Kazakhstan: turbulence in Central Asia

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2022 has begun with the West keeping an eye on the tense situation in Ukraine. Russia's military deployment on the Ukrainian border has alarmed NATO, triggering the possibility of Russia's armed intervention.

However, it is not this situation that has caused alarm in the East. The first major political shock of 2022 in Russia's neighbourhood came in Kazakhstan, which borders Russia and China. The Kazakh government's decision to raise the price of liquefied gas at the beginning of the year sparked public anger in a country where citizens use this energy source for a living. Anger over the price hike mutated into protest against the government, especially against former president Nursultan Nazarbayev, who led the country from independence in 1991 until 2019, but maintained influence through the Security Council, and the huge difference in living standards between a rich elite and a poor people.

What is relevant to the Kazakh crisis are the consequences that such protests may have on fuel prices and cryptocurrency mining. In the case of the former, it is important to note that Kazakhstan is home to significant oil and gas reserves exploited by companies such as Exxon Mobil and Chevron. While it is true that production has not been affected by the protests, foreign companies may consider leaving the country, as they are likely to perceive Kazakhstan as an unstable country in which to do business. Regarding cryptocurrencies, Kazakhstan has 18% of the world's bitcoin mining. The protests have led to a 5% loss in value, which has alarmed bitcoin investors. The increasingly common use of bitcoins in finance and the lack of control over transactions will make it more likely that the possibility of regulating bitcoins to prevent shocks like the Kazakh one will be debated.

Also significant is Russia's swift reaction to the protests through the Common Security Treaty Organisation (CSTO).  For the first time the CSTO intervened militarily to restore order at the behest of a member country. Such intervention will most likely be seen as a precedent for the repression of pro-democracy protests in pro-Moscow countries. If Russia intervened in Kazakhstan it is likely to do the same in other scenarios. The CSTO formula could be invoked by tyrants such as Lukashenko of Belarus, which experienced pro-democracy protests last year. Such an action could result in straining already fragile relations between the West and Russia, as the former would take a dim view of the latter's military intervention in a country bordering NATO's eastern border. This could make the resolution of the Ukrainian dispute more difficult and even result in military intervention.

In conclusion, 2022 has begun with Russia intervening militarily to quell protests in Kazakhstan, a country within its sphere of influence. At first glance it seems unlikely to draw parallels between what happened there and Ukraine, where it remains to be seen how Russia's military escalation on the border will play out. However, Russia's rapid military intervention, the first under the umbrella of the CSTO, should worry the West as tyrants like Lukashenko in Belarus - a country bordering Western Europe - are likely to see the Kazakh example as an opportunity to turn to Russia for help. The fact that Belarus experienced pro-democracy protests in 2020 and 2021, which were strongly repressed, makes it likely that Russia would intervene militarily under the umbrella of the CSTO if protests were to recur. The events in Kazakhstan have also affected the country's abundant cryptocurrencies and oil. In the case of the former, the rapid fall in its value will increase interest in regulating the cryptocurrency market to prevent such shocks. Regarding oil, foreign companies are likely to consider abandoning investments in oil fields, as Kazakhstan will be seen as an unstable country for business.