Iran’s Trade Promotion Organization plans to sign a memorandum today to open six shipping lines in the Caspian Sea to Russia and Kazakhstan.
The new routes form part of Iran’s plan to develop new rail and sea links for its key exports like oil, natural gas, and plastics to regional neighbors. In late September, Iranian, Azeri, and Russian officials met to discuss the International North-South Transport Corridor Project (INSTC), a network of ship, rail routes and roads between India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia and Europe. However, there is no long-term strategy for the project, and full implementation of the project has been delayed for almost twenty years.
Alternatives to the Suez Canal trade route like the INSTC are needed, as the Suez route remains more expensive and congested. The INSTC is estimated to bring down transportation costs between India and Russia by about 30 percent and bring down the transit time from 40 days by more than half compared to the Suez route. Iran’s position in the middle of the route would strongly benefit its struggling economy that has been affected by sanctions related to JCPOA violations. As such, expect Iran to push for speedy implementation of the shipping lines.
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Nastia is a research analyst on the Current Developments team. She focuses on the former USSR region, specializing in security, Russian and Eurasian affairs.