The Middle Corridor

Dependence on Russian energy has exposed vulnerabilities, necessitating strategic solutions. Europe's overreliance on Russian natural gas in a period of heightened geopolitical tension has raised justifiable concerns about supply disruptions and price volatility. The need to transition to renewable energy adds another layer of complexity to the challenges.

To address them, Europe must diversify energy sources, enhance energy efficiency, and invest in renewable infrastructure. The Middle Corridor (MC), a network of roads, rails, and sea lanes that connects Europe with Central Asia, offers alternative energy transport routes, and promotes diversification, economic cooperation, and geopolitical stability. All this strengthens European energy security and resilience.

A Quick Turnaround 

Before the outbreak of war in Ukraine, EU energy security relied heavily on imported Russian natural gas and oil imports. Russia was, in fact, the bloc’s largest source of crude oil and petroleum products. Efforts by Brussels to diversify energy sources were underway, but progress was slow. Infrastructure and policies still reflected close ties to Russian supplies.

Between 2021 and 2023, EU energy imports from Russia decreased sharply, from 41% of the bloc’s needs to 8%. Brussels’ desire to starve Moscow of revenue led to significant changes in EU energy security strategy. The EU accelerated diversification efforts, seeking alternative suppliers and increasing liquefied natural gas (LNG) imports. The bloc, in part, began to look to the MC, which circumvents Russia, to do this.

The impact was swift. The MC saw a 33% increase in container traffic in 2022 alone, and trade volumes surged in countries that the corridor transits. Kazakhstan’s and Georgia’s increased about 45% in 2022 compared to the annual average between 2019 and 2021. Azerbaijan, benefitting from expanded exports of commodities including crude oil, natural gas, copper, and ferroalloys, saw its volume of trade soar 72%. Subsequent logistical challenges, such as a lack of preparedness and coordination on transshipments, led to a 37% decline in MC traffic in 2023. Still, the corridor’s 2021 trade volume is expected to triple by 2030. 

That, however, is based on significant, and necessary, investment in infrastructure, including railways, ports, and logistics hubs, such as warehouses, to ensure efficient and reliable connectivity. And there are other problems. Varied customs regulations and trade policies among the corridor's countries also pose hurdles to seamless transit and trade, but Georgia, which has strategic partnerships with Azerbaijan and Türkiye, is working to resolve this and has already made progress. Lastly, MC traverses politically sensitive regions, including the South Caucasus, where ongoing tensions between Armenia and Azerbaijan present potential risks.

Despite the challenges, regional cooperation through the MC stimulates economic development and strengthens ties among participating countries. Key projects include the Baku-Tbilisi-Kars (BTK) railway, which links the Caspian Sea with Türkiye and, from there, Europe. The development of the Baku International Sea Trade Port and the planned Anaklia Deep Sea Port in Georgia aim to increase the corridor’s capacity. Development of these projects intensified following the Russian invasion of Ukraine. In addition, the Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipeline play important roles in transporting energy from the Caspian Sea to Europe.

Future initiatives will focus on new rail lines, improved logistics systems, and digital trade platforms. These and more investment in energy infrastructure, such as pipelines and LNG terminals, will support Europe’s energy diversification efforts. This is one reason why Georgia, Azerbaijan, Romania, and Hungary are constructing an underwater electricity cable, which will become an additional route for electricity to reach Europe.

Eyes on Tbilisi

Georgia’s strategic location as a transit hub is pivotal in the MC, as is the country’s commitment to EU integration. Georgia’s potential EU membership could further facilitate stronger ties between Europe and the South Caucasus, especially Armenia and Azerbaijan, by promoting regional stability and economic integration. Tbilisi could even encourage its neighbors to adopt European standards and practices.

But here, too, there are challenges that cannot be overlooked. These include Russia’s occupation of Georgian territory, the currently tense relationship between the EU and Georgia, where Brussels will scrutinize an October parliamentary election for its fairness and transparency, and ongoing tensions between Armenia and Azerbaijan that remain a barrier to regional cooperation despite Georgian efforts to mediate. The entire region also needs substantial investment in infrastructure and human capital to fully unleash its economic potential, and more engagement from global players, such as the United States, to help tackle all these challenges.

Amid the turbulence, stronger ties between EU and South Caucasus countries are key. The two can boost cooperation by sealing broader trade agreements and jointly investing in regional infrastructure, such as railways, ports, and energy pipelines. In addition to offering funding, the EU should provide technical expertise and promote regulatory alignment to ease customs and trade barriers. Initiatives such as the EU’s Eastern Partnership can foster political dialogue and economic integration, and encourage the adoption of European standards. Additionally, European diplomatic engagement could address the region’s conflicts and tensions, thereby creating a more stable environment for cooperation. Strengthening institutional ties and people-to-people exchanges would also build mutual understanding and trust.

Much Mutual Gain 

The MC has emerged as a key option for Europe to manage its pressing energy-security challenges in the wake of Russia’s invasion of Ukraine. The route is free of Russian dominance and provides a resilient and diversified network for trade and energy supply. Despite obstacles such as logistical complexities and political tensions in the South Caucasus, strategic investment and regional cooperation efforts are underway to harness the corridor's full potential. Moreover, initiatives to expand energy infrastructure, including pipelines and the planned underwater electricity cable, serve to enhance Europe's efforts to diversify its energy sources. 

In the future, deeper cooperation between the EU and South Caucasus countries on economic, security, and infrastructure initiatives will remain imperative. By leveraging collaborative efforts and using diplomacy to address conflicts in the South Caucasus, both regions can forge a path toward enhanced energy security, economic prosperity, and geopolitical stability.