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THE TRANS-AFGHAN TRANSPORT CORRIDOR: STATE INTERESTS AND DEVELOPMENT PROSPECTS
Azamat ZOKHIDOV
Ph.D. (Econ.), Researcher at the Tashkent Institute of Road Traffic (Tashkent, Uzbekistan)
Introduction
Efforts are currently being stepped up to create a Trans-Afghan transport corridor (TATC), motivated primarily by its vast transit capabilities and the role it can play in developing economic relations in the Central Asia region. Furthermore, it is important to note that building a transport infrastructure in Afghanistan capable of invigorating integration with neighboring states is not only vital for developing the country's economy, but also for ensuring its domestic political stability.
Given their unique geographic location, Uzbekistan and Afghanistan have advantageous conditions for creating and developing intercontinental transport corridors. For example, the main international transport corridors pass through the
territory of Uzbekistan, which is one of the largest Central Asian states. This makes it extremely attractive from the viewpoint of Eurasian goods and passenger transit via the shortest route in essentially all directions. Moreover, intensive development of Uzbekistan's foreign trade demands organizing efficient international cargo carriage.
On 18 June, 2003, in order to promote the restoration of Afghanistan's economy, raise its transit potential, and develop economic trade cooperation in the region, the heads of state of Uzbekistan, Afghanistan, and Iran signed an Agreement on building international transport corridors via the Termez-Hayraton-Mazar-e Sharif-Herat-Meshed-Bandar Abbas route. It should be noted that full-fledged implementation of this project
largely depends on how all-embracing and similar the interests of the regional states are, as well as on the level of their cooperation in this vector.
This article analyzes the interests of those states involved in creating the TATC, as well as the prospects for its development.
Interests of the Regional States
At the moment, the regional states (Iran, Afghanistan, Pakistan, Uzbekistan, Tajikistan, Turkmenistan, and China) are not unanimous in their opinion about building the TATC. Along with their shared considerations, some states also have alternative proposals for gaining access to the southern ports through Afghan territory.
Iran's Interests. The following factors are conducive to cooperation between the Islamic Republic of Iran (IRI) and the Islamic Republic of Afghanistan (IRA):
■ their long common border;
■ their national-ethnic kinship and similar cultural and religious traditions;
■ drug production in Afghanistan;
■ the ongoing internal instability.
In their economic relations, the two countries have been focusing on building and restoring the transport infrastructure that connects them. For example, in 2006, Iran and Afghanistan signed an agreement on building the Herat-Khaf railway, the total length of which is 191 km (77 km pass through Iran and 114 km through Afghanistan). Iran was to finance 60% of this project and Afghanistan 40%; according to official Afghan data, the project is 70% complete,1 construction being halted after the Taliban attacked workers building the Afghan section of the railroad on 31 November, 2007.
According to the estimates of economists, implementation of the Herat-Khaf railway is promoting an increase in trade turnover between the two states. For example, whereas in 2006 the trade turnover volume amounted to around $500 million, in 2011 this index reached $2 billion 180 million, while in 2012 trade turnover between Iran and Afghanistan will grow to $3 billion.2
Iran is also interested in developing Afghanistan's natural resources. According to Head of the Trade Development Organization of the Khorasan Province Ali Safar-zade, Afghanistan is undergoing development and a large number of projects are being implemented in the country. In this respect, Iranian businessmen can take active part in providing engineering and technical services and developing Afghanistan's industry. By way of spheres for extending trade and economic cooperation between the two countries, Ali Safar-zade noted exploration and exploitation of natural resource deposits, as well as building factories and production lines in Afghanistan for manufacturing engineering products.
According to American geologists, Afghanistan has large amounts of unexploited natural resources, the potential cost of which amounts to around $1 trillion, and the TATC could play a pivotal role in their transportation.3
1 See: "Plan stroitelstva zheleznykh dorog Khaf-Herat zavershen na 70%, August 2008," available at [http://www. afghanistan.ru/doc/12176.html].
2 See: "Ob'em tovarooborota mezhdu Iranom i Afghanistanom vyros v 4 raza," available at [http://www.iran.ru/rus/ news_iran.php?act=news_by_id&_n=1&news_id=80831], 28 May, 2012.
3 See: "Resursnye perspektivy Afganistana: otsenki ekspertov," available at [http://www.afganistan.ru/doc/ 17691.html].
Iran also intends to use the TATC for transit purposes; in the future it could join up with the transport systems of China (through Uzbekistan and Kyrgyzstan), which will result in a transcontinental corridor. As of today, the CA states mainly use the port of Bandar Abbas in export-import operations with the countries of Southeast and Southwest Asia. This route is also promoting the development of Iran's economic relations with the western districts of China.
If we keep in mind the current flow of traffic through ports and the additional time and money needed for loading-unloading operations (with an annual increase in service volume of 10%), transporting freight by land through Central Asia appears extremely advantageous.4 For example, the conveyance of one ton of cargo by traditional sea transport via the Kashgar-Shanghai-Tehran route (13,800 km) costs $160, while the same operation costs only about $90 via the alternative Kashgar-Osh-Termez-Herat-Tehran route (3,500 km). As of today, the goods turnover volume between Iran and the East Asian states is quite high: it comprises more than $30 billion with China, more than $11 billion with Japan, and around $7 billion with the Republic of Korea.5
As Iranian experts note, building the TATC will enhance ethnic relations, which will help to realize Iran's political interests. In their opinion, in this event, Iran may be able to increase its influence on the ethnic minorities living in Afghanistan who confess Shi'ite Islam (Tajiks, Hazara, and others).
China's Interests. With respect to its economic interests, China gives particular priority to assimilating Afghanistan's natural resources.6 During his visit to the PRC in March 2010, Afghan President Hamid Karzai, in turn, called on Chinese investors and businessmen to engage in joint exploitation of Afghan natural resources, building transport infrastructure, and enhancing the energy and construction industries; he guaranteed business safety in Afghanistan.
Today, many Chinese companies are engaged in the exploitation of Afghanistan's natural resources. For example, in 2008, the China Metallurgical Group Company (CMG) won a tender for developing the Aynak copper deposit and invested $2.9 billion in this project. The PRC acquired the right to develop the deposit for 30 years.
The Aynak deposit situated 35 km to the east of Kabul is considered the second largest copper ore deposit in the world; earlier its reserves were estimated at 11 million tons, but some Afghan specialists claim that this figure is deliberately grossly underestimated. The Afghan Ministry of the Mining Industry thinks that after work begins to produce copper and build the accompanying infrastructure, around 100,000 jobs will be created for the local population. Furthermore, Afghanistan will receive $400 million every year in rental payments alone.
Moreover, on 27 December, 2011, the Afghan government approved signing a contract with the China National Petroleum Corporation (CNPC) on developing oil fields situated in the valley of the Amu Darya River in the provinces of Faryab and Sari Pul. According to the Hamid Karzai administration, oil reserves at these fields amount to 87 million barrels.7
When the TATC is built, China will be able to strengthen its trade relations with the CA states and Iran, particularly in the energy sphere. As mentioned above, the Kashgar-Osh-Termez-Herat-Tehran route is almost 4 times shorter than Kashgar-Shanghai-Tehran.
4 See: Documents of the 7th International Forum TRANSEURASIA-2008, Astana, 24-25 September, 2008.
5 See: "Iran: vneshneekonomicheskie sviazi," available at [http://iran.ru/rus/news_iran.php?act=news_by_id&_ n=1&news_id=72300].
6 See: According to the Ministry of Mines and the Mining Industry of Afghanistan, the total cost of the country's natural resources amounts to at least $3 trillion. Iron ($421 billion), copper ($274 billion), niobium ($81.2 billion), cobalt ($50.8 billion), gold ($25 billion), molybdenum ($23.9 billion), precious stones ($7.4 billion), silver ($4.4 billion), and others account for the main share of these minerals.
7 See: "Afganskie vlasti odobrili kontrakt s CNPC na razrabotku nefti," available at [http://www.km.ru/biznes-i-fin-ansy/2011/12/27/neftegazovyi-sektor-ekonomiki-v-mire/].
It should be noted that China imports 20% of the energy it uses from other countries; the Middle Eastern states account for 60% of its volume. The imported oil is delivered by tanker via a long sea route that passes through the Persian Gulf, Strait of Hormuz, Indian Ocean, and the Malacca and Taiwan straits. This route crosses the most volatile spots in the world; the tense relations between the U.S. and Iran in the Persian Gulf and Strait of Hormuz, as well as the conflict in the Taiwan Strait, are a delayed-action mine for China, since any aggravation of the situation means a halt to oil export, which would be a disaster for the Chinese economy. Moreover, the long length of this route, not to mention the high transportation costs, also creates several other problems. This is why China has begun looking for other energy sources and new transportation routes.8
According to a statement by Iranian Ambassador to China Mekhdi Safari, the goods turnover volume between China and Iran will reach $100 billion in the near future.9
Pakistan's Interests. The corridor is promoting the development of bilateral economic relations between the Islamic Republic of Pakistan (IRP) and the CA states. It should be noted that the TATC has an alternative branch that will lead to the ports of Pakistan through Afghanistan. In order to develop its transit potential, Pakistan is providing the Central Asian states with access to the ports of Karachi and Gwadar, which is helping to increase the volume of Pakistani export to Afghanistan.
Moreover, Pakistan has its own interests in developing Afghanistan's natural resources. According to experts at the Institute of the Middle East, despite the country's relatively large volumes of proven natural gas reserves, Pakistan depends (and will continue to depend in the foreseeable future) on the import of this energy resource owing to the underdevelopment of its gas production, refining, and transportation industries.10 In this respect, the planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is being considered as an alternative.11
Turkmenistan's Interests. In recent years, a trend has been seen toward activating economic cooperation between Turkmenistan and Afghanistan. One of the main projects being implemented by the two countries in the transport sphere is the Atamyrat-Ymamnazar (Turkmenistan)-Akina-Andkhoy (Afghanistan) railway line, which is to connect Turkmenistan's transport system to the Afghan province of Faryab. In May 2011, during Afghan President Hamid Karzai's official visit to Turkmenistan, a corresponding agreement was signed.
According to experts, implementing this project will help to increase the export volume, as well as allow deliveries to be made from European countries to Afghanistan through the Caspian and restore trade relations between Europe and South Asia by means of land transport; furthermore, Turkmenistan will receive additional transit revenue.
The five-fold increase in electric power deliveries will also be of significant benefit to Afghanistan's economy. Turkmenistan has already begun laying a 500V power transmission line along the Mary-Atamyrat-Andkhoy route for this purpose, which will make it possible to meet approximately 70% of the electricity needs of neighboring countries.12
Turkmenistan, like the other participants in this project, is interested in building the TAPI gas pipeline.
Tajikistan's Interests. Tajikistan would like to use the TATC to extricate the country from its transport impasse and enhance its economic relations with the regional states.
8 See: Z.F. Kûçûk, "China's Energy Policy toward Central Asia and the Importance of Kazakhstan," Central Asia and the Caucasus, No. 3 (57), 2009.
9 See: "Iran: vneshneekonomicheskie sviazi."
10 See: N.A. Zamaraeva, Pakistan: sovremennaia situatsiia i perspektivy razvitiia gazovogo sektora ekonomiki," available at [http://www.iimes.ru/rus/stat/2010/14-12-10b.htm].
11 See: "Vneshneekonomicheskaia deiatelnost Pakistana," available at [http://www.xserver.ru/user/vedpk/3.shtml].
12 See: A. Kurbanova, "Turkmenistan podderzhit Afganistan postavkami elektroenergii i prazvitiem transportnykh koridorov," ITAR-TASS, 28 December, 2011.
Experts think it would be advantageous for the country to develop economic relations with Iran using the alternative TATC branch (a railroad from Afghanistan to China through Tajikistan and Kyrgyzstan and a highway from China to the Iranian port of Bandar Abbas).13
Tajikistan is exerting efforts to attract investments in the development of its transport infrastructure by delivering NATO cargo to Afghanistan. It should be noted that the bridge built in 2007 in Panji Poyon is currently playing an important role in the transit of NATO cargo to Afghanistan; the U.S. financed its construction for $37 million.
The Vakhdat-Iavan railway is also being built using Chinese investments ($50 million). This will help to connect the railway system of the west of the country with the south (through Dushanbe).
Uzbekistan's Interests. Uzbekistan is interested in the TATC both in terms of developing its economy and of ensuring security in the region.
Uzbekistan regularly comes forward with initiatives for resolving the Afghan problem by peaceful means, which is primarily envisioned in restoring Afghanistan's economy and developing its social sphere.
So the railway completed at the end of 2010 by Uzbek specialists is the main branch of the future route. It connects the Uzbek town of Termez with one of Afghanistan's economic centers, Mazar-e Sharif, and will promote development of socioeconomic and cultural relations between the two countries.
Putting the TATC into operation will make it possible for Uzbekistan to further advance its economic relations with Afghanistan. In particular, this will allow more commodities to be exported from Uzbekistan to Afghanistan, which, in turn, will promote further intensification of goods exchange between the two countries.
The Trans-Afghan corridor will provide Uzbekistan with access to the sea ports by the shortest routes. For example, the length of the Tashkent-Termez-Karachi route is 2,500 km, whereas the length of the Tashkent-Termez-Bandar Abbas corridor is 3,100 km. According to preliminary estimates, it will be $10-12 cheaper to deliver one ton of freight to the port of Bandar Abbas via the TATC than via Serakhs (which is in Turkmenistan).
Development of economic relations between the two countries will also give Uzbekistan greater access to the South Asian markets via the Hayraton-Mazar-e Sharif trunk railway lines.
Uzbekistan is giving particular attention to rehabilitation in Afghanistan. For example, it has put forward several regional-level proposals for controlling and resolving the Afghan problem, as well as for minimizing its negative influence on neighboring countries.
It should be noted that according to most experts, building the TATC will help to increase the transit potential of the Tashguzar-Baysun-Kumkurgan railway that went into operation in 2007 (on the Uzbek side); its planned cost amounts to $447.1 million. It should also be noted that Uzbekistan will receive more than $40 million a year in profit from this transit.
At present, 90% of the total freight volume is delivered to Afghanistan through Hayraton. According to experts' preliminary estimates, by 2015, the transit potential of this corridor will amount to 4.5 million tons, and this index will increase by 15-20% every year.14
Afghanistan's Interests. Afghanistan is very interested in creating the TATC, since it promises the country political and economic gains.
In particular, from the political viewpoint, building transport corridors will ensure peace, security, and stability in Afghanistan. Building a transport infrastructure that connects large cities and regions
13 See: "Afganistan, Iran i Tadzhikistan budut stroit zheleznuiu dorogu ot Afganistana do Kitaia," available at [http:// www.intermost.ru/news/107665/].
14 See: M. Mirkhamidov, "Strategicheskoe znachenie transportnykh kommunikatsii dlia budushchego Afghanistana: zheleznaia doroga Hayraton-Mazar-e Sharif," in: Marterialy VI zasedaniia Foruma SHOS, Tashkent, 27-28 May, 2011.
will lead to an increase in positive development trends in the social relations of Afghan society, which, in turn, will help to strengthen the ideological unity of the country's population.
Improving the transport infrastructure in Afghanistan will also reduce the gap between the center and the periphery, which should lead to an increase in the government's influence.
From the economic viewpoint, building the TATC will open up a multitude of opportunities for Afghanistan. For example, Afghanistan will become a country with extremely profitable railway transport due to its low operating costs. This will allow Afghanistan to successfully develop economic relations with other states.
Today, Afghanistan is an agricultural country with sufficiently developed industry in which a leading place is occupied by the very promising mining sphere. So the Afghan government is focusing its attention on attracting foreign investments and cooperating with foreign metallurgical companies. For example, on 25 June, 2010, a presentation on Afghanistan's natural resources was held in London; its main goal was to draw foreign investments into exploitation of the country's natural riches. Afghan Minister of the Mining Industry Vakhidulla Shakhrani called on foreign metallurgical companies to develop the Khajigak iron-ore deposit situated in the Bamian Province.
According to the afganistan.ru website, in September 2010, the Ministry of the Mining and Metallurgical Industry announced a tender to develop the above-mentioned deposit; it was noted that the tender would last for 11 months. If the Khajigak deposit is developed, the country will obtain $1.5 billion a year in profit and $300 million in rental and tax payments.
The Afghan government also announced a tender for developing an oil field in the Sari Pul Province. Next year, there are plans to develop another oil field situated along the Afghan-Tajik border (its reserves amount to 1.6 billion barrels).
Afghanistan is also developing its reserves of high-quality marble. As a local manufacturer Sh. Akhmad notes, 30,000 m of marble are produced every year in the Panjshir Province; however, according to representative of the U.S. Agency for International Development (USAID) Curtis Rose, there are problems relating to the low level of qualification of Afghan workers, as well as to the shortage of necessary technical equipment. Drawing foreign investments into this sphere will have a positive impact on the country's economy.
The exploitation and export of natural resources primarily requires the formation of a transport network in the country (transport infrastructure and transport corridors). According to most specialists, Afghanistan's entry into the international transport system will expand the country's capabilities to exploit mineral resources.
During his visit to China, Afghan President Hamid Karzai called on Chinese businessmen and investors to participate in exploiting the country's natural resources, as well as in developing railway communication, the power industry, and construction. He also said that businessmen will be guaranteed a safe environment for carrying out their activity.
On 22 September, 2010, an agreement was signed between China's CMG Company, which has begun developing the Aynak copper deposit, and the Afghan Ministry of the Mining Industry, according to which there are plans to build a 700-km railway from the border of Uzbekistan to the border of Pakistan through Kabul that will cost $4-5 billion); it will take five years to implement this project.
After the annual session of the Asian Development Bank (ADB) held in Tashkent, Afghan Minister of Finance Omar Zakhelval said that Japan was planning to allot $1 billion to building railway lines in Afghanistan. It should be noted that this is Japan's way, which has priority interests in Central Asia, of trying to gain possession of Afghanistan's raw materials. On 21 June, 2010, Afghan President Hamid Karzai proposed giving Japan the right to develop the country's mineral deposits.
In addition to everything else, the TATC will boost Afghanistan's integration with the regional countries. According to American expert Frederick Starr, building transport corridors that link Af-
ghanistan with neighboring states is vitally important for both Afghanistan and the CA countries.15 According to him, the TATC will turn Afghanistan into a transit state.
Afghanistan's extensive transit capabilities mean that most of the cargo from Central Asia sent to the southern ports can be transported via the TATC. Afghanistan, in turn, will gain access to the ports and the opportunity to develop its national economy.
Prospects for the TATC
Building the TATC is a very complicated process, on which several negative factors have an influence, the main one being the unstable situation in the country and the rugged relief (see Table 1).
Table 1
Impacts on the TATC
On the whole, in the mid term, an increase in the influence of the positive impacts and measures being undertaken to overcome the negative aspects will lead to the emergence of the necessary conditions for putting the corridor into operation. However, some experts note that withdrawal of the coalition forces from Afghanistan could have a negative effect on the country's stability. For example, according to expert of the Political Studies Center (Uzbekistan) Rustam Makhmudov, a scenario is very likely in which the Americans' departure will strengthen the position of the leaders of the northern groups that are based on ethnic and regional grounds. It is possible that Afghanistan could turn once more into an arena of geopolitical rivalry among external forces.16
For Central Asia and South Asia, this will mean that an energy and transport corridor in the southerly direction will not appear any time soon.
There are a whole slew of factors that show the high expediency of putting the TATC into operation: the most important are the following:
15 See: S.F. Starr, "A Partnership for Central Asia," Foreign Affairs, Vol. 84, No. 4, July/August 2005, pp. 164-178.
16 See: R. Makhmudov, "Stabilizatsiia v Afganistane. Neochevidnye perspektivy," Ekonomicheskoe obozrenie, Tashkent, No. 4, 2011, available at [http://www.review.uz/ru/article/253].
—it will give the CA states access to the nearest sea ports (Tashkent-Termez-Bandar Abbas— 1,300 km, Tashkent-Termez-Karachi—2,500 km);
—it is economical (it will be $10-12 cheaper to deliver one ton of freight to the port of Bandar Abbas via the TATC than via Serakhs);
—it has great transit potential (according to preliminary estimates, by 2015, 4.5 million tons of goods will be delivered via the Termez-Mazar-e Sharif railway and this index will increase by 15-20% annually11);
—it will enhance the development of regional economic integration;
—the length of the Kashgar-Andijan-Termez-Herat-Bandar Abbas route is 3,500 km; this means that delivery time via the TATC will be cut by half compared to the traditional route;
—it will play an important role in developing Afghanistan's natural resources and will enhance the development of the country's national economy.
However, there are several circumstances that cast doubt on whether the TATC can be implemented:
—halting of the construction of sections of the TATC (Herat-Khaf, Mazar-e Sharif-Herat);
—breakdown in Afghanistan's transport infrastructure;
—differences in technical specifications for building railways among the regional countries (the matter concerns the railroad gage)18;
—extra loading-unloading operations due to the lack of correspondence between standards, which requires additional time and money;
—lack of cargo carriage safety;
—Afghanistan's rugged relief;
—the high cost of building a railway in the direction of Mazar-e Sharif-Kabul;
—non-funding of some projects for building the transport corridor;
—disparate interests of some states involving in building the TATC;
—financing risks and limited material possibilities of some states.
On the whole, the prospects for the TATC consist of the following:
—joining the Trans-Afghan route up to the China-Kyrgyzstan-Uzbekistan corridor will promote trans-continental relations;
—participation of the regional countries in building the TATC will enhance their mutual integration;
—participation of international economic organizations (the ADB, CAREC, EEC, U.N., and other programs);
—the presence of U.S. and NATO troops in Afghanistan will ensure stability in the country;
17 See: M. Mirkhamidov, op. cit.
18 The standard railroad gage in different countries is different: according to Chinese, Iranian, and European standards, it is 1,435 cm, while according to the Russian and Central Asian standard, it is 1,520 cm, and according to the Pakistani and Indian standard—1,676 cm.
—competition of the North-South corridor in the economic cooperation of Russia and the CIS countries with the Southeast Asia region.
Based on the above, we made attempts to draw up scenarios regarding the prospects for building the TATC.
> First scenario: the corridor will be built at an accelerated rate, work will be completed on all its sections by 2017-2018 (not counting the second branch of the corridor leading to the Pakistani ports).
> Second scenario: the corridor will be built later than the established time.
> Third scenario: it will be impossible to implement all sections of the corridor.
In Lieu of a Conclusion
Keeping in mind the interest of the above-mentioned states, as well as the need for ensuring stability in Afghanistan, it can be presumed that the_ first scenario will be implemented. This will largely depend on how work progresses on the Mazar-e Sharif-Herat and Herat-Khaf sections.
Today, a feasibility report is being drawn up for building the Mazar-e Sharif-Herat railway, and the Uzbekistan temir yullari State Joint Stock Railway Company could well win the tender. Uzbekistan's minister of finance said that the republic is willing to continue building roads in Afghanistan. According to official data, it will take 3-4 years to build this section of the corridor (if it is undertaken by Uzbek construction workers). Moreover, Afghanistan's transport strategy and the CAREC programs envisage completing the work in 2017-2018.19
Reasons for the second scenario are as follows:
—first, the time for completing construction of the Herat-Khaf section has still not been determined and work has currently been halted;
—second, according to a memorandum signed by China's MCC Company and Afghanistan's Ministry of Mines and the Mining Industry, it will take five years to build the second branch of the corridor leading to the Pakistani ports. However, implementation of this project depends on development of the Aynak copper deposit. If we keep in mind the time required to develop this deposit, the need for the corridor will not arise until after the deposit has been fully developed. Moreover, building the corridor in the established time might also lead to continuation of the instability in Afghanistan.
The third scenario will become realistic in the following cases:
—if the situation in Afghanistan becomes aggravated (that is, the leaders of the northern groups gain a stronger foothold) and in the event of geopolitical rivalry among external forces, which could be revived after the NATO forces are withdrawn from the country;
—if relations among the states of the region deteriorate due to the differences in national interests or approaches to resolving transport problems.
On the whole, despite the differences in the national views of the regional states, today they are all interested in building the TATC according to the first scenario.
19 See: CAREC Transport and Trade Facilitation: Corridors Performance Measurement and Monitoring. ADB Report for 2009.
However, we need to keep in mind the differences in approaches among the regional countries, as well as the impacts (mentioned above) that could have an effect in one way or another on the implementation of this project.
So at the first stage, regional experts should look to harmonizing interests and finding a common way to develop the transport and transit potential both of the CA countries individually and of the region as a whole.
