Eurasia

Sanctions threaten Iran’s dream of becoming Eurasian transport hub

Al Monitor | The Middle East is a place of zero-sum games in which Iran is a player. Beyond the region, however, in Eurasia, Tehran is attempting to take part in a win-win game.

By increasingly operationalizing its section of the International North-South Transport Corridor (INSTC), Iran is trying to step up its presence in the geo-economy of Eurasia with the strategic goal of reviving its historic role as the link connecting north and south Eurasia. Indeed, during the past few years, participation in the corridor —  which connects the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and then Northern Europe via the Caucasus and Russia — has become the focal point of Tehran’s economic diplomacy.

The tripartite agreement between Iran, Russia and India to develop the INSTC was signed in 2000, with additional countries joining subsequently. The participating states, however, have only recently tried to make the agreement operational, through new investments and diplomatic visit between involved countries: Russia, within the framework of Eurasian Economic Union; Azerbaijan with the aim of expanding its infrastructure connections with its neighbors; India, with the aim of rivaling China’s One Belt, One Road project and expanding its economy; and, Iran, with the hope of escaping economic and transit isolation and reducing the effects of sanctions on its economy. All the states now see it in their national interest to make the INSTC work.

The INSTC is aimed at making it easier for India and Southeast Asia to access Russia and Central Asia (and vice versa). While it is not meant to rival the Suez Canal, as the latter is a global trade artery, it does compete with China’s One Belt, One Road at some nodal points.

If the INSTC becomes fully operable and utilized, it could increase India’s trade with countries along the route from $28 billion to $170 billion, according to some estimates. Indeed, the INSTC is 40% shorter in distance and 30% cheaper in shipping costs than India’s current trade routes with Russia and northern Europe via the Suez Canal. In addition, if the India-Myanmar-Thailand corridor also becomes operational, Southeast Asia will have cheaper and faster access to Central Asia and northern Europe. Moreover, the corridor provides Russia, Central Asia and the Caucasus with new connections to South and Southeast Asia.

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