Eurasia’s new Silk Road
Our top story from the March 2024 edition of The Steppe
European and international investors have pledged an unprecedented 10 billion euros to bolster transport connectivity with Central Asia as part of the hotly-anticipated Middle Corridor, a network of road, rail and energy links that advocates say will help close the gap between East and West.
This funding, a strategic reaction to geopolitical shifts following Russia's war in Ukraine, is set to expedite the expansion and development of the Corridor at a time when pressures on international shipping, such as the Red Sea crisis, make overland transport more and more attractive to global firms. The EU has identified 33 infrastructure projects to be potentially funded, many of which are rail projects.
Given the challenges and sanctions associated with the Northern Corridor (Russian) and southern (Iranian) routes, the Middle Corridor, extending through Turkey, the South Caucasus, and Central Asia, is an alternative transport route that minimizes exposure to sanctions, while getting goods to market. This is important for Europe’s trade and connectivity, especially amid political and economic constraints. Moreover, it bolsters Europe's resilience to changes in trade patterns and disruptions.
But, there are major hurdles to consider when evaluating the feasibility of developing the Middle Corridor. Ilayda Nijhar, Geopolitical Risks Advisor at the Overseas Development Institute (ODI), a global affairs think tank, says alternative corridors like the International North-South Transport Corridor (INSTC), backed by Iran and Russia, still present a challenge to the Middle Corridor’s development.
This is despite the potential sanctions that using them may risk, as these routes offer shorter trade paths for Iran, India, and Russia. Consequently, the INSTC
“has the potential for a more competitive offer aligned with the strategic interests of the countries and businesses involved.”
This is especially so given that some of the countries involved are still deliberating the extent of their commitment to developing the Middle Corridor.
Another problem is that, given numerous logistical challenges like current capacity constraints and lengthy cargo transport times, its capacity would only be about 10 percent of the Northern Corridor’s 100 million tonne capacity. Developing the Middle Corridor will require major upgrades to road and rail systems and port improvements.
The EU’s endorsement of the Middle Corridor will certainly boost its competitiveness, especially in light of its inherent strategic appeal for several other countries on the way. As Nijhar notes,
“Turkey has been a vocal supporter in promoting the Corridor as a stable and dependable route, viewing it as a means to consolidate its regional position and become a central hub for Eurasian trade.”
Azerbaijan, Georgia, and Kazakhstan, hosting key transit points along the route, are also set to benefit from the Middle Corridor.
Kazakhstan in particular has emerged as a crucial contributor to the realization of this project. With its strategic location on the route and strong economic and infrastructure capabilities, Kazakhstan has entered into roadmaps with Azerbaijan, Georgia, and Turkey, committing to resolving bottlenecks and developing the route by 2027. These upgrades address some of the infrastructure challenges and they align seamlessly with the broader objectives of the EU in advancing the route.
Addressing the technical challenges beyond the Middle Corridor and its inability to completely supplant the Northern Corridor, it still stands as a crucial alternative, fostering increased connectivity. As trade volumes grow between the East and West and European investments pour into regional connectivity initiatives, the Middle Corridor plays a pivotal role in reshaping the trade landscape. Its appeal lies not only in its potential to overcome geopolitical challenges, but also in the prospect of creating more diverse and resilient trade routes.