Trans-Caspian International Transport Route

Reflecting new geopolitical and economic realities

The ongoing Russian-Ukrainian conflict and security issues in the Red Sea due to Houthi attacks have pushed European countries to seek alternative trade routes to China, avoiding Russia, the Red Sea, and the Suez Canal.

The focus has shifted to the Middle Corridor, or Trans-Caspian International Transport Route (TITR), a key land-sea-rail trade route linking China with Europe.

In 2023, China was the EU's third-largest export partner and a major source of imports. Germany, France, and the Netherlands lead in EU exports to China.

The Middle Corridor spans 4,256 kilometers and includes both land and sea routes. It starts in Kashgar, China, travels through Kyrgyzstan and Uzbekistan to Türkmenbaşy on the Caspian Sea, and then moves through Azerbaijan, Georgia, and Turkey before reaching Europe.

This route is faster compared to the Northern Corridor through Russia, which covers about 10,000 kilometers and takes 15 days, whereas the Southern maritime route via the Red Sea and the Suez Canal is around 20,000 kilometers and takes 45-60 days.

The World Bank reported an 88% increase in cargo volume on the TITR in early 2023, highlighting its growing importance.

Central Asia, a geostrategic hub, has been bolstering infrastructure and aligning with China and the West for investment and development.

The region's significance has grown, especially after the United States withdrawal from Afghanistan and increased competition among Russia, China, the United States, and the European Union. President Biden's meeting with Central Asian leaders in September 2023 underscored this shift.

The US is promoting the C5+1 Dialogue to exploit the region’s mineral wealth, while Japan is also increasing its engagement, with plans for a summit in August 2024 and potential projects in renewable energy.

The EU, a major donor and investor in Central Asia, has intensified its involvement as the region seeks to diversify from Russia and China.

In June 2023, EU President Charles Michel visited Kyrgyzstan for the Second EU-Central Asia Summit, and in June 2024, Kyrgyzstan signed the Enhanced Partnership and Cooperation Agreement (EPCA) with the EU.

This agreement, replacing the old Partnership and Cooperation Agreement, aims to deepen ties in trade, investment, and various sectors, reflecting new geopolitical and economic realities.

Pakistan should get ready to trade with Iran

According to a Dawn report the revival of the Joint Comprehensive Plan of Action (JCPOA) signed between Iran and leading super powers in 2015 is likely to present Pakistan some of the rarest opportunities. It will not only open up new avenues for closer economic engagement between the two neighbors, but access to oil, gas oil and minerals.

According to credible media reports, JCPOA is expected early next month. To earn Iran’s trust and to convince the world of the US intent, President Joe Biden has restored some sanction waivers early this month. These breaks would allow firms around the world to trade with Iran.

The private sector, aware of the US hostility towards Iran and its dominant position in the global market, particularly over capital flows through the banking system.

Razzak Dawood, advisor to Prime Minister on commerce, did not divulge much on the possibility of visiting Tehran to explore possibilities. Responding to Dawn, he did not hide his lack of interest. “I am looking into it.”

The reports from Vienna are calming in a global environment of growing geopolitical rivalries threatening whatever is left of Covid-battered economies. If the growing energy insecurity amidst rising oil prices and vanishing fears of Western backlash kick-start the Pakistan-Iran oil pipeline project, it will be a real boon for the people and the private sector groaning under the burden of rising fuel prices, hoped an incorrigible optimist.

Journalist-turned-politician Senator Mushahid Hussain Syed was hopeful of a positive outcome if the sanctions are lifted on Iran and the financial flows are eased. The partial sanction waiver by the United States is good news for Pakistan. as it will open up opportunities for boosting commercial cooperation between the two neighbours. Coupled with US humanitarian sanctions waiver for Afghanistan after January 23-25 Oslo meeting, this augurs well for lowering tensions in the region.

“While Iranian minister’s visit was linked more with cross-border security issues, especially terrorism in Balochistan, last year’s opening of a third border crossing point between Pakistan and Iran can provide an impetus for bilateral trade and travel.

“The biggest issue was that, fearing Western retaliation; Pakistani banks were not willing to open a letter of credit (LC) for legitimate overland trade. Perhaps, eventually, the Pakistan-Iran pipeline deal can also be revived. Iran can provide energy security to Pakistan which would strengthen the economy.

“An additional force multiplier for Pakistan-Iran economic ties is the China-Iran strategic economic agreement,” he responded in writing when reached for his input.

Dr. Manzoor Ahmed, former Ambassador of Pakistan to the World Trade Organization (WTO), lament limited trade and implicitly blamed a weak foreign policy.

“Pakistan has a very low trade volume; its exports to Iran can be multiplied manifold. Despite sanctions, India’s exports crossed US$3 billion as it allowed Iran to buy in Indian currency,” he said.

In the past, it was not US sanctions alone, but also the Saudi pressure that prevented Pakistan from deepening trade ties.

Pakistan should start preparing for the post-sanction period. It enjoys potential to diversify its energy import sources. Both the countries enjoy a long common border. There is also a probability of opening more border posts.

Pakistan has already signed a preferential trade agreement with Iran. The time has come to reciprocate the good will gesture of Iran.

The New Great Game

Lately, Nikkei Asia after focusing on Mongolia has featured Central Asia. These are five states of the region: Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. All were members of the former Soviet Union and became independent 30 years ago.

Nikkei wants it readers to look at both the latest Big Stories, on Mongolia and on Central Asia, because historically the Mongol Empire in the 13th century, under the rule of such distinguished leaders as Chinggis Khan and Kublai Khan, were pioneers during their reigns of what today has become the "Belt and Road" initiative to link infrastructure and economy.

They could make it possible, because they governed the region from China to modern day Russia and Iran. Some historians argue that Mongolia created a global trade network for the first time in human history.

In this big story, the author mentions Samarkand in Uzbekistan as the capital of the empire of Timur, the conqueror who made the city a key economic and cultural hub linking East and West in the 14th century. Timur was a descendant of the Mongolian Empire.
 
China's current expansionism is a potential threat to these "stans", as is shown from their huge loans from the communist country, which account for 43% of the government's foreign debt in Kyrgyzstan and about 40% in Tajikistan. Still, considering their geopolitical positions, without making use of the opportunities that the Belt and Road Initiative offers them, a bright future for these countries is unimaginable.

The Great Game is a historical term referring to the political and diplomatic confrontation between the British and Russian Empires over Afghanistan and neighboring territories in the 19th and early 20th centuries.

In the main illustration to this big story, we see a chessboard with a toppled Eagle having failed in Afghanistan. Meanwhile, a Dragon has approached, while the Bear is watching from a distance.

 

Pakistan hosts meeting of spymasters of regional countries

According to DAWN newspaper, Pakistan on Saturday hosted a meeting of spymasters of some countries in the region on the situation in Afghanistan. The meeting was attended by the intelligence heads from Russia, China, Iran and some Central Asian states.

The hosting of the meeting by Pakistan reflects its sincerity for peace in the region and Afghanistan.

It was the latest effort by Pakistan, which had over the past few days hosted meetings of the foreign ministers of the six neighboring countries of Afghanistan and that of their special envoys, to develop a common regional strategy on dealing with challenges emanating from the events unfolding in the war-ravaged country since the fall of Ghani regime.

Foreign ministers of Afghanistan's neighboring countries earlier in a meeting on Wednesday, “Agreed to remain seized of the developments in Afghanistan and coordinate with each other for a holistic, comprehensive and harmonized response,” according to a joint statement issued after their meeting.

The regional countries are worried about security situation along their borders with Afghanistan, terrorists using Afghan soil for launching attacks on other countries, spread of extremism, possibility of influx of refugees, drug trafficking and transnational crimes.

According to an Op-Ed, Russian Security Council’ Deputy Chairman Dmitry Medvedev warned that tens of thousands of militants were harboring in Afghanistan’s provinces close to borders with Central Asian countries.

Also on Wednesday, CIA Chief William Burns during his visit to Pakistan met Chief of the Army Staff (COAS) Gen Qamar Bajwa and Inter-Services Intelligence (ISI) Director General Lt Gen Faiz Hamid. Burns had come to Pakistan to share US concerns about the new situation and see how Pakistan can be helpful in dealing with them.

Earlier on 4^th September, the ISI DG had travelled to Afghanistan where he reportedly held meetings with the new Taliban regime. According to sources, in his meetings in Kabul, besides, other issues had emphasized on the urgent need for dealing with the terrorist threat from groups including ISIS, Al-Qaeda, ETIM, TTP, BLA, and Jundullah to the neighbouring countries.

Islamabad had while welcoming the formation of caretaker government in Afghanistan by the Taliban hoped that “the new political dispensation will ensure coordinated efforts for peace, security and stability in Afghanistan”.