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Tehran-Baku Cooperation in Full Swing
Economy, Business And Markets

Tehran-Baku Cooperation in Full Swing

Oil-rich countries are concerned that lifting of sanctions on Iran’s oil industry and the return of Iranian crude to international markets would result in a further decline in oil revenues.
However, Moody’s Investors Service –a prominent international economic rating institute–back in September said the nuclear deal between Tehran and world powers offers Iran’s northern neighbor Azerbaijan opportunities that could partially offset pressures from lower oil prices, wrote Financial Tribune’s sister newspaper Donya-e-Eqtesad.
Early October, those opportunities were discussed in the meeting of the joint commission between Iran’s Minister of Communications and Information Technology Mahmoud Vaezi and Azerbaijan’s Minister of Economy and Industry Shahin Mustafayev. The commission held two sessions, one in Azerbaijan’s city of Astara and another in a city in Iran’s Gilan Province with the same.
The most remarkable outcome of the meeting, which was also attended by Governor of Gilan Mohammad Ali Najafi and director general of Iran Railway Company, Mohsen Pourseyyed Aqaei, was the signing of a deal on construction of a railroad connecting the rail networks of Iran and Azerbaijan by the end of the next Iranian year (March 20, 2017).
Under the deal, Baku will extend its railroads by 8 kilometers up to the border from where Iran needs to build two kilometers of railroads inside the country to Astara Port.
Both countries also discussed joint investment in another railroad project connecting Astara to Rasht, Gilan’s capital city, which will be later connected to Qazvin.
Those projects are the missing links in the International North-South Transport Corridor, which will connect Central Asia to Northern Europe.
The railroads, when completed, will increase the 600,000 tons of commodities currently traded between Iran and Azerbaijan to 5 million tons per year, helping bilateral trade to dramatically increase from the current $500 million per year.
“We’re planning to create a combination of rail, sea and road transport network in Astara. The multi-modal transport infrastructure will provide the means for transit of goods from the Persian Gulf to Azerbaijan and Russia,” said Vaezi.
In another meeting of the commission in Iran back in December, the minister said both sides would further discuss the details of the railroad projects, along with other development plans such as setting up an automated customs clearance system on the joint border.
Iran and Azerbaijan are also aiming to promote tourism via seaborne passenger transport.
“To increase cooperation, both countries should also focus on reviving seaborne tourism and exploiting the capacities of ports and FTZs, in addition to connecting their railroads,” he said.
Besides Anzali, which is a well-developed free trade zone facilitating trade with Russia, Kazakhstan and other Caspian littoral states, according to Najafi, the government is also planning to upgrade two other FTZs, namely the Joint Caspian Free Zone and Astara Free Trade-Industrial Zone in Iran.
Those plans, he said, with help the railroad project lay the foundation for the comprehensive development of Gilan.
The railroad projects also come with side projects that boost collaboration between the neighbors.
“Both countries are planning the construction of a bridge that will be jointly financed,” Najafi said without giving details.
“A terminal will also be built at the end of the 2-kilometer railroad from the border to Astara [in Iran]. That project will also be offered to both countries’ investors,” he said.
The government is also counting on Baku to finance Qazvin-Rasht railroad whose construction was stopped due to shortage of capital. The project is 80% complete.
Azerbaijan says it is determined to make investments key to completing the North-South Transport Corridor. The project, according to Mustafayev, will lead to a tenfold increase in transit between the two countries.

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