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Wednesday, 25 December 2013 17:25

Ethiopia: Forging New Partnership

IdrissovBy Bruh Yihunbelay

ADDIS ABABA, Ethiopia, December 25, 2013 (The Reporter) -- The world's largest landlocked country by land area and the largest economy in Central Asia. It possesses enormous oil reserves as well as minerals and metals. It also has considerable agricultural potential accommodating both livestock and grain production.


Mr. Erlan Idrissov, the Foreign Minister of the Republic of Kazakhstan, came to Addis Ababa and met with officials including, President Mulatu Teshome Prime Minister Hailemariam Desalegn and his Ethiopian counterpart Tedros Adhanom (Ph.D.). During his visit he discussed with officials issues related to bilateral cooperation and economic relations. Apart from that, he revealed that his governments will open its embassy in 2014.

Bruh Yihunbelay of The Reporter sat down with Mr. Idrissov at Sheraton Addis for an exclusive interview to discuss various issues ranging from the outcome of the meetings to the future plans of Ethio-Kazakh relations and the controversial Hollywood motion picture "Borat". Excerpts:

The Reporter: How was your meeting with Prime Minister Hailemariam?

Erlan Idrissov: It was very good. I was really impressed with your prime minister. He is a man with vision. He is a man with dedication and has the ambition to develop forward-looking plans and he has the knowledge and stamina to deliver those plans. So I can say that it was a very fruitful meeting.

The Reporter: Kazakhstan does not have an embassy in Addis. Do you have plans to open one here?

Erlan Idrissov: This was one of the messages I brought to your president, PM and foreign minister. We are planning to open an embassy here. A political decision has been made and we hope that this will boost our bilateral cooperation on regional and global issues. Apart from that, economic relation is something that we discussed at large. Our two countries have many things in common. You have a very diverse society which is a very big asset when you take into account economic plans.

Also, both countries are landlocked. That is always a challenge when devising economic plans. Another issue is your government is very keen on economic reform and transforming the standard of living of the population. In addition, your government is also forging viable partnership with other countries in terms of attracting investments and creating new opportunities.

These are also our priorities and we have discussed this. Currently, our trade interaction is at a minimal level but the potential is there. Agriculture, manufacturing and new energy are possible areas of interaction. Before my visit, we had a delegation headed by Brigadier General Kinfe Dagnew from the Metals and Engineering Corporation (MeTEC). He met with a number of his counterparts in Kazakhstan and discussed specific areas regarding manufacturing and the energy sector.

The Reporter: What are the key secrets of success of how Kazakhstan in a quite short period of time has attained such significant economic progress?

Erlan Idrissov: Certainly, the formula of national success is based on the personal factor of President Nazarbayev, specifically his strategic thinking and unique experience of the politician, as well as clear understanding of the possibilities of entering a qualitatively new level of competitiveness that Kazakhstan should take in addressing global problems of today's world. The crisis of the collapsed Soviet economy in terms of this scale was comparable for us with the Great Depression in America. However, despite the new regional and global crises we confidently went along the road of economic modernization.

Our country was the first one among all post-Soviet countries in 1997 which moved to the rails of strategic planning. Strategy "Kazakhstan-2030" was the first of the long-term plans aimed at the accession to the 50 most developed countries of the world. This policy document specified the outlines of Kazakhstani project in all fields of development. Nevertheless, the approach of consequential implementation of market reforms and preservation of strong social policy of the state were probably identified as the main objectives of the Strategy.

Banking and pension reforms were held in the republic, which were characterized by international experts as the best ones in the CIS territory. Moreover, effective institutions of economic development were established. We implement an effective oil revenues management policy. In general, the country's gold and foreign exchange reserves currently account for 90 billion dollars, which is about 30 percent of the economy of our country.

At the time of gaining independence in 1991, the county's GDP per capita was calculated at the amount of 700 dollars, while today - following the results of 2012 - it is 12,000 dollars. This is a phenomenal result, even in comparison with the rapidly developing south-eastern "tiger countries". According to British experts, Kazakhstan is ranked third out of the 25 most dynamic economics of the first decade of the 21st century, being behind only China and Qatar. Thus, the majority of tasks and objectives set forth by the Strategy "Kazakhstan-2030" were realized in practice. According to the results of the authoritative Global Competitiveness Index of the World Economic Forum for 2013-2014, Kazakhstan took the 50th place.

The Reporter: How did you manage to turn your oil and gas sector into the major engine of economic development of your country, the successful diversification of directions of its development?

Erlan Idrissov: As I have already mentioned in the previous question, our country implements the effective oil revenues management policy. That is, despite the significant investments in this economic sector and, consequently, its high profitableness, Kazakhstan has always focused on diversification of the economy and development of other sectors: production, construction, services, etc.

We totally understand that the era of oil and gas will pass eventually. In this regard, Kazakhstan has already begun to plan its own economic future regardless of primary resources. Due to the primary resources revenues, we have established the National Fund, the so-called "Fund for Future Generations" which has already accumulated the funds in the amount of more than 73 billion dollars. In the nearest future it is planned to increase this amount up to 80 billion dollars.

Socio-economic foundation built over years of independence, as well as the assets of the National Fund, allowed us to quickly overcome the consequences of the global economic crisis, to maintain the stability of the social system, and to prevent the escalation of the problems of some sectors of the national economy in a systematic crisis. We used windows of new opportunities opened in the post-crisis era for an accelerated forwarding along the way of modernization, diversification, and formation of strong human capital.

The priority of "green economy" development has become the most important trend in recent years. Its basics are laid in the Strategy "Kazakhstan-2050" concept on the transition of the Republic of Kazakhstan to the "green economy", our foreign policy initiative "Green Bridge", which implies close cooperation of Central Asian countries in order to support key international institutions and the private sector in the direction of "green economy" development. It is worth noting separately the authoritative exhibition "Expo 2017: Energy of the Future", which is scheduled in Astana. We are confident that the exhibition will give a significant impetus to the development of our country's "green economy".

Currently, our country implements a large-scale project, "New Skill Road", which should revive the historical role of Kazakhstan as the main interlink of the continent and turn it into the major regional business and transit hub - a peculiar kid of the bridge between Europe and Asia.

The Reporter: What is the situation with attracting foreign investments to Kazakhstan? To what extent is it done? To which sectors of the economy is it relevant?

Erlan Idrissov: One of the state policy priorities of the Republic of Kazakhstan is the maintenance of a favorable investment climate and future stimulation of foreign direct investments inflow to the country's economy. Investment climate quickens high confidence among investors. Kazakhstan took the 50th place in the World Bank's rating: "Doing Business 2014".

The factors affecting the investment attractiveness of Kazakhstan include a comfortable business climate of the country supported by favorable investment legislation, attractive investment support measures, as well as economic and political stability.

The second is the availability of rich natural and mineral resources. According to the estimates of scientists, Kazakhstan is ranked 6th in the world in terms of reserves of mineral resources. Today our country is 9th in the world according to the proven oil reserves. In addition, the republic takes 8th place in the world according to the coal reserves and the 2nd according to the uranium reserves. Kazakhstan is also a world leader in the production of aluminum.

The third is advantageous geographical position. Kazakhstan is located in the heart of the Eurasian continent; main transcontinental routes linking Asia Pacific region with the Middle East and Europe pass through the republic. Three countries out of five BRICS countries are located near Kazakhstan - Russia, China and India.

Over the years of independence more than 170 billion dollars of investments, of which 48 percent or 81.6 billion dollars over the last 4 years, were attracted to the economy of Kazakhstan. This has become possible due to the alignment of a constrictive cooperation with major investors: BP, BG, Chevron, Arcelor Mittal, Samsung, General Electric, General Motors, CNPC, etc.

As part of the "State Program on Forced Industrial-Innovative Development", foreign direct investments were attracted in oil refining and infrastructure projects in oil and gas sector, ore mining and smelting industry, nuclear and chemical industries, mechanical engineering, construction industry, pharmaceuticals industry, agro industrial complex, tourism, information and communication technologies, biotechnologies, alternative energetics, and space industry. Thus, as you can see, investment capital was attracted almost to all sectors of the economy.

The Reporter: What is the main purpose of your visit to Ethiopia? In your opinion, how will the relations between the two countries be developed in the future?

Erlan Idrissov: It is no secret that our countries cooperation with the African continent until now has not been well developed because of a number of objective reasons. These reasons include the geographical distance between the two countries, the lack of direct transport links, the lack of access to the sea in both our countries, insufficient information about each other, etc.

In this regard, our challenge is to overcome the existing barriers, to open the available potential for the establishment of effective and mutually beneficial relations, which in turn requires giving the necessary impetus to the development of a comprehensive political dialogue and the exchange of visits at various levels.

Astana considers Addis Ababa as a perspective partner on the African continent and our aspirations for establishment of closer relations proceed from the provisions of the new Development Strategy of Kazakhstan till 2050, which in December last year was presented by our President Nursultan Nazarbayev, who have identified the necessity for diversification and deepening of the foreign policy contacts in the context of national interests. I hope that the results of my visit, which is the first kind in the modern history of our bilateral relations, will be the beginning of close and beneficial cooperation between Kazakhstan and Ethiopia and will lay a solid foundation for trade, economic and cultural ties.

At the same time, I would like to note that our relationship will not be developed from starch. Many Ethiopian students studied in Kazakhstan as part of the educational programs of the Soviet Union. Besides, we have experts who once worked in African countries, including Ethiopia in the line of different organizations of the former USSR. We could work out together the possibilities of resumptions of cooperation in the field of exchange of students and experts of two countries.

Moreover, the President of Ethiopia, Dr. Mulatu Teshome, before his election to the current post, was concurrently accredited as the Ambassador of Ethiopia to Kazakhstan. We are planning to establish our Embassy in your capital city, the activities of which will certainly contribute to the development of relations between Kazakhstan and other countries of Africa.

The Reporter: What do you think about Africa in general and about Ethiopia in particular? Does Ethiopia have a potential for adopting the successful experience of your country?

Erlan Idrissov: We attach great importance to the development of comprehensive cooperation with the countries of Africa, which has abundant natural resources and represents a huge market for a variety of industrial and agricultural goods. In recent years, the role and political importance of the continent in world affairs have significantly increased. According to the forecasts of the authoritative international research centers, the African continent in the 21st century will occupy a leading position in terms of the growth rate of the economy and could have the potential to become an important trade and economic direction for Kazakhstan business. On the other hand, political stability and the achievements of our country in the agro-industrial, technological and financial spheres may serve as the guarantee for the future successful cooperation between Kazakhstan and Africa.

Recently, the president of Kazakhstan signed a decree on opening of the Embassy of Kazakhstan in South Africa, and in Addis Ababa next year. This choice is dictated by the geographical importance of these countries and geographical location on the continent.

We know that over the last decade Ethiopia was able to achieve relatively high rates of economic growth (an average 10.7 percent of GDP growth per year) due to modernization of agriculture, development of the services sector and the process of industrialization. In 2012, your country took 12th position among the fastest growing economies in the world. According to experts, if your country was able to maintain the current paces of development, Ethiopia will be able to achieve the status of a middle income country by 2025. This is a very serious progress.

In addition, your country has managed to build favorable and constructive relations with most of the leading countries of the international community and international organizations. Our foreign policies are very similar. Astana, like Addis Ababa, stands for the regional integration and is positioned as one of the leading drivers of this process in the region.

During the chairmanship of Ethiopia in the African Union in this anniversary year, we have made important steps towards future integration of African states, addressing urgent problems faced by the continent regarding peace and security, promotion of trade, investments, economic growth, development of education, expansion of information and communication technologies and strengthening of healthcare sector, etc.

It is obvious for us that Ethiopia is gradually becoming a center of African political life. This happens largely because the headquarters of the Union, in which we have recently received an observer-status, is located in Addis Ababa. Kazakhstan also plans to establish a sub-regional hub of multilateral diplomacy and open an office of the UN Secretariat in our southern capital. Thus, our countries may become the initiators of interregional cooperation between Central Asia and Africa.

The Reporter: Can Ethiopia rely on Kazakh investments in the near future?

Erlan Idrissov: In recent years, Kazakhstan turned from the leading "importer of foreign investments" into the major investor in foreign economies. The total volume of Kazakhstan foreign investments reached about 30 billion dollars, which were mainly invested in neighboring countries and Eastern European countries. Today, Kazakhstan business is actively developing new markets and therefore we are very interested in investment opportunities and priority projects in Africa.

In this regard, we believe that Ethiopia may become the "window" of Kazakh exports and investments in Africa, the so-called "business hub" for Kazakh entrepreneurs on the continent. Besides, Kazakhstan annually produces about 15-30 million tons of grain and has the potential to increase the production up to 30 million tons, 5.6 million tons of which are consumed by domestic market, while the rest part is exported. Currently, the bulk of the grain export is carried out through Russian and Ukrainian ports in the Black sea. In the following year, Kazakhstan, together with Turkmenistan and Iran, plans to complete the construction of the railway, which will connect our country with the Iran port Bandar Abba in the Persian Gulf, which will open up the broad opportunities for the development of trade relations with the countries of Central and South Africa.

The Reporter: We know that your country has a long-term Strategy "Kazakhstan-2050". After implementation of this strategy, what kind of Kazakhstan will we be able to see?

Erlan Idrissov: Indeed, the president, in December of 2012, presented a new, long-term strategy "Kazakhstan-2050" to the people of Kazakhstan and the world community. Its main goal is the accession of our country to the top 30 most developed countries of the world.

The fact is that the world has changed significantly since the adoption of the first strategy "Kazakhstan-2030". At the same time, Kazakhstan has reached a new level of development; it has become a strong state. This allows us to look further into the future, to set new goals and to strive to fulfill them. Today, the country's priority is not a policy of survival but the policy of improvement and progress. As I mentioned earlier, we have already implemented most of the objectives of the strategy "Kazakhstan-2030".

Kazakhstan will have to get into the top-rating in terms of economic, social investment, business competitiveness alongside the leading countries of the world - the US, Great Britain, Finland, and European Union countries. But the experience of the last two decades shows that the country has all the prerequisites to make this breakthrough, following its unique "Kazakh way" - a symbiosis of creative thinking, innovations, stability and solicitous attitude to national values.

The main priorities of the strategy "Kazakhstan-2050" defined the formation of economic policy of the new course based on innovations and development of "green economy"; comprehensive support for entrepreneurship; development of a fundamentally new social policy; formation of a highly professional apparatus of managers; further strengthening of statehood and the development of Kazakhstani democracy; continuation of the course of coherent foreign policy; strengthening of Kazakhstan patriotism. This state will have a completely different level of economic development, social policy, where appropriately a new generation of educated, advanced and highly competitive Kazakh people will live.

The Reporter: What do you think are the specific areas that the Ethiopian government should focus on?

Erlan Idrissov: Your government knows better. Your PM and his government clearly know what needs to be done. I think the focus is on capacity building and educating the local population. You are fortunate to have a young population. I think the plan is to build on your strengths. I think there are also hopes for the development of the energy sector. Also, diversifying the economy and intensifying regional partnership is a core issue. Human capacity is vital to have viable economic plans and that should take center stage. In agriculture, manufacturing and new energy, Brigadier General Kinfe met with a number of his counterparts in Kazakhstan and discussed specific areas regarding manufacturing and energy sector.

The Reporter: What about your cooperation with the continent?

Erlan Idrissov: Addis Ababa has the presence of all African countries. So it is important to be here. Being here is important for bilateral mission and multilateral continental mission. Kazakhstan has excellent relations with African countries.

We support the case of Africa and African development. We support historically justified demand for giving opportunities for Africa to develop. Therefore we watch the global dialogue about African development. We hope to contribute to the development in our modest way. We recognize Africa as an emerging economic area of opportunity. The continent is blessed with mineral resources and human capital. So the continent needs to invest in education and infrastructure to tap in to those resources.

The Reporter: I am sure you are aware of the big Chinese presence in Africa. How will you manage to penetrate the African market?

Erlan Idrissov: The Chinese presence is evident. We have a very good understanding of that and we have respect for the Chinese policy of economic engagement. China as one as the fastest growing economies in the world, is destined to be the largest economy very soon.

It is an economy which needs massive resources and capital for sustaining development. So I think it is logical that China seeks to engage globally. Africa, as I said, is the area of economic opportunity with a lot of potential. So we are not surprised that China is engaging actively. Being neighbor to China I think we have room to benefit from this presence, particularly if you take into account the opportunities in Africa. Kazakhstan is a young nation when looking at the recent political history. We were part of the Soviet Union. So we are only 22 years old as an independent state. Of course, our history is very long.

Currently we have excellent relations with China, Russia, India, our central Asian neighbors and Europe. Europe is our number one trading partner. We also have excellent relations with the Unites States, which is the second largest investor in Kazakhstan after the Netherlands. Now we want to expand our presence in Africa. Apart from our embassy in Cairo we have opened our embassy in South Africa. Gradually, we will expand and the expansion will be motivated by economic interests. With Ethiopia in particular we are taking our first step. We are here and have agreed to develop the legal bases for our economic and political relations like avoiding double taxation and mutual protection of investments. So we will set up the foundation for this economic interaction.

We hope to build government-to- government economic commission to meet regularly and eventually we hope to build a business council between the two countries. Then the task of the two governments as we agreed is to encourage the private sectors to explore opportunities with each other. Your president said that there was a psychological barrier of distance between us. You were focusing on your neighbors and we were focusing on our part of the world but now with the visits there will be growing interests to encourage this. Then opportunities will present themselves in various sectors. The engine of cooperation is the private sector. Therefore, we have to create the climate and identify areas where they will work most profitably with each other.

The Reporter: Can you say a few words about the cultural relations between the two countries?

Erlan Idrissov: As far as our cultural relationship is concerned the roots have been planted back in the Soviet days. Back then, many young Ethiopians studied in the former Soviet Union and some of them studied in Kazakhstan. For instance, as part of the MeTEC delegation, one prominent gentleman from Ethiopia, Dr Ashebir Woldegiorgis, who spent more than 10 years in Kazakhstan studying medicine, believes that Kazakhstan is his second home. He is a cultural bridge between the two countries.

He knows the culture and our people. I think that there is a good future for developing cultural engagements. Ethiopia has a unique history with a diverse society and cultural heritage. So when we open our embassy here there will be a greater cultural presence of Kazakhstan and Ethiopians will learn about both or ancient and modern culture and when there is Ethiopian diplomatic presence in Kazakhstan, Ethiopian culture in its diversity will be well presented and that will bring our two nations together. (This interview was originally published by The Reporter)



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