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Kazak Railways Lose Custom to Russia

By News Briefing Central Asia
Kazakstan is losing out to Russia in the competition as a carrier of Chinese rail freight. NBCentralAsia analysts say what is needed are no comprehensive transit arrangements between all three states, as bilateral deals are manifestly not working.

Last week, executives from Kazakstan Railways called on the government to intervene in a crisis which has seen the number of Chinese containers going through Kazakstan drop by 30 per cent in the last three months, according to the Kazakstan Today news agency.

The fall in traffic is the result of Russia’s decision to significantly reduce the rates it charges on rail freight, which encouraged China to redirect goods consignments to the Trans-Siberian Railway, bypassing Kazak territory. Kazakstan Railways has proposed bilateral talks with China to win back its custom.

NBCentralAsia analysts say this crisis exposes the flimsy mechanisms for trilateral cooperation on rail transport.

Economics analyst Petr Svoik said Kazakstan Railways had proposed bilateral talks was that there were real fears that three-way talks would fail.

At the moment, agreements on this kind of issue are achieve in one-to-one talks between the presidents of the countries involved – but whether formal or unpublicised, such agreements are often ignored. Svoik said a better system was needed so as to allow all three states to negotiate with one another.

Svoik added that whatever happened, Kazakstan would now have to reduce its own freight charges to coax the Chinese back as customers for its rail services.

Larisa Guseva, an expert at the Kazakstan Institute for Strategic Studies, said the rail crisis was the result of economic competition between Kazakstan and Russia, and no political agreement could change this.

“This can’t be seen as a case where a country is ignoring agreements on regional integration to do what it likes,” she said. “Why should Russia make sacrifices for Kazakstan?”

(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)