For thousands of years, Iran has been an important route for
the transit of foreign goods due to its geopolitical position. The country
played a significant role in transporting commodities from west to east as one
of the main stations along the ancient Silk Road.
In the modern day, this huge capacity became dormant due to
war, political conflicts, and sanctions and consequently lack of
infrastructure. Now the global conditions are changing in Iran’s favor and new
opportunities have appeared on the horizon.
The
Ukraine war, despite its grave consequences for many countries, has presented
Iran with a golden opportunity to realize the long-awaited goal of becoming the
global transit hub it once was.
The row between Europe and Russia over the Ukraine war,
which resulted in harsh sanctions being imposed on the country, cornered the
Russian government economically and many European countries closed their
borders on Russian goods making it very hard for its traders to be able to
access their destination markets. As a result, the country started looking for
new ways for distributing its goods across the world, especially in Asia and
the International North-South Transit Corridor (INSTC) once again came under
the spotlight.
The agreement for launching INSTC was signed by Iran, India,
and Russia in 2000. Despite all the interest and hype, the attention to the
route faded due to geopolitical hurdles including the global economic
stagnation, the US sanctions on Iran, the conflict in Karabakh, and the
pandemic.
Now the
multi-modal network of ships, rail, and roads is once again gaining its
importance, as the most important trade link between Asia and Europe.
According
to official data, one of the major advantages of this transportation route is
that the cost of transporting goods through this corridor is 30% cheaper. It
also halves the time it takes to transport Indian goods to Russia via the Suez
Canal.
Iran can use this transit route to distribute European
commodities in the shortest possible time and at a lower cost than other routes
to the Indian Ocean and the Persian Gulf.
It is
predicted that after the full operation of INSTC, Iran will be able to earn US$20
billion in transit profits annually, something helping it reduce its dependence
on oil revenues amid the American ban on the sector.
Iran has been taking serious measures for the development of
its railway network as well as its ports and shipping infrastructure in order
to encourage more countries to join the project.
Using
the capacities of INSTC, Iran will be able not only to expand the volume of
trade with Russia and the countries of the region; it can also gain a huge
share of the mentioned countries’ annual transit.
Currently, Russia has proposed to take part in some railway
projects in Iran in order to accelerate the development of the Islamic
Republic’s railway network along the mentioned route.
Last
week, Igor Yevgenyevich Levitin, aide to the president of the Russian
Federation, visited Iran on top of a high-ranking delegation to meet with
Iranian Transport and Urban Development Minister Rostam Qasemi and discuss the
expansion of transport ties.
According
to the Iranian Transport Ministry, Levitin was tasked by Russian President
Vladimir Putin to take the necessary measures for the implementation of Iran’s
Rasht-Astara railway and the signaling of the country’s Incheh Borun-Garmsar
railway line (both of which are along the INSTC route).
Besides linking India to Europe via this corridor, Iran can
connect Central Asia to the Indian Ocean and the Persian Gulf. Landlocked
countries in Central Asia can use the corridor's railway to access the high
seas. Over time, Iran's place in the corridor would become known to all.
Kazakhstan,
Turkmenistan, Turkey, Iraq, and Afghanistan have also shown interest in joining
the huge project by linking their railways to that of Iran.
Earlier this month, Kazakhstan reached an agreement with the
Islamic Republic of Iran for using the country’s rail network and the southern
Shahid Rajaee Port for transiting goods to the Central Asian and Commonwealth
of Independent States (CIS) regions.
Iran has also been seeking to join its railway with Iraq in
order to use the Arab country to facilitate access to the Syrian market, this
way Syria can also be somehow linked to the INSTC.
The
rail and sea route can also join the Chinese Road and Belt project, which seeks
to revive the ancient Silk Road. As one of Iran’s major trade partners China
has also shifted to Central Asia and the Caspian Sea to transit its goods to
Europe after the eruption of the Ukraine crisis and Iran could play a
significant role in delivering Chinese goods to their destinations.
The current international conditions have presented Iran
with a proper opportunity to play a bold role in the broader implementation of
the INSTC and to transform into a regional trade hub by developing its rail and
transit infrastructure.
Given the lower costs and shorter time of trade via this
route, Iran can become the main trade link between Asia and Europe and
effectively neutralize the US measures aimed to isolate Iran from the global
economy.