Baku, January 28, AZERTAC

Most recently, the bilateral relations between China and Azerbaijan are gaining momentum due to which the scope and outreach of One Belt One Road Initiative (BRI) has also been further strengthened.

Moreover, rapidly changing socio-economic, geopolitical and geostrategic emerging conflicting ground realities have further consolidated economic, trade, business and infrastructure cooperation between the two countries.

Therefore, Chinese BRI and Azerbaijan’s Middle Corridor (MC) geographical leverage has been clubbed.

Azerbaijan’s true potential of a MC has further enhanced strategic outreach of the BRI connecting economies from Central Asia to the South Caucasus and on into Eastern Europe.

Most of the trade between China and Europe was carried through the Northern Corridor, which goes through Russia.

Now with the war in Ukraine and the socio-economic sanctions on Russia, a significant part of this trade has shifted towards the MC which passes through Central Asia and the Caucasus, again, linking China to Europe.

The geographical location on the East-West trade route, connecting Europe and China, widens a lot of opportunities for Azerbaijan.

The strategic location on the MC also enables Azerbaijan to become more attractive to global value chains, and be able to be better integrated in global value chains.

The Russian-Ukraine conflict has reinvigorated the MC, both as a regional economic zone comprising Central Asia, the Caucasus and Türkiye but also as an increasingly attractive alternative route between Europe and China.

Interestingly, bilateral relations between China and Azerbaijan have been stable for a long time.

Both countries build their respective national policies on pragmatic models and are bound by common interests and take their obligations very seriously.

Most recently, while at the World Economic Forum in Davos President Ilham Aliyev stressed that Azerbaijan fully supports the initiatives regarding further development of MC has already completed a large part of its feasibility.

In this regard, both countries are cooperating in diverse sectors of economy including agriculture, modern technology, healthcare and culture.

The Chinese companies are also involved in numerous projects in the liberated territories. On its part, Azerbaijan private companies are entering the Chinese market and establishing business contacts in China.

Mutual trade has increased to 20 percent. The Chinese government has already announced plans to expand the volume of bilateral trade, simplifying trade and investment procedures.

It plans to involve more large Chinese companies in cooperation with Azerbaijan in such areas as infrastructure, digital economy, green energy, finance and so on.

In this connection, the Chinese government will also facilitate Azerbaijan companies to enter the Chinese market through participation in exhibitions and through cross-border e-commerce so that enterprises and people of the two countries can benefit from this cooperation.

Obviously, transport and logistics segment of China-Azerbaijan bilateral ties has great significance.

It has multiplier effects for other regional countries and entire Eurasian region will be benefited.

The MC almost coincides with central route of BRI. Azerbaijan has been actively involved in this mega project almost from very beginning.

Interestingly, Azerbaijan plays an important role as a connecting hub where all routes and communications converge which enhances its regional as well as trans-regional role in terms of logistics and transportation system.

Time and again, President Ilham Aliyev has stressed that his country is the only country where the North-South and East-West corridors converge/connect.

Resultantly, having no access to the world oceans it has become an international logistics and transport hub.

Now BRI has interned into its tenth year and Azerbaijan has done a lot during these years to support the implementation of the BRI.

Azerbaijan’s modern railway network has been further modernized and continues to expand, while the largest commercial port in the Caspian Sea has been built with a capacity of 15 million tons and with the prospect of expanding to 25 million tons of cargo.

Currently, it is building a shipyard to be able to produce ships for transporting goods across the Caspian.

Hopefully, the MC after its full operationalization and channelization may become more competitive and connected compared to the Northern Corridor.

The MC is about 2,500 kilometres shorter, and delivery by rail will take a week less time than along the Northern route.

Moreover, it allows the delivery of goods from China to Türkiye in 10-12 days and from China to the EU in 14 days.

It is also the safest and most stable route for the delivery of Chinese goods to Europe. To conclude, the Middle Corridor will remain important for achieving the desired goals of immense socio-economic prosperity, greater regional connectivity, trade and commerce integration, and inflows of the FDIs in Azerbaijan in which bilateral relations between both of the countries and BRI would play a vital role.

Comparative study reveals that a record number of trains were sent from China to Europe along the Middle Corridor, and 75 percent more cargo passed through Azerbaijan in transit during 2022.

The Chinese BRI has facilitated cargo transportation along the North-South and North-West routes.

It is indeed a global project, demonstrating its benefits to all countries along this route. The China-Kyrgyzstan-Uzbekistan railway project, which was initiated by China, will increase the importance of the Middle Corridor, as this route leads to the Caspian Sea.

Baku always promotes the idea of common benefit, cooperation and peace at the regional level.

China is following the holistic concept of shared prosperity and Azerbaijan is replicating it on regional scale, but both share the same philosophy.

The ongoing Russia-Ukraine war, imposition of unilateral socio-economic sanctions on Russia and Belarus amid the war, the MC, a joint venture composed of Azerbaijan, Georgia, Kazakhstan and Türkiye, has gained a new impetus and prominence.

Internationally known as the Trans-Caspian International Transport Route (TITR), the route stretches from China to Europe through Central Asia and the South Caucasus and is divided into two main lines.

The first route is China-Kazakhstan-Caspian Sea-Azerbaijan (Northern Lines) and the second route is China-Kyrgyzstan-Uzbekistan-Turkmenistan-Caspian Sea-Azerbaijan (Southern Line) with an additional extension via the Lapis Lazuli Corridor.

Thus Azerbaijan has the magic connection for greater regional connectivity. The MC offers China safe access to Western countries since it is not subject to any international limitations compared to other transit routes.

Moreover, China has strategic partnership with Azerbaijan, Kazakhstan, Uzbekistan and Turkmenistan which makes the relevance of the corridor more explicit.

According to latest figures (December 2022), the transportation volume through the MC has increased significantly.

The transportation volume from January to March 2022 increased up to 266,300 tons of cargo and in September 2022, the volume of transport reached 845,000 tons of cargo.

To further enhance the strategic capacity of the MC it is suggested that the Georgian deep water port on the Black Sea should be completed as soon as possible.

Its East-West Highway should also be completed. The Baku-Tbilisi-Poti/Batumi Rail should be further diversified and connected.

On its part, Azerbaijan has successfully developed the Baku Sea Port in Alat with the first phase capacity of 10-11, 5 million tons of general cargo and 40,000-50,000 TEU containers, with plans for further expansion.

Dr Mehmood Ul Hassan Khan

Executive Director: The Center for South Asia & International Studies (CSAIS), Islamabad

Regional Expert: Azerbaijan & South Caucasus