The Chinese-Kyrgyz-Uzbek railway could become a pilot project within the framework of the emerging network of SCO/Greater Eurasian Partnership transport corridors, which are really important in the formation of a new geopolitical and geoeconomic reality, Kubatbek Rakhimov writes.
The history of the project to build a railway from China to Uzbekistan through the Kyrgyz Republic is just under 30 years old. Active discussions on this issue and the corresponding actions of the state bodies of the three countries began in the mid-1990s, that is, literally a few years after the former Soviet republics of Central Asia gained independence. When Kyrgyz President Sadyr Japarov came to power in 2021, this project again attracted the attention of the Kyrgyz authorities. Its implementation is associated with both the national interests of Kyrgyzstan and Uzbekistan, and with China’s strategic objectives in Central Asia.
Chinese experts have formulated the concept of the so-called three continental bridges from China to Europe: the first is the Trans-Siberian Railway, including the Trans-Mongolian Corridor and several railway crossings directly from China to the Russian Federation; the second is the Trans-Kazakh railway line heading to Europe through the Russian Federation, the Caspian region and the countries of Central Asia, and also to Iran, with access to the Persian Gulf; the third is a potential railway corridor through Kyrgyzstan to Uzbekistan with further access to both South Asia through Afghanistan and Iran and to the Caspian Sea, with subsequent access to Southern Europe and Turkey. The advantage of the third bridge is a shorter distance and, accordingly, the delivery time of goods compared to other continental bridges. However, there is one nuance — and it is the most important — if two bridges actually exist and are actively developing, then the third one does not physically exist in nature, although a straight line between the existing railway stations of Kyrgyzstan and China is no more than 200 km long.
Uzbekistan belongs to the category of “double-landlocked countries”, that is, it is necessary to cross two borders to access the sea. For the Uzbek elites, both under Islam Karimov and Shavkat Mirziyoyev, it has become an idée fixe to become a transport mega-hub: to ensure minimal costs for Uzbekistan both in exporting and importing goods, and to become a transit country. This project is critically important for Uzbekistan, since thanks to this railway they have a gateway to China, and they will not be limited to transporting goods via the railways of Kazakhstan. In this regard, Tashkent is looking for diversification and the straightening of routes in order to connect with southern Xinjiang using the shortest possible route.
However, there are several key problems in the implementation of this project.
The first problem is the chronic poverty of the Kyrgyz economy and the impossibility of it implementing the project on its own and using its own production capacities. Despite the country’s GDP growing by leaps and bounds over three decades (taking into account the effect of the catastrophically low base in the first years of independence), Kyrgyzstan remains one of the poorest countries in Central Eurasia.
The second problem is the large external debt of the Kyrgyz Republic and extremely limited opportunities to directly attract the necessary external financing, as well as simply provide a state guarantee for this project. At present, the public debt of Kyrgyzstan exceeds 50% of GDP, and the cost of the Trans-Kyrgyz Railway construction project has increased almost four times, coinciding with the amount of Kyrgyzstan’s external debt.
Thirdly, the period is too short from the point of view of a full assessment of the payback capacity of these railroads, which directly affects the payback time and the transition of the project from a conditionally geopolitical to a conditionally commercial one. This, in fact, is impossible without a great deal of income from the development of deposits along the route of the railway with certain branches to remote, but very important deposits. Not a single international development institution actively working with Kyrgyzstan has offered a sustainable payback model for the project and none has acted as a stakeholder.
Fourth, Kazakhstan has persistently rejected this project, having already built two full-fledged railway routes to China (Dostyk-Alashankou and Khorgos-Altynkol) and begun the construction of a third railway crossing. Moreover, Kazakhstan has interests in increasing freight traffic along the so-called Middle Corridor, also known as the former TRACECA project.
Competition, albeit latent, can be both counterproductive and beneficial for the project. Until recently, Russia was sceptical about the Trans-Kyrgyz Railway project, reasonably believing that this project would not be a global competitor to the Trans-Siberian Railway, despite the shorter, but more complex route to Europe. Russian Railways were even officially present in the working group for the development of the Trans-Kyrgyz Railway project (or as it is called, the Chinese-Kyrgyz-Uzbek Railway), but somehow quietly and imperceptibly withdrew from it. Moreover, the very sensitive issue of track gauge (the Stephenson standard of 1435 mm in China, and the Russian 1520 mm standard in Kyrgyzstan and Uzbekistan) was resolved rather strangely — the Chinese track goes deep into Kyrgyzstan and there the train is either reloaded or undergoes a change of wheel pairs.
It is impossible to discuss the development prospects of a particular railway without taking into account the seismic danger of the region. The problem with a railway, unlike a hydroelectric power station or a nuclear power plant, is its length, which significantly reduces the chances of building it in a strictly safe zone. This factor can play a large role in increasing the costs of strengthening the railway track and the costs of rolling stock. The latter is especially important, since it is obvious from the current situation that only Chinese rolling stock is possible. Accordingly, its maintenance will require the use of additional labour resources from China along the entire route.
The formation of an Uzbekistan-Kyrgyzstan consortium would allow, without an overly active role of China, for an optimal formula for attracting investments to be found. In particular, the Republic of Uzbekistan could provide a state guarantee for at least half of the railway building cost and thereby provide a crystallisation point for the consortium, which would attract institutional investors, in addition to international development institutions and, in fact, the Chinese banks themselves, led by Eximbank. Private investors would also be ready to get the securities issued by the consortium within the framework of, for example, an IPO on the Hong Kong Stock Exchange.
Thus, this project could either be narrowly regional and take into account the interests of the two Central Asian countries as much as possible, attract loans from international development institutions and diversified investments for this project in a balanced manner via the most transparent and extremely market conditions. Secondly, it could look at the interests of geopolitical actors and neighbours in the region, which, in fact, are multidirectional.
The second option is preferable — a full-scale consortium with the participation of the Shanghai Cooperation Organization countries, since the Chinese-Kyrgyz-Uzbek railway directly or indirectly affects the interests of key geopolitical actors on the Eurasian continent. The Chinese-Kyrgyz-Uzbek railway could become a pilot project within the framework of the emerging network of SCO/Greater Eurasian Partnership transport corridors, which are really important in the formation of a new geopolitical and geoeconomic reality.
