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Kazakhstan Signs $200 Million in Contracts with Afghanistan

Despite continuing to consider the Taliban a terrorist organization, Kazakhstan signed $200 million in contracts with Afghanistan on 2-3 August, leaving some perplexed.

Kazakhstan Signs $200 Million in Contracts with Afghanistan

Image: primeminister.kz

When the Taliban seized power in Afghanistan in 2021, neighbors to the north looked on with a blend of anxiety and dismay.

Fast-forward two years and Kazakhstan has just finished giving the red carpet treatment to a Taliban delegation for a business forum that took place in Astana on August 2-3.

The event, which was attended by 300 officials and private sector representatives from both countries, produced $200 million in commercial deals that mainly comprised commitments by Kazakhstan to supply Afghanistan with grain and flour.

Artur Akhmetov, head of Altyn Grain Group, an exporter of agricultural products, told reporters that his company had signed a contract with the Afghans to supply them with wheat worth $23 million, equivalent to 100,000 tons, per year.

The deal comes as a relief to local grain exporters who have been fighting a losing battle against their Russian peers. At a recent roundtable of the Grain Union of Kazakhstan, Alexander Malov, a representative of the lobby group, complained that Kazakhstan has over the past few years lost considerable ground to cheap Russian exports in Kyrgyzstan and Iran.

The certainty of future food deliveries from Kazakhstan is also a relief to Kabul. Last year, Afghanistan imported 1.28 million tons of Kazakh flour, becoming one of the top three buyers of the commodity, along with Tajikistan and Uzbekistan. Afghanistan alone buys up some 70 percent of Kazakh flour exports. Kazakhstan in turn imports mainly sweet, non-alcoholic drinks from Afghanistan.

In the hope of advancing its agenda of boosting grain exports to Afghanistan, Kazakhstan is pressing for timely construction of a grain terminal on Turkmenistan’s eastern border.

The ascendancy of the Taliban did little to constrain economic relations between Afghanistan and Kazakhstan. Bilateral trade last year rose to $1 billion, twice as much as in 2021, the year that the Taliban seized power. Astana says it wants that figure to rise to $3 billion by some unspecified date in the future.

Kazakhstan aspires to hit that target through diversification. Trade and Integration Minister Serik Zhumangarin said at the Astana business forum that Kazakh exporters intend to supply Afghanistan with more "food products, petrochemical, chemical, metallurgical, light, machine-building industry goods" worth $500 million. Media have reported that the food exports will also include beef, lamb, ready-made flour, and confectionery products.

Zhumangarin stressed that the Afghan market is important for Kazakhstan not only because of its large population of 40 million, but also because it has access to large markets in nearby Pakistan and India, as well as the Middle East, which Kazakhstan is especially eager to cultivate as an export destination.

The warmth of the Kazakh government’s dealings with the Taliban has left some perplexed, however. The arrival of the Afghan delegation in Astana generated a flurry of wry online commentary about how the same government that had dubbed demonstrators involved in the January 2022 unrest as “terrorists” was now greeting members of an organization that is still legally designated a terrorist group with open arms.

When quizzed by journalists on this point, deputy General Prosecutor Zhandos Umiraliyev conceded that the Taliban indeed remains a proscribed organization in Kazakhstan.

“[This ruling] still holds legal force today. The idea of it being revised has not yet been raised. But at the same time, I would like to inform you that, according to the Foreign Ministry, in order to counter threats to regional security, our country is committed to the sustainable development and stability of Afghanistan,” Umiraliyev said.

Meanwhile, Aibek Smadiyarov, a representative of the Foreign Ministry, said that the Taliban’s diplomatic presence in Kazakhstan was conditional. One stipulation was that the activity of Taliban envoys in Astana be limited only to matters concerning trade and economic affairs. Another was that the diplomatic mission would not use the flag or any other symbols alluding to the Islamic Emirate of Afghanistan, whose existence remains unrecognized by Kazakhstan.