Rail routes are all the rage, as the SCO gathers. Keep an eye out for new agreements on regional transit routes.
A trial period of three months will see freight trains from China deliver goods to Afghanistan via Kyrgyzstan and Uzbekistan. Exports of Afghan goods will follow the same route back to China. This new railway corridor commenced its trial run on September 13 when the first two containers of cargo that were trucked from the city of Kashgar in Xinjiang province, arrived in the city of Osh in Kyrgyzstan. From there the cargo will be transported via rail through Uzbekistan then into Hairatan, a border town in the northern Balkh Province of Afghanistan. According to the Kyrgyz national rail operator, Kyrgyz Temir Zholu, by September 15 ten containers with cargo from China are expected to arrive along the route.
The agreement for a trial run of a new economic corridor between China and Afghanistan was signed on September 11, when representatives of the national railway authorities of Uzbekistan, Afghanistan, and Kyrgyzstan met in Tashkent with Zhejiang Union of Railway International Logistics Co Ltd, a private Chinese logistics company.
The Zhejiang Union of Railway International Logistics company is expected to transport 3,500 to 5,000 containers of commercial goods from China each round. According to the agreement, the time it takes for goods to reach Afghanistan from China will be cut from two months to two weeks. The Afghan Railway Authority also stated that import and export tariffs would be reduced significantly on goods being transported by rail.
At present, the port of Karachi in Pakistan serves as the entry point for commercial goods into Afghanistan from China. The Afghan Chamber of Commerce and Investment said that the current route costs Afghanistan a significant amount of money, apparently because of frequent delays and transit costs. Notably, if successful, the proposed railway corridor would bypass Pakistan.
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Afghanistan is a landlocked country and it has traditionally relied on Pakistani land routes and seaports to conduct international trade. The frequent border disruptions at key checkpoints along the Afghan-Pakistan borders have remained a challenge for Afghan traders. While the trial rail route run could enhance China’s engagement with Afghanistan, it should not be interpreted as a snub to Pakistan by China nor a replacement of the Afghan route to China via Pakistan. Overall China’s economic engagement with Pakistan remains strong and investments in Afghanistan are still relatively small.
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There are three main challenges facing the proposed railway route. The first is suspicion of Chinese investment in Uzbekistan, Kyrgyzstan, and Afghanistan. Secondly, there are many unanswered questions surrounding the financing of the project if it moves forward. Finally, there are also long-running security tensions along the shared Kyrgyzstan-China border and inside Afghanistan.
With the Russia-Ukraine conflict dragging on, longer-term sanctions and a reduction in trade with Russia could result in the redrawing of some supply chains and trade routes.
The need for additional transport links is an age-old issue for doubly landlocked Uzbekistan and also Kyrgyzstan. For Uzbekistan and Kyrgyzstan, the new railway corridor means the expansion of commercial and transport corridors. The route would generate transit fees, benefitting local industries as well as a chance to upgrade their infrastructure.
This is true, particularly in the case of Kyrgyzstan, for which the reasons are threefold. Firstly, since its independence, Bishkek has struggled to attract funds to repair and expand its rail services; in addition, relative even to its Central Asian neighbors, Kyrgyzstan is more vulnerable to geopolitical tensions. Finally, border disagreements between Kyrgyzstan/Uzbekistan have impeded previous efforts for regional connectivity but that relationship has much improved.
The China-Afghan corridor trial run could also see the much anticipated China-Kyrgyzstan-Uzbekistan railway project (commonly known as the CKU) kicking off. The CKU is a 4,380-kilometer multimodal railway that aims to connect Kashgar in China’s Xinjiang province to the city of Andijan in Uzbekistan via Kyrgyzstan.
In July this year, Kyrgyz President Sadyr Japarov’s office announced that China will finalize the deal at the Shanghai Cooperation Organization summit in Samarkand, Uzbekistan. The summit, starting today, will give us a good indication of how the China-Afghan railway corridor fits into China’s plans for the region and how seriously it is being considered.
For Uzbekistan, Tashkent has been aligning the country’s development agenda with China’s Belt and Road Initiative (BRI) ambitions since 2019. This China to Afghanistan rail corridor not only complements the CKU, but also another Uzbek-backed project, the Trans-Afghan railway project.
For China, Afghanistan enjoys a strategic geographic position, offering a potential overland shortcut for imports of containerized goods. In 2020, China was the fourth-largest export destination for Afghan goods, after the United Arab Emirates (UAE), India, and Pakistan. It was also the sixth-largest source of imported goods for Afghan markets, following UAE, Pakistan, India, Kazakhstan, and the United States.
If history serves as a preview, without stability in Afghanistan, China may invest a little and make long-term promises, but won’t do more. Yet despite setbacks over the years, China remains interested and continues to play a growing role in the region.
The relevance of testing the China-Afghan rail route also lies in its timing. While talks about this potential route began in 2019, only recently has it been given real attention. In preparation for the SCO summit, China’s President Xi Jinping published a statement on China-Uzbekistan relations. High on the agenda was the security issue in Afghanistan. Similarly, Uzbekistan’s President Shavkat Mirzoyeyev issued a statement emphasizing the southern transport routes, specifically highlighting the Trans-Afghan railway project.
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The trial of this new rail corridor is happening against a backdrop of disruption in world supply routes. In light of this, the need for cooperation and diversification of global supply chains along the East-West and North-South directions is acquiring a strategic dimension. This is equally so for the five Central Asian republics as sanctions against Russia have constrained their supply chains. While this may help add more relevance to the upcoming SCO, unity in the group remains elusive — the group struggles to tackle core security issues in part because it includes longtime antagonists like India and Pakistan. And despite enhancing cooperation, the SCO has struggled to drive regional economic integration. It is neither a trade pact nor an investment vehicle and its members often cannot see eye to eye about specific infrastructure projects.
The China-Afghanistan route is a long way from being open to serious commercial traffic. But this trial run perhaps paints a bigger picture. As Russia’s strength wanes in Central Asia, Beijing can gain ground on key issues like trade routes. Such efforts contribute to China’s long-term aspiration to shift global trade from being sea-based to land-based.
With that in mind, at the summit, we can expect to see a series of trade and transport agreements, perhaps packaged as “Belt and Road” investments. With current geopolitical challenges, the SCO summit could present a window of opportunity for the Central Asian leaders. For them, it presents a chance to be in the driving seat and push for alternative trade routes, so they too can have a seat at the negotiation table.