Devastating events in the region include Almaty (1911), Ashgabat
(1948), Tashkent (1966), Spitak (1988)—all earthquakes that almost
totally ruined the respective cities. On top of these, severe flooding
in the Balkans in 2014 and 2016 caused tremendous damage and
disruption to several of the region’s economies.
“Turkey was always positioned as the ‘bridge’ between Europe and
Asia; now, with the Belt and Road Initiative (BRI), this concept can
go further to the entire region between mainland China and the EU,”
“With the BRI and key transport corridors passing through countries
of the Commonwealth of Independent States and the Western
Balkans the threat of devastating natural disasters and earthquake in
particular takes on new dimensions.
“This is especially true if investment is made in infrastructure to
further open up key transport corridors, but these are located in
some of the most earthquake-exposed territories of Eurasia—if not
The investment being poured into the region by the Chinese
government via the BRI is designed to expand its economic footprint
and to recreate the ancient Silk Road that linked Europe to Asia.
This requires the creation of infrastructure such as roads, railways,
bridges and warehouses, as well as the living quarters for local workers.
All of this would be very vulnerable to a major earthquake, not to
mention the losses that could be caused by business interruption costs.
“Private markets have the solution to this in the form of parametric
cat bonds,” says Savrassov.
“This is a classic win-win partnership and it’s very much the future
of the development of the ILS class. It’s in the interest not just of
investors or ILS fund managers, but in the interest of international
agencies and financial institutions such as the UN Development
Programme and the Asian Development Bank, as well as the
“To give an example of the scale of the vulnerability, the BRI has
not yet been completed but 10,000-plus trains a year already pass
through railways from China to Europe.
“The amount of disruption from an earthquake in Kazakhstan or
Uzbekistan could be economically catastrophic,” he says.
Savrassov iterates that with investments of billions of dollars being
poured into critical infrastructure, the BRI is seen by transit countries
as an important opportunity to expand their international trade and
gain a boost to their economies.
“However, the issue of protection in case of a large disaster remains
areas are also very vulnerable to earthquakes, such as the ones that
have devastated Armenia and Tashkent in the past 50 years.
Protecting the Silk Road
Savrassov says the Turkey earthquake illustrates Turkey’s strategic
importance as part of Eurasia, an area with a long history of various
natural disasters, although earthquakes have probably been the most
SHUTTERSTOCK / RUDRA NARAYAN MITRA