Kazakhstan's defense industry will soon be manufacturing helicopters, night vision equipment, 1,000-ton warships, armored personnel carriers and drones – all with the help of foreign companies.
Kazakhstan's market for military equipment is still small, but it's growing, and foreign defense contractors want a share of the business. But the government of Kazakhstan is imposing the same condition on nearly every deal it makes with a foreign defense company: they have to set up manufacturing in Kazakhstan, hand over the technical details of the equipment, and train locals to build and repair it themselves.
At the KADEX defense expo in Astana two years ago, several of the foreign defense contractors who exhibited said they weren't enthusiastic about the requirements to cooperate with local partners.
“The Ministry of Defense is providing the same message to all companies: 'You must be here, you must be a local company. We want your technology to create new opportunities for this country.' And I think this makes sense,” one foreign exhibitor at the show said then. “But the question is going from the theory to the practice, because these guys are very far right now from being able to absorb these kinds of technologies – right now. But this is the direction.” A South Korean defense contractor who was setting up a joint venture ammunition factory in Almaty added: “There is some different thinking – we want to sell, they want us to invest.”
This time around, there was little grumbling about it, and everyone seemed to accept it as the cost of doing business. And Kazakhstan is definitely not the only country that does this, it's becoming the defense business norm all over the world, though people seemed to think that Kazakhstan was much stricter about it than most countries. It's part of a long-term plan to build up an indigenous defense industry and eventually start exporting military equipment. (Currently, all the joint ventures being set up are producing equipment only for Kazakhstan's military.)
At the show, Ukrainian defense exporer Ukroborobprom announced a deal to produce BTR-4 armored personnel carriers in Kazakhstan. South Korean shipbuilder STX announced that it is going to set up a shipbuilding works on the Caspian, which will be able to produce ships of over 1,000 tons -- Kazakhstan's current shipbuilder, the Zenit company in Uralsk, can only make ships up to 600 tons. (There must be a story of why the Soviets decided to set up a shipbuilding company in a town that isn't on the sea, but the fact that any ship has to travel down the Ural River to reach the Caspian limits the size of ships that can be manufactured there.) Turkish firm Aselsan is building a factory in Astana to produce night-vision equipment, which should open in October. And Kazakhstan is negotiating with two Israeli companies, IAI and Elbit, to establish drone manufacturing in Kazakhstan.
Eurocopter has almost finished a factory just next to the Astana airport, which will produce eight EC145 helicopters this year, part of a deal to make 45 for Kazakhstan. And they hope to use the facility to service other Eurocopter helicopters from around the region. The factory will be inaugurated on July 6 – President Nursultan Nazarbayev's birthday, the company rep said. Nazarbayev signed the deal to set up the joint venture with his French counterpart Nicholas Sarkozy, the rep pointed out. "It's his program."