/ Meridian Highway: Chinas BRI attracts Russia to Participate

China’s Belt and Road initiative strengthening ties across Eurasia has increasingly attracted many countries to participate in the project. China’s venture has recently gained significant support from the Russian Federation. And this last June, Russian prime ministry, Dimitry Medvedev, announced its cooperative effort in the project. Named the “Meridian Highway,” it is planned that project will stretch 2,000 kilometers through Russia, from the border of Kazakhstan to the border of Belarus, connecting it the Belt and Road initiative.

For Russia, it will cost around 600 billion rubles, not out of the governments pocket, but fully paid for by private investors. The main factor propelling the project forward financially is a Russian investment holding called LLC Meridian, a company is owned by Alexander Ryazanov, who is also a current board member of Russia’s railway monopoly, RZD. Ryazonov already has 80% of the land that will be required to complete the project.

Revenue will flow from the tolling of trucks passing through Europe and China and is expected to fully compensate the initial investment in 10-12 years. The project will be fully funded by investors funds, who in return, want the government insures 550 million USD for insurance of political and security risks that could hinder the functionality of the road, such as the closer of boarders.

Besides infrastructure development expected along the highway, it is expected that trade relations will become significantly more balanced between Russia and China, Russia benefiting from a stronger relationship with the economic superpower. Russia’s steadier supply of natural resources will reduce China’s dependence on the Middle East, on trade routes from the Mediterranean, the Red Sea, and across the Indian Ocean to China’s coast.

The meridian project will also stimulate new economic activity and jobs along the new highway. Passed Russia, China has also kept its eye on the Port of Riga’s port, as an effective transit hub for the transportation of Chinese container cargoes and as a good place for Chinese investment.

Latvia, a country that could bridge sea and land transport routes, has been the first of the Baltic States to agree to link up to the Belt and Road initiative, and has the potential to be a major player in the development of the belt and route project, which will bring a significantly strengthened Chinese economic ties to Latvia and the Baltic States, making the region attractive for future investments and projects.

Micah Wisean Intern at LIIA