The Lynchpin of the Middle Corridor

The Caspian Sea, which lies at the heart of the Eurasian land mass, is a uniquely critical connector linking Asia and Europe. The greater region forming around the world’s largest inland sea matters more than ever as a geostrategic security and economic crossroads.

For Washington and Brussels, the Caspian region is a distinctive place where a multitude of challenges and opportunities almost constantly and completely converge.

For Washington and Brussels, the Caspian region is a distinctive place where a multitude of challenges and opportunities almost constantly and completely converge. On the one hand, the region is susceptible to be affected by many of the foreign policy complications the West faces: Russia, China, and Iran. On the other hand, the region presents ample yet not fully tapped economic opportunities for the U.S. and its many allies in Europe. A well‑functioning transportation route though the Caspian region would give the whole of Europe as well as the U.S. resilient and diversified supply chains. Also notable is that China in particular has recognized the economic importance of the greater Caspian region and intended to incorporate the region into its own strategic trade and investment engagement by taking its domestic industrial capacity abroad as part of the wider Belt and Road Initiative (BRI) of geo‑industrialization through state‑led economic development interventions.

In this greater and ever‑evolving geostrategic context, it is no fantasy when leaders invoke the ancient Silk Roads in arguing for new road, rail, and port infrastructure to realize the region’s potential as a strategic junction for trade from East to West. Hence a noticeable increase in the use of the term “Silk Road region” in some quarters to describe this part of the world.

Particularly in today’s evolving geopolitical and economic reality triggered by Russia’s invasion of Ukraine, the Caspian region has gained greater relevance whilst acquiring renewed significance. More specifically, one of the geostrategic consequences of Putin’s ongoing assault against Ukraine and its broader implications for the global economy has been the enhanced impetus for ensuring the pragmatic and strategic utility of the “Middle Corridor” (also more formally known as the Trans‑Caspian International Transport Route, or TITR) for the Caspian region and beyond as a viable commercial transport route alternative to the long‑established northern pathway through Russia.

China, which has been eager to expand its economic networks, had hoped to dominate economically the utilization of the Middle Corridor as part of an expanding BRI. But at least some of the countries in the region (and beyond) have grown increasingly uneasy about participating in it. They have viewed China as leaving many of its BRI promises unfulfilled. And they have also become more concerned that Beijing’s BRI engagement comes with too many geopolitical strings attached and can lead to debt traps.

By and large, China has invested in a number of infrastructure projects in Central Asia within the framework of BRI. Most of China’s activity has taken place on the eastern shore of the Caspian. Major port, pipeline, and infrastructure projects on the Caspian’s western shore have been done without much, if any, direct Chinese involvement.

Making the Middle Corridor work properly is not an easy task: it will take considerable degrees of time, financial means, and political commitment. With many economic and political challenges lingering around, by no means, the cross‑country transportation route could become the cheapest option any time soon. Nonetheless, in an increasingly raucous world where diversifying supply chains reduce risk and has become more desirable, the route could become not only fully viable but, more importantly, truly cost‑effective.

To that end, what is increasingly unambiguous is that the forward‑thinking mindset and proactive role of Azerbaijan, an important U.S. partner for a number of reasons, has become more relevant to advancing the Middle Corridor to a next operational level. Azerbaijan is a regional economic leader in the South Caucasus and an important economic actor in the greater Caspian region. In addition, Baku is the most important metropolis on the Caspian Sea. The city is home to the Caspian’s largest port and has been positioning itself successfully as an increasingly capable transportation hub for goods traveled between Europe and Asia.

It is in the strategic interest of the United States and the European Union to stay practically engaged with Azerbaijan.

This is one of the many reasons why it is in the strategic interest of the United States and the European Union to stay practically engaged with Azerbaijan. From a broader perspective, the U.S. and the EU need an anchor of engagement and influence in the Caspian region. Azerbaijan is a nation that will continue to look to the West while maintaining its unique role in the region. That certainly makes this Caspian Sea nation a strategic, elevated partner for which Washington and Brussels to pursue a pragmatic relationship, based on prudent mutual interests.  

The context is clear: Azerbaijan is the largest country of the South Caucasus in terms of territory and population, followed by Georgia and Armenia; since the collapse of the Soviet Union, the three countries in that region have followed their own distinct strategic paths, both in domestic and international terms. Despite the geography that binds all three countries together, their distinct foreign policy experiences and political circumstances have rendered their geostrategic postures to reflect their particular economic, security, and political positions. While Tbilisi tries to maintain strong ties with the European Union, aspiring to join Euro‑Atlantic institutions and to lessen Russian influence over its territories and separatist regions, the geopolitical chessboard of the South Caucasus has made Yerevan strengthen its military and economic ties with Russia. Baku, while still maintaining a neutral and independent foreign policy path in general, has been trying to be a more practical partner to the EU and cultivate more strategic and broader relations with the Unites States at the same time.

Equally important is the fact that Azerbaijan has been developing closer practical partnerships with countries in Central Asia, particularly Kazakhstan and Uzbekistan, while continuing to deepen strategic cooperation with Türkiye in assisting the extension of Ankara’s economic and political relations there, particularly after the transformation of the Cooperation Council of the Turkic‑Speaking States (Turkic Council) into the Organization of Turkic States (OTS) at its November 2021 summit.

Elevated Strategic Utility

It was quite notable that in June 2022 Azerbaijan’s president Ilham Aliyev made an important and successful diplomatic visit to Uzbekistan, with nearly two dozen cooperation documents signed, notably in the fields of trade, transport, and logistics. For the last two decades, Azerbaijan has been working on increasing the connectivity capacity of the Caucasus by building, with Georgia and Türkiye, solid infrastructure like the Baku‑Tbilisi‑Kars railway, which could be also used by Uzbekistan. Tashkent has been actively exploring a westward transit route that encompasses Uzbekistan, Turkmenistan, Azerbaijan, Georgia, and Türkiye.

Underlining Azerbaijan’s practical plans for the development of transport and logistical infrastructure in the greater Caspian region and beyond, Aliyev also pointed out, during his 24 August 2022 meeting with his Kazakh counterpart Kassym‑Jomart Tokayev that

timely measures have been taken both in Kazakhstan and Azerbaijan to create this infrastructure. Now there is talk about linking the cargo flow between our countries and increasing its volume, thereby increasing the transit potential of our countries. Relevant bodies have been actively cooperating in this direction for some time now. In my opinion, the Middle Corridor has great prospects and, of course, Kazakhstan and Azerbaijan have a very important role in the implementation of this project.

Various indications point to the greater potential utility and application of the Middle Corridor as a chief land‑based transit route between Asia and Europe via the Caspian region.

Indeed, the necessity for a more focused and expedited pursuit of furthering the operationalization of the Middle Corridor has gained greater attention and traction. Various indications point to the greater potential utility and application of the Middle Corridor as a chief land‑based transit route between Asia and Europe via the Caspian region.

Uzbekistan and Kazakhstan are the most forward‑leaning countries in Central Asia. Each in their own way see the development of the Middle Corridor as a strategic advantage and as an opportunity to expand their respective roles in energy, logistics, and manufacturing. Azerbaijan has long recognized the corridor’s strategic importance and prioritized regional cooperation.

A critical aspect of the changing geopolitical landscape, precipitated by the effects of Russia’s ongoing invasion of Ukraine, will be how to ensure connectivity across the Eurasian landmass. The northern route through Russia, which has served for decades as a major corridor between Europe and Asia (particularly China) has become less appealing in light of layers of tightening sanctions imposed by the West and its allies on Moscow.

While raising regional tensions, Russia’s protracted war in Ukraine has also exposed the reality that— win, lose, or draw—it will take Russia years to rearm and upgrade before it could contemplate further significant expansion and influence in the post‑Soviet space, be it politically or economically or both.

This outcome of the evolving geopolitical circumstance has injected a revitalized momentum for making the Middle Corridor emerge or re‑emerge as an alternative transcontinental trade route. Light has again been shed on the necessity of diversifying trade routes or creating alternatives in global trade, especially in transportation between Asia and Europe.

As a matter of fact, even a brief glance at the map unequivocally shows the unique geographical linkages that the Middle Corridor presents as a strategic way of securing a viable cross‑continental commercial route. Running across the vital regions and facilitating container and commodity transport, the corridor is the shortest route that connects and puts together East and West.

The global demand for transport amid supply chain disruptions has made the Middle Corridor more desirable as an alternative means to get some goods to market. As a result, the route will likely continue to develop. Global trade is too important to be put at risk by being tied to a small number of routes. Given the fact that the cost and time are of great importance in transportation, the possibilities of the Middle Corridor, which are improving day by day, should be indeed taken into more serious and practical account.

The Middle Corridor is a set of three interconnected transport routes that was formed in 2014 via a partnership between Kazakhstan, Azerbaijan, and Georgia, but eventually grew to include Ukraine, Romania, Türkiye, and Poland. Each route of the Middle Corridor is multimodal, mixing rail with ferry transfers across the Caspian and Black seas. All three routes go to Azerbaijan from China via Kazakhstan before splintering off and finding their own ways to Europe—one going via Georgia to Romania, another going from Georgia to Ukraine, and a third, which this essay focuses on, goes from Baku to Europe via Türkiye.

In March 2022, Azerbaijan, Kazakhstan, and Georgia made an announcement creating a joint venture to develop the Trans‑Caspian International Transport Route. The three countries intend to build this transportation route, whose potential is estimated at 10 million metric tons or 200,000 containers per year. Also notable is that the three states plan to establish uniform tariffs for domestic shippers whilst improving and simplifying the work of carriers in the corridor.

A month after the March 2022 announcement, the three countries in question (i.e., Azerbaijan, Georgia, and Kazakhstan) were joined by Türkiye in signing a quadripartite declaration on the Trans‑Caspian East‑West Corridor. This notable document underscored the importance of pursuing the Middle Corridor and increasing its transit potential as well as strengthening cooperation among the parties. Furthermore, the quadripartite declaration noted the significance of the Baku‑Tbilisi‑Kars railway line in the development of competitive transport between Europe and Asia, as well as the importance of completing construction work to increase the railway’s capacity. The declaration also emphasized the critical investment need for infrastructure to enhance the quality of transportation operations along this route.

At a June 2022 meeting held in Baku, a working group comprising Azerbaijan, Kazakhstan, and Türkiye was established on the Middle Corridor (at the suggestion of Türkiye), with a protocol signed for increasing the capacity and efficiency of the transport route. Turkish Transport and Infrastructure Minister Adil Karaismailoglu highlighted that the “effective functioning of the Middle Corridor is important for the integration of Azerbaijan, Kazakhstan, and the Caspian Region into global trade. Taking into account the fact that we are at the center of the Asian‑European foreign trade networks in our region, we aim to be a regional base in logistics.”

Baku has taken an increasingly central role in the geopolitical equation of the Middle Corridor and represents this transcontinental route’s nexus and vector. 

Undoubtedly, Türkiye is an important player. However, the real prize was and remains Azerbaijan. Baku has taken an increasingly central role in the geopolitical equation of the Middle Corridor and represents this transcontinental route’s nexus and vector. Azerbaijan’s key geographical location, coupled with its well‑developed logistics infrastructure and state‑of‑the‑art port and air cargo facilities, is crucial to the success of this emerging opportunity for transiting goods and services between Europe and Asia.

In following through all of these critical and timely agendas for advancing the Middle Corridor, the vital role Azerbaijan can and will play in operationalizing and promoting the viable transcontinental trade route is likely to become more apparent than ever.

As a willing and capable driver of the Middle Corridor, Azerbaijan has been long focusing on its own infrastructure development of a well‑functioning transportation route. Facilitated by ongoing efforts to streamline relevant regulatory and other measures, the forward‑looking construction of Azerbaijan’s transit infrastructure has made the operationalization of the Middle Corridor more feasible.

More specifically, in terms of connecting and enabling the corridor at a critical geographical juncture, Azerbaijan is quite well‑positioned: it has established all the necessary infrastructure, such as railways, highways, and the Port of Baku itself. Indeed, although a number of ports in the region have great cargo‑processing capacity, Azerbaijan’s flagship Port of Baku stands out. The modern port facility has become an increasingly important strategic gateway of the Middle Corridor, advancing Azerbaijan’s transit potential through digitalization and expansion of the international cooperation.

Indeed, Baku’s strategic thinking and its facilitatory role has become an indispensable element of making the Middle Corridor work and warrants greater encouragement from broader key stakeholders of the corridor for a number of reasons.

More Engagement Is Merited

Not only is Azerbaijan the only country in the world that borders both Russia and Iran (and Türkiye), it also proactively seeks to broaden its relations with the West as a balancing factor. At the same time, Azerbaijan has been and will continue to be an independent and sovereign power in the vital part of the world.

America’s engagement with Azerbaijan has become more necessary, with 2022 marking the thirtieth anniversary of the establishment of diplomatic relations between the two nations. From Washington’s foreign policy perspective, the strategic importance of the country is undeniable. Not only is Azerbaijan the only country in the world that borders both Russia and Iran (and Türkiye), it also proactively seeks to broaden its relations with the West as a balancing factor. At the same time, Azerbaijan has been and will continue to be an independent and sovereign power in the vital part of the world.

As highlighted in his message to celebrate Azerbaijan’s National Day on 28 May 2022, U.S. Secretary of State Antony Blinken unequivocally noted that,

this year, we are celebrating the thirtieth anniversary of diplomatic relations between the United States and Azerbaijan. […] The United States is proud to continue to expand our relationship not only through strong economic linkages, but also through our people‑to‑people ties. […] We are committed to promoting a peaceful, democratic, and prosperous future for Azerbaijan and the South Caucasus region, and we stand ready to help by engaging bilaterally and with like‑minded partners, including to help the region find a long‑term comprehensive peace. During this challenging period of global uncertainty, the United States once more reaffirms its commitment to supporting Azerbaijan’s independence and sovereignty, as well as the rights and freedoms of the Azerbaijani people.

Indeed, over the past three decades, since Azerbaijan’s independence from the Soviet Union, the U.S.‑Azerbaijan relationship has grown comprehensively in advancing energy security in Europe, combating transnational threats, and boosting bilateral trade and investment, among other policy priorities.

More relevantly to the current geopolitical setting, Azerbaijan’s vast hydrocarbons and other natural resources have been also enabling the Caspian Sea nation to serve as a significant alternative to Russia for oil and gas. That in turn has helped enhance the energy security of the European Union and, by extension, the security of the United States.

Indeed, it is in the clear, pragmatic interest of the United States and the European Union to prioritize and advance relations with Baku as the critical trade, energy, and economic link between the east and west of the Eurasian landmass. The Middle Corridor offers an opportunity to further elevate this relationship of growing strategic importance in terms of its structure, impetus, and path forward.

Azerbaijan’s recently completed Southern Gas Corridor has further brought vital energy resources from the Caspian region to the European market. This project had proceeded despite regional challenges, as well as opposition from Germany and Russian efforts to thwart the initiative by funding environmental and political groups to bring challenges against it. The final leg of the system was put into force, in part thanks to U.S. urging of Italy.

In a welcome development on 18 July 2022 that will help the EU reduce its reliance on Russian energy, the European Commission signed a deal with Azerbaijan to double imports of natural gas by 2027. During her visit to Baku for the important announcement, EU Commission President Ursula von der Leyen highlighted that, “today, with this new Memorandum of Understanding, we are opening a new chapter in our energy cooperation with Azerbaijan, a key partner in our efforts to move away from Russian fossil fuels.”

Expressing a strong appreciation for the humanitarian assistance that Azerbaijan has been providing to Ukraine, EU High Representative for Foreign Affairs and Security Policy Josep Borrell underscored that, “in the current difficult geopolitical context, it is important to strengthen the dialogue among partners, as we are. I appreciated, today, the open and constructive exchanges that we have had. Azerbaijan is an important partner for the European Union and our cooperation is intensifying.”

The EU has expressed its interest in the Middle Corridor, too. During the 18 July 2022 meeting, von der Leyen also noted that in a recognition of the importance of Baku as a connecting hub between the Caspian region and beyond, “the Economic and Investment Plan has the potential to mobilize up to EUR 2 billion in additional investments. It is already at work, supporting round about 25,000 Azerbaijani small and medium companies, and making the Port of Baku a sustainable transport hub.”

Azerbaijan is and will continue to be a country of geopolitical importance, with its relevance to the EU and the United States elevated, particularly in the context of securing alternative energy sources as well as transport route to Russia.

In that strategic context, more than ever, continuing to adopt greater reform measures and advance economic freedom is critical to Azerbaijan. Over the past decades, the country has succeeded in reducing its poverty rate and directed revenues from its oil and gas production to develop more modern and much‑needed infrastructure.

According to the Heritage Foundation’s annual Index of Economic Freedom, which measures important policy areas of the rule of law, fiscal health, regulatory efficiency, and market openness, Azerbaijan has been on a notably upward trend of economic freedom since the country was first included in the index in 1996, with its overall score consistently above the world average over the past decade.

Azerbaijan has made meaningful progress in liberalizing its economy. In 1996, Azerbaijan was regarded as a repressed economy. Since then, however, the country has measurably advanced its economic freedom, with its overall rating improving markedly in contrast to many other countries in the region and beyond.

Undoubtedly, Azerbaijan has been and will continue to be a country of geopolitical importance and economic competition. More than ever, continuing to adopt reform measures and advance economic freedom in a time of uncertainty is critical to Azerbaijan.

Regulatory Efficiency and Market Openness Matter

Greater and more vibrant economic interaction amongst the Middle Corridor states and beyond is essential. 

Greater and more vibrant economic interaction amongst the Middle Corridor states and beyond is essential. In fact, more than ever, trade and investment issues meld foreign policy and economic policy. There are many areas of potential cooperation in the greater Caspian region, but without vibrant commercial links and practical entrepreneurial interactions, economic cooperation, and engagement among the countries in the region cannot flourish.

Building a network of vibrant, functioning markets, underpinned by regulatory efficiency and market openness, is the key to fostering the spirit of constructive partnership among the countries that share economic bonds. Central to that task of enhancing economic freedom in the region must be committed economic statecraft that creates a more inviting playing field for private investors and companies.

Market openness is a critical pillar of economic freedom. In an increasingly integrated global market, countries with more open markets stand to benefit from the free exchange of commerce and thereby enjoy greater economic prosperity. This multidimensional relationship is well‑documented in the Index of Economic Freedom. Countries with greater market openness—measured by trade freedom, investment freedom, and financial freedom—are more prosperous than are those with less economic freedom. More specifically, consumers and producers who live in countries with low barriers to trade and investment are better off than those who live in countries with high barriers. Reducing those barriers remains a proven recipe for prosperity.

Given the clear relationship between market openness and economic dynamism, the overarching objective of any meaningful strategic economic statecraft related to ensuring the success of the Middle Corridor in the greater Caspian region must be to facilitate the expansion of open trade and investment environments that provide the best chance of translating opportunity into prosperity. This is because the success of the Middle Corridor will depend not solely on infrastructure upgrades, but also on institutional developments that will necessitate policies that will advance economic freedom.

In realizing the Middle Corridor’s full potential, it is critical that governments and others in the region make highly visible steps to attract international business attention. Competitive terms and conditions are essential along with an eye to building long‑term business arrangements. Those in the region developing the Middle Corridor need to ensure that the route is efficient and capable, and just as if not more secure and faster than what they have been using to move around goods.

On this critical dimension, the ongoing infrastructure development seem to evolve largely in a vacuum in which the greater institutional capacity building is confined to reactionary policy stemming from the markets and market demands outside the region. More proactively adopting policies that further enhance capable connectivity based on efficiency and competitiveness will support development on both economic and institutional capacity fronts. Greater growth and broader‑based development would in turn contribute both to ensuring an elevated level of resilience and stability.

Fundamentally, America’s and Europe’s economic relationship with the region will be exercised best through the private sector: the catalyst for real and meaningful economic transformation.

Needless to say, Washington and Brussels cannot provide countries in the region with the political will that they need to transform their economies according to greater market principles and transparency. However, by getting more directly and practically involved in critical policy dialogues through greater and more candid willingness, the West can ensure that its constructive engagement is taken into account. Washington and Brussels can also engage at the technical and practical level in a way that enables countries to advance their economic development. Fundamentally, America’s and Europe’s economic relationship with the region will be exercised best through the private sector: the catalyst for real and meaningful economic transformation.

As with other aspects of the greater Caspian region’s development, governments’ dialogue with business and adopting a more cooperative approach with each other not only makes sense but continue to be essential to realizing what each of these governments hope to achieve. In current geopolitical circumstances, it is disadvantageous for countries in the region to project a divided image to the world. Collaborative efforts to solve differences and establish better communication channels to avoid last‑minute surprises during high‑profile events would demonstrate the region can be a reliable and predictable partner for other countries and companies.

It is notable that despite the current challenges in fully utilizing the Middle Corridor, a good number of countries and companies have begun to direct their attention to optimizing the corridor for future transit. In the short term, growing cooperation among the Middle Corridor countries and companies, particularly in the Caspian and Central Asia region, will help modernize railways, ports, and other relevant soft infrastructure, which will result in enhancing the corridor’s capacity, sustainability, and efficiency for more dynamic trade. Consequently, these improvements would enable more cargo volumes to be rerouted from the Northern Corridor to the Middle Corridor.  

In other words, although the Middle Corridor will not likely provide a comprehensive, ready‑made alternative to the Northern Corridor in the near future, optimization efforts collectively made by key stakeholder of the Middle Corridor will increase the alternative route’s potential to competitively offset losses from the Northern Corridor and reduce reliance on the Russian route in long term.

It is important to remember that at the end of the day, however, its attractiveness to business is what is going to determine the level of success that the Middle Corridor achieves.

The Path Forward

The greater Caspian region will continue to be a critical theater for regional and global powers well into the future. The desire to present both an alternative energy source and trade route is unambiguously strong and clear in the greater Caspian region.

Toward achieving those constructive and transformative objectives, Azerbaijan deserves strategic and practical attention from U.S. and EU policymakers. It is worth repeating that, as Azerbaijan moves forward, it is in the clear, pragmatic interest of Brussels and Washington to prioritize relations with Baku. An important thread of this line of thinking has been developed by those writing about Azerbaijan as a “keystone state” in the pages of Baku Dialogues and elsewhere and will not be repeated here. A good place to start remains the journal’s Editorial Statement, which can be found on its website.  

Indeed, more can and should be done as Azerbaijan moves forward. Washington and Brussels can support this important and reliable partner in the Caspian Sea region by widening and deepening the frank, open, and forward‑looking dialogue between the two countries on issues of mutual concern.

The Caspian region has been, is, and will continue to be an area of geopolitical importance and competition. If the U.S. and the EU are to have a grand strategy to deal with a resurgent Russia and an emboldened Iran whilst at the same time working in concert to improve the energy and trade security of the European continent, policymakers in Washington and Brussels cannot ignore the Caspian region and, more particularly, the vital role Azerbaijan has been and will be playing in the region.

Grasping and capitalizing on all opportunities to further deepen practical trade and investment relations through the Middle Corridor is in the mutual interests of many countries in Europe and Asia that will be connected through the corridor. Key stakeholders of the Middle Corridor—particularly in the greater Caspian region—must remain steadfast in their determination to ensure that the evolving strategic partnership grows stronger as they move forward together.

To that strategic end, Azerbaijan is the lynchpin of connecting the elements for the success of the Middle Corridor. Washington and Brussels should welcome that and seize the opportunity to further advance it.