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    World Central Asia

    Ukraine conflict sparks modern revival of ancient Silk Road

    Ukraine conflict sparks modern revival of ancient Silk Road

    Amidst the tumult of global geopolitics, the ancient Silk Road is experiencing a modern resurgence, fueled in part by the conflict in Ukraine, Carnegie Politika reported. This year, an estimated 150,000 tons of freight will be shipped from central China, the eastern terminus of the ancient Silk Road, through Central Asia and across the Caspian Sea to the South Caucasus.

    Photo: Trade surges along the Middle Corridor amidst global upheaval
    Source: VOA

     

    The Trans-Caspian International Trade Route, also known as the Middle Corridor, is emerging as a vital artery for trade between East and West, as traditional routes face disruption and uncertainty.

    The collapse of the Soviet Union in 1991 opened the door for Central Asia and the South Caucasus to reclaim their roles as intermediaries in global trade. In 2013, Azerbaijan, Georgia, and Kazakhstan committed to revitalizing the region’s trade infrastructure, laying the groundwork for the Middle Corridor.

    While China’s Belt and Road Initiative has captured much attention, investing in maritime infrastructure remains a priority for Beijing. EU–China trade reached nearly $800bn in 2023, with the vast majority—91% in 2021—conducted by sea. Trade by land has consistently accounted for approximately 3% of total turnover, predominantly via Russia and Belarus. However, Russia’s invasion of Ukraine and subsequent Western sanctions have prompted a search for alternative routes, leading to a resurgence of interest in the Middle Corridor.

    Container traffic along the Middle Corridor has surged by 33% since the onset of the conflict in Ukraine, signaling a shift in global trade patterns. Azerbaijan, Georgia, and Kazakhstan pledged in late November 2022 to improve the route’s speed, connectivity, and accessibility to capitalize on this momentum. With global maritime trade predicted to contract and EU–China trade set to grow 30% by 2030, there is a consensus on both sides of the Caspian Sea that now is the time to reassert the region’s agency with respect to this vital trade artery.

    Photo: Challenges and opportunities along the revitalized Silk Road
    Source: Google Images

     

    Challenges persist, however, including the need for coordination among stakeholders with varying logistical capabilities. Disparities in infrastructure and operational efficiency pose obstacles to the corridor’s full potential. For instance, Azerbaijan aims to run at least fifty-three trains daily to transport freight from its ports to the Georgian border. In contrast, Georgia has only seven trains per day available to move this freight to the Black Sea port city of Batumi, resulting in over 80% of the cargo needing to be delivered by trucks.

    The issue extends beyond railways. Stops for some container ships at the Georgian ports of Poti and Batumi are twice as expensive as at better-equipped ports like Rotterdam in the Netherlands or Shanghai in China. In Alat, Azerbaijan, and Aktau, Kazakhstan, long dwell times can account for up to 70% of the total transport time through the Middle Corridor.

    Despite these delays, the Middle Corridor is faster than the seventy days it can take to ship cargo via the Suez Canal. However, the route through Russia and Belarus remains a strong competitor for the South Caucasus and Central Asia. Although legally problematic due to Western sanctions, this route offers a thirteen-day transit for EU–China cargo. Some companies have bypassed sanctions by routing trade through intermediaries like Georgia, Armenia, and Kyrgyzstan, which have seen a significant increase in trade with EU countries.

    Many challenges facing the Middle Corridor can be addressed. However, a major limiting factor is the Caspian Sea's low and decreasing water levels, which force vessels to carry less cargo and operate less frequently. This issue is worsened by tectonic shifts and climate change, with little that can be done to change this trend. If it continues, it will hinder efforts to improve cross-sea connectivity, including limiting port expansions and the acquisition of new vessels.

    Photo: Map of China's BRI
    Source: Mercator Institute for China Studies

     

    For the region’s actors, the Middle Corridor is one of only a few opportunities to attract foreign direct investment in infrastructure. Investment in transport infrastructure often leads to socioeconomic improvements for the communities along these networks.

    A resurgence of the Silk Road could well foster the rise of new economic hubs in the South Caucasus and Central Asia. It could also stimulate economic development. Oddly, Azerbaijan, Georgia, and Kazakhstan—with a combined population of around 30mn—lag behind Bosnia and Herzegovina, a country of about 3mn, in terms of economic complexity. Increased interregional connectivity could generate moderate GDP growth for these communities, if only temporarily.

    The revival of the Silk Road holds promise for the economic development of the South Caucasus and Central Asia, potentially fostering new economic hubs and stimulating growth. Moreover, it could pave the way for deeper regional integration and enhanced political resilience in an era of multipolarity.

    Ultimately, the Middle Corridor represents more than just an economic opportunity—it embodies a vision of regional connectivity and cooperation in the face of global uncertainty.

     

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    11.06.2024, 21:22   Comments (0)   2102
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