Interview with Ben Godwin, Associate Director, PRISM Political Risk Management

Ben Godwin is a political risk consultant who has lived and worked in both London and Nur-Sultan (previously named Astana) and is currently Associate Director at PRISM Political Risk Management. He has six years’ experience helping UK and European exporters in Kazakhstan.

Here he discusses the political transition from Nursultan Nazarbayev, the first President of Kazakhstan who had been in office since 1990, which sectors hold opportunities for British businesses and how the coronavirus outbreak might impact the country’s economy.

 What does the recent political transition in Kazakhstan mean for stability in the country and its external relationships?

Since coming to power, President Kassym-Jomart Tokayev has emphasised his support for Kazakhstan's long-held multi-vector foreign policy, which sees Kazakhstan maintain positive relations with a wide range of countries. The European Union is Kazakhstan’s largest trade partner thanks to its oil exports. However, it also has a very tight economic and political relationship with Russia and has in recent years developed deep ties with China, which is now invested across the economy, from energy to communications. The transition of power was largely welcomed in Kazakhstan. However, the population since 2014 has faced stagnating socio-economic conditions as the economy has struggled to manage volatility and an overall decline in energy prices. This has created an undercurrent of social unrest, which was most clearly expressed in various demonstrations that took place during the presidential election. These more difficult socio-economic conditions have also caused the government to exert more pressure on major investors to localise jobs and their supply chains.

In which sectors are the greatest opportunities for developing bilateral trade and partnerships between the UK and Kazakhstan?

Bilateral trade relationships have been traditionally strong in the oil and gas sector and the mining sectors, where the UK and Kazakhstan have a long history. The oil supply chain has been closely linked to the UK thanks to the presence of British-Dutch oil major Shell, which is a shareholder in two of the largest projects and a major oil pipeline. UK companies are also very active in the mining industry. More than seventy UK companies are members of the UK-Kazakhstan intergovernmental working group on metals and mining. Education has also been an area where the UK has seen trade develop - from UK universities receiving students from Kazakhstan, to campuses and qualifications localising in country. One final area is professional services. With Kazakhstan keen to improve the efficiency of its corporate management and develop its capital markets, it has turned to UK banking, legal and accounting services for support. This is most clearly expressed in the Astana International Financial Centre, which has adopted a form of UK common law as its underpinning.

What might the consequences of the coronavirus in country and in neighbouring China have on health, economy and ongoing infrastructure projects?

The health impacts of the coronavirus have been relatively limited due to swift action taken by the Kazakhstan government. However, there are multiple economic impacts. The drop in commodity prices, particularly oil, driven by a sharp reduction in consumption and the failure of OPEC+ to agree production cuts has had a major impact on the economy and national budget. As the country shuts down, the government is also taking extensive measures to support the population and the economy at great cost. This is all having an impact on the national budget, which will run a non-oil deficit of 10 per cent of GDP this year, according to the government. 40 per cent of spending will be directed on healthcare provision and social protection measures, meaning long term projects such as the Nurly Zhol infrastructure programme will have to take a back seat in 2020. The drop in economic activity from China will also have an impact on infrastructure in Kazakhstan and connectivity across the wider region.

Interview conducted and photographs by Amy Wevill