Kazakhstan's Two-Step Nuclear Plan Reveals Delicate Diplomacy

4 months ago 9

It was a completely unsurprising surprise announcement.

In a highly unusual statement issued on June 14, a Saturday, Kazakh authorities said they had selected Russia’s state-owned Rosatom to build Kazakhstan’s first nuclear power plant, binding the country further to its northern neighbor.

“Finally, the spectacle is over,” Kazakh economist Aset Nauryzbaev, who opposed the project, said in a video after the announcement.

The real surprise came later the same day when Almassadam Satkaliyev, the chair of Kazakhstan’s nuclear energy agency, said in an interview that the country would build a second power station, this one likely constructed by a Chinese state company, which had been the runner-up in the bidding on the first plant.

The Kazakh nuclear two-step shows that, despite predictions that Central Asia would drift from Russia after the full-scale invasion of Ukraine, the Kremlin keeps finding ways to maintain its influence. But the outcome also illustrates that Central Asian states cannot afford to rebuff China either.

The balancing act between Beijing and Moscow has been a throughline for Kazakh foreign policy in the last decade, while the next decade will show whether Astana can successfully leverage that balance to meet its energy needs without tying itself too closely to either power.

Though Rosatom’s campaign was heavily colored by geopolitical tones, observers say the company may have indeed offered Kazakhstan a good deal.

“In terms of competitive advantages, Rosatom’s proposal really does look like one of the best options for Kazakhstan,” said Shaimerden Chikanayev, a researcher at the ChineseUniversity of Hong Kong who studied the selection process.

Russia already processes much of Kazakhstan’s uranium, the two countries share language and culture, Rosatom has some of the most advanced technology and a portfolio of 19 overseas reactor projects, and the company offered advantageous credit terms and nuclear waste disposal, Chikanayev said in an email to Eurasianet.

“Of course, this project can and will play a certain role as a lever in the relationship between Russia and Kazakhstan,” he said.

Officially, the Kazakh nuclear energy agency said Rosatom will lead an international consortium building the plant, but most experts regard it as highly unlikely that other major, especially western, companies would join.

Kazakhstan’s Soviet-built nuclear plant on the Caspian was decommissioned in 1999 and since then there has been talk of building a new one, though the discussions intensified after President Kassym-Jomart Tokayev came to power in 2019.

Proponents cite the need to reduce Kazakhstan’s energy deficit, which the government predicts could balloon from two gigawatts during peak hours in 2024 to seven gigawatts by 2030, while opponents have raised environmental and cost concerns.

Seventy-one percent of voters approved a referendum last October endorsing the construction of a new nuclear plant, and the Kazakh government published a shortlist of vendors in April, including Rosatom, China National Nuclear Corporation, France’s EDF and Korea Hydro & Nuclear Power.

Rosatom is slated to complete the project by 2036, and Kazakhstan will be paying for the plant long after that while further entwining Russia into the country’s energy supply.

It fits into Russia’s larger ambitions in a region increasingly turning toward China and, to a lesser extent, the rest of the world.

In 2023, with Gazprom’s influence on the wane due to the war in Ukraine and western sanctions, Russian President Vladimir Putin signed a foreign policy document highlighting nuclear power’s role as a diplomatic tool. Subsequently, Central Asia has been a focus of Rosatom’s attention.

Rosatom has secured a contract to build a nuclear power plant in Uzbekistan, and is in discussions with Bishkek about a plant in Kyrgyzstan.

Though Rosatom is not directly under sanctions, they could still drag out the construction timeline, and Russia’s troubles financing three coal-fired power plants under construction in Kazakhstan raise concerns about similar issues with the nuclear station, Chikanayev said. The opacity of the bidding process could also cause legal headaches, he added.

Yet, the consequences of spurning Rosatom may have influenced Astana.

“We still fear the Kremlin,” political analyst Dosym Satpayev said on the Hyperborei YouTube channel after the announcement.

The nuclear energy agency denied politics influenced the decision, saying it was only based on energy security and development, according to its press service.

The pair of reactors will be built in the town of Ulken on the south end of Lake Balkhash, 325 kilometers northwest of Almaty, but how much it will cost and exactly how the financing provided by Russia will look remain unknown.

The price tag will be $15 billion at a minimum, but likely much more, and Kazakhstan will be paying back the Russian loans for a “very, very long time,” probably via electricity rates, Kazakh energy analyst Olzhas Baidildinov said in a June 16 interview.

Many opponents of the Rosatom plant point to the Akkuyu nuclear power plant, which Rosatom is building in Turkey and will own, as a warning, but Astana said in the wake of the announcement that it will not be following that example.

“The owner of the plant will be the Republic of Kazakhstan,” Satkaliyev, the chair of the nuclear energy agency, said in an interview with Vlast, a Kazakh media outlet, June 14.

But picking Rosatom for the plant meant turning down China.

The announcement that Rosatom had beaten out the state-owned China National Nuclear Corporation for the contract fell awkwardly two days before Chinese President Xi Jinping arrived in Astana for the second China-Central Asia summit.

It was at the first such summit two years ago that China signaled a willingness to make considerable investments in the Central Asian energy sector, Satpayev, the political analyst, pointed out.

“When Rosatom’s interests were lobbied so actively, and Kazakhstan basically rewarded this lobbying, I think that this most likely left a certain unpleasant aftertaste for Beijing,” he said.

Kazakhstan is seeking to smooth things out with the announcement of a second plant, Satpayev said.

Details about the second plant are even more hazy than the first, especially how Kazakhstan will pay for two plants.

A nuclear agency statement on June 16 suggested current arrangement could be undone, if Russia’s help in financing can’t be secured on satisfactory terms. “If we talk about the general contract, it will be concluded after the signing of intergovernmental agreements between Kazakhstan and Russia on the main terms of cooperation and the provision of interstate export financing,” according to the statement.

During the China-Central Asia summit, Kazakh officials spoke almost as if they want to build the plants in tandem, with Deputy Prime Minister Roman Sklyar telling reporters that the second plant might even be completed before the first, depending on the technology used.

“No one will drag this out. By the fall, I think, there could already be some numbers, data, a site,” he said.

By Alexander Thompson via Eurasianet.org

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