Kalmyk Port and Canal Threaten to Upend Power Relations in North Caucasus

The southwestern Russian Republic of Kalmykia has long hoped to become a major player on the Caspian, which it argues could be achievable with the construction of a new port on that inland sea along with a new canal from there to the Sea of Azov—and thus to the Black Sea and the wider world. Many Russian commentators have suggested that such proposals are far-fetched (see EDM, September 5, 2019), particularly given the problems some of other regional ports currently face (Ast-news.ru, February 6, 2020) and especially considering that Iran has expressed interest in financing these port and canal projects (Ast-news.ru, February 18).  However, were the two Kalmyk-backed projects to succeed—and with Iranian support—they would upend existing power relations in the North Caucasus by reducing the role of the Russian ports at Astrakhan, Olya and those in Dagestan, not to mention the major nearby western Caspian ports in Azerbaijan; this new reality would give the Kalmyks and the Iranians behind them new influence in the Caucasus (Casp-geo.ru, February 29). Because that is the case, Moscow almost certainly will oppose Elista’s plans but how successfully and at what price remains to be seen.

What Kalmykia and Iran want to do, Russian analysts Dmitry Verkhoturov and Anton Chablin say, is to develop the small port at Lagan into a major transshipment point and, ultimately, a gateway to the world via a new east–west canal (Eurasia Canal) to the Sea of Azov. Such a port is projected to be able to handle 22.5 million tons of cargo a year, an amount that would seriously reduce the volumes of trade going through Astrakhan or the Russian port being developed at Olya, just 50 kilometers to the north. With adequate financing, which the head of the Kalmyk Republic claims Tehran is ready to provide (Ast-news.ru, February 18), Port Lagan could be operational in only two or three years. The length of time it will take to complete the Eurasia Canal to the Sea of Azov remains a matter of dispute, with some saying it could be quickly dredged for barge traffic but only made deep enough over the next ten years for the passage of major ships (APN, February 29; Ast-news.ru, February 6).

Verkhotoruv, an independent Russian expert and commentator, is skeptical about the development of either the port or the canal system because of costs. Building the port will cost “on the order of 100 billion rubles” ($1.6 billion), an amount he doubts anyone—even China—would be willing to provide given Moscow’s own presumed opposition to the project. Russia wants to maintain its role as central Eurasia’s predominant overland (road and rail) outlet to European markets (see EDM, June 6, 2017, June 21, 2019, December 3, 2019). And it wants to keep maritime access to the Caspian bottled up by retaining the limited-capacity (and internal waters) Volga–Don Canal as the only way in and out (see EDM, May 5, 2014, April 29, 2015). Additionally, deepening and extending the canal system between Lagan and the Sea of Azov— however attractive this may appear since it would shorten the route and time needed to transit goods compared to the Volga–Don canal system—would cost several times more than the estimated expenditures on constructing Port Lagan (APN, February 29).

But if the money is found, the creation of such a new route would have profound consequences for the other Caspian seaports, Verkhoturov argues. That is because ports on inland seas are quite different from ports on open oceans. Effectively, the number of cargo ships in the Caspian is fixed: if they go to one port, they do not go to another. That is a rather different situation than ports on open oceans, which may be able to attract ships from further away; thus, new ports on open oceans may lead to an overall expansion of regional commerce rather than take it away from another nearby port. If Port Lagan really did handle more than 20 million tons of cargo annually, the expert writes, the amount of traffic at Astrakhan, Olya and Kaspiysk would fall, at least initially. Moreover, the country or company behind the seaport construction would gain far more economic and political influence than would be the case elsewhere. The beneficiaries in this case seem likely to be Iran and Kalmykia; the losers—Russia and other Caspian littoral states (APN, February 29).

Over time, the Russian analyst concedes, trade could grow to the point that all the ports on the Caspian would benefit; but he suggests that over the next decade, Iran and the Central Asian countries would most benefit from Iran’s investment, something that would cause at least some Central Asians to look more favorably in Tehran’s direction and thus weaken Moscow’s position in the region (APN, February 29).

Chablin, a specialist on the North Caucasus at the Moscow Center for Applied Research and Programs, is equally skeptical about the possibilities that Port Lagan and the Eurasia Canal will be built. Likewise, he expressed concern that, if the difficulties currently standing in the way of both the seaport and canal are somehow overcome, the economic and thus political order around the Caspian will be transformed (Ast-news.ru, February 6).  In that event, the Caspian will not be the Russian “lake” Moscow would like, and the other countries along its shores will have both new possibilities to reach the larger world and new reasons to look elsewhere than to Moscow for leadership.

Given the stakes, it is extremely likely that the Russian government will do everything it can to discourage Iran from making this influential investment and to throw up its own roadblocks to make it more difficult for Tehran or anyone else to develop a port in Kalmykia and a new canal system from the Caspian to the Azov Sea. But even if Moscow succeeds, the Kalmyk gambit will have consequences: the Buddhist Kalmyks will have yet another reason to be angry at the Kremlin, and the other littoral states on the Caspian’s eastern shore will have seen what the future might have been had Moscow not put its interests far above theirs.