European interests between the geo-economics of Middle East, Central Asia and Caucasus connectivity
- This report analyzes the geo-politics and geo-economics of several new connectivity projects across the Middle East, Caucasus and Central Asia, such as the Trans-Caspian International Transport Route.
- It concludes that good alternatives to the Belt an Road initiative are lacking, which is mainly due to its early mover advantage, but also a result of the limitations of other routes as well as the EU's Global Gateway.
- In consequence, the EU ought to consider pursuing a dual strategy of cooperation and competition with China and (re-)orient Global Gateway accordingly. If done well, this has the additional benefit of reducing the bloc’s economic dependence on the US.
As global trade shifts from the transatlantic area to Eurasia, zones like the Middle East, the Caucasus and Central Asia are gaining in geo-economic importance. At present, China dominates economic realities in these zones in terms of partnerships, investments and infrastructure, chiefly via the Central-West Asia leg of its Belt and Road Initiative (BRI). Recent Western policy enthusiasm for alternative land-based connectivity initiatives should not obscure the fact that the EU is behind the curve in positioning itself in this changing economic landscape. Worse, close examination of contemporary ‘connectivity initiatives’ in the Middle East-Caucasus-Central Asia region – such as the Trans-Caspian International Transport Route or the Development Road – suggests an absence of realistic avenues for (out)competing China in the short- to medium-term. However, this does not have to be problematic for the EU in the geo-economic sense.
If the EU is able to pursue a dual policy towards China that allows for simultaneous competition and collaboration, it can actually use China’s dominance to reduce its economic dependence on the US through diversification. This requires expanding its Global Gateway initiative in the Middle East, Caucasus and Central Asia; upgrading its customs union with Turkey; deepening relations with Armenia/Azerbaijan; negotiating a new understanding with China about trade and industrial policy; and improving its own policy coherence as well as economic value proposition. These are exactly the issues one would expect a ‘more geopolitical Commission’ to address.
