EU, China compete for influence on Middle Corridor
Struggle for strategic supremacy intensifies

ANALYTICS  09 February 2024 - 14:59

An investment forum has recently ended, where Brussels announced its readiness to invest 10 billion euros in new communications with Central Asian states. It is assumed that along this route goods from China to Europe will be delivered in the shortest possible time.

Broadband to Asia

At the end of January, Brussels hosted another forum Global Gateway-2024, dedicated to the development of new transportation corridors between the EU and Central Asia. The Global Gateway project was announced at the end of 2021 and its first forum was held in Brussels in 2023.

This time the central theme of the forum was to turn the Trans-Caspian International Transport Route (TITR) into a modern, competitive and fast route. The forum was attended by representatives of Central Asian countries, EU member states, Trans-Caspian route partner countries, international financial institutions and private sector.

An important event of the forum was the session with the characteristic title "Soft Connectivity II: How to Make the Corridor Work". At the session, Gaidar Abdikerimov, Secretary General of the International Association of TITR, called on the forum participants to actively integrate regional transportation systems. The TITR Association was established in late 2016 by Azerbaijan, Georgia and Kazakhstan.

A memorandum of cooperation was signed at the end of the Global Gateway. It was also announced that 10 billion euros are expected to be invested in sustainable transportation links to Central Asia. Of these, 1.5 billion are going to be provided by the European Commission and the European Investment Bank.

"Global Gateway" is a global project, its organizer is the so-called "Team Europe". The process was launched during the coronavirus pandemic. It was then that Ursula von der Leyen, President of the European Commission, said: " COVID-19 has shown how interconnected the world we live in is. As part of our global recovery, we want to redesign how we connect the world to build forward better". The European Union is not alone in this regard, and is opening the "Global Gateway" in coordination with a similar project of the United States "Build Back Better World".

In total, Team Europe is planning to implement 150 such initiatives by 2027, which is an unprecedented level of European activity. "Global Gateway" will include EU projects covering most regions of the planet - Africa, Latin America and the Caribbean, Asia-Pacific and the Middle East. Total Global Gateway investments until 2027 are expected to be 300 billion euros, with the most planned to be invested in the development of transport communications with sub-Saharan Africa - 150 billion euros.

On the surface, Global Gateway looks almost like a humanitarian mission. The project widely claims to close the "investment gap", develop "green energy", education, health care, poverty alleviation and other social programs. But, of course, the main goal of the "gateway" is economic benefit. As declared - for all participants. Therefore, even the description of local projects shows that priority is given to the development of logistics, communications, mining and transportation of minerals.  

For example, in the Central Asia (CA) region, apart from the TITR corridor through the Caspian Sea, the following most significant projects are being implemented - the ASEAN European Group initiative on power grids, satellite broadband in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, the project on classification and extraction of so-called "critical raw materials" in Central Asia, strategic partnership with Kazakhstan on raw materials, batteries and renewable hydrogen.

A sustainable corridor with a central location

From 2021 to 2023, the European Commission and the European Bank for Reconstruction and Development conducted a study on creating sustainable transport links to Central Asia. It was recognized that in order to create sustainable corridors in the region ("sustainable" is almost the key word in this strategy), it is necessary to modernize roads and railways, expand rolling stock, and create new port facilities and logistics centres. The EU also recognized market liberalization, tariff harmonization, simplification of trade rules, customs procedures and border control as equally important. The EU-EBRD researchers also named the lack of uninterrupted communication as almost the most important problem for the region's logistics.

Calculations also showed that 18.5 billion euros should be invested to improve transport communications with the five Central Asian republics. At the same time, the volume of trade between the EU and Central Asia is steadily growing, increasing by 38.8 per cent in ten years - from 34.2 billion euros in 2012 to 47.5 billion euros in 2022. But it is characteristic that 2/3 of the turnover is imported from the West, while from Central Asia mainly raw materials and chemical products are exported.

But although the word "China" is used as little as possible in the documents of the "Global Gateway", nevertheless, it is primarily a question of paving a new route for goods from the Celestial Empire through Central Asia to Europe.

China is one of the two most important trading partners of Europe, along with the United States. At the same time, China ranks first in exporting goods to the EU; in 2022, the share of Chinese goods in European markets was 21 per cent, while the United States' share was 12.3 per cent. 80-85 per cent of goods from China are brought by sea, 10 per cent of cargo transportation is overland.

Today there are 3 main corridors between China and the EU. "Northern corridor" goes through Kazakhstan, Russia and Belarus to its border with Poland-EU (Brest). A variant of this route can follow the Trans-Siberian Railway entirely through the territory of the Russian Federation, with access to ports near St. Petersburg. The length of this route is about 10,000 kilometers and the travel time averages 14 days.

The middle corridor or Trans-Caspian International Transport Route passes through Kazakhstan and the Caspian Sea. The key logistics hub here is the port of Baku. Then, through Azerbaijan, goods go to Georgia, from where they can reach the EU in two ways - through the Black Sea to Bulgaria or Romania, or by land through Türkiye.

"Southern Corridor" crosses Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, bypasses the Caspian Sea through Iran and then enters the EU via Türkiye. There is also an additional option with a Caspian Sea crossing - from the port of Turkmenbashi to the Islamic Republic of Iran.

Today, according to many experts, the most promising corridor is the Middle Corridor passing through Azerbaijan. And here is why. "Northern Corridor" is still considered the main one, what is called - a well-traveled track. But due to the imposition of sanctions against Russia and Belarus and the growing escalation with the West, the last few remaining crossings on the borders with the EU may be closed at any moment. With Finland (and potentially Sweden) joining NATO, there is a theoretical possibility of a blockade of the Gulf of Finland. And then the Russian route will be blocked. Transit transportation is still allowed through Russia, but some Western operators have already started restricting it.

"The Southern Corridor" is popular with road carriers because it basically doesn't require crossing the Caspian and Black Sea. But the "Southern Corridor" has a much more serious flaw - it is Iran. More precisely, the tense situation that constantly exists between Tehran and some neighbouring countries, as well as with the United States and NATO. And today we see another aggravation of the military situation around Iran. If desired, certain forces can also create an explosive situation near the southern borders of some Central Asian republics.

Therefore, the Middle Corridor with transit through Baku is the most optimal in the future. Also, the route through Azerbaijan is one-third shorter than the Northern Corridor. But there is still a lot of work to be done to improve port facilities and other logistics, which requires serious investments. For example, according to European experts, the resource of Kazakhstan's fleet in the Caspian Sea is currently insufficient. Significant modernization of key ports and terminals, such as installation of fitting platforms, is also needed. But the potential of the Middle Corridor is also evidenced by the fact that the volume of transportation has increased threefold since its launch in 2017.

Also, the deteriorating situation in the Red Sea also jeopardizes the sea route through Suez, which makes the Middle Corridor even more relevant, reliable and fast China-EU route.        

In turn, the Trans-Caspian Corridor is divided into Northern, Central and Southern routes - the latter runs, as mentioned, from Turkmenistan to Iran. But according to the estimates of the special report, according to 5 criteria, the most efficient and convenient is the Central Trans-Caspian network - with a sea crossing from southern Kazakhstan to Azerbaijan.

European Commission studies have shown that even without investments, the volume of standard transit containers can increase from 18,000 units in 2022 to 130,000 in 2040. And if investment projects are implemented, the volume of containers through the Central Trans-Caspian Corridor in 2040 will increase to 865,000 units. That is, in less than 18 years the volume of container transportation can be increased 48 times!

Gateway vs. Belt and Road

Actually, the reasons why Brussels pays such close attention to this project are not hidden. As stated in the relevant EU documents, against the backdrop of increasing geopolitical competition in the Asia-Pacific region, it is becoming a key issue.

Of course, the competition in question is the rivalry with China. There is a specific similar logistics project from China - "One Belt, One Road". Global Gateway should be an alternative to it. Today 150 countries are involved in this project, which has already celebrated its 10th anniversary.  The Trans-Caspian route is also given special importance within its framework.

As for the "Global Gateway", it will be primarily through this gateway that Chinese goods will move from Asia to Europe. But old Europe is still trying, as before, to take the initiative into its own hands. After all, if in the 15th-16th centuries, the military and merchant fleets of Portugal, Spain, England, Holland, France, and then the United States had not overtaken the camel and horse caravans, the world would have been different. Better or worse - it is not known, but with other centres of power and development.

And now Europe wants the flow of goods from the East to go through the infrastructure from the West, and therefore - under its control. In addition to the commercial component, Global Gateway logistics facilities can at any moment become a tool of pressure from the West on China.

Also, Global Gateway digital projects in Asia are an attempt to respond to the growing Chinese competition in this area. At the same time, at the end of 2023, many in the global South are already criticizing this project for the fact that all the phrases about "progress" and "fighting poverty" remain on paper. And that in reality, the West was primarily closing its needs for renewable energy and critical raw materials through the Global Gateway.

It should also be taken into account that a wide variety of players may join the global routes, including those with not the best offers. The proxy powers of some states can destabilize the situation on various sections of the new "Great Road" at any moment. And a lot depends on who can guarantee peace and stability on this road - the U.S. and NATO through partnership programs and aircraft carrier formations? Or China through its economic growth, favourable development proposals and traditional diplomacy?

Also, the EU's separate Global Gateway program is designed to demonstrate its equal global status with the United States.  

It is important to note, however, that Europe also stipulates this project with its usual conditions. In addition to the requirements of economic liberalization, the first place among the six basic principles of the "Global Gateway" is prescribed "democratic values". This is good in itself, if only the West did not use calls for "democracy" to very selectively punish the undesirable.

At the same time, the states that obediently follow the policy desired by Washington and Brussels do not see any violations of these very democratic principles. Other countries, which pursue a sovereign course and value their independence, are subjected to claims on the slightest grounds, or even without any grounds at all. By the way, China does not traditionally accompany its economic proposals with any ideological conditions.

As for Azerbaijan, it seems that its historically established place on the way from Europe to Asia, at the junction of great civilizations, makes the passage of a new world route through its territory non-alternative.

Caliber.Az