| It is in Germany’s interest to take a leading role in Central Asia’s green energy sector by supporting smaller, scalable projects. By providing know-how and funding, Germany could also help to increase the EU’s role in the region. Central Asia is a resource-rich region comprising five countries: Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan. It holds significant reserves of oil and gas, as well as critical raw materials (CRMs) such as copper, lithium, and nickel. The growing global demand for alternative energy sources, secure access to CRMs, and a reliable transport route that bypasses Russia has renewed international interest in the region, including from Germany and the European Union (EU). In response, the EU has revived the once-abandoned Middle Corridor, a strategic transport route linking Central Asia to Europe. The region is rapidly becoming a focal point for European investment. At the Investors Forum for EU-Central Asia Transport Connectivity held in Brussels in January 2024, European and international financial institutions pledged €10 billion in support of the Trans-Caspian International Transport Route, with a significant share of funding drawn from the EU’s Global Gateway initiative. This was followed by the first EU-Central Asia Summit, which was held in Uzbekistan in April 2025 shortly after US President Donald Trump announced new global trade tariffs targeting several EU countries. During the summit, the EU unveiled an additional €12 billion Global Gateway investment package for Central Asia, allocating €3 billion for transport; €2.5 billion for CRMs; and €6.4 billion for water, energy, and climate. The remaining funds were designated for digital connectivity. Despite its growing strategic and economic importance, Central Asia remains highly vulnerable to climate change. Within decades, nearly half of the glaciers feeding the region’s main rivers, Amu Darya and Syr Darya, could disappear. Rising temperatures and reduced inflow from the Russian part of the Volga River are causing the Caspian Sea to shrink. These changes are worsening water shortages, making water an increasingly critical and contested resource in the region. Aside from their climate-related impacts, they also endanger the region as a strategic route for Europe. To enhance the strategic outreach between the two regions and improve the climate situation, the EU must reconsider its current approach. As detailed in this DGAP Policy Brief, it needs to adopt a more inclusive and regionally responsive strategy for both the long-term success of the Middle Corridor and the sustainability of Central Asia as a whole. The Revival of the Middle Corridor as a Reliable Transport Route The EU first began investing in Central Asia’s transport connectivity in 1993 with the launch of its Transport Corridor Europe-Caucasus-Asia (TRACECA) program, which established agreements with Central Asian states. However, ferry crossings across the Caspian Sea, as well as Black Sea routes from Georgia to Romania and Bulgaria, were slow and expensive. Underdeveloped rail infrastructure in Turkey and inefficient border and custorms management also caused delivery delays. However, Russia’s aggression in Ukraine has revived EU interest in developing an alternative transport chain independent of the Russian Northern Corridor. The updated route - now branded as the Middle Corridor - connects China and Central Asia to Europe via the Caspian Sea to Azerbaijan, where it splits into two main paths. One crosses Georgia and the Black Sea, reaching Bulgaria, Romania, and Ukraine. The other runs through Turkey and the Mediterranean Sea, continuing onward to Europe. Since Russia’s large-scale invasion of Ukraine in February 2022, Kazakhstan has used the Middle Corridor to export uranium and oil to Europe. As a key producer of 18 of the EU’s 34 CRMs, it signed a memorandum of understanding (MOU) with the EU in 2022 on raw materials and green value chains. In 2023, German company HMS Bergbau AG pledged €630 million for lithium in East Kazakhstan. Additionally, in April 2024, Uzbekistan signed a similar MOU with the EU, establishing a partnership on CRMs. In April 2025, the EU committed €3 billion for transport and €2.5 billion for CRMs as part of its €12 billion investment. These developments show that the Middle Corridor, which is one of the key components of the EU’s Global Gateway, plays a crucial role in diversifying German and European sources of CRMs. The Middle Corridor is becoming a stable route that helps mitigate the threats associated with the Russian Northern Corridor while securing a portion of energy supplies from Central Asia, particularly in the context of trade tensions with the United States. The EU’s Current Global Gateway Financing in Central Asia The increasing strategic importance of Central Asia as a source of energy and CRMs and the Middle Corridor as a reliable transport route has forced the EU to deploy a range of instruments to support its objectives in the region. In 2024 and 2025, under the Global Gateway, European and international institutions committed a total of €22 billion to support sustainable connectivity in Central Asia with a strong focus on developing the Middle Corridor. In 2022, the EU had already launched two Team Europe Initiatives under the Global Gateway: one on Water, Energy, and Climate with €700 million in support and the other on Digitalization with €40 million. Both initiatives are backed by the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD). They aim to strengthen sustainability and digital infrastructure in Central Asia and, together with the Middle Corridor, form part of the EU’s strategy to build resilient global connections. Almost half of the Global Gateway’s funding comes from the European Fund for Sustainable Development Plus (EFSD+), which leverages public and private investments through guarantees and blending instruments. The EIB manages two thirds of the guaranteed volume. EFSD+ offers guarantees to reduce investment risks in high-risk countries, compensating investors if projects fail. Blending lowers project costs by using public funds to cover parts of expenses, encouraging additional investment. Under the Global Gateway, Brussels also provides soft loans and grants. Furthermore, the EU provides funding for addressing climate impacts in the region. Despite ambitious funding that includes €6.5 billion allocated for water and energy under Global Gateway and €700 million on water, energy, and climate from Team Europe, the challenges in the region related to climate and resources remain huge. Under Global Gateway, the EU will also support the International Fund for Saving the Aral Sea (IFAS), which is dedicated to preventing the further drying of what was once a vast inland body of water. As it was nearly destroyed by massive Soviet-era irrigation projects, the Aral Sea adds another layer of difficulty to the EU’s mission in the region. Additional factors are worsening the climate situation. Following the collapse of the Soviet Union, the upstream countries of Kyrgyzstan and Tajikistan began using the Amu Darya and Syr Darya rivers for hydropower. Yet, the downstream nations - Kazakhstan, Uzbekistan, and Turkmenistan - rely on them for irrigation. This conflicting water use has fueled regional tensions. With Central Asia’s population projected to hit 100 million by 2050 and climate change worsening scarcity, the region faces growing water stress. Adding to the difficulties, the Team Europe Initiative launched in 2022 faces delays in Central Asia, especially in Tajikistan and Turkmenistan, due to limited EU presence and weak bilateral ties. Complex EU regulations and approval processes - as well as strict environmental, social, and governance (ESG) standards under the EFSD+ instrument - further hinder project implementation. The EU’s new €12 billion Global Gateway package could suffer a similar fate to this previous Team Europe package. The Middle Corridor: Prospects and Realities The Middle Corridor has attracted growing international interest as a viable alternative to the Russian Northern Corridor. The Asian Development Bank (ADB) has initiated a pilot unified electronic transit system in Azerbaijan, Georgia, and Kazakhstan, aligning with EU standards to streamline cross-border trade. Germany has emerged as a key stakeholder. Under Chancellor Olaf Scholz’s leadership, Berlin hosted a summit with Central Asian leaders in 2024 to reinforce cooperation. German logistics firm Rhenus Group also plans to build a container terminal at Aktau Port, enhancing maritime trade capacity in the Caspian Sea. Meanwhile, the Abu Dhabi-based AD Ports Group, in partnership with Kazakhstan’s state transport company, is operating oil tankers across the Caspian, improving regional connectivity. In the green energy sector, a German-Swedish consortium aims to construct the world’s largest green hydrogen plant in Central Asia, drawing water from the Caspian Sea. If completed, the facility would allow hydrogen exports to Europe via the Middle Corridor, anchoring the route as a long-term green energy corridor. Despite these initiatives, the Middle Corridor remains far behind its northern counterpart. In 2024, its capacity reached just 6 million tons, compared to over 100 million tons on the Russian route. Logistical inefficiencies - including transport delays, shortages of vessels and wagons, and pricing instability - continue to undermine competitiveness. Realizing meaningful upgrades will require substantial investment. The EBRD estimates that €18.5 billion is needed to modernize transport infrastructure across Central Asia. Financing remains a hurdle. Much of the funding still relies on loans and domestic contributions. In 2025, the EU issued a €200 million soft loan via the EIB to the Development Bank of Kazakhstan, while the EBRD provided €288 million to Kazakhstan Temir Zholy, the country’s national railway company, for railway upgrades. However, these remain modest in comparison to what is required to approach the scale of the Northern Corridor. Environmental concerns also pose risks. The green hydrogen project, though visionary, depends on extracting 50 million cubic meters of water from the Caspian Sea - a body of water already nearing its lowest recorded levels since 1977. In Kazakhstan’s shallow coastal zones, this could disrupt fragile ecosystems, harming local flora and fauna. At present, the Middle Corridor lacks a stable funding model because securing financing through blending and guarantees remains time-consuming and uncertain. Moreover, the absence of a clear governance and coordination system contributes to ongoing delays. With Central Asia already vulnerable to climate change, further development of the Corridor - if not properly managed - could worsen environmental stress, particularly in the region around the Caspian Sea. Recommendations for the EU and Germany Central Asia is becoming increasingly important for the EU as a supplier of energy and critical raw materials (CRMs), and the Middle Corridor is emerging as a safer and more strategic route for their transport. However, the EU’s approach remains overly broad, and current funding mechanisms are insufficient to address the scale of challenges on the ground. Moreover, the EU’s financial instruments - organized from Brussels - are not functioning effectively. To ensure the long-term success of the Middle Corridor, and to respond to the challenges outlined above, the EU and its partners should consider following these three recommendations: First, addressing climate impacts is important for the success of the Middle Corridor. Therefore, the EU should adjust the focus of its funding. While the Team Europe Initiative on Water, Energy, and Climate - alongside the €6.5 billion allocated to these sectors - holds promise, its scope is currently too broad to address the region’s specific challenges. With a more targeted approach, this initiative could effectively support the decarbonization of road, rail, and waterway transport along the Middle Corridor, especially as traffic volumes grow. Electrifying railways and integrating them with renewable energy sources are key opportunities. Likewise, the Team Europe Initiative on Digitalization and the Global Gateway’s €100 million investment in digital infrastructure aim to expand internet access across the region - a goal that remains highly ambitious. Still, these efforts could enhance logistics, optimize transport planning, reduce energy consumption, and digitally support green projects. Rather than dispersing billions across loosely coordinated or overly ambitious efforts - such as saving the Aral Sea - the EU would benefit from setting focused, realistic goals. A cohesive and integrated strategy would ensure better coordination, maximize impact, and deliver meaningful benefits for the Middle Corridor and the wider region. Second, the EU should strengthen its cooperation with the Asian Development Bank (ADB), which shares similar priorities in climate and sustainability, as well as with Gulf countries that have the financial capacity to invest in connectivity projects. This collaboration could help sustain momentum for EU initiatives once EIB and EBRD loan resources are ended - otherwise, progress on the Middle Corridor may stall. A major challenge for the Global Gateway is its reliance on the EFSD+ mechanism, which depends on attracting both public and private funding. Given that the Middle Corridor requires an estimated €18.5 billion in priority investments, the current funding model may fall short. Regional governments alone are unlikely to bridge this gap. ADB and Gulf states, with their expertise in infrastructure financing, could provide soft loans and attract additional private investment from Asia, reinforcing EU-led efforts. So far, the Team Europe Initiative in Central Asia has had limited success, largely due to difficulties in mobilizing funds through guarantees and blending - a fate that could also affect the €12 billion Global Gateway package. To ensure steady progress, the EU must deepen its partnerships with other international actors. Third, Germany should position itself as a strategic player in Central Asia to secure early access to CRMs and renewable energy, particularly in Kazakhstan, where competition is growing. With its advanced green technologies, Germany is well-placed to support and benefit from regional green projects while strengthening transport connectivity along the Middle Corridor. German and Swedish companies have the potential to establish one of the world’s largest green hydrogen plants in Kazakhstan, with plans to export hydrogen or ammonia to the EU via the Middle Corridor. However, logistical and transport challenges - including limited capacity and complex transit routes and border crossings - make it less competitive than Northern Africa’s hydrogen initiative, which offers simpler transit options. Additionally, such a large-scale project risks harming the fragile Caspian Sea ecosystem. As an alternative, German and Swedish companies could prioritize smaller-scale projects, such as financing a green hydrogen facility for decarbonizing fertilizer production. With lower investment requirements, these projects are more feasible, still deliver economic and environmental benefits, and align with Germany’s sustainability goals while strengthening ties with Central Asia. |
