North-South Transport Corridor
The ambitious 7,200-km-long trade corridor seeks to link Russia’s Baltic Sea coast to India’s western ports in the Arabian Sea through Azerbaijan and Iran
It was first mooted in 2000. The idea was to build a transport corridor linking Russia’s Baltic Sea coast to India’s western ports in the Arabian Sea via Iran. Russia, India and Iran signed preliminary agreements to develop the 7,200-km-long International North-South Transport Corridor (NSTC) in 2002. Three years later, Azerbaijan signed up for the project. This agreement was eventually ratified by 13 countries — India, Russia, Iran, Azerbaijan, Belarus, Bulgaria, Armenia, Kazakhstan, Kyrgyzstan, Oman, Tajikistan, Turkey and Ukraine.
But despite its perceived potential and the keenness shown by key powers, there was little progress on the project’s implementation for years. One of the reasons was the western sanctions on Iran over its nuclear programme. But Russia’s February 2022 invasion of Ukraine, after which it was sanctioned by the West, seems to have brought Moscow and Tehran closer, giving a fresh impetus to the NSTC.
In February this year, President Vladimir Putin said in his State of the Nation address that Russia was developing the NSTC, which would open up new routes for trade with India, Iran, Pakistan as well as Gulf countries. Last week, Mr. Putin and his Iranian counterpart Ebrahim Raisi virtually participated in a ceremony where both countries signed an agreement to develop the 162-km Rasht-Astara railway, a critical link in the NSTC.
According to the original plan, the corridor has several branches. On the western side of the Caspian Sea, it would link Russia to Iran through Azerbaijan. The eastern branch runs along the eastern coast of the Caspian Sea and links the main corridor to different road and rail networks of Central Asian countries such as Turkmenistan and Kazakhstan.
According to a report by the Federation of Freight Forwarders’ Associations in India, the corridor is 30% cheaper and 40% shorter than the current traditional route. The traditional route to move goods from Russia or Europe to India is through the Suez Canal — the Baltic Sea-North Sea-Mediterranean-Arabian Sea route. Mr. Putin calls the NSTC an alternative to the Suez Canal.
The Rasht-Astara link
In the western branch, which is the faster route, the Rasht-Astara railway would link Iranian railways up with Azerbaijan’s railways, opening a direct corridor from St. Petersburg to Bandar Abbas on the Gulf, Iran’s busiest port. According to the agreement signed last week, Russia will invest $1.73 billion on the construction of the railway, while Iran will spend roughly $5 billion and is looking for foreign investors.
For India, a country that’s dependent on imports for about 80% of its energy requirements, this corridor would open fresh avenues for energy security. India has substantially increased its energy ties with Russia over the past year.
The corridor can also boost trade between India and Central Asia. India is now asking for the Chabahar, the Iranian port it is developing, to be connected to the corridor.
While it has great potential on paper, the project still faces a lot of challenges. Construction of the Rasht-Astara railway, along the Caspian Sea, has been lagging for years because of both financial and practical reasons. The link will have 22 tunnels and 15 special bridges and there is no guarantee that it will be finished as per schedule in 48 months.
The Russian rail gauge, which is used in former Soviet republics as well, is different from that of Iran. Moreover, there are geopolitical problems. Both Russia and Iran would find it difficult to raise enough funds to finance the project as they are grappling with sanctions, while third parties remain reluctant to make investments in Iran.
And Iran’s relationship with Azerbaijan remains tense. Baku has repeatedly accused Iran of interference in its internal matters, and the war between Azerbaijan and Armenia has complicated the geopolitics of the Caucasus.
However, despite the challenges, the Russians and the Iranians seem determined to go ahead as they see the corridor as a potential game changer in their plans for Eurasian economic integration.