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What Will Uzbekistan’s Role in Central Asia’s Connectivity Be?

By Robert M. Cutler A new World Bank report on Central Asian connectivity published in April 2024 highlights the importance of the Middle Corridor, a trade route spanning Central Asia, the Caspian Sea, and the Caucasus, connecting China and East Asia with Georgia, Turkey, and Europe. This corridor is seen as a critical alternative to Russian-controlled routes, especially in light of recent geopolitical tensions. The World Bank identifies ten steps to address bottlenecks in the Middle Corridor, aiming to increase trade volumes by tripling them by 2030. This would significantly reduce travel times and increase trade volumes to 11 million tons, with proper investment and efficiency measures in place.   Uzbekistan and the Middle Corridor The report emphasizes the need for a "holistic" approach to improving transport connectivity in Central Asia. By this, it means a comprehensive and integrated strategy that combines improvements in infrastructure and logistics improvements with a reduction in border delays and tariffs, along with the harmonization of standards across countries. This includes improving both physical and digital infrastructure, enhancing governance and efficiency and addressing productivity issues amongst the state-owned enterprises that dominate the transport sectors in the region. The World Bank notes that Uzbekistan would profit from better rail connections with Kazakhstan; yet it does not identify any potentials for such projects. That is likely because a report by the Bank identified the Trans-Caspian International Trade Route (TITR) through southern Kazakhstan as the preferred program for international support.  Uzbekistan's participation in the Middle Corridor is still in a developmental stage. Tashkent has an active interest and a strategic geographic location, but concrete actions and project details are still emerging. There have been no public announcements about specific infrastructure projects or investments that Uzbekistan is undertaking within the Middle Corridor framework. It can be foreseen, however, that railway modernization should be high on the list of programs. There is, however, a new railway project - the Darbaza–Maktaaral line - currently underway in Kazakhstan that could be extended to improve connectivity with Uzbekistan. It is projected for completion in 2025. A second phase including an extension to Kazakhstan's Syrdarya station could then facilitate a further branch line from Syrdarya to Zhetysai, on the border with Uzbekistan. This project would reduce congestion at the existing Saryagash border crossing between the two countries and thus increase the capacity for transporting goods between the two countries by as much as 10 million tons per year.   The Middle Corridor and improvements to digital connectivity At present, the region has only limited connectivity.  The Central Asian countries have heavily invested in infrastructure since the turn of the century, but the region still lags behind middle-income countries in both investment and maintenance. Most areas continue to suffer from insufficient infrastructure and expensive services. These in turn hinder the potential for internal and external trade. The World Bank's report also provides a comprehensive analysis of the challenges and opportunities for enhancing connectivity in Central Asia. For this purpose, it focuses on both physical and...

Trans-Caspian Corridor High on Agenda of Kazakh President’s Visit to Azerbaijan

On March 11th, Kazakhstan’s president Kassym-Jomart Tokayev and Azerbaijan’s president Ilham Aliyev attended the first meeting of the Interstate Council of Kazakhstan and Azerbaijan in Baku where freight and oil shipment across the Caspian Sea was high on the agenda. The leaders also participated, by teleconference, in a ceremony marking the arrival of the first container train in Azerbaijan’s Absheron station following its departure on February 28th from the Kazakh transport and logistics centre in China’s Xi'an, via the new section of the Trans-Caspian International Transport Route (TITR). At the ceremony, Tokayev emphasized that against current global geopolitical turbulence, the creation of a new transport and logistics framework for Eurasia has a key role to play in nurturing close and fruitful cooperation between Kazakhstan and Azerbaijan. Following talks with the Azerbaijani president, Tokayev spoke of the intensifying degree to which other countries struggle to access transport and logistics opportunities. “This is a strategic area. As testified by today’s ceremony, the close interaction between Kazakhstan and Azerbaijan, as natural partners, is therefore both gratifying and highly significant.” Outlining other issues raised at the meeting, the Kazakh president told the press, “We discussed joint efforts in the fields of digitalization, the creation of artificial intelligence, and the construction of fibre-optic communications along the bed of the Caspian Sea. Each is a unique project.” Azerbaijani President Ilham Aliyev reiterated that the Trans-Caspian transport corridor will determine the level of regional cooperation. “It is impossible to become a transit country without good relations with neighbours. Both Kazakhstan and Azerbaijan have demonstrated their commitment to regional cooperation and strengthening their relations with their neighbours. We are separated the Caspian Sea but this is no longer an obstacle. On the contrary, with the Trans-Caspian transport route set to reach its full potential, the Caspian Sea is a bridge not only between our countries, but also between many others too.” In his report to the Kazakh-Azerbaijani Business Council on cargo transported via the TITR between Kazakhstan and Azerbaijan, Satzhan Ablaliev, Kazakhstan’s Deputy Minister of Transport, stated: “The volume increased by 65% in 2023, and in the current year, is planned to increase by a further 43%, of up to 4.2 million tons. In January alone, the volume of transportation increased 2.5-fold compared to January last year. The transit of Chinese containers has increased almost 3-fold.” During Tokayev’s visit, Kazakhstan’s national oil and gas company KazMunayGas and Azerbaijan’s state oil company SOCAR signed an agreement to increase the transit of Kazakh oil across the Caspian Sea through Azerbaijan along the Aktau-Baku-Tbilisi-Ceyhan route to 2.2 million tons per year. This represents significant progress on an agreement drawn up in 2022 to transport up to 1.5 million tons of oil along the same route. The two companies also signed a Memorandum of Strategic Cooperation on the purchase and sale of Kazakh oil for further processing at SOCAR’s refineries and subsequent trading in the regional and global markets.

EBRD to Tackle Bottlenecks on Major Logistical Hub

To tackle the identified bottlenecks within the Trans-Caspian corridor, the European Bank for Reconstruction and Development (EBRD) announced on December 27th its commitment to providing financial support for the enhancement of modern logistical infrastructure. The bank's loan, amounting to up to U$ 40 million, is intended for Kazakhstan’s principal private rolling stock operator, Eastcomtrans. This support aims to bolster the operator's container handling capacity, specifically targeting one of the busiest junctions near Almaty city, thereby ensuring the continuous operation of its railway fleet. Eastcomtrans, an EBRD client since 2014 and the possessor of 8% of the nation’s total rolling stock, will utilize the allocated funds, available in both US dollars and Kazakh tenge, to further advance its Zhetygen logistical center. The investment will also facilitate the acquisition of approximately 250 new railcars and the maintenance of its existing stock. Located in close proximity to the Chinese border and adjacent to Kazakhstan's largest urban area, this upgraded logistical hub will function as a pivotal point along the Trans-Caspian Corridor. It is poised to enhance the smooth flow of cargo traffic across Kazakhstan. Anticipating a surge in trade volumes, especially in container traffic between Asia and Europe, the hub's development aims to accommodate the escalating demand for freight transit.