Economy

Kazakhstan Looks To Russian Rivers As Outlets To Global Markets

Analysis 8 February 2019
Kazakhstan Looks To Russian Rivers As Outlets To Global Markets

Last week (February 2), the influential Russian news and commentary portal IA Rex featured a story headlined, “Kazakhstan Is Seriously Discussing Becoming a Sea Power.”

To most readers, the article must have seemed extremely improbable or even to be “fake news” given that Kazakhstan is a landlocked country, hundreds if not thousands of kilometers away from the nearest ocean. Undoubtedly, that impression was only strengthened for many because the IA Rex report focused not on the possibility that Astana would develop its Caspian shipping capacity to carry oil and natural gas across that sea to the Caucasus and the West, but rather hopes to use Russia’s river system to reach the Trans-Siberian Railway and even the Northern Sea Route in the Arctic (IA Rex, February 2).

Enormous technical and political obstacles to such a project certainly exist. And yet, three years ago, Kazakhstan already made some important strides toward this goal when it used Russia’s Trans-Siberian Railway and the Ob-Irtysh river system to import heavy equipment from South Korea. As such, Kazakhstan was, in fact, building on the long history—generally overlooked in recent decades—of Russia’s use of its rivers as major arterials for carrying cargo not only within the country but also to coastal ports, from where it can be exported abroad.

And for both of these reasons, the IA Rex headline is actually not as unthinkable as it may appear, a fact that has been drawing increasing attention in Kazakhstan, Russia, China and the Pacific Rim states, and even in the United States (Kmgrm.kz, January 6, 2017; Kazpravda.kz, October 5, 2016; Azernews.az, June 11, 2018; Nownews.ru, February 5, 2019; CACI Analyst, January 23, 2019).

For much of its early history, Russia developed economically by moving goods along internal rivers. Even in Soviet times, despite having expanded its networks of railroads and highways, Moscow remained heavily reliant on rivers to move bulk cargoes inside the country and beyond. Since the Soviet Union disintegrated, that internal riverine system has decayed, with many ports no longer working or able to handle modern intermodal shipping methods; Russian barges and ships are aging and are not being replaced; and in many places, Russia’s rivers are not being regularly dredged to allow for navigation.

But in the last decade, the government in Moscow has made significant progress in starting to correct all these weaknesses because its rail and highway networks remain far too inadequate to transfer bulk cargos. Moreover, Russia has announced plans to rebuild and expand the riverine transportation system and to link it, in particular, to the development of the Northern Sea Route (Garant.ru, December 5, 2001; Government.ru, March 1, 2016).

Not surprisingly, some of Russia’s neighbors have taken notice and decided to explore how to piggyback on that development. One of the most advanced in that respect is Kazakhstan, not only because it was part of the Soviet riverine network but also because several of the navigable tributaries to the Siberian Ob-Irtysh basin rise or pass through that Central Asian country. Kazakhstan’s efforts have been explored in detail by Aleksandr Voronenko of the Shanghai Cooperation Organization’s Khabarovsk Research Center (SCO-KRC). In a heavily footnoted, 2,500-word article, he considers both what Astana has done and hopes to accomplish as well as some of the obstacles that must be overcome if it is to succeed in realizing what he calls “the Ob-Irtysh Project” (Sco-khv.org, February 5, 2017).

The Siberian scholar traces the use of the Ob-Irtysh river system as a means of delivering bulk or ultra-heavy cargo back to 1984, when the Soviets dispatched oil refinery equipment from Volograd to Pavlodar. Russia and Kazakhstan agreed to continue this arrangements in 1992 and 2010 but little happened because of the decay of Russia’s riverine network. When that system began to recover, South Korean companies in 2016 made use of it to ship some ultra-heavy equipment to Kazakhstan via an intermodal system of rivers and rail.

However, the river portion did not work as well as many hoped, because Russian river ports still lacked necessary facilities. In one place, Voronkov says, the transfer from one mode to another had to occur not on land but on a ship.

Yet, such choke points are finally being overcome, he says. In addition, Moscow is modernizing its entire waterway system, building new ships and barges, improving ports and communications, and, most importantly, ensuring that dredging keeps most of the 14,000 kilometers of navigable rivers available. Given that “a substantial part of the Ob-Irtysh system (1,700 kilometers of the Irtysh River) is in Kazakhstan,” the Khabarovsk-based expert says, it is entirely natural that Kazakhstan should make use of its possibilities.

Voronkov’s discussion of Kazakhstan’s role, however, additionally highlights what may be the biggest obstacle of all: policy differences between Astana and Moscow. Kazakhstan wants to take part in this transportation network to build up its own economy by allowing it access to the world’s oceans and their increasingly important shipping networks (Kazpravda.kz, October 5, 2016), while Moscow wants Kazakhstan to be subordinate to Russia’s interests in the development of both east-west trade between China and Europe and north-south trade between Russia and India. Kazakhstan could profit from such trade but not to the same degree as it would from a more autonomous approach (Sco-khv.org, February 5, 2017).

By virtue of geography (the rivers involved, after all, are in Russia) and the relative underdevelopment of Kazakhstan’s riverine fleet (Astana has far too few barges and ships to allow it to expand its own trade to anything like what its leaders have talked about), Russia has the whip hand. It will try to subordinate Kazakhstan into a Russian-dominated system, likely with China involved as well, even as Kazakhstan seeks a more independent role using a means of transportation many may have thought no longer much mattered. These issues are almost certainly going to heat up soon because, as the IA Rex report notes, Moscow and Astana are already scheduled to discuss the issue before the end of this year (IA Rex, February 2).

This article was originally published on www.jamestown.org.

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