Iran’s Post-JCPOA Transit Initiatives in Central Asia

Omid Rahimi
As a post-JCPOA implication, Iran has followed 4 transit initiatives in Central Asia including “Persian Railway Corridor”, “East Caspian Railway”, so-called “Ashgabat Agreement” and “Iran-Kazakhstan-China Corridor” more seriously.
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US withdrawal from the nuclear deal which led to imposing secondary sanctions by Trump administration highlighted the considerable effect of “resource curse” on Iran’s economy. In the meanwhile, exempting Iran’s Port of Chabahar from the US sanctions remembered Tehran that “every cloud has a silver lining”. The decision proved that the last scrap of the JCPOA may still be operational in areas such as transit.

Transit projects such as INSTC can bring Iran with stable annual revenue of 2$ billion.

According to official statements, transit projects such as INSTC can bring Iran with stable annual revenue of 2$ billion. The Benefits could not only affects the country’s economy, but the politics and beyond. Thereupon, Iran has more carefully focused on its geo-economy based on transit corridors.

 

In this regard, land locked Central Asian republics are among Tehran’s priorities. The region also play a bridge role for the 37$ billion trade turnover (2017 official statement) between Iran and China. In this regard, Iran has proposed transit initiatives to Central Asian states to revive its geo-economy, as well as replacing revenue loss caused by sanctions.

 

Ashgabat Agreement

In March 2011, Iran, Uzbekistan, Turkmenistan, Oman and Qatar signed a transit agreement initiated by Iran’s former President Mahmoud Ahmadinejad, in Ashgabat. The agreement envisages facilitation of transit and transportation of goods between Central Asia and Iran’s southern Persian Gulf and Gulf of Oman. The member states expected a cheaper, faster and more facilitated transit corridor. However, the Qatar withdrawal faced the agreement with recession, Zarif’s negotiation in Muscat in August 2014, reactivated the process of implementation. Suspending Iran’s nuclear sanctions following the JCPOA, and Mirziyoyev’s presidency in Uzbekistan accelerated the project. In December 2017, Uzbek President Shavkat Mirziyoyev issued a decree to diversify the country’s transportation options including “Uzbekistan-Turkmenistan-Iran-Oman” corridor. In the wake of this situation, more countries such as India and Kazakhstan tend to join the agreement.

 

Iran-Kazakhstan-China Corridor

In October 2015, just a few months after finalizing the JCPOA, officials from China, Kazakhstan and Iran signed a trilateral agreement to create a new transit corridor. It was officially launched since June 2018 in Iran. The corridor starts off as a rail route from Urumqi, in China, and reaches Kazakhstan’s Aktau Port, located on the east bank of the Caspian Sea. Then goods are loaded onto vessels before they are transported to the newly launched Caspian Port in Anzali free trade zone. In August 2018, Iran's first export cargo from this route was shipped to China. Subsequently in February 2019, the first shipment from China arrived in the Caspian port of Iran. The main advantage of this corridor is the reduction of the distance, time and obviously the cost of transport over the existing route through the Yellow Sea, the Indian Ocean and Bandar Abbas in southern Iran. Tehran has also planned the Caspian Port Development Program, targeting a capacity of 18 million tons, looking forward exporting Kazakh wheat to Iraq.

 

East Caspian Railway

In 1996, former Presidents of Iran and Turkmenistan opened the Tejen-Sarakhs-Mashhad railway, as the first rail corridor between Iran and Central Asia. However, as the route was not cost effective for some destinations. Hence, in 2007, Iran, Turkmenistan and Kazakhstan signed an agreement to create the second route, named East Caspian Railway. The construction phase including 146 Km rail roads in Kazakhstan, 129 Km in Iran and 686 Km in Iran, started from 2009. The Kazakh section completed in 2012, but the Turkmen part faced a delay by the Iranian contractor, “Pars Energy”. In December 2014, East Caspian Railway officially inaugurated in a ceremony attended by Berdimuhamedow, Rouhani and Nazarbaev. Plans to develop the rail route along the Inchebron-Garmsar with €1.2 billion Russian investment remain on Iran's agenda.

 

Persian Railway Corridor

Another transit initiative has not yet been implemented, is the rail route, crossing over three Persian speaking countries of Iran, Afghanistan and Tajikistan. Iran has followed the route through various options. In October 2010, an agreement on feasibility studies signed by Iran, Afghanistan, Tajikistan, Kyrgyzstan and China, called “The Five Nations Railway Corridor (FNRC)”.

 

A preliminary agreement for developing the FNRC project was also signed in the Tajik capital Dushanbe in December 2014. The implementation phase should have started from 2016. A similar rail corridor has been discussed within Economic Cooperation Organization (ECO) regional corridors, which connects Tajikistan to Turkey. Moreover, during the 13th meeting of Iran-Tajikistan Joint Economic Commission held in December 2019, the two countries made a deal on topography and mapping cooperation through a joint working group. According to Iran’s Energy Minister, Tehran and Dushanbe also agreed on joint efforts such as negotiation with Turkish side, and holding a trilateral meeting with Afghanistan.

Iran's new strategy was to integrate these projects with major international initiatives such as Indian “International North–South Transport Corridor (INSTC)” and Chinese “Belt and Road Initiative (BRI)”.

Iran’s strategy in depth

Iran's transit initiatives first sparkled in 2007 following the intensification of nuclear sanctions. Iran has explicitly planned to make the most of its geo-economic advantages. However, sanctions remain an important obstacle to operationalizing the projects, and more importantly, utilizing them. The initiatives followed more hopefully by approaching the nuclear deal to its end. Iran's new strategy was to integrate these projects with major international initiatives such as Indian “International North–South Transport Corridor (INSTC)” and Chinese “Belt and Road Initiative (BRI)”. The integration idea was first to attract extensive investments, while playing more independent and significant role. And then, getting involved in such major international initiatives could prevent possible non-sanction pressures on small countries participating in transit initiatives. International powers such as China and India can provide political support as a guarantee, keeping them in deal.