This article was originally published by Open Democracy Russia and Beyond on 31 August, 2015.

With a ‘president for life’, poor human rights record and hydrocarbon-dependent economy, Kazakstan often appears a mirror image of its northern neighbour, Russia.

Scratch beneath the surface, and you find a post-Soviet state, which, though similar in behaviour to its Russian counterpart, is making its own path.

Temporary free fall

Over the past ten days, the business world has overwhelmingly been focused on Kazakhstan’s record 23 per cent currency plunge, which followed Astana’s decision to float the tenge. The situation recalls the fate of the rouble after the Russian Central Bank allowed it to float in November 2014.

By that time, the Russian currency had already fallen 50 per cent against the dollar. But the once-maligned 45.6 rouble-dollar exchange rate would soon seem a dream. On December 16, 2014, Russia was hit with its own ‘Black Tuesday,’ when the rouble dropped by 20 per cent —hitting almost 80 to the dollar and inciting panic among a populace no stranger to economic collapse.

Perhaps used to the shocks, perhaps fatigued with bad news, the Russian public has been less swift to react as the rouble hit a seven-month-low last Monday, reaching 71 to the dollar. Some analysts believe the Russian currency could hit 85 by year’s end. Having less and expecting less is perhaps the new norm.

In contrast, the tenge has begun a slow, though turbulent recovery. Kazakhstan has no plans to intervene to prop up the currency should the situation deteriorate. The central bank claims there is no specific devaluation target they are aiming for.

As Bloomberg reports, Kazakhstan’s Prime Minister Karim Massimov claims the free float ‘will create the necessary conditions for a recovery of economic growth, increased lending and investment activity, creation of new jobs and a decrease in the inflation rate to between three per cent and four per cent in the medium term.’ Such high hopes, however, may be wishful thinking.

Stability pegged to the price of oil?

With roughly 8.3 times fewer people and an economy 8.5 times smaller ($1.861 trillion versus $212.2 billion according to 2014 World Bank data), Kazakhstan is often thought of as a scaled down version of Russia.

According to the Observatory of Economic Complexity, crude petroleum accounts for over 55 per cent of Kazakhstan’s $83.9 billion in annual exports, with petroleum gas and refined petroleum accounting for another 4.9 percent and 4.2 percent respectively.

Technically, the EU is Kazakhstan’s number one destination for goods and services, accounting for nearly 40 per cent of total exports. Italy (8.7 per cent), The Netherlands (7.4 per cent), and France (6.9 per cent) lead the pack, with imports dominated by oil and gas.

But when it comes to individual countries, China is Kazakhstan’s number one export partner, purchasing some $16.4 billion (or 20 per cent) of Kazakhstani goods sold abroad. Russia, meanwhile, comes in second place with nine per cent.

In total, Kazakhstan is the second largest exporter of crude oil in the region after Russia, whose $470 billion in annual exports are also dominated by crude petroleum (39 per cent) refined petroleum (15 per cent) and petroleum gas (9.1 per cent.) Russia also counts the EU among its largest trading partner, though political tensions have seen Moscow attempt an eastward pivot (which have thus far come with limited results).

With oil accounting for 25 percent of Kazakshtan’s GDP and 60 per cent of its balance of payments, the Central Asian state has seen its fortunes rise and fall on the price of oil. It is only natural that its currency would reflect such fluctuations.

During the boom years when the price of oil rose significantly between 1999 to mid-2008, Kazakhstan experienced an average annual GDP growth of eight per cent.

After slowing down during the 2009 financial crisis (crude oil plummeted to $30.28 a barrel in December 2008), the Kazakh economy bounced back with the price of oil, hitting a robust 4.6 per cent growth in 2014.

On the back of falling oil prices growth is expected to cool to 1.5 percent for 2015. That modest figure, however, stands in sharp contrast to Russia, which is set to see GDP fall by 3.4 percent this year, partly due to the price of oil, partly due to western sanctions over its role in the Ukrainian crisis.

Following a nuclear deal with Kazakhstan’s Iranian neighbour across the Caspian Sea, the US Energy Information Administration (EIA) now predicts crude will trade at around $49 per barrel throughout 2015, with a modest recovery to $54 in 2016.

Instability