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KAI RYSSDAL: Crude oil lost almost 3 bucks today to settle below $89 a barrel. I told you that so I could tell you this: The Pentagon announced a new military cooperation pact with Kazakhstan today. The U.S. will assist the Central Asian country as it tries to bring its military up to NATO standards. Why? Think back to those oil prices I mentioned. Marketplace’s Jeff Tyler explains.
JEFF TYLER: Kazakhstan is strategically important to the U.S. A strengthened military relationship could help in the battle against terrorism in neighboring Afghanistan. But that may not be the only motive at play.
SEAN ROBERTS: It’s also, of course, about natural resources.
That’s Sean Roberts, Central Asian Affairs Fellow at Georgetown University.
Kazakhstan is home to some of the world’s largest oil reserves. One of the biggest is under the Caspian Sea, where the U.S. plans to help the Kazaks build up its Navy. Roberts says a closer military relationship with the West makes Kazakhstan less reliant on Russia. And potentially opens the way for new business relationships in the oil industry.
Roberts: While not wanting to deliberately snub the Russians, they have continually been looking for other avenues to get their oil to market.
But not everyone agrees that military cooperation greases the way for business.
MARTHA BRILL OLCOTT: I really don’t think there’s an economic component of this military pact.
That’s Martha Brill Olcott with the Carnegie Endowment for International Peace.
Olcott: The Kazaks have been playing hardball in recent months — or the last year or so — with Western investors in Kazakhstan. And there’s no evidence at all of linkage between this increased military cooperation and any economic benefit for U.S. investors in Kazakhstan.
In recent months, Kazakhstan has renegotiated more favorable terms with international petroleum companies. And earlier this week, the country’s energy minister proposed a new export duty on oil.
I’m Jeff Tyler for Marketplace.
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