Economic Relations between Kazakhstan and Russia

Thirdly, Russia is the major economic partner Republic of Kazakhstan.
It not only imports different production and techniques to Kazakhstan, but also is the market of selling of Kazakhstan production. About 70 % of
Kazakhstan industrial potential is involved on economy.

In - fourth, both states are combined with a historical generality, spiritual and cultural links. In region of Russia the man is Kazakh
Diasporas including 740 thousand. In Kazakhstan Russian are second on number ethnic group, making about 30 percents of the population of the country.

In this context the Russian direction of exterior policy of Kazakhstan remains to one of priority and strategic.

As a whole at the present stage in the Russian-Kazakhstan ratios the following most priority and perspective directions of cooperating are meant:
• Mutual trade.
• Interaction in oil and gas and power sphere.
• Cooperating in sphere of transport and communications.
• Cooperating in sphere of safety.

1.1 Mutual Trade.

The interests of both countries are answered with magnifying of mutual trade. Russian Federation traditionally occupies the first place among the basic trade partners of Kazakhstan both on export, and on import. Trade turn over in 2001 from Russian Federation has made 4 639,3 million of US dollars (Diagrama1,2).

It is necessary to mark, that last years the growth of a share of
Russian Federation in import and reduction in export is watched. The specific gravity of Russia in total amount of the Kazakhstan export is sequentially reduced (from 44,5 % in 1994 up to 20,2 % in 2001) and is augmented in import (from 36,3 % per 1994 up to 45,4 % per 2001). Within several last years of Kazakhstan has negative trade balance with Russian
Federation.

Basic trade partners, in import, 1994-2001 (%)

[pic]
|1994 |1996 |1997 |1998 |1999 |2000 |2001 |
|•Russian | 36,3 | 54,8 | 45,8 | 39,4 | 36,7 | 48,7 |45,4 |
|Federatio| | | | | | | |
|n | | | | | | | |
|• China | 2 | 0,8 |1,1 | 1,2 |2,2 | 3 | 2,8 |
|Poland | 0,7 | 1 |1 | 1,1 | 1,7 | 1,2 | 0,9 |
|•Uzbekist|7,8 | 2,1 |1,5 | 2,2 | 2,4 | 1,5 | 1,3 |
|an | | | | | | | |
|•Kyrgysta| 2,9 | 2,1 |1,5 | 1,2 | 0,7 | 0.6 |0,4 |
|n | | | | | | | |
|• | 0,5 |0,4 | 0,1 | 0,1 |0,1 | 0,1 | 0 |
|Tajikista| | | | | | | |
|n | | | | | | | |

The Diagrama1

Basic trade partners, in export, 1994-2001 (%)

[pic]
|1994 |1996 |1997 |1998 |1999 |2000 |2001 |
|•Russian | 44.5 | 42 | 35,2 | 29.6 | 19,8 | 19,5 | 20,2 |
|Federatio| | | | | | | |
|n | | | | | | | |
|• China | 4,6 | 7,8 | 6,8 | 7 | 8,5 | 7,3 | 7,1 |
|Poland | 1,7 | 0,4 | 0,4 | 0,8 | 1,4 | 0,8 | 1.5 |
|•Uzbekist| 4 | 3,4 | 2,3 | 2,2 | 1,2 | 1,5 | 1.4 |
|an | | | | | | | |
|•Kyrgysta| 1,9 | 1,9 | 1 | 1,2 | 1,1 | 0.6 | 1 |
|n | | | | | | | |
|• | 03 | 1 | 0.8 | 0.8 | 08 | 0.6 | 0,6 |
|Tajikista| | | | | | | |
|n | | | | | | | |

The Diagrama2

Considering structure of export and import on groups of the commodity spectrum, it is possible to select the following characteristic features.

Export. Structure of export Republic of Kazakhstan in Russian
Federation for the last few years has varied the separate commodity groups have occupied a leading position.
Now on four commodity groups (glow iris3) (fuel mineral, oil and petroleum; products of inorganic chemistry; grain bread and ores) are necessary about 80 % of the Kazakhstan export in Russia, whereas in 1994 on the pointed groups it was necessary 53,3 %. In 2001 as contrasted to
2000 the separate outbound delivering tended to lowering, so, for example, the specific gravity of export of a grain was reduced from 12 % up to 6 %; the export of products of inorganic chemistry was reduced from 14 % up to
13 %. Certainly, on lowering of export in Russia renders influence a variance between the in-house prices and prices of outbound delivering.

At the same time it is necessary to mark, that the reduction of export has taken place not on all basic groups of the commodity spectrum. The specific gravity of export of ore has increased from 8 % up to 10 % and export of fuel from 46 % up to 47 %.

Import of republic of Kazakhstan goes into first five of the countries of the basic trade partners of Russia in import. The specific gravity of import of Russia has increased in total amount of the Kazakhstan import from 36,7 % per 1999 up to 45,4 % per 2001. There were insignificant variations in groups of imported commodity production. So, the volumes of import were reduced
[pic]

Diagram 3
[pic]

Diagram 4

Transport, accordingly, from 15 % in 2000 up to 11 % in 2001, alongside with it the magnifying of import on such commodity groups is marked: fuel mineral (from 17 % up to 21 %), chemical production (from 14 % up to 16 %), black metals and work pieces from them (from 11 % up to 13 %)
(Diagrama4).

The analysis of export and import displays, that in structure of import as against export there is no predominance of separate commodity groups, it more diversification, at the same time grows a specific gravity of articles of food, products of processing ready articles.

From 89 regions of Russian Federation 72 have trade - economic links with Republic of Kazakhstan. Depending on volume trade turn over with
Kazakhstan these regions Russia can divide into a series of groups. The active participants of the foreign trade activity with Kazakhstan are first three groups of regions of Russia (table 1).

As a whole on 16 regions of Russian Federation from 72 it is necessary
80 % exterior trade turn over of Russia with Kazakhstan. The high activity pointed 16 regions is stipulated by more developed structure of their industrial manufacture with predominance of fuel-raw, petrochemical and machine-building specializations.

Feature of transport -geographical interregional links of regions of
Russia with Kazakhstan is the directedness mutual goods traffic primarily with Ural, Western and East Siberia, and also with Moscow and Moscow region.

Basic groups of the trade partners of Kazakhstan in Russia

|Group |Annual |Regions |A share in |
| |commodity | |common |
| |circulation | |commodity |
| | | |circulation |
|I |From 200,0 up |Moscow, |0,465 |
| |to 500,0 mln |Chelyabinsk, | |
| |of dollars |Ekaterenburg, | |
| | |Orenburg and | |
| | |Tyumen region | |
|II |From 100,1 up |Omsk, Irkutsk,|0,22 |
| |to 200,0 mln |Kemerovo, | |
| |of dollars |Moscow region.| |
| | |Altay region | |
| | |and | |
| | |Novosibirsk | |
| | |region | |
|III |From 50,1 up |Kurgan region,|0,115 |
| |to 100 mln of |Republic of | |
| |dollars |Bashkortostan,| |
| | |Republic of | |
| | |Hakasya, | |
| | |Krasnoyarsk | |
| | |region and | |
| | |Samara region | |
|IV |From 20,1 up |Perm, Tomsk |0,095 |
| |to 50,0 mln of|region, | |
| |dollars |Republic of | |
| | |Tatarstan, | |
| | |Nizhniy- | |
| | |Novgorod, | |
| | |Belgorod, | |
| | |Volgograd, | |
| | |Saratov, | |
| | |Rostov, | |
| | |Vladimir, Tula| |
| | |region and. | |
| | |St.-Petersburg| |
|V |Up to 20 mln |Others 45 |0,105 |
| |dollars |regions of | |
| | |Russian | |
| | |Federation | |

The important place in the Russia -Kazakhstan links occupies frontier cooperating, on which share it is necessary 71,5 % from common commodity circulation. Most actively explicate trade -economic links with frontier regions of Kazakhstan Omsk, Orenburg, Astrakhan, Chelyabinsk, Novosibirsk region and Altay region. From regions of Russia the ready roll stock of black metals, pipe steel, petroleum, electric motors, automobiles, forest products, coal, footwear, fabrics and other goods is taken out. In export of many frontier subjects of Federation significant volume is necessary on production of a petrochemical industry (Volgograd, Omsk, Samara region,
Altay region - more than 70 %).

In the Russia -Kazakhstan frontier region more 300 share enterprises, among which such large interstate join, as “Kazroshim”, “Koksohim”, automobile complex on basis Ural - for and Kustanay diesel factory operate.

The essential propagation in trade with Kazakhstan was received with barter operations (57 %). So, Orsk meat factory the combine sends in
Kazakhstan in basic production of the manufacture and receives in exchange raw material for manufacture of this production - living cattle and meat.
The joint-stock company “Nosta” receives from Kazakhstan immovable coal and delivers metals.

The significant experience of mutual economic cooperating with frontier regions of Kazakhstan accumulated in the Orenburg region, and also Pavlodar region of Kazakhstan with frontier regions of Russia. Now 18 % of the
Orenburg export and more than 40 % of import have on Kazakhstan.
By the largest foreign trade partner of Republic Bashkortostan, Altay and
Krasnoyarsk edges, Kemerovo, Irkutsk, Omsk, Orenburg, Sverdlovsk and
Chelyabinsk regions is the Pavlodar region.

As a whole before Kazakhstan in mutual trade with Russia there is a series of perspective tasks, which decision will influence definitely a common economic situation in the country.

One of the important tasks is the variation trade balance of Kazakhstan from Russian Federation from negative in positive. Besides the gradual variation of structure commodity circulation in favorable for Republic of
Kazakhstan a direction is desirable.

Radiating from interests of two states, it is expedient in the nearest perspective to consider a complex of measures on hardening links of frontier regions. The necessity of creation of legal fundamentals of a development of frontier regions does not call doubts. On our sight, it is necessary to speed up development of the defining laws. Among them Laws
About state support of a socio economic development of frontier territories
Republic of Kazakhstan, About free economic regions, About frontier trade.
It is necessary also to speed up ratification four sided of the Agreement on basic principles of frontier cooperating of the states - the participants of the Contract about a deepening of integration in economic and humanitarian regions from March 29, 1996.

Obvious presence of potential and mutually advantageous opportunities of Russia and Kazakhstan also is by way of use of the optimum shapes of specialization, density of the industrial and financial capital, use of effective financial instruments, architecture of optimum commodity, financial and transport streams. In this connection special urgency in a development Kazakhstan – Russia of links was got with problems of a synchronization of legislative and normative basis of the countries. It would be expedient to realize step-by-step transition to collection of the
VAT on destination in Kazakhstan – Russia to trade, having begun it(him) from machines, equipment, vehicles.

Not less important the coordinated marketing strategy of Kazakhstan and
Russia in the international markets is represented, where the saving and hardening of common positions is quite possible. The priority direction represents perfecting the organizational shapes of activity Kazakhstan and
Russian suppliers in the world markets. Them can become cartel of the agreement.

One of the important instruments of hardening of two-way communications could become creation of conditions for expansion of contacts between the enterprises, creation of the share enterprises. On official dates (2000) in republic 220 share Russia -Kazakhstan enterprises and 88 enterprises with the 100--percent Russian capital actively work. The majority JV in republic, including Russia-Kazakhstan JV, has trade –intermediary directedness. However as against other states Russia- Kazakhstan JV of an industrial directedness envelop considerably wider spectrum of spheres of activity - from production and processing of natural operational life up to production of a high scale of processing that in a defined measure confirms an overall performance Russia- Kazakhstan JV. At the same time Russia
–Kazakhstan JV for the present do not play that role, which they could play in a development of trade -economic cooperating. Therefore in this direction the active support is expedient on the part of state structures.

1.2 Cooperating in oil gas and power sphere.

The given direction of cooperating between two countries by us is one of perspective. The structure of the Kazakhstan export of oil on the countries in 2001 is characterized by lowering of a share of delivering in the countries of CIS (17 %) and expansion of geography of export of oil in the countries of foreign countries (83 %) (Diagrama5).

The indexes of export of petroleum in 2001 essentially have varied as contrasted to 2000. Alongside with export of Kazakhstan realizes import of petroleum. And 98 % of all imported volumes of petroleum are necessary on
Russian Federation.

The lowering of the excise rates on imported petrol with 80 up to 31
EURO per ton in 2001 and falling recently of world prices per oil promoted magnifying of delivering of the Russian oil for in-house processing. The export of petroleum to the countries of CIS became more attractive for
Russia, than the delivering of oil on the world market, as, for example, in
Kazakhstan of the price on the same aspects of petroleum is much higher
Russian.

Kazakhstan more than on 50 % depends on Russia in a ratio of delivering of crude oil on refinery factory in Shimkentand Pavlodar receive west
Siberian oil on the algorithm manifold from Omsk. Pavlodar refinery factory on 100 % depends from west Siberian of oil. Shimkent usually works on 75 % on west Siberian and on 25 % on raw material Kumkol of a deposit. Today dependence from of west Siberian oil “Orgsintez” is reduced half at the expense of use of the Aktyubinsk oil, transport by a railway transportation from west of Kazakhstan. Because of lowering production of oil on west
Siberian deposits, fadeout of payments and mutual debts the question of security by oil Pavlodar and Shimkent refinery factory more than once acquired critical character, and the capacity factor of powers of these enterprises frequently lowered below 0,5.

Its technological dependence on Russia falls into basic problems
Pavlodar refinery factory: the production cycle of the enterprise is calculated for consumption west Siberian of oil with the low contents of sulfur and paraffin. The perspectives flagship of the Kazakhstan oil processing is complicated with its neighborhood with the Russian factories
- competitors:

Omsk, Ufa, Volgograd refinery factory by the enterprises being vertically - integrated, they have stable access to crude oil, besides on reduced prices, which the necessities of northern Kazakhstan in petroleum could at desire completely satisfy.

Structure of export of the Kazakhstan oil, 2001

[pic]

Diagram 5

In oil and gas of branch the cooperating explicates also through link of share development of the Kazakhstan deposits. Russia in the projects on natural resources users in region of Republic of Kazakhstan, as it is possible to see from the Diagrama6, occupies the fourth place and makes 6
%. The Russian investments in a mineral-raw complex (MSK) of Kazakhstan have made in 2000 32,2 million of dollars, including in investigation hydrocarbon of raw material (UVS) 3,5 mln of dollars, in production of hard minerals (TPI) - 28,7 mln of dollars.

Two Russian investors “Bashnevt” and OJSC “Lukoil” submit the investments in UVS. In oil branch of Kazakhstan the company “Lukoil” is submitted in such large projects, Tengiz and Karachiganak Besides “Lukoil” is ready to expand the presence at Kazakhstan, messages not only development of ready deposits, but also prospecting operations.

The large interest in relation to Kazakhstan is expressed with the large oil Russian company “Yokus” which has received a section for developments in Russia and region of Kazakhstan.

Structure of the direct foreign investments in Kazakhstan,2000[pic]

Diagram 6

In sphere TPI of Kazakhstan the Russian investors are submitted by such large companies, as the Russian Academy of Science of European
Economic Community (83,9 %), OJSC “Magnitogorsk” metallurgical combine
(10,6 %) and NPK “Investor” (3,8 %).

The Kazakhstan enterprises also show interest to the Russian projects.
So, “Kazakhoil” (“Kazmunaigas”) negotiates for share developments in Tomsk region, on a deposit “Komsomolsk” in the Astrakhan region. At Kazakhstan oilman there are intentions to develop deposits in the Arkhangelsk region.

Since 2000 the electric power system 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 considerably has boosted quality of electrical power and reliability of electro supply of consumers of Kazakhstan, Central Asia and Russian Federation, and also has allowed operatively to realize surplus of electricity 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 Comminity of Russia is called secure each other in case of crashes.

In the whole cooperating of Kazakhstan and Russia in fuel and energy sphere has noticeable perspectives.

Rather perspective the project of transfer of a direct current
Ekibastuz - Tambov by voltage 1 500 sq is. This project opens an opportunity of transport of the electric power of the Siberian power stations and Ekibastuz heater in central regions of Russia and in the countries of Europe.

With the purposes of security of a mutually acceptable uniform tax condition of trade in the electric power, utilities equipment it is expedient to realize transition of the countries at collection of indirect taxes on a principle the countries of assignment. In this connection for a heightening of efficiency of a parallel operation of electric power systems the simplification of customs procedures is important at migration of electrical power through the customs boundary.

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