On August 6, Ukraine printed a coastal notification, declaring the waters of six Russian ports on the Black Sea – Anapa, Novorossiysk, Gelendzhik, Tuapse, Sochi, and Taman – as a zone of “army risk.” This occurred in response to Russia’s exit final month from a deal that had allowed secure export of Ukrainian grain. Moscow introduced that it could view all ships heading to Ukrainian ports within the Black Sea as carriers of army cargo, and the international locations underneath whose flags these ships are registered as contributors within the warfare on the aspect of Kyiv.
The scenario escalated considerably after Ukrainian maritime drones struck Russian vessels close to Novorossiysk and Kerch in early August. Ukrainian President Volodymyr Zelenskyy issued a warning that Russia dangers dropping its ships if it continues to dam the Black Sea waters and the export of grain. Sergey Vakulenko, a nonresident scholar on the Carnegie Russia Eurasia Heart, wrote recently that the Ukrainian drone assaults on Russian ships close to Novorossiysk and Kerch are a part of a plan aimed toward decreasing Russian exports from Black Sea ports, primarily oil.
Such important blows to grease infrastructure might additionally harm the export of Kazakhstani oil. The primary portion of Kazakhstan’s oil exports (round 70 p.c) are despatched by means of the Yuzhnaya Ozereevka terminal close to Novorossiysk to European Union international locations. The EU presently serves as the first and most vital commerce and financial accomplice for Kazakhstan. The EU accounts for 40 p.c of the nation’s exterior commerce and 48 p.c of whole overseas direct funding (FDI) influx.
Moreover, Kazakhstan provides 70 p.c of its exported oil to EU international locations and ranks third amongst non-OPEC members by way of uncooked materials provides to the European Union. The share of Kazakhstani oil makes up about 6 p.c of whole EU oil imports. Kazakhstan additionally gives 21 p.c of the uranium imported into the EU.
Contemplating that oil is the first export commodity guaranteeing the influx of overseas foreign money for Kazakhstan, commerce with the European Union is an important component within the structure of the nation’s financial stability and safety.
Issues concerning the unreliability of transportation and transit routes by means of Russian territory, by means of which the export of Kazakhstani merchandise happens, predate Russia’s assault on Ukraine. Sadly, Kazakhstan’s issues with exports to Russia and transit by means of Russia have been power.
Russia repeatedly, in violation of the foundations governing the Eurasian Financial Union (EAEU), unilaterally restricts the entry of Kazakhstani merchandise to its home market, making use of non-tariff regulatory strategies, together with unjustified choices by regulatory authorities organizations (Rospotrebnadzor, Rosselkhoznadzor). Moreover, Kazakhstani items transiting by means of Russian territory to exterior markets face systematic issues (resembling Russia’s imposition of a quota on the export of Kazakhstani coal through its territory in 2019), typically pushed by political motives. These disruptions repeatedly end in multimillion-dollar prices for Kazakhstan’s economic system.
At current, the scenario has been considerably aggravated by financial sanctions imposed by the West in opposition to Russia and Belarus. This has finally undermined the long-term, relative stability of the already problematic “Northern Commerce Route” for Kazakhstan. For a few years, whereas having fun with financial consolation and aligning their path with Russian pursuits, the political elite of Kazakhstan typically uncared for critical steps towards diversifying export routes. Consequently, the authorities successfully pushed the nation right into a “transit entice” set by the Kremlin, which had a damaging impression on the nation’s financial growth and heightened Kazakhstan’s financial and, consequently, political dependence on Russia.
Now the Trans-Caspian Worldwide Transport Route (TITR) challenge, passing by means of Azerbaijan and Georgia, is gaining new momentum. Kazakhstan’s President Kassym-Jomart Tokayev, on the summit of the Council of Cooperation of Arab States of the Persian Gulf (CCASG) and Central Asian international locations held on July 19, 2023, in Saudi Arabia, introduced plans to extend cargo transportation alongside the TITR to 500,000 containers per 12 months by 2030. Compared to the Northern Hall, the TITR (the so-called Center Hall) affords a extra economical and quicker commerce route, decreasing the space by 2,000 kilometers. Moreover, it advantages from favorable climatic and political situations. Good neighborly and partnership relations with Azerbaijan and Georgia (by means of which the Trans-Caspian route passes), in addition to the political predictability of those international locations, can guarantee extra favorable transit situations for Kazakhstan.
The event of the TITR and different various transport routes will likely be a major step in guaranteeing financial safety. That is a part of a pure response to ongoing issues with transporting items by means of Russia. The advantages of the event of the TITR must be shared by all of the international locations alongside its route. Among the many principal benefits that the collaborating international locations will acquire from the challenge, the next will be highlighted: Transit charges and extra revenues; creation of needed financial infrastructure to facilitate unhindered transit, together with pipelines, railways, ports, and terminals; elevated geopolitical affect by means of management over key transit routes; and stimulating the event of the vitality sector by means of the passage of oil by means of particular territories.
For Kazakhstan, specifically, the event of the TITR affords broader entry to international markets for promoting oil and different items and accelerated transportation by means of the usage of Azerbaijan’s developed infrastructure for oil supply and processing, guaranteeing extra environment friendly provide administration. The route additionally diversifies threat: With a number of routes in place, Kazakhstan can scale back the probability of issues or delays in transit.
An vital end result of this challenge may very well be nearer cooperation between Kazakhstan and Azerbaijan, which might have a optimistic impression on numerous facets of interplay. This might vary from joint investments in infrastructure and alternate of expertise and applied sciences, to strategic strengthening of political, financial, and cultural ties between the 2 international locations.
Sadly, however for fairly predictable causes, the TITR challenge faces sturdy opposition from Russia. Not too long ago, Russian media employed a set of political expertise clichés, describing the scenario as a “recreation at nighttime.” (One headline, for instance, learn: “A Sport within the Darkish: Kazakhstan is Constructing a Transport Hall round Russia”). This isn’t shocking, contemplating that profitable completion of the challenge would strip the Kremlin of an vital leverage level over Astana.
The numerous financial results that Kazakhstan would profit from in creating the TITR wouldn’t favor the Kremlin, which is accustomed to “twisting the arms” of economically susceptible neighbors.
It’s additionally value noting that the challenge comes with its challenges. Among the many main obstacles are the advanced logistics of the route and excessive funding prices for rolling inventory and infrastructure. The logistical complexities contain double transshipment between rail/street and sea transportation by means of the Caspian and Black Seas. Presently, cargo transportation throughout the Caspian is primarily carried out by Azerbaijani vessels. To realize the declared capability, substantial investments are wanted in transportation infrastructure and the enlargement of the maritime buying and selling fleet. Moreover, customs inspection occasions have to be lowered.
The conclusion of the TITR challenge would require not solely financing but additionally sturdy political and diplomatic will, in addition to competent challenge administration from the governments concerned.
