Connectivity projects play a crucial role in landlocked Central Asian countries. One such project is the China-Kyrgyzstan-Uzbekistan Railroad, which aims to enhance regional trade and transportation links. However, this ambitious railway project also brings about major concerns, particularly the lack of transparency and potential imbalances in its benefits. Closer scrutiny clearly highlights the ulterior intentions of China in trying to expand its dominance over the minor neighboring countries in and through a maligned debt trap solely for its self promotion and self aggrandizement.
China’s Premier Li Qiang will visit Kyrgyzstan later this month to discuss the long-awaited China-Kyrgyzstan-Uzbekistan (CKU) railway project. The recent political tensions and sanctions have created a need for alternative routes from China to Europe and the Middle East, giving new life to this project. Central Asia has an opportunity to establish itself as a key transit region for trade between East and West. The new railway route will significantly reduce delivery times to Europe and potentially restore Central Asia’s pivotal role in continental trade. However, experts caution that the CKU railway project could disproportionately benefit the wealthy elite and be exploited to evade sanctions and fuel gray-zone trade. Currently, it takes anywhere from 45 to 70 days to transport goods by train from China to Uzbekistan through Kazakhstan, making it impractical for perishable or high-value items. Traders also face the challenge of high transportation costs via railway and air transport. These costs, coupled with state duties on goods exported from China to Uzbekistan, pose significant hurdles for businesses. To address these issues, the proposed CKU railway route of approximately 450 kilometers will pass through Kashgar, Torugart, Arpa, Makmal, and Jalalabad, despite the challenging mountainous terrain. If successfully built, this route is expected to reduce delivery times to Europe by at least a week.The First Project and Survey Institute of China Railway Construction Corporation submitted the final technical and economic feasibility study (TEO) for the railway project to the Kyrgyz and Uzbek governments on June 1. The exact cost of the TEO is unknown, but both countries contributed at least 30 percent of its funding. Unfortunately, despite our request, we have not received any summary of the document from the ministries of transport and trade in Kyrgyzstan and Uzbekistan. The State Enterprise National Company Kyrgyz Temir Zholu and JSC O’zbekiston Temir Yo’llari, responsible for the project, have not shared any details about the TEO. This lack of transparency raises concerns about the project’s viability and environmental sustainability. Central Asia, known for its semi-arid climate and susceptibility to earthquakes, experiences regular natural disasters with significant risks. The region is highly vulnerable to climate change, and in 2008, Kyrgyzstan was devastated by a 6.6 magnitude earthquake that destroyed Nura village. Another risk is associated with the main rivers in Central Asia, the Amu Darya and Syr Darya, which can overflow and cause damage to infrastructure, settlements, and agricultural land. Failing to address these risks promptly could result in substantial costs. There is also concern about the potential displacement of local communities due to the construction of the railroad. The true extent of the impacts on archaeological sites, livelihoods, water sources, and waste management cannot be accurately assessed until the Kyrgyz government releases the feasibility report. Access to this report is necessary to fully understand the potential consequences. This year, a trilateral meeting was scheduled, where officials from China, Kyrgyzstan, and Uzbekistan would discuss financing options for the railway.The visit’s agenda is expected to include discussions on the development of the CKU railway project. Financing remains the most crucial point of discussion, especially for Kyrgyzstan, which may struggle to fund the project on its own territory. Estimates for the total cost of the railway range from $3 billion to $5 billion, indicating that the section passing through Kyrgyzstan could cost between $1.8 billion and $3.1 billion. Temur Umarov, a researcher at the Carnegie Center for Russian and Eurasian Studies in Berlin, believes that the railway project is far from being confirmed. He raises serious questions about its funding sources, as Kyrgyzstan alone may not be able to finance it. Umarov does not expect funds to come from Western institutions due to Kyrgyzstan’s increasing authoritarian direction, leaving China as the likely option. However, he questions whether Kyrgyzstan is willing to become even more dependent on China. Kyrgyzstan is nearing its limit regarding its debt situation, as it has set a cap that restricts more than 45 percent of its total foreign debt to a single creditor. Currently, the country’s debt to China accounts for 39 percent of its overall external debt, approaching that limit. Over the next five years, Kyrgyzstan faces significant annual debt repayments of $400-460 million, with about half of it allocated to repaying loans from China’s Export-Import Bank.The railway has the potential to lower transportation costs for goods, which would contribute to the growth of trade relations and the economies of the three countries as a whole. However, Temur Umarov believes that the project will not be groundbreaking, pointing out that 98 percent of trade currently occurs through sea routes. As a result, the railway’s impact will be limited to establishing connectivity between China and Uzbek businesses. Nevertheless, if the necessary infrastructure can be developed alongside the railway, it could still bring significant benefits to the economies of Central Asia.. The CKU railway presents the possibility of incorporating Central Asia into global supply chains. However, there are notable differences between Kyrgyzstan’s economy and Vietnam’s much larger, manufacturing-focused economy. Additionally, Yau highlights the “lack of competency of policymakers in the region,” suggesting that this scenario is highly unlikely. Instead, it is more probable that the unbalanced trade relationship between China and Central Asia will persist. The railway could be utilized to import more Chinese products and provide limited opportunities for some Central Asian products to be sold in China. Connectivity projects are essential for landlocked Central Asian countries with underdeveloped roads. Traders like Otabek Siddikov eagerly await the potential for faster and more cost-effective transportation. However, concerns exist regarding the lack of transparency surrounding the project, customs statistics, and the possibility of Kyrgyzstan falling into a debt trap. Ultimately, the CKU railway may lead to increased smuggling of illicit goods across borders, benefiting primarily the elites who already control trade with China.
The China-Kyrgyzstan-Uzbekistan Railroad brings both opportunities and concerns for the region. While connectivity projects can be transformative for landlocked Central Asian countries, it is essential to address transparency issues and ensure equitable distribution of benefits. Central Asian nations, China, and transit countries all have the potential to reap significant advantages from this ambitious railway project.
The realistic aims of China are to dump its goods and products at a relatively economical rates to the surrounding countries and amass huge gains both for its economy as well as Industry.
It is time for the Global Nations to come together realizing the impending danger of promoting such ruthless policies of China in trying to expand its presence over the economically weaker Nations to foster its personal ends through the heinous ways of trap, trouble and triumph.
Discussion about this post