The Astana International Forum has come to an end. The conference, taking place in the Kazakh capital on 8-9 June, brought together the international community to address current global challenges, including climate, food scarcity and energy security.
Under the theme “Tackling Challenges through Dialogue: Towards Cooperation, Prosperity and Progress”, the conference addressed four main pillars – foreign policy, security & sustainability, energy & climate and economy & finance, through a series of keynote speeches, panel sessions, armchair discussions, as well as several side events.
One of the panel discussions on Friday addressed the Middle Corridor in the context of strengthening Eurasian connectivity. The participants touched on the bottlenecks still faced by the transport route, as well as the commitments and investments than need to be undertaken to overcome these hold-ups.
1. More than just a corridor
Also called the Trans-Caspian International Transport Route (TITR), the Middle Corridor is a multilateral institutional development linking the containerized rail freight transport networks of China and the EU, passing through Central Asia, the Caucasus, Türkiye and Eastern Europe. The multilateral, multimodal transport institution links Caspian and Black Sea ferry terminals with rail systems in the Asian and European countries. The route starts from Southeast Asia and China, runs through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and Türkiye before moving forward in Europe, depending on the destination.
The initiative started in 2013, but has gained a lot more attention since the war in Ukraine started, as it became the alternative connecting route from Asia to Europe, bypassing Russia. While the importance of the route for trade and general connectivity between the two continents is undisputed, the corridor needs to become a market and economic system of its own to attract enough investment to become sustainable.
Let’s face it, the Russian corridor still works and is still accessible, the middle corridor is not an alternative, it’s an addition.Zsuzsanna Hargitai, Managing Director for Central Asia, EBRD
Even before the war started last year, the European Bank for Reconstruction and Development (EBRD) had already began looking at how to diversify trade routes from Asia to Europe. Three options were found: the Northern Corridor, referring to the Middle Corridor, the Central Corridor, entering Kazakhstan in Khorgos instead of Dostyk, the two eventually merging, and the third corridor, still in the feasibility studies phase, going through Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan instead of Kazakhstan.
All three present a set of advantages, which are not mutually exclusive, explained Zsuzsanna Hargitai, Managing Director for Central Asia at EBRD. The three corridors are at different stages of development and while all offer opportunities, the EBRD study emphasised the Middle Corridor more because it has the potential of creating several major production centres along the route.
Due to multiple bottlenecks on its path, except for not passing through Russia, the TITR does not offer very enticing advantages compared to the old route. These challenges make the corridor unreliable in the face of the currently unpredictable transport levels. “Let’s face it, the Russian corridor still works and is still accessible, the middle corridor is not an alternative, it’s an addition”, Hargitai pointed out.
It shouldn’t be just a corridor, but a market and economic system, so that other sectors, not necessarily related to transportation, can benefit from this.Mirek Dušek, Managing Director, World Economic Forum
To reach its full potential of really becoming an alternative route rather than the best available option in the current geo-political climate, the EBRD estimates €18-20 billion need to be invested in the Middle Corridor. However, such an investment can only be achieved through public-private partnerships and for private investors to be interested in the route, it needs to be more than just a corridor. It should be “a market and economic system, so that other sectors, not necessarily related to transportation, can benefit this”, said Mirek Dušek, Managing Director at the World Economic Forum.
2. Attracting investors
“I’ve been observing clearly increasing and very concrete interest from the private sector. That tells me that the opportunity is there, not just from the region, but really internationally. But this brings us back to more general problems”, noted Wiebke Schloemer, Director for Central Asia and Türkiye at the International Finance Corporation (IFC).
The key asset to attract investors is predictability.Wiebke Schloemer, Director for Central Asia and Türkiye, IFC.
Investors need to have a higher level of certainty before embarking on a project. Several bottlenecks have already been addressed, explained Nurlan Sauranbayev, CEO of Kazakhstan Temir Zholy, however, according to Schloemer, it is the non-financial risks, rather than the development challenges, that are harder to mitigate. The uncertain political scene of the involved countries, which could eventually prompt sanctions blocking the route, as well as the lack of international cooperation and cooperation on the project are the main concerns than need to be addressed.
“On the highest level, you need some kind of intergovernmental cooperation and dialogue, which boils down to commitment and to aligned interest. At the same time, you have to be practical and already start with some projects. Make it concrete. Show some results”, Schloemer said. “Without coordination, a project as big as this will be very difficult to implement”, agreed Sauranbayev. “The cost was first estimated at €2-3 billion, hearing €18 billion means we need to get started right now before the estimation grows even more.”
The deployment of digital tools, digitalisation and streamlining of border processes, as well as policy harmonisation on customs and transport documentation are among the first steps leading to the creation of an international platform for coordination and action. “The realisation of the Middle Corridor’s potential depends on close coordination between all stakeholders all the way along the route and this is a very long route”, noted Jonathan Charles, International Advisor to Kazakhstan and former EBRD Managing Director.