How the Ukraine war could revitalize trade in Eurasia

Before the war, most land trade between China and the European Union was carried by Russia’s vast rail network, connecting two of the world’s largest markets. This better-developed northern route provided freight companies with a predictable and affordable trade network.

As a result, Russian trains became the main means of transport for land trade between China and the EU.

But Russia’s invasion changed that, as cargo companies had to circumvent sanctions and find new trade routes between Europe and China that bypassed Russia.

“Transit between Europe and Asia is becoming more complicated and expensive every day,” Romana Vlahutin, a fellow at the German Marshall Fund and former EU ambassador for connectivity, told RFE/RL.

Thus, the Ukraine war breathed new life into the Middle Corridor after years of being avoided due to rising costs, border problems and a lack of infrastructure.

“The Middle Corridor would be the shortest multimodal corridor and the Central Asian states have a real interest in more stable and closer ties with the EU,” said Vlahutin.

Attracted by the potential of this mega route, cargo traffic through the Middle Corridor increased from 350,000 tons in 2020 to 3.2 million tons in 2022. According to a World Bank study published at the end of 2023, trade volumes through the Middle Corridor could triple by 2030, reaching 11 million tons.

But the limitations of the Middle Corridor – ranging from the lack of infrastructure to the enormous waiting times at ports and border crossings – have yet to be overcome.

“A lot will depend on how China perceives the Middle Corridor,” Emil Avdaliani, professor of international relations at the European University in Tbilisi, told RFE/RL. “Without Chinese cargo, there will be little incentive to expand the route.”

The EU has also taken steps to further develop infrastructure in Central Asia and the Caucasus; other countries have seen the opportunity and poured billions of euros into new investments. Georgia, Azerbaijan, Turkey and Kazakhstan have agreed to set up a body to accelerate development and are working to improve coordination and reduce trade barriers.