Russia Hopes to Use Caspian Sea Route to Evade Sanctions

Russian Journal of Economics, 2022

The Russian economy will have to adjust its logistics to face the new reality. The operationalization of the multimodal International North-South Transport Corridor (INSTC) is an important strategic part of it. This "pivot to the South" by Russia and other Eurasian Economic Union (EAEU) countries is of particular significance in light of the required reconfiguration of supply chains in Eurasia. Russian exporters, importers and freight forwarding companies' needs in alternative logistical opportunities have increased dramatically. The INSTC development would promote Eurasian intra-and transcontinental connectivity, reduce export costs, develop new production niches, and realize the Caspian region's transit potential. This study estimates that the aggregate potential INSTC freight traffic via all the routes and modes of transport, including containerized and non-containerized cargoes, will reach 15-25 million tonnes by 2030. The container traffic could rise 20x and this will require investments in hard infrastructure and also soft infrastructure improvement. The corridor will contribute to the evolving outline of the trans-Eurasian transport backbone and bring significant benefits for the economies of Russia, Central Asia, the Caucasus, Middle East, and South Asia.

The Central Asia - Caucasus Analyst , 2019

According to Russian officials, the Russian Federation is not fully utilizing the economic potential of its Caspian regions, given the importance of the Caspian Sea in Eurasian trade flows. Russian experts emphasize that the development of Caspian transport infrastructure remains insufficient for satisfying domestic and international transportation needs, which effectively increases Eurasian transit bypassing Russia (through Azerbaijan-Georgia-Turkey). In 2015-2017, the volume of such cargo transit increased by over 15 percent, compared to an increase of only 10 percent through Russia’s Caspian region. Russia’s actual transit revenues in this sector barely reaches a third of the existing potential. Additional projects, which will also be connected with the canal, have been mentioned as future main Russian transportation ports in the Caspian. These are Makhachkala, the planned new port in Kaspiysk in Dagestan, and Lagan in Kalmykia. Chebotarev noted that Dagestan needs an additional port to provide for the transportation of goods delivered, including by rail. This will allow for connecting the Caspian to the Black Sea through railway and motorways, which is of great political and geopolitical importance. According to Russian officials, China has already expressed interest in investing in new transport projects. Officials in Kalmykia stated that Port Lagan JSC (the initiator of the project) has already reached agreements with China’s two largest construction companies. According to the CEO of Port Lagan JSC, POLY Group and China Energy Engineering Group International are ready to prepare the design and documentation for the port and start construction this year. After the drop in oil prices, Russia’s economic ability to support social projects in the region is limited. Social and financial support are key elements in buying legitimacy in the turbulent region, especially in Dagestan and adjacent republics. On the other hand, through regional economic cooperation, Moscow aims to strengthen the economic links between littoral countries and Russia and cement its position in the Basin. However, suspicions and diverging interests of the littoral countries, along with Russia’s economic limitations, make the perspectives of Russia’s economic projects in the Caspian problematic.

Implications of Russia’s invasion of Ukraine for the emergence of the Middle Corridor as a viable route for East-West trade, 2022

Russia’s invasion of Ukraine and the ensuing Western sanctions on Moscow destabilized the traditional rail routes linking China to Europe through Russian territory and pushed major logistics companies to seek alternative modalities for intercontinental trade. Among few options, the Middle Corridor passing through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and Turkey (or the Black Sea) emerged as a possible alternative, with capacity to divert a share of cargo traffic away from the northern corridor. The Middle Corridor countries used this opportunity to step up efforts to bolster the hard and soft infrastructure capacity of the route which not only helps them benefit from growing cargo transit but also affords them opportunities to strengthen geopolitical linkages with alternative power poles. In the fast-changing yet complex geopolitical landscape of wider Eurasia, the South Caucasus, and Central Asian republics need to use intercontinental rail transportation networks as a strategic tool to strengthen domestic resilience, boost long-term growth, and cement their position as pivotal players in regional affairs. With the growing demand for the route, the Middle Corridor countries should come up with policy solutions such as deeper customs cooperation, regulatory approximation, better tariff coordination and more IT solutions to enable the smoother transit of cargo from China to Europe or vice versa. The participating countries also need to coordinate efforts to increase transparency in transactions along the route and liberalize inter-regional and intra-regional trade to attract freight volumes away from the northern corridor. The EU and China should provide financial and technical assistance to the Middle Corridor countries to further develop this route as it will offer a viable intercontinental rail connection in an otherwise highly destabilized neighborhood.

The Polar Journal

MGIMO Review of International Relations

Connectivity has been one of the most challenging issues for developing trade cooperation between Russia and India. Due to the geographic distance separating the two nations, along with the unstable security environment in Afghanistan and border disputes between India and Pakistan, the creation of a direct and shortest transport route has proven difficult, thereby rendering it impossible to implement crucial projects in energy infrastructure.This paper briefly outlines the functioning logistics between Russia and India, which has relied primarily on shipping through the Suez Canal, with an emphasis on the developments in the wake of conflict in Ukraine. The author briefly explores the prospects for maritime connectivity between the Russian Far East and Indian ports, and highlights several challenges for launching a regular Vladivostok-Chennai corridor.The US and European sanctions against the Russian economy, combined with subsequent difficulties in transporting goods by sea, has re...

Innovative Economics and Management, 2020

Historically Georgia is associated with the “Silk Road” transport corridor, which connected the Asian and European countries by its geographical location. “Silk Road” transport corridor did not lost its actuality even during the last decades. This is proved by development of small and large-scale transport corridors in the Eurasian region being implemented and planned by different countries at different times, signing new cooperation agreements and forming associations that are part of the historic “Silk Road” route. In the present paper is discussed the represented transport corridors in the Caucasus and Eurasia regions, which are one of the important levers in the Eurasian region to increase the economic interests and the spheres of their influence of the major players in the region, such as the European Union, China, Russia and Iran. The goal of the present work is to determine the importance and opportunities of Georgia as the transport corridor country in the context, that in parallel, alternative transport corridors are being formed in the region, as well as observation is made how developments are related to these processes in the Eurasian region. The aim of the study is to describe the geopolitical and economic situation in the Eurasian region and to line out the strengths and weaknesses of Georgia - as a transport corridor country connecting the EU and Asian countries. Originality and value of the given research lies in studying the state of Georgia as a country of a transport corridor in relation to the development of other alternative transport corridors in the region, as well as identifying existing and potential weak positions and determining ways to overcome the weaknesses. To achieve the objectives of the study were used complex methods of obtaining information. By bibliographic research was implemented extraction, sorting and analyzing the secondary data. The theoretical basis of the research is the existed literature on the subject: scientific papers, studies, publications, articles from periodicals, data retrieved from the Internet. This thesis discusses the existing geopolitical situation in the Eurasian region and the impact of sanctions imposed on some countries in the region on the functioning of the middle corridor, which has a positive impact on the functioning of the corridor. The current logistical challenges faced by the countries involved in the corridor are also discussed.

Having reliable and effective transportation networks for easy access to global markets is vital for modern economic development and security, particularly for landlocked states with disadvantageous geographical locations. Thus, the creation of efficient transportation corridors is very important for Azerbaijan and its Central Asian neighbors Kazakhstan, Uzbekistan Turkmenistan, Kyrgyzstan and Tajikistan in terms of obtaining secure and cost effective access to the major export and import markets, and in order to overcome the trade bottlenecks created by the geography. Consequently, ensuring the reliable export of hydrocarbon resources to world markets and establishing cargo transport corridors have been a shared goal for Azerbaijan and the former Soviet republics of Central Asia since the restoration of independence in 1991. Currently, Baku-Tbilisi-Ceyhan oil pipeline, together with Azerbaijani railways, serve as an important export route for Central Asian oil to international markets. The Trans-Caspian partnership for the delivery of Central Asian energy resources to world markets is not limited to oil. There are also ongoing talks about the possibility of transporting Turkmen gas via Azerbaijan as part of the Southern Gas Corridor project. The other priority in regard to the creation of the geopolitically and geo-economically strategic Trans-Caspian corridor is the establishment of a South Caucasus-Central Asia cargo transit route between Asia and Europe. Attracting part of multi-billion EU-China trade to transit through Central Asia and South Caucasus offers a significant revenue source for all of the regional countries, as well as promises to create an effective corridor for their own trade relations with Asian and European countries.

ISPI, 2024

Russia’s invasion of Ukraine burdens the Russian economy, including its Arctic projects. The projects' targets have already been postponed. In this respect, a question arises whether Moscow may achieve its geoeconomic goals in the Arctic by increasing energy production, especially LNG, increasing the cargo volume in the Northern Sea Route, and building the required icebreakers and ice-class vessels. Although Moscow tries to attract investments and increase joint projects of Asian and the Gulf countries, the Western sanctions following the invasion of Ukraine heavily challenge the developments of the Russian Arctic projects. In this respect, the thought that Russia’s contemporary foreign policy behavior challenges its economic projects and that the security and economic values of the Arctic are a dilemma for the Kremlin once again is approved. One of the research findings is that although Western sanctions block or at least slow down Moscow’s economic projects in the Arctic, Russia tries to increasingly use schemes to circumvent sanctions and steal technologies required for the Arctic energy and transport projects. Moreover, using small-scale land and sea-based nuclear power plants and extending the service of Soviet nuclear-powered icebreakers mean potential problems for the environment, which Moscow may also use as a form of blackmail. However, Russia’s greatest ally in pushing forward with its Arctic energy projects will likely be the increasing global LNG demand by the 2040s and its role as a transition fuel in the coming years. When the war ends, Western companies may return to the projects. These possible developments also encourage Moscow to try to keep the projects going as much as possible. . This report explores the current state of the Russian Arctic economic projects, their challenges, and their perspectives. It also analyses the involvement of the non-Arctic powers, such as China, in the Russian economic projects in the High North. The information and data from official documents and sources, media reports, discussions in professional groups on social media and telegram channels, and expert interviews (anonymous) are used.

AsiaGlobal Online , 2020

https://www.asiaglobalonline.hku.hk/after-nuclear-deal-china-and-iran-tread-carefully

Kohli, H., Linn, J., Zucker L. (eds.) China's Belt and Road Initiative: Potential Transformation of Central Asia and the South Caucasus. , 2019

Russia appreciated the potential positive implications of the Belt and Road Initiative early on. Over the last years, it increasingly embraced various aspects of the BRI, most importantly additional investment and rising volumes of trans-Eurasian transit. The latter, apart from being a lucrative business on its own, should eventually lead to better internal connectivity between inner-Eurasian regions. In this paper, we start with the providing estimates on the volumes of trans-Eurasian land transit. Then, we provide an analysis of various Russian interests and perceptions on the BRI. We complement this analysis by looking into the real and perceived concerns.