Azerbaijan as vital segment of Middle Corridor: Opportunities and prospects

With 360 days into the Russian invasion of Ukraine, the outcome of the war remains unclear with almost all the strategic transport corridors from the east to Europe via Russia and Ukraine, remaining paralyzed with no light at the end of the tunnel.

At this critical juncture, owing to strategic thinking and future-oriented calculations of the Azerbaijani state – the location of the Middle Corridor between the east and west - has taken on greater and greater importance.

The implementation of the Middle Corridor project from China to Europe via Central Asia, Azerbaijan to Turkey, and the Mediterranean and southeast Europe has already taken shape and certain segments are almost operational.

On February 18, speaking at the Munich Security Conference, the Azerbaijani president in a comment on the issue in question mentioned “some advantages, especially with respect to connectivity projects. Azerbaijan for many years invested in the creation of modern transportation and logistics and infrastructure. And now, the diversion of cargo transportation from Central Asia across Azerbaijan to Europe creates additional opportunities".

It is in some cases the shippers that need to find a safe and fast transport route to save money and time. In this regard, the routes passing through Azerbaijan, one of them being the Middle Corridor, are becoming more attractive in many aspects.

One of the reasons that make the Middle Corridor or the Trans-Caspian International Transport Route (TITR) attractive is the fact that it is going to show itself as a consolidating network, which today represents the interests of a number of countries and companies on the new Silk Way. Aiming to coordinate the interaction of all the participants in the transportation of goods and containers along the route from Asia to Europe and in the reversed direction, including needed informational support, TITR is looking forward to creating a competitive environment.

As for the importance of the Middle Corridor, it can be emphasized that Azerbaijan can benefit more from it.

When Azerbaijani President Ilham Aliyev mentioned the importance of the Middle Corridor at the plenary meeting on “Eurasia’s Middle Corridor: From Pathway to Highway” held as part of the World Economic Forum in Davos, he highlighted opportunities for investment in Azerbaijan through accessing two corridors simultaneously.

“We think that the transportation not only will be helping us to diversify our exports, so, we will export the services. However, at the same time being on route on the Middle Corridor, at the same time being on route of the corridor North-South creates additional opportunities for business in Azerbaijan. Soon there will be the inauguration of a free zone in Baku, which is just next door to the seaport. And we hope that this free zone will be a place of manufacturing and the place where companies will find itself appropriate to invest.”

The Middle Corridor is not considered significant in Azerbaijan but many foreign business sectors and investors think it a lucrative option. In this regard, IFC seems to be one of the most interested parties in the development of the Middle Corridor, as well as in the passage of this route through Azerbaijan.

In her comments on the prospects of the Middle Corridor Rana Karadsheh, Regional Director of the International Finance Corporation for Europe gave an appraisal on fostering partnerships among Azerbaijan, Georgia, Kazakhstan, and Turkiye.

According to her, while global supply chains are still adapting to the disruptions, caused by the COVID-19 pandemic, on the other hand, the Russian invasion of Ukraine has further complicated matters.

“The Trans-Caspian International Transport Route or the Middle Corridor could serve as an alternative route. It could strengthen ties between Azerbaijan, Georgia, Kazakhstan, and Turkiye as well. As for IFC, it is looking at opportunities to support infrastructure through the expansion of transport infrastructure in Azerbaijan,” she added.

As for other parties who believe that the Middle Corridor will contribute to safe transportation and increased investment, the European Investment Bank (EIB) also favors the opening of a new transport route. Thus, the EIB confirmed that on sustainable connectivity, it is looking to focus on operations related to the (Trans-Caspian International Transport Route) Middle Corridor which is closely aligned with the European Global Gateway strategy and that is complementary to the substantial EIB support already provided on the East-West corridor in the South Caucasus.

As per the final reports received from the Working Group and the International Association Trans-Caspian International Transport Route, record growth in traffic along the TITR route over the past year has reached 1.5 million tons of cargo, which was 2.5 times higher compared to 2021. In addition, the volume of container traffic amounted to 33,020-foot equivalent containers (TEU), which is 33% more than in 2021.

A plan for the volume of cargo transportation along the route for 2023 was approved, and agreements were reached on the issues of running a regular shuttle train on a fixed schedule and creating a single transit product.