Middle Eastern countries are currently working to strengthen their maritime connections to various parts of the world through new naval lines and channels. This would bring about significant economic benefits, specifically by streamlining commerce with other countries and developing logistical naval centers to make use of the transit and commerce movements coming into, and leaving from, the region. There are a few obstacles that could stand in the way of these plans mostly related to a lack of funding, increasing security threats, and rising political tensions in the region.
Regional Axes
The Middle East is connected to the world by 136 seaports, with the capacity to handle approximately 44.8 million containers. Many countries in the region are working hard to increase their sea connections. This is particularly true for Iran, which, after the lifting of international sanctions in January 2016, began working to restore its commercial relations with the rest of the world. Iran’s strategic location and centrality between the Arab world, Central Asia and the Caucasus allows it to strengthen its economic ties to these regions through increased maritime activity.
In order to achieve these economic benefits, Tehran has embarked on a number of mega-projects in cooperation with other countries. One of these projects is the “North-South International Freight Corridor” in cooperation with Russia and Azerbaijan, expected to connect Southeast Asia to Northern Europe, all the way to Russia, via a water and land corridor totaling approximately 7,200 kilometers. The project is being accompanied by the construction of a freight railway between the various seaports along the corridor. Estimates indicate that such a project would save time and money in moving products from east to west, especially when compared to the current naval corridors.
Another country working to increase its commercial relations with neighboring Asian countries is India, which is contributing 500 million USD to the improvement of the Chabhar seaport in south Iran. This move will enable India to start trade with Iran, Afghanistan and Central Asia. Iran is also working to increase its naval connections to Africa, establishing routes with important seaports with countries along the Red Sea and the Indian Ocean, such as Kenya and Eritrea.
As for Turkey, it is currently planning to become a central transit point for regional trade. This can be seen in its efforts to build land and sea bridges with neighboring countries. One indicator that Ankara is working to increase its prominence as a naval thruway is the “Istanbul Channel” project, which will allow large ships to pass from the Sea of Marmara to the Black Sea viaa 43km long channel at a cost of about 10 billion USD.
In Israel’s efforts to overcome its isolation in the Middle East, it too has increased its efforts to become a Middle Eastern export and trade hub. Israel has started implementing a plan that aims to compete with naval corridors in the region, as evidenced by the 2012 announcement by the government of a national project to extend the Med-Red rail line, which connects the Mediterranean and Red Seas. This is in addition to creating a sea channel connecting Eilat on the Red Sea to Ashdod on the Mediterranean.
In addition to the aforementioned ambitions, Israel is undergoing a number of projects to expand and improve its seaports. With the continuing war in Syria, and the decimation of its trade lines as a result, Israel has an economic opportunity to become a main hub for trade between Europe and certain Arab countries.
Jordan, in the meantime, is exerting a lot of effort to expand and improve the Akaba seaport. This is set to be done over a number of phases, the first of which started in the fourth quarter of2015. The agreement for the second phase was signed in May 2016, as per the conclusions from a number of studies that showed the necessity of starting the second phase right after the completion of the first, rather than having some buffer time between them (the second phase was initially planned to begin in 2025). This is withinthe framework of a larger plan that aims to improve the Akaba area seaport network to make it safer and more stable, in order to turn it into a grain re-export hub, especially for wheat. This would give theAkaba region a crucial economic and logistical international standing.
Numerous Obstacles
All the above mega projects face numerous obstacles that may prevent them from achieving their strategic goals. Among the most important obstacles are:
1. Lack of funding: Many of the countries embarking on the mega projects above are in dire financial situations due to the repercussions of the region’s conflicts, such as the worsening Syrian refugee crisis. Another factor is declining oil prices, which has in turn caused a financial crunch for mega projects whose effects may not be readily available in the short and medium terms.
Among the projects facing financing trouble due to high costs is the waterway Israel is planning to connect the Mediterranean and Red seas, as well as the water channel partnership between Russia, Iran, and Azerbaijan. Estimates indicate that the total need of infrastructure development—including seaports, airports and railways—in the Middle East will amount to approximately 4.3 trillion US Dollars by 2020.
2. Slowing world trade: The slowdown in both developed and emerging economies has caused the World Trade Organization to cut its estimates of international trade growth for 2016 by over one third. International trade will very likely grow by about 1.7% by the end of 2016, far short of the WTO’s initial estimate of 2.8% growth. Fundamentally, international trade in goods had declined sharply in 2015, reaching only 16 trillion US Dollars, a 14% decline from 2014. The current slowdown in the world economy will likely lead to further shrinking in international trade in the short and medium terms, which may affect the operational abilities of the above projects.
3. Increasing instability in the region: All the projects above, especially ones that span across borders, face threats that may stop them from happening. This is mostly due to the rising tensions between some of the countries involved. For example, the North-South Corridor project is facing trouble reaching an agreement between the five nations overlooking the Caspian Sea and sharing in its oil resources. Another example is India, which has no land access to Afghanistan—and from there to Central Asia—thanks to objections from Pakistan, which believes that India’s expansionist diplomacy puts its interests and security at risk.
4. Regional competition: There is no doubt that the completion of the above projects will lead to increased competition among the region’s nations over the centrality of each of their roles in the movement and routing of sea trade. This competition would seem to be a double-edged sword. On the one hand, it will lead to more streamlined trade movement in the region. On the other hand, it will lead to a division of the region’s share of transit movements and supporting logistical services to a larger number of regional logistical centers, thus decreasing the estimated returns of each individual project.
Altogether, it can be said that the region’s naval expansion prospects are very positive, thanks to its strategic location which allows it to be a hub for international trade. This ambition, however, faces a number of obstacles that can delay the completion of these projects, at least in the short term.
