Russia activates its alternative routes to replace transit and shipping through the Black Sea, while Iran Saudi Arabia upgrade their newly revived relations

Russia activates its alternative routes to replace transit and shipping through the Black Sea, while Iran Saudi Arabia upgrade their newly revived relations

    Tuesday, August 29, 2023   No comments

The chief executive of the Islamic Republic of Iran Railways (RAI) announced on 27 August the transit of Russian cargo to Saudi Arabia via the Iran transport corridor for the first time.

A transit train hauling 36 containers entered Iran for the first time from Russia through Iran’s Incheh Borun rail border near Turkmenistan, Miad Salehi stated.

The deputy roads minister added that this cargo transit train was dispatched to the port city of Bandar Abbas on the Strait of Hormuz and will be transferred from there to the Saudi Arabian port city of Jeddah by sea.

Russia seeks to develop the International North–South Transport Corridor (INSTC) to connect India, Iran, Russia, Azerbaijan, and other countries via railways and sea.

Russia says the INSTC will rival the Suez Canal as a major global trade route.

In May, Russian President Vladimir Putin and his Iranian counterpart Ebrahim Raisi signed a deal to finance and build an additional Iranian railway line between the cities of Rasht and Astara.

“The unique North-South transport artery, of which the Rasht-Astara railway will become a part, will help to significantly diversify global traffic flows,” Putin said.

He also said the 162-kilometer railway along the Caspian Sea coast would help to connect Russian ports on the Baltic Sea with Iranian ports in the Indian Ocean and the Gulf.

“Without a doubt, this agreement is an important and strategic step in the direction of cooperation between Tehran and Moscow,” Raisi said.

Iran hopes the successful development of Russian-financed railway links comprising the NSTC will increase transit revenues and reinforce Iran’s “Look to the east” policy of strengthening ties with neighboring countries and eastern powers in response to western economic sanctions.

Raisi’s Deputy Chief of Staff for Political Affairs, Mohammad Jamshidi, claimed that the INTSC earnings would rival Iran’s oil revenue. In this vein, the semi-official ISNA on May 17 estimated annual revenue of $20 billion from the corridor.

State broadcaster-run Jam-e Jam newspaper described Iran as the “golden path of trade” in an article highlighting the potential benefits of the railway.

Iran and Russia have developed closer economic, diplomatic, and military ties in recent years, as both countries have been subject to US economic sanctions and have resisted US foreign policy in West Asia, including Syria, and the former Soviet states, including Ukraine.

Kazakhstan, and soon Russia, increase export of agricultural goods through Iran via the INSTC

Kazakhstan, and soon Russia, increase export of agricultural goods through Iran via the INSTC

    Tuesday, August 08, 2023   No comments

In another sign of activating alternative paths for global trade with the uncertainty in the Black Sea due to the conflict in in Ukraine, Kazakhstan decided to export its agricultural goods across the Persian Gulf through the Islamic Republic of Iran to open a new direct route to free waters, which starts from the port of Korik in Kazakhstan, then the Iranian port of Amirabad overlooking the Caspian Sea, and then to the port of Bandar Abbas on the Persian Gulf.

The Iran route reduces the duration of the transfer of goods through presence in the ports of the Emirates, India, Pakistan, the Far East and the coasts of East Africa, in addition to that this route can export Kazakh goods to the European Union.

Meanwhile, the Deputy Prime Minister of Kazakhstan, Srik Jumangarin, held talks with the head of an Emirati shipping and transport company, to employ joint investments for this goal.

This is a major development, which practically, could allow Russia to export its goods and services through this route directly or through Kazakhstan, bypassing the risk associated with the Black Sea trade route. However, this North-South route has been in the making for over two decades, and only now it is showing its potential in a new geopolitical climate.

What is the International North–South Transport Corridor—INSTC?

It was first conceived in the early 2000’s. The idea was to build a transport corridor linking Russia’s Baltic Sea coast to India’s western ports in the Arabian Sea via Iran. Russia, India and Iran signed preliminary agreements to develop the 7,200-km-long International North-South Transport Corridor (NSTC) in 2002. NSTC consists of sea, road, and rail transportation systems with investments for building the railroads and truck highways coming mostly from India, Russia, and Iran. 

The INSTC's western route passes through Russia, South Caucasus, and Iran. The middle axis reaches India through Saint Petersburg – Astrakhan – Caspian Sea – North and South ports of Iran (Amirabad, Anzali, Chabahar, and Astara ports). The eastern axis passes through Russia-Kazakhstan-Turkmenistan and Uzbekistan-Iran.

Three years later, Azerbaijan signed up for the project. This agreement was eventually ratified by 13 countries — India, Russia, Iran, Azerbaijan, Belarus, Bulgaria, Armenia, Kazakhstan, Kyrgyzstan, Oman, Tajikistan, Turkey and Ukraine.

Now the NSTC is allowing states close to its main path to benefit from this increased North-South activities created by the sanctions imposed on Russia and the new sanctions imposed on Iran after the collapse of the Nuclear Deal. Iran stands to benefit most from this initiative, which, together with China’s BRI project will create new networks I the region and east Africa.