Economy, Domestic Economy

Iran Provides Transit Route for C. Asian States

Iran Provides Transit Route for C. Asian StatesIran Provides Transit Route for C. Asian States

Central Asian countries are buzzing with excitement over the lifting of western sanctions against Tehran, but for the time being Iran may mainly act as a transit hub between the landlocked region and the Middle East, as its first priority is to reestablish trade links with the European Union, according to bne IntelliNews–a London-based publisher of business news and data on emerging markets.

For many centuries, caravans crossed through Iran and Central Asian territory, but it has been well over 100 years now since trade between, or across, Iran and Central Asia flowed freely.

When they were part of the Soviet Union, the five Central Asian countries could trade with the world only via Russia and they were only able to start building alternative routes, mostly via China, after they obtained independence in 1991.

Turkmenistan and Kazakhstan, as Caspian-littoral states, could also divert some trade with Iran and the Caucasus by sea.

According to Luca Anceschi, senior lecturer in Central Asian studies at the University of Glasgow, “having this reentry of the Islamic Republic onto the world stage does actually favor the Central Asian states, giving it easier access to global markets, to the open sea, to the [Persian] Gulf”.

“Iran can be a real game-changer for infrastructure–railroads, freeways, roadways...that could actually change a lot in terms of the connectivity of Central Asia with the rest of the world,” Anceschi said.

In December 2014, even when Iran was still under western sanctions because of its nuclear program, Kazakhstan, Turkmenistan and Iran opened a new 928-km-long Ozen-Gyzylkaya-Bereket-Etrek-Gorgan railroad that gave access for Central Asian goods to Iran and the Middle East, and for Iranian commodities to Russia and China.

Earlier in the 1990s, Kazakhstan had linked its railroad networks to those of China’s by building the Dostyk-Alashankou railroad corridor and in 2012 opened the second Zhetygen-Korgas rail link to China with a capacity of 12 million tons per year.

Astana now plans to increase the capacity of the first link from the current 23 million tons a year to 50 million tons and the second one to 33 million tons per year in the future.

With Ashgabat having already completed the construction of an 88-km-long stretch of a Turkmenistan-Afghanistan-Tajikistan rail line, Turkmenistan is on course to diversify its gas-based economy by turning into a transit bridge between other Central Asian countries and Iran and potentially Turkey.

This link has become more important after Russia banned the transit of Turkish goods via its territory following the downing of one of its bombers by Turkish air force.