Kazakh exports face decline amid continued Russian obstructionism

By Kanat Altynbayev


A vendor sells various food items at Moscow's Preobrazhensky market on February 26, 2019. Russian policies have stymied Kazakh products from flourishing in the Russian market, and from reaching European markets via Russian territory. [Yuri Kadobnov/AFP]

ALMATY -- Russia continues to create obstacles aimed at curbing Kazakhstan's ability to export goods to Ukraine and other European countries via Russian territory, Kazakh business owners and analysts say.

"Domestic businesses continue to suffer huge losses due to regular problems with the transit of goods through Russia," said Yevgeny Bolgert, deputy board chairman of the National Chamber of Entrepreneurs (NCE; also known as Atameken) in Nur-Sultan.

That situation continues "despite the official recommendations" coming from the Eurasian Economic Commission (EEU) against Russia's unilateral use of measures against Kazakh merchandise, he said.

Kazakh goods meant for Russian consumers are being targeted as well.


Kazakh President Kassym-Jomart Tokayev (right) confers with Russian Ambassador to Kazakhstan Alexey Borodavkin (far left) in Nur-Sultan June 10. [Kazakh presidential press office]


Apples from Kazakhstan, which Russian public health authorities destroyed, are shown in Tyumen Province, Russia, July 4. [Rosselkhoznadzor]

In one recent example, Russia's Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) announced that on June 28, traffic police and customs agents in southwest Russia stopped a truck carrying about three tonnes of apples.

The cargo was heading from Kazakhstan to Kurgan Province, Russia. Since authorities could not confirm the origin of the apples, they destroyed the whole lot on July 4.

Also earlier in July, Rosselkhoznadzor inspectors, citing violations of veterinary law, sent 30 tonnes of wool and frozen fish back to Kazakhstan even though the merchandise had veterinary certificates.

Rosselkhoznador officials wanted written documentation on laboratory tests of the merchandise, on its packaging and on its origins.

Kazakh companies suffer losses

The Russian measures affect a multitude of countries that would like to buy Kazakh goods.

Meanwhile, on the border between Russia and Ukraine, authorities have been holding 426 Kazakh railway cars loaded with coal concentrate heading from Karaganda, Kazakhstan, to Kryvyi Rih, Ukraine.

Russian authorities will not release the Kazakh cargo, citing an "absence of permission to export to Ukraine via Russia", Bolgert said in a July 4 NCE statement, without identifying the date when Russia impounded the cargo.

The Russian policy took effect June 1.

Kazakh entrepreneurs face daily losses of more than 5 million KZT ($13,000), not counting penalties written into their contracts, due to the detention of the railway cars in Russia, according to the NCE.

"Since the end of 2014, Kazakh entrepreneurs have been constantly confronted with restrictions and bans on importing goods [through Russia] into Kazakhstan from European countries and Ukraine, and since June 1 of this year, domestic exporters have had serious difficulties," said the NCE in its July 4 statement.

'Unfriendly' behaviour

"Despite the deepening of integration within the EEU ... businesses regularly have to deal on their own with problems that arise primarily from the absence of dialogue and of co-ordinated action when one of the EEU member states makes such decisions," Atameken said, apparently referring to Russia.

The EEU is a regional economic organisation formed in 2015. It consists of several former Soviet countries: Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia. Russia holds the rotating chairmanship at this time.

Kazakh exporters constantly complain about intentional obstacles caused by Russian authorities and the subsequent losses that the exporters endure.

Businesses and consumers in Kazakhstan and Ukraine are suffering from the prohibitive measures implemented by Russia, said Beibit Kebekbayev, a Nur-Sultan-based entrepreneur.

"In official statements, Russia declares friendship and co-operation, while in reality it behaves hostilely towards its partner countries," he said.

Eliminating competitors

Russia, in forming the EEU, never planned to create favourable conditions for all participating countries, analysts say.

While the EEU has fostered conditions favourable to Russian entrepreneurs, investments and goods, competing businesses from other EEU members are forced to operate under harsh and unequal conditions, said Ruslan Zhumaly, a political analyst from Almaty.

"Russia is using non-market mechanisms. Its regulators, who supposedly expose violations of health standards, are actually eliminating competitors," he said.

One illustration of this effort is the persecution by Russian authorities of Rakhat, the leading Kazakh candy maker.

Russian enterprises are constantly involving Rakhat in legal battles, while regulators regularly seize the company's products, Rakhat chief executive officer Konstantin Fedorets told journalists in Almaty in February.

Russian companies lean on friends in government to help limit foreign competitors, said Fedorets at the time.

"Russia prefers to act from a position of strength everywhere, including in retail," he said.

As a result of the moves by Russian authorities, Rakhat's exports to the country decreased by 2% in 2018.

Since Russian authorities regularly confiscate Rakhat merchandise, Russian shops selling the Kazakh candies have told the company they are doubtful about any future co-operation, Fedorets said.

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11 Comment(s)

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But Kazakhstan devised this union, they created and adopted the rules. So, follow them or leave. China is waiting for you... They badly need your "resources" and territory. What's the problem?


Kazakhstan proposed an equitable union, but Russia wants to benefit from everything.
One can only hope China won't gobble up the [Russian] Far East.


Kazakhstan is not so brave too, Uzbek fruits and vegetables are being transported to Kazakhstan and afterwards being sold duties off as Kazakh goods in Russian market. And that is destroying Uzbek sellers who are paying all the duties, half of Kazakh freight carriers making their days by transporting Uzbek goods, and they also do not have any papers, and this is ruining Uzbek logistics!


Kazakhstan must give a tit-for-tat response


[It's necessary] to abandon this union immediately and not buy Russian goods. Their food products are no competition to ours. Buy your own products.


[We need] a referendum on leaving this detrimental union with Russia. People will rally in the streets and get rid of these authorities if there's no referendum.


That's why our government wants to open joint factories with China to make this aggressor country [Russia] shut up.


That's why they will keep strangling you for [calling them] an 'aggressor country.'


But Russia has been strangled.


And now Kazakhstan certainly must leave this disadvantageous EUU.


But Kazakhstan is swarmed with poor-quality Russian merchandise. These goods should also be stopped on the border with every document and certificate thoroughly verified. And look for a route to Ukraine and Europe bypassing Russia. And, by the way, we need to leave this useless Customs Union.