Eurasia: The World's Largest Market Emerges
Economies from Eastern Asia to Western Europe are being drawn together.
It is happening subtly but its impact could potentially alter the geopolitical and economic balance of the world. Eurasia, as a contiguous continent stretching from the west of Europe to the eastern coast of China, is slowly being drawn together into a massive market covering 70% of the world’s population, 75% of energy resources, and 70% of GDP.
Driving this enhanced concept of an interconnected Eurasia is something that has been haphazardly dubbed the New Silk Road — the modern interpretation of the ancient trade routes, transshipment hubs and economic corridors that once spanned Europe and Asia — which has been emerging over the past 15 years. This growing network received a large boost in 2013 when Chinese President Xi Jinping formalized his country’s enhanced participation in it — which included a trillion-plus dollars of funding and the political will and direction to actually make the colossal project come together.
Where Chinese gauge tracks come together to meet Russian gauge tracks -- the place where east meets west at Khorgos Gateway in Kazakhstan. Image: Khorgos Gateway.
“Because of the New Silk Road concept, more and more people have started using the term Eurasia,” said Karl Gheysen, the former-CEO of the Khorgos Gateway dry port on the Kazakh/China border. “Five years ago that didn't exist: you had Europe and you had Asia. Somewhere in the middle was Central Asia, where they have the camels and the funky people, and that was it. But now people are really talking about Eurasia as a continent.”
Since the demise of the ancient overland trade routes of the Silk Road, the sheer expanse of land and distance in the central parts of Eurasia have been a barrier to transportation and development. In the recent era, the region has been hamstrung by political divisions, inefficient customs protocols and old Soviet infrastructure that was starting to crumble. While the port cities on the peripheries of this landmass prospered, the interior lagged behind.
The Chinese recognized this imbalanced in their own country early on. On the eastern fringes of China some of the most economically kinetic and sophisticated cities in the world were rapidly rising, while the inland regions remained suspended in the proverbial stone age -- in Shanghai people were driving around in BMWs, in Gansu tens of millions were living in caves. It was clear that this imbalance was going to became a social, political and economic crisis, and in 2000 China commenced the “Go West” policy, which sought to link-in and develop these left-behind inland regions.
The result was a completely new transportation, energy and telecommunications grid — which included over 19,000 kilometers of new high-speed rail lines, 60,000 kilometers of new expressways, and over 100 new airports — a series of massive Economic and Technological Development zones, and a good portion of the most economically dynamic cities in the world today.
At the same time that China was improving the logistical network and economic conditions in its hinterlands, other regions across the Eurasian landmass were busy at work doing the same. Some former Soviet states, like Kazakhstan, Azerbaijan and Georgia, began looking for ways to develop and diversify their economies. For this, they looked back into their histories and found what they were looking for in the ancient Silk Routes, when they were vibrant transit hubs on a great trans-continental network.
So they began building better transportation infrastructure, logistics hubs, industrial zones and forging better diplomatic and economic relations with other key countries along the newly emerging China-Europe trade network. While on the western side of Eurasia, some Eastern European countries, such as Poland, were waking up to the fact that they could serve as doorways to the great markets straddling them to the east and west.
“Regions that have long been regarded as peripheral and as separating Europe from the densely populated parts of Asia along the Indian and Pacific Oceans are now increasingly seen as constituting a 'land bridge' that serves to connect Europe with various parts of Asia,” said Frans-Paul van der Putten of the Clingendael Institute, which publishes a key Silk Road newsletter.
China’s developmental advances in its western regions are now meeting those of Central Asia, which are in turn meeting those of the Caucasus and Eastern Europe, as the interior of Eurasia is being cracked open. Distance and remoteness are no longer impediments to overland trade here. With marked improvements in transportation infrastructure, a more open political landscape, and a couple of huge customs unions, land transport between China and Europe is not only more direct but two to three times faster than sea -- and a fraction the cost of air. With just two (streamlined) customs crossings en-route, loading a container upon the wagon of a block train or back of a truck and sending it across Eurasia is nearly as smooth sailing as a freighter out at sea. At key junctions along these revitalized trade routes new logistics, industrial, financial, and commercial centers are being built, as new economies are rising up.
The New Silk Road isn't a trade pact, it's not an economic union, it's not a treaty organization; it's a loose conceptual platform for countries to engage in mutually beneficial partnerships via the building of an enhanced economic grid that covers the whole of Europe and Asia. Rather than competing with the various existing geopolitical structures, this is a network that essentially links them together. It is an on-the-ground mechanism for better integrating China's Belt and Road endeavors, the EU, non-EU Eastern Europe, the Eurasian Economic Union, ASEAN, Iran, the Caucasus countries, and parts of South Asia together into a contiguous and interconnected Eurasia.
“More and more people are starting to realize that it's happening,” said Karl Gheysen.
However, there is still a lot of work to be done to bring this pan-Eurasia dream fully to life. While the infrastructure is being built, the investments are being made, and some of the key political and economic partnerships are being forged, when we look out across this landscape we also see long-standing conflicts between neighboring countries -- and even between entire geopolitical realms.
The Azerbaijan-Armenia conflict is blocking the broader integration of the Caucasus region, inhibiting its ability to become a true land bridge. The Russian-backed breakaway region of Abkhazia is a brick wall in the middle of what could otherwise be a prime north-south trade route between Russia and the Middle East. China's infrastructure-building and political partnerships with Pakistan, Bangladesh, and Sri Lanka are seen as a threat by India, which has limited the participation of Asia's second largest emerging market in the Silk Road network.
“As the Brexit exemplified, walls are being built up, instead of torn down. Populists all over Europe are increasingly successful in exploiting fears and promoting a counter-narrative to connectivity. Examples include the ongoing debates over international free trade, the refugee crisis, or the role of Islam in Europe,” explained Moritz Rudolf, an expert on Chinese foreign policy at MERICS. “Secondly, Russia and the Middle East are currently unable to serve as bridges between Europe and Asia. The relationship between Europe and Russia has deteriorated over the Ukraine crisis and the Middle East remains unstable and divided.”
While there are challenges ahead, the integration of Eurasia is one of the main story lines playing out in the first half of the 21st century, and our conception of the region will continue to change.
"Eurasia is no longer a mere synonym for Central Asia but rather a new economic macro-region, where Eurasia is considered as one continent with huge economic potential," Gheysen concluded.