Ukraine is taking two important steps toward expanding its ties with the global economy.
The Beskyd-Skotarske train tunnel in the Carpathians is being widened from one track to two, thanks to funding provided by the European Bank for Reconstruction and Development and the European Investment Bank. The project will more than double the speeds at which trains can travel through the tunnel as well as double the number of trains undertaking the journey. Since 60 percent of Ukraine’s current trade with countries to its west goes through the tunnel (originally built in 1886), the result will be a vastly enlarged capacity for imports and exports with the European Union, which already is Ukraine’s largest trading partner and with which Ukraine now shares a free trade zone. The work is scheduled to be completed by the end of 2017; trains will start using it by mid-2018.
Even more impressive is Ukraine’s participation in the Trans-Caspian international transport route that extends from Georgia, through Azerbaijan and Kazakhstan, to China, thereby bypassing Russian territory. The first trial run of a Ukrainian train consisting of 10 cars and 20 40-foot containers began in mid-January in the Ukrainian port city of Illichevsk. It was transported by ship to Batumi, Georgia. Thence by train to the Azerbaijani port city of Alyat, where it was loaded onto a ferry and crossed the Caspian Sea to Aktau in Kazakhstan. Some cargo will stay in Kazakhstan; some will go on to China, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan. Naturally, Chinese and Central Asian goods will also flow westwards.
The journey to Aktau is supposed to take about nine days. The train will run three times a week starting in March. Ukraine has high hopes, planning to transport up to 10 million tons of cargo annually via this route.
Ukrainians can thank Russia’s hapless president for their country’s involvement in the Silk Road. Moscow imposed an embargo on the transit of Ukrainian goods in early 2016, as punishment for Ukraine’s pursuit of closer economic ties with the European Union via the Deep and Comprehensive Free Trade Area agreement. That move, like Vladimir Putin’s decision to destroy Western food products and reduce economic ties with Turkey, has only forced Russia’s neighbors to search for alternatives to their traditional over-dependence on Russia. Since the alternatives are there, the big loser is Russia, which, thanks to Putin, will increasingly become isolated, economically and politically. Ukraine will be a big winner, since ending its economic dependence on Russia’s backward energy-based economy is a sine qua non of the still-backward Ukrainian economy’s finally becoming globally competitive. Over time, going global will help create commercial conditions that will allow Ukraine’s trade to expand and its economy to advance and modernize, while Russia’s remains unreformed and antediluvian.
Perhaps the most striking and encouraging aspect to Ukraine’s linkage to the Trans-Caspian trade route is that the country’s leadership was able to successfully navigate and negotiate a complex deal swiftly and efficiently through an intelligent and sustained diplomatic effort.
To organize the running of trains, the Ministry of Infrastructure, Ukrainian Railways, and the Coordination Committee of the Trans-Caspian international transport route made significant and hard work in 2015. The inclusion of Ukraine in the Great Silk Road was first recorded in the Ukrainian-Chinese inter-agency protocol. The possibilities of the project of Trans-Caspian international transport route were presented on 16 November 2015 during a road show and on 3 December 2015 at the International forum “Connecting Europe and Asia: a new look at the formation of the transcontinental route system” in Odessa.
The bottom line is this: Ukraine’s policymakers wisely anticipated the Kremlin’s embargo and even more wisely addressed the looming potential crisis well before it became one. That’s impressive, suggesting that Ukraine can get the job done if and when it needs to.
