Trade Corridors in the Caspian Region: Present and Future
Central Asian countries need to implement domestic policy reforms that will make it easier to start new businesses and to trade across borders.
The historical routes from the People’s Republic of China (PRC) and India to the Middle East or Europe ran north of, south of, and across the Caspian Sea. Since 1500, maritime transport has dominated trade between Europe and East Asia. Central Asia became an economic backwater, incorporated into the Russian Empire and later forming part of the Soviet Union from 1917 to 1991. Practically all the trade links ran north to the Russian Federation. In the 21st century, with the increasing significance of Central Asia as an energy producer, countries have constructed several oil and gas pipelines. However, for trade in other goods, new transport corridors opened up more slowly until, in the 2010s, the PRC–EU rail links began operating through Kazakhstan. We examine the establishment of new trade corridors in the form of pipelines and railway lines, focusing on trans-Caspian links. We also discuss the impact of the COVID-19 pandemic on international trade. The disruption resulting from lockdowns and quarantine requirements has negatively affected maritime, air, and other types of transportation. The COVID-19 pandemic, coupled with substantially depressed energy prices, is putting additional financial pressure on the Caspian governments, which are struggling with the major medical challenges that the pandemic has created.
WORKING PAPER NO: 1266