A Proposal for a Trans-Caspian Development Bank
Diplomacy is not alchemy. Just as lead cannot be magically turned into gold, grand visions require practical tools to become reality. The Middle Corridor—a trade and transport route stretching from Central Asia across the Caspian Sea to the South Caucasus and onward to Türkiye and the European continent—is one such vision. The corridor has captured the imagination of policymakers and strategists, who seek to reorient global trade flows, diversify energy routes, and diminish dependencies on geopolitical chokepoints like the Suez Canal. Yet, for all its potential, the Middle Corridor still remains more of an ambition than a reality, constrained by insufficient infrastructure, fragmented political coordination, and—perhaps most importantly, a lack of cohesive financial strategy.
For the Middle Corridor to succeed as a vital artery of international commerce, it requires more than bilateral agreements and fragmented investments. The project requires a dedicated institution capable of bridging its diverse stakeholders, financing transformative projects, and aligning growth with the twenty‑first century’s imperatives like digital innovation and climate adaptation.
A Trans‑Caspian Development Bank (TCDB) could provide precisely the kind of focused and flexible framework needed to turn the Middle Corridor into a thriving economic corridor. By pooling resources and expertise from member states, private investors, and international partners, the TCDB would fill the critical gap between lofty ambitions and actionable progress.
A Trans‑Caspian Development Bank (TCDB) could provide precisely the kind of focused and flexible framework needed to turn the Middle Corridor into a thriving economic corridor
The rationale for such an institution lies not only in economics but also in geopolitics. As major power competition intensifies, the Middle Corridor has emerged as a crucial neutral alternative to trade routes dominated by major powers. Its development would not only empower regional keystone states like Azerbaijan, Kazakhstan, and Uzbekistan, but also provide Türkiye, the Western Balkans, and the European Union with a more secure and sustainable connection to the South Caucasus, Central Asia, and beyond. Yet this opportunity will slip away unless the region can generate the momentum, capital, and coordination needed to make the Middle Corridor competitive with established corridors like the northern land route and its maritime alternative.
The proposed Trans‑Caspian Development Bank thus represents a once‑in‑a‑generation chance to transform the Middle Corridor from an aspirational patchwork into a cohesive and competitive economic artery. By establishing a mechanism to finance large‑scale infrastructure projects, attract private investment, and foster cooperation among its diverse stakeholders, TCDB would provide the practical foundation needed to make the Middle Corridor viable. Yet the need for such an institution cannot be fully understood without considering the region’s geopolitical forces.
The proposed Trans‑Caspian Development Bank thus represents a once‑in‑a‑generation chance to transform the Middle Corridor from an aspirational patchwork into a cohesive and competitive economic artery.
Geopolitical Context
To understand the trans ‑ formative potential of the Middle Corridor, it is crucial first to examine the broader geopolitical and geoeconomic landscape of the Silk Road Region—a vast expanse stretching from the Black Sea littoral to the peaks of the Altai Mountains, and from the arid sands of the Taklamakan Desert to the Fertile Crescent and the Persian Gulf. This region sits at the intersection of historical trade routes, emerging multipolar competition, and dynamic regional transformations.
Three key dimensions define its geopolitical context: one, the shifting balance of power among great powers; two, the increasing agency of regional states; and three, the growing viability of the Middle Corridor itself as a critical trade artery. A brief examination of each is thus warranted.
The first dimension of the Silk Road region’s geopolitical context is shifting great power dynamics. This part of the world is experiencing an intensification of competition among major external powers—the United States, China, and Russia—each seeking to exert influence over its economic and strategic pathways. Building on a concept put forward in 2011 by Nouriel Roubini and Ian Bremmer in Foreign Affairs, the U.S. Naval War College’s Nikolas Gvosdev identified this phenomenon as part of the “G‑Zero paradigm” in an earlier edition of Baku Dialogues, wherein no single power possesses the dominance to dictate outcomes, leading instead to fragmented spheres of influence and transactional politics. This strategic shift is particularly evident in Russia’s declining leverage and China’s rising footprint through its Belt and Road Initiative (BRI).
For decades, if not centuries, Russia has viewed the Silk Road Region as its strategic backyard, particularly Central Asia and the South Caucasus. The region’s critical role as a buffer zone—and, more recently, a transit hub for energy pipelines—cements its place in Moscow’s foreign policy calculus. However, as Gvosdev argued in these pages, Russia’s capacity to dominate what it calls “Eurasia” is waning due to two key factors: the resource drain of the conflict over Ukraine and the economic impact of Western sanctions. Once the dominant actor, Russia now faces challenges in maintaining its prevailing influence as countries like Kazakhstan and Azerbaijan double their efforts to counter Moscow’s still significant influence.
Russia’s weakening hand in the region is evident in the shrinking importance of the Northern Corridor, which passes through Russian territory. Before 2022, it was the preferred route for land trade between Europe and China, carrying over 85 percent of cargo. The war in Ukraine disrupted this status quo. Sanctions, diplomatic isolation, and fears of over‑reliance on Russia have driven the EU, China, and Türkiye to diversify their transit routes. This erosion of the Northern Corridor’s overwhelming transport route dominance has exposed the limits of Moscow’s leverage, incentivizing regional states to recalibrate their foreign policies.
In contrast, China has emerged as a major player in the Silk Road Region, driven by its need to secure overland trade routes and ensure access to critical resources. Launched in 2013, BRI exemplifies Beijing’s ambition to connect Asia, the Middle East, Africa, Türkiye, and the European continent through infrastructure investments and trade agreements. The initiative is not merely an economic project, but also a strategic effort to circumvent U.S. maritime dominance— and thus implicit leverage over seabound trade—and reshape the geopolitical landscape of the Silk Road region and its neighborhoods.
Thus, China’s many investments in railways, pipelines, and ports across the core Silk Road region reflect its desire to build resilient trade networks. However, Beijing’s efforts face challenges, including concerns (usually expressed by outsiders) over debt dependency and a scattering of local resistance to Chinese influence. Despite this, the scale of China’s involvement dwarfs other outside actors, solidifying its position as the leading infrastructure financier in the Silk Road Region.
Then there is the United States. Since the dissolution of the USSR, Washington has largely viewed the region through the lens of its counterterrorism and energy security strategies, meaning that its engagement has remained limited. In more recent years, Washington’s focus has shifted toward managing competition with China and Russia on a global scale, often relegating the Silk Road Region to a secondary priority. However, initiatives like the C5+1 framework signal renewed interest in fostering regional cooperation, albeit without the scale of investment or strategic focus demonstrated by Beijing. Like most other important outside actors, the U.S. also has not yet taken any steps to institutionalize its engagement with the entire core of the Silk Road region—that is to say, conceptually to bring together Central Asia and the South Caucasus, although a recent reorganization of the State Department’s bureaucracy points to what would be a welcome shift. Azerbaijan, in particular, needs to be understood as “the cork in the bottle of Central Asia,” in the words of Zbigniew Brzezinski.
The U.S. approach is constrained by geography and competing priorities. Unlike China and Russia, the United States lack direct access to the region, which limits its ability to exert influence. Nevertheless, programs like the Blue Dot Network and the EU’s Global Gateway initiative (supported by the United States) highlight the West’s attempts to counterbalance China’s BRI by promoting transparent and sustainable infrastructure projects. These efforts remain nascent, but they indicate a recognition of the Silk Road Region’s strategic importance in an evolving global order.
The second dimension of the Silk Road region’s geopolitical context is the rising agency of regional states. The fragmentation of major power dominance has coincided with the increasing assertiveness of regional states, particularly those in Central Asia and the South Caucasus. As Damjan Krnjević Mišković has written in an earlier edition of Baku Dialogues, the “strategic logic informing […] admittedly embryonic plans now being laid [by some of the regional actors themselves] call to mind older arrangements in other geographies: ASEAN, the Nordic Council, the Gulf Cooperation Council, and the original European Economic Community.” Krnjević concluded that the “Silk Road region stands a chance of no longer remaining merely an object of major power competition—a geography to be won and lost by others; it is, rather, on the cusp of becoming a distinct, autonomous, and emancipated subject of international order.”
On the right side of the Caspian, Central Asian states like Kazakhstan, Turkmenistan, and Uzbekistan are leveraging their geographic centrality to pursue multivector, “independent,” or “neutral” foreign policies, balancing relationships with China, Russia, Türkiye, and the European Union. Astana, for instance, has invested heavily in modernizing its rail and port infrastructure, positioning itself as a critical transit hub between Europe and Asia. Similarly, Uzbekistan’s reforms under President Shavkat Mirziyoyev signal a broader shift toward economic liberalization and regional integration. These stratagems have allowed Central Asian states to attract infrastructure investment while maintaining sovereignty over key economic and security decisions.
Meanwhile, on the left side of the Caspian, the South Caucasus has similarly seen a reconfiguration of its geopolitical alignments, driven in part by Azerbaijan’s victory in the Second Karabakh War. Buoyed by its decisive victory, Azerbaijan has consolidated its territorial integrity and gained greater freedom to pursue independent foreign and economic policies, leveraging its strategic location and energy resources to deepen ties with Türkiye, the European Union, and other global partners.
Armenia, meanwhile, has been more deeply affected by this reconfiguration. Once a cornerstone of Yerevan’s foreign policy, the Russian‑led Collective Security Treaty Organization (CSTO) did not come to Armenia’s defense during the 2020 war, on the basis of the logic that the conflict over Karabakh did not infringe on that country’s sovereignty and territorial integrity. This failure, compounded by Armenia’s growing isolation within the CSTO framework and Russia’s preoccupation with Ukraine, caused Yerevan to explore alternative partnerships, including closer ties with the United States and the European Union, and enhanced economic and diplomatic engagement with Iran and India.
For its part, Georgia has leveraged this reconfiguration to try to strike a more realistic balance between its Euro‑Atlantic trajectory and the realities of its immediate geopolitical circumstances. While Tbilisi remains cautious about antagonizing Moscow—as seen in its recent elections, in the context of the Ukraine conflict and Georgia’s own unresolved issues in Abkhazia and South Ossetia—the weakening of Russian influence in the South Caucasus leaves the door open for more opportunities to engage deeper with the West along similar terms to those laid out recently by the Indian external affairs minister: “We look for partners, we don't look for preachers. Particularly, preachers who don't practice at home what they preach abroad.” Georgia, like Azerbaijan, is a key access point for the EU to Central Asia, and this objective reality needs to be taken seriously in Brussels, as it has increasingly been by Chinese concerns.
The third dimension of the Silk Road region’s geopolitical context is the Middle Corridor’s emerging potential. Amid these shifting dynamics, the Middle Corridor—formally known as the Trans‑Caspian International Transport Route—has grown significantly in relevance since Russia’s invasion of Ukraine, which disrupted traditional trade through the Northern Corridor (as mentioned previously) and heightened concerns about the EU’s over‑dependence on Moscow.
The Middle Corridor offers a strategic advantage by bypassing Russia and Iran, providing a politically neutral route for trade between Europe and Asia. Although the corridor faces infrastructure bottlenecks and (for now) higher transit costs, the World Bank’s 2023 report on the corridor and its viability projects substantial improvements by 2030, including halved travel times and tripled freight volumes. Investments in rail and port facilities, digitalization of customs processes, and the development of the Caspian maritime leg are key priorities for unlocking its full strategic potential.
More broadly, the corridor’s development has garnered significant international support. For example, the EU pledged €10 billion in investments in early 2024. According to the United Nations Economic and Social Commission for Asia and the Pacific, foreign direct investment in North and Central Asia reached $24.8 billion in 2024—a 27 increase over the previous year. Such influxes of funding underscore the corridor’s growing appeal as a cornerstone of connectivity, aligning economic incentives with geopolitical imperatives.
The Middle Corridor’s success, however, hinges on effective regional collaboration. Initiatives like the Astana International Forum, the Tashkent International Investment Forum, and the Trans‑Caspian Forum provide platforms for dialogue and coordination among stakeholders. More recently, October 2024 saw the launch of the Trans‑Caspian Transport Corridor Coordination Platform, which is expressly dedicated toward “promot[ing] the corridor and coordinate efforts to implement priority projects in hard and soft infrastructure in Central Asia. It will also coordinate with investments and activities in the South Caucasus and Türkiye that are relevant to strengthening operational efficiency and seamless connections across the Trans‑Caspian Transport Corridor."
Yet these initiatives alone are insufficient to overcome the Middle Corridor’s significant challenges, including infrastructure bottlenecks, regulatory inefficiencies, and fragmented investment strategies across its diverse stakeholders.
A Trans‑Caspian Development Bank could serve as the critical mechanism to address these issues, providing targeted financing for key projects, fostering regional economic integration, and aligning the corridor’s development with broader trade and sustainability goals. The bank would ensure that investments are coordinated and strategically deployed to maximize the corridor’s potential by uniting resources under a single institution. This necessity becomes even clearer when examining the current state of trade and infrastructure along the Middle Corridor, where gaps and inefficiencies hinder its viability.
The Middle Corridor at Present
The Middle Corridor, despite its strategic promise, remains constrained by a range of systemic inefficiencies that undermine its competitiveness. Efforts to modernize infrastructure and improve coordination have progressed markedly but still fall short of addressing fully critical gaps that limit its viability as a reliable trade route. To move beyond its current status as a supplementary alternative, the corridor must overcome significant efficiency, cost‑effectiveness, and operational reliability challenges. Although somewhat outdated, the World Bank’s late 2023 report, The Middle Trade and Transport Corridor: Policies and Investments to Triple Freight Volumes and Halve Travel Time by 2030, offers illuminating insights on this matter.
Start with the relative inadequacy of its physical infrastructure, particularly its ports and railways. Ports along the Caspian Sea, such as Alat (Baku), Aktau, Kuryk, and Turkmenbashi, are underutilized due to poor operational efficiency, limited connectivity to rail networks, and a lack of modern equipment. That said, there are notable signs of progress since the publication of the World Bank’s report. The Port of Baku, for instance handled 7.6 million tons of cargo in 2024—a 3.2 percent increase from the previous year— and managed 76,775 twenty‑foot equivalent units (TEUs), reflecting a substantial 73 percent rise in container throughput. That said, there still remain delays due to inefficient cargo handling and insufficient first‑ and last‑mile connectivity. Similarly, Kazakhstan’s ports have seen important capacity increases, yet issues such as high wind speeds and outdated navigation equipment frequently disrupt operations.
Meanwhile, railways, which form the backbone of the corridor’s land‑based transit network, are plagued by bottlenecks at critical nodes and along key segments. The Baku‑Tbilisi‑Kars (BTK) railway, a vital link connecting the Caspian region to Türkiye and Europe, operates below its potential due to limited rolling stock, outdated signaling systems, and inefficiencies at border crossings. However, in May 2024, the completion of long‑anticipated repairs, upgrades, and expansions to the Georgian section of the line significantly improved its throughput capacity—from 1 million to 5 million tons per year—marking significant milestone in the corridor’s development. Though this is welcome progress, some structural issues persist elsewhere. For instance, the Almaty‑Shu section in Kazakhstan, another critical segment, continues to struggle with congestion and infrastructure fatigue, resulting in delays that ripple throughout the corridor. These sorts of deficits reduce the corridor’s capacity and increase transit times and costs.
The corridor currently suffers from high costs and long, unpredictable transit times, which deter many potential users. Transit through the corridor presently takes three times longer than the Northern Route through Russia and still offers little advantage over maritime shipping, despite being more expensive. According to the World Bank, the average time to transport goods from Khorgos, China, to Constanta, Romania, via the Middle Corridor was around 50 days in 2022. This is comparable to maritime shipping, which is far cheaper and more reliable.
So, although the situation has improved compared to previous years, there is still significant room for further improvement. This is gradually being tackled. For instances, in early 2024, Middle Corridor countries jointly launched the Digital Trade Corridor (DTC) online platform, aimed at streamlining cargo movement by enabling operators to track shipments in real time and bypass some of the corridor’s more burdensome bureaucratic procedures. Though there is more to be done, this represents a strong step toward greater transparency and operational efficiency across the route.
Current railway operations are fraught with inefficiencies. Inconsistent service standards across countries, despite interoperability in railway systems, and delays at transshipment points contribute to extended transit times. The imbalance in eastbound and westbound traffic further complicates logistics, as empty wagons often need to be repositioned, adding to costs and delays. Before the Ukraine war, Russia’s rail network played a key role in balancing freight flows—a function that the Middle Corridor is still working to replicate. The year 2024, however, delivered signs of improvement; including the first direct container train from the Xi’an (China) to Baku (Azerbaijan) and its return service. The volume of Chinese cargo traffic through the corridor has grown around 160 percent since, prompting the Trans‑Caspian International Transport Route International Association (TITR‑IA) to open a permanent representative office in Xi’an following a March 2025 meeting in Baku.
The sea crossing, primarily at the Caspian leg, is also a bottleneck. A shortage of vessels, slow ferry operations, and high shipping tariffs make this segment particularly inefficient. For example, shipping rates between Aktau and Baku are disproportionately high relative to the short distance, exacerbating overall costs. Delays at ports further compound the problem, with dwell times often exceeding global standards due to inadequate handling equipment and poor coordination among stakeholders. As with other issues, governments are moving to address this segment. Azerbaijan’s government authorized a $12 million investment into Baku’s port to increase annual cargo capacity from 15 million to 25 million tons. Similarly, Kazakhstan’s government plans to triple container throughput in ports of Aktau and Kuryk and boost their cargo capacity by 50 percent by 2028, making room for improvements in efficiency
More broadly, since the Middle Corridor spans multiple countries—each with its own regulations, operational priorities, and investment strategies—the resulting lack of cohesive management is one of the corridor’s most significant challenges. Coordination among national railway operators, port authorities, and customs agencies remains low, resulting in delays, inconsistent service quality, and increased costs. For instance, the absence of a unified operator overseeing end‑to‑end logistics means that shippers must navigate multiple agencies and standards, leading to inefficiencies at every stage of transit.
Border crossings are particularly problematic. Delays often occur due to misaligned customs procedures, inadequate staffing, and outdated systems. For example, the transition of goods between Kazakhstan and Azerbaijan frequently involves lengthy inspections and duplicative paperwork, despite international agreements aimed at simplifying these processes. Surveys conducted by the World Bank highlight that poor coordination at borders is a leading cause of transit delays along the corridor.
Efforts to address these issues, such as establishing a joint logistics operator by Azerbaijan, Georgia, and Kazakhstan, represent progress but remain in the early stages of implementation. Without a centralized authority to enforce standards and streamline operations, the corridor suffers from fragmentation that undermines its competitiveness.
The corridor’s reliance on outdated and fragmented digital systems further exacerbates its inefficiencies. While many stakeholders have adopted modern IT solutions, these systems are not interoperable, leading to duplication of documents, delays at border crossings, and reduced transparency. Shippers often lack visibility into the status of their goods, making it challenging to plan effectively and adding to the uncertainty of using the corridor. The aforementioned launch of a new unified online platform in early 2024 represents an important corrective step, but further progress is necessary.
The lack of digital integration is particularly evident in customs operations, where manual processes and inconsistent data requirements cause significant delays. For instance, shippers frequently report having to submit the same documentation multiple times due to a lack of standardized procedures. These issues not only slow down transit but also increase costs, as delays often result in additional fees for storage and demurrage. Digitalization efforts, though underway, remain relatively limited in scope. A more holistic and comprehensive approach to digital integration is needed to unlock the corridor’s potential and align it with global standards.
Finally, the environmental challenges facing the Middle Corridor are also noteworthy. The Caspian Sea, for instance, faces long‑term ecological risks due to declining water levels. Ports like Baku, Aktau, and Turkmenbashi will require significant dredging operations and adaptive infrastructure to maintain their functionality. Without these investments, the corridor’s maritime segment could face severe disruptions, undermining its reliability.
The Port of Baku at Alat will need to continue playing a foundational role in the corridor’s performance and integration. As emphasized by Azerbaijan’s national logistics strategy, Baku is positioned to serve a population of 140 million people within a 1,000 km radius, offering connectivity across East‑West and North‑South trade axes.
The Port of Baku at Alat will need to continue playing a foundational role in the corridor’s performance and integration.
Azerbaijan has prioritized the development of Baku into a worldclass intermodal logistics hub, and its collaboration with Kazakhstan, Georgia, and Turkmenistan continues to deepen. The port leads efforts to improve efficiency on both port and national levels, replicate best practices across Caspian ports, strengthen partnerships with Black Sea terminals, and expand its catchment into the EU, North Africa, and South Asia.
According to IEC International, freight projections for the corridor show that without additional terminal and rail upgrades, capacity limits could be reached as early as the end of 2025 (for containers and fertilizer), and by 2030 for oil and general cargo. The corridor’s backbone rail (BTK) is currently underutilized—serving 6.5M tons versus a capacity of 17M—and would benefit from targeted investment in rolling stock and line upgrades, particularly across Türkiye and the Balkans.
Overall, the Middle Corridor’s current inefficiencies present a mixed picture. Incremental improvements and fragmented investments are certainly helpful; the volume of goods transported along the corridor reached 4.5 million tons in 2024—a 62 percent increase from the previous year alone. This is the sort of growth that is enviable in other parts of the world, and should be recognized as such. Moreover, governments from the region are still working to upgrade existing infrastructure, upgrade locomotives and vehicles, and integrate the various networks together. Yet at present, this will not suffice to transform the corridor into a reliable trade route that can effectively compete with maritime options.
Addressing the corridor’s myriad challenges—spanning infrastructure, coordination, and financing— requires a bold, centralized mechanism capable of mobilizing resources, streamlining operations, and fostering regional cooperation. A Trans‑Caspian Development Bank could serve as the institutional foundation to bridge these gaps, enabling the corridor to reach its full potential while aligning with the region’s broader developmental and geopolitical objectives.
Conceptual Blueprint
For our proposed Trans‑Caspian Development Bank to succeed, it must be designed as a robust, independent institution capable of channeling investment, mitigating risk, and coordinating regional infrastructure development. It cannot afford to be just another multilateral bureaucracy that issues reports and recommendations without real influence.
For our proposed Trans‑Caspian Development Bank to succeed, it must be designed as a robust, independent institution capable of channeling investment, mitigating risk, and coordinating regional infrastructure development.
Rather, TCDB must function as a financial engine that directs capital to the most impactful projects, ensures investments generate returns, and provides the institutional backbone the Middle Corridor currently lacks.
The first part of our proposal focuses on the Trans‑Caspian Development Bank’s governance model. A Board of Governors, consisting of representatives from each founding member state, would serve as the highest decisionmaking body of the TCDB. Each country would appoint one Governor— likely a finance minister, central bank governor, or high‑ranking economic official—responsible for setting long‑term strategic priorities. Their voting power would be weighted based on their capital contribution to the bank, ensuring a fair balance between financial commitment and decisionmaking authority.
Beneath them, a Board of Directors would oversee the bank’s operations. The board would consist of 15 directors, with 10 seats allocated to the founding member states and five reserved for external investors who provide significant financial commitments. This structure ensures that regional actors retain control while allowing for external involvement in a structured, non‑dominant way. The President of the TCDB, selected on a rotating basis from among the founding members, would serve as both the bank’s chief executive and chair of the board.
Supporting the President, a team of Vice Presidents would manage specific operational areas, such as infrastructure lending, green financing, private sector engagement, and digitalization initiatives. They would oversee project implementation, ensure financial sustainability, and work directly with recipient governments and private investors to move projects forward.
Unlike development banks that become bloated with administrative overhead, the TCDB must remain lean and results‑driven. The core staff should be highly technical, with expertise in transport logistics, energy infrastructure, and trade facilitation—reflecting the corridor’s unique needs. The bank must not become a bureaucratic haven for political appointments. Instead, it should actively recruit top financial experts and infrastructure specialists from both the region and institutions like the World Bank, the European Bank for Reconstruction and Development (EBRD), and the Asian Infrastructure Investment Bank (AIIB).
The second part of our proposal focuses on how to fund the Trans‑Caspian Development Bank. A new bank of this envisaged scale requires a solid financial foundation, drawing from multiple sources to maintain both independence and long‑term sustainability. The TCDB’s initial capitalization should be at least $30 billion, with contributions from each founding member state. The allocation should be weighted based on economic size and trade volume within the corridor, meaning Kazakhstan, Azerbaijan, and Uzbekistan would provide the largest shares.
Beyond state funding, public‑private partnerships (PPPs) would be a crucial pillar of the bank’s financial structure. Logistics firms, energy companies, and major infrastructure developers should be invited as non‑voting investment partners, offering capital in exchange for long‑term participation in projects. A Trans‑Caspian Development Fund, managed under the bank’s umbrella, could serve as a structured vehicle for these investments, reducing risk for private sector participants while ensuring that profits are reinvested into further corridor development.
The TCDB must also actively seek support from international financial institutions, particularly those with experience funding large‑scale infrastructure projects in emerging markets. The AIIB, the EBRD, and the Green Climate Fund (GCF) should be natural funding partners. The AIIB and EBRD have already invested heavily in the Silk Road region, while GCF funding could be directed toward sustainable transport and renewable energy projects within the corridor.
The TCDB would issue bonds and syndicate guarantees to maintain financial credibility, allowing it to leverage its capital base and attract further investment. The Astana International Financial Centre could take the lead on this aspect, and perhaps others. The structure should include both paid‑in capital (available for immediate lending) and callable capital, which acts as a financial safeguard to reassure outside investors.
The TCDB should also take advantage of sovereign wealth funds in the Gulf and other parts of Asia that are actively seeking infrastructure investments with long‑term returns. By structuring regional investment funds, the bank could establish designated pools of capital for specific priorities, such as railway modernization or renewable energy integration.
The third part of our proposal is about membership and location. The founding members of the Trans‑Caspian Development Bank should include the C5 (Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan), along with Azerbaijan, Georgia, and Türkiye. These countries collectively control the core trade routes of the Middle Corridor and stand to benefit the most from its development. Armenia could also be offered (retroactive) founding membership once it signs and ratifies peace and normalization treaties with both Azerbaijan and Türkiye.
Beyond regional membership, the bank should also allow for non‑regional investment partners, including relevant major powers like China, the EU, Russia, and the United States— along with lesser ones like Japan, Saudi Arabia, and the UAE. These investors would provide financial contributions without direct governance rights, ensuring regional stakeholders maintain decisionmaking control.
However, this raises the issue of the TCDB’s headquarters; it must be geopolitically and economically strategic, situated in a city that reflects both the region’s economic reality and its long‑term aspirations. Some would argue that it should be Astana, as it is the capital of the largest economy in the Silk Road region, providing stability and regional centrality. Kazakhstan has the financial capacity and geopolitical leverage to lead such an institution. Others would point to Tbilisi, which offers proximity to European capital markets and investors, as well as a pro‑business regulatory environment. But undoubtedly the natural hub of the Middle Corridor is Baku. Not only does it have a well‑developed financial sector, is positioned at the critical maritime chokepoint of the Caspian, and is located at the heart of the Silk Road region, but, as Krnjević has put it, Azerbaijan is the “indispensable country for the advancement of the strategic energy and connectivity ambitions of all major outside powers in the Silk Road region— Western and non‑Western alike.” In short, Baku is the logical choice for the TCDB’s headquarters.
The fourth part of our proposal concerns the strategic focus areas of the Trans‑Caspian Development Bank. The TCDB must be structured to fund projects that directly enhance the Middle Corridor’s competitiveness, rather than becoming a generic infrastructure bank. Its investments should be targeted and highly impactful, with an emphasis on four areas.
First, rail and port modernization. The TCDB’s first priority must be to expand and upgrade critical transit infrastructure, including increased rail capacity along the Baku‑Tbilisi‑Kars corridor, modernization of Kazakhstan’s Almaty‑Shu rail segment, and capacity expansion at key Caspian ports such as Baku, Aktau, and Turkmenbashi.
Second, renewable energy integration. A key opportunity for the corridor lies in developing large‑scale wind and solar projects, particularly in Azerbaijan, Kazakhstan, and Uzbekistan. The two undersea mega‑cable projects to carry electricity produced by renewable sources from the aforementioned three countries and Georgia to European markets speak directly to this point. Investments in electrified rail infrastructure would also reduce reliance on diesel‑powered freight, aligning the corridor with global decarbonization efforts.
Third, Caspian gas projects. The TCDB should play a role in enhancing regional energy trade, particularly by improving gas export infrastructure in Azerbaijan and Turkmenistan. Expanding natural gas storage facilities and pipeline interconnectivity would strengthen energy security across the corridor.
Four, digital trade corridors. Modernizing customs procedures and trade facilitation is as important as physical infrastructure. The TCDB should fund the development of a unified electronic customs system, blockchain‑based cargo tracking, AI‑driven logistics management tools, and the Digital Silk Road initiative to reduce transit delays and improve efficiency.
Qui Bono?
Beyond its direct financial impact, the TCDB would provide structural benefits that extend far beyond infrastructure development. For instance, centralized coordination would allow member states to pool resources, ensuring that regional investment is deployed strategically rather than in isolated and potentially redundant projects. Instead of competing for limited funds and managing disjointed infrastructure initiatives, countries could align their priorities through a single, structured financing institution.
Likewise, the bank would also enable targeted investments in the most critical areas of the Middle Corridor, focusing capital where it could generate the highest returns. By funding high‑impact projects such as port expansions, railway upgrades, trade facilitation programs, and standardizing funding and procurement practices, the TCDB would improve the corridor’s overall efficiency and competitiveness while reducing waste and ensuring that capital is deployed efficiently. A well‑run TCDB could cut through bureaucratic delays and corruption risks that often plague regional projects, helping to deliver results faster and more cost‑effectively.
From a geopolitical standpoint, the bank would bring salutary benefits. It would serve as a vehicle for outside actors to participate in the region without direct political entanglements. Western investors, Gulf sovereign wealth funds, and Asian development institutions would have a structured, neutral mechanism to engage with the Middle Corridor, reducing the risk of geopolitical pushback while encouraging multi‑stakeholder participation in regional development.
Finally, the TCDB would promote regional integration, fostering cooperation among countries that have struggled historically with fragmented policies and competing interests. A shared financial institution would create stronger incentives for collaboration, aligning national economic policies with broader regional growth objectives.
Building the Bank that Builds the Region
This essay has laid the conceptual foundation for the Trans‑Caspian Development Bank. The need is clear, the framework is sound, and the potential impact is undeniable. But ideas, no matter how well‑articulated, mean nothing without action. The next step is turning this vision into a reality, which requires political will, strategic partnerships, and a clear roadmap for implementation.
The need for the TCDB is clear, the framework is sound, and the potential impact is undeniable. But ideas, no matter how well‑articulated, mean nothing without action.
A financial institution of this magnitude cannot be willed into existence overnight. The formation of the AIIB took over two years of negotiations, coalition‑building, and institutional planning before it was launched. The EBRD, another relevant model, required extensive diplomatic engagement to align the interests of multiple stakeholders. The Trans‑Caspian Development Bank would need a similarly rigorous process that blends high‑level diplomacy with targeted financial negotiations to secure both regional buy‑in and international support.
The first step in this process requires assembling the right coalition of leaders, institutions, and private sector stakeholders to move the proposal forward. That means immediate action is needed to begin laying the institutional groundwork and securing early commitments.
The first concrete move should be convening a high‑level conference on the TCDB concept, hosted in Baku—a natural convening force for this initiative and one of the most proactive countries in the region regarding infrastructure development. With its existing networks in Central Asia and Europe, Baku is the ideal location for bringing together regional policymakers, financial experts, and prospective investors. Doing so would solidify the argument for making this city the TCDB’s headquarters.
This initial conference would serve multiple purposes. First, it would provide a venue to formally introduce the TCDB concept to a broad audience of policymakers and financiers. Second, it would allow for detailed discussions on key technical aspects, from governance models to capital structures. Third, and most importantly, it would generate momentum by compelling stakeholders to begin publicly engaging with the idea.
Simultaneously, an exploratory committee should be formed to conduct a formal feasibility study. The committee should include representatives from potential founding member states (enumerated above) as well as technical advisors from existing development banks and financial institutions. Its purpose would be to assess the capital requirements, operational structures, and legal frameworks needed to establish the bank. This process would also provide an opportunity to refine the proposal, ensuring that it aligns with the specific needs of regional economies and financial systems.
The TCDB should also be elevated as a key agenda item in upcoming high‑level regional meetings. One way forward would be to present the idea at the September 2025 Consultative Meeting of the Presidents of Central Asian states, which has of late come to include the President of Azerbaijan as an “honored guest.” Invitations could easily be extended to the presidents of Georgia and Türkiye, as well as perhaps others. Another would involve making TCDB a central agenda item at the next summit of the UN Special Program for the Economies of Central Asian Countries (SPECA). Raising at the next summit of the Organization of Turkic States (OTS) and the Central Asia Regional Economic Cooperation (CAREC) Program would also make sense. Should major outside powers (e.g., China, the EU, the United States) decide to expand the “5” in their respective 5+1 meetings, then TCDB could also be raised there in a central way. A plethora of other such opportunities to promote the concept, such as discussing it at the Astana International Forum, also spring to mind.
Next, strategic partnerships that provide synergy ought to be explored. The reality is that no development bank can function without strong financial backing. While the TCDB would be led by regional states, attracting international investment would be critical to ensuring its long‑term viability. Fortunately, there are multiple strategic partners and funding sources that align with the goals of the institution.
The EU’s Global Gateway initiative, which aims to mobilize €300 billion of public and private capital for infrastructure projects in its various neighborhoods, presents an opportunity for securing financing for TCDB‑backed projects. Brussels has already identified Central Asia as a key region for Global Gateway investment, and a well‑structured regional development bank could serve as a natural intermediary for channeling EU funds into Middle Corridor infrastructure— assuming, of course, that Brussels will choose to look more strategically at the area between its own external borders and Central Asia.
Similarly, since 2015, Japan’s Partnership for Quality Infrastructure has sought to provide funding for sustainable infrastructure projects, particularly in regions where China’s BRI has left gaps. It has since grown into the Expanded Partnership for Quality Infrastructure, which extends Japan’s infrastructure diplomacy globally. Additionally, Japan has been an active investor in Central Asia and the Caucasus, and its financial institutions, including the Japan Bank for International Cooperation (JBIC), could play a role in co‑financing TCDB projects.
Gulf sovereign wealth funds are another important source of capital. The United Arab Emirates, Saudi Arabia, and Qatar have all demonstrated interest in Central Asian infrastructure, particularly in logistics, energy, and industrial development. The TCDB could be structured to allow Gulf investors to participate as non‑voting financial partners, allowing them to invest in long‑term infrastructure projects without exerting direct influence over bank governance.
Beyond state‑backed funding sources, the private sector would be an essential partner. Major logistics firms, energy companies, and infrastructure developers should be engaged early in the process. Companies that already have a vested interest in the Middle Corridor—such as DP World, which operates port infrastructure in Kazakhstan— should be approached as potential investment partners. The bank could also collaborate with global investment firms specializing in infrastructure financing, ensuring that projects backed by the TCDB meet commercial viability standards.
One of the most significant advantages of a development bank is its ability to de‑risk private investment. By using concessional financing and guarantees, the TCDB could make Middle Corridor projects more attractive to institutional investors, particularly those in Europe and Asia. The model used by the International Finance Corporation (IFC)—which blends public and private capital to support infrastructure projects— could serve as a template for structuring TCDB‑backed investments.
Ultimately, the case for the TCDB is not just an economic argument—it is a geopolitical and strategic imperative. Without a dedicated financing institution, the Middle Corridor will remain a fragmented collection of national projects rather than a cohesive trade and infrastructure network. The region needs an entity capable of coordinating investment, standardizing regulations, and ensuring that infrastructure is developed to maximize regional connectivity rather than reinforcing existing bottlenecks.
There is also a narrow window of opportunity to establish the TCDB before external actors impose their own visions on regional development. China’s BRI has already shaped much of the infrastructure landscape in Central Asia, and if regional states do not act decisively, they risk becoming mere participants in a system designed elsewhere. The TCDB offers an opportunity to take control of the region’s financial future, ensuring that investments align with the interests of Central Asia, the Caucasus, and Türkiye rather than being dictated by outside powers—not just China (and to a much lesser extent Russia), but the EU as well.
Just as institutions like the EBRD helped shape post‑Cold War Europe by channeling investment into critical industries and infrastructure, the TCDB could help shape the next phase of Silk Road region cooperation and perhaps even point the way to some sort of integration. It is not simply about financing railway lines or ports; rather, it is about creating the financial architecture necessary for long‑term regional development centered on value‑added energy projects, manufacturing, and strategic connectivity. The Middle Corridor is an existing concept in diplomatic communiqués and policy papers. However, without a mechanism like the TCDB, it will struggle to reach its full potential.
The TCDB is about creating the financial architecture necessary for long‑term regional development centered on value‑added energy projects, manufacturing, and strategic connectivity.
The next steps are clear: think inclusively, convene the right stakeholders, secure early commitments, and begin the process of institutional design. The foundation is already there. It is now up to regional leaders, investors, and policymakers to move beyond discussion and into action. The Trans‑Caspian Development Bank is not just an opportunity—it is a strategic necessity.
