Geo-economics of the Railways - East and West - Research Paper Example

Geo-economics of the Railways – East and West The subject of the ever-increasing dependability of rail transportation between Europe and Asia has in recent times been on the rise with regard to the role it plays in this region (Russian railways). The Asia-Pacific region, in particular China, is rapidly industrializing in spite of the global financial downturn, as a result huge potential for boosting foreign trade remains, including with the European Union. Russia can take part in this crisis by significantly contributing in the region’s geo economics as a natural transport bridge connecting Europe and Asia (Transport weekly 6). Main commodity groups that can be transported by Eurasian routes can be identified (China–West Europe). Export and import goods between China, Russia and Western Europe are mainly transported by sea (Welfens 45). China’s export oriented industries are concentrated in coastal areas. For example, almost all industrial output from Guangdong, Fujian and other provinces around Shanghai is shipped by sea, with export logistics designed accordingly (Roussev 27). China’s main shipping centres are in the south of the People’s Republic, the Pearl River delta, and the Shanghai province. Northern provinces are traditionally home to countless heavy industrial facilities, and local railways there essentially serve this sector. Therefore, opportunities to increase container transportation from these regions to EurAsEC are exceptionally limited. Commodities which can be transported by rail from China (including the XUAR) to Kazakhstan and Russia include: chemicals, including hazardous loads; foodstuffs (perishable) and other restricted cargoes; instrumentation; stereo, video and audio systems; mobile communications equipment; TV sets; electrical goods; electric cables; furniture; clothes and shoes; cosmetics (Evgeny et al 15). The map below shows the shipments of goods between the zones. East and West Railway Corridor Central Asia The region is cosmic, covering an area of over 4,000,000 sq. km, bigger than India and occupied by just over 60 million people (Evgeny et al 23) The inhabitants of the region are mainly inhabiting the two areas remote from each other: the Ferghana Valley and its border and the north of Kazakhstan. Linking these two population centers hub lies an expansive land of about 1,000 km. Central Asian countries are distant from the vast waterways-oceans and seas: separating the expansive area is a distance of approximately 5,000 km. While traversing from the Indian Ocean‐Persian Gulf to Pacific is almost, 2,700 km. Finally crossing the Black Sea from the Baltic is an expanse of 3,950 km (Miguel 7). The map on the next page shows the corridor. Central Asian Corridor- Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan Map of central Asia Central Asian Corridor The central trans-Asian corridor extends from the Sino-Kazakh border passing through Dostyk to Almaty and on to Ukraine. This corridor is approximately 10,000 km long. Traversing the Asian continent, it is the shortest way to Central Europe. It is duo-track and electrified within the former Soviet Union and presents a perfect right of entry to Poland via Jagodin and Mostiska and to Slovakia and Hungary via Chop. Kazakhstan relies on the Chinese and Russian corridors as a major entry point to the main oceans, and Turkmenistan depends on Iran. Along with the limitation of the topography, one more factor that has affected communications in Central Asia - north‐south pattern to join the so‐called Siberian Corridor between Moscow and European Russia (Miguel 23). For decades, the Trans-Siberian Railway has been the primary railway link between European Russia and its industrial regions to the east (Siberia, the Urals). The TSR is 9,288 km long; it was completed in 1903 and completely electrified by 2002. It has several branch lines in its far eastern section which connect to Chinese, North Korean and Mongolian railways, central Eurasia (Central Asian railways via Kazakhstan) and Europe (to Western European railways through Belarus). At present, the TSR is technically able to of carry 250,000-300,000 TEU of global shipment cargoes per annum. When the upgrading of the TSR is over, and on condition that the Baikal-Amur Mainline (BAM) railway is used, this figure was projected to rise to 1 million TEU per annum. This type of design is still today determining the way goods are moved in Central Asia. The railway is the most widely used method in Central Asia to transport goods over long distances: roughly 90% of exports are transported by rail (UN ESCAP). The following maps show the most widely used sections of railway according to research by CAREC (Central Asia Regional Economic Cooperation). The thicker lines are the routes transporting the greatest tonnage. Rail Routes and Prices Some corridors towards Iran, China and the Caucasus are not yet in a position to compete price‐wise with the Russian corridor. The Russian rail network is the major export and supply means for countries in Central Asia, despite the fact that some neighbouring countries have opened corridors towards the oceanic border of Asia and some worldwide infrastructure investment projects have been funded by ESCAP, TRACECA and the Asian Development Bank, with the major focus on building different access points to Central Asia, in particular on an east‐west axis without running through Russian territory (European Commission). Transport Corridor Europe Caucasus Asia (TRACECA) - Iron Silk Road The TRACECA is European Union funded project to aid the implementation of another alternative from Europe to central Asia, from the Black sea via Caucasus and the Caspian Sea through Mongolia and China. The TRACECA Programme was approved at a convention held by the EU in Brussels in May 1993, present at this forum were representatives from Georgia, Azerbaijan, Armenia, Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan (afterward Ukraine and Mongolia joined). The Programme aimed at expanding a transport corridor from Europe to Central Asia through the Black Sea, the Caucasus and the Caspian (Abdullayeva 174). It includes the (Georgia) – Varna (Bulgaria), Poti – Burgas (Bulgaria), Poti – Odessa (Ukraine) and Baku in Azerbaijan) – Turkmenbashi (Turkmenistan) ferry lines. Besides, the new ferry routes of Poti – Constanta (Romania) and Batumi (Georgia) – Novorossiysk were to be commissioned and a new Kars (Turkey) – Tbilisi (Georgia) railway section was to be built. Nine railway ferry complexes were to be operated in the Black Sea region. The design capacity of TRACECA is up to 40 million tonnes per annum. Presently, TRACECA is utilized to ship oil and oil products from Turkmenistan and cotton and grain from Uzbekistan. It is projected that Chinese cargo transport will also use this route from the Trans-Asian mainline. TRACECA distances (sections in use):Tashkent – Brest – 4,200 km;Tashkent – St. Petersburg – 4,000 km; Tashkent – Bandar Abbas – 3,900 km; Tashkent – Odessa – 4,230 km; Tashkent – Batumi – 2,900 km. The key benefit of this corridor is that it begins at the Black Sea ports where numerous of the Pan-European corridors end. The rationale behind TRACECA is to reduce the transport expenses for the long distance freight by having a shorter distance by linking directly to Trans European Network and the European Transport corridors. The nations through which it passes were ardent to be used for cargo transportation. To put into action the TRACECA Programme, the countries concerned ratified the Multilateral Agreement on the Development of TRACECA on 8 September 1998 in Baku. However, the Programme never achieved intended capacities. TRACECA did not succeed to achieve its design capacity fourteen years after significant documents were approved. The reasons why TRACECA failed are: parties to TRACECA signed several documents appertaining to particular advantages and lowered taxes, for example a 50% discount on rail goods and ferry transportation of empty wagons. Also, taxes and fees on shipment cargoes were done away with, and steps were taken at national level to enhance the safety of commuters, cargoes, carriers and vehicles. Central Asia and Trade Partners The EU’s TRACECA (Transportation Corridor Europe-Caucasus-Asia) project was a new inherent anti-Russian scheme. The EU’s plan was to institute an East-West transportation corridor that would by-pass Russia. In return, Russia in March 2000 earmarked its own programmes in this area, temporarily named Transcam that would connect China, Japan and the Russian Far East with the Near East and the Transcaucasus via Russian Territory. The railway gauge via cross‐border connections is variable, which thwarts a continuous traffic of trains. Uninterrupted train travel is at present only feasible towards the Russian Federation. The central markets supplying Central Asian countries, except Turkmenistan, are Russia and China: together they comprise 79.9% of Kyrgyzstan’s imports, 57% of Kazakhstan’s imports, 43% of Tajikistan’s imports and 30.1% of Uzbekistan’s imports (World Trade Organization 56). TRACECA Route – Restoration of the Silk Road The corridor begins in the Eastern Europe in these countries-Bulgaria, Romania, and Ukraine. Moreover, it crosses Turkey (Koch et al 12). The route is passing the Black Sea to the ports of Poti and Batumi in Georgia. For further transport, the transport network of the Southern Caucasus is used (Peyrouse 67). A land connection towards this region also exists from Turkey (Gegeshidze 172). From Azerbaijan by means of the Caspian ferries (Baku – Turkmenbashi, Baku – Aktau) TRACECA route reaches the railway networks of Central Asian states of Turkmenistan and Kazakhstan. The transport networks of these countries are linked to destinations in Uzbekistan, Kyrgyzstan, Tajikistan, and reach the boundaries of China and Afghanistan (Karayianni Marika). Routes of Transportation – including TRACECA By these linkages this route could be extended from the north of Europe to the south of China and could become the most significant bridge between the West and the East. Today, each and every investment by global financial institutions in the development of the transport infrastructure in TRACECA countries has surpassed one billion Euro. As of 2009 to 2015, additional 470 million Euros will be spend on the development of the transport corridor to realize the desired objective of delivering a sustainable, efficient and integrated multimodal transportation system between the EU and TRACECA countries by 2015. The expansion of world trade has directly impacted the growth of trade in the TRACECA countries. Over the past decade the volume of goods transportation through TRACECA has swelled six times and in some areas by ten-fold. The main freight carried along the corridor is oil and oil products as well as ore, metals, building materials and chemical products, and other goods (Traceca). Russia, China and EU Accordingly, to wrap up that trade in Central Asia is conducted generally with China, Russia and Europe. China and Russia are essentially supplier markets for Central Asia and Europe is an export market for Central Asian products (Turkey and Iran are smaller markets). The value of cargo exported to Central Asia by EU countries totaled €9.5 billion in 2011, while the value of goods imported from Central Asia amounted to €15.4 billion. A large amount of the income from sales of central Asian products in Europe (hydrocarbons, minerals and cotton) is invested in paying for Chinese products (consumer goods, machinery, textiles, processed foods, shoes, electronic products, pharmaceuticals, automobiles, etc) or Russian products (hydrocarbons, ferrous and non‐ferrous metals, machinery and equipment, chemical products and processed foods). Presently, trade between Russia and China and Central Asia is in excess, whereas the EU has a trade deficit. The US, India and Pakistan have negligible trade relations in the region. Conclusion Over the past decade the rail transport market in the Baltic and Black Sea region has been more and more reconstructed and barriers like boundary crossing modus operandi have been reduced. Nowadays the rail freight market is more developed than the passenger market and in Eastern Europe rail freight transport is more important than rail passenger transport. Most of the cargo which is shipped to the Baltic ports is shipment cargo to Russia and China. Chinese trade offers for the rail cargo sector the prospect of huge flows of manufactured goods and reducing the existing dependency on low value bulks. When taking a closer look at the import/export-statistics of China, this presumption can be supported. In recent years it could be seen that the majority of EU imports and exports with China consisted of over 60% of manufactured goods like machines and mechanical appliances, electrical equipment, textiles and textile articles, vehicles, airplane, vessels and assorted manufactured articles. Work Cited Abdullayeva, Tamila, “State and prospects for development of transport highways in Central Asia“, Central Asia and Caucasus, № 3, 2001. 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Pérez Martín, Geo-Economics in Central Asia and the ‘Great Game’ of Natural Resources: Water, Oil, Gas, Uranium and Transportation Corridors. Real instituto elcano, 2010. Accessed on February 2012 from http:www.realinstitutoelcano.org Peyrouse, Sebastian (‘The Economic Aspects of the Chinese-Central Asia Rapprochement’, Silk Road Paper, Central Asia-Caucasus Institute, 2007 http://www.silkroadstudies.org/new/docs/Silkroadpapers/2007/0709China-Central_Asia.pdf. Roussev, Serguey, ‘Environment Management along the Road-Bed of Trans-European Corridor N8 in the Section between Sofia and Skopje’, in Balkans: Politics, Economy, Security [journal on-line] 2, no. 2 (2000);available from http://www.balcanica.org/balkanreview/current/a3.html , accessed February, 2012 Russian railways, International Cooperation, n.p, n.d. accessed on February 2012 from http:eng.rzd.ru. Traceca: Transport Corridor Europe-Caucasus-Asia, n. p, 1993-2002: http://www.traceca.org/rep/broshure/broshure.pdf; Internet. 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