One of the most ambitious connectivity initiatives in Central and South Asia has been the Uzbekistan-Afghanistan-Pakistan (UAP) railway project. This railway, spanning 573 kilometers, is designed to connect Pakistan’s seaports with the landlocked economies of Central Asia, particularly Uzbekistan. This would not only facilitate trade and economic integration but also function as a critical corridor for the broader region, including Afghanistan, which would benefit from enhanced infrastructure and increased transit revenues. Mohammad Sadiq, Pakistan’s Special Representative, recently underscored the project’s importance, asserting that it would “contribute significantly to the advancement of Afghanistan and the region as a whole.” Nevertheless, the feasibility of Pakistan fulfilling this commitment is intricately linked to its own economic circumstances and the influence of external actors, particularly China.
Pakistan’s economic situation remains precarious, despite some indications of stabilization. Major international financial institutions, including the United Nations, World Bank, and Asian Development Bank, anticipate that the country’s GDP growth will fluctuate between 2.3% and 2.7% in 2025. The overall development trajectory is modest, although inflation has decreased and macroeconomic stability has improved in comparison to previous years. Pakistan continues to face structural economic challenges, including persistent fiscal deficits, high external debt, and a limited tax base. As part of its ongoing agreements with the International Monetary Fund (IMF), the government is under pressure to implement stringent fiscal and monetary policies. This leaves little space for discretionary spending on large-scale infrastructure projects.
When it comes to financing mega-projects such as the UAP railway, Pakistan’s fiscal constraints are particularly severe. Such endeavors necessitate substantial initial investment, not only for construction but also for long-term maintenance and operational expenses. Pakistan’s current fiscal situation, characterized by a high deficit and limited fiscal space, makes it challenging to allocate the necessary resources in the absence of substantial external financing. Additionally, policy uncertainty, security concerns, and global economic headwinds impede the country’s investment climate. These factors cumulatively discourage both domestic and foreign investors from entering into long-term projects, particularly those that pass through volatile regions such as Afghanistan.
The significance of China’s involvement in this context is growing. China’s strategic interests in regional connectivity are well-established, particularly through its Belt and Road Initiative (BRI), which aims to improve trade and infrastructure connections throughout Asia. China has been actively engaged in trilateral dialogues with Pakistan and Afghanistan, with a focus on regional stability and economic cooperation. The UAP railway is consistent with China’s overarching objective of establishing a connection between Central Asia and the Arabian Sea, thereby enhancing its geopolitical influence and facilitating the establishment of new trade routes. Considering Pakistan’s fiscal constraints, the railway project’s realization will likely be contingent upon Chinese involvement, whether through direct investment, concessional loans, or technical expertise.
China is an ideal ally for the UAP railway due to its extensive experience with large-scale infrastructure projects, both within its borders and across the BRI network. Nevertheless, the security situation in the region, particularly in Afghanistan, presents a substantial challenge. Pakistan and China have both expressed apprehensions regarding the activities of militant groups and have pledged to establish trilateral security cooperation to protect such initiatives. Afghanistan’s political stability and security are essential for the effective operation and construction of the railway. The undertaking could be delayed or derailed by any deterioration in the security environment, irrespective of the financial and technical resources that are available.
Pakistan’s capacity to independently finance and execute the UAP railway is restricted in light of these realities. The country’s success in this endeavor will be contingent upon the implementation of structural reforms, maintaining macroeconomic stability, and its capacity to attract external investment. Pakistan has made some progress in these areas; however, there are still substantial hazards and uncertainties. Pakistan is unlikely to achieve the maximum potential of the UAP railway in the near term without significant external support, most likely from China. It is probable that China’s participation in the project, as both a financier and a mediator in regional security, will be instrumental in its advancement.
Additionally, the feasibility of the UAP railway is contingent upon the ongoing trilateral cooperation with Afghanistan and Uzbekistan, as well as the stability of the broader region. In addition to financial and technical resources, the project’s success will necessitate effective coordination among all stakeholders and political will. The project’s success will be contingent upon the implementation of sustained economic reforms in Pakistan and the maintenance of regional security, particularly in Afghanistan.
In summary, Pakistan says it is deeply committed to the Uzbekistan-Afghanistan-Pakistan railway and acknowledges its transformative potential. However, Pakistan’s economic challenges and fiscal constraints prevent the country from fulfilling this vision independently. The project’s transition from ambition to reality will be significantly influenced by China’s financial, technical, and diplomatic support.