The “ Zangezur corridor ” is a geo-economic revolution
The South Caucasus region has the opportunity to become one of the most important transport corridors in Eurasia.
The current global situation has been dramatically affected by the Covid-19 pandemic, as well as regionalization, widespread use of digital media, non-compliance with WTO rules, trade wars and the incident with the ship Never given in the Suez Canal, all of which have led to an overhaul of international trade and supply chains around the world.
The growing proximity of links between China and Europe, two of the world’s three largest economies, has motivated countries between them to initiate their transport-logistics capacity ahead of demand.
The Trans-Caspian international transport route departs from Southeast Asia and China, crosses Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, Turkey and to Europe. After the November 10, 2020 ceasefire agreement ended a 44-day war between Armenia and Azerbaijan, the region’s drastically altered geopolitical and geo-economic configuration created new opportunities for the expansion of routes between Asia and Europe in the Middle Corridor.
According to the ceasefire agreement, Armenia will guarantee the security of transport links between the western regions of Azerbaijan and the Autonomous Republic of Nakhichevan in order to facilitate the free movement of citizens, vehicles and goods. in both ways. As a result, Azerbaijan enjoys a strengthened position as a major transportation hub on the East-West and North-South crossroads corridors in the heart of the Eurasian continent, thus diversifying routes. Azerbaijan is the dividing point along the Middle Corridor in the South Caucasus, while the Middle Corridor splits in Azerbaijan in two directions through its southern and northern capillaries.
Azerbaijan, along with other partners along the Middle Asia-Europe Corridor, could support the establishment of a better balance between eastbound and westbound rail traffic, which has been one of the main objectives of operators active on the New Silk Road. Because the cost of rail freight decreases when traffic to the east increases, it fuels the sustainability of transcontinental railways, according to Pierre Borgoltz, member of the advisory board of FERRMED, a multisectoral association founded in Brussels to improve rail transport in Brussels. goods and industrial competitiveness.
Baku has already started construction of the Azerbaijani section of the railway to Nakhichevan, the landlocked country of Azerbaijan exclave which crosses recently liberated territories. Thus, Zangilan district in Azerbaijan will be a transportation hub at the border crossing point of Iran, Armenia and Azerbaijan. Therefore, an international airport and highways are planned for construction in Zangilan, which will give it the status of a hub.
Trilateral negotiations are underway between Moscow, Yerevan and Baku on the construction of the Armenian section of the road, the Zangezur corridor, between mainland Azerbaijan and its Nakhchivan enclave. Although the Zangezur Corridor passes through Armenia, the railways are owned by the Russian-owned South Caucasus Railway Company as the owner and operator of the Armenian Railways.
A cheaper alternative
Turkey and Iran are also keen to open communications regarding the newly redesigned geopolitical map of the South Caucasus, given the resolution of the Nagorno-Karabakh issue. This is in line with the “3 + 3” geopolitical partnership format, which covers the three South Caucasus countries of Armenia, Azerbaijan and Georgia, and their three neighbors, Turkey, Russia and Iran. .
The Zangezur Corridor between Azerbaijan and Nakhichevan offers a cheaper alternative to other projects in the region, as it offers a shortened route. For example, for many years, neither international financial institutions nor foreign governments, nor the Armenian government, have been able to finance a new railway between Iran and Armenia, which is expected to cost 3, US $ 5 billion.
The Belt and Road Initiative, which aims to reduce China’s dependence on US-controlled choke points, is redefining the Eurasian transport map because, among other things, it re-energizes the Silk across the South Caucasus. Since land transport links are the gateway from China’s internal regions to global markets, it is a viable alternative to existing sea lanes for China, whose sea transport is limited by the so-called “first chain of islands”, from the Kamchatka Peninsula to the Malay Peninsula.
Therefore, Azerbaijan’s transport and logistics capacity, as well as that of other partner countries on the transcontinental route, is available to move comparatively high value-added goods which are the EU’s main exports to the country. East Asia.
Azerbaijan is also developing its own transport potential, as the trade turnover of the port of Baku in the Caspian Sea, the first “green port” among 26 European ports to receive this status, increased by 20% in 2020.
The port of Baku hosted most of the 2020 push, as well as transcontinental transport and trade across Eurasia. Large vehicle (TIR) and container throughput that year was a 30-year record. In 2020, the number of trucks increased by 28%, container exports by 15% and the volume of cargo transported through the dry cargo terminal by 280%.
Thus, compared to the last five years, there has been a fivefold increase in road freight, three times as many containers and a three and a half times increase in the volume of cargo handled at the port’s dry cargo terminal. from Baku. Azerbaijan plans to build both a mining terminal and a grain terminal, taking into account increased exports of mineral products (carbamide and sulfur) from Turkmenistan and significant grain exports from Kazakhstan.
Once the management and capacity limits have been reached at the cross-border station in Poland / Belarus, through which 95% of the total container freight transits “EU-China Express”, other land routes through the Eurasia, including the intermediate corridor, have gained importance. Therefore, the overhaul of the geo-economy in Eurasia and the South Caucasus is complemented, thus empowering Azerbaijan to play its role in Eurasian connectivity.
A new geography
A new geography of transcontinental transport and trade is taking shape across Eurasia, as in 2020 the “EU-China Express” freight trains reached a historic transit of the equivalent of half a century. million TEU containers, an increase of 65% compared to 2019.
In accordance with the recommendations of the World Customs Organization and advanced international experience, Azerbaijan’s “green corridor” closure system creates favorable conditions for speeding up the passage of goods through customs border controls. The application of customs controls is based on risk assessment and a more flexible and transparent implementation of customs clearance protocols for goods and means of transport is being implemented.
The quote from Nobel Laureate economist Paul Krugman, “Canada is closer to the United States than to itself” may apply to the case of Armenia, because “Armenia is closer to Azerbaijan and Turkey than it is of itself ”. In other words, the main populated parts of Armenia (like its capital Yerevan) are all closer to Turkey or Azerbaijan than they are to each other, which will influence future economic development. of Armenia. Taking advantage of new opportunities, once it opens communications in the region, it would be possible to reach both the Persian Gulf and Russia via Azerbaijan.
Lee Kuan Yew, the sponsor of the Singaporean “economic miracle”, gives good advice: “Don’t fight with your neighbors, trade with them”, which is true for the South Caucasus. Estimates based on the gravity model prove the advantage of bilateral trade for Azerbaijan and Armenia.
As part of the EU’s ‘Connecting Europe and Asia’ strategy, the European Commission has proposed the basic elements leading to concrete policy proposals and initiatives that will improve connections between Europe and Asia. Asia, including interoperable transport, energy and digital networks.
Azerbaijan’s initiatives for oil and gas pipelines leading to Europe, its transport projects and the Azerbaijan digital center, which aims to make Azerbaijan a regional cyber-service center for the South Caucasus, the Middle East, Central Asia and South Asia, all are in line with the EU strategy. In addition, the China Belt and Road Initiative and Turkey’s Central Corridor project are complemented by Azerbaijan’s efforts to extend transport capillarity to end users.
China and the EU, whose commercial turnover amounted to 560 billion euros in 2019, are interested in the development of the Middle Corridor. At the same time, the Middle Corridor is important for the trade turnover between Turkey and Central Asia, which amounted to $ 6 billion, while the turnover between China and Central Asia. Turkey was $ 21 billion over the same period.
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