Uzbekistan: Does Tashkent Use an Afghan Supply Route to Tweak Russia?, a 8 September 2011 article on Wikileaks at Eurasianet.
More on increased Uzbek rail tariffs at Eurasianet: “Uzbekistan: Did Karimov Tantrum Prompt NDN Transit Fee Hike?“.
A EurasiaNet article by Deirdre Tynan discussing “a morass of inefficiency, arbitrariness and “informal” payments” in Uzbekistan.
June 28, 2010
Responses to a Pentagon-issued request for information about sourcing fuel in Uzbekistan appear to suggest that the Uzbek-Afghan corridor of the Northern Distribution Network (NDN) is a morass of inefficiency, arbitrariness and “informal” payments.
In documents obtained under the Freedom of Information Act (FOIA), respondents to the Pentagon query made stark comments about severe delays at the Uzbek-Afghan border, and one – a major partner to USAID in Afghanistan – said corrupt payments “might be required to keep business moving.”
The NDN is a supply line for troops serving in Afghanistan spanning Europe, Russia and Central Asia. It was developed by US Transportation Command, US Central Command, Defense Logistics Agency, and the State Department, in conjunction with a variety of regional commercial and governmental actors. [For background see EurasiaNet’s archive ].
In August of 2009, the Defense Energy Support Center (DESC) solicited preliminary procurement evaluations from commercial companies in a query titled “Sources sought within the Republic of Uzbekistan for Products and Services in Support of Operation Enduring Freedom (OEF).” The query specifically sought information covering possible diesel, motor fuel and aviation fuel supplies.
According to the FOIA request submitted by EurasiaNet.org, eight companies responded to the DESC query. But only six responses were made available to EurasiaNet.org under the FOIA. Two responses, one from FMN International, the parent company of FMN Logistics, a firm that has strenuously denied any financial connections with the disgraced Uzbek conglomerate Zeromax, and another from NCS Fuels, were deemed “un-releasable.” [For background see EurasiaNet’s archive ].
One response – from Milio International Ltd, a company working in the fuel business in the former Soviet Union since 1997 – contended that “Uzbek Railways frequently (often for some period of time each month) bans all rail traffic going to the destination of Hairaton, Afghanistan. This is due to the thousands of rail cars both empty and full of all types of goods that have congested the rail stations for the past year while waiting to get to Afghanistan […] this is especially the case around the Termez and Karshi areas.”
Rail cars from the Baltic states and Russia also get “blocked from time-to-time,” the Milio response noted.
Meanwhile, Afghan Management Group (AMG) said rail transport from Bukhara, Uzbekistan, to Hairaton “with no ‘speed up fee’ takes up to 35 days.” But with “payment of informal fees, the time can be reduced to 7 to 18 days, (depending on amount of money paid).”
When asked to describe “the known impacts related to fuel specifications, taxes, transit leases/approvals, other local laws and challenges you may expect to face,” AMG outlined the payment of “informal fees” as a major challenge in Uzbekistan.
“Apart from refinery fees and transport costs, there are no taxes to be paid in Uzbekistan. However, payment of informal fees to authorities and individuals might be required to keep business moving,” the AMG response said.
“One of the biggest problems in both countries involved is the fact that rules are changing overnight and very frequently. To cope with this issue requires good contacts to authorities and flexibility to adapt own processes to a new situation,” the AMG response added. “AMG/Partner is very reluctant to pay bribes, but manages issues through established good relationship to authorities involved.”
AMG is listed as an “implementing partner” to USAID in Afghanistan. According to both USAID and AMG’s websites, “AMG is a leading firm supporting the reconstruction of developing nations, like Afghanistan, while promoting economic growth and higher living standards among the people of those nations.”
In another DESC response, Agility, one of Defense Logistics Agency’s top-100 contractors, said fuel trucks could be used as an alternative to the “normal delays” experienced at the Termez-Hairaton railway crossing.
“Government taxes and leases will always present challenges,” the Agility response added. However, initial talks with “government and commercial officials” signal that “they are willing to work with the United States to find suitable business arrangements.”
FMN, a firm that did not have its response to the Pentagon query released, reportedly maintained a strong relationship with Zeromax. According to a document available from the American-Uzbekistan Chamber of Commerce’s website, FMN Logistics purported to be capable of carrying out “rail cargo operations coordinated out of Tashkent using Zeromax Rail Code.” [For background click here ].
“Based on local presence, FMN Logistics and Zeromax Logistics transit times into and through Uzbekistan are half those of major shippers […] FMN Customs brokerage clearance services can cut Uzbek transit times in half,” the company asserted.
According to FMN’s website, “FMN was formed on 8 September 1999 as a domestic US corporation. The shareholders were, and remain its founder, Harry F. Eustace, Sr. and members of his family.”
“In 2009, FMN formed a subsidiary, FMN Logistics, with Harry F. Eustace, Jr. as its CEO and whose shareholders are the Eustace family plus David O’Connor, a Canadian citizen. FMN Logistics’ prime mission is to serve the US war fighter in Afghanistan by providing effective logistics solutions throughout the Central Asian Theater,” the website added.
The NDN carries 30 percent of goods delivered to US troops in Afghanistan, according to a White House statement on June 24.
Copyright (c) 2010 Open Society Institute. Reprinted with the permission of the Open Society Institute, 400 West 59th Street, New York, NY 10019 USA, wwwEurasiaNet.org
AFGHANISTAN: WASHINGTON EXPLORING CHINESE RE-SUPPLY ROUTE
Deirdre Tynan 2/02/10
On land, the NDN also appears to be experiencing some problems. Although the US Department of Defense insists the NDN is running at top capacity, Dmitri Rogozin, Russia’s mischievous envoy to NATO, told the Russian news paper Izvestia on January 26 that “there are some technical problems associated with an overload on one of the railway routes.”
Experts caution that additional land routes, whether routed through China or eastern Russia, could ultimately face the same problem — a bottleneck in Uzbekistan. “The problem isn’t the route to Central Asia, it is getting across Uzbekistan [to Afghanistan]. So you can have 10 ways to get to Termez, but what’s the difference?” a well-placed source told EurasiaNet.
Until major upgrades are completed at the Termez-Hairaton border crossing, and action taken to contain corruption and red tape, Uzbekistan is likely to continue to act as a choke point for US and NATO supplies bound for Afghanistan, the source added.
Source: Eurasianet , 2010-02-20
EurasiaNet has an interesting report by Deirdre Tynan, a freelance journalist specialising in Central Asian affairs, which discusses problems with the US plan to supply military forces in Afghanistan by rail from the north. I’ve highlighted some key bits.
The report includes a quote from David Brice, a international railway consultant who was in Afghanistan in 2005 working on a capacity increase and re-equipment study for freight lines.
One puzzling thing is the reference by a Russian Railways spokesman to
the widening [of the narrow gauge tracks] at Galaba-Hairaton on the Uzbek-Afghan border. As the Soviet-built railway tracks at Hayratan in Afghanistan are only connected to wider world via the bridge with Uzbekistan, it seems pretty unlikely that the tracks are anything other than the 1520 mm broad gauge used across the former USSR and into some neighbouring countries. There would be little point in having built just the terminal to standard (1435 mm) or even a true narrow gauge.
CENTRAL ASIA: NORTHERN SUPPLY NETWORK FOR AFGHANISTAN HITS SNAGS
Deirdre Tynan 7/23/09
The Northern Distribution Network, an American-assembled logistical pipeline designed to ease and expand the flow of supplies to coalition forces in Afghanistan, is off to a lackluster start.
The land routes for the delivery of non-military goods from Europe to Afghanistan via Central Asia provided just over 250 containers between June 5 and July 14. That total is far short of the number originally envisioned by military planners. During a Senate hearing in March, Gen. Duncan McNabb, the head of TRANSCOM, the military’s transport wing, predicted that the NDN would transport “hundreds of containers” per day.
The existing rail route, which begins in Riga, Latvia, and ends at border points in Uzbekistan and Tajikistan, appears to be experiencing bottlenecks and other problems. On June 5, TRANSCOM officials told EurasiaNet, “We have shipped roughly 750 containers of construction material and other general supplies for US forces in Afghanistan through the NDN, which includes the original ’proof of concept’ shipment of about 200 containers. ”
“With the appropriate transit agreements in place, the US Transportation Command began using existing rail and road infrastructure in mid-May,” the Transcom statement added. “It is important to note that no additional construction was necessary and the NDN utilizes commercial companies from origination to destination.”
On July 14, TRANSCOM said, “For obvious operational security reasons, we cannot provide geographic and time-sensitive specifics of moving military cargo. But to update information previously provided, the US has shipped more than 1,000 containers of non-lethal cargo, such as construction materials and other general supplies, along the Northern Distribution Network.”
In June and July, according to publicly available data, only seven containers a day on average were arriving in Afghanistan via the NDN. A commercial source, speaking on condition of anonymity, characterized the performance as “ridiculous.” Railway experts have also questioned whether the Uzbek rail route, which crosses the Afghan border at Termez-Hairaton, is capable of handling the amount of traffic envisioned by the US military and its allies.
David Brice, an international rail consultant who made recommendations on upgrading the capacity of Hairatan two years ago, said the depot remains under-equipped to deal with a large volume of traffic. “There will certainly be a capacity problem in the Termez-Hairatan section, which two years ago was handling its full capacity of three or four trains daily without the US traffic,” Brice said.
“Three-quarters of the terminal area was disused and the working area very badly equipped for its task,” he told EurasiaNet in an interview. “The ideal route for this traffic would be deep sea via Bandar Abbas and the new Iranian rail line being built from Sangan to Herat. It’s a massive problem, though, due to the current political tension between the United States and Iran.”
Given the complexities of overland operations, an air-transit deal for arms and military equipment, struck by Presidents Barack Obama and Dmitry Medvedev in Moscow in early July, appears to be an important breakthrough. However, America’s partners in the region say similar arrangements with the United States have not been negotiated.
Daniyar Mukataev, a spokesman for the Kazakh Ministry of Transport and Communications said, “There are no agreements or talks between Kazakhstan and the United States on the transit of military cargoes through the territory of Kazakhstan. After reaching agreement with Russia, they now have to talk with Kazakhstan and then with Uzbekistan on the transit of military cargoes. But for the moment the agreement with Russia is just empty words.”
When EurasiaNet asked the US State Department if attempts were being made to secure military transit agreements with the Central Asian states, the press office did not respond directly to the question, referring instead to Under Secretary of State William Burn’s remarks publicized during his early July trip to Central Asia. Burns told reporters in Ashgabat, Astana, Bishkek and Tashkent, that Washington looked forward to “new ways of working together.”
Some regional observers suggest the United States may have underestimated the complexities, both political and logistical, of establishing the NDN. “We have to realize that this network implies crossing of the borders of several states and every transit country is looking out for its own material interests,” said Andrei Grozin, the director of the Central Asia Department at the CIS Institute in Moscow.
“Frankly speaking, this is one of the main reasons why the system is not set up properly and not working well,” Grozin continued. “There are of course objective reasons such as the complexity of the system itself. But, mostly it’s all about the borders, the financial interests of the transit countries, and corruption in these countries.”
Central Asian leaders publicly express concern about the security threats originating from Afghanistan, but, although they don’t say so openly, the NDN is also seen as a lucrative opportunity, Grozin said. “The United States understands that for solving its geopolitical and other problems, it has to pay,” he added.
But many experts are asking: is Washington overpaying? Several indicators would seem to suggest that the Pentagon’s tendency to throw money at the problem is not producing desired results. Not only is the rail network not delivering as expected, financially speaking it’s shaping up as something of a boondoggle.
Russian and Uzbek companies are reorganizing their structures to take maximum advantage of the Pentagon’s commercial approach to the NDN. In a move designed to get the network up and running quickly, defense officials eased tender rules to allow for lucrative contracts to be granted with no competitive oversight. That has seemed to stimulate a feeding frenzy among regional transport entities.
Russian Railways, for example, has confirmed to EurasiaNet that it is seeking a grant from the US government to upgrade the Termez-Galaba-Hairaton border crossing between Uzbekistan and Afghanistan.
A spokesperson for Russian Railways said on July 9, “We can confirm that Russian Railways seriously addresses the issue of modernization at Galaba-Hairaton on the Uzbek-Afghan border to transit American goods from Riga [Latvia] to the border with Afghanistan. Also, a proposal was sent to Ministry of Foreign Affairs of Russia on the need to involve US participation in the financing of the widening [of the narrow gauge tracks] at Galaba-Hairaton on the Uzbek-Afghan border.”
Neither the Russian Ministry of Foreign Affairs nor the US State Department would elaborate on the information provided by Russian Railways.
Source:Eurasia Insight 2009-07-23
[Copyright © 2009 Open Society Institute. Reprinted with the permission of the Open Society Institute, 400 West 59th Street, New York, NY 10019 USA, www.EurasiaNet.org]
Following on from the recent Russian agreement to let Germany ship military equipment to Afghanistan by rail, other countries are reported to be getting in on the act.
American military officials are continuing to press for alternative transport routes to Afghanistan, with senior commanders exploring the feasibility of a rail route through the Caucasus and Central Asia.
According to a press release issued by Kazakhstan’s Ministry of Defense [here], Deputy Defense Minister Bulat Sembinov met with the commander of the US Transportation Command, Duncan McNabb, to look into “opportunities for organizing transit and providing material and technical assistance to the process of reconstruction and backing forces in Afghanistan.” Earlier in November, McNabb met with Azeri President Ilham Aliyev.
Separately, Kazakhstan’s transport minister, Serik Akhmetov, met Richard Hoagland, the US envoy in Astana, to discuss various transit ideas involving Afghanistan. The high level meetings in Astana follow on Russian permission to Germany to use the country’s extensive railway network to transit military goods bound for Afghanistan. It is the first time Russia has permitted a NATO ally to transit military supplies via an overland route.
A spokeswoman for NATO said the alliance was now actively pursuing agreements with Azerbaijan, Kazakhstan and Uzbekistan to gain access to Afghanistan.
Meanwhile, Uzbekistan, Afghanistan, and the Asian Development Bank (ADB) have signed a Memorandum of Understanding to expand trade and economic opportunities through railway transport. Zhao Xiaoyu, ADB Vice-President, said the agreement “will be taking a major step toward realizing the dream of expanded trade and economic opportunities for larger Central Asia.”
Source: Eurasianet, posted 27 November 2008
© Open Society Institute.
The Kazak Ministry of Defense’s website says:
Today deputy minister of defense of the Republic of Kazakhstan general–lieutenant Bulat Sembinov met commander of Transport Command Staff of the USA (TRANSCOM USA) general Dunkan McNab in the defense office. During the meeting there were discussed perspectives of bilateral cooperation possibilities of transit organization, rendering material and technical assistance to the process of reconstruction and support of forces and means in Afghanistan in particularly.
USA TRANSCOM – is the one detachment which manages all the aviation, land and sea transport of the Ministry of defense of the USA. And Kazakhstan is the one state in the region which has 5 year cooperation Plan with the USA between defense offices which includes such important directions of cooperation as development f peacekeeping potential of the Armed Forces RK, improvement of Kazakhstan military education system and mutual participation in exercises.
Source: Ministry of Defense, Kazakhstan, 21 November 2008
NATO is “Making progress on Afghanistan rail route”, according to a Eurasia Insight report dated May 5. It seems NATO is hoping to move freight between Europe and Afghanistan via the rail connection from Uzbekistan to Hayratan, across the Friendship Bridge.
NATO is striving to rapidly conclude a deal with Central Asian states on an inter-continental rail link that would ease the supply of non-lethal equipment and assistance for both military and reconstruction operations in Afghanistan.
The rail project is an outgrowth of NATO’s efforts to reinvigorate its Afghan operations. Discussions on how to improve Afghan reconstruction efforts featured prominently at the alliance’s early April summit in Bucharest. [see previous posting] …
At present, the cost of supplying NATO operations in Afghanistan is astronomical, due mainly to the fact that most supplies must be brought in by air. According to NATO estimates, airlifting supplies to Afghanistan costs a whopping $14,000 per ton, or roughly $7 per pound. In addition to the high cost, the air option may not be able to handle the requirements necessitated by an expansion of NATO forces in Afghanistan.
A Europe-Afghan rail link could cut supply costs to roughly $300-$500 per ton, allowing the bloc to both save tremendously on transportation and increase supply for its Afghanistan operations. The optimal route envisioned at this time would traverse Ukraine, Belarus, Russia, Kazakhstan and Uzbekistan. By all appearances, NATO has secured approval in principle from all the potential transit states.
… no new railroads are expected to be built at this point; the route will follow existing Soviet-era high-capacity tracks. … NATO indicated that if route proves reliable and efficient, the alliance will seek the permission of transit states to allow military equipment to travel over the railway. This option would necessitate closer cooperation between NATO and the Russia-led Collective Security Treaty Organization (CSTO), of which several transit states are members.
The full article has a lot of background to the political implications of allowing such traffic through the surrounding countries.
Other than the Europe-Afghan railway, there would seem to be no other viable options for the overland supply of Afghan reconstruction efforts.