Kazakhstan Gains What Russia Loses

International sanctions against a nation-state take time to impact its economy. Since Russia’s February 2022 invasion of Ukraine, under Putin’s so-called “special military operation,” it has faced increasing economic sanctions. One result is that Russia is “hemorrhaging” foreign firms currently based in the country, according to John Daly of the Jamestown Foundation. These companies are moving to former Soviet states, including many that are choosing Kazakhstan. At a government meeting in Astana on April 19, Prime Minister Alikhan Smailov said 43 firms are considering moving to Kazakhstan and 24 already have done so. Tengri News reports that those moving their base of operations include: Honeywell, InDriver, Weir Minerals, Ural Motorcycles, Fortescue, TikTok, Koppert and Emerson. Boeing, EPAM System, Youngsan, Skoda Transportation, GE Healthcare and Philips remain in discussion about the details of a similar move. As Putin’s war drags on into its second year, more foreign firms in Russia are growing concerned about the impact of increasingly harsh sanctions on their viability if they remain there. Kazakhstan recognized it as an opportunity for the Central Asian state and is courting these firms, hoping to attract large amounts of foreign direct investment (FDI) into the country to help modernize it.

Kazakhstan, as the largest and most prosperous of the Central Asian states, is using its economic power to attract these firms. It started the campaign to attract Russian-based companies one month after Putin invaded Ukraine. By the end of last year, Kazakh Deputy Minister of Foreign Affairs Almas Aidarov says Kazakhstan was negotiating with hundreds of Russia-based foreign firms about their possible relocation to his country. He noted in December that “Since the beginning of the conflict and the announcement of sanctions against the Russian economy, we have identified 362 companies that have publicly announced their withdrawal or reduction of their activities in the Russian market. These 362 companies are foreign companies that have operated in Russia and are of interest to us.”

Kazakhstan is attractive as an alternative platform. Kazakh President Tokaev’s administration is putting extensive effort into diversifying its economy. He wants to delink its over-reliance on hydrocarbon exports as well as attract more FDI. Tokaev considers the response to Russia’s invasion an unexpected windfall for his country. The US Department of State reports that according to official Kazakh central bank statistics, as of October 2021, FDI in Kazakhstan totaled $170 billion, including $40.4 billion from the US.

A Kazakh delegation traveling to Washington, DC and New York last year held meetings with Boeing, Valmont Industries, Honeywell, Pfizer, Champion Foods, Paramount, SMP Robotics, LA Solar Group, Ardmore Capital and JPMorgan Chase & Co. officials. Daly quotes Merzhan Iusupov, Chairman of the Board of Kazakh Invest, a national company responsible for attracting FDI to the country, as saying that “In connection with the relocation of many companies to Kazakhstan, we express our readiness to create all the institutional conditions for establishing direct interaction with foreign companies by providing opportunities for moving to Kazakhstan or opening joint ventures.” Since the US trip the flow of businesses leaving Russia has turned into a deluge of companies scrambling to leave.

Last week, in response to the loss of FDI, Putin signed a decree — “On the temporary management of certain property,” which established a mechanism for the introduction of temporary management of foreign assets in Russia, according to Daly. Vedomosti reports that it provides for the temporary management of Russian held subsidiaries of Finland’s Fortum Oyj and Germany’s Unipro (both energy companies) by the Federal Property Management Agency, to generate assets “of paramount importance for the stable functioning of the Russian energy sector.” Putin’s decree essentially establishes the government’s right to externally manage foreign assets inside Russia if Russian legal entities or individuals are deprived of the right of ownership of property abroad.

Putin’s actions are likely to encourage other foreign firms to leave Russia later this year, with Kazakhstan as the likely relocation site. Lloyds Bank in April reported that 70 percent of total regional FDI inflows in post-Soviet Central Asia go into Kazakhstan. As the leading Central Asian state continues down a path to reforming its legal and economic structures to attract more FDI, it appears the country will become the permanent base for many large firms once located inside Russia. The cost of Putin’s military incursion will have large and long-lasting impact on the Russian economy.

Daria Novak served in the U.S. State Dept.

Quick Analysis

Judge Merchan continues to deny justice to Donald Trump

In August of 2024, we discussed the US Supreme Court’s decision in Trump v. United States. We described the three tiered system enunciated by Chief Justice Roberts to determine whether or not the actions taken by the President of the United States are entitled to immunity from criminal prosecution or not. The first tier are acts within the President’s constitutionally mandated authority which are subject to “absolute immunity.” The next are acts that may have “presumptive immunity,” and are subject to examination with evidence that rebuts the presumption of immunity. The third are acts which are unofficial, and which enjoy no immunity. In September, we also discussed the effect this decision should have on the New York County criminal case currently pending against President-elect Trump before Judge Juan Merchan. We cited to a CNN report, which described the evidence used against Donald Trump at the trial of that matter: “Trump’s lawyers pointed to testimony at trial – including from White House officials Hope Hicks and Madeleine Westerhout – they argued should not have come before the jury…'[a]ll of Hicks’s testimony concerning events in 2018, when she was serving as the White House Communications Director, concerned official acts based on [Presidential] authority for which President Trump is entitled to absolute immunity,’ Trump’s attorneys argued. ‘[the Supreme Court’s ruling] specifically forbids prosecutors from offering ‘testimony’ from a President’s ‘advisers’ for the purpose of ‘probing the official act.’” Sure enough, as Chief Justice Roberts stated in the Presidential Immunity decision, “[a]llowing prosecutors to ask or suggest that the jury probe official acts for which the President is immune would thus raise a unique risk that the jurors’ deliberations will be prejudiced by their views of the President’s policies and performance while in office. The prosaic tools on which the Government would have courts rely are an inadequate safeguard against the peculiar constitutional concerns implicated in the prosecution of a former President.” At the time, we stated that “Judge Merchan allowed testimony regarding Donald Trump’s official acts as President, acts which enjoy absolute immunity and which cannot be used against him, or even be entered into evidence in a criminal trial, a situation which could have been avoided had Judge Merchan delayed the trial until he’d received the guidance of the US Supreme Court.” Nonetheless, we predicted that Judge Merchan “will find a way to justify his actions once again, and let stand the unlawful conviction of former President Donald Trump.” You know how much we hate to say we were right…but…we were right. “This Court…finds that the evidence related to the [President-elect’s] claims relate entirely to unofficial conduct and thus, receive no immunity protections,” Judge Merchan wrote in his December 16, 2024 decision. “Further, even if this Court were to deem all of the contested evidence…as official conduct falling within the outer perimeter of Defendant’s Presidential authority, it would still find that the People’s use of these acts as evidence of the decidedly personal acts of falsifying business records poses no danger of intrusion on the authority and function of the Executive Branch, a conclusion amply supported by non-motive-related evidence.” In so ruling, the Court denied Donald Trump’s motion to dismiss his New York County conviction. Let us examine these findings, in light of the evidence admitted at the President-elect’s trial, and then compare that evidence to the acts granted absolute immunity by the US Supreme Court. In his decision, Judge Merchan discusses the testimony of Hope Hicks, who served as the Communications Director for the Trump White House. “Defendant argues that in her roles at the White House, any communications between Ms. Hicks and Defendant must receive absolute immunity…as Defendant’s ability to speak freely to Ms. Hicks was a core function of the Executive. According to Defendant, because Ms. Hicks wielded executive power on his behalf, authority that exists pursuant to Article II of the Constitution, any communications [President Trump] had with [Hicks] are subject to absolute immunity,” the Court wrote. Judge Merchan also noted that “[t]he People argue that the communications Defendant had with Ms. Hicks…constitute unofficial acts not entitled to any level of immunity.” In his inevitable agreement with the arguments presented by Manhattan DA Alvin Bragg’s office, Judge Merchan wrote “Defendant’s argument that any communication he had with Ms. Hicks is subject to absolute immunity by virtue of the position she held in the White House is mistaken…the President himself may speak in his unofficial capacity as a candidate or party leader, and certainly he can do so in his private capacity as well. Any argument that private conduct transforms into official conduct by communicating about the same to an individual with a particular title is without merit.” Thus, it is Judge Merchan’s position that the conversations Donald Trump had with his Communications Director are not entitled to immunity, even though those discussions were held at the White House, while Donald Trump was serving as President of the United States, merely because those discussions were not related to official Executive Branch activities. Sounds possibly reasonable – until you examine the Presidential Immunity decision more closely. In September, we wrote that “the statement made by Chief Justice Roberts in his majority opinion in the Presidential Immunity case [is significant]; ‘Presidents cannot be indicted based on conduct for which they are immune from prosecution…[t]estimony or private records of the President or his advisers probing such conduct may not be admitted as evidence at trial.’” This statement by Chief Justice Roberts points to a blanket immunity for ANY discussions had between the President and his advisors, regardless of the nature of those communications. Further, we noted that the Supreme Court issued the following warning: “[t]he government…contends that a jury could ‘consider’ evidence concerning the President’s official acts ‘for limited and specified purposes,’ and that such evidence would ‘be admissible.’” In rejecting that argument, Chief Justice Roberts states “[t]hat proposal threatens to eviscerate the immunity we have recognized. It would permit a prosecutor to do indirectly what he cannot do directly – invite the jury to examine acts for which a President is immune from prosecution […]