Upheaval in Kazakhstan casts spotlight on Canada’s business ties to nation

Hey there, time traveller!
This article was published 09/01/2022 (984 days ago), so information in it may no longer be current.

MOSCOW—Less than a month ago, before Kazakhstan erupted in protest that was met with the government’s iron fist, Don Streu, president of Calgary’s Condor Petroleum, filmed a video celebrating the 30th anniversary of the country’s independence from the Soviet Union.

“Condor … has been operating in the Republic of Kazakhstan for almost three decades and we have a business strategy to continue for many more,” said Streu, sitting at a desk with Kazakhstan’s blue-and-gold flag and a pile of Russian-language books — one that recounts the Soviet military commanders of the Great Patriotic War — on display.

That business strategy, according to a presentation on Condor’s website, is premised upon the central Asian nation’s rich oil reserves and its “politically stable environment.”

But demonstrations over a sharp hike in gas prices that led to violence, mass arrests, the deaths of dozens of police and protesters and accusations of a foreign-led terrorist plot have exposed the worst of the Kazakh government’s authoritarian instincts.

In directing the response, President Kassym-Jomart Tokayev, who was viewed by many as a moderate reformer, has sorely tested the rationale of political stability that many foreign firms have used to justify doing business in the country.

With borders closed, the internet and telephone service off-line until Monday morning and thousands detained across the country, a resource-rich nation that has worked relentlessly since the implosion of the former Soviet Union in 1991 to lure foreign business and investment now looks all-too-political and not very stable at all.

“I’ve always said that (Kazakhstan) is a thousand years old, but only 30 years young,” Margaret Skok, a former Canadian ambassador to the country, said in an interview.

In those three decades, Canadian companies, led by the energy and agricultural sectors, have eagerly set up shop in a country with vast oil deposits, the bulk of the world’s uranium and strong agricultural tradition that has declared itself resolutely open for business.

Saskatoon-based uranium producer Cameco is the most significant of the Canadian firms doing business in Kazakhstan. Since 2009, it has been operating the Inkai uranium mine — one of the world’s largest — in a joint venture with the national atomic firm Kazatomprom.

So far, there have been no reported disruptions to the mine’s operations, but Kazatomprom said it has boosted security at its mines and Cameco said that the interruption of rail lines, border closures and a nation-wide internet blackout could add to the “pre-existing operating risks” and lead to “global supply chain disruptions.”

Calgary’s Condor Petroleum, which did not return calls requesting comment, is another big player. It signed a contract in December to convert the country’s freight locomotive fleet to run on liquified natural gas. The company said in a statement that the work could lead to Condor becoming “the largest producer and supplier of liquified natural gas in Central Asia.”

At this point, Canadian and international companies will not be rushing into drastic decisions about the future, said Skok, who served as ambassador to Kazakhstan from 2006 to 2009.

“Nobody’s pulling out. Nothing changes, except for the violence of course and he challenge to the government on many fronts — and we don’t know what the fronts are,” she said.

Canadian business leaders, like almost everyone inside the country or looking on from afar, will be anxious to find out what forces are behind the violent uprising.

Though the protests were sparked by the young and middle-class citizens grown tired of economic inequalities in their country, President Tokayev has claimed that the movement was hijacked by “terrorist groups trained outside the country.”

In a tough-talking address to the nation last week, Tokayev said he had given orders to “open fire without warning” on the “bandits and terrorists.”

Over the weekend, Karim Massimov — a two-time former prime minister — was deposed as the head of Kazakhstan’s intelligence service and arrested Saturday on charges of state treason, the details of which have not been revealed.

Kazakhstan’s Health Ministry reported that 164 people had been killed in the rioting, 103 of them in Almaty, the country’s largest city, according to Vlast, an online news site. The government says that nearly 8,000 had been arrested, and that “among them are a significant number of foreigners.”

The figures will hardly be a comfort to current and future investors that have been so eagerly courted by Tokayev and his predecessor, Nursultan Nazarbayev, who ruled Kazakhstan from shortly before the breakup of the Soviet Union until he passed the presidency to Tokayev in 2019.

Private companies, officials from the governments of Ontario, Alberta and Saskatchewan and federal government delegations regularly meet with their Kazakh counterparts through forums arranged by the Kazakhstan Canada Business Council and the Canada Eurasia Russia Business Association.

Canada is also an annual stalwart at annual mining industry conferences in Kazakhstan, while the Canadian embassy in there co-sponsored an online industry summit in 2020, at which companies from Ontario, Quebec, British Columbia and Alberta were featured.

Kazakh authorities appear sensitive to the possibility that the instability could drive away potential foreign investors and business partners.

On Sunday, Kazakh Invest, the national investment promotion agency, said it had established an emergency call centre on Sunday specifically to address the concerns of jittery businesses and investors who may have been spooked by the violence of the last week.

“We emphasize that all commitments made by the state to investors remain and, as the situation in the country stabilizes, work on improving business conditions will continue,” the agency said on its Facebook page.

The story of Canadian involvement in Central Asia has never been one for the faint-of-heart, said Skok.

“It was a risk to begin with,” she said, describing the country and its post-Soviet landscape as “geographically remote, totally unknown.”

“It was more expensive and more risky for Canadian companies to go there, but we were led very nicely by our strength in our agricultural sectors, in our oil-and-gas sectors.”

Early supporters of Kazakhstan, which moved rapidly after the Soviet Union’s implosion to build a robust economy through foreign investment, have been rewarded for their confidence.

Cameco president Tim Gitzel sits on the country’s influential Foreign Investor Council, a body appointed by the Kazakh president. This past summer, Condor Petroleum head Streu was named honorary consul of Kazakhstan for Alberta, in recognition of his long, close business ties with the country.

Modern laws governing civil society and protecting human rights have been introduced more slowly than those revamping the country’s economy.

“I think it’s really important to see (how authorities manage) this investigation that they’ve officially launched,” Skok said. “That’s a critical piece of the puzzle. In any other country you wouldn’t jump to conclusions, so here we can’t jump to conclusions either.”