Silk Road Monthly: November 2024
Regional Cooperation, Energy Development, and Geopolitical Challenges Shape New Partnerships Across Central Asia
Kazakh Nuclear Plant Consortium
On October 6, the construction of Kazakhstan’s first nuclear power plant was given the green light after 71% of voters said yes at the nuclear power construction referendum. Four companies from France, South Korea, China and Russia are competing for the contract, with Russia’s Rosatom being hailed as the favorite. Reports are now indicating that Kazakhstan is considering forming a consortium of the four nations for the project. Kazakhstan wants the best technologies available for the construction of the nuclear power plant and believes that a consortium might be the best solution. If Rosatom wins the contract for the project or joins as a key consortium member, it will signify its continued economic and political influence in the region.
China-Central Asia Going Visa Free?
After Kazakhstan’s 30-day visa-free agreement with China, which came into effect in November of 2023, Kazakhstan has seen a 64% increase in tourism from China in 2024. This past week Uzbekistan followed suit, signing its own visa-free agreement with China, which will allow 30-day visa-free travel for tourists between the two countries. Since March of 2021, Uzbekistan has had a 10-day visa-free agreement with China. Uzbekistan’s new visa agreement with China comes just after China updated its visa-free list, which allows 38 countries 30-day visa-free travel. This agreement is another step for Uzbekistan to open its borders as it was largely closed off up until 2016 under its previous president, Islam Karimov.
Upstream River Discussions
On November 1, Nurzhan Nurzhigitov, Kazakhstan’s Minister of Water Resources and Irrigation, met with the Chinese Ambassador to Kazakhstan, Zhang Xiao, to discuss the joint use and distribution of water from transboundary rivers, namely the Irtysh and Ili rivers. Both rivers originate in Xinjiang and have historically been a cause of tension between the two countries. China has not signed the UN’s Watercourse Convention, whereas Kazakhstan ratified the agreement in 2001. Signatures from both parties would require equitable use of transboundary bodies of water. Without agreements on transboundary bodies of water, downstream droughts, dried-up fisheries, farming and agriculture cycles, and a source of renewable energy can be impacted. Upstream countries hold greater leverage in negotiations, as has been seen with U.S.-Mexico tensions over the Colorado and Rio Grande Rivers and China and Southeast Asian countries over the Mekong River.
Four Central Asian Entities Land on the U.S. Sanctions List
On October 30, the U.S. added 275 businesses and individuals to its sanctions list. Four Central Asian businesses, Kazstanex (KZ), Uzstanex (UZ), LLC The Elite Investment Group (UZ), and LLC Service Fly Bishkek (KG) were added to the sanctions list. In an elaborate trade scheme, Kazstanex and Uzstanex were found to have procured machinery from Europe, before sending the machinery to a Chinese company, Shanghai Winsun Co., to then have the machinery resent to Open Systems Dynamic Technology in Russia. The shipments of European-manufactured machinery are believed to be used in the Kremlin’s war efforts in Ukraine. All pertinent individuals involved in the trade scheme were also put on the sanctions list.
From Trash to Treasure
Kyrgyzstan signed a $95 million deal with Chinese company JunXin to build a waste-to-electricity plant just outside of Bishkek. The project is projected to be completed by November 2025 and will process 1,000 tons of garbage a day into electricity. Bishkek city will pay JunXin $17 per ton of garbage and JunXin will sell the electricity back to Bishkek, with an initial power of 20 MW/h. The plant hopes to increase its capacity to 3,000 tons in the future. The plant will cost Bishkek an estimated $6 million per year to dispose of its garbage.
Bishkek has both a waste management and an air quality problem. This project is aimed at relieving the issues of the Altyn Kazyk landfill, which has been smoldering for decades and impacting the health of around 30,000 nearby residents. Bishkek has claimed that the plant will meet the EU’s emissions standards for waste incineration. While this plant may greatly benefit its waste management problem, there are currently no reports that the plant will improve Bishkek’s dire air quality situation.
New Cargo Terminal in Baku
On November 12, Azerbaijan, China and Kazakhstan formalized an agreement to establish a joint cargo terminal at the Port of Alat, about 70 km south of Baku, during COP29. This facility, part of the Trans-Caspian International Transport Route (TITR), aims to enhance container train traffic, initially accommodating 300,000–350,000 containers annually. Featuring a universal cargo yard, a covered warehouse, and a container area, the terminal is set to support the “middle corridor,” a transport route providing an alternative trade corridor that circumvents Russia and Western sanctions. In March, a train successfully traveled 3,200 miles from Xi’an to Baku via this route in just 11 days. The agreement follows Kazakhstan’s September announcement to construct a new container port in Aktau, further expanding regional transport infrastructure.
Cross-Border Attack on Chinese Workers in Tajikistan
On November 18, a cross-border attack from Afghanistan killed one Chinese national and injured four more, one of whom was Tajik. The attack was reportedly carried out by armed personnel from Afghanistan either involved in drug trafficking or a militant group onto the Zarbuzi Gorge in southern Tajikistan. The Chinese workers were reportedly working at a gold mine in the region. The event has not yet been addressed by Tajik officials.
Following this event, on November 28, the Collective Security Treaty Organization (CSTO) signed an agreement to strengthen the Tajik-Afghan border. Given the threat emanating from Afghanistan, this attack should only bolster Chinese involvement in Tajikistan with actions such as investments in the Tajik military and local law enforcement. Numerous extremist groups are present in Afghanistan outside of the ruling Taliban, including Islamic State Khoresan Province (IS-KP), Islamic Movement of Uzbekistan (IMU), and Jamaat Ansarullah.
First Chinese Rail Shipment Arrives in Afghanistan
On November 23, the first Chinese freight shipment arrived in Afghanistan, reaching Mazar-i-Sharif and Hairatan via rail after traversing Uzbekistan and Kazakhstan. The rail line in Mazar-i-Sharif, part of the former Soviet infrastructure, was decommissioned following the Soviet withdrawal but has since been reopened for commercial use by Uzbekistan Railways under an agreement with the Afghan government. This rail line is a critical segment of the proposed Uzbekistan-Afghanistan-Pakistan railway, planned in 2023 to connect Tashkent, Kabul, and Peshawar. The arrival of this shipment signals China’s intent to strengthen economic ties with Afghanistan and support regional connectivity through initiatives like the new rail project.
Kyrgyz Russia-Bound Auto Exports
This month, Kyrgyzstan hit a 12-year high for automobile exports to Russia, with 112,000 vehicles being shipped north. Ninety-three percent of the cars were manufactured in China and were made up of European, Japanese, Chinese and Korean car brands. Of the cars destined for Russia from Kyrgyzstan, the majority were all Chinese brands, namely Geely, Chery, GAC, and Haval. Since Russia’s full-scale invasion of Ukraine, Central Asian countries have found themselves in the re-export business to help Russia avoid sanctions. However, even prior to the war, Kyrgyzstan was in an interesting position: Kyrgyzstan is the only Central Asian country that is a member of the EU’s GSP+ group, the WTO, and the Eurasian Economic Union (EEU). This provides Kyrgyzstan tariff-free or lower tariff access to multiple markets, particularly the Chinese, Russian and EU markets, making the small, landlocked Eurasian nation a prime market for re-export. Kyrgyzstan’s sharp auto export increase to Russia of 45% from 2023 highlights the impact of both Russia’s war on Ukraine and EU and American tariffs on Chinese automobiles.
Regional Chinese Ex-Im Bank Office Opens in Tashkent
On November 22, China opened a regional office for its Export-Import Bank in Uzbekistan’s capital. The bank will coordinate activities of the eight Caucasus and Central Asian countries: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. Talks were held with the Eximbank delegation over potential new projects in Central Asia, particularly in hydropower, transport, telecommunications and water management.
Renewable Energy in the Land of Gas
Kazakhstan’s Samruk-Kazyna state fund signed an agreement with the Chinese sustainability company, SANY Renewable Energy will build a $114 million plant to construct wind turbine parts in Kazakhstan’s Zhambyl region. The plant is expected to be built by the end of 2025 and is projected to create over 300 jobs. The plant will produce nacelles, hubs and towers for wind turbines, with only the blades being left out of the plant’s production.