Russia Now Forced to Look East of Caucasus to Reach Iran

Russian officials and international media have given prominent coverage to Moscow’s plans for a transcontinental trade corridor southward to Iran via the Caucasus. These efforts aim to end-run Western sanctions and expand Russian trade in the Indian Ocean basin and beyond. But Russian experts concede that the opening of such a route is months or even years away, with some suggesting that it may never be completed (RT, December 26, 2022). As a result, Moscow and Tehran are increasingly turning to other routes, including the expansion of shipping on the Caspian and the use of existing railroads in Central Asia. While this shift changes the status quo, it does nothing to lessen the geopolitical competition opened by the latest Russian-Iranian move.

While many might be inclined to see instability in the Caucasus as the primary cause for this shift, Russian experts, such as Georgy Vlastopulo of the Optimal Logistics Company, say that the immediate bottleneck lies in northern Iran’s topography. The mountainous terrain explains why the rail line has not been built there before. Opening it would require the construction of numerous new tunnels and bridges, followed by the electrification of feeder and main lines (Bfm.ru, December 24, 2022). According to Vlastopulo, some 164 kilometers of track need to be laid through some of the most mountainous regions, and electrical networks must be expanded on more than 494 kilometers of line. The Russian expert mentioned that Moscow has promised to invest $1.2 billion into these projects; but it is “an open question” as to when the work will be completed. In any case, it will not be soon enough to break the West’s sanctions regime. Another Russian logistics specialist, Sergey Khestanov of Moscow’s Open Investments Company, adds that it is far from clear whether the potential value of trade along such a line would justify its completion.

Nevertheless, since the opening of a new route southward is quite crucial in President Vladimir Putin’s thinking, Russian officials are now focusing their attention on two alternatives that avoid some but not all of the problems with the Caucasus route—namely, the development of shipping on the Caspian between Russian ports on the north coast and Iranian ones on the south, as well as the use of existing rail lines in Kazakhstan, Uzbekistan and Turkmenistan to connect the national rail systems of Russia and Iran. (For a map of these lines showing the latter two as already in existence and the Caucasus route as designated with a dotted one, see Casp-geo.ru, December 29, 2022). 

At the end of November 2022, Moscow and Tehran announced plans to open trade on the Caspian Sea between Astrakhan in Russia and Bandar-e Anzali in Iran. The two sides have further agreed that Russia will be allowed to transfer 12 million tons of cargo from ships to rail lines across Iran each year, equal to approximately 3,000 trainloads. In this way, “the Caspian will become for Moscow a trade window to the world.” The two countries had earlier agreed to expand trade via Kazakhstan and Turkmenistan but now prefer the sea route due to fewer political and security issues as well as Iran becoming a member of the Shanghai Cooperation Organization (Realtribune.ru, November 30, 2022). 

Moreover, Russian analysts say, this new Caspian route gives Russia an alternative to complete dependence on China and sends a message to the countries of Central Asia and the South Caucasus that the north-south trade route Russia has long wanted can become more useful for them too. Additionally, this new Caspian route is especially critical as “a natural counterweight” to Turkey’s presence and “Turkish ambitions” in both regions. In truth, it challenges the networks Ankara and the West have set up to undermine or even exclude Russian influence (TASS, December 18, 2022; Vpoanalytics.com, December 29, 2022; Ru.irna.ir, January 1).

However, serious obstacles remain to the completion of the project, especially on the Russian side. Moscow lacks sufficient shipping capacity to make it work and cannot build ships or buy them quickly enough to overcome this shortcoming, argues Mikhail Voytenko, a Russian journalist who specializes in maritime issues (Interaffairs.ru, July 26, 2022). Moreover, the Russian ports at Astrakhan and Makhachkala are aging and incapable of handling any significant increase in trade. And perhaps most important, Voytenko stresses, Russia has experienced serious problems in handling intermodal shipping—that is, moving cargo from trucks to trains to ships and then back again. Consequently, despite the current hype surrounding the possibilities this route could open, the Caspian route, too, may not be in effective service anytime soon.

Due to these problems, the Russian government is now focusing on a third possible alternative: expanding the use of railroads in Central Asia to link up with Iran’s rail network. Moscow is even considering the formation of a new “railroad alliance” among Russia, Kazakhstan and Turkmenistan (Vpoanalytics.com, December 29, 2022). The attractions of such a path are obvious: The amount of new investment needed to make the plan operational is far smaller than in the case of the other two routes already mentioned; these lines could carry Russian and Iranian cargo in both directions in expanded amounts in the near future; and they would help counter the expansion of Turkish influence in Central Asia, something both Moscow and Tehran would welcome. As a result, both Russian and Iranian commentators are enthusiastic about the prospects of this approach (Ru.irna.ir, January 1; Casp-geo.ru, January 3).

But difficulties abound with this route as well. Not all Iranian lines are modernized, and the threat of instability is growing across Central Asia. Furthermore, the Central Asian states are continuing their efforts to distance themselves from Moscow due to Putin’s war against Ukraine (Ia-centr.ru, January 4). Consequently, these countries are likely to resist some of Russia’s and Iran’s blandishments to appease their Western partners, which could delay the development of what may be Moscow’s last hope to end-run sanctions southward for the foreseeable future. At the very least, it sets the stage for intensified geopolitical competition among those Central Asian capitals involved in the negotiations.