TURKISH CENTER for ASIA PACIFIC STUDIES
Time is right to pursue greater Sino-Turkish Silk Road cooperation
The world has become deeply interconnected in the age of economic globalization. China declared its ambitious connectivity initiative to boost economic integration in Asia, Europe and Africa a decade ago. The Belt and Road Initiative has evolved and made concrete progress in the past decade. Turkey also has its Silk Road connectivity initiative under the name of the Middle Corridor, aimed at building a logistic link between China and Europe through Turkey, the Southern Caucasus and Central Asia. As the Middle Corridor is complementary with the overland Silk Road Economic Belt, Ankara has been eager to cooperate with Beijing after the Chinese initiative was proposed in 2013.
Over the past decade, the economic partnership between Turkey and China has developed remarkably. According to Turk Stat data, the bilateral trade volume increased from $28.3 billion in 2013 to $44.6 billion in 2022. Chinese direct investment in Turkey reached a historically high level and Chinese banks and financial institutions provided funds for Turkish mega infrastructure projects. According to International Monetary Fund data, China's FDI in Turkey from 2015 to 2021 was $6.3 billion, and Turkey's FDI in China from 2015 to 2021 was $1.8 billion.
But despite these economic developments, there has been little progress on region-wide Sino-Turkish Silk Road cooperation for a variety of reasons. One of the main reasons is that China-Europe trade is heavily dependent on the sea route through the Suez Canal because of very low operational costs and the necessary infrastructure. If there is overland connectivity, the Russian Northern Corridor from China to Europe for cargo transfer is more efficient and less costly than the Middle Corridor. A lack of infrastructure and multiple border crossings mean the Middle Corridor cannot compete with the Northern Corridor, which may be the shortest route between Europe and China through a single country, Russia. On the other hand, the Middle Corridor involves crossing many borders (Kazakhstan, Azerbaijan, Georgia and Turkey) and transiting one or two seas (the Caspian Sea and the Black Sea), depending on where the cargo is heading. As of 2019, about 95 percent of Europe-Asia overland transit in both directions went via the Northern Corridor, while the other 5 percent used the Middle Corridor and other routes according to the International Union of Railways.
The unexpected geopolitical challenges that have occurred over the past couple of years underline how diversification of the logistic routes is crucial to minimizing the risks of disruptions to the global supply chain. The Russia-Ukraine war has caused a decoupling process between Moscow and Western capitals. The cessation of most direct trade between Russia and European countries has also diminished the importance of the Northern Corridor. The new situation creates a window of opportunity to realize the Middle Corridor as a logistic hub from China to Europe despite its operational disadvantages against the Northern Corridor.
The outbreak of a new round of the Israel-Palestine conflict on Oct 7, 2023, has had a spillover effect on the region and created great challenges for the East-West logistic link from Asia to Europe. As the Houthi militant group in Yemen has been targeting Israeli port-bound ships in the Red Sea, the most important sea route through the Suez Canal has been under challenge and many shipping companies have begun to change their logistic routes to avoid the conflict zone. Undoubtedly, the decision of shipping companies to bypass the Red Sea route has raised insurance and fuel costs. Shipping via the Cape of Good Hope takes 10 to 14 days longer than through the Suez Canal with additional costs. With no sign of the Gaza conflict ending anytime soon and the joint air strikes by the United States and the United Kingdom against the Houthi military targets, it indicates that further escalations on the Red Sea and Eastern Mediterranean regions are highly likely. The security challenge to the main sea route between Asia and Europe is worsening, which might give another boost to the efficient use of the Middle Corridor.
Furthermore, if Azerbaijan and Armenia reach a final peace deal on their territorial issues, Armenia will likely integrate into the Middle Corridor. The resumption of direct air cargo transportation and opening of the land border for nationals of third countries between Armenia and Turkey in 2023 are good signs for regional connectivity initiatives in the Southern Caucasus. After being blocked for three decades, Ankara and Yerevan are now preparing for the opening of the Armenian-Turkish border.
Ankara and Beijing are on the same page regarding a new connectivity initiative from South Asia to Europe, namely the India-Middle East-Europe Corridor, which was agreed upon by India, the United States, the United Arab Emirates, Saudi Arabia, Jordan, Israel and the European Union at the G20 New Delhi Summit in September 2023. The IMEC is mainly considered a move to counter the BRI. Ankara also reacted to the IMEC bypassing Turkey entirely. Ankara proposed another connectivity initiative, namely the Iraq-Turkey Development Road. The $17 billion initiative aims at bolstering connectivity between Turkey and Iraq through a rail and highway link from the Port of Basra to the southern Turkish border. Ankara also has the hope of attracting Chinese funds and investments to this connectivity project within the framework of Belt and Road cooperation.
Ankara and Beijing should take some joint steps to increase Belt and Road cooperation on the Middle Corridor.
First, increasing logistic connectivity is the key. Building an integrated transportation system including railways, highways, and ports in Central Eurasia covering Central Asian and Caucasian countries is essential for the realization of the BRI.
Second, the Middle Corridor's freight usually lacks transparency, especially regarding the cost of its extended section from China to Europe. China, Turkey, and other regional countries should fix the exact time of delivery and cost of freight through a multilateral mechanism.
Third, the China-Central Asia Summit, which was held for the first time in 2023, may extend to Azerbaijan, Armenia, Georgia, and Turkey to discuss Belt and Road cooperation. The expanded China-Central Asia Summit can function as an institutional mechanism to realize full compatibility between the Middle Corridor and the BRI.
In conclusion, new geopolitical challenges have proved how new connectivity initiatives are vital to sustaining regional and global supply chains. The unexpected geopolitical risks make the Middle Corridor and BRI-related new connectivity projects more viable. Furthermore, Turkey, Caucasian and Central Asian countries want to realize the Middle Corridor to reach Chinese and European markets easily. All these developments should prompt Ankara and Beijing to strengthen their Silk Road cooperation.
The author is the founding director of the Turkish Center for Asia Pacific Studies in Ankara, Turkey. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.
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The middle way: Time is right to pursue greater Sino-Turkish Silk Road cooperation
China Daily - January 24, 2024