How Trump Can Break China's Tightening Grip On Central Asia

Currently, Central Asia's most reliable trade partners are neighboring China and Russia. Although EU trade is higher than Russia's, there are reasons to suspect that a significant share of it is transshipments to Russia to circumvent Western sanctions, as Brookings Institute senior fellow Robin Brooks has suggested.

Their trade also has to transit across the Caspian Sea, the South Caucasus and either the Black Sea or Anatolia. The same is true for Turkey's trade with Central Asia, which is likewise multimodal and accordingly results in comparatively higher costs and longer transit times.

Georgia plays an indispensable role in facilitating EU and Turkish trade along what's known as the“Middle Corridor”, but the possible resolution of the Armenian-Azerbaijani dispute over what Baku terms the“Zangezur Corridor” could streamline this route in the future.

A bubbling conflict over that dispute, however, risks disrupting their trade.

Azerbaijani President Ilham Aliyev told reporters last week that“[Armenia] should not stand in our way. They should not act as a geographical barrier between Turkey and Azerbaijan. The Zangezur corridor must and will be opened. The sooner they understand this, the better.”

He also called for demilitarizing Armenia and“eradicating” what he described as its“fascist ideology” in language similar to Russian President Vladimir Putin's in the run-up to what the Kremlin has referred to as its“special operation” in Ukraine.

Even if another regional war doesn't break out, deteriorating relations between the EU and Georgia over Tbilisi's Russia-inspired foreign agents legislation and latest parliamentary elections could complicate the bloc's trade with Central Asia.

Although this might cede greater market share to Turkey with time irrespective of whether the Zangezur Corridor ever comes to pass, China might end up being the greatest beneficiary, in which case the region might slip deeper into its sphere of influence.

It is in the US national interest to avert that scenario, most realistically by facilitating Central Asia's trade with all of its partners except for China. That, in turn, would allow them to serve as a collective counterweight to China.

For that to happen, the US will have to make some tough, if not controversial, choices. For starters, the incoming Trump administration would need to reconsider some of its Russian sanctions, many of which haven't worked as punitively intended.

As the Foreign Policy Research Institute's Maximilian Hess wrote last month ,“It may seem counterintuitive, given one of the key aims of the sanctions imposed on Russia has been to restrict trade with Russia, but trade with Russia has boomed for Central Asia and the Caucasus since 2022. Much of this has been driven by trade rerouting as European exports to Russia declined and were instead rerouted through the region.”

While Hess noted that sanctions have caused some complications in their trade, namely due to Russia's exclusion from SWIFT, their only real impact on the region has been the de facto rerouting of some pre-war European trade to Russia via Central Asia.

While exact data is hard to find, it's clear that a significant share of the EU's trade with the region is transshipments. That means EU-Central Asia actual trade is likely lower than officially stated, meaning China has greater influence than the data suggests.

Rescinding certain sanctions, extending waivers to European companies or declining to threaten secondary sanctions in response to violations – any or all of which could be part of a package deal with Russia on Ukraine – could bring greater economic clarity about Central Asia's actual present trade.

That's imperative to better understand the EU's competitive advantages there vis-a-vis China, which could then be more effectively leveraged.

The second tough choice concerns the continued granting of sanctions waivers to India for its trade with Afghanistan (and presumably also Central Asia) via Iran's Chabahar port.

Significantly, Trump's Ukraine envoy, Keith Kellog, revealed over the weekend that the incoming administration plans to revive its“maximum pressure” policy against Iran.

India's trade with Central Asia lags far behind its potential, and if the US wants to keep China's influence in check in the strategic region, then it must rely in part on India as a counterbalance.

But this can only happen if India and Central Asia are confident that their companies won't face secondary sanctions for violating the US's primary ones through their trade across Iran.

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An ideal solution would be for Pakistan to patch up relations with Afghanistan and India, thereby allowing India to pioneer an overland route to Central Asia, but that's politically unrealistic at present. That's why Iran must be relied upon as a transit state, which requires the US to be flexible with sanctions.

And finally, Trump should consider reversing Biden's pressure policy on Georgia and signal to the EU that it should follow suit. Such a rapprochement would ensure the EU can continue trading with Central Asia across Georgia's territory, thereby lifting present uncertainties.

In parallel, Trump's incoming government could also consider taking the lead in resolving the Armenian-Azerbaijani dispute over the so-called“Zangezur Corridor” in order to avert another war.

Trump and his advisors are known for their business-minded worldview and thus may agree that compromises toward Russia, Iran-India and the South Caucasus (Georgia and Armenia-Azerbaijan) are acceptable to counter China's rising influence in Central Asia.

If the US fails to act, then China will inevitably become even more of a dominant economic force in the strategic region, thereby giving it greater access to its energy and minerals while providing a ready conduit for more trade with Iran.

Those outcomes would run counter to US interests as China's existing dependence on energy imports by sea gives the US Navy leverage in any potential conflict with China, including through a blockade of the Malacca Strait chokepoint.

Meanwhile, greater overland trade between China and Iran via Central Asia would serve to neutralize Trump's“maximum pressure” policy on Tehran.

The incoming Trump administration would thus be wise to make Central Asia a more prominent part of its foreign policy calculus, otherwise its planned pressure tactics on China and Iran will be less likely to succeed.

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