Decisive Year for Kazakhstan’s Eurasian Hub Ambitions

Publication: Eurasia Daily Monitor Volume: 11 Issue: 5

(Source: Kazakhstan Temir Zholy)

One priority for Kazakhstan this year is to execute the country’s first comprehensive transportation infrastructure development plan, which the government drafted in collaboration with the World Bank and adopted last November (en.government.kz, November 16, 2013). The plan, which extends to 2020, aims to realize Kazakhstan’s ambitions to become a key transit hub for Eurasia and beyond. Prime Minister Serik Akhmetov affirmed that the ultimate goal is to ensure that “Kazakhstan, with its location on the crossroads of several international transport corridors, meets all prerequisites for becoming a major logistics hub connecting Europe and Asia” (The Astana Times, December 4, 2013). For this reason, Kazakhstan is developing transportation, logistics, and export centers both on its territory and in important foreign countries.

The government has allocated 5 trillion tenge (more than $32 billion) of public and private investment to implement all the envisaged transportation and logistics improvements, which will boost the country’s annual GDP growth by an estimated 1 percentage point (Astana Times, December 4, 2013). As of late 2012, Kazakhstan ranked only 86th on the World Bank’s Logistics Performance Index. According to the minister of transport and communications, Askar Zhumagaliyev, the plan aims to raise Kazakhstan’s ranking to the 40th place by doubling transit cargo through Kazakhstan by 2020 (en.government.kz, November 16, 2013). It foresees improvements in the country’s road, rail, maritime, and aviation sectors, both inside Kazakhstan and externally, to ensure the country’s integration into pivotal international transport corridors. Whereas currently approximately 16 million tons of freight traverses Kazakhstan, by the end of 2020, the volume of transit cargo traffic is expected to multiply 1,000 percent, to 170 million tons (Astana Times, November 23, 2013).

Placed in context, the new transportation plan supports the overarching “Strategy-2050” adopted last year; its goal is to acquire the transportation and other critical infrastructure needed to raise Kazakhstan into the ranks of the 30 most developed countries (Astana Times, December 4, 2013). The transportation plan also helps achieve the “Kazakhstan–New Silk Road” program, designed to create a national capacity to move any good by any means of transport rapidly between any locations within Kazakhstan (inform.kz, November 7, 2013).

These plans all have an important foreign-policy dimension. Kazakhstani leaders argue that the economic fates of Kazakhstan and neighboring countries are inseparable due to globalization and the necessity of Eurasian countries to cooperate to achieve their mutual goals (Astana Times, November 11, 2013).

The transportation infrastructure development plan would continue developing the country’s rail network. In addition to building new lines, it will renovate more than 8,000 kilometers of rail lines inside Kazakhstan, all 302 railway stations, and hundreds of railroad engines and passenger cars (Trend, November 28, 2013). In terms of commercial aviation, the government intends to reconstruct 11 of the country’s 18 airports and open 75 new international air routes by 2020. The priority for maritime development is to expand the capacity of the Aktau seaport and construct the first national cargo fleet of some 20 commercial ships (Astana Times, December 4, 2013).

In cooperation with the Ministry of Transport and Communications, Kazakhstan Temir Zholy (KTZ), the national railway company, will oversee implementation of the plan as it transforms into a multimodal transport and logistics operator. The intent is to create a single comprehensive transportation structure with a “single window” (one-stop shopping), eventually to include the Common Economic Space being developed with Belarus and Russia (Astana Times, December 4, 2013).

The one main transportation sector not under KTZ’s direct operating control is Kazakhstan’s road network, and it is precisely its planned expansion that is perhaps unique in Kazakhstan’s transportation development plan. Within Kazakhstan, the priority is to renovate some 30,000 kilometers of poor quality roads (Tengri, September 12, 2013). In addition, the plan envisages building 260 roadside service centers, 9 bus terminals, 45 bus stations, and more than 1,000 taxi stands to extend coverage throughout the country, including to underdeveloped rural areas (Trend, November 28, 2013). Whereas today, only 75 percent of rural villages with a population of more than 100 people have regular bus service, 300 more routes will be open by 2020 to cover all such villages (Astana Times, December 4, 2013).

Beyond the national territory, the priority is constructing the Western Europe–Western China International Transit Corridor, which is improving the safety and efficiency of the main roads between China and Europe that traverse Kazakhstan and neighboring countries. The new roads will be safer, more durable, capable of carrying heavier vehicles, and permit for faster driving speeds. The Kazakhstani portion of the highway corridor, which costs $5.6 billion, should reach completion in 2015 (World Bank, July 10, 2013). The Corridor will raise Kazakhstan’s GDP by 68 percent above the 2010 baseline, while boosting the GDP of neighboring Central Asian countries by 43 percent (Asian Development Bank, November 13, 2008). It will reduce yearly transportation costs in Kazakhstan by some $230 million simply by shortening transit times (Central Asia Online, December 18, 2009). The construction and related activities will create more than 30,000 jobs, with development in five regions that encompass about half of Kazakhstan’s population: Aktobe, Kyzylorda, South Kazakhstan, Zhambyl and Almaty (World Bank, July 10, 2013).

President Nursultan Nazarbayev called the corridor the “construction of the century” in his 2012 State of the Nation address (http://www.akorda.kz/en/page/address-by-the-president-of-the-republic-of-kazakhstan-nursultan-nazarbayev-to-the-people-of-kazakhstan-27-01-2012_1341926486). Its completion is essential for realizing not only the new transportation plan, but for transforming Kazakhstan’s challenging status as the world’s largest landlocked country into an asset and for reducing national development gaps. The improved roads will revitalize land traffic through Eurasia and, unlike the limited number of fixed rail lines, will allow for the rapid delivery of goods throughout the region (Astana Times, February 20, 2013). Furthermore, since they encompasses some of the least developed areas of Kazakhstan, the improved roads will help reduce urban-rural and other socio-economic disparities within Kazakhstan, both directly, by bringing more road construction and related employment to these undeveloped regions, and indirectly, by making these areas more attractive to investors.