Kazakhstan: A True Transit Link Between East and West

By Tom Michael

rail-bridgeKazakhstan – the world’s fifth largest country in terms of land mass – is aiming to put its valuable territory to global good use as it participates in a massive new railway-to-sea transit route linking China with Eastern Europe.

Often referred to as the New Silk Road (a nostalgic and honorary acknowledgement of the ancient Silk Road trade route), the transport route will move freight and passengers overland between Pacific seaports in the Russian Far East and China and seaports in Europe.

The transcontinental railroad currently comprises the Trans-Siberian Railway, which runs through Russia and is sometimes called the Northern East-West Corridor, and the new Eurasian Land Bridge or Second Eurasian Continental Bridge, running through China and Kazakhstan.

In announcing Kazakhstan’s plans, President Nursultan Nazarbayev characterized the proposal as beneficial to all mankind.

president

Kazakh President Nursultan Nazarbayev

“I propose creating a new high-speed multi-modal transport route – the Eurasian transcontinental corridor,” the Kazakh president declared. “It will run through the whole territory of our country, will allow the free transit of goods from Asia to Europe and back. This brings us together and creates security, because security is beneficial to all of us.”

Karait Umarov, Kazakhstan’s ambassador in Washington, told EdgeKz the ambitious rail line is something the country has contemplated from the earliest days of its independence in 1991, as it planned to make full use of its transit potential.

The ambassador also said the rail is a natural outgrowth of Kazakhstan’s friendly relations with it neighbors and that it fits into the nation’s geopolitical and economic goals.

“Having multiple directions for shipments would allow us to efficiently run our multi-vector foreign policy,” Umarov said. “As successors of nomadic civilization, we are naturally prone to interact with all of our neighbors and beyond. We have natural curiosity to engage other nations and develop multifaceted ties with them.”

“Kazakhstan offers a natural transit port with multiple neighboring countries, thus paving the way for economic and commercial activities along the transit routes,” he added. “Multinational companies using these routes for trade between China and Europe will be inclined to consider Kazakhstan as a logistics hub and set up their manufacturing bases in our country, as our small and medium enterprises emerge as part of global supply chain, producing spare parts and delivering services.”

The ambassador also noted that the transit route through Kazakhstan will be economically sustainable as the nation collects transit fees and other revenues from private companies that take advantage of it for their business purposes.

In March 2015, Kakazhstan’s First Deputy Minister of Investment and Development Zhenis Kassymbek (who has since been promoted to the full minister) told participants at the Kazakhstan-Batumi business forum that the government would invest $20 billion in its transport infrastructure through 2020 with a focus on east-west infrastructure.

russian-prime-minister-dmitry-medvedev

Russian Prime Minister Dmitry Medvedev

Russian Prime Minister Dmitry Medvedev also attended the meeting, voicing support for infrastructure upgrades in the region, generally, while not commenting on Kazakhstan’s plans specifically.

“Modern infrastructure is the key to the implementation of many business projects, large-scale initiatives, in order to establish advanced manufacturing workplaces,” Medvedev said, according to published reports.

The expansion of Kazakhstan’s railway network has actively been in the works for at least three years. Two years ago, Askar Mamin, head of Kazakhstan Temir Zholy (commonly referred to as KTZ) rail company announced its specific plans for the railway. Mamin, who has since become the First Deputy Prime Minister of Kazakhstan, then said the Central Asian nation hopes to boost its ranking on the World Bank’s Logistics Performance Index from 80th place to 40th place among 155 countries by 2020. The rail project is part of the strategy.

In keeping with those plans and the proposed Khorgos-Aktau railway, KTZ has committed to a new $2.7 billion investment program to modernize 126 locomotives, 4,172 freight cars and 250 passenger cars, repair 450 miles of rails and construct new lines.

Speaking at the Astana Economic Forum in May 2015, President Nazarbayev explained that the New Silk Road will cut delivery time and improve shipments between China and Europe. This initiative includes plans to build a railway from Khorgos on the border with China to the Aktau port on the Caspian Sea.

Kazakh ambassador to the United States in Washington - for edge umarov

Karait Umarov, Kazakhstan’s ambassador in Washington

Ambassador Umarov elaborated on the president’s remarks in his comment to EdgeKz in November.

“Construction of high-speed narrow-gauge railway across Kazakhstan is designed to help remove bottlenecks and any impediments that might negatively affect traffic flows between China and Europe,” he said. “It will lead to accelerated movement of goods between China, Kazakhstan and other countries of the Caspian region, as well as Turkey and European countries.”

Asked when the rail segment would be completed, the ambassador declined to state a specific date.temir-zholy-logo

“At this stage, the preparatory work is being done to make sure that this ambitious plan is implemented as soon as possible,” Umarov said.

The Kazakh government sees the China-Kazakhstan railway project as fundamental to its plans to upgrade the country’s transport infrastructure and integrate it with others in Eurasia.

“We need to integrate into the international transport and communication networks,” Nazarbayev told a plenary session of government officials in Astana last year. “First, we need to create a multi-modal high-speed transnational Eurasian corridor.”

Global marine terminal operator DP World has worked in recent years to bring trade players together to discuss transit opportunities in Asia and Europe through Kazakhstan.

“With the shift of manufacturing to central and western Chinese cities, far from the traditional

sea ports that have taken Chinese made goods around the world, the New Silk Way across

Kazakhstan has enormous potential to link China and the west mainly by land, and particularlyeurasia

by rail,” said DP World Group CEO Mohammed Sharaf.

The legendary ancient Silk Road combined land and sea and so would the new one. Both old and new also thread through many different countries of diverse faiths and bodies of knowledge. But the new version of the Silk Road has one massively tangible advantage – speed.

The route utilizing Kazakhstan drastically reduces the time needed for a container to reach Europe from Asia. By sea, the average time span is 42 days. By train over land, it takes around 13 days. While transport costs over land are higher than by sea this overhead is negligible for high-value, time sensitive goods such as new phones, computers and medicine.

“We are proud to have advised on Kazakhstan’s new dry port, the logistics and industrial zone Khorgos and the expansion of the port of Aktau, the country’s main cargo and bulk terminal on the Caspian Sea,” DP World said in an announcement.

Umarov stressed that the rail project would not only provide tangible economic benefits to Kazakhstan, its neighboring countries and the private companies that take advantage of it, but would also spur political and social progress.

“From our past experience, we know that restoring the Silk Road will help enhance people-to-people ties and cultural cooperation,” he said. “Opening up to the immediate neighborhood and beyond will help strengthen Kazakhstan’s status as a bridge connecting East with West, and North with South. Thus, the commerce will be generating not only revenues, but also goodwill that is crucial for our region and beyond.”

Umarov also said the rail project is a crucial part of Kazakhstan’s plan to diversify its economy, long heavily dependent on declining oil revenues.

rail-german“Overall, Kazakhstan is confident that in the years to come, it will emerge as a vital logistics hub of the region and serve as a gateway for vast Eurasian, Chinese and Iranian markets,” he said. “Massive investments in infrastructure will help improve our diversification efforts to put the economy on the more sustainable track.”

The ambassador also signaled that Kazakhstan stands ready to assist the United States and its corporate community to take advantage of trade opportunities rapidly developing in his native land.

“At the embassy, we will be glad to facilitate technological, investment, commercial and economic cooperation between Kazakhstan and the U.S.,” he said. “In the U.S., top best infrastructure and logistical companies can benefit from the ongoing massive investment in infrastructure in our part of the world.”

 

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