Tuesday, 15 December 2015 21:16

The EU, Central Asia, and the Development of Continental Transport and Trade Featured


1512TransportBy S. Frederick Starr, Svante E. Cornell, and Nicklas Norling

Silk Road Paper, December 2015.

Click to Download



Executive Summary

Since the collapse of the USSR, a number of initiatives have embarked on the momentous task of rebuilding trade and transportation arteries between Europe and Asia across Central Asia and the Caucasus. The underlying logic has been two-fold: by reconnecting the landlocked new states of the region to their neighbors and historic trading partners, the heart of Asia can become a land corridor connecting Europe to Asia. This was the rationale behind the EU’s visionary but poorly implemented TRACECA project (Transport Corridor Europe-Caucasus-Asia). Since 1998, when the EU co-hosted a conference in Baku on the “Restoration of the Historical Silk Road,” the term “New Silk Road” has gradually gained currency in various projects. Indeed, the past several years have seen a competition of initiatives. The U.S. launched its New Silk Road (NSR) initiative in 2010, which nevertheless failed to get the endorsement from the Presidential level needed for its success. Three years later, China launched the Silk Road Economic Belt, itself part of China’s broader “One Belt, One Road” initiative. More recently, following Indian Prime Minister Narendra Modi’s visit to the region, India has also begun to formulate its own version of Eurasia’s emerging web of transport while Pakistan is pursuing a similar but as yet uncoordinated course. It is remarkable that the EU, which pioneered the concept of reopening continental transport a generation ago, is now absent from the list of leaders of this grand project.
Overland trade links offer great potential benefits, but the future corridors are still only in a formative stage. Approximately 90% of the cargo from Europe to China is transported by ship via the Suez Canal; most of the remaining volume is flown by air, without stopping in Central Asia. The overland corridors tra-versing Central Asia are shorter compared to sea routes, but are presently inefficient and, in some cases, relatively expensive. Several obstacles must be overcome in order to make overland transport corridors genuinely competitive. Notable among these are slow borders, but other causes for delay range from impediments in the legal, economic, tax, organizational, and banking sectors to issues with security and communications. Furthermore, there is to create integrated and competitive intermodal transportation and logistics networks across the region. The fact that Central Asia is landlocked compounds these problems, but the heart of the problem is that bottlenecks in one section of a given route end up affecting the entire route and those trading along it.
Thus, overland trade is still in its infancy. This is in spite of China’s increasing trading ties with Eastern and Central Europe, which would be particularly suitable for overland or intermodal transport. China’s trade with Eastern and Central Europe increased nearly tenfold from 2002 to 2013, from $6.8 billion to $58 billion, while its trade with all CIS countries together expanded from $16 billion to $153.5 billion during the same period of time.
Initiatives to ameliorate the situation have been many. But importantly, initia-tives from within the region itself have played a crucial role. All Central Asian states have formulated and begun to implement transport plans and strategies, which have resulted in improved connectivity within the region and new links to Afghanistan. The integration of road and rail networks stands out as particularly promising. Examples include the recently inaugurated Zhezkazgan-Beineu and Arkalyk-Shubarkol rail links in Kazakhstan, completed at a cost of $2.7 billion. The section between Shalkar and Beyneu alone will reduce the transport distance between China and Europe by more than 1,000 kilometers (625mi).
A second and equally important Eurasian land corridor is that which connects India/Pakistan with Europe and the Middle East. Traditionally, Central Asia played a significant role in this ‘southern corridor.’ while development of this route lags at least a decade behind the China-Europe corridor, its long-term potential may be even greater, given the striking demographic characteristics of the Indian Subcontinent as compared with China. Turkmenistan’s new road and railroad, the Pakistan port of Gwadar, Afghanistan’s ring road, and the TAPI pipeline are all elements in this future emerging and vitally important corridor.
In 2011, Kazakhstan completed construction of the 293km (182mi) Zhetygen-Korgas rail link, which connects southern Kazakhstan with the Chinese bor-der—thereby opening a second China-Europe link across its territory in addi-tion to the Alashankou border crossing. The construction of the $1.9 billion Angren-Pap rail link in Uzbekistan, which will connect Uzbekistan’s portion of the Ferghana Valley with the rest of the country, has been approved, and the 928km (576mi) Uzen-Bereket-Gorgan railway now links Kazakhstan and Iran via Turkmenistan.
To the West, opportunities for transit across the Caspian Sea have increased considerably. Kazakhstan has developed the port of Aqtau; Turkmenistan has substantially upgraded the port at Turkmenbashi; and Azerbaijan has built a major new port facility at Alat, south of Baku. Together, these three states have invested tens of billions of dollars in port development. Adding to this are the newly expanded Georgian ports of Poti and Batumi, and the projected port of Anaklia.
These developments dovetail with the Baku-Tbilisi-Kars railroad, which will connect the Azerbaijani and Georgian railroads directly to the Turkish rail net-work; and the Marmaray project, which is digging a tunnel beneath the Bospo-rus that will connect the European and Asian sections of the Turkish railroad system. When these two projects are completed, a high-capacity railroad link from the shores of the Caspian to the European Union will be operational. Fur-thermore, the existing railroad connections to Georgia’s Black Sea coast provide the opportunity to develop the maritime linkages to the Central and East European railroad system, particularly the Viking Railroad. This Railroad, forming a Baltic-Black Sea link, connects Lithuania with Ukraine via Belarus, a 1776km-run over 52 hours.
From a European perspective, a number of steps can be taken to further the development of continental trade. A key question is the placement of logistics hubs in the region. Being centrally located and bordering every Central Asian country including Afghanistan, Uzbekistan has considerable potential. And for future links between Europe and South Asia, Turkmenistan is also centrally located. Yet as European leaders consider the expansion of trade and transportation links, Kazakhstan occupies a unique position in at least three ways. First, by virtue of geography, Kazakhstan forms a one-country link between China and the Caspian Sea. Second, Kazakhstan is the Central Asian country that has gone the farthest in terms of deepening institutional cooperation with the EU, as evidenced by the signing of an enhanced EU-Kazakhstan Partnership and Cooperation Agreement this week. Third, in a regional context Kazakhstan offers an improving business environment crucial to the establishment of a trading hub: In the World Bank’s Doing Business 2016 ranking, Kazakhstan jumped 12 positions from 53rd the previous year up to 41st. If the EU were to take a more strategic approach to continental transport and trade, it will be natural to focus initially on the partnership with Kazakhstan. Importantly, this should not occur at the expense of a focus on other regional countries, but as a first step in what must ultimately be a regional effort that includes all Central Asian states, including Afghanistan.
The heady potential has fed the prevailing enthusiasm, but it has also caused all parties involved to underestimate the challenges that must be addressed before such potential can be achieved. Four issues in particular deserve greater attention.
While the program thus far has been dominated by governmental initiatives, future success will be determined as much or more by market realities, and will depend on the private sector. Therefore, the first challenge is to embrace and build upon the inevitable shift from activities initiated and funded by governments to market-driven activities in many spheres, which must exist for the project as a whole to succeed.
Second, it will be necessary to develop “soft infrastructures” along the route itself. Given its location and its status as the largest transit country between Europe and China, Kazakhstan is a likely and suitable locus for such activities, which should be developed both by Kazakhstan-based businesses and by Ka-zakhstan-Europe partnerships in many fields. The development of such busi-nesses will benefit shippers in the East and West and at the same time be essen-tial to garnering the local support within Kazakhstan, which will be instrumental if the New Silk Road is to be sustainable.
Third, the geopolitics of transport and trade must be fully understood and their importance acknowledged by clear-headed policies. It is in the interest of both Europe and Central Asia to ensure that no power gains the ability to monopolize or control the emerging East-West transport corridors. This means utilizing the existing road and rail links to Northern Europe via the Russian Federation. But it also calls for balancing that route with the emerging corridor to Europe via the Caucasus and Turkey. Failure to achieve such balance will imperil the success of the entire project.
Finally, to assure that both present and future phases of the project are informed by the insights to be gained from the analysis of longer-term developments on the Eurasian continent, and specifically the likely rise of the Indian sub-continent as a major economic force by the year 2040. Acknowledging this emerging reality, the European Union, Kazakhstan, and other Central Asian states should combine forces to advance the opening of the most direct and efficient transit corridors between Kazakhstan, Central Asia, and the Indian sub-continent. These should be understood as an essential but separate supplement to the Silk Road Corridor, and their creation should be a task for the transit countries themselves.
The successful development of continental trade requires close and effective coordination between the European Union and the transit countries of Central Asia. Such coordination must be based on their common interests as defined through careful analyses by both sides and by close consultation between them. Rather than define their common interests narrowly in terms of trade, the two sides should extend the inquiry into all matters that will be affected by the opening of Eurasian land corridors, including nearly all sectors of their economies, diversification, governmental institutions, national and regional security, and demography.


Read 25274 times Last modified on Wednesday, 13 January 2016 05:56





  • CACI Chairman S. Frederick Starr comments on "Preparing Now for a Post-Putin Russia"
    Friday, 03 November 2023 18:30

    Whether Russian President Vladimir Putin dies in office, is ousted in a palace coup, or relinquishes power for some unforeseen reason, the United States and its allies would face a radically different Russia with the Kremlin under new management. The geopolitical stakes mean that policymakers would be negligent not to plan for the consequences of a post-Putin Russia. On November 2, 2023, CACI Chairman S. Frederick Starr joined a panel organized by the Hudson Institute’s Center on Europe and Eurasia for a discussion on how US and allied policymakers can prepare for a Russia after Putin.

    Click here to watch on YouTube or scroll down to watch the full panel discussion.

  • Central Asia Diplomats Call for Closer Ties With US
    Monday, 26 June 2023 00:00

    REPRINTED with permission from Voice of America News
    By Navbahor Imamova

    WASHINGTON -- U.S.-based diplomats from Central Asia, a region long dominated by Russia and more recently China, say they are eager for more engagement with the United States.

    Many American foreign policy experts agree that a more robust relationship would be mutually beneficial, though U.S.-based nongovernmental organizations express deep concerns about human rights and authoritarian rule in the five countries: Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan.

    Michael Delaney, a former U.S. trade official, argued in favor of greater engagement this week at a webinar organized by the American-Uzbekistan Chamber of Commerce.

    He noted that three of the five republics are World Trade Organization members and the other two are in the accession process — a goal actively encouraged by the U.S. government.

    "I've always believed that this is a geographically disadvantaged area. There are relatively small national economies," he said. But, he said, collectively the region represents a potentially more connected market, about 80 million people.

    Key issues

    In this virtual gathering, all five Central Asian ambassadors to Washington expressed eagerness to work on issues the U.S. has long pushed for, such as water and energy sustainability, security cooperation, environmental protection and climate, and connectivity.

    Kazakhstan's Ambassador Yerzhan Ashikbayev said that despite all factors, the United States does not want to leave the field to China, its global competitor, which actively invests in the region.

    "Recent visit by 20 companies to Kazakhstan as a part of certified U.S. trade mission, including technology giants like Apple, Microsoft, Google, but also other partners like Boeing, have shown a growing interest," Ashikbayev said.

    The Kazakh diplomat described a "synergy" of economies and diplomatic efforts. All Central Asian states are committed to dialogue, trade and multilateralism, he said. "As we are witnessing the return of the divisive bloc mentalities almost unseen for 30 years, it's in our best interest to prevent Central Asia from turning into another battleground of global powers."

    During his first tour of Central Asia earlier this year, Secretary of State Antony Blinken visited Kazakhstan and Uzbekistan, meeting separately with the foreign ministers of all five countries.

    That was deeply appreciated, said Meret Orazov, Turkmenistan's longtime ambassador, who also praised the regular bilateral consultations the U.S. holds with these countries.

    Uzbek Ambassador Furqat Sidiqov sees the U.S. as an important partner, with "long-standing friendship and cooperation which have only grown stronger over the years."

    "The U.S. has played a significant role in promoting dialogue and cooperation among the Central Asian nations through initiatives such as the C5+1," he said, referring to a diplomatic platform comprising Washington and the region's five governments.

    "This is where we address common concerns and enhance integration," said Sidiqov. "We encourage the U.S. to bolster this mechanism."

    Tashkent regards Afghanistan as key to Central Asia's development, potentially linking the landlocked region to the markets and seaports of South Asia. Sidiqov said his country counts on American assistance.

    'Possibility of positive change'

    Fred Starr, chairman of the Central Asia-Caucasus Institute in Washington, ardently advocates for the U.S. to adopt closer political, economic and people-to-people ties with the region.

    In a recent paper, he wrote that among dozens of officials, diplomats, entrepreneurs, experts, journalists and civil society leaders interviewed in Central Asia, "even those most critical of American positions saw the possibility of positive change and … all acknowledged that the need for change is on both sides, theirs as well as ours."

    This is the only region that doesn't have its own organization, said Starr, arguing that the U.S. could support this effort. "We have not done so, probably because we think that this is somehow going to interfere with their relations with their other big neighbors, the north and east, but it's not going to. It's not against anyone."

    "Easy to do, low cost, very big outcome," he added, also underscoring that "there is a feeling the U.S. should be much more attentive to security."

    "Japan, the European Union, Russia, China, their top leaders have visited. … No U.S. president has ever set foot in Central Asia," he said. He added that regional officials are left to wonder, "Are we so insignificant that they can't take the time to visit?"

    Starr urges U.S. President Joe Biden to convene the C5+1 in New York during the 78th session of the U.N. General Assembly in September. "This would not be a big drain on the president's time, but it would be symbolically extremely important," he said. "All of them want this to happen."

    Read at VOA News

  • Read CACI Chairman S. Frederick Starr's recent interview on the resurgence of Imperial Russia with The American Purpose
    Tuesday, 23 May 2023 00:00

    Why Russians Support the War: Jeffrey Gedmin interviews S. Frederick Starr on the resurgence of Imperial Russia.

    The American Purpose, May 23, 2023

    Jeffrey Gedmin: Do we have a Putin problem or a Russia problem today?

    S. Frederick Starr: We have a Putin problem because we have a Russia problem. Bluntly, the mass of Russians are passive and easily manipulated—down to the moment they aren’t. Two decades ago they made a deal with Vladimir Putin, as they have done with many of his predecessors: You give us a basic income, prospects for a better future, and a country we can take pride in, and we will give you a free hand. This is the same formula for autocracy that prevailed in Soviet times, and, before that, under the czars. The difference is that this time Russia’s leader—Putin—and his entourage have adopted a bizarre and dangerous ideology, “Eurasianism,” that empowers them to expand Russian power at will over the entire former territory of the USSR and even beyond. It is a grand and awful vision that puffs up ruler and ruled alike.

    What do most Russians think of this deal? It leaves them bereft of the normal rights of citizenship but free from its day-to-day responsibilities. So instead of debating, voting, and demonstrating, Russians store up their frustrations and then release them in elemental, often destructive, and usually futile acts of rebellion. This “Russia problem” leaves the prospect of change in Russia today in the hands of alienated members of Putin’s immediate entourage, many of whom share his vision of Russia’s destiny and are anyway subject to Putin’s ample levers for control. Thus, our “Putin problem” arises from our “Russia problem.”

    Click to continue reading...

  • CACI director Svante Cornell's interviewed on the 'John Batchelor Show' podcast regarding Turkey's 2023 presidential election
    Friday, 19 May 2023 00:00

    Listen to CACI director Svante Cornell's recent interview on the 'John Batchelor Show' podcast regarding Turkey's 2023 presidential election. Click here!

  • New Article Series on Changing Geopolitics of Central Asia and the Caucasus
    Wednesday, 24 November 2021 11:53