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Does the crisis in Kazakhstan affect Brazilian international trade?

    The Republic of Kazakhstan, located in Central Asia, is among the ten largest countries in the world and shares borders with powers such as Russia and China. It also occupies its place among the territories with the greatest abundance of mineral resources and fossil fuel reserves, having the 12th largest existing oil reserve ― according to data from the Brazilian Institute of Petroleum and Gas (IBP). With this in mind, it can be said that the country's economy is mainly based on such reserves, as well as its influence around Asia is mainly sustained through them.

 

The advance of the Kazakh political crisis

 

    In the midst of these conditions, the country has been ruled since 2019 by Kassym-Jomart Tokayev, the successor appointed by former President Nursultan Nazarbayev, who had been in power since 1990 through re-elections that were heavily criticized for his serious irregularities. This and other issues, such as high inflation, social inequality and limited civil liberties, led to a great feeling of dissatisfaction among the population, so when the government announced the increase in the price ceiling for liquefied petroleum gas (LPG), used as a fuel in the country's automobiles, this consolidated as the trigger for a wave of protests in the first weeks of 2022.

    In response, the Kazakh government accused the protesters of being terrorists, announced a nationwide state of emergency and asked for help from the Collective Security Treaty Organization (OTSC), the military alliance of which it is a part. As a result, Russia, one of the members, sent troops to the region and, together with the local police, began to contain the revolt hard, resulting in 225 deaths and more than 4,500 injuries, according to the EFE Agency. Finally, Tokayev promised to lower the price of gas, fired officials aligned with Nazarbayev and several other government officials resigned, gradually moving the country towards normalcy on the streets.

 

How much can this crisis affect Brazil?

 

    Even after this agitation that caught the attention of the international media, it can be said that Brazilian international relations, especially in the commercial sphere, remained unchanged. This is because despite having good diplomatic relations and importing US$140 million – in ores, such as sulfur – from Kazakhstan, this flow occupies only 0.06% of Brazilian imports, according to 2021 data from ComexStat. Likewise, exports to the country, which are based on machinery and agricultural products, move around US$12 million, representing a small portion of the total exported by Brazil. Therefore, there is no significant interdependence between the countries, which meant that there was no direct impact on Brazilian international trade in the face of the crisis in Kazakhstan.

 

The involvement of other trading partners in the crisis  

 

    However, it is important to emphasize that important trading partners of Brazil were involved or were impacted by this event, which gives scope to consider some indirect impact to the country. Firstly, Russia, which trades around US$7 billion in trade with Brazil, was present through its troops in containing the protests and is a long-time ally of Kazakhstan, as both were part of the dissolved Soviet Union. .

 

    This intervention in the crisis was viewed negatively by the United States, Brazil's second largest trading partner, considering that, as it does in regions such as Ukraine, the Russian government does not hesitate to deploy troops in ex-Soviet territories to assert its military influence in region and, as the US authorities argue, this is consolidated as a process of gradual Russian invasion. In contrast, China, Brazil's main trading partner, supported Russian action, as it needs stable Kazakhstan as it depends on a large part of Kazakh natural gas and for having the region as essential for its transport and infrastructure project known as the New Silk Road, which aims to connect Europe, the Middle East, Asia and Africa.  

 

The importance of international consulting in entering foreign markets

 

    In the midst of this complex international context, the Brazilian government remains neutral, which still does not imply significant impacts on the country, but there is no doubt that, given the involvement of other Brazilian partners in the advance of the political crisis in Kazakhstan, it is always important to pay attention to this and other socio-political conjunctures around the world to consolidate itself in international trade. Therefore, for businesses that want to enter foreign markets, an in-depth and up-to-date research on them is essential, such as a Market Analysis or even a Market Update, services provided by Prisma Consultoria Internacional.

 

 

By Mariana Fernandes on 1/19/2021

 

Sources:

https://bit.ly/3255ELr  

https://bit.ly/3A2YMdS  

https://bit.ly/3KfLjUW  

https://bit.ly/3GC73bc  

https://bit.ly/3tvFsVB  

https://bit.ly/3Ie4BbA