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Kazakhstan: Analysis From Washington--Power Lines And Power Flows

Washington, 21 October 1996 (RFE/RL) -- Kazakhstan's decision last week to allow its northern regions to contract directly with Russia for electricity highlights the increasing links between energy flows and political ones in the Commonwealth of Independent States.

At one level, of course, Almaty's decision to allow its six northern regions to pay Russia for electric power on a barter basis is nothing more than simple economics.

Because Kazakhstan owes Russia more than $400 million, Russia in mid-August turned off the supply of electricity to Kazakhstan.

As a result, many regions of that country do not have power, many of its factories are operating at reduced capacity, and Kazakhstan's economic difficulties have been compounded, leaving it with even less cash to pay its bills.

But at another level, the forced decision of the Kazakhstan government on this point has a political meaning far broader than this economic one.

Like a number of the other newly independent states, Almaty has tried to raise money to pay its energy debts by selling off its energy infrastructure.

More than 60 percent of the country's power plants are now owned by foreign companies. And Almaty is seeking to sell its power lines to a foreign company. If it succeeds, Kazakhstan will be the first of these states with an energy industry almost entirely in foreign hands.

In many cases, this foreign ownership is, in fact, Russian ownership, a pattern that gives Russian firms and often the Russian government enormous political influence.

And this pattern of Russian acquisition of the energy infrastructures in former Soviet republics is not restricted to Kazakhstan. It has occurred in Ukraine, Latvia, and several other countries, as well.

But now, in an effort to pay up, Almaty has made an even greater concession, one likely to give Moscow even greater leverage in Kazakhstan's political life and certain to disturb several other of Russia's neighbors who might be forced to follow Almaty's example.

Specifically, the Kazakhstan government has allowed six of its northern regions to enter into barter agreements with Russia for the supply of electricity in exchange for industrial goods and agricultural produce.

These are predominantly Russian areas. And this latest expansion in their ties with the Russian Federation will reinforce the views of many there and in Moscow that these areas are more properly part of Russia than of Kazakhstan.

At a minimum, Almaty's latest concession will further reduce the effective importance of the Kazakhstan-Russian border and thus allow the Russian government to have a greater say in Almaty.

Moreover, by removing part of the Kazakhstan economy from the monetary system of that country, this latest move will have the effect of reducing Almaty's ability to raise the new revenues that it will need to escape its current economic crisis.

Further, it may have the effect of increasing, rather than reducing, economic differences between the predominantly ethnic Russian north of Kazakhstan and its predominantly ethnic Kazakh south.

Russian press accounts of the Kazakhstan decision have suggested that any such consequences are simply the product of a free market and that the actions of Russian firms and the Russian government are separate.

As a result, they suggest, these outcomes should be beyond political criticism.

Many analysts in the West share that view.

But the facts here suggest that this view distorts what is taking place and that the Russian government and Russian firms are working in concert, if not according to a single script.

Generally ignored in such analyses is the fact that Moscow has not paid Almaty more than $400 million for the rent on the Soviet-era Baikonur space facility -- an amount more than sufficient to cover Kazakhstan's energy debt.

But unlike the Russian government and Russia's energy sector, Almaty lacks the leverage and the allies it would need to force Russia to pay its bills in a timely fashion.

Given these attitudes and this situation, the flow of electric power in one direction in the former Soviet space will likely continue to be matched by the flow of political power in the opposite one.