A critical analysis of the potential for Arab investments in the Middle Corridor, with specific reference to the Gulf Cooperation Council

The ambitious projects undertaken by Gulf states, including the construction of skyscrapers, artificial islands and cities of the future in arid environments, serve to illustrate their aspiration for global recognition. Nevertheless, a significant challenge persists, as these ambitious projects are predicated on a finite set of natural resources, namely oil and gas. For instance, the United Arab Emirates and Saudi Arabia are acutely reliant on imported foodstuffs and fresh water, in addition to maritime logistics, in order to sustain their economies. The Gulf region as a whole is characterised by a scarcity of water resources, rendering it particularly susceptible to the adverse effects of climate change. As indicated by the World Bank, the degree of water stress in this region is among the highest globally. In the context of climate change and cyclical fluctuations in oil prices, the implementation of domestic projects such as skyscrapers and "cities of the future" necessitates not only a substantial capital investment but also the provision of costly maintenance services, including air conditioning and water supply. This can potentially pose a challenge in the event of economic downturns. The Gulf economies are heavily reliant on the maritime route from China to Europe via the Indian Ocean and the Suez Canal, which is of significant geostrategic importance. This route is of vital importance for the transportation of not only goods, but also the oil that is a fundamental component of the region's economic prosperity. Nevertheless, any disruption to this route, whether resulting from political instability, environmental disasters, or the development of alternative logistics corridors, could have a significant impact on the region's economy.

The 2021 incident involving the Ever Given vessel blocking the Suez Canal demonstrated the vulnerability of global supply chains. It is estimated that the closure of the canal for several days resulted in a loss of $10 billion to the global economy on a daily basis. For the Gulf states, whose ports handle a considerable volume of global maritime traffic, such risks could have a catastrophic impact. It is for this reason that the Middle Corridor is emerging as a promising alternative for Gulf states in such circumstances. This corridor, which connects China to Europe via Central Asia, the Caspian Sea, and the South Caucasus, offers a strategic land alternative with significant strategic implications. As posited by the International Transport Forum (ITF), by 2030, up to 10% of all trade between China and Europe could traverse the Middle Corridor. Infrastructure development in states along the Middle Corridor, including Kazakhstan, Azerbaijan, and Georgia, is already underway with the objective of expediting the flow of goods. To illustrate, Kazakhstan has invested in excess of $20 billion in the development of its railway network and ports on the Caspian Sea, with the objective of ensuring stable connections with neighbouring countries and global markets. Furthermore, the Baku-Tbilisi-Kars (BTK) project, which connects Azerbaijan, Georgia, and Turkey, has become a significant component of this corridor. As reported by the Ministry of Transport and Communications of Azerbaijan, the Baku-Tbilisi-Kars (BTK) project has already transported in excess of one million tons of cargo since its inauguration in 2017.

On 4 September 2024, Astana played host to a significant gathering – a meeting of the Arab Coordination Group (ACG), which brings together a number of key Arab financial institutions, including the Islamic Development Bank, the Saudi Fund for Development, the OPEC Fund for International Development and others. The meeting addressed the topic of attracting Arab investment in Kazakhstan's infrastructure, which suggests that Arab states are increasingly interested in Central Asia as a region of strategic importance.

During the course of the event, the National Infrastructure Plan of Kazakhstan until 2030 was presented, which includes a series of projects in a number of key areas, including transport, energy, water resources and healthcare. Particular attention is paid to the development of transport corridors, which aligns with the strategic interests of Arab countries seeking to diversify their investments.

Kazakhstan is endowed with a wealth of natural resources, which affords it a distinctive advantage. According to the Ministry of Energy of Kazakhstan, the country is the 11th largest holder of oil reserves worldwide and is a significant supplier of uranium, copper, zinc and other minerals, making it an attractive destination for long-term investment. The concluded agreements with Arab funds pave the way for substantial investment inflows, which could reach $7 billion in the initial phase. Furthermore, it is noteworthy that the common Muslim identity of Arab countries and Central Asia serves as a significant factor contributing to the rapprochement between these regions. The countries through which the Middle Corridor passes, such as Kazakhstan, Uzbekistan and Turkmenistan, have a Muslim majority population, which contributes to a cultural and religious affinity with Arab states.

The Islamic Development Bank (IDB), one of the largest financial institutions in the Islamic world, has been actively engaged in Kazakhstan and other Central Asian countries for some time. In recent years, the bank has made significant investments, amounting to billions of dollars, in the development of infrastructure and social projects in the region, thereby fostering stronger ties between the countries.

It would be remiss not to acknowledge the historical role of Great Britain in the development of the Arab monarchies of the Persian Gulf. During the period of the British Empire, London played a pivotal role in the formation of contemporary states on the Arabian Peninsula. Nevertheless, the United Kingdom also has an interest in the development of the Middle Corridor countries, which it views as a means of strengthening its economic and geopolitical positions in Eurasia.

As a significant regional actor, Turkey is engaged in initiatives that facilitate the advancement of Turkic states and reinforce the Middle Corridor. Ankara perceives economic and geopolitical advantages in this regard. It is also notable that Turkey and the Central Asian countries, which historically constituted part of the region known as Turkestan, share a number of cultural and ideological values, a common language and culture. It is the alliance between Turkey and the Arab monarchies of the Persian Gulf and Great Britain that may prove to be the key factor in the successful development of the Middle Corridor.

Elbrus Mamedov,
The Director of the Center for Information Support of the Azerbaijan-Georgia-Turkey Strategic Partnership

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