignty in the south china sea to protect its energy transportation lifeline while simultaneously looking to the western continent for more resources china has only two land-based crude oil pipelines in actuality one is the china-russia pipeline and the other is the china-kazakhstan pipeline another one the china myanmar pipeline still needs to transport the crude oil coming from the middle east by sea meanwhile the natural gas pipeline from china to central asia also has to pass through kazakhstan therefore kazakhstan is a vital energy channel for china the ccp's belt and road initiative has undermined moscow's influence through geostrategic means this has created deep uneasiness in moscow about china originally the communist party wanted to use the belton road to get rid of the dominance of oil and gas resources by major powers such as russia but the kazakhstan incident has caused a major setback to beijing's plan as we mentioned earlier the relationship between kazakhstan and russia will become closer and russia has a bigger chance of gaining pricing power over oil and gas trade between china and central asia moreover china's railway transportation in central asia will be somewhat subject to russian control when nazarbayev was president in the latter part of his term he started to get closer to beijing and distance himself from moscow presumably behind his closeness was a huge amount of bribe money from the ccp in other words the ccp must have used considerable resources to bribe all the bureaucrats and elites in the former president's system now it appears that such investment might have gone to waste on january 3rd 2022 xi jinping exchanged congratulatory messages with the former and current presidents to celebrate the 30th anniversary of diplomatic relations between the two countries he addressed the former president as my old friend just two days later the fate of his old friend was turned upside down the former president appears to have fallen for real and a whole lot of ccp bribed officials have been purged with the economy rapidly deteriorating it's a big question as to whether the communist party has the money and time to bribe the new kazak government separately the communist party's one belt one road initiative has been causing public discontent in kazakhstan a few years ago there was a massive nationwide protest against the ccp in kazakhstan in addition to accusations of collusion between beijing and kazakh officials to plunder natural resources such as land minerals and oil chinese investments in oil and mining companies have been criticized for causing ecological disasters in the country radio free asia reported that kazakhs who migrated to kazakhstan from xinjiang have been unable to contact their relatives in xinjiang since 2017 which has made some kha'zix very unhappy with the ccp if the current kazakhstan government returns to the pro-russian path completely the ccp will become the biggest loser in the 2022 kazak protests russia used the kazakh coup to suppress the ccp's ongoing attempts to expand its influence in central asia it could be argued that beijing's investment of nearly 23 billion us dollars in central asian infrastructure amounts to an indirect benefit to russia present beijing is surrounded by a circle of so-called hostile forces including japan taiwan india and some countries in the south china sea if kazakhstan in northwestern china turns to russia beijing will find itself in an even more vulnerable situation on january 10th china's global times took the initiative to say that china and russia won't split over kazakhstan which incidentally gives a hint of beijing's weakness because as we have analyzed in past video programs beijing and moscow have never been true friends never have been and never will be you