Transforming Eurasian Trade: The Middle Corridor’s Role Post-2022

Europe

For a long time, Central Asia was a diplomatic backwater for the European Union (EU) but following Russia’s invasion of Ukraine in 2022, Brussels interest in the region intensified. Ever since, the EU block has been making substantial investments in the region’s transport infrastructure for its own geostrategic and geoeconomic interests, which include diversifying sources for enhanced energy security and reducing dependency on Russian controlled trade routes.

The latest instance of this was the EU-Central Asia summit in Samarkand, Uzbekistan on April 3-4, wherein the European Commission announced a 12 billion-euro (US$13.2 billion) Gateway Investment Package for the region to increase cooperation in transport, critical raw materials, clean energy and digital connectivity.

Last year, in January, the EU allocated €10 billion in investments for the Middle Corridor through an investors forum organised as part of its Global Gateway initiative, and in the recently concluded EU-Central Asia summit, the EU President von der Leyen announced that another investors forum will be organised in Uzbekistan this year to further mobilise private investment for the corridor.

Per a report published by the European Bank for Reconstruction and Development (EBRD) in 2023, the Middle Corridor could achieve a transit capacity of 130,000 twenty-foot equivalent units (TEUs) by 2040 in a ‘business as usual’ scenario, and this traffic could expand to as much as 1.4 million TEUs, plus an additional 470,000 TEUs of container traffic between the region’s countries if existing bottlenecks are removed.

Overall, the EBRD estimates that around 18.5 billion euros in investments are required to establish the Middle Corridor as a feasible alternative to existing trade transit routes connecting Europe and Asia.

The United States

Alongside Europe, the United States is demonstrating a growing interest in the Central Asian region, especially within the critical minerals sector, and has shown interest in building and running nuclear power facilities in Kazakhstan and Uzbekistan.

For instance, in March, a US Congresswoman, Carol Miller, a Republican from West Virginia, undertook low-profile tour to Central Asia, as part of which, in a notable departure from the usual protocol for a US representative not within the legislative ranks, she held talks with Uzbek President Shavkat Mirziyoyev and Kazakh President Kassym-Jomart Tokayev.

Reporting on this visit, the EurasiaNet pointed out that Miller’s website does not even mention that she travelled to Central Asia, and the visit did not receive any traction at all from the international media, plus the statements issued by the Presidential press services of both countries were nothing more than vague summaries of the discussions, not touching on mining or critical minerals.

However, the same EurasiaNet article also cited a report by an Uzbek outlet, published on March 19, which said that Miller met with top Uzbek Trade Ministry officials and that Uzbekistan expressed “readiness to more actively develop partnership in key areas such as industry, critical minerals, investment, and trade.”

Other than that, the US has also been expanding its involvement in improving Central Asia’s trade infrastructure as part of its B5+1 initiative. For instance, in August 2024, the US provided advanced Dell Technologies Inc. servers to Kazakhstan’s State Revenue Committee (SRC).

“Adopting innovative technologies will streamline processes, enhance accuracy, improve transparency, and foster a business-friendly environment, attracting more investors and boosting economic growth,” US Ambassador to Kazakhstan Daniel Rosenblum said in a statement.

It is important to note here, though, that since Donald Trump’s ascension to the US Presidency, the efforts by the EU and US in the region may no longer complement one another’s interests, and should therefore be seen as a competition between the two for larger influence among the Central Asian states. 

China

China has also been deepening engagement with Middle Corridor countries, especially after 2022, to reduce its reliance on Russian transit routes that were subjected to Western sanctions after the Russian invasion of Ukraine.

For instance, in May 2024, Georgia announced that a Chinese-Singaporean Consortium won the tender for the construction of the large deep-sea port in Anaklia on the Black Sea coast, and reports suggest that this deep-sea port will be constructed based on Chinese cargo needs and is slated to become a critical node in China’s Belt and Road Initiative (BRI).

With a strategic location on the western Black Sea, and an annual capacity of 50 million tons and 2 million TEUs, Georgia’s Anaklia port can help to reduce congestion and increase the corridor’s transit capacity in the long run.

Similarly, in September 2024, China’s Lianyungang Port Group and Kazakhstan Temir Zholy reached an agreement to co-invest in a container hub at the Aktau port on Kazakhstan’s Caspian coast, which is expected to increase the port’s capacity and further reduce congestion.

Also, a year before that, China and Kazakhstan reached an agreement to construct the Tacheng-Ayagoz railway line and set up a third railway checkpoint between the two countries. This new railway line is expected to boost the annual rail freight capacity between China and Kazakhstan from 28 million tons to approximately 48 million tons, while the new checkpoint will help to reduce the burden on the Dostyk-Alashankou and Altynkol-Khorgos crossings, thereby reducing transit times in the long term.

Overall, China has also been expanding its economic influence in the Middle Corridor countries, for instance, the official statistics for 2023 show that China has surpassed Russia as a trade partner for all five Central Asian states.

Japan and South Korea

Even Japan and South Korea are increasing their involvement in the Middle Corridor. In February, Maersk completed its first trial cargo shipment from Japan to Turkey via this route, which is said to have set a precedent in cross-border multimodal logistics between East Asia and Europe, entailing complex operations with several phases of loading and unloading.

The shipment began from Japan’s Nagoya port, from where the goods were shipped to Qingdao, China, then transported by rail to Xian, an inland logistics hub, before continuing by train through Georgia (Poti) and finally reaching Ambarli, near Istanbul, via the Black Sea. 

Maersk’s preliminary data indicates that this route reduces transit time from Japan to Turkey from 45-60 days via sea to just 15-20 days, with costs falling between sea and air transport.          

So, this route managed to avoid two risk-prone areas, Russia and the Red Sea, while offering shorter transit times than an all-sea route. For Japanese and South Korean companies, this translates into greater flexibility in inventory management and a reduced risk of supply chain disruptions.

Min Young Kim, Head of Cargo Risk and Cross-Border Transportation Management at Maersk in Northeast Asia, stated that the governments of Japan and South Korea have supported this project because they seek to diversify and strengthen international logistics. 

Japan has made investments in port infrastructure upgrades in Qingdao and Xian, while South Korea has nudged its companies to try the Middle Corridor for their shipments through tax incentives.

Also, the Japanese logistics company, Nissin, is taking active interest in conducting transportation and logistics via the Middle Corridor. Earlier this month, the Kazakh Deputy Prime Minister and Foreign Minister Murat Nurtleu met with a delegation of Japanese companies in Tokyo, which included Masahiro Tsutsui, president of Nissin transport company, who is said to have expressed strong interest in using the corridor to enhance logistics, particularly with regard to reducing transportation time.

Visible Instances Of Russia’s Concern About Being Sidelined By Alternative Transit Routes

Overall, things appear to be on the up for the Middle Corridor, so far as the engagement and investments from Europe and East Asia is considered. Another way to gauge the prospects of the Middle Corridor is to see how the Russians are viewing the emergence of this route which if becomes viable, will cut into their revenue stream coming from the Northern Corridor.

As highlighted by the Author previously, there is some concern, or at least there have been some visible instances of such concern among Russians, not specifically pertaining to the Middle Corridor but about the emergence of the alternative transit routes in Central Asia bypassing Russia in general.

For instance, in early 2022, Alexey Shilo, the Deputy CEO of Russian Railways and the Head of the Central Freight Forwarding Department, expressed the company’s concerns about the revival of alternative container routes bypassing Russia.

“We are closely monitoring what is happening around us, and we see some revival of various alternative routes bypassing Russia. These are both statements that are made and figures that we officially see. At least in the first two months, almost 3 thousand containers have already been transported along TRACECA. This year, colleagues are clearly counting on a better result than last year. If they build normal logistics there – with such prices, I think it will be a very affordable route. We can get part of the volume bypassing our country,” said Shilo.

Also, there have been reports of friction between the Russians having conveyed their displeasure to the Chinese about their use of alternative transit routes bypassing the Northern Corridors for their exports to Europe.

For instance, in early February, Russia-based ABNews.ru reported, citing a Chinese article, that Russia has issued a serious warning to China regarding its logistics initiatives seeking alternative trade transit routes bypassing Russia.

“Chinese logistics companies have been experiencing delays in cargo delivery with their containers arriving at their destinations in Europe weeks or even months after the scheduled time of arrival.

“As it turns out, the problem is that cargo is spending too much time at Russian customs. This has come as a surprise to the Chinese side, which is suffering quite serious losses,” reported ABNews.ru on February 10, citing an article in China’s Baijiahao publication.

According to ABNews.ru, Chinese journalists believe that these delays are a deliberate measure by Russia to convey to China its displeasure regarding the latter’s initiatives seeking alternative trade transit routes bypassing Russia, particularly its promotion of China-Kyrgyzstan-Uzbekistan (CKU) high-speed railway.

Tanmay Kadam is a geopolitical observer based in India. He has experience working as a Defense and International Affairs journalist for EurAsian Times. He can be contacted at tanmaykadam700@gmail.com.