Azerbaijan's Middle Corridor initiative: Pivot for energy connectivity

On August 30, Azerbaijan’s Minister of Finance Samir Sharifov participated in a panel discussion titled "Middle Corridor: Reshaping the Euro-Asia Connectivity," as part of the Asian Development Bank's (ADB) annual meetings in Tbilisi, Georgia. This indeed highlights a significant economic development initiative poised to enhance regional connectivity and energy efficiency. By partnering with major global institutions such as the World Bank and the Asian Development Bank (ADB), Azerbaijan is not only bolstering its energy infrastructure but also positioning itself as a key player in the evolving energy landscape of Eurasia.

Since 2020, Azerbaijan has pursued a relatively renewed foreign policy strategy towards Central Asia in light of the rising importance of interregional transport connections. For several years, Azerbaijan, in partnership with Türkiye, promoted the idea of the Middle Corridor (Trans-Caspian International Transit Route) linking China-Central Asia to the South Caucasus and Europe via the Caspian Sea. Just to give a brief overview, the Caspian Sea-Black Sea-Europe Energy Corridor Project aims to lay a state-of-the-art optical cable beneath the Black Sea. This infrastructure is designed to facilitate high-speed data transfer and improve energy transmission capabilities across a broad geographic area, linking the Caspian Sea region with the Black Sea and extending to Europe. The project is anticipated to transform energy logistics by enabling more efficient electricity transmission and data exchange.

Enhancing Regional Energy Production: Land Bridge to Europe

The primary economic benefit of the project is its potential to significantly boost energy production capabilities in Azerbaijan and neighbouring Georgia. By enabling direct seabed transmission of electricity, the project will reduce energy losses and improve the efficiency of power distribution. This advancement is expected to attract additional investments in the energy sector, both from within the region and internationally, fostering economic growth and stability. The collaboration with international financial institutions such as the World Bank and ADB underscores Azerbaijan’s commitment to strengthening economic ties with global partners. This cooperation is likely to lead to further economic support and investment opportunities, enhancing Azerbaijan’s position as a critical energy hub in Eurasia. The involvement of these institutions not only provides financial backing but also technical expertise, ensuring the project's successful implementation and long-term viability.

Facilitating Energy Transition: Azebaijan’s Great Contribution to Green Energy

Azerbaijan’s focus on energy transition is another crucial aspect of this project. As COP29 host, the country is actively working to replace fossil fuel-based electricity with renewable energy sources. The above-mentioned new infrastructure will support this transition by integrating renewable energy into the grid more efficiently. This shift aligns with global trends towards sustainability and is likely to enhance Azerbaijan’s competitiveness in the global energy market. It also gives a vast diversification in economics. By investing in advanced infrastructure, Azerbaijan is diversifying its economy beyond traditional oil and gas sectors. The development of high-speed data transfer capabilities through the optical cable will also promote the growth of digital economies in the region. Enhanced connectivity can lead to increased opportunities in sectors such as technology, finance, and telecommunications, further diversifying Azerbaijan’s economic base.

Geopolitical Influence, Potentials, and Possible Outcomes:

As the global geopolitical order shifts, Azerbaijan proactively adjusts its foreign policy strategy. This adjustment is based on building deeper partnerships with the Turkiye, Central Asian region, and notably China, reflecting shared geopolitical and economic interests. The energy corridor project strengthens Azerbaijan’s geopolitical influence by positioning the country as a central player in the energy and data networks linking Europe and Asia. In short, we can sort of call this initiative a land bridge between Europe and Asia. This strategic positioning could result in increased political and economic leverage, benefiting Azerbaijan in regional and international negotiations. But perhaps despite its promising prospects, the project faces several challenges. These include the technical complexities of laying an underwater optical cable, geopolitical tensions in the region, and potential environmental impacts. Addressing these issues will be critical to ensuring the project's success and sustainability.

Nevertheless, Azerbaijan’s investment in the Caspian Sea-Black Sea-Europe Energy Corridor Project represents a bold step towards enhancing regional energy connectivity and economic growth. By leveraging international partnerships and focusing on sustainable energy practices, Azerbaijan is positioning itself as a key player in the evolving global energy landscape. The successful execution of this project could lead to substantial economic benefits, including increased energy efficiency, stronger economic ties, and enhanced geopolitical influence.

The current format perfectly matches Baku’s interest as it remains a key transit country for countries like Kazakhstan, Turkmenistan, and Uzbekistan in linking them with Türkiye and further to Europe amid geopolitical uncertainty. Finally, Baku's engagement with Central Asian countries increases its geopolitical importance, not only for the regional powers but also for the EU and China.