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Russia and Iran eye trade route with India to bypass sanctions: Asia Nikkei


Russia and Iran are working on a new shipping corridor that cuts Europe and its sanctions out of the picture, and are looking to partner with India, which has kept its distance from the Western-led isolation campaign against the two countries. This was reported by Asia Nikkei, citing sources.

The plan is an answer to the U.S.-led push for "friendshoring," an effort to relocate supply chains to allies and friendly countries.

Construction is underway on 3,300 kilometers of railways throughout Iran, and 560 km of new track is set to open for operation by March, a senior Iranian official said recently. Completing all of these projects would expand the country's rail network by 20%.

Around 6,000 km of highways are also under construction, with 1,000 km set to finish by March. A four-lane highway linking the Caspian Sea and the Persian Gulf opened in 2022.

Iran seeks to leverage its potential as a transport hub between Asia, Russia and Europe. Moscow, New Delhi and Tehran signed an agreement back in 2002 laying out plans for the International North-South Transport Corridor, which would connect India and Russia through Iran and Azerbaijan, bypassing the Suez Canal.

For Russia, the corridor would provide a major export channel to South Asia without needing to go through Europe, which has been working to cut Moscow loose economically since its invasion of Ukraine. When Russian President Vladimir Putin visited Iran in July, he and counterpart Ebrahim Raisi agreed on the need to finish the Rasht-Astara rail link in northern Iran, part of the proposed route.

Isolated from much of the rest of the world through Western sanctions, Russia and Iran have been building closer economic ties with each other.

Iran's Ministry of Petroleum said in September that it would import 9 million cu. meters of Russian natural gas a day through Azerbaijan. Iran's national oil company and state-owned Russian energy giant Gazprom signed a memorandum of understanding on energy cooperation last year worth $40 billion.

A key issue will be winning over New Delhi, a strategically important player for the democratic camp in dealing with Russia and China.

A senior Iranian diplomat visited India in November to discuss development of the port of Chabahar in southern Iran, which would connect India with the rest of the corridor.

Tehran and Moscow argue that the route would benefit New Delhi politically and economically. It would open up the possibility of more trade with resource-rich Central Asia through Iran, as well as further India's goal of developing alternatives to the Belt and Road link between China and the Pakistani port of Gwadar that New Delhi has opposed.

India has not participated in the sanctions campaign against Moscow in response to its invasion of Ukraine, continuing to buy Russian oil. It also has not joined Western countries in condemning Iran's suppression of anti-government protests.

But using the two countries as a trade route is likely to be a challenge, given that they are cut off not only from global supply chains, but also from international financial networks.

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