Russia, Azerbaijan and Iran Accelerate Work on an Alternative to the Suez Canal

Vladimir Platov
ROD422In order to accelerate the development of the International North-South Transport Corridor (ITC), in particular its railway segment through the Western Chord, a Declaration was signed in Baku by Russia, Azerbaijan and Iran confirming the readiness of these countries to intensify cooperation in the assessment and analysis of infrastructure and transport capacities to fully exploit the corridor. The parties expressed their intention to consider proposed targets for realizing 30 million tones of transit and bilateral overland freight traffic across the territories of the three countries by 2030. Russian Deputy Prime Minister Alexander Novak stressed that the Western Chord of the route will be the backbone of the railway connection, but it will not be able to increase capacity without the 165 km long Rasht-Astara railway line from Iran.  According to him, the construction of the railway will take several years, but the issues of property rights to land and land use must be settled, and the parties’ investments must be protected. The Deputy Prime Minister also noted that the future rail route should include logistics centers and services for transshipment in the ports of Enzeli and Bandar Abbas of cargo to and from the countries of the Persian Gulf and South Asia. “The implementation of the project will have a cumulative effect on the economies and business of the three countries, will increase trade, deliveries and transit of goods,” Novak stressed.

Islamic Republic Foreign Ministry Spokesman Nasser Kanaani said on September 12 that Tehran, Baku and Moscow had reached an agreement on accelerating the construction of the Rasht-Astara railway line within the framework of the INSTC. The resolution of this issue will accelerate the implementation of the project on direct railway connection through the Samur (Russia)-Yalama (Azerbaijan) border crossing with further access to the Iranian railway network through the Astara (Azerbaijan)-Astara (Iran) border crossing. The construction of the Rasht-Astara railway is now the most important task in terms of getting this transport corridor up and running as quickly as possible.

The issue of completing the 165-kilometer stretch of railway between Rasht, the administrative center of the northern Iranian province of Gilan, and Astara, the border with Azerbaijan, was discussed during Iranian President Ebrahim Raisi’s visit to Moscow on January 19 this year. According to the agreements, Iran has allocated additional funds for the construction of the railway as soon as possible.

Abbas Khatibi, Deputy Head of Iran’s Construction and Development of Transport Infrastructures Company (CDTIC), earlier said Iran is actively negotiating to raise the necessary resources to finance the Rasht-Astara railway project, which requires more than $20 billion in investment to complete. In particular, this financing is envisaged in three ways: domestic financing, foreign investment and barter. Baku had previously extended a $500 million loan to Tehran for this purpose. On January 25 the foundation stone of the new bridge over the Astarachay River, 89 meters long and 30 meters wide, was laid on the Azerbaijan-Iran border and it is scheduled to be completed by the end of 2022.

The reported stalemate in the construction of the Rasht-Astara stretch of the railway is not only due to a lack of financial resources in the sanctioned country, but also to Tehran’s hopes of restoring the rail link through Julfa, still known from the Soviet era, with access to Russia via the Meghri region of Armenia and Azerbaijan. However, after the “fall” Karabakh war of 2020, as well as recent border incidents between Armenia and Azerbaijan, there are still more unresolved questions than answers. In addition, Yerevan’s passive behavior has led to a change in the logistics of electricity communications as well. In particular, within the Iran-Armenia-Georgia-Russia North-South electricity corridor, all acceptable deadlines for the commissioning of the 3rd Iran-Armenia transmission line are being disrupted. Instead of the originally agreed 2019, the Armenian authorities first postponed the commissioning of the transmission line to 2021, and today they are already claiming possible completion of the project by the end of 2023… Under these circumstances, Tehran has already announced its readiness to synchronize its electricity system with the Russian one via Azerbaijan in order to increase mutual electricity flows, instead of synchronizing the Iranian and Russian energy systems via Armenia and Georgia.

The North-South International Transport Corridor was established on September 12, 2000 by an agreement signed between Russia, Iran and India. In the following years, 10 more countries, including Azerbaijan, joined the project. The 7,200-kilometer North-South route was planned to run from the Indian port of Nhava Sheva, south of Mumbai, to St Petersburg via Iran. Sea, river and rail transport will be used for transportation. In this case, Russia will become a reliable transit point in the ITC and will connect Europe and India through the Caspian Sea. The INSTC project will almost halve the delivery time for goods from the Asia-Pacific region to Europe and vice versa.

In the long term, the Trans-Arabian railway could join the INSTC, connecting Saudi Arabia, Bahrain, Kuwait, Qatar, UAE and Oman. This would bring international trade routes beyond continental Eurasia.

In July this year, Turkmenistan joined the route, with the first freight train arriving from Russia to Iran. It travelled 1,600 km along the ITC’s Eastern Chord, bound for the Iranian port of Bandar Abbas. The train with 39 containers left Chekhov station near Moscow and travelled 3,800 km along the railways of Russia, Kazakhstan and Turkmenistan before arriving in Iran at the Sarakhs railway station on the border with Turkmenistan, in Razavi Khorasan province. The train will reach the port of Shahid Rajaee in southern Iran in Hormozgan province, then the cargo will be delivered to India by sea.

In addition to the ITC’s Eastern Chord, which connects Russia to India via the Central Asian countries Kazakhstan, Uzbekistan and Turkmenistan, and the ITC’s Western Chord via Azerbaijan, there are also plans to actively use the Central Chord. It begins at India’s largest port, Jawaharlal Nehru in the western state of Maharashtra on the Indian Ocean, then connects by a 1,275-km sea route to the port of Bandar Abbas in Iran’s Strait of Hormuz. It then travels overland to northern Iran by road and rail to Nowshera, Amirabad and to the Caspian Sea at the Iranian port of Anzali. From there it can continue to the Russian ports of Lagan and Astrakhan, as well as ports in Azerbaijan, Kazakhstan and Turkmenistan.

With Europe closed, the INSTC routes are becoming one of the main routes for shipping cargo from Asia to Russia, as well as to Northern and Western Europe. It becomes a real alternative not only to the Chinese One Belt, One Road project, but also to the traditional routes via the Suez Canal – the Black Sea straits of Turkey; the Suez Canal – the ports of the former Yugoslavia; the Suez Canal – the Strait of Gibraltar – the ports of Belgium/Holland. Moreover, not only do the economic benefits become evident, but the geopolitical advantages of the ITC for India, Russia and Iran are also demonstrated. And Russia and Iran are becoming almost the main sea and land corridor from Asia to Europe.