A Russian delegation of railroad officials met with the head of the Construction and Development of Transportation Infrastructure Company of Iran, Kheirollah Khademi, in Tehran on Monday to examine different aspects of Russia’s cooperation in constructing the Rasht-Astara railroad.
Officials from Iran’s Ministry of Roads and Urban Development, as well as managers, experts, contractors and engineers engaged in the project attended the meeting, IRNA reported.
“If the financial resources are provided, Rasht-Astara railroad, which is a missing link along the International North-South Transportation Corridor, will be completed within three to four years,” Khademi added.
The official noted that INSTC links Northern Europe, Scandinavia and Russia, through Iran, to the littoral states of the Persian Gulf and the Indian Ocean and Southeast Asia, adding that the route is the cheapest and fastest transit route connecting these countries.
“The meeting was held because the inauguration of INSTC is very important to the two sides and we are surveying ways of expanding bilateral cooperation in the design, execution and determining the technical features of the route,” he said.
The war between Russia and Ukraine has had a direct impact on the status of various China–Central Asia–Russia–Europe transit corridors that traverse Eurasia. The Northern Corridor branch of China’s Belt and Road Initiative, in particular, has faced serious challenges and limitations, forcing a halt to the so-called “New Eurasian Land Bridge” project, linking Russia, Ukraine, Poland and Belarus with East Asia. This has given new impetus to developing the so-called Middle Corridor, formally known as the Trans-Caspian International Transport Route, which starts from Southeast Asia and China, and, bypassing Russia, runs through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and further to European countries.
“Another budding option, particularly for the landlocked Central Asian region, is to build north-south linkages to Iran’s overland transit network, which offers further connections to Turkey, the Middle East and Europe, as well as to Iranian seaports on the Persian Gulf and the Sea of Oman,” said Vali Kaleji, an expert on Central Asia and Caucasian studies, in an article for The Jamestown Foundation. The full text of the article follows:
For Russia, the growing challenges with maintaining the west-east routes across its territory have also incentivized Moscow to focus more on trans-regional north-south routes to Central Asia/South Caucasus and, from there, to Turkey and Iran.
By strengthening these transit corridors, Moscow hopes to counter the tightening economic sanctions and transit restrictions on Russia that the West adopted in response to the Russian assault on Ukraine. In this regard, one of the most important prospects for Russia is to strengthen the land and rail routes of the International North-South Transporation Corridor. While to the east of the Caspian Sea there is a working railroad from Russia through Kazakhstan and Turkmenistan to Iran, along the western shore of the Caspian Sea, in the South Caucasus region, the linked railroad networks of Russia and the Republic of Azerbaijan still lack a physical connection with Iran.
A 164-Kilometer Gap
The Astara–Rasht–Qazvin railroad, which will wind along the southwestern corner of the Caspian Sea, forms a central link of the longer INSTC, a multimodal route linking India, Iran, Azerbaijan, Russia and Europe.
The cross-border Astara (Iran)–Astara (Azerbaijan) section of the railroad was officially inaugurated on March 29, 2018, while the Rasht–Qazvin section inside Iran was implemented on March 6, 2019. Therefore, the only remaining gap is a 164-kilometer railroad section from Rasht to Astara.
Until this railroad segment is completed, freight moving by train must be transferred to trucks and then back again.
In the latest development signifying growing regional prioritization for the Astara–Rasht–Qazvin railroad and INSTC more broadly, Iranian Roads and Urban Development Minister Rostam Qasemi visited Moscow on April 30, 2022.
Following his talks with Russian Transport Minister Vitaly Savelyev, the two officials signed a comprehensive agreement on cooperation in the field of transportation. The two sides noted the importance of establishing a railroad connecting the Asian continent’s north and south, notably stressing the need to complete the missing Rasht–Astara portion of INSTC as soon as possible.
Financing Obstacle
The 164-km Rasht–Astara railroad has faced years of problems in terms of construction and implementation. The main obstacle has been financing, particularly due to the United States’ sanctions on Iran.
According to an earlier agreement between Iran and the Republic of Azerbaijan, both sides pledged to provide $500 million each to build the Rasht–Astara railroad. And in 2016, the International Bank of Azerbaijan signed a deal with Iran on the allocation of a $500 million loan for this purpose.
However, in practice, this agreement and the loan were never implemented due to the comprehensive US sanctions on Iran’s banking network.
Comparative Advantage
Nevertheless, the Iranian government is determined to implement this important railroad project, which compares favorably along various metrics with a handful of other railroad projects in the region.
Notably, the Iranian-Armenian railroad from Meghri, Syunik Province, in southern Armenia, suffers from high costs and has not seen any progress since 2009. Whereas plans to restore Soviet-era east-west railroad corridors in the South Caucasus following the Second Karabakh War (Sept. 27–Nov. 10, 2020) have stalled due to differences between Armenia and Azerbaijan over the interpretation of the ninth clause of their ceasefire agreement, brokered by Moscow.
The construction and completion of the Rasht–Astara railroad is, therefore, the only practical and accessible short-term prospect for Iran to connect to South Caucasus. Its implementation will complete the last remaining section of INSTC and create a physical rail link for the Republic of Azerbaijan, Georgia and Russia to Iran’s Chabahar Port alongside the Oman Sea and Bandar Abbas on the Persian Gulf coastline.
Another important issue for Iran is the expansion of its freight corridors to the Moscow-led Eurasian Economic Union to take fuller advantage of the EEU-Iran Preferential Trade Agreement.
In this regard, Iranian President Ebrahim Raisi last year said, during a tour of Gilan Province (where the two cities of Rasht and Astara are located), that railroad and other transit infrastructure projects, along with the purchase of roll-on/roll-off vessels, should be accelerated to boost intra-regional trade (Iranian Labor News Agency, May 25, 2022).
At present, Iran needs to complete the Rasht–Astara railroad. But since the Republic of Azerbaijan has been unable to fulfill its financial obligations due to sanctions, Tehran is turning to Moscow for support. Even prior to the aforementioned April visit to Russia by the Iranian transport minister, President Ebrahim Raisi traveled in January 2022 to Moscow, where the two sides finalized a previously agreed-upon $5 billion credit line for the completion of several development projects in Iran (Iran Online, January 22). Among those projects, Iranian Economy Minister Ehsan Khandouzi noted, would be the Rasht–Astara railroad.
About two months later, Russia’s large-scale reinvasion of Ukraine created problems for and restrictions on trans-Russian east-west transit routes across Eurasia, inducing Moscow, to pay more attention to the development of corridors in the north-south direction. Tehran has sought to utilize this situation, stepping up efforts to attract Russian investment in the Rasht–Astara railroad project.
Russia is itself under ever more painful Western economic sanctions. But assuming Moscow can find the financial resource necessary to see the completion of Rasht–Astara railroad, then the International North-South Transportation Corridor, in addition to the Middle Corridor, may both end up being beneficiaries of the region-wide geopolitical reverberations caused by the Russo-Ukrainian war.
