Central Asia’s Middle Corridor Expansion: Opportunity For China And Iran – Analysis


By Felix K. Chang

(FPRI) — The sustained attacks on merchant shipping in the Red Sea by Yemen’s Iranian-backed Houthi rebels since November 2023 have given a fresh boost to a budding Central Asian trade network known as the “Middle Corridor” and, in so doing, created an opportunity for China and Iran, as shippers have been forced to consider alternative routes for their cargoes.

Only a month earlier, in October 2023, representatives from Iran, Kazakhstan, Turkey, Turkmenistan, and Uzbekistan met to discuss how they could hasten the development of the Middle Corridor’s second major conduit, called the “Turkmenistan-Uzbekistan route.” During the same month, an Iranian minister spoke about the benefits of a third transit-trade route, a spur to connect the Turkmenistan-Uzbekistan route to Iran. Such transit-trade routes are valuable because they speed the flow of goods across national borders, and thus stimulate economic growth.

As it was originally conceived in the late 2000s, the Middle Corridor’s main transit-trade route ran from Europe—through Turkey, the Caucasus Mountains, the Caspian Sea, and Kazakhstan—to China. The countries along the path of that route referred to it as the Trans-Caspian International Transport Route (TITR). Since then, they have worked to make it a viable alternative to Eurasia’s other major east-west trade routes—the Trans-Siberian railway in Russia (or the “Northern Corridor”) and the Indian Ocean (or the “Southern Corridor”). Though more work remains to be done on the TITR, Russia’s 2022 invasion of Ukraine shone an international spotlight on it. Suddenly, Europe sought a new overland trade route to East Asia that bypassed Russia, and the Middle Corridor fit that bill.

Capitalizing on the interest, Middle Corridor countries have tried to hasten their development of other transit-trade routes. Of those, the Turkmenistan-Uzbekistan route has made the most progress. Surely, it would help the two countries to develop economically and reduce their reliance on Russia. But the potential addition of a transit-trade spur from the Turkmenistan-Uzbekistan route to Iran (and possibly to the Gulf) could make China and Iran the biggest beneficiaries of the wider scheme. The combination of the two transit-trade routes could offer Iran an economic lifeline and a closer link to China, its most important great-power ally. By the same token, the combination of those routes could enable China to expand its trade footprint and its influence in Africa and the Middle East. Perhaps more important for Beijing, it could help China to overcome its “Malacca Dilemma” and thus better position itself in its rivalry with the United States.

Fear of Missing Out in Turkmenistan and Uzbekistan

In December 2022, a freight train loaded with ninety-one, twenty-foot shipping containers left the outskirts of Tashkent bound for Turkmenistan’s port of Turkmenbashi with little fanfare. Their cargo of copper was the first shipment to travel through the Turkmenistan-Uzbekistan route. At Turkmenbashi, the shipping containers were transferred onto a ship and taken across the Caspian Sea to Azerbaijan’s port of Baku, where they were transported along the TITR across Azerbaijan, Georgia, Turkey, and finally to Europe. The shipment was the culmination of years of effort by Turkmenistan and Uzbekistan that had laid the groundwork for their eponymous route. Having seen how the Middle Corridor helped Kazakhstan to attract foreign investment and realize parts of its Bright Path (Nurly Zhol) economic development strategy, Turkmen and Uzbek officials hoped that the Middle Corridor would do the same for their countries.

To be sure, interest in trade networks is not new for Turkmenistan. It has long sought conduits for its exports, most notably of oil and natural gas. Thus, unsurprisingly, it had been an early supporter of the Middle Corridor. As one Turkmen officialput it “Turkmenistan is making efforts to implement transit on several routes” simultaneously. In fact, Turkmen officials discussed a possible transnational highway to China in 2023. Demonstrating its commitment to the Middle Corridor, Ashgabat invested $1.5 billion to expand its key intermodal transshipment port at Turkmenbashi during the 2010s. In anticipation of greater trade across the Caspian Sea, Ashgabat wanted Turkmenbashi’s port facilities to be able to handle as much as seventeen million tons of cargo, including 400,000 shipping containers, every year.

Similarly, an important part of Uzbekistan’s economic development strategy has been to build a globally integrated market economy. As a result, Tashkent has worked to overhaul not only its national railways, but also its financial and legal systems for over half a decade. In 2017, it allowed its currency to freely float. Then in 2019, it removed capital controls. Uzbekistan has also supported tax and regulatory reform to further raise the country’s economic competitiveness. All these moves would facilitate trade and encourage foreign investment. 

Opportunity for China and Iran

In parallel with Turkmen and Uzbek efforts to advance their east-west transit-trade route, there has been talk of a spur route that would connect the Turkmenistan-Uzbekistan route to Iran. Such a combination of routes would certainly create opportunities for China and Iran, especially if the spur to Iran was extended to the Persian Gulf or Arabian Sea. For one, the combination would give Iran a new trade conduit, one that it has long sought given that 85 percent of its international trade travels by sea. Commenting on his country’s potential link to the Middle Corridor, Iran’s Minister of Roads and Urban Development noted that his country “has unique geographical advantages and transit opportunities that can be used” to boost regional trade. Indeed, Iran has already sought to become a transportation hub for its neighbors. In early 2022, Iran began to transport cargo through its ports and railways to Turkey and the United Arab Emirates.

But a link to the Middle Corridor would also be strategic for Iran. More than just another transit-trade route, such a link could help Iran to mitigate the effects of Western economic sanctions on it. The link would enable Iran to trade more freely with China—a country with which Tehran has had a “comprehensive strategic partnership” since 2016 and signed a twenty-five-year cooperation agreement in 2021—along a route that is beyond the physical control of the United States and administered by countries that have been lukewarm towards sanctions monitoring. Plus, considering China’s surging demand for raw materials from Africa and the Middle East, the link could serve as a profitable transit-trade route between the Turkmenistan-Uzbekistan route and the Iranian ports of Bandar Imam Khomeini in the Persian Gulf and Shahid Rajaie on the Arabian Sea, offering Iran an economic lifeline.

Another beneficiary of such a transit-trade route would be China. The country’s key role as the Middle Corridor’s eastern terminus was always likely to expand Chinese influence in Central Asia. At one time, that had been something Moscow tried to keep in check by orchestrating Russian-dominated initiatives like the Eurasian Union, a European Union-like organization for post-Soviet countries. But Russia’s need for Chinese support after its 2022 invasion of Ukraine has given Beijing a freer hand to reshape Central Asian trade flows. So far, China has focused its attention on the TITR, allowing other routes, like the China-Kyrgyzstan-Uzbekistan railway, to languish. However, if a transit-trade route from the Middle Corridor through Iran proves to be successful, it could easily capture China’s interest and help to enhance its influence in not only Central Asia, but also Africa and the Middle East.

Strategically, combining the Turkmenistan-Uzbekistan route and a transit-trade spur to Iran could improve China’s ability to deal with potential contingencies. Such a combination could lower China’s reliance on the seaborne transport of cargo across the Indian Ocean. Doing so would help mitigate what former Chinese General Secretary Hu Jintao once called China’s “Malacca Dilemma”—the vulnerability China feels because much of its trade, particularly its imported oil and natural gas, passes through the Malacca Strait, a chokepoint that the United States could throttle. It is a concern that resurfaced with Beijing’s increasing tensions with Washington over Taiwan and the South China Sea. Having trade routes that bypass the Malacca Strait would reduce American leverage over China and strengthen China’s position in its rivalry with the United States. Though an earlier Chinese attempt to create such a trade route by using the Belt and Road Initiative to finance the China-Pakistan Economic Corridor foundered, the combination of transit-trade routes through Central Asia and Iran could give Beijing a second chance. 

Implications of Middle Corridor Expansion

The prospects for the Middle Corridor’s expansion today are as good as ever, especially if Houthi attacks on merchant shipping in the Red Sea persist. But the Middle Corridor still has a ways to go. Although trade volume along the TITR has soared, reaching roughly 1.5 million tons in 2022, it remains a small fraction of the 144 million tons of cargo that Russia’s Trans-Siberian railway transported in 2020. Moreover, much of the corridor’s status as a viable east-west trade route rests on the safety and reliability of its path over the Caucasus Mountains, which has been threatened by periodic bouts of conflict between the Caucasian countries of Armenia and Azerbaijan, including in September 2023. Should hostilities intensify or spread, freight insurance rates through the region would likely rise, making the Middle Corridor less attractive to shippers. Both hurdles will likely encourage Middle Corridor countries, particularly Turkmenistan and Uzbekistan, to support a transit-trade spur to Iran as an alternate outlet.

Certainly, a Middle Corridor expansion that includes a link between the Turkmenistan-Uzbekistan route and Iran would further cement the strategic bond between Beijing and Tehran—something that will likely worry Washington. What may equally concern the United States is the possibility that such an expansion could move Turkmenistan and Uzbekistan away from their traditional strategic neutrality and closer into China’s orbit. At the very least, the link would provide both countries with an economic incentive to ensure the unimpeded trade flow between China and Iran. That, of course, would complicate any American efforts to levy economic sanctions on either China or Iran in the future.

The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.

  • About the author: Felix K. Chang is a senior fellow at the Foreign Policy Research Institute and the Chief Operating Officer of DecisionQ, an artificial intelligence engineering company.
  • Source: This article was published by FPRI

Published by the Foreign Policy Research Institute

Founded in 1955, FPRI (http://www.fpri.org/) is a 501(c)(3) non-profit organization devoted to bringing the insights of scholarship to bear on the development of policies that advance U.S. national interests and seeks to add perspective to events by fitting them into the larger historical and cultural context of international politics.

Leave a Reply

Your email address will not be published. Required fields are marked *