2024-08-26 18:00 №2 2024 GLOBAL TRENDS

“NORTH – SOUTH” INTERNATIONAL TRANSPORT CORRIDOR – KEY FOR INTEGRATION OF THE GREATER EURASIAN ECONOMIC AREA

Jawahar Vishnu Bhagwat, Associate Professor of the Department of Regional Studies, International Relations and Political Science at the Higher School of Social and Humanitarian Sciences and Intercultural Communication of the Northern (Arctic) Federal University named after M. V. Lomonosov, Candidate of Political Science (St. Petersburg State University), PhD in History, University of Mumbai (Republic of India),retired Captain of the Indian Navy Dalbir Singh, National Secretary, Indian National Congress, President, Foundation for Policy and Governance, Member, Supreme Advisory Council, Eurasian Peoples Assembly (India)

«The North–South transport corridor should become an example of the widest international cooperation. We are talking about the formation of new logistics routes in order to accelerate the economic and social development of the countries of Eurasia and the global South»,
President of the Russian Federation Vladimir Putin.

THE CHALLENGE OF TIME
The crisis in the Red Sea that usually carries 12% of world trade has been underway since November 2023. This crisis has demonstrated the need for active work to develop alternative international transportation routes. This is an opportunity for Azerbaijan, Georgia, India, Iran, Russia, Turkey, Turkmenistan and other countries of the Eurasian Economic Union to coordinate efforts for mutual benefit to make the North-South transport corridor
a viable international alternative.

NORTH-SOUTH TRANSPORT CORRIDOR: OPPORTUNITIES, CHALLENGES, PROSPECTS
The North-South transport corridor includes three possible routes:
• “Western” Route along the western coast of the Caspian Sea through Russia and Azerbaijan is approximately 5,100 km, with the best connections to railway and road networks of the South Caucasus;
• “Trans-Caspian” Route, which uses ferry and feeder container lines across the Caspian Sea, is approximately 4,900 km;
• “Eastern” Route along the eastern coast of the Caspian Sea through Kazakhstan and Turkmenistan is approximately 6,100 km.
The role and place of the North–South Corridor, its routes and transport hubs in the framework of the Eurasian transport system are shown in Figures 1 and 2.

The first transit of Russian goods to India, using the International North-South Transportation Corridor (INSTC) was accomplished on June 11, 2022 in 24 days, which is much less than the Suez canal route. It may be noted that Russian territory is already being used for export of goods from China to Europe (transit time: 20 days much lesser than the traditional Suez Canal route) and there is already a high-speed container train to facilitate this. There is also a Middle Corridor that links China with Europe via Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and Turkey bypassing Russia.

Transportation from China’s Lianyungang to Turkey and EU countries via these corridors takes from 13 to 23 days. At the same time, transportation by sea, via the Suez Canal, requires from 35 to 45 days.

The North-South Transport corridor initiative would prove to be a stable alternative transit corridor not only for trade with the EAEU but also with Europe for India. A Free Trade Agreement (FTA) between India and the Eurasian Economic Union (EAEU) needs to be negotiated. The Free Trade Zone Agreement between Iran and the EAEU (which replaced the interim agreement of 2019) has already been in force since 2023.

The assessment of cargo transportation potential by 2030 and the primary goods that could be carried along the
North-South Transport Corridor are depicted in Figures 3 and 4, respectively. It is relevant to mention that cargo carried reached 19 million tons in 2023, which was earlier than expected (according EDB data). Important advantages of the corridor are its year round availability and cost as compared to the Northern Sea Route. Here it is relevant to quote Igor Levitin, assistant to the President of Russia, during his speech at the Siberian Transport Forum in Novosibirsk in 2023,

“the development, i.e. an increase in capacity for each ton of cargo, for example, the North–South corridor, will cost from 1 to 6 billion rubles, the NSR – about 20 billion rubles and the Eastern railway polygon – 30 billion rubles” Each of these routes has to be developed but cost considerations must also be factored taking into account the potential for future markets.

The North–South transport corridor is more relevant for trade between the EAEU and South Asia, South-East Asia, the Middle East and Africa. Transport infrastructure and other barriers (Figures 5 and 6) could be resolved in the future.

The shortcomings of the transport infrastructure and other obstacles hindering the development of the North-South ITC could be overcome by establishing the Eurasian Transport Commission and the BRICS Transport Commission, as recently proposed by President of Russia Vladimir Putin There are important lessons to be learnt from the Chinese Belt and Road Initiative (BRI), and one of the significant takeaways is the establishment of an international body of experts to review progress and give recommendations.

Moreover, an annual North-South Transport corridor Forum similar to the BRI forums is also needed to bring together government officials, experts and prospective investors.

SIGNIFICANT DEVELOPMENTS
It may be noted that the signing of an agreement on May 17, 2023 between Russia and Iran to build the Rasht-Astara railway line connecting Russian ports in the Caspian Sea and Iranian ports in the Persian Gulf was a milestone in development of the route. This railway line is expected to be operational by 2027. Another significant development was the signing of ten years agreement between India and Iran for operation of the Chabahar port on May 13. Recently, during the 27th Saint Petersburg International Economic Forum (5-8 June 2024) it was announced that Russia is planning to export coal to India via this route.

In 2023, the Islamic Republic of Iran Shipping Lines announced that it has assigned 300 containers to transport goods between Russia and India, and this could increase if there was more demand. Thus, it is observed that there are positive developments which augur well for the future the North-South transport corridor.

STRATEGIC GOALS
The most important strategic tasks for India, Iran and Russia with respect to develop the North-South corridor are as follows:
• Initiate North-South corridor transport commission and a committee of international experts to facilitate its further development.
• Convene an annual North-South corridor transport forum.
• Initiate talks for a Free Trade agreement between India and the Eurasian Economic Union.
• Establish cooperation between Maritime and Transport Institutes of countries to train specialists and continuously evaluate different shipping routes and related issues.

JOINT ACTIONS ARE THE KEY TO SUCCESS
The Red Sea Crisis has brought to light the vulnerability of global supply chains and trade to asymmetric threats. Given the current geopolitical and economic challenges facing the world, the situation may worsen further, primarily due to the inflationary impact on energy prices, and also other vital commodities.

The North-South transport corridor (INSTC) is the most feasible alternative transport route to meet trade requirements of India, Iran and the Eurasian Economic Union. However, sustained coordinated efforts are needed to achieve this goal.