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As the development of trade routes between the West and the East is in full swing, Iran and Turkey risk being overlooked due to their own policies, despite their strategic position between the two regions.
Logistics corridors for East-West trade: India – Europe (IMEC), China – Europe (BRI / the Median Corridor, the Development Road)
Some analysts perceived the rekindling of the conflict in Gaza in October 2023 as a possible attempt to undermine not only the process of bringing relations between Israel and Saudi Arabia back on track (the establishment of diplomatic relations seemed imminent prior to October 7), but also the project of the India Economic Corridor -Middle East-Europe (IMEC). Announced at the September 2023 G20 summit in New Delhi, this maritime and rail logistics corridor is an initiative of the United States and the European Union strategically aimed at ensuring better connections between Indian and Western markets through a logistics corridor designed as an alternative to traditional trade routes from the south, via Bab-el-Mandeb, the Red Sea and the Suez Canal.
IMEC would consist of three large segments: a first segment by sea, linking India to the United Arab Emirates (UAE); a second segment by rail, from the UAE to the Israeli port of Haifa, via Saudi Arabia and Jordan; and finally, the third segment, also by sea, from Haifa to European ports. The land segment requires major investments for the development of railway links.
Given that this logistics corridor bypasses Iran, many saw the October 7, 2023 Hamas attack as Tehran's response to IMEC. As Turkey was also not included in the IMEC route, Ankara’s pro-Hamas statements were also thought to be linked with opposition to this project.
Turkey is interested in two alternative projects - the Development Road, proposed by Iraq, and the so-called “Median Corridor”, which is part of China's Belt and Road Initiative (BRI).
The Development Road involves the modernization of railway infrastructure starting from the Iraqi port of Al-Faw (Basra, Persian Gulf), reaching Turkish territory bypassing Syria, and from Turkey to Europe and the Caucasus. The stated goals of this project include the stabilization of Iraq through economic development. However, the project will have to deal with such problems as insufficient funding, corruption sweeping the Iraqi state apparatus, poor security, but also the lack of a convincing study on the project's feasibility and strategic, regional or global role.
The Median Corridor connects China to Europe via Central Asia, the Caucasus and Turkey, also by rail. However, from the point of view of the huge Chinese economy, the Median Corridor is not a specifically vital objective trade-wise. Over 80% of China's foreign trade is sea-bound, and the country ranks second in the world, after Greece and ahead of Japan, in terms of the size of its trade fleet. The world's oceans are more profitable than land routes and are better capitalized on by Chinese exporters, hence Chinese investors’ interest in European ports and beyond. Therefore, the value of the Median Corridor for the Chinese economy should be assessed in a broader context and seen as an alternative, not as an exclusively indispensable economic objective. I think people are somewhat right to consider the BRI and the Median Corridor rather as an investment in regional political influence, which could spell economic benefits for China as well, but especially for countries along the route such as Kazakhstan, Turkmenistan, Uzbekistan, Azerbaijan or Georgia.
The Median Corridor in the BRI is endorsed by China and has the EU’s conditional support, yet only the costs of building and operating the necessary infrastructure will ultimately determine its fate. IMEC, on the other hand, has the advantage of being a predominantly maritime route. In addition, it not only has the support of India, a country with an economy ranking among the top five in the world, but also of the initiators of the project (the European Union and the USA), as well as of other G20 partners. It would not be surprising if China also took an interest in this project at some point, as relations with the US improve. The only real problem with IMEC is that it overlaps with the traditional East-West route via the Red Sea and the Suez Canal. And it would probably be more cost-effective for the world's major global players to work together with a view to eliminating the threat of Shia Houthi rebels in Yemen (the Bab-el-Mandeb strait), rather than to invest large sums of money into upgrading and operating the UAE-Israel rail link.
All these logistics corridors aim to reduce the cost and transit time of goods between Europe and Asia. An overview is provided in the map published by the Turkish Ministry of Transport and Infrastructure.
The idea that these corridors compete against one another is debatable. Rather, they can be approached as alternative routes, more or less convenient for certain types of goods and traders, in different seasons and under specific political and security circumstances. Investments in all these connections will help develop transit countries and regions, contributing to the global growth of trade flows. Those countries and regions bypassed by the large logistics corridors will also share in their benefits, albeit indirectly, provided they do not hinder them, but contribute to their development and the building of adjacent connection networks.
Strategically placed between East and West, Turkey and Iran are sabotaged by the policies of their own leaders
Turkey and Iran are strategically located between East and West, but they are land, not sea bridges. Besides, both countries face difficulties in terms of ensuring the security of the movement of goods or the functioning of their judiciary and the protection of citizens' rights. All that translates into higher economic and political costs and risks. A median corridor that would cross not the Iranian or Turkish territories, but the Black and Caspian Seas, with maritime logistics links from Central Asia to the South Caucasus and Europe (Romania and Bulgaria), should be “cheaper”, both economically and politically.
Many years after the collapse of the regimes built on totalitarian ideologies, Iran continues to display totalitarian tendencies, subject to a religious nationalism that fits the logic of a conflict with made-up enemies. As a major exporter of oil and gas, Iran pays the cost of its own foreign policy subordinated to the ruling regime's anti-Israel and anti-Western militancy. Tehran's actions have destabilized the Middle East, thus attracting Western sanctions, which prevent the Iranian economy from fully accessing world markets. Instead of being included in regional and global cooperation schemes, Iran today is a pariah that preserves bitter, if not wholly aggressive attitudes towards most states in the area, with very few exceptions. Instead of being a bridge for East-West trade, Iran chose to be an obstacle that needs avoiding. Teheran continues to respond to its exclusion from key regional deals by stepping up its logistical and financial aid to the destabilizing actions of Hezbollah and Hamas to the west, as well as those of Shia Houthi rebels to the south, in Yemen, i.e. in strategic points for global trade.
And while the world evolves through commercial and intellectual exchanges, Iran continues on its path to nowhere, accompanied only by Putin's Russia and, in very few cases, the much more cautious China. And the situation at home is rosy either. If the presidential election scheduled in the wake of the tragic death of president Raisi, does not produce a substantial change in Teheran’s decision-making, the regime and Ayatollah Khamenei, who is ill and is now 85, will face a resurge of tensions that have been grinding Iranian society for years. And Iran will remain an example of a global player with huge potential, but whose own politics prevent it from being part of the normal flow of regional and global exchanges. “Splendid isolation” will not help Iran progress, but could instead hasten the collapse of the very regime that endorsed this policy.
Another noteworthy important example for our discussion of global and especially East-West trade is that of Turkey. Its geographical position allows Turkey to play the role of a bridge between the East and the West, provided it actually owns up to the role instead of just mimicking it.
After decade-long conflicts in the South Caucasus, where Turkey has always openly supported Azerbaijan, Ankara today is faced with the opportunity of opting for cooperation. Turkey should convince Iran to jointly support the peace process between Armenia and Azerbaijan. A lasting peace would create favorable conditions for Baku and Yerevan to cooperate with Georgia in order to ensure regional stability, a key prerequisite for attracting foreign investment.
Ankara's interest in such a positive development is actually even greater than it may appear. Turkey has been looking for many years to open a logistics corridor to the Turkic states of Central Asia via Baku, but it has to get there either through Iran or Armenia. The political and economic costs would be lower, and even Turkey would stand to gain in the long term by cooperating with Armenia. Building a direct corridor crossing Armenian territory (the Zangezur corridor) from Turkey to the new Azeri port of Alat, on the Caspian seacoast, based on an agreement between Ankara, Yerevan and Baku would benefit not just Turkish exports to Central Asia, but also the development of Armenian and Azerbaijani economies. That means Turkey could become a long-term defender and beneficiary of stability and development throughout the South Caucasus, especially if cooperation agreements would include Georgia and Iran. Such an ambitious goal should guide Turkey’s regional policymaking if Ankara is determined to remain an active part of global trade.
By contrast, Ankara has, at least in recent years, opted for a rather conflictual approach, which is transparent in its skirmishes in Syria, Turkey’s tensions with Greece, the disputes regarding the gas fields in the Eastern Mediterranean, the Northern Cyprus dispute, its often blunt rhetoric towards its NATO partners and, last but not least, its support for Hamas, an organization hostile to two major players in the region: Israel and Egypt. Developments at home – an economic crisis, a regime with serious authoritarian tendencies, a judiciary suspected of being politically subordinated, an ongoing conflict with the Kurdistan Workers' Party – are just as unlikely to encourage investors.
Much like Iran, Turkey could lose the development race of its own doing.
