The Real Potential of the Middle Corridor: How Global Sanctions Are Reshaping the South Caucasus in Trade

Since 2022, sanctions imposed on Russia have significantly altered the trade geography of Eurasia. The EU has cut trade ties with Russia across nearly all strategic sectors, and Western companies have begun actively seeking alternative logistics routes. This shift has sparked global interest in the so-called “Middle Corridor” — a route connecting China to Europe via Central Asia, the Caspian Sea, Azerbaijan, Georgia, and Turkey.

According to the Eurasian Development Bank, in 2023, cargo volume along the Middle Corridor exceeded 3.9 million tons — about 33% more than the previous year. However, this is still far from the route’s full potential. China itself has reinforced its interest: in early 2024, China State Railway announced increased freight volumes to Europe via Kazakhstan and Azerbaijan.

Yet, infrastructure challenges remain significant. The Baku-Tbilisi-Kars railway still faces technical limitations and internal logistical gaps in Georgia. Poti and Batumi ports are operating at near capacity, and customs procedures remain below global standards in terms of speed and transparency.

Armenia is attempting to connect through an alternative route — the so-called Southern Corridor via Iran. With India’s backing, projects such as the Chabahar Port route aim to create a new northbound freight channel. If regional tensions ease, this could give Armenia a role as a logistical hub. However, the political deadlock with Azerbaijan and internal challenges in Iran make the corridor unstable.

At the same time, the South Caucasus is increasingly being used as a channel for semi-legal or gray-zone trade with Russia. For example, EU data showed that in 2023, Armenia’s imports of microchips surged dozens of times, suggesting possible re-export of sanctioned technologies to Russia. Similar signs have appeared in Georgia — especially in the import of vehicles.

These developments pose risks but also opportunities for Georgia. To retain international trust, the country must function as a transparent and efficient transit zone. This requires upgrading port and rail infrastructure, strengthening customs controls, and coordinating policy closely with foreign partners.

If Georgia fails to enhance its transit infrastructure and maintain a consistent stance on sanctions enforcement, interest in the Middle Corridor could decline, and investment may shift to other routes — including those passing through Iran or even Russia. That’s why 2025 could prove decisive for whether the South Caucasus — and especially Georgia — can turn its geographic advantage into real strategic value in global trade.