The New Silk Road Alternative to EU China Trade

silk road project map
silk road project map

The EU is an alternative route to Chinese trade The New Silk Road: As the trade between Europe and China continues to increase, an alternative to conventional maritime transport is emerging from the past: the New Silk Road. The cooperation between the Turkic Speaking Countries and Turkey

Council Secretary General Halil Akıncı told The Wall Street Journal.

WSJ: Can you briefly introduce the new Silk Road?

Halil Akıncı: The Historical Silk Road lost its former importance after the 15th century with the discovery of the Far East seaway. In the 19th century, the Atlantic economy led by the European and American economies came to the fore. This structure began to change with the independence of the countries of the Soviet Union in the last decade of the 20th century. Today, Silk Road has once again become one of the effective geographies of the global economy due to the striking economic developments of the Chinese, Indian and South Asian economies, the vast energy resources in Central Asian countries and their strategic position in East-West trade.

Increasing trade and economic relations between Europe and East Asia have increased the need for a long land link that will have access from Europe to China and South Asia. In fact, the old perception that Europe and Asia are two separate continents is changing now. This new united continent is called Eurasia.
From this point on, the idea of ​​"New Silk Road" refers to all the connections that will allow to reach another point from one piece of land between Western Europe, China, the Middle East and the Indian Subcontinent, by road, rail and oil, gas and hydroelectric transport technologies.

“Increasing trade and economic relations between Europe and East Asia have increased the need for a long land link that will have access from Europe to China and South Asia”

WSJ: How much will the "New Silk Road" potentially shorten China - Europe trade? How much will it get cheaper?

HA: Let's consider a product produced in the west of China. In order for this product to be transported to Western Europe by sea, it must first travel 3000 kilometers and reach the ports on the east coast of China. Then, it will arrive at the ports of Western Europe through the Suez Canal by a sea of ​​approximately 20 thousand kilometers. This journey can take 30 to 45 days depending on the saturation rate of the ports, the insufficiency of the transportation lines connecting the ports into the country, seasonal conditions and the waits in the Suez canal passage.

”This situation makes the multimodal transportation option, which is dominated by the rail mode on the East-West route, more and more in terms of time and cost.

However, the same goods New Silk Road expressed as "Central Transport Corridor" through (China-Kazakhstan-Caspian Sea-Azerbaijan-Georgia-Turkey-Europe) multi-mode can only 8500 kilometers in the same spot after a trip when transferred to a transport model . The duration of this journey is currently taking 16 days, and it is foreseen that it will decrease to 10-12 days after the completion of the “Silk Wind” project under the scope of TRACECA. With the Silk Wind, Kazakhstan will not have to travel the Caspian sea while crossing a new and shorter railway. The train that will cross Caspian by sea will be connected to Europe by Baku-Tbilisi-Kars and Marmaray.

However, most of the Asian European trade is still done by sea. This rate increases by 5,6% every year. The main reason for this is that sea transportation is relatively cheap compared to other modes.
However, it is foreseen that sea transportation will not be able to grow in terms of both quantity (transport quantity) and quality (transport quality and speed) to the speed of increasing economic and commercial relations between Europe and Asia. This situation makes the multimodal transportation option, which is dominated by the rail mode in the East-West route, more and more in terms of time and cost.

WSJ: What are the main risks that will prevent or delay the realization of the New Silk Road?

HA: One of the obstacles to the Central Transportation Corridor, which is intended to operate on the East-West route, is an effective transportation option, and the countries it passes through have different physical and legal transportation infrastructures. This situation, which causes problems all over the world in terms of the effectiveness of international transportation, remains valid in terms of New Silk Road transportation. In order to overcome the problems, harmonization of the legal regulations of the countries in the field of transportation, standardization of the transport models (OTIF-CIM / OSJD), reduction of bureaucracy, ending the long waits at the borders, re-evaluation of the negative effects of the applications such as pass certificate / quota on international trade and modern customs practices need to be implemented.

“One of the obstacles to the Transportation Corridor being an effective transportation option is that the countries it passes through have different physical and legal transportation infrastructures”

Studies in this direction are continuing. Countries under the Central Transport Corridor are included in the study under the leadership of UNECE on “Unified Railway Law in Eurasia”. He has his signatures in the “Joint Decleration”. Similarly, the transport operation within the scope of the member countries is being conducted in the Turkish Council of Finance (Azerbaijan, Kazakhstan, Kyrgyzstan and Turkey) Central Transport Corridor to are initiatives to eliminate existing obstacles in order to make active. To this end, the Transport Working Group has met 4 times to date and identified practical problem points. These issues were presented to the Ministers at the Meeting of the Ministers of Transport of the Turkish Council in July 2013 and a “Joint Cooperation Protocol” was signed. In addition, under the leadership of the Turkish Council "Transportation Coordination Board" consisting of Deputy Ministers, from transportation to customs; A comprehensive four-point “Agreement” will be prepared, aiming to eliminate the problematic points that prevent transportation between our countries from finance to insurance. It is anticipated that these initiatives will form the infrastructure of an unimpeded transportation model among the New Silk Road countries over time.

It would not be wrong to say that Russia, which has a privileged place in both fields, is not very willing for the new Silk Road initiative to create an alternative line both as a means of transportation and energy transmission. Russia wants both the supply of the hydrocarbon resources in the Caspian to the world markets and the European-Chinese goods movement through its own. However, in both issues, the opinions of countries on the transportation lines, especially in Europe and China, outweigh the options.

WSJ: What role will the new Silk Road play in shaping the global trade, while world trade is reshaping with the Atlantic Trade treaty?

HA: 75% of the world's population today; Having 60% of the global national income and 75% of the world energy resources, Eurasia is gradually increasing in the global economy. The average growth rate of 17 countries classified as Silk Road countries between 2004-2012 is 6,9%. These countries are the fastest growing countries after the IMF group of countries classified as "Developing Asia". It is increasingly accepted that the economic attraction has shifted to the East. In 2000, G-7 countries achieved about 66% of world welfare, while in 2012 this rate decreased to 47%. Rising and Emerging Economies, on the other hand, received a 2000% share of world welfare in 20, while this rate increased to 2012% in 37. In the same period, developing Asia's share in world welfare increased by 10%.

“The history of economic development in this geography brought the Silk Road back to the agenda as a powerful option”

Therefore, it is essential that the economic and commercial dynamism, which has increased in Asia, has the transportation opportunities it needs. The history of economic development in this geography brought the Silk Road back to the agenda as a powerful option.

WSJ: How much trade volume is foreseen in the short term and in the long term?

HA: If it can be operated effectively, it is anticipated that there will be shifts from sea transport to the New Silk Road line where high-speed multi-mode container block trains will move. Because, it is known that many sectors will use this option for fast and safe delivery depending on the nature of the product. In addition, the Euro-China trade volume is estimated to grow by an average of 10% each year (trade from Asia to Europe is projected to increase by 11% per year, and trade from Europe to Asia will increase by 7% per year). However, it is necessary to eliminate all kinds of possibilities that increase the cost such as waiting for borders, handling the goods and bureaucratic obstacles.
In the context of Chinese transportation and power transmission lines, it attaches great importance to alternative land connections to the sea for economic and security reasons. It is a party to the Silk Wind Project that will operate through Kazakhstan. After the completion of the Baku-Tbilisi-Kars Railway Project (BTK), which is one of the main elements of the project, it has given the project a guarantee of 10 million tons of goods annually. This figure is expected to increase in the following years. Therefore, when evaluated with China's announcement, it is expected that the amount of cargo to be carried over BTK will reach 10 million tons in the first 30 years.

Ulaş Only the amount of cargo to be transported on the BTK is expected to reach 10 million tons during the first 30 year “
Apart from this, China works for a separate railway construction between itself and Kyrgyzstan and Uzbekistan. It is stated that the line will have a capacity of 2 million tons when this project, which is invested 15 billion dollars, is completed. Extension of the line to Turkmenistan is on the agenda. If it does happen, an alternative line with the Caspian crossing from China may be active on the Silk Road.

The important energy transmission lines on the New Silk Road are the Kazakhstan-China Oil Pipeline; Turkmenistan-Uzbekistan-Kazakhstan-China Natural Gas Pipeline; Baku-Tbilisi-Ceyhan Oil Pipeline; Baku-Tbilisi-Erzurum Natural Gas Pipeline; South Gas Corridor Project and TANAP Project.

WSJ: With the developments such as shale gas, what will be the role and position of the New Silk Road in the energy trade reformed in the world?

HA: In line with the rapidly growing economic mobility worldwide, global energy demand is expected to increase by 2030% to 40% by 60. 2013% of Europe's total energy demand in 45; Total natural gas demand is expected to increase by 70%. Europe wants to meet its growing energy needs through alternative lines to Russia, where it is 70% dependent. It also considers the South line (North Africa), one of its sources, as a risky line. In this respect, it provides full support to projects such as the Southern Gas Corridor or TANAP, which will carry the Caspian's Natural Gas resources to Europe, located in the center of the New Silk Road corridor.

On the other hand, shale gas, which did not have a special place in energy markets until 2004, is a candidate to affect energy relations. According to the International Energy Agency, the US will surpass Russia, the world leader in natural gas in 2015, and Saudi Arabia, the world leader in oil in 2017, and will begin exporting oil and gas in 2020. Some commentators say this is "the harbinger of a new age"; "Geopolitical earthquake"; "energy rönesansI"; or "the return of the USA to home" in reference to the US dependence on Middle Eastern energy resources. It is stated that shale gas currently accounts for 33% of the US market.

As a result, the inclusion of Kaya Gas in the energy equation is not sufficient to meet the need for energy resources on the New Silk Road; The energy needs of China and India, which are expected to double almost in the 2030-2050 margin, cannot be met solely with the US gas. It is stated by the commentators that after 2020s, rock gas, which can be injected as an alternative input to the energy markets, may cause the natural gas prices to decrease relatively, but this will increase the energy mobility rather than decrease it.

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