Analysis: Russia, Kazakhs eye rival canals

By JOHN C.K. DALY, UPI International Correspondent  |  Feb. 7, 2008 at 9:59 PM
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Call it the "battle of the canals." Both Russia and Kazakhstan are promoting rival projects to increase the Caspian's access to the Black Sea and from there, the world's oceans. In essence, Moscow is promoting an upgrade of the Russian Federation's aging Volga-Don waterway, "Volga-Don-2," while Kazakhstan's President Nursultan Nazarbayev, flush with petroleum revenue, is proposing an entirely new "Eurasia Canal" project across southern Russia. The other Caspian petro-states -- Azerbaijan, Turkmenistan and Iran -- are watching the discussions with interest, as is the European Bank for Reconstruction and Development, which is about to issue a tender for evaluating the relative merits of the two projects.

The issue is increased maritime access to the Caspian, the world's largest enclosed body of water. The Volga-Don Canal is the Caspian's sole maritime exit not only for Russia, but Azerbaijan, Kazakhstan, Turkmenistan and Iran as well.

Simply put, the 37-mile, 56-year-old Volga-Don Canal is aging. Finished in 1952 by prisoners of the gulag and connecting the Don and Volga, southern Russia's largest rivers, the canal's nine one-chamber canal locks are only capable of handling ships up to 5,000 tons. Depth limitations on the lower Don, between Kalach and Azov and at Gorodets-Nizhny Novgorod, limit vessel displacement to less than 12 feet. The Volga-Don Canal's carrying capacity is 16.5 million tons of cargo per year, while Nazarbayev's proposed Eurasia Canal could potentially carry up to 45 million tons annually.

Both projects have their patrons -- the governors of the Volgograd and Astrakhan regions strongly support Volga-Don-2, while the Eurasia Canal is endorsed not only by Nazarbayev, but the governor of the Rostov region and Stavropolskii krai and the administration of Kalmykia.

Nazarbayev first proposed an alternative Eurasia Canal at the St. Petersburg Economic Forum last June. His vision is to build an almost straight canal using Soviet-era navigable reservoirs across Russia's north Caucasus territory, beginning at the Caspian and then transiting the Cuma River, Vostochny Manych and Zapadny Manych onward to the Sea of Azov, which would shorten shipping routes using the Volga-Don Canal by nearly 600 miles.

"The Central Asian and Caspian regions are rich in energy resources ... but these reserves have to be delivered to world markets … (the new canal) would be a powerful corridor providing an outlet for the whole of Central Asia to the sea via Russia," Nazarbayev said. " … We have heard some of our Russian colleagues say that Kazakhstan will bypass Russian territory. But we will not bypass anyone. We are searching for routes that will benefit exports and Kazakh products. I say to Russia: let us build a canal! It carries a price tag of $6 billion. But we will have no difficulty finding investors."

The Volga-Don2 project envisages installing new 985-foot-long locks to allow the passage of larger vessels, increasing the channel's annual capacity from 16.5 million tons of cargo annually to 30 million tons. Neither project would be inexpensive; experts estimate that either canal would cost at least $5 billion.

Among the Caspian nations, Azerbaijan has been the coolest to Moscow's plans to upgrade the Volga-Don Canal. Baku's reticence to participate in the project may well stem from unhappy memories dating back to the early 1990s, when Azerbaijan was developing its offshore oil facilities with a massive influx of Western capital. Moscow charged what the Azeri government saw as extortionate transit rates for Western transports using the Volga-Don Canal to bring advanced Western drilling technology into the Caspian to develop Azerbaijan's offshore oil fields. Accordingly, Azerbaijan has politely declined Moscow's offer to invest in the Volga-Don 2 project; the same month Nazarbayev unveiled his Eurasia Canal vision, Azerbaijan's Transport Minister Zia Mamedov said: "At this stage, we see our participation in the project only as a carrier."

There are indications that Moscow is softening its covert opposition to the Eurasia Canal and moving toward possibly supporting both projects.

"There are two possible options. The first is to continue to develop the second thread of the Volga-Don Canal and to build it with the help of a consortium of a number of countries. The second option, which is quite sound as well, is the Eurasia Canal," Russian First Deputy Prime Minister Dmitry Medvedev said Feb. 2. "These two variants should be scrutinized and decisions should be made on them by the year's end.

"In any case, each variant could be developed. One project could be an international and the second could be regional to interregional."

As Medvedev is widely believed to be a shoo-in to succeed Russian President Vladimir Putin in the March 2 presidential elections, it looks as if shippers seeking entrance and egress to and from the Caspian may soon see their options doubled.

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