Moscow wants to outwit West on trade routes

Moscow wants to outwit West on trade routes

Since the collapse of the Soviet Union, discussions of trade routes in the Caucasus have mostly been premised on the conviction that the north-south route and the east-west route, backed by Moscow and the West, respectively, are competitors. Every positive development in one is treated as a defeat for the other economically and geopolitically.

For sure, compelling reasons exist for why this view endures, The Jamestown Foundation writes in the article  Moscow Now Seeking to Make the Caspian Both a North-South and an East-West Hub. If the north-south route becomes predominant, the countries in the region will arguably continue to fall within Moscow’s orbit. Whereas, if the east-west route becomes more important, the Caucasus and Central Asian states will presumably have an alternative path to international markets.

The former remains true, and Moscow is pushing hard to develop this link to Iran, India and the outside world. The latter belief might now be called into question, however, because of Moscow’s efforts to develop alternative east-west routes that will give it renewed influence over the other post-Soviet republics surrounding the Caspian Sea. Increasingly, these countries may use the Russian east-west corridor.

The Russian government’s push to develop the north-south route has, in fact, accelerated in recent weeks. Moscow committed to helping Iran expand its rail lines as part of the intermodal transport network from Russia to the Indian Ocean. And five days ago, RT trumpeted the fact that “the opening of the long-awaited multi-modal transport corridor through Iran will become a big push for the development of bilateral trade between Russia and India,” something that will have not only economic, but geopolitical consequences. The new route will undercut Western sanctions on Iran and pull India away from the West, while giving Russia’s partners in the Eurasian Economic Union new international prospects.

Use of the Caspian Sea will make shipping via this corridor cheaper than the alternative rail routes from Central Asian countries favored by the United States. For this reason, its development, according to Russian analysts, will undercut US influence in the region, while simultaneously expanding Russia’s. In short, the north-south corridor will—perhaps to no one’s surprise, even in the West—finally begin to play the role that Russian President Vladimir Putin sketched out for it in 2012. After all, this is what Moscow hoped for and what the West mistakenly thought it could block by sanctioning Tehran.

Potentially far more important are Moscow’s moves to insert itself into the east-west trade route that had historically received support from Western countries. For more than two decades, the West in general and the United States, in particular, have promoted trans-Caspian pipelines as well as both pipelines and railroads running from western Caspian ports through Georgia to Turkey. In so doing, Europe and the US hoped to gain access to the hydrocarbon supplies of the region as well as believed that the West could build up political influence in the Caucasus capitals.

More recently, the Russian government has sought to steal a march on the West by developing an expanded canal system between the Caspian and Azov seas. In today’s world, moving goods by water is generally less expensive than by rail or highway; and thus, many will choose to use water transit routes over land-based corridors, giving Russia a competitive advantage.

The water links between the Caspian and Black Seas were largely ignored, the canal system had, heretofore, not been in good repair: it was heavily silted in places and incapable of handling large ships or even heavily-laden barges. But now, both Moscow and regional Russian governments are working to repair the existing system and expand it in ways that will shorten the route and make it possible for far more cargo to pass through.

In the short term, this improved and expanded canal system will benefit mostly domestic trade within the Russian Federation. Analysts like Aziz Abdraimov of the Rhythm of Eurasia portal, however, are already looking forward to a time when this water route could carry cargo from east to west in ways that will compete with Western-back railroads further south and give Moscow a new role in east-west trade, not only between Central Asia and Europe but between China and Europe as well.

The turn toward this east-west Russian route will not happen anytime soon, given the difficulties Moscow will certainly face in developing it into an attractive option. Other countries in the region, as Abdraimov points out, will continue to pursue alternative transit corridors. But it is an indication that for the first time, Moscow believes the Caspian can be both a north-south and an east-west corridor and that both will serve its interests.