EU gas needs pull Kazakhstan closer to Brussels

With Moscow currently able to switch off power to every fourth household and factory in the EU, Brussels is stepping up efforts to bring in Caspian gas and oil without using Russian pipes in a tactic set to boost ties with some of the region's biggest suppliers – Kazakhstan and Turkmenistan.

In the $70 per barrel oil era, Kazakhstan, which has more oil and gas than the rest of the Caspian states put together, is flush with new cash and self-confidence as the EU's "trade partner number one" in the region. "We need the EU but the EU also needs Kazakhstan, desperately," Mr Zhigalov stated.

The new gas pipeline, to be co-funded by the EU, would run from Aktau in Kazakhstan via Azerbaijan and Georgia to Turkey and is currently at the pre-feasibility study stage with obstacles left to overcome.

"Definitely the Russian company [Gazprom] will not be very happy with this, because it is a competitive pipeline," the Kazakh envoy explained. "I'm not sure that it's possible to block it," he added, but noted that Russia is one of the five Caspian states that must agree to a maritime territory deal in order to give the investment a sure legal footing.

The EU is also keen to ship Kazakhstan's oil via two new pipelines from Odessa, Ukraine to Gdansk, Poland and from Burgas, Bulgaria to Alexandroupolis, Greece. But Russia "will probably" secure 51 percent ownership of the Bulgaria-Greece project, Mr Zhigalov predicted.

In the nuclear arena, the EU already buys 316 tonnes a year of uranium from Kazakhstan, with the ambassador envisaging EU companies in future investing more heavily in uranium mining and in the country's first nuclear power plant to be built on Lake Balkhash.

Political reform needed

The EU has so far kept at arm's length Kazakhstan's political ambitions to join the ENP and to chair the Vienna-based pro-democracy club, the OSCE, in 2009. There are no plans to extend the ENP to Central Asia, and Kazakhstan "has more work to do on the political reform side" before taking the OSCE helm, a European Commission spokeswoman said.

Kazakhstan in May upset some MEPs by refusing to allow a Brussels visit by opposition leader Galymzhan Zhakiyanov, who accuses the state of murdering two of his allies - Zamanbek Nurkadilov and Altynbek Sarsenbayev. Its presidential elections last December were marred by vote-rigging and newspaper closures reminiscent of the 19 March Belarus poll.

But Kazakhstan looks good in human rights terms next to its neighbours Turkmenistan and Uzbekistan, with many MEPs routinely enjoying generous state hospitality on visits to its booming new capital in Astana. EU relations with Turkmenistan and China also suggest that Brussels puts trade and security before democracy, analysts say.

Kazakhstan is confident it will secure EU backing for market economy status and World Trade Organisation membership by the end of 2006, while planning to "recall" its energy discussions with Brussels when it comes to opening up the ENP issue in the next two to three years.

From trade to democracy

In the meantime, the country sees its OSCE bid as a pledge of goodwill on its own road toward democracy and to spreading market economy models to the Caspian region as a whole.

"We think first of all we should develop our economy and the development of political forces should be half a step behind. Without a strong middle class it is impossible to build a strong democracy," Mr Zhigalov explained. "Kazakhstan is now ready to invest in the economy of our neighbours."

"Bidding for the chairmanship, we try to stress that our democratic development is an irreversible process and to send the signal to European countries that for us market economy and democracy are two sides of the same coin."