Crisis In The Middle East And Eurasia’s Transportation Routes

The news that Saudi Arabia has suspended talks with Israel amid a new conflict in Palestine has prompted a wider interpretation of events involving the interests of India, Iran, the EU, Russia and China. While wars in the Middle East have always in some way affected the whole world, especially the Eurasian region, this case is really about the plans of a number of states towards both Israel and Saudi Arabia.

Just a few days before the Hamas attack, the White House confirmed that virtually all issues relating to the stabilization of relations between Saudi Arabia and Israel had been resolved, with some Iran-related nuances still to be agreed.

Access to nuclear technology and the improvement of the socio-economic conditions of the Palestinians, that were directly dependent on Israel, were two conditions on the Saudi side. Now the Palestinian issue has become the cornerstone of this bargaining and Hamas has pretty much sabotaged the deal. At the same time, the collective West was interested in another geoeconomic project – the creation of another transport corridor, with Saudi Arabia and Israel as the key sections.

India-Middle East-Europe Economic Corridor

The agreement was reached at the G20 summit in New Delhi. According to a White House Fact Sheet, the leaders of the United States, India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union signed a Memorandum of Understanding agreeing to create a new India-Middle East-Europe Economic Corridor (IMEEC).

High-speed data cables and energy pipelines were to be laid alongside railways and shipping lines. They would improve the flow of goods and services to and between these countries, complementing existing sea and road networks.

From a geopolitical perspective, the India-Middle East-Europe Corridor has come to be seen as a rival to China’s Belt and Road Initiative. The US and EU countries probably cherished this hope, even though the Chinese initiative involves more than 150 countries and about 30 international organizations. But the Chinese initiative already includes Saudi Arabia and Israel. It is therefore difficult to speak of real competition.

As for India, it initially opposed the Belt and Road because its main component, the China-Pakistan Economic Corridor, passes through disputed territory. It was also important for New Delhi to create an alternative route to EU countries, since all goods now flow through the Suez Canal. In addition, the Adani Group, an Indian conglomerate, acquired the Port of Haifa in Israel in 2003. And India-Israel relations have been quite productive in recent years in many areas.

Italy’s withdrawal from the China Initiative, on the other hand, points to skepticism on the part of European countries, which are increasingly wary of China’s growing power, following Washington’s political line.

Meanwhile, there are other alternatives to the India-Middle East-Europe and Belt and Road projects for organizing routes and logistics. And they have their stakeholders and detractors, just as in the case of the two mentioned above.

Middle Corridor

The day before, Azerbaijani President Ilham Aliyev visited Georgia. In a meeting with Prime Minister Irakli Garibashvili, he confirmed the importance of the Middle Corridor and participation in it. The resumption of the construction of a new deep-water port at Anaklia was on the agenda, as well as the development of other transport infrastructure.

The initiative was officially launched in 2013 by Kazakhstan, Azerbaijan and Georgia, but has only recently gained momentum. There is an international association Trans-Caspian International Transport Route, which is the operator of this project.

At the regular meeting, which was held in Aktau on 28-29 September 2023, the parties signed an Agreement on Interaction and Measures of Responsibility in Organising Cargo Transportation in Container Trains on the TMTM Route using Feeder Ships and an Agreement on Organising Container Transportation in Direct International Rail-Sea Communication using Feeder Ships between the ports of the Caspian Sea (Aktau – Baku (Alyat)).

The following companies have also been accepted as members: Alport (Azerbaijan), BMF Port Burgas (Bulgaria), Semurg Invest (Kazakhstan), LTG Cargo (Lithuania), Global DTC Pte.Ltd (Singapore) and Eastcomtrans LLP (Kazakhstan). This brings the total number of members to 25 with 11 countries represented.

Although the Middle Corridor currently accounts for less than 10% of the total cargo transported along the Northern Corridor (i.e. through Russia), this is due to the limited capacity of seaports and railways, the lack of a unified tariff structure and the absence of a single operator. Currently, the TMTM member countries have set a target to increase the capacity of the Middle Corridor to 10 million tons per year by 2025.

The advantages of the Middle Corridor include that it is 2,000 kilometers shorter than the Northern Corridor through Russia, which reduces the travel time from China to Europe to 12 days, compared with 19 days along the Northern Corridor. The Middle Corridor will also reduce the risk of sanctions related to transit through Russia. It certainly opens up access to new markets with a population of around 80 million along the route.

The Middle Corridor also provides an opportunity to increase energy exports from Central Asia to Europe. For example, Kazakhstan intends to ship 1.5 million tons of oil (2-3% of its oil exports) to Europe via the Middle Corridor this year.

The two initiatives reviewed have one thing in common. This route bypasses Russia, as does the India-Middle East-EU Corridor. However, the Middle Corridor includes China. On May 19, 2023, Xi Jinping met with five Central Asian leaders during the China-Central Asia Summit, where they discussed the launch of the China-Kyrgyzstan-Uzbekistan railroad and the construction of several highways that will play an integral role in the Middle Corridor.

Turkey, meanwhile, is trying to use its geostrategic importance to become a bridge between the EU on the one hand and the countries of the Caucasus-Central Asia and China on the other.

It is predicted that under an optimistic development scenario, the Middle Corridor could increase transit capacity to 50 million tons, complementing China’s Iron Silk Road vision and Turkey’s growing regional influence. At the same time, due to its geographical structure, Turkey plays a crucial role as an intermediary in the European value chain.

However, Turkish President Erdogan has recently announced plans for an alternative trade corridor and is considering sharing the Iraq Development Road project as an alternative route. Turkey’s share of Iraqi economy is already significant.

North-South

Finally, there is the International North–South Transport Corridor, which also involves India. Other key players are Iran and Russia, through whose territory the route passes. This route has been discussed for some time, but it is only this year that we have seen tangible results, both in terms of ferry services across the Caspian Sea and the completion of the Azerbaijan-Iran railway. In addition, it could have a number of branches. In particular, a sea route from Iran to Saudi Arabia (cargo from Russia has already been transported via this route) and a rail route from Iran to Turkmenistan and on to Central Asian countries. An additional horizontal dimension covering Afghanistan and Pakistan (including the revival of the TAPI energy pipeline) is also possible in the future.

Turkey, which shares a border with Iran, could also join the corridor, but is in no hurry to do so.

The Russian position on the realisation of this route is optimistic (even the Middle Corridor can be mutually beneficial), but not proactive enough. After all, it is only now, with the sanctions regime, that we have achieved concrete decisions and results, although it would have been much easier to do so earlier.

Moreover, given Kazakhstan’s fear of falling under secondary sanctions, it is unlikely that Russia’s interests will be taken into account there. On the contrary, Kazakhstan will seek to promote the Middle Corridor in order to diversify its logistics capabilities.

There is also the Northern Sea Route, but it is a Russian monopoly and represents a different segment of the global geoeconomics. The pairing of the Belt and Road Initiative with the Eurasian Economic Union has also been talked about for some time. But in practice it is quite complicated, because the first is part of China’s foreign policy, and the second is an integration project that involves synchronising legislation and optimising tariffs.

In conclusion, the Belt and Road will continue to develop along its planned trajectory. The Middle Corridor may carry some risk for Russia of losing some of its transit. The India-Middle East-Europe Corridor remains unrealisable for the time being. And the North-South Corridor is the most promising in terms of Russia’s interests. The Iranian and Russian economies are becoming increasingly intertwined (and this is important on the eve of Iran’s accession to the EAEU). Contacts with India continue to grow, balancing the Chinese vector. And the evolution of this transport corridor will attract other countries in the region to use it.

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