Recent reports highlight the steady deepening of relations between the UAE and Kazakhstan across several strategic sectors, most notably the energy sector. Both are resource rich states looking to attract foreign investment; moreover, they also share closed off power structures whereby political control is centralised into the hands of a few key individuals. In the period ahead, Western entities should watch the rise of Kazakh companies in the UAE economy as Emirati stakeholders may afford them informal in-roads to the domestic economies of Abu Dhabi and Dubai.
Backdrop to Courtship
On the 7th of June 2017, the United Arab Emirates’ Foreign Minister, Abdullah bin Zayed Al Nahyan, penned an open letter in The Astana Times where he spoke of “25 years of friendship and diplomacy” between his country and Kazakhstan.
Although not an immediately obvious relationship, it appears that there are several noteworthy avenues of cooperation between Astana and Abu Dhabi. With more than 200 Emirati companies operating in Kazakhstan, commercial linkages also accompany the cordial political relations that have garnered steady momentum since 1992.
The two agreed to new visa exemption rules in January 2017, coming into force in May, which no longer require Kazakh passport holders to arrange visas prior to arriving in the UAE if staying for a 30-day tourist visit. This gives Kazakh citizens the same entitlements to remain in the Emirates as those enjoyed by the British and Americans, in what is likely a major coup for the Foreign Affairs Ministry in Astana.
Executive travel between both countries in the energy sector is likely to have driven forward this development and signals a willingness on both sides to strengthen ties forged in the petroleum industry.
Longevity in the upper echelons of power in both of these countries means that, although bilateral ties have existed for a quarter of a century, only Kazakhstan’s Nursultan Nazarbayev and Sheikh Khalifa bin Zayed from the UAE’s corner, have overseen them. The then-Emir of the UAE, Sheikh Zayed bin Sultan, brokered ties with Nazarbayev following the establishment of Kazakhstan in the wake of the Soviet collapse, although his son Khalifa increasingly assumed responsibility for Presidential affairs throughout the 1990s.
As such, political continuity has ensured stable, if not slightly underwhelming, relations. That said, various recent agreements are indicative of the UAE’s modus operandi, which is based on diversifying its economy and broadening its sphere of influence – with both countries on track to share and collaborate on strategic initiatives.
Time and Energy
At the same time as the visa-free travel announcement, it transpired that the UAE’s Mubadala Development Company is set to construct a multi-billion-dollar chemical complex in Kazakhstan’s Atyrau region. This follows on from news at the start of the year that bilateral investments would indeed extend to the energy and mining sectors among other fields such as infrastructure, logistics, agriculture, and food security.
In fact, energy investments between Kazakh-UAE actors are a noteworthy theme given the natural resources at both nations’ disposal. Supporting this, Reuters reported in October 2008 that Mubadala signed an agreement with KazMunaiGas for a 24.5 percent stake in an offshore field in the Caspian Sea. In November 2008, the Al Falah Fund was launched in Kazakhstan, whereby the UAE committed to funding projects in priority sectors such as “Energy, Power, Food Production, Infrastructure, Natural Resources and Real Estate”.
Of course, this compounds a lingering worry that increased UAE-Kazakh relations in terms of energy sector development may run to the detriment of Western actors’ ambitions in the Gulf country. To some extent, this took place in 2014 when the 75-year concession agreement between Abu Dhabi’s political elite and four big Western oil companies (ExxonMobil, Royal Dutch Shell, Total, and BP) expired.
With only Total immediately renegotiating a 10 percent stake in ADCO, several new Asian companies moved into the fold, eating into the IOCs’ long-standing market share in this sector. As it transpired, China National Petroleum Company acquired 8 percent, Inpex Corporation of Japan received 5 percent, GS Energy of South Korea has 3 percent, and CEFC China Energy Company Limited secured a 4 percent interest in the Emirates’ onshore oil giant.
A pivot towards Asian energy companies ultimately proved to be in the interests of ADNOC’s Emirati stakeholders, with the largest consumers of Emirati oil coming from East Asia. In fact, it took BP almost two years to get back into the fold, perhaps as a message that the UAE is no longer beholden to the established Western oil giants nor are these companies necessarily at the front of the queue when it comes to exploring joint ventures.
The real question then becomes to what extent Central Asian companies could increase their standing in this fields at the expense of age-old players across the UAE economy. Should a regional market for Emirati resources emerge, then Western entities may wish to take note and enact long term plans.
A timely overlapping interest between these nations, and one which ticks these two boxes, is their hosting of arguably one of the world’s biggest commercial events – The Expo.
Astana is currently two-thirds of the way through playing host to the 2017 Expo, where the UAE is an active participant. The Emirates’ pavilion in Astana was opened on the 10th of June by Sultan Al Jaber, a Minister of State from Abu Dhabi, and Emirates Group Chairman, Ahmed bin Saeed Al Maktoum, from Dubai. The former is explored in greater detail below and the latter is one of Dubai’s notable power players, coming from the Emirate’s royal family – the Al Maktoum.
Furthermore, he is a member of the Executive Council of Dubai and one of five directors at the Investment Corporation of Dubai. This gives him a strong political and economic position and is the perfect example of a commercially exposed royal in the Gulf. These two could leverage the position of Kazakh energy companies who sign up to attend the Expo 2020, which makes being ‘in the know’ now so crucial to understanding the business deals that may actually unfold during the event.
Dubai won the right to host Expo 2020 on the 27th of November 2013, and sees the project as its chance to further bolster its reputation as a commercial hub in the Middle East and North Africa. With Abu Dhabi acting as the country’s resource rich money-maker, energy sector activity should be expected as a feature of the Expo 2020.
As such, Dubai will be hoping that its partners and allies overseas help create a fruitful event with booming commercial activity. As the Emirates inches closer and closer to Vision 2021, it will see the Expo as a defining moment helping reach its ‘competitive knowledge economy’.
For its part, Kazakhstan became the first country to commit to participating in Dubai’s scheduled event, as relations appear to have crystallised over the past few years. Open sources indicate that there may have been more impetus to foster cooperation from both sides over the past 6-7 years than at any previous point. Kazakh entities, and Central Asian companies more generally, may represent an opportunity for the UAE to move away from its reliance upon Western actors and South-East Asian labour, and towards a new type of actor.
Political Elites at the Table
Owing to his professional remit, Sultan Al Jaber is thought to sit at the intersection between UAE-Kazakh relations. The vast majority of open source coverage of UAE-Kazakh relations stresses cooperation in the energy sector, both renewables and oil and gas, which brings Jaber in due to his position as CEO of Masdar; the UAE’s flagship clean energy company.
As a matter of fact, Jaber is hugely influential within the UAE and his rise began with the Chairmanship of the National Media Council (“NMC”) in 2005. He then won promotion to the Cabinet in March 2013 and his directorships in various public companies continue to give him leverage across a whole host of domestic sectors vis-à-vis foreign investors.
Jaber’s other key Chairmanships are at Sky News Arabia, the Abu Dhabi Ports Company (Kizad), and the Zayed Future Energy Prize. The crown jewel in his portfolio, however, undoubtedly came during his elevation to CEO at ADNOC in February 2016. Coupled with his position as the head of Masdar, his influence over energy strategy is second to none and foreign investors should expect him to be heavily involved in any initiatives explored with Kazakhstan.
It is unclear if Sultan Al Jaber is related to the UAE’s ambassador to Kazakhstan, Mohammed Ahmed bin Sultan Al Jaber, as no sources explicitly make this familial connection. However, the same last name and other features suggest there is a blood kinship connection. If true, this would potentially give the Al Jaber family a heightened exposure to the Kazakh economy, and pave the way for additional in-roads for any of their privately held entities.
Furthermore, Sheikh Mansour bin Zayed is also party to the majority of meetings concerning relations with Kazakhstan, giving him an important role in their enhancement. Mansour is a full brother of Mohammed bin Zayed (Crown Prince of Abu Dhabi and regent for the low-profile Sheikh Khalifa) who is entrusted with a number of high level affairs.
Notably, he is Deputy Prime Minister of the UAE and Minister for Presidential Affairs, meaning he is employed as a key conduit between outside actors and Emirati figureheads such as MbZ and Mohammed bin Rashid of Dubai. Interestingly, Mansour is married to the daughter of Mohammed bin Rashid, making him the only member of the ‘Bani Fatima’ – the five sons of Sheikh Zayed largely in control of the Emirates – to have direct familial connections to the Al Maktoum.
Is the Future Set to Change?
It is the case that foreign investors may have neglected the slow burning Kazakh-UAE relations. Although partners for 25 years, there has been very little high-profile news pertaining to the joint ventures of these two states.
However, there is great potential for cooperation and a willingness from both to deepen their ties. If the number of Memorandum of Understandings (“MoU”) that have been signed by Abdullah bin Zayed and Kairat Abdrakhmanov – his Kazakh counterpart – are followed through on, then established investors can expect major collaborations to follow.
By Shadow Governance Intel
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