Central Asia’s comparative isolation from the world market is attributed to its geographical limitation of landlockedness. Landlockedness is inherent economic limitation denoting lack of access to sea. It is a key challenge faced by the Central Asia Republics (CARs) of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. Uzbekistan is, in fact, doubly landlocked for being with landlocked neighbors. Such countries bear high transportation and transit cost for not having admittance to sea ports and international shipping operations that involve cheaper trade. As per an estimate, average GDP of landlocked economies is hardly 57% of the maritime neighbors with 10% higher cost of shipping. Economies depend on international trade routed through sea. Marine trade connects with world value chains at far lower cost and brings about long term economic sustainability with smooth flow of global trade.
The Caspian Sea bordering Kazakhstan is itself landlocked and largely frozen. Ever since their independence in the 90s, Central Asian states have been aware of this structural challenge reflecting lack of access to sea, remoteness and isolation from world markets, despite having a strategic location at the crossroads of Europe and Asia.
It has been top priority of Central Asian leadership, over the years, to get access to warm-water ports for international trade. Connectivity to a deep-water port can remove a major impediment to the export growth. China Pakistan Economic Corridor (CPEC) presents marine outlet to the landlocked Central Asia states by connecting to deep sea port Gowadar in the Baluchistan province of Pakistan. CPEC is a flagship project of China’s Belt and Road Initiative (BRI) that was inaugurated in 2015. With over US$ 60 billion investment, Gowadar port is main attraction of the project that provides shortest link to the much needed warm waters for Central Asian states.
Gowadar port of Pakistan links overland to Chinese city Kashgar in western province Xinjiang that borders with Kazakhstan, Kyrgyzstan and Tajikistan. Chinese cargo transportation from Kashgar to Gowadar port has already started.
Kashgar being located in the western province flanked by CARs is also connected to Khorgos Dryport of Kazakhstan. Khorgos is actually a 450 hectare special economic zone being developed as the world’s largest dry port. A railway track changing facility is also there due to gauge difference between China and Kazakhstan; that facilitates rail cargo between China and Europe. China-Europe Express Train is successfully running since 2011 and it links 48 cities in China and over 40 cities in fourteen European countries via Khorgos. Therefore, Central Asian countries can optimize Khorgos-Gowadar Axis carry out trade with South Asia, Middle East, Africa and Pacific region. Having insight of future trade and commerce, certain Pakistani companies have already registered with Khorgos Dryport.
Gowadar port of Pakistan would do away with the landlockedness of Central Asia and would enable the CARs to look beyond immediate markets. Khorgos-Gowadar Axis explained above can evolve diversification of Central Asian economies by searching competitive trading partners in South Asia, Middle East, Africa and Pacific Region. This process would explore and extend the range of products to trade on. Extension of trade links is naturally accompanied by the growth of tourism.
There is no rivalry between Gowadar port and Chabahar port that is situated at a distance of 75km only. In fact, Iran itself wants to join CPEC with the purpose to outstretch its Chabahar port to Gowadar port that can handle heavy cargo ships for being a deep sea port. In sea routes around the world, deep sea ports have much more credence. Besides, the current geo-strategic environment has some promising developments. Ongoing withdrawal of NATO forces from Afghanistan is likely to bring about intra-Afghan settlement for stability. Two major players of the region, Russia and China are unanimous on the goal of regional connectivity through CPEC and Gowadar port. All countries of the region are connected to Central Asia Regional Economic Cooperation (CAREC) and Belt and Road Initiative (BRI) that too connect to warm water ports of Gowadar, Karachi and Chahbahar.
Hence, the energy-rich CARs have wonderful opportunity to quench their quest for warm waters. Current global gas demand is 162 trillion cubic meters while oil demand is 145.6 million barrel a day. The Asia Pacific region alone consumes half of the world’s energy. Around 51% of US oil demand (19.5 million barrel per day) is met through imports. Considering these imports, the energy resources of Persian Gulf and Venezuela are depleting fast. Considering this, the hydrocarbon resources of the Caspian region have emerged as a substitute to the existing resources. The CARs also want to export their energy resources to other countries and regions as they are already selling these to China and Europe. Therefore, Gowadar port is the most suitable option for the CARs and Russia to export not only their energy resources but also carry regular international trade with every part of the world. Consequently, the dreams of regional connectivity, economic diversification and sustainable growth would be translated into reality.
The writer is a senior banker based in Kazakhstan, with keen interest in Central Asian studies. He can be reached out at [email protected].