Railroad Track Or Giant Trap? The China-Kyrgyzstan-Uzbekistan Route: Pros And Cons – OpEd

October 2024 will see the start of construction on the China-Kyrgyzstan-Uzbekistan (CKU) railroad, which will connect China with Iran and Europe.

Different experts view this project, part of the Belt and Road Initiative (BRI), differently, highlighting both positive and negative aspects. As a rule, all participants are looking for opportunities to benefit themselves. Let’s try to understand what this project will bring to these countries.

China

The project’s initiator and primary sponsor. Although Chinese authorities insist that the BRI has no geostrategic motives or geopolitical ambitions, the opposite is true. In fact, the initiative links more than 130 countries through trade and infrastructure projects.

The BRI encompasses both successful and unsuccessful projects. For instance, track construction work in the center of the country stalled two years after it began in 2017, turning Kenya’s railroad into a road to nowhere. Kenya now has to service loans totaling about $4.7 billion, taken mostly from Chinese banks.

The Sri Lankan government, unable to repay loans for the $1.5 billion port project, agreed instead to lease the port to China for 99 years.

Economists fear that small countries like Nepal, Laos, the Maldives, etc. are facing a looming debt trap. According to AidData, benchmark interest rates for debtor countries around the world have risen sharply. In some cases, China raised the interest rate as a penalty for late payments from 3% to 8.7%. China has thus become the world’s largest debt collector.

The CKU is primarily an alternative route for Beijing to markets in Europe, the Middle East, and South Asia compared to the existing railroad routes through Kazakhstan and Russia. Currently, the majority of transit cargo passes through these two countries. By creating a new route, China has the opportunity to reduce transit tariffs.

Simultaneously, the construction of railroads enhances the accessibility of mineral exports. For instance, deposits of noble, non-ferrous, and rare metals, as well as non-metallic raw materials, represent Kyrgyzstan’s mineral resource base, and the CKU route provides direct access to these resources.

Despite its positive aspects, this project also poses significant risks for China. This branch of the new “Silk Road” could potentially merge with the drug trafficking of the renowned “Golden Crescent.” The Golden Crescent is the largest opium-producing region in Central Asia, located between the mountain ranges of Iran, Afghanistan, and Pakistan. It serves as a major global hub for the production and distribution of heroin and other types of psychotropic substances.

High levels of corruption and organized crime in some Central Asian countries suggest that this road will open a new route for drug shipments to China and Europe.

The next risk for China and the Eurasian region as a whole is that the construction of the new road will remove a natural barrier between extremist and terrorist organizations in the region. High mountains naturally separate the region from neighboring Afghanistan. Separatist groups in Xinjiang will now have a direct route to militants from southern Central Asia and the Middle East, both literally and figuratively. There is also the possibility that the CKU railroad will eventually lead to increased smuggling of illicit goods.

Kyrgyzstan

The country expects to profit from cargo transit. However, most of the stake in the joint venture belongs to China – 51%, and Kyrgyzstan and Uzbekistan – 24.5% each.

Undoubtedly, the railroad complex is of special strategic importance for any country. The CKU project contributes to the development of Kyrgyzstan and Uzbekistan’s transit potential, bringing them out of transportation isolation. While this project allows Uzbekistan to reduce the cost of delivering goods from China, Kyrgyzstan does not reap any obvious benefits. There is only PR and populism, as well as the potential use of the railroad to export minerals from the country and direct smuggling of goods and cargo from China by certain categories of persons.

Azamat Sakiyev, general director of the Kyrgyz State Railway Company, disclosed that the Chinese side will provide $2.350 billion in loans. The three countries will split the remaining cost equally. With uncertain transit tariffs and competition from Russia and Kazakhstan, Kyrgyzstan expects a 24.5% share. Furthermore, Kyrgyzstan must repay its debts to avoid repeating the unfortunate experiences of Kenya or Sri Lanka.

“The future looks problematic for Kyrgyzstan, and helping it escape the Chinese debt trap will not be easy, particularly sincethe international community is focused on, and investing in, more visibly pressingglobal hot spots and conflict zones,” analysts Wilder Alejandro and Marin Ekstrom note.

Nevertheless, President Zhaparov expects that the CKU project will open access to the sea for Kyrgyzstan and have an overall positive impact on trade and economic cooperation between the Gulf countries and Europe.

According to Kyrgyz economist Azamat Akeneyev, an “economic miracle” will not happen. Due to the necessity of the railroad for goods transportation, Kyrgyzstan’s small economy has hindered the development of export-oriented goods production. As is well known, Kyrgyzstan hopes to profit from the transit of goods. However, competition with Russia and Kazakhstan could lead to a “transit-tariff war,”which would ultimately be economically disadvantageous to either country. Transit through Russia is approaching pre-crisis levels, while Kazakhstan is significantly increasing the capacity of its routes, opening new checkpoints, and building new railway lines.

In contrast to the CKU project’s design for 15 million tons annually, Kazakhstan’s new checkpoint in Bakhty will boost cargo transit from China to 20 million tons per year. At the same time, the construction of the road through Bakhty does not carry any environmental or economic risks.

Reports indicate that CKU will span 454 km, with 280 km traversing through Kyrgyzstan’s territory. The plan calls for the construction of 18 stations, 41 tunnels, and 81 bridges along the line. In addition, a special unloading base will be built for “change of gauge,” where the wide gauge used in post-Soviet countries will be replaced by the Chinese gauge. All of this construction may negatively affect the ecosystem and harm the environment, as well as entail additional costs.

One of the main problems is that Kyrgyzstan experiences about 13,000 earthquakes annually, and over the past 150 years, the country has experienced more than ten strong earthquakes with a magnitude of 7.0. Earthquakes can destroy built infrastructure and cause frequent force majeure events, delaying goods delivery and cargo transit.

Uzbekistan

The real beneficiary of the CKU project is Uzbekistan, which will be able to establish a direct link with China, bypassing Kazakhstan. Unlike Kyrgyzstan, this country is export-oriented. In addition, with the launch of this railroad, the cost of freight transportation in this country will become cheaper.

“In the future, this railroad will allow access through the promising Trans-Afghan corridor to the capacious markets of South Asia and the Middle East,” Uzbek President Shavkat Mirziyoyev is confident, although relations with Afghanistan always remain tense for Tashkent.

The multibillion-dollar debt may be unsustainable for Kyrgyzstan, but given the relatively large size of the economy, the Chinese loan will not be a heavy burden for Uzbekistan.

Although Uzbekistan carefully controls its state border, there are occasional illegal crossings and incursions by certain groups. Given its proximity to the Taliban terrorist organization, which seized power in the Islamic Republic of Afghanistan in 2021 after the withdrawal of the Alliance’s international peacekeeping forces, there is a huge terrorist threat here at all times.

It is possible that a railway route passing right through the backyards of drug traffickers, terrorists, and smugglers could become an object of distinct interest, convenient for use at the most inopportune moment, destabilizing the situation in the Central Asian region as a whole.