The Caspian Sea is the best option for “One Belt, One Way”

The Piraeus-Khorgos route mostly passes through the water, and its surface part is not as long as the other potential OPOP corridors that are partly passing through the earth between the European Union and China. This is a route connecting the European Union and China with the least number of mediating countries (there are only three of them – Georgia, Azerbaijan and Kazakhstan), and it goes around Russia. But on the way, it is necessary to cross the Caspian Sea, and it is also necessary to modernize the railways of the Caucasus.

The National Commission for Development and Reforms of the People’s Republic of China in 2016 published a document entitled “Plan for the Creation and Development of the China-Europe Corridor,” and it features four competing routes: Manchuria-Russia-Belarus; Mongolia – Russia – Belarus; Kazakhstan – Russia – Belarus and Kyrgyzstan – Uzbekistan – Turkmenistan – Iran – Turkey.

The Russia-Belarus route passes through the smallest number of jurisdictional territories, and the railroad has the longest of the presented routes, and these two factors do not agree with China’s policy, whose goal is to violate the primacy of Russian and American trade institutions.

The corridor Mongolia – Russia – Belarus is long and, again, passes through Russia. The same is true for the route Kazakhstan-Russia-Belarus. The Kyrgyz corridor passes through five jurisdictional territories, and during transportation it is necessary to change the railway track twice: on the border of China and Kyrgyzstan, and then on the border of Turkmenistan and Iran.

In turn, the route from Piraeus to Horgos connects the Greek port of Athens, where the Chinese transport company COSCO has a container terminal, with Georgian terminals in Batumi and Anaklia in the Black Sea, which is protected by international maritime law. For China, the delivery of containers through Georgia and Azerbaijan to the Caspian Sea may be more expensive than transport by sea, but much cheaper and faster in comparison with the corridors Belarus-Russia or Mongolia-Russia-Belarus.

In April, Kazakhstan, Azerbaijan and Georgia signed a tripartite agreement with the goal of coordinating the development of the trans-Eurasian transport corridor. The route connects Khorgos with the Black Sea with the help of an updated railway line leading to the Caspian Sea port of Aktau in Kazakhstan, improves the communication between Aktau and Azerbaijan’s Baku, connects Baku with the new Georgian deep-sea port of Ankalia in the Black Sea through the Caucasian railway corridor.

The route passes through the Black and Caspian Seas, which means that the Xinjiang Uygur Autonomous Region will be connected to Europe, mainly through the sea route. The goods will be delivered from China to the European Union through the Caucasus, which will assume the role of the Panama and Suez Canal on land. Railway transportation in the Caucasus and Kazakhstan will be supported by Chinese taxpayers, and the Caspian route will approach the sea route from Europe to the western part of China economically.

During the implementation of the OPOP, Beijing’s industrial and commercial ambitions in the Caucasus are manifested. The trade agreement between China and Georgia was concluded in May, Georgia became China’s first partner in creating a strategically important transport corridor. The agreement will enter into force in late 2017 – early 2018.

Under the deal, 90.9 percent of Chinese imports from Georgia and 96.5 percent of Chinese exports to Georgia will not be taxed. As a result, for China, Georgia becomes almost a duty-free bridge, through which it is possible to trade with the European Union. For Georgia, this is a way to balance relations with the great powers and balance its longstanding confrontation with Russia.

Azerbaijan sees in the new trade route the opportunity to enter new markets and reduce dependence on the sale of energy resources. The country seeks internationalization, and the State Oil Fund of Azerbaijan is active in international markets. The Ministry of Economy recently published the document “10 Strategic Challenges for 2021”, which focuses on non-oil and gas-related economic sectors, improving export competitiveness and investing in transport infrastructure development. This fully meets the needs of China.

In the next five years, Kazakhstan plans to increase the capacity of the sea and rail routes of the Caspian Sea, hoping that the volume of supplies will increase many-fold. According to the total size of the new logistics hub of the Chinese company COSCO in Khorgos, it will be possible to judge the volume of container and freight traffic along the corridor.

There is no doubt that for Kazakhstan this is the largest project for the development of railway infrastructure, which is more important than the construction of corridors connecting Khorgos with Moscow and Turkmenistan – two important projects for China. The port of Aktau has already been expanded, and Kazakhstan hopes to improve other ports of the Caspian Sea.

One Belt

The Baku-Tbilisi-Kars railway, which connects Azerbaijan with Georgia and Turkey, is another trade route that increases the flow of goods passing through the Caspian Sea. During the year, China is likely to come up with political and trade initiatives to consolidate the status of the Caspian Corridor and increase the potential of the key ports of Aktau, Baku and Anaklia.

China pursues a one-on-one trade policy, cooperating with each country separately. This allows China to dictate its terms to its partners and support the tendency to abandon the creation of systems on the basis of multilateral treaties in favor of bilateral agreements. Be that as it may, world trade will benefit if the Chinese consumer goods markets can meet demand, which will lead to improved infrastructure and economic conditions for the countries of Central Asia and the Caucasus.

If Georgia once joins the European Union, it will be a crossroads on which Western Europe, the Eurasian Economic Union led by Russia and China will meet. But China’s strategy for trading partners should bring benefits to people in the region, and not just to help Beijing in the embodiment of its grandiose plans.