Central Asian Trade Corridor Gains Interest Amid Regional Tensions

The emergence of a Middle Corridor — a transit network linking Asia with European markets by way of Central Asia, the Caspian Sea and the Caucasus — is rapidly gaining momentum as an alternative to Russia-controlled routes.

While the Trans-Caspian routes, also sometimes referred to as the China-Central Asia-West Asia Corridor, have come into their own over the past 30 years, Russia’s February 2022 invasion of Ukraine has prompted a significant increase in traffic over the routes.

Gaidar Abdikerimov, who heads the Trans-Caspian International Transport Route (TITR) association, reports that his network now comprises 25 transport and logistics companies including ports, vessels, railways and terminals. Its members also include 11 countries: Azerbaijan, Georgia, Kazakhstan, Turkey, Ukraine, Poland, Romania, Bulgaria, Lithuania, China and Singapore.

“This all means that there is a high interest in our route,” Abdikerimov said in a recent forum at the Central Asia-Caucasus Institute (CACI) in Washington. He told the audience that over the past 10 months, more than 2.256 million tons of cargo have been transported over the route.

Abdikerimov’s office is based in Astana, the capital of Kazakhstan. The oil-rich republic stretches from China’s northwestern frontier to the Caspian Sea, where cargo can be offloaded onto ships and carried to Azerbaijan in the Caucasus.

“We have decreased the estimated delivery time of transit container trains from 38 days to 19 days,” he said.

The World Bank stressed the “catalyzing potential” of the Middle Corridor in a November 27 report that focused on its beneficial impact on Kazakhstan, Azerbaijan and Georgia – Azerbaijan’s western neighbor providing access to the Black Sea.

“There was indeed a spike in the volume of traffic in 2022,” said Charles Kunaka, a lead transport specialist at the World Bank. “We see the Middle Corridor as adding to the resilience of the transport networks across the region, and especially connectivity between Europe, Central Asia, and East Asia.”

The World Bank foresees two major types of commerce flowing through the Middle Corridor, the first being trade between China and Europe.

“We see this type of trade as being relatively elastic. And we saw this in the immediate aftermath of Russia’s invasion of Ukraine, that most of this trade initially switched to the Middle Corridor,” Kunaka said in a presentation to the CACI forum.

“But after some time, because of the constraints that still affect the performance of the Middle Corridor, we see some of this trade switching to maritime transport, for instance.”

The second flow is within the region itself, which the World Bank sees as a “more solid foundation for the development of the Middle Corridor.” Much of the traffic in this category involves fertilizers, minerals and grains.

Kunaka underscored the importance of collaboration among governments, the private sector, development banks and other relevant institutions if the route is to overcome several obstacles to its continued growth, including logistical and bureaucratic bottlenecks.

Grievances expressed by stakeholders in the project include high costs, unreliability, bottlenecks, poor service quality and a lack of transparency and traceability, he said.

Digitalization and the use of electronic documents by both the railways and on the Caspian Sea would ease the process, Kanaka suggested.

“A combination of investments and efficiency measures can reduce travel times along the corridor by half and triple trade flows by 2030,” said the World Bank report. “A fully functioning corridor would help to shield China-Europe trade and supply chains from shocks.”

Abdikerimov agreed, stressing that the Trans-Caspian routes must also connect with the Black Sea ports.

“Speed, quality service, sustainability and safety. We are systematically going towards these goals,” he said at the CACI forum.

Brenda Shaffer of the Naval Postgraduate School in Monterey, California, believes the World Bank study is an indication that “the Middle Corridor is increasingly of interest to multiple stakeholders.”

Speaking on the same virtual panel as Abdikerimov, Shaffer described an emerging alliance among Turkey, Azerbaijan, Kazakhstan and Uzbekistan, pointing to a growing convergence in the messaging of these countries’ diplomats in Washington and other capitals.

She thinks the Taliban’s takeover of Afghanistan and Russia’s invasion of Ukraine “created a security threat to the region, especially to those that border Russia, such as Kazakhstan.”

For Shaffer, Turkey is a unique player, steadily boosting its role in the Caspian region.

By backing Azerbaijan during its invasion to reconquer the unrecognized republic of Nagorno-Karabakh, which had been under the de facto control of ethnic Armenians since the early 1990s, Ankara demonstrated “that cooperation with Turkey can have meaningful security benefits.”

She also expects Turkmenistan’s gas exports — currently directed mainly toward China — to shift westward.

“Increasing volumes of oil are going across the Caspian in various forms of small tankers,” she said, adding that all sides find it in their interests to increase those volumes significantly.

“Turkmenistan is dealing with potential demand destruction or lack of reliability of demand from China, surprisingly, for gas. As Russia increases its gas exports to China, they’re cheaper,” Shaffer said.

CACI’s Mamuka Tsereteli urges the U.S. government to focus on the value of increasing connectivity across the Black and Caspian seas through Central Asia and beyond.

“For Central and Eastern European states with a decades-long dependency on Russian resources in Russia-linked infrastructure, South Caucasus and Central Asia are major potential alternatives,” Tsereteli said.

Tsereteli hopes the United States and the EU will help in the development of the Middle Corridor, pointing out that Central Asia is also a large market for Western goods and services.

Kazakhstan’s Abdikerimov underlined that “Russia is definitely not fond of this Middle Corridor,” even though the goal has never been to avoid or exclude it. He said the Trans-Caspian transport network he oversees has always had its eyes on Turkey, North Africa and Southern Europe.
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