The Kazakh-Russian “Eurasia” Canal: The Geopolitics of Water, Transport, and Trade

The Kazakh-Russian joint working group will soon present a proposal for the construction of the “Eurasia” canal linking the Caspian and Azov seas (www.izvestia.ru, September 28). From expanded trade and transit across Eurasia to new energy projects and maritime access for landlocked Central Asia, the project entails far-reaching geopolitical ramifications, with Russia, Kazakhstan, and China, among others, standing to benefit from growing energy trade and economic relations between Europe and Asia. 

With an estimated price tag of 4.5 billion Euros and annual freight transit capacity of 75 million tons, the 700 kilometer long planned waterway, according to one version, traverses Russia’s areas of Dagestan, Kalmykia, Stavropol and Rostov province, and will serve as a conduit for trade in oil, as well as other commodities and products. The Eurasian Development Bank earmarked $2.7 million for a feasibility study of the “Eurasia” canal and “Volga-Don-2” shipway –another possible yet more costly and lengthy option (www.rosbalt.ru, September 28; www.regnum.ru, May 23, 2008). 

The idea to build a canal linking the Black and Caspian seas is not new. Russia considered building a similar waterway at various times, but complications, including recurring wars, have often stood in the way. In fact, there were at least 30 related projects under review in the days of the Russian empire alone (www.ng.ru, November 10, 2008). Today, the construction of the shipway is a real possibility, though not without concerns related to potential financial constrains, lack of water to fill the canal, and its adverse ecological impact (www.regnum.ru, September 16, 2009). 

Opponents further argue there is little need for the canal because the Caspian Pipeline Consortium, Baku-Ceyhan, Atyrau-Samara, and Baku-Novorossiysk pipelines have plenty of room for any necessary expansion, while some Russian ports and the existing Volgo-Don shipway (an old canal with annual transit capacity of 11 million tons) are allegedly still underutilized (www.ng.ru, November 10, 2008; www.regnum.ru, May 23, 2008). 

Russia and Kazakhstan, however, seem determined to launch this geopolitically ambitious project. In 2007, former Russian President, Vladimir Putin, called for the expansion of inland water-ways within the country, stating that a canal connecting the two seas “will not only provide the Caspian bordering countries with access to the Black and Mediterranean Seas, (the seven seas), but qualitatively change their geopolitical position and allow them to become the maritime powers” (www.rosbalt.ru, September 28). The project is expected to contribute to the development of Russia’s southern regions and the Caucasus (www.regnum.ru, May 23, 2008). 

In the same year, Kazakhstan’s President, Nursultan Nazarbayev, expressed the country’s interest in the project: “We need different routes: naturally, these commodities –oil and gas– will follow the routes that will prove to be economically sound for us. The construction of a new “Eurasia” shipway from the Caspian to the Black sea can become a landmark project…This canal would be a powerful outlet for the entire Central Asia seaward across Russia” (www.nomad.su, September 29). 

The Caspian shelf is home to 20 oil-gas fields and more than 250 oil lands. Oil deposits in the area contain about 6-10 percent of the world reserves. If built, the shipway will reportedly create competition for the TRACECA transport corridor and Baku-Ceyhan pipeline projects. The canal will allow Russia to enhance its leverage in the dynamically developing Kazakhstan and, according to Alexander Dugin, might lead to a “new oil cartel equal to OPEC” should Iran and Azerbaijan join the scheme (www.newsazerbaijan.ru, September 28; www.ferghana.ru, September 28; www.ng.ru, November 10, 2008). 

Whether the “Eurasia” canal initiative fails or not, the regional states can explore in parallel other transport options involving China, Azerbaijan, Georgia, Afghanistan, and Iran to reach regional and global markets by both land and sea. As Nazarbayev noted, if Kazakhstan does not secure access to the seven seas, “we [the country] will be forced to seek other alternatives.” Of the twenty largest oil producers and 15 oil exporters, Kazakhstan is the only country that does not have access to seas (www.nomad.su, September 29; www.warandpeace.ru,September 18, 2009).

The landlocked yet resource-rich Kazakhstan –keen on attracting foreign direct investment, pursuing deeper integration into the wider global economic networks, and diversifying foreign economic and political relations – is currently seeking to create a Eurasian Transit Center, with “Eurasia” waterway being one of its many other initiatives. The “Eurasia” shipway will enable both Russia and Kazakhstan to diversify their trade routes, especially considering projected increase in the oil and gas production in the Caspian. Thus, Kazakhstan alone is expected to produce 150 million tons of oil by 2015, doubling the current annual oil production of 76 million tons (www.centrasia.ru, October 17, 2008; www.nomad.su, September 29; www.zn.ua, June 12). The US, Russia, and China, among other countries, are all vying for larger influence in the energy-rich and strategically positioned Kazakhstan. 

The canal’s construction will also open the way for expanded transit of cargo from Central Asia and China into the Black Sea and Europe. Today, China and the EU engage mostly in sea-based trade, with overland trade representing merely 2 percent of total cargo flowing between Europe and Asia by sea (www.diapazon.kz, September 17, 2009; www.nomad.su, September 29). Asia’s trade with Europe, therefore, offers immense potential for Eurasian countries, particularly Russia and Kazakhstan, which can capitalize on their geographic position and benefit from expanding their regional and continental infrastructure in the area of energy, trade, and transport. 

Kalmyk authorities in Russia have already held negotiations with India and China on engineering works and hydro-construction. Beijing, in turn, has expressed its desire to fund the construction of the “Eurasia” canal. The latter may have an international status and is expected to be much cheaper and faster, generating millions of dollars in transit fees for Kazakhstan and Russia (www.nomad.su, September 29; www.regnum.ru, September 16, 2009; www.ng.ru, November 10, 2008; www.regnum.ru, May 23, 2008). To put this in perspective, if the “Western Europe – Western China” road connecting China, Russia, and Kazakhstan obtains a 5 percent transit share of current Europe-Asia sea cargo, the transit countries could receive around $3 billion in transit fees annually (www.diapazon.kz, September 17, 2009).

The proposed “Eurasia” canal is but one manifestation of the expanding economic space on the Eurasian continent in general and Central Eurasian area in particular. This expansion proceeds in the fields of transport, energy, and trade, driving geopolitical changes in the Caspian and Central Asian regions where Russia, China, and Kazakhstan are positioned favorably to capitalize on their roles as trade, energy, and transit centers. If completed, the canal has the potential to augment these trends and roles, producing yet another configuration on the Eurasian chessboard.