China’s New Foreign Policy Target: South Caucasus

China is spreading its soft power relentlessly in the South Caucasus, with interests not only in energy but the transportation system as a means of advancing its Silk Road tentacles across the region, which is bordered on the north by Russia, the west by the Black Sea and Turkey, on the east by the Caspian Sea, and on the south by Iran.

China sees the region as a rich source of energy as well as a means of pushing out its transport system. It is also a region that is considered to be a bone of contention, given its geopolitical location between powerful countries. The US and Turkey have always competed with Russia for a leading role. That has now been complicated further with the entry of China and Iran into the ring.

The Russian Bear Rules

The Big Bear, Russia, is the regional leader, with great influence on its neighbors’ politics and economics. China, which appears to be reaching for any possibility to enter the region, is ready to do huge investment, with its impact on the region growing rapidly.

China finds the Caucasian developing countries an attractive market, giving Beijing a unique opportunity to overwhelm the region with its affordable products and take a leading role. Given its resources and growing markets, it is fast coming into competition with Moscow. Russia, despite considering China an ally, will hardly make the mistake of letting another major competitor onto its own economic battlefield.

In this struggle, even Western countries are likely to support Russia to hinder the growth of Iranian and Chinese influence. Either Russia will get its share of the pie or nobody will taste it. Nevertheless, Chinese diplomats are hardly unaware of the dynamics and if they take concrete steps it means they know how to take their targeted share.

Although China and Russia have strong diplomatic relations, it does not prevent them from mini economic skirmishes. Geographically, China's number one ally is Iran. Thus, many diplomatic actions by the Iranians are considered to be on behalf of Beijing. China delivers its goods and commodities to this part of the world through Iran, an active and influential player.

Despite attempts at diplomatic isolation from the western powers, Iran has strong and developing economic relations with Turkey, Russia, Azerbaijan and Armenia. Although an Armenian-Iranian railway project is on the table, it appears that only China’s sponsorship can turn the project from paper to reality. The line is anticipated to stretch 316 km from to the Iranian border and to cost more than US$3 billion.

And although China may have more profitable business projects to finance, the railway’s geopolitical value is clear. One of the most important reasons is that Armenia can become the linchpin between the Persian Gulf and Black Sea and a direct path for both China and Iran to Europe. Taking into account the favorable relations that would accrue between Armenia and China, such a sponsorship looks attractive.

The railway is not a new idea. A railway already exists although it is out of order for political reasons. It passed through Nakhijevan, historically Armenian territory under the thumb of Azerbaijan since 1921, when then-Soviet Russia and Turkey signed an agreement in Moscow over the handover of the territory to Soviet Azerbaijan.

It would be impossible to recover and launch the railway, as Armenia and Azerbaijan have no diplomatic relations and they have been in conflict for more than 20 years because of the war for the enclave of Nagorno Karabakh. Although some observers claim that recovering the old railway would be cost effective and beneficial, the growing tension on the Armenian-Azerbaijani border makes it unlikely. The two countries are closer to war than cooperation.

For Armenia, China’s sponsorship of a new Iran-Armenia railway would play a significant role not only in increasing economic activity but also in escaping the transportation blockade imposed by neighboring countries.

There are two rival, similar projects that include Russia, Iran, Azerbaijan, Turkey and indirectly China. One connects the cities of Kars in Turkey, Naxichevan in Azerbaijan and Qazvin in Iran the second, connecting Qazvin and Rasht inIran and Astara in Azerbaijan. They are to be connected by rail from Baku to Nakhchivan, bypassing Armenian territory. The implementation of both railroads, especially the second, would deepen Armenia’s transport blockade..

The Qazvin-Rasht-Astara railway would launch a direct connection between the Persian Gulf and Azerbaijan. Parties signed the agreement in 2004, in Tehran. The railway would connect Azerbaijan's Astara to Iranian Astara-Qazvin and Rasht cities. The "North-South" transport corridor construction, as it is called, would cost US$400 million. Qazvin-Rasht-Astara railway was signed in Tehran, in 2004 between Iran, Azerbaijan and Russia.

The railway would pass through Azerbaijan via the Iranian Persian Gulf port of Bandar Abbas railway link with Russia. This is a massive project and is considered to become one of the world's biggest transportation hubs, linking the markets of South and Southeast Asia, Russia and Europe with an almost direct railway which would result in substantial unloading cargo traffic through the Suez Canal.

The problems include deadline delays and conflicting announcements of transportation ministers about the completed work. However, it is undeniable that construction is in process. Last month, Mohammadali Najafi, the governor of the Iranian province of Gilan, told local media that Iranian President Hassan Rouhani had instructed to finish construction in 2016.

The Kars-Nakhichivan railway is under construction to become the Baku (Azerbaijan)-Tbilisi (Georgia)-Akhalkalaki(Georgia)- Kars(Turkey) railway extension. The project has been hanging fire since the beginning of the 1990s, according to Azerbaijani sources. The cost is estimated at US$600 million. Railway track and rolling stock are in need of repair or replacement and are being modernized. Reportedly, the railway would connect Beijing to London.

Currently, more than 10 major railway lines connect Central Asia to Russia and the South Caucasus. China has plans for two additional new railways to the South Caucasus, one starting from Korgan, the first Chinese border town linking Kazakhstan's largest city Almaty. The second one is from China's leather settlements west of Tashkent, Uzbekistan before reaching the territory of Kyrgyzstan.

The Iran-Afghanistan-Tajikistan-Kyrgyzstan-China railway is already being implemented. The agreement to connect China with Iran through Kyrgyzstan, Tajikistan and Afghanistan, was signed in 2014 and is expected to start from China's Kashgar to Afghanistan's Herat, continue through Kyrgyzstan and Tajikistan and eventually will reach Iranian. Iran allocated US$1 million to Tajikistan to construct the 392 km Tajik stretch. China and Tajikistan are actively cooperating in various fields, especially agriculture.

Manvel Keshishyan (keshishyanmanvel@gmail.com) is a Hong Kong University student at the Journalism and Media Studies Centre and an Asia Sentinel intern