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Uzbekistan’s Modern Policy on Developing International Transport Corridors to the South

23 Min Read

Introduction

With the outbreak of the war in Ukraine, access to the traditional northern cargo transportation routes for Central Asia has become significantly constrained. As a result, the leadership of Uzbekistan has prioritized expanding the geography of exports and increasing the volume of foreign trade, while simultaneously accelerating the diversification of international transport corridors. Currently, the main attention is focused on the southern direction to ensure free access to the Indian Ocean. Several options are under consideration: transit through Iran and Afghanistan, the utilisation of combined routes for the delivery of goods to India, Pakistan, the Middle East, and other promising markets. The development of these routes contributes to the expansion of the logistics capabilities of Uzbekistan, potentially reducing its transport and transit dependence on Russia.

Trans-Afghan communications

For Uzbekistan, the shortest route to the Indian Ocean begins at the border with Afghanistan, which plays a critical role in connecting Central and South Asia. Together, these fast-growing regions boast over two billion people, offering a solid foundation for economic growth and development. Given such potential, it is natural for both regions to seek expanded cooperation, particularly in transport and trade.

In 2021, trade between these macro-regions totaled $4.7 billion, with Uzbekistan’s trade with South Asia exceeding $1.8 billion. Afghanistan accounts for nearly half of this volume, followed by India and Pakistan. Notably, Afghanistan ranks among Uzbekistan’s top ten trading partners, with trade exceeding $867 million by the end of 2023. This growth is driven by Afghanistan’s geographic proximity and available transport infrastructure.

A significant portion of Afghan imports reach the republic via the Hairatan-Mazar-i-Sharif railway, which was built with the participation of Uzbekistan and international financial organizations in 2011. This railway is the only functioning transport artery connecting Afghanistan with the outside world. It is extremely important for Uzbekistan as well, as it generates revenue from the transit of goods in the Afghan or trans-Afghan direction.

Amid rising global geopolitical tensions, establishing reliable transport links between Central and South Asia via Afghanistan is increasingly urgent. In recent years, a number of serious initiatives have been put forward in this context.

First, it is worth mentioning the idea of constructing the Mazar-i-Sharif-Kabul-Peshawar railway, which is planned to launch in 2030. The Uzbek establishment has high hopes for this project, as it has been stated more than once that the Kabul Corridor will become the “shortest and cheapest route” to international seaports.

The Trans-Afghan Railway will span 647 kilometers, cutting transit time from Pakistan to Uzbekistan from 35 days to just 3-5. The cost of transporting one container is expected to decrease by nearly threefold. By 2030, the potential cargo flow through the new route will be about 22 million tons per year, predominantly formed through transit

Road communication has already been established through Afghanistan. In 2021, Uzbekistan received the first batches of cargo from India and Pakistan.

South Asians view the region as a gateway not only to Central Asia but also to China and the Asia-Pacific. An important example is the China-Kyrgyzstan-Uzbekistan railway, the construction of which is expected to begin soon. On June 6, 2024, in Beijing, the parties signed an intergovernmental agreement to implement the project

The new transport artery will connect Central Asia and China via the shortest route. If it is linked to the Mazar-i-Sharif-Kabul-Peshawar railway, Uzbekistan has every chance of becoming a key hub in international transit from China to South Asia and the Middle East.

This integration is also applicable to another branch of the Trans-Afghan Corridor, with access to the largest Iranian ports on the open sea – Chabahar and Bandar Abbas. The project arose long before the idea of creating a trade route towards Pakistani direction. In 2020, Iran and Afghanistan launched the first three sections of the Khaf-Herat railway. The second part of the Trans-Afghan Corridor was supposed to be the Mazar-i-Sharif-Shiberghan-Maimana-Herat railway, agreed upon by the presidents of Uzbekistan and Afghanistan in December 2017. However, the project was never completed. Currently, the Uzbek side has completely switched its attention to the Trans-Afghan railway to Peshawar. The reason for this shift may be the presence of an alternative transport corridor from Uzbekistan to Iran and the Persian Gulf countries through Turkmenistan, created under the Ashgabat agreement in 2011.

Meanwhile, the current, unrecognised government in Afghanistan is trying to use the capabilities of other foreign economic partners to ensure transport connections between the country’s largest cities and regions.

In May 2023, the Taliban government approved the Mazar-i-Sharif-Herat-Kandahar railway project, which is positioned as the shortest route between Moscow and New Delhi through Afghanistan. It is possible that the Taliban will seek support for this project from Russia.

The road to Kandahar will stretch for 1468 km, crossing 9 provinces and 37 districts of Afghanistan. The first stage includes the construction of a 657-kilometer section from Mazar-i-Sharif-Herat. Then, a railway line spanning 811 km from Herat to Kandahar will be laid. This is a highly complex and expensive project, which has several advantages. The main one is the possibility of extending the new railway both towards Iran and to the borders of Pakistan. This potential likely spurred interest  from Turkmenistan and Kazakhstan in the implementing the Turgundi-Herat-Kandahar-Spin Buldak trade route, which will pass from Turkmenistan’s  western border  through Afghanistan to Pakistan. In September 2024, the construction of the first stage of the Turgundi-Herat railway was launched.

It is expected that with the emergence of the Trans-Afghan railway corridors, competition between the Central Asian states for transit flows in the southern direction will become inevitable. For now, the implementation of both projects is complicated by a lack of investment and the low level of security in Afghanistan. Therefore, Uzbekistan continues to diversify external trade routes and seeks alternative options for transport connections with other regions.

Connectivity to the Middle East

Recently, Uzbekistan has noticeably intensified its dialogue with Middle Eastern countries. Uzbekistan’s head of state has strengthened ties with the Middle East through multiple visits to Saudi Arabia, the UAE, Qatar, Iran, and Egypt.

The rapid economic development of densely populated Arab states, especially the Persian Gulf monarchies, highlights promising markets in the region where Uzbek producers can secure a significant niche. At the very least, this includes exports of fruit, vegetables, and textile products. There is also potential for establishing joint ventures in more labor-intensive industries such as petrochemicals, pharmaceuticals, electrical engineering, and others.

Despite mutual interest, trade volume between Uzbekistan and its Middle Eastern partners remains low. The United Arab Emirates has the highest figure. As of the end of 2023, trade turnover with this country amounted to $626 million. Trade with Iran is slightly lower, at $503.4 million, while figures with other nations remain modest. For example, although the volume of trade with one of the fastest-growing economies in the world, Saudi Arabia, has increased tenfold over the past few years, it remains comparatively low. To achieve greater economic success, it is necessary, among other things, to ensure reliable transport connectivity between Central Asia and the Middle East.

The first step in this direction was the joint initiative of Iran, Turkmenistan, Oman and Uzbekistan to launch the multimodal corridor Central Asia – Persian Gulf. One part of the routes runs along the railway connecting Uzbekistan – Turkmenistan – Iran, while the other involves sea transport from the Iranian ports of Bandar Abbas and Chabahar to the Omani coast of the Persian Gulf. In 2011, the parties adopted the Ashgabat Agreement, after which the project began to be developed with active discussions on the provision of benefits and unification of tariffs for the transportation of goods by railway.

Five years later, the route was operational, but it failed to produce the expected results. It is believed that the main reason was the international sanctions against Iran, with a new wave occurring at the close of the first decade of the 21st century. Economic restrictions forced many countries, including Uzbekistan, to suspend cooperation with the Islamic Republic. This turn of events, of course, had a negative impact on the implementation of joint infrastructure projects with the participation of the Iranian side.

Now, we are seeing the opposite dynamics. This is partly due to the increased importance of Turkmen transit, which has speed up and reduces the cost of shipping Uzbek goods to Europe (via the Trans-Caspian International Transport Corridor) and the Middle East. In 2022, Tashkent announced new plans to connect with India through the territory of Turkmenistan and Iran became known. It is likely that the proposed route will become an alternative to the unfinished trans-Afghan highway toward Iranian. However, this is a separate topic, and we will return to it later.

For now, it is worth noting that, against the backdrop of increased interaction between Uzbekistan and Turkmenistan, the issue of effectively utilizing the Central Asia–Persian Gulf multimodal corridor has once again become relevant. On August 8-9, 2022, a meeting of the Uzbek-Turkmen working group on transport issues was held in Tashkent. During the meeting, the parties decided to “revive” the forgotten route and discussed its future prospects. Subsequently, several rounds of negotiations were held with the remaining beneficiaries of the project, which served to intensify the dialogue with Iran.

With Uzbekistan’s current desire to expand the geography of exports by intensifying trade with Arab states, the need for Iranian transit, both land and sea, will only increase. That is why it is important for Tashkent to achieve full implementation of the Ashgabat agreement. Turkmenistan and Iran are equally interested in this, viewing Uzbekistan as a reliable partner and expressing their readiness to meet it halfway.

Iranian transit

As mentioned earlier, Iranian transit presents significant challenges due to international sanctions. However, it is precisely this partnership with Iran that offers Uzbekistan broad opportunities to improve interregional supply chains for export products. Through Iran, it is possible to quickly and conveniently deliver goods to world markets, while also enabling the redistribution of transport flows in various directions. Additionally, Iranian transit is safer than Afghan transit, which fully aligns with the geoeconomic interests of the Central Asian countries.

To avoid secondary sanctions, Uzbekistan, like many other countries, is cautious in its relations with the Islamic Republic. The most effective cooperation between the two countries is in the transportation sector. In 1996, they jointly launched the Tejen-Sarakhs-Mashhad railway line. For Uzbekistan, this remains the shortest route to the open seas via Iran.

The deep-water port of Chabahar is especially prominent, serving as a crucial transit hub for cargo shipments from Central Asia to India, Iran, Afghanistan and the Middle East. Chabahar’s strategic importance is explained by its convenient location, which allows cargo ships to easily enter the Indian Ocean.

One drawback of the port is the lack of a high-quality railway connection to the sea terminals. This limitation hinders the attraction of additional cargo traffic to Chabahar and impedes related international transport routes, including the multimodal corridor Uzbekistan-Turkmenistan-Iran-Oman. In 2020, Iran began constructing  the 628 km Chabahar-Zahedan railway line, with  more than half of the section has already completed. The facility is scheduled for completion by March 2025.

Over the past decade, Chabahar port has undergone significant transformation, largely due to investments by India, which now gains access to markets in Afghanistan and Central Asia. In 2016, Iran, India and Afghanistan signed a trilateral agreement on transit and trade. Since 2021, Indian goods have been delivered to Afghanistan via the newly established Khaf-Herat railway. Originally, there were plans to extend this line to Uzbekistan’s borders.

However, the project remained unfinished, and later an initiative has emerged to build an alternative Trans-Afghan corridor connecting to the port of Gwadar in Pakistan. China is heavily involved in developing Gwadar’s infrastructure, which conflicts with India’s interests, as it is also pursuing a competing project in Iran’s Chabahar. This infrastructure would allow China to strengthen trade and economic ties with Central Asia, a goal that Uzbekistan also shares by intensifying its transport cooperation with Iran.

In 2022, the launch of a new logistics route, Uzbekistan-Turkmenistan-Iran-India, using Chabahar port was announced. This initiative is driven by the steady growth of trade turnover between Uzbekistan and India, which is expected to reach $1 billion in the near future. Given the unpredictability in Afghanistan and Uzbekistan’s interest in developing railway links to Pakistan’s Peshawar, the Trans-Iranian Corridor to Central Asia appears to be a more reliable option for New Delhi.

In 2023, Iran and Uzbekistan, with India’s active assistance, reached an agreement on jointly using Chabahar port. Uzbekistan is offered the opportunity to acquire one of the port’s terminals. Investments in Chabahar port hold considerable promise, as having direct access to maritime transport will allow Uzbekistan not only to streamline trade with foreign partners but also to generate revenue. A major advantage is that Chabahar is not subject to the anti-Iranian sanctions regime, making it an attractive option for trade. This initiative aligns with American diplomatic efforts to promote free trade between India and Central Asia.

Uzbekistan’s involvement in Chabahar port is expected to boost trade with Iran. By the end of 2023, bilateral trade between the two countries had already exceeded $500 million, with plans to increase this figure to $1 billion. These figures suggest a strengthening of Iran’s economic presence in Uzbekistan.

Back in 2018, the parties agreed to develop investment cooperation. Consequently, over the past five years, the number of joint ventures with Iranian capital has tripled, reaching 355. Uzbekistan has also established a mechanism for tolling zinc ore from Iran, which can be considered a successful example of industrial cooperation between the two countries.

With its growing production capacities for processing hydrocarbons and various metals, Uzbekistan is well-positioned to increase exports of chemical products, iron, steel, copper, and their derivatives to Iran.

Iran is equally keen on leveraging Uzbekistan’s transit potential, as the country serves as a critical link in trade routes connecting China, Europe, and China. Uzbekistan also plays a key role in the Middle Corridor, which provides access to the South Caucasus and Turkey’s seaports. As a Caspian state, Iran seeks to join this logistics network, enabling it to receive Chinese cargo and participate in transporting it to neighboring countries and regions.

Conclusions

In summary, it should be concluded that Uzbekistan has several options for developing trade routes in the southern direction. Judging by the official rhetoric and frequent mentions in the media, special preference among them is given to the Trans-Afghan Railway towards Pakistan. The Uzbek leadership ardently supports this project, appealing to its economic benefits.

It is estimated that the Mazar-i-Sharif-Kabul-Peshawar railway will significantly reduce the time and cost of transporting goods from Central Asia to South Asia. However, given the current situation in Afghanistan, it is unrealistic to believe that the new transport artery will function smoothly. It is also unknown who, and in what proportions, will cover the costs of implementing the project. Most importantly, the question of who will control and manage the Trans-Afghan Corridor remains unclear.

It is obvious that the Uzbek side’s push for the launch of a railway line to Peshawar is closely intertwined with the interests of China, which intends to connect with resource-rich Afghanistan and the growing markets of South Asia through our region. For these purposes, China has accelerated the construction of the China-Kyrgyzstan-Uzbekistan railway.

At the same time, China, as part of the Belt and Road initiative, is modernizing the Pakistani port of Gwadar, which opens access to the sea for Central Asian countries and is a serious competitor to Iran’s Chabahar, also located on the Indian Ocean coast. The launch of the Trans-Afghan route in the Pakistani direction will lead to an increase in cargo traffic and enhanced capacity at Gwadar, giving it an additional advantage. This is something that India and Iran, which are developing an alternative infrastructure project in the port of Chabahar, would not want to happen.

As for the Central Asia-Persian Gulf multimodal corridor, its future will mainly depend on the interest of the project participants in continuing this story. The key link in the transport and transit route in the Middle East is Iran, which is under international sanctions. These sanctions may cause difficulties in transporting goods from Iranian ports to Oman. In addition, to reduce logistics costs, the parties need to unify transit tariffs. However, even with this option, the multimodal route is unlikely to become economically attractive. Since combined transportation is always inferior to single-transport transportation in terms of price and time.

Nevertheless, Uzbekistan has other options for access to the Middle East, such as utilizing Pakistani ports in the open ocean. By strengthening ties with Pakistan in the transport sector, Uzbekistan is simultaneously betting on Iranian transit. Its most important element is considered to be the port of Chabahar, which is exempt from anti-Iranian sanctions. Therefore, the Uzbek side is actively involving Chabahar in its promising logistics projects. The new multimodal route Uzbekistan-Turkmenistan-Iran-India promises to become one such example. With the growing dynamics of trade with India, the emergence of this corridor is very opportune.

The railway to the Iranian port of Bandar Abbas through Afghanistan, or the first version of the Trans-Afghan Corridor, remains under consideration by experts as an alternative to transport routes that provide Uzbekistan with access to the southern seas. This route would connect with India or the Middle East. But the problem is that the use of Bandar Abbas is limited by the sanctions regime against Iran. Another restraining factor is Tashkent’s prioritization of establishing a railway connection with Pakistan through Afghanistan. For these reasons, the Uzbek side is unlikely to decide to complete its section of the Trans-Afghan Railway with access to Iran in the near future.

Thus, by diversifying foreign trade routes, Uzbekistan is solving its main task – breaking the transport deadlock. Proactive actions in this direction will have a multiplier effect for all Central Asia, contributing to the economic development of the region.

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