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Russia eyes billions in transport
connection
By Sergei Blagov
MOSCOW - Russia has been keen to make the
North-South transport connection a viable alternative to
Red Sea routes. An alternative transport link from Asia
to Europe - from Mumbai, India, to the Caspian port of
Olya in the Astrakhan region via Bandar Abbas in Iran -
is expected to bring Russia billions of dollars in
revenues.
In 2002, 7 million tons
of freight were shipped through Russia along
the North-South transport corridor, and this figure could
reach 8 million tons this year, Deputy Transportation
Minister Chingiz Izmailov told journalists in Moscow.
Russia's Transportation Ministry has suggested
launching a consortium of shipping companies that would
operate along the corridor. Among possible participants,
Izmailov mentioned Iran's state-owned cargo fleet, the
St Petersburg Port, the Olya Port near Astrakhan on the
Caspian and the Free Port of Hamburg in Germany.
Izmailov claimed that the consortium would be able to
invest "hundreds of millions of dollars" to develop
railroad, highway and river infrastructure between the
Caspian Sea and St Petersburg.
Russia, India and
Iran signed an agreement on the development of the
North-South corridor in September 2000. In March 2002,
President Vladimir Putin signed into law a bill
ratifying a trilateral agreement on the development of
the North-South link.
The ministry estimates
that the North-South link would be able to handle some
15-20 million tons of freight per year, hence becoming a
rival of the Suez Canal. The route would be a channel
for goods shipped to and from Russia, as well as an
alternative transit route between Asia and Europe.
Russia and other partners in the North-South link
project hope to lure shippers by the low cost of
transportation via this corridor. Now most South Asian
cargo bound for Russia is moved either to Russia's Black
Sea ports or via the Atlantic Ocean and Baltic Sea to St
Petersburg.
The new corridor is expected to
reduce delivery time by 10 to 12 days compared with
traditional routes through the Mediterranean and the
Suez Canal. The planners also hope that the link will
cut operation costs by about 20 percent, or US$400, per
container.
Russia's southern Astrakhan region
has started building a 51-kilometer long rail link
between Olya port and Privolzhye railway system. The
project is estimated to cost $140 million, including $60
million loan from the European Bank for Reconstruction
and Development.
The corridor has good chances
to connect Asia and Western Europe, Transportation
Minister Sergei Frank has argued. The Transportation
Ministry estimates that the annual trade turnover
through the corridor could reach $10 billion per year,
with Russia, Iran and India becoming the main
beneficiaries.
Russia and Iran have also
discussed the restoration of a rail link between the two
countries within the framework of the North-South
transport corridor agreement.
Freight from
Southeast Asia would travel the corridor from the Indian
Ocean through the Persian Gulf, where it would be loaded
onto trucks and trains in Iran. The cargo would then be
shipped across the Caspian Sea into Russia, then
forwarded to Western Europe.
However, millions
of dollars need to be spent to make the North-South
corridor a viable alternative to customary Red Sea
routes. Many parts of Russia's segment of the corridor
are incomplete or in disrepair, including rail links
serving ports on the Caspian and roads leading through
the Volga region.
Yet despite infrastructure
problems and possible political risks caused by Iranian
involvement, the benefits of the corridor to Russia
seemingly attract some former Soviet states.
Izmailov announced that Belarus and Kazakhstan
formally joined the project and claimed that another six
nations could join in various capacities, naming
Tajikistan and Oman as potential participants. Armenia,
Azerbaijan, Bulgaria and Syria have expressed interest
in writing to join the project, Izmailov stated.
Kazakhstan may join the project directly as the
North-South link could include the Aktau port in western
Kazakhstan. These plans involve a regular
Aktau-Astrakhan ferry line, while links between Russian
ports Olya, Astrakhan, Makhachkala and Kazakh port Aktau
in the Caspian Sea would become important elements of
the proposed North-South transportation system.
Meanwhile, Belarus would remain Russia's main land
connection with Western Europe.
Russia has long
tried to capitalize on its unique geographical position
by providing transcontinental links. However, the
economic viability of these ambitious plans has yet to
be tested.
For instance, theoretically Russia's
Trans-Siberian Railway, which takes seven days to travel
from one end to another, constitutes an ideal
transcontinental link. It runs from Moscow to
Vladivostok, is the longest continuous rail line on
earth, of almost six thousand miles (or about ten
thousand kilometers) over one third of the globe. Other
possible routes to the west are Moscow to Berlin and
from there to Paris, as well as St Petersburg and to
Helsinki.
Russia has long hoped to develop the
scheme to funnel freight between Asia and Europe through
the Trans-Siberian Railway. However, the scheme so far
has not been a success, mainly due to Russia's railway
service's lack of reliability.
On the other
hand, despite the considerable economic potential of the
corridor to Russia, there will also be problems -
especially with Iran, which has been labeled by US
President George W Bush as part of an "axis of evil".
(©2003 Asia Times Online Co, Ltd. All rights
reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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