Background on Global Infrastructure Development

Corridors, connectivity, supply chains…there are various terms and phrases being thrown about when we talk about global transport corridor projects.

While they are all part of the same family, they each serve different roles. So in order to understand this topic it is important to first differentiate between all the terms. I have compiled all the common transport corridor terms and concepts you may hear.

• A Transport Corridor: is a geographical line that connects two points by a mode (s) of transport (rail, road, port, air).

• “Corridorizing:” I define “corridorizing” as the policy strategy adopted by a government of a major international country with the aim to develop a transnational or transcontinental transport route for the movement of goods and services. This approach integrates policies on infrastructure, urbanisation and economic growth.

• Connectivity: Connectivity is the extent to which passengers or freight flows from a node can reach other nodes directly (direct connection) or indirectly through another node or a series of nodes.

• Modality: a transport corridor can be made up of one transport mode (intermodal) or integrate multiple modes of transport (highways, railways, and ports).

• Supply chain: The supply chain is the interconnected journey that raw materials, components, and goods take before their assembly and sale to customers.

• Logistics:The Council of Supply Chain Management Professionals (CSCMP) offers a nice definition and explains why it is important to differentiate between logistics and supply chains: “Logistics is a part of the supply chain — but it isn’t the supply chain itself. […] Logistics, on the other hand, is the process of planning, implementing and controlling the flow and storage of goods. Hence, it is mainly about movement and transportation of products as well as management of inventory and warehousing. Logistics activities include transportation management, inventory management, order fulfillment, packaging and distribution of goods and services. The goal of logistics is to ensure that the right product will be in the right place at the right time in the most cost-efficient way based on customers’ needs.”

There's lots of information to digest. Where do you start? How do you make sense of it all?

Each global infrastructure project is made up of 7 components. This includes the following:

1. Geography – the route from A to B across countries (if cross-border) or cities (in-country).

2. Modality – intermodal or multimodal.

An easy definition of the two terms is explained clearly in DP World’s educational blog. I have shared the section below:

‘Multimodal transportation is defined as transportation that uses many modes of transport but is regulated by a single contract. It makes no difference what mode of transport is used - rail, river, road, and so on.’

‘Intermodal transportation is defined as transportation that uses many modes of transport and in which the customer may contract with multiple companies. In the case of intermodal transport, there may be many types of transport, and responsibility is allocated equitably among all participants.’

3. Project Management – the construction and operational management of a transport corridor can either be managed by government ministries or outsourced to private companies.

4. Finance – the investment and funding sources and financial strategy behind the transport corridor.

5. Impact – the political, social and economic impact on partner countries of the transport corridor project.

6. Marketing – the narrative and the visible marketing strategies adopted by policymakers and financial institutions to promote and enforce a transport corridor project – slogans, speeches, bilateral meetings, multilateral conferences.

7. Risks and Challenges – sanctions, technical and operational hurdles, financial challenges, security issues and geopolitical tensions and political instability.

The South and Central Asia region are located at the crux of major transport corridors and have been for over centuries.

The Eurasia region is home to 5 critical global infrastructure initiatives. I look at each:

1. The China led Belt and Road Initiative (BRI) is the first modern example of a major global transport corridor project. China’s Belt and Road Initiative (BRI) is made up of two parts: The “Belt” seeks to connect the Eurasian continent from East Asia to Western Europe, while the “Road” (in full, the “Maritime Silk Road”) attempts to link the Western Pacific, the South China Sea, and the Indian Ocean.

   The BRI is China’s global economic strategy and is frequently asserted by observers as Xi’s grand strategy. Since its announcement in 2013 by Chinese President Xi Jinping in Kazakhstan, the BRI’s key venue has been Asia. Made up of six corridors, the largest and most developed corridor is the China-Pakistan Economic Corridor (CPEC). Under the banner of the BRI other railway lines are being built in Central Asia such as the China-Uzbekistan-Kyrgyzstan (CKU) railway line.

   2.The Middle Corridor, also known as “The Trans-Caspian International Transport Route (TITR)” is a Western backed multimodal land and sea transport route stretching from China through Central Asia and across the Caspian Sea through Azerbaijan and Georgia to the Black Sea. The Middle Corridor has been operational since 2017, but it faces several performance and logistical challenges.

   The Middle Corridor is considered as the shortest route between western China and Europe, compared with the Northern Corridor through Russia and sea lanes through the Suez. Sanctions has made this corridor more attractive as it is increasingly difficult to ship cargo be­tween Europe and China via Russian and Belarusian territory.

2. The Partnership for Global Infrastructure and Investment (PGII) was launched in June 2022, US President Joe Biden together with G7 partners. G7 is an organisation made up of the world's biggest economies, including Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union.

   The G7’s Partnership for Global Infrastructure and Investment (PGII) is a shared G7 commitment initiated by the US to support infrastructure projects in developing nations. It was created to counter China’s BRI. In this project India plays a key role. The Lobito Corridor, the India–Middle East–Europe Corridor (IMEC), and the PACE program—each resting under the larger G7 Partnership for Global Infrastructure and Investment (PGII) initiative (2022)—all serve US strategic interests to counter China’s development infrastructure initiatives and/or the Belt and Road Initiative.

   The largest project under the PGII is the India-Middle East-Europe economic corridor (IMEC) was announced in September 2023 at the G20 summit. The IMEC partners include the EU, France, Germany, India, Italy, Saudi Arabia, the United Arab Emirates (UAE) and the US. According to the White House statement

   ‘The IMEC will be comprised of two separate corridors, the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe.

   It will include a railway that, upon completion, will provide a reliable and cost-effective cross-border ship-to-rail transit network to supplement existing maritime and road transport routes – enabling goods and services to transit to, from, and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe.

   Along the railway route, Participants intend to enable the laying of cable for electricity and digital connectivity, as well as pipe for clean hydrogen export.’

3. The International North-South Transport Corridor (INSTC)is the Russia led transport corridor in Asia which is a 7,200 km intergovernmental transport project first established in 2000 by Iran, Russia, and India.

   This corridor connects the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and connects Russia, St. Petersburg with Northern Europe. The INSTC was expanded to include eleven new members, namely: Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Belarus, Oman, Syria, Bulgaria (Observer).

   India plays a key role in this project. The INSTC represents 3 things: an alternative to China’s BRI, a new avenue into European markets, a supply of cheap coal and oil from Russia, and an insurance policy should there ever be a falling out with the West. For Russia, it offers an escape from Western sanctions. For Iran and Azerbaijan, the INSTC is an opportunity to extract developmental and trade concessions from the project’s primary backers. And for the BRICS (which is an organisation of the world’s largest developing economies made up of Brazil, Russia, India, China, South Africa, Iran, Egypt, United Arab Emirates, and Ethiopia. Saudi Arabia was invited to join but announced they are still considering the membership), the INSTC is a chance to demonstrate influence by actualising a project that reroutes trade flows beyond the reach of US sanctions.

   This is the aim of the INSTC. The reality, however, is different. The project has been stalled for over 20 years and requires significant investments to fill rail gaps and expand terminal capacity in the Caspian Sea. Moreover, US sanctions continue to hinder the progress of the project.

   The Trans-Afghan Railway project was initiated by Uzbekistan in December 2018, and seeks to establish a direct railway link from Uzbekistan through Afghanistan to Pakistan, ultimately providing Central Asian countries access to the Arabian Sea and the Indian Ocean via Pakistani ports of Karachi, Gwadar, and Qasim.

   The proposed route connects Termez in Uzbekistan, passes through Mazar-i-Sharif and Logar in Afghanistan, and reaches Pakistan through the Kharlachi border crossing in Kurram. The initiative has gained momentum due to geopolitical shifts and the urgency to diversify trade routes, due to joining international stakeholders like Qatar and in light of the Russian sanctions following the Ukraine conflict. The Trans-Afghan railway is considered by Russia to be part of the North-South Corridor, but also China has been in talks with financing the project also.

4. The EU’s Global Gateway Initiative - The EU is a key actor in PGII through its flagship Global Gateway programme