Russia and Iran establishing 3,000-kilometer trade route to bypass sanctions

21 December 2022, 11:21 PM
President of Iran Ebrahim Raisi (Photo:WANA NEWS AGENCY \ Reuters)

President of Iran Ebrahim Raisi (Photo:WANA NEWS AGENCY \ Reuters)

Tehran and Moscow are working to establish a new transcontinental 3,000-kilometer-long trade corridor to the Indian Ocean, which will make them less vulnerable to foreign sanctions, Bloomberg reported on Oct. 21.

Both countries are spending billions to speed up the flow of goods along rivers and railways, linked by the Caspian Sea. According to Bloomberg, dozens of Russian and Iranian ships, including those that were sanctioned, are already using this route.

The goal is to protect economic ties from Western interference and integrate with the rapidly growing economies of Asian countries.

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The emerging trade corridor will allow Russia and Iran to shorten existing shipping lanes by thousands of kilometers.

According to an expert at the International Institute for Strategic Studies, Marina Shagina, Russia and Iran are investing up to $25 billion in the internal trade corridor to facilitate the movement of goods – something Western countries aim to curb.

“These two countries are playing cat and mouse,” the expert notes. “They will explore every loophole for the transfer of sanctioned goods and weapons.”

Biden administration’s Iran envoy, Robert Malley, notes that any new trade route requires close attention to cut off weapon supply between the two countries.

“This is an extremely damaging and reckless decision that they made,” Mally notes.

As Bloomberg notes, in addition to arms trade between countries, there are a number of economic reasons for the new transit route. In particular, ships navigating Russia’s Don and Volga rivers traditionally trade in energy and agricultural products. At the same time, Iran is the third largest importer of Russian grain, but its share could now grow even further.

The countries have announced a number of new trade agreements that cover products like turbines, polymers, pharmaceuticals, and car parts. Russia also supplies nuclear fuel and components for the Iranian nuclear reactor in Bushehr.

Bloomberg notes that India is an important node in the network – for both Russia and Iran.

The first batch of Russian grain of 12 million tons that was sent to India, has already passed through Iran. However, trade flows could increase if Iran manages to connect the unfinished Chabahar port on the Indian Ocean with a long-distance rail link.

The agency noted that while Chabahar is not under U.S. sanctions, it could soon attract Washington's attention.

As director of District Consultancy and trade adviser in Washington, Bharath Gopalswamy, points out, in order for this kind of infrastructure to be built, used, and maintained, cooperation from all other countries along the corridor is required.

Earlier, The Washington Post reported that Moscow and Tehran signed a secret deal to launch production of Iranian kamikaze drones on Russian territory.

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