A new silk road through Central Asia

By Volker Ahlemeyer

Refurbishing the silk road in Kazakhstan

The EBRD has provided loans to help finance key transport links across Kazakhstan and the Kyrgyz Republic. Road refurbishment and construction in Central Asia is vital to the region's interconnectedness and economy.

At the crossroads between East and West, Kazakhstan has always occupied a key position between different civilisations and trade centres. For almost 3,000 years, merchants have travelled along the so-called “Silk Road” from Europe to East Asia to trade textiles, perfume, spices, jewels and other luxurious goods. The merchandise has changed over time, but the same trade routes are still vital for the country today.

Despite a population of only 16 million, Kazakhstan is the ninth largest country in the world – and the largest landlocked one. Road transport therefore plays a crucial role for the Kazakh economy and international commerce.

“Road projects are extremely important in Kazakhstan and in Central Asia because there has been a lot of under-funding of the transport networks. They are absolutely key to regional integration and the development of markets in the region,” says Sue Barrett, EBRD Director for Transport.

Connecting Kazakhstan to its neighbours

In the light of this, the EBRD has provided loans for several vital projects. One, a loan of US$ 28.5 million, has served to upgrade the regional road between Almaty and the Kyrgyz capital Bishkek.

This project is a good example of cooperation among international organisations, Sue explains. “The Asian Development Bank (ADB) provided a US$ 65 million loan and the EU provided technical cooperation funds for project design and a road development plan, which was very important for the institutional development in Kazakhstan and the Kyrgyz Republic.”

“The Almaty to Bishkek road enables traffic to flow smoothly between the two cities. In the year 2000, the traffic intensity for the EBRD-financed section of the road was between 3,500 and 4,000 vehicles per day. Now, following the rehabilitation, daily traffic volumes have grown to 25,000 to 30,000 vehicles,” says Mr Yerzhan Zhasybayev, Director of the Almaty department of the Road Committee.

“The road is important for Almaty and Kazakhstan. Almaty is the economic centre of the country and the highway connects the city to Bishkek and further on to Uzbekistan and Russia. Ultimately, the road will also cross the South-West corridor, which will connect Western China to Western Europe,” he adds.

IFI cooperation for key transit road

The South-West corridor is yet another key project in which the EBRD is involved. The Bank is providing a US$ 180 million loan to upgrade the 102 km-long road between the Russian border and the city of Aktobe at the northern end of this corridor.

“The Western Europe-Western China road corridor is another more recent example of cooperation between International Financial Institutions (IFIs),” says Sue. “The World Bank contributed about US$ 2 billion, the ADB just slightly less than US$ 200 million and the Islamic Development Bank just slightly over US$ 400 million for this road.”

Furthermore, the EBRD is also providing technical cooperation grants, funded by the Japan/Europe Cooperation Fund, to assist with the development of a Public-Private Partnership project in Kazakhstan according to best international practice. This will help involve private companies in developing the road network in Kazakhstan and make the transport sector more efficient.

The improved transport links will further integrate Kazakhstan and its Central Asian neighbours into the international road network, strengthening vital trade links between Western Europe and Asia.