Looking at Belt and Road in the Caucuses - and the promise it holds for the Caspian Sea's role in the China-Europe trade
 One of the least contentious aspects of China's Belt and Road Initiative, which invokes the spirit of Marco Polo's trade route to the West, is the Transport Corridor Europe-Caucasus-Asia (TRACECA) and its help in developing of the Port of Baku, the principal harbour of Azerbaijan (pop 10 million) on the southern west coast of the Caspian Sea.
While other Belt and Road projects are fraught with political intrigue and suspicions of ulterior motives on the part of Chinese funding agents, there is not much wrongdoing suspected in the Port of Baku.
Since Czarist days, the port was seen a promising as early as the mid-19th century. It continued to enjoy secondary importance in 1920 when it was absorbed into the newly minted Soviet Union, when the oil rich region grew in prominence as petroleum replaced coal as the world's primary strategic fuel.
Today, Baku, for the purposes of the Belt and Road Initiative, is the New Port of Baku at Alat, 80 kilometres south of the Azerbaijani capital. This harbour is linked to existing highways and railways, and connects the new port to the inland regions and to Georgia and three international rail that converge there. To the northwest, it passes through Baku to Russia. To the west, another line passes through Georgia to the shores of the Black Sea.
With per capita GDP rising in much of the world, the TRACECA route's tentacles into the oil fields of southern Russia, west to Georgia and then across the Black Sea to Romania, Bulgaria and the Ukraine and now south through Turkey, serve regions that have become consumer rich territories and with promising prospects, given the economic trajectory of the world.
Thus even the most suspicious of bodies, such at the Washington-based Centre for Strategic Studies (CSIS), saw fit to publish a benign assessment of the risks involved in the Belt and Road Initiative as they pertain to Baku and the Caucuses’.
"Potential uses of this corridor include a northern option, where goods enter from western China into Kazakhstan through the Khorgos border crossing are shipped across the Caspian Sea from Aktau into Baku and then by the BTK railway to transfer goods into Turkey. From there, goods can be shipped over the Black Sea into Greece. As such, Alat port is a key part of this segment of the Belt and Road Initiative and is often discussed in tandem with the larger TITR route," said Katherine Schmidt, writing for Reconnecting Asia, a CSIS project.
"To date, China has gifted equipment worth about US$2 million and, in total, has allocated grants worth around $70 million for the New Port in Alat. Azerbaijan’s total government investment is unknown due to the lack of transparent, publicly-available state statistics, but my interviews with two experts at Port Baku indicate that the majority of funding for the estimated $544.74 million three-phase project and impetus behind the port’s creation comes from the Azerbaijani government," she said.
Ms Schmidt found that the Azerbaijani officials at first suspected to ulterior motives from China, but found their suspicions were groundless. They found that had been Kazakhstanis on the others side of the Caspian Sea, they would have had more reason to fear, because Kazakhstan shares a border with China and would be subject to such pressure.
But Mr Hasanov dismissed the idea of China leading the port’s development. "To him, overseeing the construction of the port, in all of its phases, was his job, and it would be absurd to think of China managing this process. While China has certainly contributed grants and gifts to aid in the creation of the new port, there was not a perception of heavy Chinese involvement and there were no mention of loans currently in effect during our meeting," said Ms Schmidt.
Javid Akhundov, a project manager at ISR Holding Company with experience working with local shipping and logistics companies, told Ms Schmidt: “China is far away.”
Azerbaijan is secured by its neighbours, she said. In contrast to countries, such as Kazakhstan, where there is both a border with China and concern over China’s involvement. "Azerbaijan views potential future involvement with China as a way for both countries to benefit from the port: Azerbaijan, through diversification of its economy and increased revenue from cargo shipments, and China through its increased trade with Europe and other countries along the way," she wrote.
"Elkhan Alasgarov, head of the Baku International Policy and Security Network, added to Mr. Akhundov’s short, yet telling, description of China as 'faraway'. He described how Azerbaijan sees China through the lens of Central Asia - meaning that China’s involvement in domestic initiatives is seen as minimal. Yet there is awareness that China is heavily involved in Kazakhstan and other countries," she wrote.
Given that Azerbaijan’s main source of economic wealth stems from oil, China’s investment in Alat port, just one - albeit large - transport and infrastructure project, is relatively insignificant. Instead, Chinese influence at the port was largely reflective of China’s presence throughout the country as a whole, stretching beyond the value of investment deals.
"For example, during my visit to the office of Port of Baku, I was introduced to an Azerbaijani professional who was fluent in Mandarin Chinese. In his late fifties, the man had significant experience in China and had completed his higher education there. A sense of growing Chinese-language influence was compounded by other informal conversations with a number of young researchers at the Centre for Economic and Social Development who had studied Chinese and lived for a few months in Shanghai. Additionally, the Azerbaijan University of Languages has a Confucius Institute, established in 2015 to strengthen cooperation in education between Azerbaijan and China," she said.
Further signs of China’s presence could be seen in the billboards along the highways in Baku, which advertised Huawei smart phones. Chinese companies, Huawei and ZTE, supply the technology underpinnings the free public Wi-Fi service in Baku, said Ms Schmidt.
While the grand ambitions of the Belt and Road Initiative encompass a global reach, a more profound effect may well be more local. Connecting the natural sinews of trade routes, putting in a bridge here, connecting road there, enlarging a tunnel to accommodate double stacked unit trains, encourages the development of businesses along the way that would otherwise not be there. And in an age of burgeoning of global e-commerce and the ubiquity of mobile phones the development of greater trade moves from the possible into the realm of the probable in years to come.
While there are worrying signs that China's influence, may not be a benign as advertised, there are some aspects of its Belt and Road Initiative that will undoubtedly leave the world in better shape than it found it. |
