China-EU Railway Freight Via Russia Continues To Operate Full Steam Ahead
Chinese companies bypassed sanctions and arranged their own mechanisms of settling payment of fees due to Russian and Belarus railway operators
The death of the railway routes between China and the EU via Russia and Belarus (CEER) has been much exaggerated, according to an article written by Hussein Askary of the BRIX Sweden Institute, which specializes in analyzing Belt and Road Initiative routes.
Stating that “the danger emanating from think tanks and intelligence agencies providing wishful thinking and propaganda rather than real and objective intelligence is that policy makers, companies, and the public in general are led to making mistaken judgments and taking harmful decisions” Askary takes aim at the US ‘Foreign Policy’ magazine in particular for spreading widely inaccurate intelligence about the CEER and its demise.
In fact, he states, trains running along the CEER from China to the EU via Russia and Belarus have actually showed a small increase in volumes, although traffic flows have been erratic. Askary states that “Around 50% of the east-bound (from EU to China) transport operations along the CEER (EU-Belarus-Russia-China) and (EU-Belarus-Russia-Kazakhstan-China) were temporarily suspended by the rail and logistics operators, because many of their clients decided to move away from Russia and Belarus to other options, mostly back to sea shipping lines. However, Chinese freight companies have continued to use this route for West-bound freight to the EU.”
Instead, sanctions created confusion rather than any impact upon Russia. “EU sanctions imposed on Russia and Belarus meant that EU companies were not able to figure out which railway companies, which banks, and which activities were banned. There was a chaotic situation in which many lost sights of two important factors, first, the Belarus and Russian railways were not included in the EU sanctions nor the banks they settle their transactions through. Second, Chinese companies did not pay attention to the sanctions and had their own mechanisms of settling payment of fees due to the Russia and Belarus railway operators. European companies could in fact use their Chinese partners to settle the payment issue.”
The EU-China drop off was largely created by “High insurance premiums imposed by EU insurance companies due to the highly volatile security situation, although Belarus and Russia were not affected by the military operations. The rising cost of freight due to rising fuel and electricity prices was another reason.”
The China-bound volume of freight along the route has also been recovering and may well continue to do so. We strongly recommend reading Hussein Askary’s article, “The China-EU Express Railway Roaring on: Putin Did Not Kill China’s Eurasian Dream!” in full here. for an excellent examination and analysis of the continuing reality of the CEEC rail freight routes.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm assists British and Foreign Investment into Asia and has 28 offices throughout China, India, the ASEAN nations and Russia. For strategic and business intelligence concerning China’s Belt & Road Initiative please email firstname.lastname@example.org or visit us at www.dezshira.com