Central Asia Transit Nations Looking At New Transport Corridors
Avoiding Kazakhstan has become a Eurasian logistics concern as sanctions measures spread
A curious side-effect of the Western sanctions policy towards Russia, has allowed Central Asia and, especially, Uzbekistan to actively engage in the formation of new transport corridors, creating interesting logistics combinations in greater Eurasia.
Russia, forced to abandon traditional routes, together with friendlier partners from Uzbekistan, Kyrgyzstan, Kazakhstan, Turkmenistan, Pakistan and India, are discussing building new transport hubs and chains that would allow for the efficient movement of goods from the north to the south and back again. In this context, Uzbekistan, located in the very heart of Central Asia, is beginning to evolve as the main player.
According to Bakhtiyor Ergashev, a director of the Ma’No Centre for Research Initiatives in Tashkent, when Russia decided to make a Pivot to Asia as a result Western sanctions and access to ports in Europe being cut, Uzbekistan, Turkmenistan, and Kazakhstan, realised they had significant opportunities to implement and strengthen their transit and transport potential within the framework of various projects.
Ergashev stated that “The transit and transport potential of Uzbekistan, Kazakhstan and Turkmenistan can be realized through projects on transport and communication interconnection with the Asian territories of Russia, east of the Urals. Russian products can be exported from Siberia to the south through the countries of Central Asia, including the existing Turkestan-Siberian Railway (Turksib) with access to the seaports of the Indian Ocean. This idea has always been around. It is economically beneficial.
On the other hand, when there are discussions about the emerging corridors such as the St. Petersburg – Chabahar route, or seaports on the Arabian Sea and Persian Gulf, these projects do not eliminate the questions that manufacturers, for example, from Novosibirsk have they ask if these are optimal from the transport and logistics costs perspective. In order to export products, say to Africa or India directly by rail through Central Asia with access to Iranian seaports, they will not need to use a route from St. Petersburg to Iran, which is a very long detour.
All the projects that are proposed today complement each other. The Trans-Afghan railway corridor from Mazar-i-Sharif through Kabul to Pakistan with access to the port of Gwadar is part of a large project the Trans-Eurasian North-South Corridor. There can be many such projects. The main thing is to ensure cargo flows both from north to south and from east to west throughout the large Eurasian space, creating land alternatives for sea transport. The large land space of Eurasia should be united by railway and road corridors that would work to create optimal conditions for business in terms of logistics and the cost of transporting goods.”
According to Ergashev, the newly utilised routes Kyrgyzstan-Uzbekistan-Turkmenistan and to Russia’s Caspian sea ports at Astrakhan and Makhachkala are the results of Russian counter-sanctions on opening up the east as doors to the west closed.
“Kyrgyzstan is becoming one of the main routes for parallel imports to Russia, primarily from China. Subject to sanctions, goods from Kyrgyzstan transited through Kazakhstan, but because Astana has agreed to comply with the West’s sanctions, certain problems and delays have now arisen. To deal with this, Kyrgyzstan, and Russia are looking for workarounds. This route is one of the options for such a workaround.”
The contours of this corridor, Ergashev added, are just beginning to emerge: the flow of goods is still very small. However, this route can provide capacity if developed while there are sanctions between Russia and the EU, and while Kazakhstan is trying to comply with the EU’s requirements. The West hasn’t just tried to cut Russia off from Western markets, it is trying to cut it off from Eastern ones too.
“If, for example, Astana stops strictly complying with the sanctions requirements of the West or sanctions against Russia are lifted and the most optimal short route through Kazakhstan begins to operate at full capacity again, the need for the Kyrgyzstan-Uzbekistan-Turkmenistan-Caspian Sea to Russia will no longer be necessary. This is a product of the sanctions, a forced measure in the current conditions.”
As he noted, Uzbekistan must consider another problem – the difficulties of transiting goods through Kazakhstan to Russia and back.
“There are certain issues that relate to sanctioned products. For example, there are obstacles to the export of non-ferrous metals from Uzbekistan to Russia. There have already been several examples when problems arose with this. There are also difficulties with the supply of microelectronics and household appliances, which were exported mostly from China through Uzbekistan and Kazakhstan to Russia.”
However, textiles and agricultural products from Uzbekistan are not yet sanctioned and are safely sent through Kazakhstan to Russia. If the sanctions against Russia continue, and these goods begin to be included in the blocking lists, then very serious problems will arise.
“It is clear that both Uzbekistan and other countries of Central Asia, which transport goods in transit through Kazakhstan to Russia, are forced to look for some alternative routes and corridors for the future. This is especially true if the sanctions spiral tightens more, and Kazakhstan participates in compliance. Then the Kyrgyzstan-Uzbekistan-Turkmenistan-Caspian Sea corridor to Russia is the only possible option. However, if Astana stops strictly complying with the sanctions requirements, this would be the most ideal option. Then there will be no need to look for any alternative routes.”
Chris Devonshire-Ellis of Dezan Shira & Associates comments “That largely depends on whether the EU is prepared to fund Kazakhstan for the loss of transit income either via compensation payments or a wider trade agreement between Astana and Brussels. Threatening Kazakhstan with secondary sanctions cannot be a longer-term concept as it will later lead to internal political issues within Kazakhstan if traders are effectively prohibited from trading. How far Astana is prepared to follow the EU sanctions will determine whether the alternative Kyrgyzstan-Uzbekistan-Turkmenistan-Russia route needs to be developed. If so, China’s recent decision to suspend work on the China-Kyrgyzstan-Uzbekistan railway may also be revisited.”