Is There Oil in 'Kryzakhstan'? Ask John Kerry

It wasn't exactly a propitious start for new US Secretary of State John Kerry on his first foreign trip when he referred to "Kyrzakhstan", where US diplomats are ostensibly working to secure "democratic institutions".

Getting all those Central Asian "stans" right can be confusing-even more so when things get muddled in the "Great Game". And it's no easy thing following in the footsteps of Hillary Clinton.

Later-after the State Department took the liberty of omitting the mention of "Kyrzakhstan" from the official transcript-it became clear that Kerry was actually referring to Kyrgyzstan (not Kazakhstan and indeed not Kyrzakhstan).

So let's look at these two countries that Kerry has inadvertently combined.

Kyrgyzstan is a landlocked country of 5.5 million people which has undergone revolution and reverse revolution since 2005 and "democratic institutions" are embryonic at best. It's extremely poor and the recipient of massive amounts of US aid, thanks to its willingness to cooperate in the global war on terror. Kyrgyzstan is important to Washington because it's also a staging ground for a US-Russian struggle to see who can gain the most influence over Bishkek.

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Kazakhstan, on the other hand, is an oil-rich nuclear power that was oddly enough the choice of venue for P5+1 talks with Iran over the latter's (not to be confused with the former's) nuclear program. 

Perhaps this added to Kerry's confusion-indeed it is some heavy symbolism that had some asking why dictatorial Kazakhstan is allowed to have a nuclear program, while Iran is not. In the 1990s, this former Soviet Republic won praise for relinquishing a massive nuclear stockpile (more than a thousand strategic nuclear warheads and 370 nuclear-tipped cruise missiles) in the name of nonproliferation. Washington was hoping Tehran would recall this and take note of the message-though the message remains somewhat unclear as Iran does not have nuclear weapons. The message was further muddled by earlier suspicions that Kazakhstan may have actually been "proliferating" to Iran.

Now Kazakhstan is hoping to make some cash by becoming a "host" for nuclear reactor fuel so that countries (like Iran) wouldn't have to enrich uranium themselves. Of course, one might also ask whether we want Kazakhstan to serve as a nuclear reactor fuel bank.

On the nuclear front, no one is quite convinced that Kazakhstan should be a nuclear power. It's not exactly a beacon of democracy, either. Its leader Nursultan Nazarbayev can only very loosely be said to have been democratically elected, and he is continually propped up by Western governments and oil interests.

He is referred to fondly as the "Sultan of the Steppes" and is almost as colorful as the late Turkmenbashi (the revered "father" of Turkmenistan whose cult of personality was unrivaled even by the likes of North Korea's late Kim Jong-il). While the Turkmenbashi even went as far as to change the names of the months to concepts that reflected his love for his mother, the Sultan of the Steppes creates holidays in honor of himself and sets himself up as the lead character in fairy tale plays and movies for the nation to enjoy. 

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He is not only tolerated but courted heavily because of the country's oil wealth. US investors have a major stake in its Kashagan field, which has around 5.4 trillion tons of oil and 1.7 trillion tons recoverable-not to mention a handful of other major fields with oil, condensate and natural gas reserves.

In late October, the US and Kazakhstan signed a Joint Action Plan to promote cooperation in nuclear security and nuclear power, hydrocarbon resources, renewable energy, energy efficiency and electric power. Underpinning this US-Kazakh relationship are pipeline plans. The US is hoping that Kazakhstan will channel all its oil and gas exports through Turkey (as opposed to Iran). But Kazakhstan has many interests-and they include burgeoning relations with China (which is particularly gunning for the country's uranium deposits) and efforts to ensure Russia that all is well between Moscow and Astana, too.

And then we have Kyrgyzstan, which pales by comparison and would probably benefit from being lumped together in a contrived country of "Kyrzakhstan". It has a bit of oil and gas, and a bit of gold, but overall relies on imports to most of its energy needs. On the border with China, and part of Russia's old Soviet backyard-as well as a transit point for stuff going in and out of Afghanistan for NATO-it has some strategic importance. But a lack of Western effort here to prop up any single leadership figure has meant that the country is languishing without an effective government since the short-lived "Tulip Revolution" in 2005, which ousted president Askar Akayev. No one rushed to help him because he doesn't have oil wealth to back him up. Widespread poverty and north-south ethnic divisions keep the violence simmering. 

Kerry is in the middle of a European/Middle East tour right now. We'll see what other countries he manages to contrive.

By. Charles Kennedy of Oilprice.com