"The sanctions imposed on the Russian economy will have a significant impact on Russia, limiting its ability to conduct foreign trade relations, which will in turn affect its position as a main transit country in Eurasia", writes Orkhan Baghirov in this op-ed. "Within the new geo-political realities, the Middle Corridor can emerge the winner, and can become the main land route in Eurasia. It will in turn strengthen the political and economic position of the participating states, including Azerbaijan, Turkey, and the Central Asian countries, all of who aspire to become regional transportation hubs".
The Russia-Ukraine war that started on February 24 triggered harsh reactions and comprehensive economic sanctions from many countries around the world, including members of NATO and the EU. As part of counteractions against Russia, heavy sanctions were imposed on different sectors, such as energy, finance, trade and many countries limited their trade relations with Russia.
All the imposed sanctions will have a significant impact on Russia, limiting its ability to conduct foreign trade relations, which will in turn affect its position as a main transit country in Eurasia. Generally, there are three main railway routes in the east-west transport corridor that physically connects Europe and China, two of the main economic power centers in the world. The northern route goes through the territory of Russia and, for the most part, follows the route of the Trans-Siberian Express. The central route goes across Kazakhstan before connecting to the northern route in the west of Russia. The southern route also goes through Kazakhstan and is divided into two directions. One goes through the territory of Iran before reaching Turkey. The other, more efficient one, crosses the Caspian Sea and continues to the territories of Azerbaijan, Georgia, and Turkey, which is called the Trans-Caspian International Transport Route (TITR) or Middle Corridor. This corridor is considered one of the most important routes in reviving the ancient Silk Road. Its formation began after 2013, when the agreement on the establishment of a Coordination Committee for the Development of the Trans-Caspian International Transport Route was signed.
Despite the fact that the "Middle Corridor" is more efficient in terms of transportation time, it attracts only a small portion of the land cargos that goes from east to west or vice versa. It is related to the fact that this corridor is newly established and there are still some technical problems, including harmonization of customs systems of participating countries. The share of this route in the transportation of cargoes between China and Europe was approximately about 5-6% in 2020 and 2021. But, the northern and southern routes are the traditional routes, and most of the land transportation in Eurasia goes through these routes, which makes Russia the main actor in connecting Europe with eastern Asia. In 2020, transportation of cargoes by railway through the territory of Russia from China to Europe accounted for 69 % of trans-Eurasian railway transit. The other advantage of routes that get through Russian territory is related to the fact that although they link together three large customs zones (China, Eurasian Economic Union, and EU), they have only two border crossings along the nine-thousand-kilometer journey.
However, despite the mentioned advantages, the heavy sanctions and the refusal of European countries to cooperate with Russia are going to increase the importance of the Middle Corridor, which could attract the cargo flows of the northern and central routes. Even before the start of the Russia-Ukraine war, container transportation via the Middle Corridor had been noticeably increasing. During the pandemic , because of the closure of the borders of Iran, the Middle Corridor became the best alternative for cargo transportation. Also, we expect that the intensification of the USA-China rivalry in the Indo-Pacific region will redirect some part of the Chinese cargo flows from sea to land transportation in Eurasia, which will also increase the importance of the Middle Corridor in coming years.
It is obvious that, currently, the capacity of the Middle Corridor is not great enough to meet the whole volume of cargos that goes through the traditional routes. But with improvements, it could gradually replace them and become a main rail connection in Eurasia. For this to happen and to improve the economic efficiency of this route, the existing barriers should be eliminated, and the process of the harmonization of policies and legislation in relevant countries should be finalized. The first steps in this direction have already been taken, and recently, Kazakhstan and Azerbaijan agreed to establish a joint venture to develop the TITR. The main goal of the new joint venture is to consolidate transit cargo on this route by contributing to the tariff setting, cargo declaration, and unified IT solutions. The Kazakh side noted the importance of reorienting export of cargo flows from Kazakhstan to Europe along the Middle Corridor.
It is becoming clear that the recent political and military confrontation, and pandemic related problems substantially, are having an impact on the transportation of cargos around the world. Within the new geo-political realities, the Middle Corridor can emerge the winner and can become the main land route in Eurasia. It will in turn strengthen the political and economic position of the participating states, including Azerbaijan, Turkey, and the Central Asian countries, all of who aspire to become regional transportation hubs.