The Central Asian region, which carries the modern legacy of the historical Silk Road, stands out as a critical trade and logistics bridge between Asia and Europe. Current difficulties in the Black Sea and Suez Canal further increase the strategic importance of this region. The world is showing more interest in alternative transport corridors than before.
Ankara Crisis and Politics Research Center (ANKASAM) brings to your attention the views it received from Ben Goddard, Founder and Editor of Eurasia Strategic Vision (ESI), to evaluate the importance of Central Asia in the context of alternative transportation corridors.
1. What kind of strategic advantages does Central Asia offer in the context of global logistics and trade between East Asia and Europe?
Central Asia has a long history of facilitating trade across the Eurasian continent, as evidenced by the ancient Silk Road from China to Europe, which today runs through Iran and Turkey. Today, global political tensions are complicating the transit of world trade along this historic route. The conflicts in Ukraine and the Middle East, as well as attacks, sanctions and embargoes by related actors, have narrowed the traditional trade routes across the Black Sea and the Suez Canal, and the diversification of stable trade routes between major global economies has become a necessity.
As a result, Central Asian states have made significant investments in transnational logistics infrastructure, including roads, railroads and ports, to develop their part of the Central Corridor transportation route. This strategic initiative aims to strengthen trade between Asia and Europe by establishing a route that circumvents potential challenges arising from geopolitical dynamics related to Iran and Russia.
Turkmenistan aims to position itself as an important entry point for the Central Corridor route through an improved rail network and the port of Turkmenbashi. The pressure on this route has increased following Russia’s invasion of Ukraine. This is due to the fact that this route crosses the Caspian Sea through Turkmenistan or Kazakhstan and is connected to Azerbaijan, Georgia and Turkey. These countries are actively seeking the support of governments and organizations that can provide expertise and funding for infrastructure and communication projects. This invitation was also highlighted at the EU-Central Asia Transport Connectivity Investor Forum organized by the European Commission on 29-30 January 2024.
In addition to passing through critical areas, the Mid-Corridor reduces the travel time for goods between China and Europe by up to 15 days compared to the traditional shipping route through the Suez Canal. This offers significant gains to the logistics sector. It also facilitates energy exports from the resource-rich Central Asian states, providing a valuable alternative for European states that have been considering oil and gas supply concerns in recent years.
2-In your opinion, how could the development of alternative transport corridors affect the economies of Central Asian countries?
Central Asia’s post-independence economic trajectory has been significantly shaped by its historical ties to the centrally planned economy of the Soviet Union. The region is heavily dependent on existing Soviet infrastructure and industrial expertise, which accounts for a large share of each state’s Gross Domestic Product (GDP). Whether they specialize in agriculture, natural resource extraction or manufacturing, most Central Asian states have doubled down on economic regionalism, neglecting to diversify their economies sufficiently to protect against economic shocks and trade deficits. Similarly, inherited rail and pipeline infrastructure has given Russia an inordinate amount of political and economic influence over Central Asian exports.
The further development of the Central Corridor has significant potential, with communication and digital infrastructure improvements necessary to facilitate its smooth operation. With an increase in trade flows and an established digital economy, multinational companies and logistics firms will begin to develop market entry strategies to establish regional hubs, leading to significant FDI flows to strengthen growth and diversification. This development will not only increase the capacity of Central Asian states to interact with global trade markets, but will also contribute to increased economic and political autonomy in the region.
3-What do you think are the recent challenges in the Red Sea region? Considering the current challenges, why is the establishment of alternative transport corridors through Central Asia to Europe becoming important?
The Red Sea and the Suez Canal are vital for international trade as a strategic maritime route linking the Mediterranean Sea to the Indian Ocean. The Suez Canal in particular is a critical shortcut for shipping, significantly reducing travel distances and costs, and any disruption to these waterways could have far-reaching impacts on the global supply chain and economy. Since October 2023, a new threat has emerged in the Red Sea due to heightened geopolitical tensions in the Middle East and in particular the Israel-Gaza conflict. The Houthi group in Yemen has repeatedly launched attacks on global shipping and warships in the Red Sea, allegedly to show solidarity with the Palestinians in Gaza. This aggression has been countered by US and UK retaliatory strikes against Houthi targets and has led to a wider escalation of missile and drone attacks on US military installations in the Middle East by Iranian-backed groups.
The effective functioning of global supply chains requires a successful investment portfolio or conglomerate, a variety of transport routes such as the Central Corridor, and comprehensive scenario planning. This can provide resilience to geopolitical instability downturns and uncertainties. While the current crisis in the Red Sea will at some point be resolved and shipping will resume, the nature of a globalized economy and the emerging era of multipolarity means that global supply chains will be disrupted again. The businesses and countries that will survive and thrive during the disruption are those that plan for crisis scenarios, mitigate their operational risks accordingly, and assess the viability of entering new markets when their markets become unsustainable.
Ben Goddard
Ben Goddard is the founder and editor of Eurasia Strategic Insight (ESI), a global geopolitical risk consultancy providing strategic advice and intelligence for business leaders and governments. Ben holds an MSc in Geopolitics, Resources and Territory from King’s College London, where he developed expertise in global supply chain risk, natural resource politics and scenario planning. Leading a team of research analysts on emerging trends and developments across Eurasia, Ben’s recent research has recognized Azerbaijan’s role as a key corridor for Euro-Asian trade and energy exports, bringing into focus both the potential opportunities and risks for businesses setting up operations in the country. His academic research has focused on the impact of the historic Russian energy infrastructure on the development of Eastern European and Eurasian states. He has also presented research on the changing global trade networks responsible for the production of critical microchips.
