Iran and Russia expand commercial relations with mega-projects
On 17 May, Russian television carried images from the video conference between President Putin and Iran’s President Ebrahim Raisi as they oversaw the signing of documents for construction of a missing link in the North-South International Transport Corridor connecting Russia’s Baltic Sea ports with Iranian ports providing access to the Indian Ocean.
The new Rasht-Astana railroad will be 126 km long and will shave several days of transit time in the intermodal corridor, further enhancing its attractiveness versus the existing logistics from North Europe to India via the Suez Canal. Estimated time of construction is 24 months. The project entails a Russian investment of 1.6 billion euros, which will be recovered from revenues of traffic using the route.
Yesterday I was asked by Press TV (Iran) to comment on the new sanctions that the U.S. has announced on the country for its alleged support of the Russian economy via the Transport Corridor project in spite of American efforts to isolate and marginalize Russia.
See US imposes new sanctions against Iranian shipping companies, port operator
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In my remarks, I mentioned the prospective value of the Corridor’s enhancement via the new railway as having great value to Russia for the sake of its grain exports to Southeast Asia and Africa. Russia’s decades long cooperation with Western European and American grain dealers has largely fallen victim to US and European sanctions. The traditional means of settlement of grain sales contracts has also failed with Russia’s cut-off from SWIFT. This necessitates creation of extensive and long-range new logistics and financial solutions of which the North South Corridor can be a major component. It is easy to imagine India assuming in the grain trade a role similar to what it is now playing in the oil trade for its own benefit and for the benefit of Russian exporters.
As regards Iran, I understand that the North South Corridor can provide an important assistance with import of refined oil products, namely diesel and gasoline, from Russia. For a variety of reasons, these fuels are in short supply in various regions of Iran.
Mention of hydrocarbons brings us to another very major set of agreements now being negotiated between Iran and Russia for development of Iran’s oil and gas resources. This was the subject of other talks in Teheran on the 17th which, for the Russian side, were led by Alexander Novak, deputy prime minister with oversight of all energy questions. Novak had for more than a decade been Russia’s Minister responsible for the oil and gas industry. The projects under discussion include not only development of prospective oil and gas fields in Iran but also construction of an LNG plant to facilitate export to world markets. The lead Russian company in these projects is Gazprom. Novak also had talks regarding Russia’s continuing participation in the development of nuclear power generating stations in Iran.
As I say in my commentary to Press TV, just a few years ago this kind of deep economic cooperation between Iran and Russia seemed improbable, because elites in both countries counted on improving relations with the West and had less interest in each other. That was when the Joint Comprehensive Plan of Action was being put in place to monitor Iran’s uranium enrichment facilities in exchange for removal of Western sanctions. Thanks to Donald Trump, the JCPA failed. Thanks to Joe Biden, America’s relations with Iran have gone from bad to worse. Both Iran and Russia have drawn the appropriate conclusions and found out how very useful they can be for one another.
©Gilbert Doctorow, 2023