The Trans-Caspian Corridor: Financial Risk Mitigation for Unlocking EU Connectivity with the Greater Caspian Region and Central Asia

Examining the financial mechanisms underpinning the European Union’s engagement in Central Asia, this Policy Brief focuses on the Trans-Caspian Transport Corridor (TCTC) as a strategic infrastructure and trade initiative. It analyses how instruments such as the European Fund for Sustainable Development Plus (EFSD+), the European Investment Bank (EIB), and the Multilateral Investment Guarantee Agency (MIGA) are deployed to de-risk private investment, foster sustainable development, and strengthen regional connectivity. By assessing both the opportunities and challenges of EU-backed financing, the study highlights how coordinated investment, regulatory frameworks, and risk mitigation strategies can enhance economic integration, diversify supply chains, and support the EU’s broader geopolitical and green-transition objectives in the Greater Caspian Region.

The Trans-Caspian Transport Corridor (TCTC) represents one of the most significant infrastructure development opportunities of the 21st century. Owing to its strategic location, it is well placed to become a transformative trade artery, combining advantages in transit time, geopolitical stability, and economic prospects. Enhancing the efficiency and attractiveness of the Trans-Caspian Corridor constitutes one of the key priorities of the EU. The objective is to develop this Corridor not merely as an alternative route, but as a viable and competitive option for the market. Spanning roughly 4,300 km, this multimodal transport route places the Caspian Sea at the core of transcontinental connectivity, providing a reliable alternative to the politically constrained New Eurasian Land Bridge (NELB) or ‘Northern Corridor’ through Russia, and the increasingly insecure Southern Corridor via the Suez Canal. This ‘middle’ Corridor links major economic hubs across China, Central Asia, and the Greater Caspian Region through an integrated network, reaching the EU in potentially 15 days.

Cost benefits extend beyond simple time savings. Reduced times mean lower insurance costs, decreased risk of cargo damage or loss, and improved cash flow cycles. For European exporters, the ability to reach Asian markets more quickly translates into better market positioning and increased competitiveness against other suppliers. Conversely, Asian manufacturers can serve European markets more efficiently, potentially reducing the need for extensive European warehousing and distribution networks.

These advantages are reflected in the rapid growth of cargo along the route: shipments have surged sixfold over the past five years, rising from 800,000 tonnes in 2020 to 4.5 mt (million tonnes) in 2024,  while container transport soared by 170% to 56,500 TEUs (Twenty-Foot Equivalent Unit) last year. Notably, 35,600 TEUs were shipped westward from China to Europe, marking a 27-fold increase year-on-year. The target for 2025 is 5.2 mt, including 70,000 TEUs of container transport, while cargo shipments along the route reached 2.3 mt in the first half of 2025,  a  7% increase compared to the same period last year.

Beyond these impressive transport figures, the Corridor enables Central Asian and South Caucasus countries to stimulate economic growth and develop resilience. Enhanced connectivity facilitates the development of new regional trade relationships and supply chain configurations that were previously unfeasible due to transportation constraints. Furthermore, the TCTC boosts regional value chains that can integrate the Greater Caspian Region more effectively into global production networks. Rather than serving merely as transit points, the countries of the region are active participants in manufacturing and processing activities that add value to traded goods, a strength they aim to further expand in the future.

Author: Luca Urciuolo, EIAS Senior Research Fellow

Photo credits: Wikimedia Commons