§ John Mann (Bassetlaw)Kazakhstan is probably not as well known in the United Kingdom as it should be when one considers its strategic importance to the UK and to the world. It is in central Asia, borders Russia, Turkmenistan, Uzbekistan, Kyrgyzstan and China, and has an area of 1.6 million miles, making it one of the largest of the former Soviet Union countries. It was home to Attila the Hun, the source of the great silk road, and Genghis Khan occupied it in 1221. Later, it came under the protectorship of Russia, which eventually colonised it, and then it became part of the Soviet bloc. It has been an independent state since 1991 and its relations with the UK have improved from that date. Another little known fact is that in 1985, in the city of Alma-Ata, I met my wife. Ever since that day, I have paid close and particular attention to its affairs.
The country is well known for its oil and gas reserves. Tenzig and Kashagan oil fields contain 88 per cent. of central Asia's oil wealth: Kazakhstan has resources of between 30 billion and 50 billion barrels of oil and its Government estimate that the Kashagan field alone might contain up to 50 billion barrels. Western dependency on energy has made the country strategically important to us, not least by creating a competitive energy alternative to supplies from the middle east. Britain is the second largest investor in Kazakhstan, with £2.5 billion investment led by British Gas. Kazakhstan has proven reserves of 65 trillion cubic feet of natural gas.
The economy of Kazakhstan is growing well. Its gross domestic product has increased by 13.2 per cent. in the past year—the best year of economic performance since 1991—and by 45 per cent. in the last four years. The hyperinflation that it experienced immediately after independence has been reduced to a respectable 6 per cent. a year. It is important to our interests that we do not lose out to other countries that are building a strong relationship with Kazakhstan—not least the United States, which through the Houston initiative has helped the country to emerge as a key player on the world stage.
The Kazakh economic strategy is to use a Norwegian-style investment fund—which already has £2 million in it—for economic development, and to create a high-tech, high value-added economic base, not one that relies on oil and gas, especially by encouraging joint ventures with western companies. That creates many opportunities for inward investment, such as that enjoyed by the organic foods industry, which has major possibilities, although technical expertise in both processing and storage has to be imported. The economy also has a significant mineral base.
One key recent development is the rapid growth of the private banking system, which now has an estimated £2 billion of deposits, many of them small. The rate of progress needs to be maintained if international confidence is to be maintained. That sector is a key indicator of the economy, and British banks and the British Government need to pay particular attention to it in the assistance that they give to Kazakhstan.
In the current world situation, it is important to note the stability in Kazakhstan, not only in relation to the surrounding countries, which is significant, but globally. 239WH Its only nuclear power plant was closed in 1999 and it is now a nuclear-free state. Semipalatinsk, in central Kazakhstan, was closed down as a nuclear testing base immediately after independence. In the years of Soviet domination and control, the whole of central Kazakhstan was used as a nuclear-testing wasteland.
During the Afghan war, the Kazakhstan Government was a loyal ally of ours and provided airspace to coalition forces to help them wage the war on international terrorism effectively. On Iraq, I quote from a statement from Kazakhstan's Ministry of Foreign Affairs on 19 March:
Unfortunately, those efforts turned out to be futile, in part because of the destructive position of the Iraqi leader Saddam Hussein who had not presented convincing evidence of disarmament of his country. The possibility of a peaceful solution of the arisen problem through diplomatic means has been basically reduced to zero.In the context of international relations, I think that we all share that sentiment.Kazakhstan's stability compared with neighbouring countries is important. All too often, we lump all central Asia together—if I may make a mild criticism of our own Government and Foreign and Commonwealth Office, they all too often use the descriptive label "central Asia"—but Kazakhstan is significantly more stable than any of the surrounding countries and it is progressing and adopting western values, including those of liberal democracy, more quickly. We should therefore be dealing with the country on its own terms and in its own right, rather than lumping it in with its neighbours.
There are issues to be resolved in Kazakhstan, such as the legal framework, which is important for businesses wishing to invest, but without question there have been significant improvements in recent years. We can provide specialist expertise to help to develop the kind of liberal democracy that will encourage western investment. The death penalty remains a contentious and important issue for the west, and I hope that we will continue to urge the Kazakhs to address it. It has been the subject of public debate in recent months, but it remains a potential obstacle to future development. I hope that we can take it up with the Kazakhs in the friendliest terms.
In terms of dialogue, a delegation of 14 Kazakh parliamentarians is visiting the UK on 12 to 18 May. I am sure that we will give them a warm welcome and that there will be significant, good deliberations during their visit.
Turning to trade unions, I quote the World Bank on trade union organisation in Kazakhstan:
Unions in Eurasian Transition Economies remain much as they were in the socialist era: aligned with management. As such, they are not independent organisations representing workers' interests. Perhaps the only exception is Kazakhstan, where recent reforms have allowed firms or individuals to opt out of union negotiated settlements and have legalised independent worker groups as bargaining entities.In the creation and strengthening of civic society, we in the west tend to overemphasise individual human rights as opposed to collective human rights. The independent Confederation of Free Trade Unions of Kazakhstan has 100 union affiliates and 350,000 members and has a role 240WH in creating civil democracy. That model has been replicated in countries such as Poland, Zimbabwe and South Africa. We have given direct assistance through the trade union movement and the Foreign and Commonwealth Office to Kazakh trade unions to encourage that growth of civil society and civic responsibility. That should remain an important part of our work, and I strongly urge the Minister to consider that.The sector of the Kazakh economy that is currently underplayed but that I would highlight for potential development is tourism. Kazakhstan is an enormous country, and the cosmopolitan city of Alma-Ata is often described as the new Paris—although some might add that it is more politically reliable than Paris these days. Kazakhstan offers potential tourists a wealth of new opportunities. A simplified visa process for UK citizens who wish to visit Kazakhstan, including those who visit for business, has been introduced, and I hope that the Minister will consider reciprocity in visa arrangements for Kazakh nationals who visit, especially on business. In particular, ecological holidays from the west have the potential for enormous growth. I hope that the Kazakh Government will continue to promote that as the number of visitors to the country increases—it was 1.8 million at the last count.
§ Linda Gilroy (Plymouth, Sutton)My hon. Friend is right to praise the tourist potential of Kazakhstan, which those of us in the all-party group witnessed when we visited last November. Will he also mention the potential for co-operation between our great universities? We paid a visit to the Kazakh British university and saw great scope for that.
§ John MannThe link with Aberdeen university is extremely important. I trust that the visit of Baroness Symons has been postponed rather than cancelled, and that it will be resurrected. I urge the Minister to make visiting Kazakhstan in the near future a priority.
The issue of drugs is important in my constituency and across this country. Kazakhstan has 8,000 miles of borders, yet the only project in which the European Union has been involved to tackle drug smuggling—which goes with people smuggling and arms smuggling—through Kazakhstan has been at Alma-Ata international airport. I urge the Government to consider supporting a project to train customs officers, and introduce computers and high technology at border posts in Kazakhstan, so that that country's counter-drugs agencies can enjoy successes that will benefit Britain in terms of our heroin problem. I propose that potential aid project for the Minister's consideration.
I also hope that additional aid can be given—perhaps through the Westminster Foundationߞto help political parties in Kazakhstan to develop themselves.
In May the Beagle 2 rocket to Mars will be launched from Kazakhstan. The Prime Minister has been invited, and I hope that we will send a delegation at the highest possible level to celebrate that success.
Help in tackling drugs and through the extended trade union movement are ways in which we can assist Kazakhstan in its progression to liberal democracy and becoming a major economic player on the world stage. The word Kazakh comes from the Turkic—it means free 241WH and independent. After years of Soviet and Russian bondage, that country now has an independent, free state. We need to assist Kazakhstan's democratisation, and I trust that the Minister will respond accordingly.
§ Bob Spink (Castle Point)I am delighted to follow the hon. Member for Bassetlaw (John Mann), and congratulate him on securing this debate.
I visited Kazakhstan last November as part of the British parliamentary delegation and should therefore declare an interest. As has already been intimated by the hon. Member for Plymouth, Sutton (Linda Gilroy), that visit was very successful. It was facilitated by Erlan Idrissov, the Kazakh ambassador in London, to whom we owe a great vote of thanks.
I saw for myself the great progress that has been made in a number of areas in Kazakhstan. In developing democracy, electoral systems are improving, civic and human rights are progressing apace, a free press is emerging and gaining confidence, and there is a desire to improve the justice and legislative systems. More can be achieved, of course, but the progress made over the past decade is remarkable when one considers how many hundreds of years it has taken us to achieve such progress in the UK.
In terms of social responsibility, Kazakhstan has added great stability to the region by fighting drug trafficking, removing the world's fourth-largest nuclear arsenal, and supporting the international community in fighting terrorism. In commercial and financial systems, macro-economic, fiscal and banking reforms have progressed tremendously in recent years. Markets are opening up, which gives some semblance of rational competition, and although there is still room for improvement, there have been tremendous achievements.
The bottom line is that Kazakhstan is a country that is making an increasing contribution to the international stability of the region, and a country with which we could and should be doing more business. Perhaps we should have a Minister for the UK equivalent of the Houston initiative.
§ Mr. Ivor Caplin (Hove)I begin by congratulating my hon. Friend the Member for Bassetlaw (John Mann) on initiating this well-informed and important debate. The House will wish to know that the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North Warwickshire (Mr. O'Brien), is abroad today on Government business.
UK relations with Kazakhstan are, in general terms, excellent. We established diplomatic relations with Kazakhstan 11 years ago, since when we have steadily increased the size of our embassy and range of interests. We continue to examine ways in which we can expand our representation further in key locations such as the capital, Astana, and in Atyrau on the Caspian sea. In time, we expect to move our embassy to Astana.
We have an excellent relationship with the energetic and dynamic former Foreign Minister, Erlan Idrissov, who was appointed Kazakh ambassador to London last year. I believe that that appointment demonstrates the importance that Kazakhstan attaches to its relations with the UK.
242WH My right hon. Friend the Prime Minister and the Kazakh President are co-patrons of the Kazakh-British Technical university, a facility that was opened by the President last September. Our embassy and the British Council are actively engaged in helping to set up postgraduate courses at the university.
Through the Kazakh embassy, we have established close co-operation with the Kazakh Government to enlist their support for the preparations surrounding the launch of the Beagle 2 Mars Lander, which will take off from Baikonur, the Russian space centre in Kazakhstan, on the Mars Express rocket. My hon. Friend the Member for Bassetlaw referred to that event, and we are looking forward to it.
Both bilaterally and through the European Union and other multilateral organisations, we are providing Kazakhstan with assistance to overcome the legacy of the former Soviet Union and to help it to develop into a free and fair market-based society. Examples of that assistance include a Department for International Development project on the former Soviet nuclear test site of Semipalatinsk, and health reform projects.
Our high-level contacts are increasing. The past six months have seen meetings between my right hon. Friend the Prime Minister and the Kazakh President, and between my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and the Kazakh Foreign Minister Tokaev. My right hon. Friend the Secretary of State for Defence, and the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North Warwickshire, met the Kazakh Defence Minister Altynbaev when he visited the UK in January. Furthermore, my hon. Friend the Secretary of State for Environment, Food and Rural Affairs met the Kazakh Minister for the Environment Samakova, when she visited London last month.
Such frequent high-level contacts are indicative of the strength of Anglo-Kazakh relations, which we hope will be further strengthened by visits from the Kazakh Ministers of Agriculture and of Justice later in the year. It is a pity that the visit to Kazakhstan by my noble Friend Baroness Symons, the Minister with responsibility for overseas trade, has been postponed in the light of current events, but I can confirm that it is her intention to reschedule that visit later in the year. I also know that my right hon. Friend the Foreign Secretary is still keen to visit the country when he can.
I am pleased to say that parliamentary contacts are also improving. A group of UK parliamentarians visited Kazakhstan last November, as we have already heard. I am pleased to see the hon. Member for Castle Point (Bob Spink) and my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy), both members of the delegation, present in the Chamber. I am especially pleased that a delegation from the Kazakh Parliament will visit the UK in May under the auspices of the all-party group. The Government warmly welcome that increased activity.
We must continue to work hard to develop our relationship. We need to engage Kazakhstan on important issues, which include not only short-term issues but long-term goals. For the United Kingdom, there are several important prizes, the first of which is energy security. Britain will soon be a net importer of oil 243WH and gas. That means that we have an increasing interest in ensuring diversity of supply and liquidity of the oil market. The Caspian will have an important role to play in world energy markets. Working with Kazakhstan to get the oil and gas out of the ground and delivered to markets is, therefore, strongly in our national interests.
The second prize relates to Kazakhstan's regional role. Kazakhstan's per capita GDP is already five times greater than that of its neighbour Kyrgyzstan. In 10 years, that gap will be wider, and it is a similar story with other countries in the Eurasian region. Our objective is that Kazakhstan, the regional motor of growth, should export prosperity and stability to the other countries of the region. The President of Kazakhstan and his Government are already strongly committed to regional co-operation. We greatly welcome that and want to work with them to make it a reality.
Thirdly, Kazakhstan's development will open up a wide range of possibilities for further co-operation between our two countries. Our aim is to support the Kazakh Government to achieve poverty reduction, a better environment and a higher quality of life for the people of their country.
Human rights are also important. Although we recognise that Kazakhstan has a better record than some of its neighbours and that transition is not an easy or quick process, there is serious concern that the human rights position has deteriorated in the past year. With our EU partners, we have lobbied the Kazakh Government on the cases of political opponents such as Zhakiyanov and Ablyazov and the leading Kazakh journalist, Duvanov. Criticism of the Kazakh Government in that respect will not go away—the problem needs to be addressed. We intend to continue raising those issues with the Kazakh Government, with our EU colleagues and with the Organisation for Security and Co-operation in Europe.
We want to work with the Kazakh Government to improve human rights in Kazakhstan. One important issue will be the new electoral law currently under consideration, to which my hon. Friend the Member for Bassetlaw referred. We also intend to fund several projects in the field of human rights and democratisation. One example is an ongoing project to provide technical assistance for the development of trade unions in Kazakhstan.
§ Linda GilroyDoes my hon. Friend agree that the point I made earlier to my hon. Friend the Member for Bassetlaw is important in developing human rights? If we can forge links between the young people of our universities, that might bring about the sort of climate in Kazakhstan that we all seek.
§ Mr. CaplinIt is clearly in everyone's interest that young people in all countries, including the United Kingdom and Kazakhstan, are able to play an active part. I would welcome any way of achieving that.
I congratulate my hon. Friend the Member for Bassetlaw on his campaigning on drugs issues in the UK. That is another important issue, and we intend to seek out opportunities for greater co-operation between the United Kingdom and Kazakhstan on the drug interdiction.
244WH To touch briefly on the international situation, the UK Government welcomed the comments the Kazakh Foreign Minister made about Saddam Hussein last month, just after the vote in the House.
Kazakhstan was one of the quickest of the former Soviet Union countries to implement essential economic reform, and one of the most thorough in doing so. It was a crucial move, which owes much to the courage and farsightedness of the Kazakh Government. However, Kazakhstan should continue with economic reform—for example, in its development of the non-oil and gas sectors.
Kazakhstan has done much to attract foreign investment. The Government recognised early the importance of foreign direct investment, which has been successful. It has the highest rate of FDI per capita in the countries of the former Soviet Union. British companies have certainly welcomed the investment opportunities: the UK is the second largest investor in Kazakhstan after the USA, with an investment since 1993 of $2.76 billion, or 14 per cent. of the total foreign direct investment in the country. We hope that that investment will continue to grow.
More than 100 companies in Kazakhstan are either fully UK-owned or joint ventures with British connections. Unsurprisingly, they are mostly active in the oil and gas sector, partly because that is the foundation of the Kazakh economy and partly because British firms have so much experience in that sector. It might be worth reminding the House that the UK faced some of the issues that now face Kazakhstan, including local content questions, during the development of our North sea oil resources in the 1970s.
There is also substantial investment in the energy sector and in aviation. For example, BAE Systems set up Air Astana, and many British firms provide consultancy, banking and other financial services. British Gas and Shell are two more high-profile British firms in Kazakhstan. British Gas has a one-third share in the Karachaganak onshore field, and Shell is one of the partners developing the massive offshore field Kashagan.
What of the future? What still needs to be done to ensure that investment, both foreign and domestic, keeps flowing and that the economy keeps growing? I would include in that list the improvement of the regulatory environment and the business climate, the establishment of market-supporting institutions, transparency and the rule of law. Those are all fundamental to business and healthy economic growth. My right hon. Friend the Secretary of State for Trade and Industry raised some of those issues with the Kazakh Minister of Industry when he visited the UK last month. Through Trade Partners UK, we are looking at ways in which we can help to assist the development of Kazakhstan's small and medium-sized enterprises.
There are still risks that Kazakhstan will scare off current and future investors by meddling with the sanctity of commercial contracts and by implementing new layers of bureaucracy. We have made our views clear to Kazakhstan: activity of that sort will seriously deter the new investment that is essential for sustained growth. We will continue to address those issues with the Kazakh Government and through the Kazakh-British Trade and Industry Council.
245WH The Government believe that our expertise and experience can add real value to the development of Kazakhstan and that they will put UK-Kazakh relations on an even firmer footing. I assure hon. Members that we will maintain a close, open and serious dialogue with Kazakhstan. We have much to offer.