FOR A GRAINY DAY

Kazakhstan 2015 | TRANSPORT | FOCUS: KAZAKHSTAN-TURKMENISTAN-IRAN RAILWAY

Over 900km of railways linking Kazakhstan to Turkmentistan and Iran are part of an aggresive strategy to increase trade by lowering transportation costs in the region.

In December 2014, the presidents of Kazakhstan, Turkmenistan, and Iran launched a railway line to connect the three countries, a noteworthy project that will affect the development of both regional trade and global politics. The 928-kilometer Uzen-Bereket-Gorgan railway will be pivotal for reconnecting by rail the areas that were once connected by the convoys of caravans of the Silk Road. The recently launched line allows the direct delivery of goods along the shortest path possible among the three countries, but also allows the transportation of goods from Central Asia to China and the Far East.

The countries' respective presidents originally signed the joint decision to construct the new railway line in 2007, with the implementation of the new project getting underway in 2009. The 146-kilometer Kazakhstan section was finished in 2012, before being linked to the existing segment of the railway in Turkmenistan at Kyzylgaa–Bereket.

The railway is a perfect example of fruitful international collaboration. The three states have managed to build a rail line of more than 900-kilometers linking the Kazakh steppe, the desert of Turkmenistan, and the mountainous province of Golestan in northern Iran.

Both the Islamic Development Bank and the Asian Development Bank have played a major role in the development of the project. Kazakhstan also offered to supply the two other countries Kazakhstani-made locomotives, cargo, and passenger rail cars. The new corridor will significantly increase Kazakhstan's transit potential. Aside from the oil and oil-product cargoes expected to dominate the flow freight, grain will also comprise a significant portion of the load. Currently, Iran has already become the biggest buyer of Kazakhstani grain and ranks first among importers of barley from the state.

Additionally, the new railway will strengthen the trade turnover between Kazakhstan and Turkmenistan. The trade turnover between the two countries over the first nine months of 2014 increased by 23%, reaching $500 million. Over the same period, the export of wheat and barley to Iran has increased almost threefold, from 280,000 tons to 786,000 tons. In 2013, Kazakhstan supplied one million tons of wheat to Iran, meeting a considerable part of the average demand of between nine and 10 million tons.

During the opening ceremony of the railway, president Nazarbayev stressed that Kazakhstan intends to export not only grain, but also steel, mineral fertilizers, and other Kazakhstani products. As Nazarbayev underlined during the World Islamic Economic Forum in Dubai in October 2014, the new railway offers Kazakhstan the possibility of exporting its goods to Iran and also to the wider Gulf Region, an area that will be of key importance for Kazakhstan if it is to maintain growth in foreign trade. Experts predict that a large amount of traffic from China to Europe, the Middle East, Central Asia, and the Caucasus will soon be reoriented to the Gulf, a region characterised by a high demand for food products with an 80% to 90% dependency on food imports. According to preliminary estimates, 3 million to 5 million tons of cargo per year will be shipped on the main line from the Caspian Sea to the Gulf, and volumes will increase to between 10 million and 12 million tons. As far as food security is involved, with the new international Kazakhstan-Turkmenistan-Iran railway, the export of Kazakhstani wheat has the potential to increase fivefold. According to experts, the UAE is also ready to buy up to 500,000 tons of mutton from Kazakhstan.