The politics of trade routes

Atul Aneja
The Hindu, 30 April

Russia, China, and India are looking for new and safe trade routes linking Asia with the markets of Europe.

RUSSIA'S RESURGENCE, the rise of China, and a promising India have opened up another frontier in the ongoing tussle between the East and West for global influence. The three countries are looking for trade routes that are safe, cost-effective, and less prone to geopolitical impediments.

The new routes from Asia to Europe, seek to integrate markets in Europe, Russia, Central Asia, China, Iran, Pakistan, India, and South East Asia. The possibility of West Asian countries joining this emerging transport architecture in the future is also high.

From a geopolitical perspective, the new routes would lessen the overwhelming reliance of partner countries on the Suez Canal for trade with Europe. Russia is especially keen on reducing its dependence on the Dardanelles and Bosporus straits. For long, Russian ships sailing from the Black Sea port of Novorossiysk have relied heavily on these channels which pass through Turkey, a key member of the North Atlantic Treaty Organisation. Turkish and Russian authorities have often been at odds with each other over the passage of Russian tankers through these straits.

Russia has been making a concerted effort to ensure that a large volume of the Euro-Asia trade transits through its territory. It has been making major investments to refurbish its domestic transport infrastructure and is rapidly developing its ports along the Caspian Sea coast.

It is also modernising its rail and road network to enable efficient transfer of cargo towards Moscow, Warsaw, Berlin, and Rotterdam. Russia already has a well-developed rail network thatconnects its Black Sea and Caspian Sea ports. Consequently, it can handle large volumes of cargo sourced from Asia, without worrying too much about congestion at its ports.

Major Asian ports, such as Mumbai, Lianyugang and Tianjin in China, and the Iranian transport hub of Bandar Abbas are the starting points of some of the new routes.

Among the large number of inter-continental transport lines being developed, the North-South corridor passing through the Caspian Sea and then Russia is promising. After transiting through Russia, the rote terminates on the Baltic Sea coast.

Starting points

Indian ports on the Arabian Sea coast such as Mumbai are the starting points of this corridor. Ships then head towards Bandar Abbas in the Persian Gulf. A road and a rail link connects Bandar Abbas with Iran's Caspian Sea ports of Bandar Anzali and Amirabad. From there, cargo is trans-shipped northwards towards Astrakhan on the Russian Caspian Sea coast. The final leg of the journey begins there. Goods are taken across the Volga corridor towards Moscow and St. Petersburg, and into northern Europe.

The North-South route is both shorter and cheaper than the alternative — the Suez Canal corridor which takes containers through the Mediterranean Sea, Atlantic, the North Sea, and the Baltic coast.

It has the potential of reducing transit time from 10 to 20 days. The cost per container can also be decreased by $400-$500. The North-South Corridor intersects other east-west transport routes passing through China, Central Asia, and Europe. Consequently, cargo can be trans-shipped in a cost-effective manner to other destinations as well.

Focussing on the Caspian Sea, Russia has been developing the ports of Makhachkala, Lagan and Olya energetically. Located strategically on the western Caspian coast, Makhachkala is the capital of Russia's Dagestan province. It plays a vital role in connecting Russia with the Central Asian republics of Turkmenistan and Tajikistan. A regular ferry service capable of handling heavy cargo connects Makhachkala with Turkmenistan's eastern Caspian port of Turkmenbashi. From here, a rail line passing through a large segment of the Turkmenistan's Karkum desert extends further east towards Dushanbe, the Tajik capital. A ferry service from Makhachkala also makes regular runs to Kazakhstan's rapidly developing Caspian port and oil terminal of Aktau. Makhachkala port has emerged as an important terminal for transferring Caspian oil to Novorossiysk straddling the Black sea.

In recent years, China has emerged as another promising gateway to Central Asia and Europe. The eastern Chinese port of Lianyugang and the Dutch port of Rotterdam are connected by a 10,900-km rail link. The track connecting the Pacific and the Atlantic oceans passes through the border province of Xinjiang before entering Kazakhstan through Urumchi.

Tianjin, further north of Lianyugang in China, has also become a springboard for trade with Europe and the countries in the Commonwealth of Independent States.

India has been making active use of both the North-South corridor and the Tianjin route for trade with Central Asia. "Currently Bandar Abbas port is handling most of the export-import freight movement from India to the Central Asian Republics. The railway network laid during the period of the erstwhile Soviet Union is being utilised for further deliveries [from Bandar Abbas] to major Central Asian cities," says Satish Chandra, president of the India-CIS Chamber of Commerce and Industry. Senior officials pointed out that there was a greater likelihood that containers loaded at ports along the east coast would transit through the China route. As trade between India and China gathers momentum and political tensions begin to ease, both sides can consider the possibility of developing another East-West transit corridor.

India is considering a plan to build 150 km of rail track across Mizoram and another 200 km inside Myanmar. This can connect with a line China is planning to extend into Myanmar through its Yunnan province. If these links are established, Myanmar could become a bridge through which Indian goods can be sent into China, Central Asia, Russia, and Europe.

With new lifelines of international commerce passing through China, Central Asia, Iran, and Russia, India's stakes in deepening its relationship with these countries have risen substantially.