On December 28, 2023, the head of Kyrgyzstan’s National Investment Agency announced that the construction of the China-Kyrgyzstan-Uzbekistan railroad – which is to form an important element of a planned Eurasian rail corridor – will begin in 2024.
This announcement appears to signal the beginning of a new stage in the implementation of the project, which was initially proposed by the participating countries back in the 1990s, and which will have an important significance for the whole of Eurasia due to its potential role in enabling cross-continental rail transportation.
Although the parties first signed a memorandum of cooperation in relation to the project back in 1997, there were three major obstacles to their joint development of the project, which delayed it for many years. Indeed, two of these obstacles were only overcome in early 2023.
The first of these obstacles was a series of disputes between the participants regarding the route of the main line through the territory of Kyrgyzstan: while China and Uzbekistan wanted to run the line along the shortest possible route, thus sidelining Kyrgyzstan’s largest cities and industrial centers, Bishkek insisted on a longer route, which would be much more in line with the goals and objectives of its Program for the Development of the Transport Network of the Republic until 2040. In the end, Uzbekistan and China deferred to the claims of their Kyrgyz counterparts and accepted the “northern” version of the route.
The second obstacle was the controversy over the choice of gauge for the new main line. The Chinese gauge is narrower than the “Soviet” gauge, which is now used throughout the Central Asian railroad network. For this reason, Uzbekistan and Kyrgyzstan insisted on using the “broad” gauge, as it would be difficult to integrate a “narrow” gauge system into the national rail network.
After overcoming those two main obstacles and signing a new agreement in August 2022, which reflected all their concessions, the parties approved and signed the final feasibility study for the project in mid-2023. The China-Kyrgyzstan-Uzbekistan trunkline was also mentioned as a promising project in the final declaration adopted at the end of the Central Asia-China summit held in mid-2023.
The potential importance of the trunkline can hardly be overestimated: most of the currently operating corridors between China and Europe (China-Russia-Europe, China-Mongolia-Russia-Europe, China-Kazakhstan-Russia-Europe) are already operating at close to full capacity. The new “Southern” corridor, which will be provided by the China-Kyrgyzstan-Uzbekistan trunkline, together with another heavily promoted route, Uzbekistan-Turkmenistan-Iran-Turkey, will increase the volume of freight traffic from China to Europe by about 10 million tons per year. The new trunkline, as the southernmost of the various railroad corridors currently under discussion, may also be the shortest: according to experts from the three countries, the route from the east of China to the ports of Southern Europe along this corridor will be 900 kilometers shorter and almost a week faster than any of the currently existing routes. Moreover, as the southernmost route, it could be the most cost-effective way of transporting Chinese exports to a number of other regions, particularly the Middle East and North Africa. Certain preconditions for the development of the route in these directions are already in place: for example, at the end of 2022, Iran expressed an interest in participating in the transit route from China through Kyrgyzstan and Uzbekistan to the Middle East. The progress on the development of the new trunkline may also encourage the “owners” of the competing projects (primarily Kazakhstan and Mongolia) to make some concessions to China and other countries involved in promising Eurasian routes. The existence of another viable alternative will inevitably lead to increased competition between the routes, even despite China’s interest in the parallel development of several such initiatives.
The prospects of starting construction of the railroad in 2024 were discussed during a meeting held on December 26, 2023 between Kyrgyzstan’s Chairman of the Cabinet of Ministers and Uzbekistan’s Minister of Transport. In all probability, it was the constructive atmosphere of these negotiations that led to the official announcement by the head of Kyrgyzstan’s National Investment Agency mentioned at the beginning of this article.
Nevertheless, while encouraging, the official announcement still leaves a lot of questions unanswered. In particular, in that announcement the China-Kyrgyzstan-Uzbekistan railroad project is mentioned exclusively in the context of attracting foreign investment – an estimated $7-9 billion in 2024-2026 – into the Kyrgyz economy. Since the cost of constructing of the Kyrgyz section of the railroad is estimated at several billion dollars, it is clear that the republic’s government has no intention of financing the project from the national budget.
In their negotiations, the three parties had initially proceeded on the basis that each country would finance its own section of the railroad itself, but in 2022 they departed from this position: while China and Uzbekistan remained willing to finance their sections independently, Kyrgyzstan refused to assume this burden, on the basis that it would not be fair to require the smallest of the three republics to bear the costs of constructing the most expensive and longest (280 out of 450 km) section of the railroad.
Discussion on the financing of Kyrgyzstan’s section are still continuing, and its partners have offered to help it in the form of a soft loan from China. Another proposal is that Kyrgyzstan could transfer development rights in respect of certain of its mineral deposits in exchange for the construction of the railroad – in effect, a form of barter. The parties also discussed the possibility of Kyrgyzstan’s gradual repayment of the cost of the work by transferring to the finance provider a portion of the not inconsiderable transit rent which it will receive from the use of its section of the railroad, an amount which is estimated at $200 million a year.
Unfortunately, none of these three options received the full support of the Kyrgyz government. Kyrgyzstan’s President has called for foreign borrowing to be kept to a minimum, given the country’s substantial indebtedness to China (and it would be difficult for it to find any other country interested in financing such a large project).
Presumably, therefore, it would be a mistake to interpret the announcement mentioned at the beginning of this article as a statement that the parties have now overcome all the obstacles to the implementation of this ambitious project, which has been on the drawing board for almost three decades.
In summary, despite the revival of discussions around the construction of the rail trunkline, the increasing interest of the parties in its promotion and the formation of a favorable geopolitical environment for its development, it seems premature to state that all obstacles to its construction in 2024 have now been eliminated. Nevertheless, the “financial problem” should be considered as a bargaining issue rather than a definitive decision by Kyrgyzstan to participate in or withdraw from the project: at this stage the importance of implementing the project is largely beyond question and Kyrgyzstan is seeking to maximize its profits from its participation. None of the parties have any interest in withdrawing from the project. On January 24, 2024, during talks between Uzbek President Shavkat Mirziyoyev and Chinese President Xi Jinping in Beijing, both parties once again stressed the importance of beginning work on the construction of the China-Kyrgyzstan-Uzbekistan railroad, describing it as “a trunkline designed to form an important component of the Transcontinental Transportation and Transit Bridge, part of the One Belt, One Road Initiative.”
Boris Kushkhov, Department of Korea and Mongolia at the Oriental Studies Institute of the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”
