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18.03.2017 - 13: 10

The railway from Russia to India reduces the attractiveness of the Suez Canal

Expansion of Central Asian transport network will help create a new global routes.

In early March, Iran and Azerbaijan inaugurated a small section of the railway that promises big prospects. Cut a length of less than 10 km it was one of the final sections of the "North - South" international transport corridor, construction of which has already lasted 17 years. The corridor connects Russia, Iran and India, and the completion of the project scheduled for this year. International Corridor not only bind to one transport network of settlements along the way, but also affect the connection between Europe and Asia.

Despite years of delays, the project is moving forward thanks to many factors. Due to international sanctions, it has become more accessible to Iran and has gained importance for Russia. Since the international sanctions were withdrawn from Iran in January 2016 years, the country has attracted foreign investors and experts to work on the expansion of its rail network. Conversely, Russia's decision to terminate the import of EU products led to a strengthening of economic relations with India, which is a major producer of agricultural products.

The emergence of other regional transport projects also contributed to the development of the corridor "North - South". In the framework of the "One Belt and One Road" China is developing a number of new land and sea routes. These projects do not compete with the transport corridor, and some of them even contribute to its development. By supporting both initiatives, Azerbaijan and Iran aspire to become regional hubs between Asia and Europe. Leaders of Asian countries are trying to make the greatest possible contribution to the development of transport networks.

The opening ceremony of the railway communication with Afghanistan near the customs post Imamnazar Turkmenistan, November, 2016 year

As a result of the transport corridor "North - South" attracted the attention of many public figures from Moscow to Delhi. Russian President Vladimir Putin has called the initiative "major project", and transport corridor development was one of the main subjects discussed at the trilateral summit held last summer, which took Russian involvement, Azerbaijan and Iran. In addition, the Prime Minister of India, Narendra Modi discussed the project at meetings with the presidents of Russia and Iran in the past year. Since the launch of the project in 2000, the list of participating countries, supplemented by at least 11 points.

The value of political support is huge, but the fate of the corridor, above all, will depend on its cost-effectiveness. Tests show that the project really has the potential, albeit modest. Held in 2014, the test cargo delivery took about half the time than a similar service on existing paths: the road from Mumbai to St Petersburg took no 40, but only 20 days. Last October, on a test delivery was spent 23 days, and this in the absence of rail links between Azerbaijan and Iran. According to some experts, the transport corridor "North - South" has great economic prospects in comparison with some other budding terrestrial routes between Asia and Europe.

In order to become effective and take its rightful place in world trade, the project should be a convincing alternative sea routes. Most likely, will be transported agricultural products from India and raw material from Iran and Russia on a new transport corridor. As for the markets, trading companies within the country for the most part will consider a new route profitable. Nevertheless, for the vast number of products and destinations will remain relevant slower, but cheaper way.

The movement of ships through the Suez Canal

Construction of a new transport corridor infrastructure will be completed this year, but still a lot of work on the creation of a legal transport framework. Exporters using this route are forced to wade through the maze of the various requirements imposed by each country. Officials stress the need to establish a unified transport documents, and experience a trial delivery as indicated. The recent accession of India to the Customs Convention on the international transport of goods is an important step forward and reduced the number of obstacles. But progress has been limited in general.

The driving force is growing

In the long term, the corridor can contribute to the resumption of efforts to create a local transport network. For example, the financing of accession of the Iranian southern port Chehbehar to the railway network of the country will increase. Invest in Chehbehar, India hopes that this port will compete with the Pakistani port of Gwadar. Similarly, the appearance of new rail sections to help in the development. Iran is seeking a route to Afghanistan, Iraq and Turkmenistan. Azerbaijan has allocated considerable funds for development of the port and free economic zone in Baku, as well as the construction of a new railway to Georgia and Turkey. Although each transport path individually fulfills its essential function, adherence to strong regional transport network will allow to increase the yield.

Of course, the transport corridor is beneficial not all. Redirect some existing routes, it complicates the situation for those who are happy with the state of affairs, and it will affect the life of seaports. The intensity of the movement in the Suez Canal has fallen as fuel prices fell, and many ships should be over a longer path, skirting the Cape of Good Hope. Forecast of Egypt regarding the traffic in the Suez Canal proved to be overly optimistic, and new land routes and trade routes in the Arctic can only aggravate the financial position of this country.

railroad between Iran and Azerbaijan promising potential with respect to a small area indicates that the value of transport networks increases. While in Asia, there are new ways to benefit can the one who will be able to join them and take its place in a large transportation network. Succeed will not be easy, because the need to work together in removing various barriers and participate in the competition for investment and attracting business. If the competition will continue in economic terms, the Asia benefit of Europe and the rest of the world would be very significant.

Jonathan Hillman - Project Director for Asia reunion at the Center for Strategic and International Studies in Washington.

A source: MixedNews

Author: Translated Anton Komarov

Tags: Russia, India, Iran, Asia, Economy, Shipping, Railways, Analytics, Egypt