For nearly fifteen years, the idea of building a railway line linking China to the Uzbek part of the Fergana Valley via Kyrgyz territory has run up against multiple problems, divergences of opinion, and technical difficulties. Since 2008, however, things seem to be taking a more positive shape, now that there has been a change of scale in the economic stakes: opening up the Uzbek market would facilitate a boom in trade with China, while Bishkek also hopes to hold off the competition coming from Kazakhstan and Tajikistan and to shore up its status as the foremost platform in Central Asia for the re-export of Chinese products.

BACKGROUND: This railway project was launched in 1996 by Tashkent, and a first tripartite commission met the following year. The Uzbek and Kyrgyz authorities were opposed to the route from the outset: the former wanted to open up Fergana by having the line go through the Irkeshtam border post in the south of Kyrgyzstan, while the latter wanted it to run through the Torugart pass. Such a line could potentially have been stretched as far as Bishkek, enabling the capital to escape the quagmire in which it finds itself as regards Central Asian communication paths. In 2001, China and Kyrgyzstan seemed decided to give their preference to the northern route, while the Uzbeks made a show of their neutrality. After years of beating around the bush aggravated by bad relations between Tashkent and Bishkek, a compromise solution was formed around 2007. In a new meeting held in the summer of 2008, the tripartite Commission in fact agreed to a 270 km, rather winding, route to start in Kashgar and extend to Torugart, the Naryn region, and then branch off through the Arpa valley and the Fergana mountains on the way to Uzgen and Karasuu in the Osh region, before finally reaching the Uzbek border to get to Andijan.

The difficulties are not slight, however. Apart from the installation of stations for changing wheels required because of the difference in track width between China and the former USSR, the route of the railway track is severely mountainous, attaining a pass at an altitude as high as 3,600 m. In addition, nearly ten tunnels must be drilled and around twenty bridges built. This indicates the high cost of the project, which, at a minimum of US$ 2 billion, will be mostly shouldered by China, especially given the state of Kyrgyzstan’s finances. But for the three countries involved, the effort is worth the risk. Beijing wants very much to access the market of 25 million potential consumers that is represented by Uzbekistan. Tashkent’s aim is to take greater advantage of the commercial manna offered by China by passing through as few intermediaries as possible. Since the authorities’ implementation of drastic protectionist measures in 2002, the Uzbek population has lacked the basic goods they were used to get from Shymkent, the main centre of commercial redistribution between Kazakhstan and Uzbekistan.

Lastly, advantages are also multiple for Kyrgyzstan. First of all, the construction site itself will provide work for local populations and thereby help to curb, at least for a certain period, the large rural exodus of seasonal workers. Bishkek can also be pleased that it was able to block the version on the project that had it running through Irkeshtam: this latter path would only have crossed a very small section of Kyrgyz territory and would have heightened north-south tensions by giving to the Osh elites a matrix of economic development that the capital would have found difficult to oversee. Above all, the adopted route guarantees the bleakest regions of the country – that of Naryn and of Jalalabad – a possibility to open up. The railway will cross through mountainous zones that have no other prospects for development than to become points of transit. Moreover, China has promised to invest in the iron and coal deposits situated along the route; and since the railway itself will reduce the costs of extraction, it ought to result in lower export prices.

IMPLICATIONS: The progress of negotiations depends on several developments. First of all, the growing competition between the three states bordering China for the control of Chinese products. Kazakhstan was discretely opposed to this railway project and has done everything in its power to improve its own network in order to maintain control over railway transit between China and Central Asia. The new route will rival an already existing one between Almaty and Urumqi that goes through the Dostyk/Alatau post, and which controls more than two-thirds of all China-Central Asian trade. The Kazakhstani authorities have planned to increase its passenger and freight traffic to a total transport capacity of 40 million tons per year and to implement simplified customs procedures to reduce transit time. Above all, the new line will provide more competition for a second railway line which is still under construction, and which is going to link Almaty and Urumqi, this time passing through Khorgos. When finished at the end of 2009, this line will run parallel to the existing highway with a maximum carrying capacity of 25 million tonnes per year.

However, despite Astana’s resistance to the project, the Kyrgyz authorities held out. Trade with China, it ought to be noted, is actually this national economy’s main source of revenues, which exceed those from gold extraction at the Kumtor mine. In 2007, more than 210,000 tons of commodities passed into Kyrgyzstan from China via Torugart and more than 240,000 via Irkeshtam. Kyrgyzstan currently re-exports approximately 75 percent of the Chinese commodities that transit through its territory to other countries: chiefly Uzbekistan, Kazakhstan, Tajikistan, but also to Russia and Afghanistan. This trade has provided new employment opportunities for thousands of people living in border zones, but also for an entire generation of traders and service providers. The Kyrgyz authorities therefore hope that the railway line will enable them to attract some of the Kazakhstani traffic, but also that it will put them in a better position to withstand Tajikistan’s unexpected competition. Indeed, since 2007 and the strengthening of Sino-Tajik cooperation, Dushanbe dreams of itself as the new eldorado of Chinese commodities. The Tajik authorities even hope to construct a railway section from either Andijan or Karasuu from which to link with their northern regional capital, Hojent.

Tajikistan actually has one major geopolitical card up its sleeve that Kyrgyzstan does not: its proximity to Afghanistan. The Tajik authorities have therefore put a three-pronged, long-term strategy into place: first, to provide Chinese bazaars with better, more secure conditions for developing than those that currently exist in Kyrgyzstan, so that they can hive off some of the manna crossing through Irkeshtam; second, to become one of the transit points for products heading to Uzbekistan, in particular to the regions of Samarkand, Bukhara and Karshi; and third, to acquire special partnership status with China via the transformation of the country into the obligatory point of passage for Chinese commodities headed for the north of Afghanistan. Lastly, as far as Uzbekistan is concerned, it is hoping not only to be able to avoid being charged commissions for the transit of commodities by the Kyrgyz businessmen, but also to develop ways to open the country up through routes avoiding Russia. This will enable a more effective distribution of its own industrial products, in particular cars constructed in the small village of Asaka near Andijan by the Daewoo Uzbek-South Korean joint venture.

CONCLUSIONS: The extremely rapid development of China’s commercial presence in Central Asia opens new perspectives for even the least competitive of the Central Asian economies, namely those of Kyrgyzstan and Tajikistan. It gives the local authorities the opportunity to change the status quo: Bishkek and Dushanbe hope that by playing their Chinese cards they will be able to shatter the regional ambitions of their greater Kazakh and Uzbek neighbors. Should the railway line successfully go ahead, it will not profoundly modify China-Russia or China-Europe trade flows, but will enable central and southern Kyrgyzstan, not to mention the Uzbek and Tajik parts of the overpopulated Fergana valley, to benefit a little from the “Chinese miracle”.

AUTHOR’S BIO: Sebastien Peyrouse is a Senior Research Fellow with the Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center. He is the author of The Economic Aspects of the Chinese-Central-Asia Rapprochement (Silk Road Papers, September 2007) and the author, co-author or editor of seven books on Central Asia (in French).