Transport cooperation - key element in future of Azerbaijan-Kazakhstan relations

Economy Materials 23 January 2023 10:34 (UTC +04:00)
Transport cooperation - key element in future of Azerbaijan-Kazakhstan relations
Emin Sevdimaliyev
Emin Sevdimaliyev
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BAKU, Azerbaijan, January 23. As the global geopolitical situation worsens, it becomes obvious that we are on a brink of interesting and significant transformations. One of these transformations is the change of the future transport cooperation. For many western states, establishing and developing new routes becomes an ethical issue, which they consider necessary to address.

The very same issue, which becomes a hindrance for the west, opens up opportunities for other countries. In this context, Azerbaijan and Kazakhstan are in a situation that allows them to explore new avenues and even rebrand the image of their countries.

Azerbaijan and Kazakhstan have always been regarded as important players in the field of energy production and security. On paper, the potential of the said countries in the transportation sector was obvious, as well. However, this potential was underutilized for a significant duration of time.

However, things are different today. The Trans-Caspian International Transport Route (TITR), also known as the Middle Corridor, is a vital element of the alternative route from the EU states to China. Azerbaijan, together with Kazakhstan, becomes a critical component of the new global transport cooperation architecture.

From a different standpoint, the International North–South Transport Corridor retains its importance, and it becomes an even more critical component for trade cooperation with Russia, Iran, and other countries.

This is not to say, however, that Azerbaijan and Kazakhstan rival each other in the context of the North-South Corridor. In the context of the said route, Azerbaijan and Kazakhstan cater to different areas, thus, both states should not be considered competitors in the framework of the above-mentioned project.

What are the potential benefits of transport cooperation for Baku and Astana?

Both capitals have an enormous and obvious interest in developing the Middle Corridor. Successful implementation of the route will create significant economic benefits for both nations. Economic advantages can be major, especially considering that such cooperation will pave the way for creating job openings for thousands of people and stimulate local businesses.

Focusing strictly on economic benefits, however, would give a somewhat distorted picture of the overall opportunities for Baku and Astana.

Azerbaijan and Kazakhstan are also a part of the North-South Transport Corridor project, which places them in the center of both routes. Consequently, both capitals can reap the benefits of their engagement in the North-South project and the Middle Corridor by cooperating with a different set of players, representing both the EU and big regional countries, including Russia, Iran, and China. This improves the bargaining position of Baku and Astana in terms of possible encounters with other partner countries in the future, as well as enables both capitals to pursue a more diverse set of strategies for future development.

One important aspect here, which most analysts tend to overlook, is that Azerbaijan and Kazakhstan can use their unique situation to strengthen their political security even further, due to their deep integration in both routes. This will serve as another layer of deterrence against any unscrupulous actors, who may seek to extend their influence by dubious means. This is one of the positive spillovers of the nations’ engagement in transport cooperation.

The involvement of both nations in the North-South Transport corridor project, and the gradual increase of interest in the Middle Corridor give Baku and Astana a very special opportunity to leverage their geographic positions and acquire tangible economic, as well as, political benefits from their participation in these projects. Additionally, Azerbaijan and Kazakhstan will have a chance to take bilateral relations to the next level, with the implementation of the Middle Corridor.

Last, but definitely not least. Implementation of such a large-scale project will lead to the modernization of transport and logistics legislation, and the compatibility of transit processes among the participating countries. Azerbaijan and Kazakhstan can benefit from this change by becoming more flexible participants in global trade, which will positively impact the image of both nations.

The views of Baku and Astana

Another element, which has not been analyzed in the context of the Middle Corridor route, is that the implementation of the route was made possible due to the high level of relations between Azerbaijan and Kazakhstan. Cordial relations between the nations paved way to quick creation of maritime traffic across the Caspian Sea. Without the sea link between the nations, the Trans-Caspian International Route would not have existed today.

It should not come as a surprise that Azerbaijan exhibits significant interest and drive to make both projects fully operational. The thoughts offered by President Ilham Aliyev on transport projects outline the views of the shape of the long-term vision of Baku.

“We believe that 15 million to 30 million tons of cargo can be transported from the territory of Azerbaijan through the North-South transport corridor alone. This is a very high figure. Currently, all of Azerbaijan’s transit opportunities make up a small percentage of that. Therefore, the North-South transport corridor is a project that can compete with the Middle Corridor. Considering that, this has become one of the top priorities for Russia after the start of the Russia-Ukraine war,” President Ilham Aliyev said.

What the Head of State said is very important. Previous skepticism and criticism of the Middle Corridor revolved around the fact that there was limited understanding regarding the potential volume of goods to be transported via the route. The issue of interest in cargo transportation via the route changed around a year ago, due to the escalation of the Russia-Ukraine conflict. Today there is a significant level of demand and attention to TITR, and the interest is likely to increase as the geopolitical situation shows no signs of improving.

The views of President Ilham Aliyev enable us to conclude that Azerbaijan is not choosing one transport project over the other, Baku is interested in developing both routes simultaneously.

Interestingly, while President Ilham Aliyev spoke explicitly regarding the views of Azerbaijan on the matter, it will not be a stretch to say that Kazakhstan shares the same vision. After all, Kazakhstan and Azerbaijan are alike in many aspects and have to deal with the same set of variables in their foreign policy.

Kazakh leadership also understands that the implementation of both projects is the way to diversify the possibilities available to the Central Asian nation, especially, in the context of the TITR.

Just recently, Kazakhstan’s National Company KazMunayGas and Abu Dhabi Ports Group agreed to create a fleet that provides offshore projects in the Caspian Sea, as well as a tanker fleet to develop alternative routes for the export of Kazakh oil towards Azerbaijan through the port of Aktau. In addition, the signatories will explore opportunities for creating a merchant fleet, including building or purchasing container ferries for transit from China to Europe via the Trans-Caspian route, and dry cargo ships to participate in the cargo transportation along the North-South route.

Now here is why it is a very important transition. Kazakhstan attracted a major player of the industry to carry out strategic projects in the Caspian Sea, related to energy and transport. First, this indicates that Kazakhstan is willing to explore opportunities that Azerbaijan can offer to increase the effectiveness of the Kazakh energy industry. Also, the efforts of Kazakhstan to attract a major company from a foreign company to the project illustrate the position of the Middle Corridor in the agenda of decision-makers.

Not a time to rest on laurels

While the outlook for Azerbaijan and Kazakhstan looks very promising, it is important to remain focused and keep the momentum going. It is true that both nations saw the value of transport cooperation, especially, in the context of the Middle Corridor project. However, it is important to keep in mind that an intervening variable of geopolitical uncertainty currently makes TITR more appealing than before.

It is an excellent opportunity for Azerbaijan and Kazakhstan to use the tools at their disposal to enhance the appeal of the transportation links passing through their territories. For Baku and Astana, the implementation of the abovementioned projects is critical to ensure long-term economic prosperity and political influence.

Eventually, this will make both nations stronger politically and economically. And as a result of cordial bilateral relations, the increased stature of one country will benefit the other.