Belarus joined Chinese Silk Road project, Ukraine didn't

Author : Oleksiy Kushch

Source :

If you look at the map of Ukraine, it immediately becomes obvious that this country is doomed to colossal success, and, first of all, as a key transit country connecting Europe and Asia. "Bridge between civilizations", "country-hub", "transit country" so international experts called us at the beginning of the 2000s. Such a weighty international potential should have resulted in double-digit indicators of economic growth, an increase in budget revenues and the population. And what happened?
23:36, 26 December 2017

112 Agency

A unique transit opportunity was opened before Ukraine in the framework of the Chinese concept of the "New Silk Road". China is an export-oriented country that pays great attention to the creation of convenient, fast and reliable communications for the delivery of its goods to key foreign markets. These include the US and the EU markets. It is clear with the first market - there is simply no alternative to sea transport. And as for the European market, the creation of a transnational railway transport corridor can shorten the path of Chinese goods from China to Europe from 36 to 16 days (in comparison with the sea route of transportation). The only negative point of the land corridor is a need to cross several state borders and depend on a clear coordination of the movement of freight trains. You can add here the need for warehouse terminals and inspection facilities.

But all these negative aspects are successfully minimized within the framework of international cooperation. If there will be a group of countries that can coordinate its transport and customs policy, the lack of a land route becomes its advantage.

In addition, the construction of transport hubs, customs terminals, and industrial landfills along the entire route of cargo transportation promises the participating countries the receipt of multibillion direct investments. It is for this purpose China created the Silk Road Fund, which should promote Chinese goods and carry out infrastructure and portfolio investments in the countries participating in the project. The total size of the fund is about 40 billion dollars, of which about 5 billion dollars were invested in 2015, while the most capital-intensive projects of the fund were:

- within the framework of the China-Pakistan Economic Corridor: construction of a hydroelectric power station in the north-east of Pakistan, investment portfolio - 1.65 billion dollars;

- purchase of 98% stake in the Italian Pirelli (tire production), investment portfolio - 1.8 billion dollars;

- purchase of shares in the Russian project for the production of liquefied natural gas Yamal LNG and the allocation of a development loan of 730 million euros.

As you can see, a project of the "Silk Road" has the same relation to silk, as a guinea pig to the pigs. In fact, it is a multifunctional global international project, the goal of which is not only to create transport corridors and an extensive logistics network but also to implement projects in the real sector of the economy and energy. In the future, the volume of the funds' resource liabilities will be increased ten times, primarily due to investments by the countries of the Persian Gulf. In addition, in 2014, China established the Asian Bank for Infrastructure Investment (ABII), which will create regional competition for the World Bank. The participants of this international financial structure responsible for the financial content of the project have already become 84 countries (almost all of Asia and the most developed countries of the EU).

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The investment and credit portfolio of the bank in the coming years may be about $ 100 billion. Many experts have already called this financial project the creation of a Chinese counterpart of the International Monetary Fund. In the foreseeable future, with the help of this financial instrument, China plans to create a trans-Asian sphere of common economic interests and a network of allied countries. In this model, ABII against an anemic and ineffective IMF in the next few years can easily replace an ineffective currency fund as the main international donor for troubled countries. But if the IMF is a conductor of the interests of the Western world, primarily the US, then ABII will become an apologist for not so much Chinese "values" but Chinese economic and commercial interests. In the near future, this bank will solve two key tasks: increasing the profitability of the reserves of the People's Bank of China, which now brings 2-3% of profit per year and placing excess liquidity of the Chinese economy, which will be released as China sells the US treasury bonds. By the way, the participants of this bank are not only traditional allies of China but also India (the largest regional competitor), as well as Vietnam and the Philippines, with which China has territorial tensions. By the way, Ukraine is not among the participants of ABII, but Belarus has joined this project.

At this stage, China proposed a new concept of the "New Silk Road", which is called "One Belt - One Way". This name is explained simply enough: the general transport corridor plans to unite several national routes and integrate into the common Chinese project the Mongolian idea of the "steppe way", the trans-Eurasian corridor lobbied by Russia and the main direction of the project - the Central Asian route of 6.5 thousand km from the Pacific coast of China through Kazakhstan and further to Europe.

Now Belarus has the greatest benefit from the project, which becomes a real gateway for the Chinese in the EU. In this country, the United Transport and Logistics Company has already been established, which organizes transit to Europe to one thousand trains from China, following through Brest. The average speed of trains on this route is over 1000 km per day. This is about three times faster than the transport of goods along the alternative sea route. Container trains follow the route Dostyk / Altynkol - Brest, the distance is 5430 km, a travel time of the trains is 132 hours, that is, less than six days.

And how does Ukraine look for its place in the chain of the "New Silk Road"? It doesn’t. Moreover, we are gradually losing our transit potential and become simply uninteresting for system investors and international partners. This is indicated by the statistics. In January-November 2017, transport companies transported 579.7 million tons of cargo, which was 102% of the volume of the previous year.

In dynamics, the volume of freight traffic represents a falling trend: if in January 2017, as compared to January 2016, traffic growth was registered at the level of 23.7%, then this index began to decline rapidly and in November this year it was only 6.1%. But the last year was not the most successful in terms of a development of the transport industry, if not to say the opposite.

In January-November 2017, 253.8 million tons of domestic cargo and exports were transported by rail, which is 5.2% less than in the same period last year.

An even greater fall was recorded on water transport: a drop in foreign traffic was 20.5%.

The situation was partially solved because of the increase in the transit of natural gas through our gas pipelines: the growth of transit was 15.9%. The volume of oil transit also increased: + 2.1%. But the pumping and transit of ammonia decreased - by 22.7% and 23%, respectively.

In this regard, I would like to recall, what creative ideas have our Ministry of Transport developed? Perhaps the business just did not appreciate the depth of its intellectual solutions, capable of changing the situation and preventing completely losing our transit potential?

In the autumn of this year, Kyiv was visited by the Chinese official delegation, which proposed to include Ukraine in the project of the "New Silk Road". Even some preliminary agreements were signed. Ukraine proposed its transit corridor to Europe, and as infrastructure facilities - the base of the state reserve. It seemed that everything is all right. Unfortunately, it is not. The fact is that the cargo way to the Belarusian Brest is already full of trains and cargoes, which means that the Chinese urgently need a spare corridor where it is possible to send trains during peak traffic loads. Ukraine is quite suitable for this role, although this format of cooperation will not bring us significant benefits. In order to compete with Belarusian route, we need to have in the western part of the country analogs of multimodal assembly sites, such as Grodnoinvest, industrial parks like the Great Stone, and inspection complexes, like in Brest, that can scan moving trains. Meanwhile, our western border differs from the Belarusian only by hundreds of trucks, which don’t have the necessary permits for moving goods.

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