Kazakhstan’s Europe-China highway project

Western Europ _ Western China becomes the major transport project within the OSCE region.

Sikander Shah

In the late spring the Czech capital hosted the 18th in a row Economic and Environmental Forum of the OSCE. A year ago under Greece chairmanship the member countries were adopting a common position on migration management, defining their relationship with economic, social and environmental policies of the partnering states.

Kazakhstan, as this year’s OSCE Chairman, introduced for the general diagnosis, obviously, with hope and perspective of subsequent treatment of another quite relevant for the former Soviet Union and much of Eastern Europe issue – good governance at border crossings and improvement of safety of land transport and international road and rail transport. Surely in this regard particularly remarkable is the fact that the “transportation” initiative of the officials in Astana is not accidental. This is where the Kazakh leadership may well be guided by the principle of “do as I do”.

Since September 2009 a super project, comparable in its scale only to mega constructions of the period when Kazakhstan was the Kazakh Autonomic Soviet Republic in the Communist Union has been implemented in this Central Asian state. This is a construction of the highway “Western Europe – Western China ”. Senior members of the Kazakh government argue that the project has no analogue in the world. They claim to surpass even the Soviet Baikal Amur Main Line – 150 thousand workers were building 3,000 miles of the Main Line for two decades.

The officials from Astana are planning to complete building their part of the corridor “Western Europe – Western China ” in three years. The highway “Western Europe – Western China” should ensure a smooth, comfortable and safe road links on the vast territory between St. Petersburg and the Chinese port of Lianyungang. In Russia, the highway runs along the route of North Palmyra – Moscow – Nizhny Novgorod – Kazan – Orenburg. Kazakhstan is responsible for the part of the transit corridor, which runs from the border with Orenburzhskoy region of the Russian Federation via Aktobe, Kyzylorda, Shymkent, Taraz, Kordai, Almaty and ends at the customs post at Khorgos on the Kazakh-Chinese border.

If we translate this into numbers the total length of the road “from point A to point B” is about 8440 kilometres, of which 2780 kilometres are on the territory of Kazakhstan. In the steppes of Kazakhstan the project was given a name “a new road to Europe” (a sort of the tangible part of the “Path to Europe”, an official state policy of the President Nursultan Nazarbayev) and literally “a dream to come true” – this was the name of one of the conferences devoted to the constructions in a city in western Kazakhstan and officially – one of the “breakthrough” projects in the country. Governments of participating countries are preparing the documents for putting the highway “Western Europe – Western China” in the list of the Asian highways within the UNESCAP for Asia-Pacific region.

It is expected that the highway on which the building of a new ultra-route will be officially transferred from the second to the first technical category with quad movement. A scheme used by the Kazakh government to fund the project looks rather attractive particularly in difficult time of crisis.

There are at least three sources of finance: national budget, external loans from international financial institutions and attracting private investment through concessions. For example, for a thorough elaboration of the project, the Government of Kazakhstan signed loan agreement amounting to $187 million with the Asian Development Bank. The document was signed by Minister of Finance Bolat Becker and the Vice President of ADB Shaoyu Zhao.

Astana received the loan for 20 years including a grace period of five years at a rate of LIBOR +0,2%. When signing the papers the Minister of Transport and Communications of Kazakhstan Abelgazy Kussainov reported that the tranche is allocated for the reconstruction of about eighty miles long Taraz-Kordai site. Along with the ADB the project involves the Islamic Development Bank, Japan International Cooperation Agency and the European Bank for Reconstruction and Development and the International Bank for Reconstruction and Development, the latter gives the largest loan in its history. Ideally the project should long be undertaken by the Organisation for Security and Cooperation in Europe – the road has geopolitical importance, it will provide transportation of cargo to three strategic areas: Central Asia – China – Kazakhstan – Russia – Western Europe. Besides the absolute advantage of the new trade route is its low time-consuming nature – the revived Silk Road is four times shorter than the sea route via the Suez Canal and almost half shorter than famous Trans-Siberian Railway. All this will ensure stable demand and loading.

The minimum time period for completion was allotted to the relevant offices in Kazakhstan – the first heavy-duty trucks will have to go on the fresh asphalt in 2012. President Nursultan Nazarbayev took the implementation of the project under his personal control and permanent monitor. Such a careful and responsible attitude of the Kazakhs to construction of the highway “Western Europe – Western China” is not surprising, on the contrary it is revealing. This project is a complete and self-sustaining anti-crisis programme, which has been implemented by the authorities of the country for the past two years.

Five regions of Kazakhstan, including depressive Kyzylorda and Zhambyl region are now developing through active participation in the construction. Last year at least five thousand residents of Kazakhstan got jobs within the project; this figure is expected to reach an impressive fifty thousand by the end of this year. Importantly, a significant portion of this number are residents of rural areas, traditionally experiencing deficit of jobs and therefore “live money”. In fact, the road is a way to prevent the marginalisation of the population of the Kazakh villages and following as a rule social upheavals, ethnic conflicts and destabilisation of the situation in the state.

The effect of road construction in Kazakhstan is extremely multiplicative; it includes development of SMB, service industry, tourism, emergence of associated road infrastructure and the revival of economic life in many regions. The research of the Ministry of Transport and Communications Research in its initial stage of feasibility study showed that by 2020 the volume of freight traffic will increase by two and half times. The average annual economic effect should reach 33,9 billion tenge by decrease of duration of delivery of cargoes from Europe to China and back, and in addition, nearly 50 million tenge by reduction of the number of road accidents and more than 80 billion tenge due to increase in gross regional product.

Environmental side of the project is also kept in mind in Kazakhstan – bypassing of all major settlements is ensured in order to improve environmental and sanitary conditions during the construction. The next few months should become the peak in terms of the workload – to speed up construction the government is ready to make changes to the legislation: it turned out that the regulations on subsoil and subsoil provide special procedures for issuing permits for the resettlement of groundwater quarries, which complicates the legal process and delay the construction.

Simultaneously the geographical expansion of the project is taking place – the authorities of Belarus have been recently invited to take part in the construction of trails Kazakhstan. Thus the highway “Western Europe – Western China” becomes the major transport project within the OSCE region and certainly deserves far more attention from both the organisation as a whole and its individual members, who are interested in developing their own transport capacity and thereby solve serious economic problems of their countries.

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