The War of Trade Routes, Part 2


The North-South transport corridor will help Moscow overcome Western sanctions. The railroad connection with Iran and other countries, including India, may become a competitor even to the Suez Canal. This is what the NYT writes with concern.

With unprecedented sanctions against Russia and rapidly declining trade with the West, Moscow has been quick to build new trade routes and bridges to the South.

Which path will Russia take?

The North-South ITC (international transportation corridor) project connecting Russia, Iran and India was enshrined in an agreement signed by the three countries in 2000. But since there were no sanctions at the time, it cannot be said that it was prioritized; it seemed that Russia’s traditional trade routes, the North-West (Baltic Sea), the Black Sea-Azov and the Far East, would always be the main ones. But sanctions have led to a dramatic increase in the importance of the ITC. In addition to the traditional trade through ports on the Caspian Sea between Iran and Russia, the project of a railroad through Iran, which should connect Russia not only with India, but also with the Persian Gulf countries, providing access to Saudi Arabia, the United Arab Emirates, Pakistan and beyond, has actively moved forward.

The cost of this project is $1.7 billion (of which $1.4 billion Russia has agreed to lend Iran to finance the project), the length of the road is 160 kilometers, and construction should begin this year.

The creation of such a transportation corridor, of course, did not please the US.

Here is what Vedant Patel, deputy spokesman for the U.S. State Department, said at a press conference in response to a question about the construction of the Rasht-Astara railroad line: «Of course, this action, as well as the entire project, cause us deep concern, because they are aimed at circumventing sanctions».

Indeed, once the railroad appears, it will mean that the last link between Russia and Iran has been laid, which will connect Moscow with Iranian ports in the Persian Gulf. And from there it will be a direct route to Mumbai. According to estimates, transportation of cargo from St. Petersburg to Mumbai will take only 10 days instead of today’s 45.

That is, Moscow has found two ways to break the Western blockade: one is through the south to the Persian Gulf countries and India, and the other is to the east through China.

To confirm this, let us cite a few figures: since 2021, the volume of trade turnover between Russia and China has increased by 61%, amounting to more than 240 billion dollars in 2023. And trade turnover with India has quadrupled, reaching $65 billion today. The combined volume of Russian trade with these two countries in 2023 exceeded the previous scale of trade with the European Union, which amounted to 282 billion dollars in 2021 — The New York Times reports.

How will the new railroad run? According to the plan, it should connect the cities of Astara (Azerbaijan) and Resht (Iran), thus connecting northern Iran with Azerbaijan, which has been connected to Russia by railroad since the Soviet era. According to the plan, the construction should be completed in 4 years.

What is the advantage of this North-South transportation corridor for Russia? First of all, it will not be subject to Western sanctions, at least because Iran is already under sanctions. Of course, there may be problems with India, which is now under strong pressure, but so far this country has demonstrated its independence in political and economic decisions.

This is confirmed by recent Indo-Iranian agreements on New Delhi’s participation in the modernization and further joint exploitation of the Iranian deep-water port of Chabahar in the Gulf of Oman. In the future, it is also planned to extend railroads to the main line of the «North-South» corridor, which so far goes to the port of Bandar Abbas in the Persian Gulf. It is clear that the potential of the two ports, one of which (Chabahar) will be able to accommodate the heaviest class of ships, will significantly increase the capacity of the transportation corridor.

While the Astaru-Resht section is under construction, cargo is transported by road. North-South also uses the so-called «Caspian route» from Iranian ports to Astrakhan and ports in Dagestan. The rest is by railroads. This scheme has been successfully functioning for several years. And another way is the railroad route through Kazakhstan and Turkmenistan. The first batches of containers have already passed through it.

Besides, the so-called «Zangezur corridor» (in Armenia it is called Syunik corridor), which could connect Russia with Iran and Turkey, is still on the agenda. It was supposed to consist of two branches — a railroad and a highway. The main part of the route was planned to go through Azerbaijan, and a small 40-kilometer section was to be built either in Armenia or Iran. According to the plans, it was going to reach the place where the borders of Azerbaijan with Armenia and Iran converge, and from there it would go through Armenian or Iranian territory to the border with the Nakhichevan Autonomous Republic, and through its territory to the border of Turkey, connecting with its highways.

What is the possible attractiveness of this route for Russia? It is that it gets access to Armenia and Turkey, while now Russian vehicles can only pass through the Georgian Military Road, which often remains blocked due to bad weather, or bypass it by rail to Baku, and from there along the international route «Baku — Tbilisi — Kars». The Zangezur corridor can give year-round access of Russian trucks to Armenia and Turkey and will reduce the railway connection with these countries by 200 km. In other words, Russia, Azerbaijan, Armenia, Iran and Turkey will benefit.

And in 2020, during the negotiations on the end of the Second Karabakh War, a framework version of the Zangezur transport corridor was even signed by the presidents of Russia, Armenia and Azerbaijan. It was agreed that the transport communication between Azerbaijan and Nakhichevan through the territory of Armenia along the Zangezur corridor would be controlled by the Border Service of the Federal Security Service of Russia. But the Azerbaijani side insists that the road through its territory should be controlled by its own security forces. And Armenia in general has an extremely negative attitude to the idea of the Zangezur corridor and the construction of the Baku-Nakhichevan railroad, fearing annexation by Azerbaijan.

The Iranian side is also concerned. It rightly fears that it will be cut off from Armenia, losing access to the Black Sea transit through the territory of this country. In addition, Iran was concerned that in this case it would lose the status of the main transit partner for Azerbaijan, and also worried about strengthening the position of Turkey, with which Tehran has an eternal regional struggle for leadership. Nevertheless, a way out was found. Azerbaijan and Iran signed a new document, an alternative to the original one on the «Zangezur corridor», in which the roads will run not on the left — Armenian, but on the right, Iranian bank of the river Aras. This project, which in Iran is called the «Arax Corridor» or «Iranian Way», is only a little longer than the Zangezur Corridor, and it is supported by Turkey as well. In principle, this option suits Russia, which has done much to help two rival countries such as Iran and Turkey agree on the construction of a transportation corridor.

Tehran’s compromise proposal should also suit Armenia, which might otherwise be left out of the transportation routes, although it could use the transit revenues from a section of the railroad that would pass through its territory. But now, given the fact that Prime Minister Pashinyan is moving Armenia away from Russia toward the West, the fate of the Armenian section of the railroad is not clear at all.

To counter Russia’s attempts to push southward, the European Union plans to create its own shortcut to Central Asia through the «Global Gateway» and plans to invest heavily in it. In the current context of Russia’s Special Military Operation, Central Asian states are increasingly pivoting toward the EU and Turkey, which is actively capitalizing on ethnic ties with the Turkic republics of Turkmenistan, Azerbaijan, Kazakhstan and Uzbekistan. And the EU, in response to China’s “One Belt, One Road”, has begun to actively work on its «Global Gateway» project.

The EU High Representative for Foreign Affairs and Security Policy Josep Borrell said at the opening of the investment forum «EU Global Gateway — Central Asia» held in Brussels with the participation of Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan that this corridor is given great importance. It is not without reason that a package of investments worth 10 billion euros was even prepared to create a short corridor that will connect Central Asia and Europe. At the same time, the transit of goods along this route should take a maximum of 15 days. It is clear that in addition to economic tasks, the «Global Gateway» should draw the former Soviet republics of Central Asia to the side of the West and increase the effectiveness of anti-Russian sanctions. It is also clear that the Global Gateway will bypass Russia. And besides the economic component, it has a pronounced political character — to pull Central Asia away from Russia and draw it to Turkey and Europe. Naturally, the Turks will try to benefit from this European project, and at the same time to profit from economic ties with Russia. But, if the pressure of the Western world and Washington on Turkey increases, no one knows which side Erdogan will lean towards.

Interestingly, the «Global Gateway» perfectly dovetails with the Organization of Turkic States’ «Trans-Caspian Mid East-West Corridor» project, which promises great benefits for Turkey. Yes, the Turks now have active economic ties with Russia, but given the extremely difficult current situation in the Turkish economy, Erdogan is unlikely to refuse the EU billions. In addition, Turkey, thanks to the new corridor, which will be more stable and shorter, can become a trade bridge between the Turkic world and Europe.

In this and the previous part, we have touched only some relevant points of the «corridor wars». It is clear that the geopolitical situation will change, and the main trade arteries of the countries will change with it, because everyone clearly understands that control over transport corridors is not only control over the economy of other countries, but also political one.