Online magazine highlighting research, news and analysis covering the European Neighbourhood

Germany and Kazakhstan: A win-win relationship

By Thomas Matussek, Germany’s Former Ambassador to the UK, the UN and India

This week, the World Bank announced it would expand the Resilient and Inclusive Supply-chain Enhancement initiative in Central Asia, with the aim of further improving the region’s capacity to produce, refine and transport key resources and minerals. This news has once again focused attention on Central Asia and its potential as a middle corridor, especially as an energy hungry Europe looks to find new pipelines to satisfy its ever growing needs. More importantly, however, the Bank’s announcement reflects the region’s rapid rise to global relevance following the war in Ukraine, and signals its long-term prominence in the face of sustained conflict and continued supply line disruptions.

In Germany, there is very little doubt over the vital role that Central Asia must play in the post-Soviet economy. Faced with diminished energy supplies, skyrocketing fuel prices, and the loss of a significant trade partner, Germany sees Central Asia, and Kazakhstan in particular, as an increasingly important business partner and reliable provider of energy.

After all, Germany had become overdependent on Russian imports of oil, gas, and coal, and suffered accordingly when Western sanctions ultimately cut off its access to Russian resources. In less than a few months, the country saw nearly half of its natural gas supply and a third of its oil supply disappear, causing economic shocks that stalled national growth and disrupted domestic industry. To recover from this crisis and identify new, and more reliable, pathways for the import of vital energy resources, Germany had since aggressively pursued new opportunities for energy diplomacy: from Norway to Qatar, from Indonesia to Nigeria and beyond – focusing on LNG and, in the long term, “green” hydrogen.

Chief amongst them is Kazakhstan, a fast growing middle country with the strongest economy in Central Asia. Benefiting from a vast resource base and strategic position at the intersection of East and West, Kazakhstan emerged as an important player on the regional and global stage, and thus represents an ideal partner for Germany. Several high ranking political visits, and a number of bilateral agreements and projects – many of which tied to energy and mineral production and the development of related infrastructure – underlined this. Among the most notable projects was the construction of a lithium processing and mining plant, paid in large part by the German private sector.

However, the most significant output of Germany’s diplomatic engagement has undoubtedly been the landmark deal with Kazakhstan’s state-run oil producer to augment crude supplies. This groundbreaking agreement has allowed for more 993,000 tons of oil to flow from Kazakhstan to Germany as of January 1st. Beyond fortifying Germany’s energy security, this arrangement has also catalysed economic growth in Kazakhstan, exemplifying the mutual benefits inherent in this burgeoning partnership.

In the bigger picture, this strategic partnership between Germany and Kazakhstan mirrors a broader trend of nations diversifying their trade dependencies and forging alliances based on shared interests. This reality will be readily observed at the Astana International Forum 2024, where Kazakhstan will host world leaders and business executives from around the globe to explore new avenues for collaboration. Such strategic events and alliances not only enable economic prosperity, but also foster enduring cross-border ties in an increasingly interconnected world.

Politically, Kazakhstan has the potential of becoming the central anchor of stability in central Asia. Situated between two powerful neighbours, the Russian federation and China, the government of President Tokayev is skilfully manoeuvring to become more independent from undue pressures, while striving to be a good neighbour. Its proximity to unstable Afghanistan makes its stabilizing role even more important.

Looking ahead, the prospects for the Germany-Kazakhstan partnership appear promising. While oil and gas may dominate their existing diplomatic priorities, both parties have recognized the long-term value of their deepening relationship, especially in the face of an ever-evolving energy landscape. In fact, alongside agreements focused on traditional resources, Germany and Kazakhstan have invested heavily in joint renewable energy and hydrogen projects, including a green hydrogen plant in the Mangystau Region in western Kazakhstan.

In an ever-changing world, the evolving tapestry of Germany-Kazakhstan relations serves as a positive and encouraging example of collaboration, resilience, and shared aspirations for a prosperous future.