Kazakhstan’s game-changing role

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Kazakhstan, the giant of Central Asia, has been bolstering its connections with neighboring nations and major economies across Asia and Europe

The global trade landscape is quickly evolving as international supply chains reconfigure themselves following the retreat of globalization, driven by the deepening bifurcation of the international arena between U.S.-led and China-led subsystems. Such a time of rapid change calls for future-oriented leadership informed by strategic foresight and diplomatic acumen. This is particularly true for countries that may find themselves in delicate geo-economic positions, such as Central Asian states.

Investments in infrastructure are essential for the economic growth of these countries.

According to the Asian Development Bank’s (ADB) 2017 report, “Meeting Asia’s Infrastructure Needs,” infrastructure investment needs in Central Asia increase to $38 billion annually, or 7.8% of the region’s gross domestic product (GDP) if those necessary for climate change mitigation and climate change adaptation are included.

Responding to these challenges, one central Asian country – Kazakhstan – managed to position itself as a pivotal player on the Trans-Caspian International Trade Route (TITR), a project reshaping trade dynamics between Asia and Europe through a network of railways and seaways to facilitate faster and more efficient trade. The TITR is a rail freight corridor linking the People’s Republic of China and the European Union through Central Asia, the Caucasus, Türkiye and Eastern Europe. The project is expected to bring significant economic benefits to the country, boosting trade and attracting foreign investment. It will open new avenues for economic growth, create jobs and foster innovation. It has the potential to make Kazakhstan a highly attractive destination for businesses seeking to install themselves in Central Asia to tap into the vast Asian markets.

Beyond economics, the TITR has already elevated Kazakhstan’s political stature. The EU and European Bank for Reconstruction and Development (EBRD) have formally recognized this shift. At a recent joint conference in Almaty, with wide participation from many Central Asian players, these two entities selected what they call the “Central Trans-Caspian Network,” running through southern Kazakhstan, as the most sustainable of three container-transit options for linking Central Asia and Europe. The EU and EBRD foresee a sevenfold increase in transit volumes from 18,000 “20-foot equivalent units” (TEUs, a standard industrial measure) to 130,000 TEUs by 2040. The EU and EBRD’s study is country-specific and proposes seven soft connectivity measures and 32 hard infrastructure investment needs across five Central Asian countries. The study provides for such practical measures as digitalization of transport documents, improvement of interoperability, enhancement of the public-private partnership (PPP) environment, facilitation of trade, liberalization of markets, improvements to tariff-setting mechanisms and the increase of funding for asset maintenance. Country-specific priority investment needs for Kazakhstan include Almaty-Khorgos and Aktau-Beyneu railway double-tracking, expansion of several terminals and railway stations, and Aktau port capacity expansion, among other projects.

The involvement of the EBRD in this study also represents a “seal of approval” for international financial institutions to participate in building out the corridor. The detailed EU-EBRD work identifies specific projects in specific geographical regions and already represents a preliminary feasibility study for them. It outlines key actions for developing the network and its integration with the EU’s Trans-European Transport Network (TEN-T), which covers all 27 EU member states.

The last 20 years have brought significant changes to Central Asia’s economic development, with the hydrocarbons sector, in particular, giving these economies a new shape, for example, in the strategic importance of Kazakhstan and Azerbaijan in world energy markets. Kazakh President Kassym-Jomart Tokayev stressed the need for economic reforms and growth, and noting a record growth of investment to $28 billion in the past decade, he reiterated the need for flexibility and adaptation to the country’s realities, proposing to ease the tax burden for new projects.

Playing a central role in a project of such scale and significance will enable Kazakhstan to reinforce its position as a key player in regional affairs. The country has already demonstrated its ability to foster cooperation and manage complex projects, establishing its reputation as a reliable and influential partner in global trade initiatives.

The Central Asian giant has been strengthening its ties with neighboring countries and major economies in Asia and Europe. The TITR’s implementation will further accelerate this trend. It is not just about facilitating trade but about building long-term, mutually beneficial relationships. As a key link in the TITR, Tokayev’s Kazakhstan is becoming not only a participant in global trade but also a significant influencer. The TITR promises long-term benefits for Kazakhstan, including sustainable development and increased regional cooperation. By promoting trade, it encourages the efficient use of resources and the adoption of sustainable practices. The shared interests and mutual dependencies that the TITR has already fostered make Kazakhstan a regional development and cooperation leader.

The TITR thus manifests the country’s strategic vision, boosting Kazakhstan’s economy and elevating its status not just on the regional but on the global stage. The country has already progressed significantly on an initiative known as “Digital Kazakhstan,” which seeks to transform how citizens, businesses and government bureaus interact. The strategy employs modern technologies like AI, 5G and Smart City to boost R&D, e-commerce, venture financing and fintech development.

Since Tokayev assumed power, Kazakhstan has undergone several reforms aimed at developing an entrepreneurial culture, attracting investments in the tech industry, and laying the foundation for Kazakhstan to serve as a technological hub in Central Asia.

Source: Daily Sabah