Azerbaijan, Kazakhstan - important transport hubs between Asia, Europe Article by Colin Stevens for EU Reporter

EU Reporter carries an article by Colin Stevens, dedicated to the economic potential of the Middle Corridor and the Azerbaijan-Kazakhstan relations, Caliber.Az reprints the article.

According to the article, these days, the President of Kazakhstan is paying a visit to Azerbaijan. The two states of the Caspian region are strengthening not only political cooperation but also transport links, which is especially important for Europe in the context of the war in Ukraine and attacks by pro-Iranian Houthis on European ships in the Red Sea.

Since Russia launched military aggression in Ukraine, the traditional transport links connecting Asia with the EU countries were disrupted. In addition, the Houthi attacks in the Red Sea have greatly affected imports and exports from Europe.

From November to December 2023, due to attacks by Houthi militants, world trade fell by almost 1.5 per cent. The situation worsened in January 2024, when the United States and its allies launched a military operation in Yemen. The transit of ships through the Suez Canal decreased by 30 per cent compared to January 2023, the article says.

This has led to a strong increase in shipping prices in the world. Economists have estimated that the current supply disruptions across the Red Sea have had a greater impact on shipping than the COVID-19 pandemic.

Due to transport difficulties, prices of goods are rising very quickly, which hits the pockets of common Europeans, whose indignation worries bureaucrats in Brussels, especially before the decisive elections to the European Parliament.

As an alternative to the European Union, Trans-Caspian International Transport Route or Middle Corridor has significant potential.

The idea of the New Silk Road is for goods from China to pass quickly from Kazakhstan to the coast of the Caspian Sea. Further, goods reached the European Union through Azerbaijan and Georgia, the article says.

According to transport experts, the volume of traffic along this corridor increased by 86 per cent, reaching 2.8 million tons, compared with 1.5 million in 2022. This is a significant increase compared to only 586,000 in 2021.

Therefore, Kazakhstan and Azerbaijan are becoming important transport hubs between Asia and Europe. However, the two states also have their own benefits from the implementation of the project.

For example, Kazakhstan can send its oil, uranium, and wheat to Europe. A special development is being given to the project of building a fiber-optic communication line along the bottom of the Caspian Sea. In turn, it is also important for Baku to expand the capacity of the Middle Corridor and lay an optical line along the bottom of the Caspian Sea.

Kazakhstan seems to be an important partner for Baku in Central Asia. Over 900 companies with Azerbaijani capital are registered in Kazakhstan, operating mainly in the field of trade and intermediary activities, road and capital construction, processing and logistics, the article says.

In turn, about 150 Kazakhstani companies are operating in Azerbaijan in the fields of industry, agriculture, trade, services, construction and transport.

Realizing the importance of developing alternative transport routes, the European Union held the first Investor Forum in Brussels on January 29-30 this year as part of the Global Gateway initiative on transport links between the EU and Central Asia.

In the EU capital, European Commission Vice President Valdis Dombrovskis announced that European and international financial institutions have committed to invest 10 billion euros (approximately $10.8 billion) in the development of sustainable transport links in Central Asia.

The effect of the Middle Corridor development will also be felt by other Central Asian states that are landlocked but interested in expanding trade with Europe, the article says.

So Uzbekistan and Turkmenistan, unlike Kazakhstan, do not have rail links with China. The China-Kyrgyzstan-Uzbekistan railway project proposed by Beijing is assessed by experts as very expensive and complex, given the mountainous terrain of the region, as well as high political risks.

Taking into account this factor, in the long term, Kazakhstan will have the status of the main transit territory in Central Asia, and Azerbaijan should maintain the necessary potential to strengthen the "Middle Corridor".

The bilateral relations between Baku and Astana acquire the character of strategic cooperation, taking into account the factor of promising transport links, as well as the political union of the Turkic states.

In this context experts believe that the European Union needs to quickly and decisively increase investments in the "Middle Corridor" certainly if Brussels would like to maintain its geopolitical position in Central Asia, the article says.