Landlocked Central Asia gets shorter railway link to Persian Gulf

AK YAYLA, Turkmenistan (Reuters) - Turkmenistan, Kazakhstan and Iran on Wednesday inaugurated a new railway route that will improve resource-rich Central Asia’s access to markets in the Middle East and South Asia.

People stand near a freight train during the opening ceremony of the new railway in the Turkmenian village of Ak Yayla December 3, 2014. REUTERS/Marat Gurt

The 925-km (578-mile) stretch of railway, built jointly by the three Caspian neighbours, will ease the exchange of goods between the landlocked post-Soviet region and the countries lying along the Indian Ocean and the Persian Gulf.

It will also accelerate shipments of goods between the Persian Gulf and South Asia on the one hand and Russia and Europe on the other.

“These are just our first steps,” Iranian President Hassan Rouhani told a ceremony in Turkmenistan which marked the end of the building of the final Turkmen-Iranian link of the new route, stretching from Uzen in western Kazakhstan to Gorgan in Iran.

“This (link) will cut trade costs and make trade more efficient.”

Rouhani, accompanied by his Kazakh counterpart Nursultan Nazarbayev and Turkmenistan’s Kurbanguly Berdymukhamedov, symbolically bolted up the railway’s final link with wrenches.

The initial carrying capacity of the new railway route of 5 million tonnes of cargo a year is set to rise to 20 million tonnes annually in 2020.

“I am confident that this new route will create new geopolitical and new geoeconomic opportunities for the region’s development, as well as for our nations,” Berdymukhamedov said.

Turkmenistan, holder of the world’s fourth-largest reserves of natural gas, hopes to ship textiles and products of its nascent gas processing industry along the new route, consistent with its strategy of economic diversification.

Oil-rich Kazakhstan, Central Asia’s largest economy and grain producer, plans to boost exports of wheat to Iran and other markets of the region.

The construction of this railway link, whose cost is not disclosed, was started in 2009. A source with knowledge of the matter, who asked not be identified, estimated the cost of the construction at $2 billion.

The Asian Development Bank and the Islamic Development Bank helped to finance the project.

Writing by Dmitry Solovyov; Editing by Mark Potter