By: Gia Jandieri

The Central Asian region possesses significant economic and trade potential, yet its realization remains constrained by traditional dependencies on Russia and China and underutilized transit pathways. Unlocking this potential through the Middle Corridor requires substantial capital investment alongside comprehensive institutional reforms and modernized trade regulations. Enhanced Western engagement, particularly from the EU and the U.S., offers a strategic framework to diversify regional trade and integrate Central Asia into global markets. Ultimately, the long-term viability of the Middle Corridor hinges on lowering transit costs, accelerating administrative procedures, and establishing a predictable, transparent economic environment.

BACKGROUND:

Its geographical location and available natural resources make Central Asia a top priority in contemporary global politics and economics. While the region's transit potential is high, its own economic capacity is currently underutilized; exports are dominated by energy resources, while the bulk of imports originates from China and Russia. Furthermore, certain countries within the region remain excessively reliant on remittances sent home by workers living in Russia.

Significant effort is required to fully unlock the region's economic capacity and expand its trade with the West. This will require rapid infrastructure development and comprehensive institutional reforms, including the modernization of trade and border-crossing regulations. Such measures could quickly double the region's economy and lay the foundation for close coordination and strategic cooperation with Western partners.

Western interest (particularly from the EU and the U.S.) in Central Asia rests on several strategic considerations:
The region offers an opportunity to expand market reach and secure reliable new partners, as well as resource base. In addition, the region holds significant economic and strategic balancing importance vis-à-vis China and Russia.

Consequently, numerous efforts are underway by the U.S. and EU to reconnect historical links or establish new partnerships to foster trade opportunities and build long-term strategic alliances. One major initiative currently driving international discourse is the Middle Corridor, a route designed to connect Europe and Asia through Central Asia and the South Caucasus, allowing access to energy, critical minerals, and other goods and resources from the region, as well as Central Asian markets.

The People’s Republic of China (PRC) maintains strong economic interest in the region and has already invested heavily. However, its interest in using the Middle Corridor by China is limited by the capacity of the transit corridor, as well as by the availability of alternative transit routes. Although the recent surge in traffic through the corridor is notable, the route requires careful feasibility planning and substantial capital investment to fulfill its expanded role. Based on current and expected trade numbers, the Middle Corridor will be more important for trade between the Central Asian countries, Europe and Mediterranean, and less important for Chinese transit.

Meanwhile, the Russian Federation (RF) maintains strong political and commercial interests in Central Asia and aims to preserve its leading role as a transit hub for goods from China. Moscow retains several political and economic leverages in the region.

The Russian Federation accounts for 15 to 31 percent of imports and 11 to 42 percent of exports across the five Central Asian states. By comparison, China accounts for 1 to 40 percent of imports and 5.8 to 25 percent of exports. Intra-regional trade remains minimal, peaking at just 20 percent in lower-income nations like Tajikistan and Kyrgyzstan. Interestingly, Türkiye's share of trade with Central Asia also trails behind that of both Russia and China.

The Middle Corridor faces numerous economic hurdles that must be addressed, including technical and institutional reforms aimed at reducing costs, increasing throughput capacity, and shortening transit times. Estimated infrastructure investments amount to tens of billions of dollars; without a clear economic return, potential investors and traders may hesitate.

IMPLICATIONS:

To evaluate the prospects of the Middle Corridor, it is essential to assess the Central Asian foreign trade market, its current and potential capacity. International trade across Central Asian states, with a combined population of 83 million, averages roughly US$ 2,500 per capita. By contrast, the three Baltic states with a combined population of 6.5 million generate a foreign trade volume nearly equal to that of Central Asia (US$ 202 billion total), translating to over US$ 33,000 per capita.

This gap highlights Central Asia's immense untapped potential. However, realizing this potential will require substantial capital injection and a major modernization of the institutional framework. In total, the region currently conducts around US$ 260 billion in global trade (goods and services, including intra-regional trade), with merchandise trade accounting for US$ 216 billion. One critical area for development is the removal of trade and border-crossing barriers. Harmonizing regional trade policies and regulations with EU standards represents a vital step forward, allowing greater efficiency of the trade route.

However, shifting away from long-standing ties with Russia carries potential political and economic costs. Hundreds of thousands of Central Asian migrant workers currently live in Russia, sending home hundreds of millions of dollars in remittances that support local economies.

Oil and natural gas represent a quarter of the region’s foreign trade. Hydrocarbon exports account for approximately 49 percent of all exports (US$ 116 billion) and are transported almost entirely via pipelines. China is the region’s largest trading partner, handling nearly half of Central Asia's total merchandise trade (US$ 106 billion). Russia remains another primary trade partner with a 20 percent share, which is nevertheless gradually declining as trade shifts toward China.

Institutional environment and economic freedom remain critical concerns: Kazakhstan ranks 68th and Uzbekistan 86th (both categorized as "moderately free") on the Heritage Foundation’s Index of Economic Freedom. The remaining three states rank below 114th, categorized as either "mostly unfree" or "repressed". Upgrading institutional quality would stimulate the wider economy and attract foreign investment beyond the oil and gas sectors.

Border-crossing procedures present additional challenges. Current regulatory frameworks in Central Asia are tailored primarily for trade with Russia and China. Adapting these systems to EU standards, alongside digitizing and simplifying customs procedures, will be essential to lower transit costs. Georgia’s implementation of the Deep and Comprehensive Free Trade Area (DCFTA) with the EU offers a proven model for regional trade regulation.

Furthermore, government integrity, local corruption, bureaucratic delays, political influence, and weak rule of law present significant obstacles. Central Asian governments must actively address these issues to prevent costly delays and administrative inefficiencies. Improving governance and mitigating local corruption risks requires reducing regulatory burdens, streamlining administrative processes, and leveraging digital technologies.

Accelerating these institutional reforms will give potential investors the confidence to finance regional growth, increasing the flow of goods toward the EU and justifying the substantial investments needed for the Middle Corridor. Ultimately, Middle Corridor investments will succeed only if transit costs and transit times remain competitive against alternative global trade routes, both now and in the future.
CONCLUSIONS:

Central Asia has strong potential to become a key economic partner for the U.S., EU and other Western states. To achieve this, the region requires deep institutional reforms to attract capital, eliminate trade barriers, and align border procedures with Western standards. Reforms must focus on creating a transparent, predictable, and streamlined regulatory environment. The success of the Middle Corridor will depend directly on its cost-competitiveness and the pace of Central Asia’s broader economic development, driven by foreign direct investments. Although current foreign trade figures remain modest, trade volume could realistically double to US$ 500 billion. Eliminating trade barriers and curbing political and bureaucratic interference, especially across internal regional borders, are critical steps.
AUTHOR’S BIO:

Gia Jandieri is Founder and Vice President of the New Economic School – a Georgian think-tank. He is an economist with extensive experience in the public sector and independent research organizations. His expertise includes public finance, business climate, international trade, monetary and anti-corruption policy.

By Aigerim Turgunbaeva and Fayazuddin Ghiasi

On February 22, 2025, during a meeting with Uzbekistan'ss Prime Minister Abdullah Aripov, Mullah Abdul Ghani Baradar Akhund, representing the Taliban, called for Uzbek investment in repairing crucial infrastructure, including the Mazar-e-Sharif–Herat railway and the second Salang tunnel. These projects are seen as vital for improving communication and trade between Central and South Asia. Baradar reaffirmed the Taliban's commitment to regional stability and enhancing economic relations, while Uzbekistan expressed support for deepening cooperation and advancing joint initiatives. The Taliban's diplomacy in Central Asia is increasingly focused on economic cooperation, prioritizing infrastructure development and trade expansion.

BACKGROUND: Following the 9/11 attacks, the U.S.-led International Security Assistance Force (ISAF) entered Afghanistan, and Central Asian countries aligned with the US by providing military support, road access, and airspace. Initially, these countries opposed the Taliban, backing anti-Taliban movements. However, over time, as the Taliban adapted their strategy and reduced their overt support for Central Asian militant groups, some regional countries shifted to a more neutral stance on Afghanistan.

During the Doha peace process, delegates from Central Asian countries held several meetings with the Taliban negotiating team, laying the groundwork for post-U.S. withdrawal relations. When American forces withdrew in August 2021, the Taliban regained control, creating security concerns for neighboring Central Asian states. This shift in power forced regional actors to reassess their approach, balancing security risks with economic and geopolitical interests.

Despite these concerns, most of Central Asian countries kept their embassies open in Kabul and initiated political and economic engagement with the Taliban. For its part, the Taliban, facing a financial crisis due to sanctions, frozen assets, reduced foreign aid, a water crisis, and a lack of international recognition, pursued an economic-oriented foreign policy. This included announcing expanding transportation infrastructure, such as the Mazar-e-Sharif-Herat-Kandahar railway corridor (1,468 km), approved in May 2023, and the Spin Boldak-Kandahar railway, set to connect Central Asia to South Asia in 2024.

IMPLICATIONS: The Taliban’s return to power has significantly reshaped regional geopolitics and economic ties. With the US withdrawal creating a power vacuum, regional actors have sought to strengthen their positions. The Taliban, in turn, have sought new partnerships to break their political and economic isolation.

As Central Asian nations engage with the Taliban while remaining wary of potential instability, they have also strengthened ties with other powers like China and Russia. This shifting landscape raises critical questions about Afghanistan's evolving role in the region, particularly in terms of security cooperation, counterterrorism efforts, and border management.

Uzbekistan was the first Central Asian country to host a Taliban delegation, receiving Acting Deputy Prime Minister Mawlawi Abdul Salam Hanafi in Termez in September 2021. Both sides signed a security and trade protocol, exchanged diplomats, and expanded economic relations. On April 13, 2023, Uzbekistan hosted the 4th meeting of Afghanistan’s neighboring foreign ministers in Samarkand to discuss the Afghan situation.

As the Russia-Ukraine war disrupts trade, Uzbekistan—where three of its eight transit corridors depend on Russia—has accelerated efforts to find alternative routes. In August 2024, the Uzbek Prime Minister visited Kabul to discuss trade and investment projects, resulting in 35 MoUs worth $2.5 billion. Trade between the two countries reached $860 million. Additionally, Uzbekistan has played a key role in infrastructure development, co-signing a trilateral agreement with Afghanistan and Pakistan in July 2023 for the Trans-Afghan Railway, linking Mazar-e-Sharif to Pakistan’s ports, with a projected cost of $6 billion.

In February 2025, Mullah Abdul Ghani Baradar led a high-ranking Taliban delegation to Uzbekistan to deepen economic, trade, and transport cooperation. Tashkent also committed to completing the "Khalqlaar Bazar" border market and providing Afghan citizens with a 15-day visa-free regime.

As for Kazakhstan, Afghanistan's top wheat, flour, and edible oil supplier, it maintained its embassy in Kabul after the Taliban’s takeover. Both sides exchanged ambassadors, strengthening diplomatic ties. Since 2023, three business forums in Astana, Almaty, and Kabul have facilitated agreements worth $1.5 billion. In April 2024, Kazakhstan’s Prime Minister led a delegation to Kabul for an Afghanistan-Kazakhstan business forum, exploring investment in the chemical, mining, and metallurgical industries. Bilateral trade grew to $700 million in 9 months of  2024, a 14% increase from 2023, with projections reaching $3 billion in five years.

Kazakhstan also joined Turkmenistan’s initiative to build a logistics hub in Herat and expressed interest in the Trans-Afghan Railway, initially agreed upon by the Taliban, Pakistan, and Uzbekistan in 2021, to access South Asian and Gulf markets.

Historically neutral, Turkmenistan has maintained close ties with the Taliban since the 1990s. It remains a major oil and gas supplier to Afghanistan, with trade valued at over $500 million. Turkmen investments in Afghanistan exceed $1.5 billion, including infrastructure projects such as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. In 2024, top Taliban officials met Turkmen leaders to resume work on TAPI, sign MoUs worth $200 million, and explore oil and gas transit routes linking Russia to South Asia via Afghanistan. Additionally, the two sides signed a $7 million agreement for three railway projects in September 2024.

With a 1,360 km border with Afghanistan, Tajikistan was initially the most vocal opponent of the Taliban, demanding an inclusive government with ethnic and gender representation. Anti-Taliban figures gathered in Tajikistan, drawing criticism from Kabul. However, economic cooperation persisted, with Tajikistan continuing electricity exports and opening five joint border markets in September 2023. The Jalaluddin Mohammad Balkhi-Sher Khan Port railway project, first signed in 2019, resumed, enhancing connectivity with Central Asia. Trade between Afghanistan and Tajikistan reached $120 million in 2024. A recent unofficial meeting between top Tajik security officials and the Taliban signaled a thaw in relations.

Concerned about the rights of the Afghan Kyrgyz minority in the Pamir region, Kyrgyzstan established early contacts with the Taliban. In September 2021, Deputy Chairman of Kyrgyzstan’s Security Council Taalatbek Masadykov met with the Taliban Foreign Minister. Trade and transit discussions continued, with Kyrgyzstan serving as a transit route for Afghan goods to China and playing a key role in the CASA-1000 electricity transmission project.

In September 2024, Kyrgyzstan’s Cabinet Chairman Akylbek Japarov met with Taliban representatives, expressing interest in expanding trade, transportation, energy, and agriculture cooperation. Some Afghan Kyrgyz, facing economic hardship and limited educational opportunities, have requested relocation to Kyrgyzstan. In response, the Taliban recently established the “Pamir” district for the Kyrgyz ethnic minority.

CONCLUSIONS: To better understand the Taliban’s role in Central Asia, it’s crucial to examine their balancing act between China and Russia, two regional powers with different interests. While China seeks stability in Afghanistan to secure trade routes under the Belt and Road Initiative (BRI) and prevent extremism near Xinjiang, Russia focuses on managing the security risks spilling over into its Central Asian sphere. The Taliban, in turn, is strategically leveraging its position as a buffer state, engaging both countries diplomatically while positioning itself as a key player in regional security.

Since retaking power, the Taliban have pursued economic diplomacy, reassuring Central Asian neighbors of border security and promoting trade expansion. This shift has redirected Afghanistan’s trade partnerships from Pakistan toward Central Asia and Russia. The Taliban have leveraged Afghanistan’s geographic position to sign infrastructure MoUs, including railways and transit corridors, inviting regional investment in large-scale projects.

Central Asian states are balancing their engagement with Afghanistan while securing their interests. However, ongoing security risks, potential shifts in Taliban leadership, and external geopolitical pressures could alter the region’s engagement strategy. Future developments, such as increased intelligence cooperation or shifts in global economic alignments, may further impact Afghanistan’s regional role.

AUTHORS’ BIO: Aigerim Turgunbaeva is a journalist and researcher focusing on Central Asia. She writes about press freedom, human rights, and politics in the former Soviet space, and delves into China’s interests in the region for publications like The Diplomat, The Guardian, Reuters, and Eurasianet. Dr. Fayazuddin Ghiasi is a Rumsfeld Fellow and senior Researcher on Afghanistan and Central Asia at the Centre for Afghanistan and Regional Studies. He writes about regional geo-economics and geo-strategy, connectivity and politics in various national and international news outlets and journals.  

By Erik Davtyan (19/08/2015 issue of the CACI Analyst)

July was a productive month for bilateral cooperation between Armenia and Georgia. Firstly, the two states expanded their dialogue in the military sphere. On July 16, a delegation headed by Armenia’s first Deputy Minister of Defense Davit Tonoyan visited Tbilisi. A subsequent meeting between representatives of the two defense ministries took place on June 24-25 within the framework of the North Atlantic Council (NAC) Defense Ministers meeting in Brussels, during which Armenia’s and Georgia’s Defense Ministers Seyran Ohanyan and Tinatin Khidasheli discussed bilateral military ties. Khidasheli later explained that the parties agreed “to find new areas of cooperation.”